Reliable Salvage, Unreliable Payment
Reliable Marine Towing and SalvageLLC v. Thomas, No.19-10503, 2019 U.S. App. LEXIS, 2019 WL 5304478 31192 (11th Cir. Oct. 21, 2019)
By: Blake Daigle
Offthe coast of Florida, a storm partially sank the defendant, John Thomas’s, vessel.Reliable Marine Towing and Salvage (Reliable Marine) provided rescue servicesand was able to bring both the vessel and owner to shore. State Farm Fire andCasualty Insurance Co. (State Farm) contracted with the defendant to cover hisvessel through a policy that covered upto $6,750.00 worth of damage. This insurance contract had an additional clause whichprovided for another 5%, or $337.50, ifthe repairs and salvage exceeded the $6,750.00 coverage. Moreover, the contractreserved $500.00 for “emergency services.”[1]State Farm found the vessel to be a complete loss and paid the vessel owner maximumcoverage. Reliable Marine then sent an invoice for a total of $3,109.84 for itsservices. State Farm considered Reliable Marine’s services as both salvage andemergency services. The insurer then paid the insured $837.50, which consistedof $337.50 for the salvage cost and $500.00for emergency services, becausethe policy required direct payment unless another party was "legallyentitled to receive payment,"[2]
The defendant did not pay Reliable Marine. This caused Reliable Marineto sue both State Farm and the defendant. The defendant consented to judgmentand assigned any claim he had against State Farm.
The district court granted summary judgment in favor of State Farm on Reliable Marine’s claim of breach of contract. Reliable Marine appealed and asserted that 1) State Farm had an invoice from Reliable Marine and therefore should have paid it the $837.50 directly and 2) State Farm is liable for rescue services above and beyond the policy limit based on Florida insurance law and because the policy contained a “sue and labor” clause. The appellate court first looked to the plain language of the insurance policy and found that it stated the defendant would receive all payments unless another party was "legally entitled to receive payment."[3] The court found no evidence that the insured assigned his right of payment to Reliable Marine.
Next, the appellate court found that the insurance policy was unambiguous and provided the vessel owner with a total expected payout equal to that which was paid. Because the vessel owner could not expect more from the policy, neither could Reliable Marine. The court further examined Reliable Marine’s claim that the policy contained a “sue and labor” clause. Here, the court found that the insured had a duty to "protect the property from further loss"[4] but was not required to go to any extraordinary lengths that a true “sue and labor” clause would demand, whereby the insurer would owe above what the policy stipulated.
Theappellate court, applying the plain language rules of Florida contract andinsurance law, found that the district court’s summary judgment in favor ofState Farm was proper and affirmed.
[1] Reliable Marine Towing & Salvage LLC v. Thomas, 2019 U.S. App. LEXIS 31192, at *2 (11th Cir. Oct. 21, 2019).
[2] Reliable Marine Towing & Salvage LLC v. Thomas, 2019 U.S. App. LEXIS 31192, at *3 (11th Cir. Oct. 21,2019).
[3] Reliable Marine Towing & Salvage LLC v. Thomas, 2019 U.S. App. LEXIS 31192, at *5 (11th Cir. Oct. 21, 2019).
[4] Reliable Marine Towing & Salvage LLC v. Thomas, 2019 U.S. App. LEXIS 31192, at *7 (11th Cir. Oct. 21,2019).
