and Submitted July 13, 2017 Portland, Oregon
from the United States District Court for the District of
Montana Susan P. Watters, District Judge, Presiding D.C. No.
Gleason (argued), Gleason Law LLC, Atlanta, Georgia; Ross D.
Tillman, Boone Karlberg P.C., Missoula, Montana; for
P. R. Eisenhower (argued) and Gerard W. White, Hill Rivkins
LLP, New York, New York, for
Before: Marsha S. Berzon, Paul J. Watford, and John B. Owens,
/ Maritime Law
panel affirmed in part and reversed in part the district
court's orders finding enforceable an arbitration clause
in a marine insurance policy and compelling arbitration of
two claims but not others brought against insurance
underwriters that denied coverage for the loss of a sailing
panel held that the plaintiff's insurance application was
not a contract, but the insurance policy was a contract
subject to the Federal Arbitration Act. The policy's
arbitration clause concerned a maritime transaction falling
under the FAA, and Montana law was inapplicable under both
federal maritime law choice-of-law principles and the policy
itself and therefore did not render the arbitration clause
unenforceable. The panel held that the arbitration agreement
showed a clear and unmistakable intent to resolve
arbitrability questions in arbitration. The panel thus
affirmed the district court's order finding the
policy's arbitration clause enforceable, affirmed the
district court's order granting the defendants'
motion to compel arbitration as to certain causes of action,
reversed the district court's order denying the
defendants' motion to compel arbitration as to the
plaintiff's remaining causes of action, and remanded to
the district court with instructions to grant the
defendants' motion to compel arbitration in its entirety.
BERZON, CIRCUIT JUDGE
sea, although an agreeable, is a dangerous companion, "
wrote Plato more than two millennia ago. Our case is about
that danger; it concerns "a brave vessel . . .
[d]ash'd all to pieces, " like the ship Prospero
hexed in The Tempest. William Shakespeare, The
Tempest act 1, sc. 2.
the background has its drama, the primary legal issues are
more mundane: Is an arbitration provision in a maritime
insurance policy enforceable despite law in the forum state
assertedly precluding its application? In addressing this
question, we consider several questions concerning the
intersection of the McCarran-Ferguson Act, 15 U.S.C. §
1012, which shields state insurance laws from federal
preemption, and the Federal Arbitration Act
("FAA"), 9 U.S.C. § 1-16, which provides for
enforcement of arbitration provisions in maritime contracts.
After doing so, we conclude that the arbitration clause
should be given effect.
Contracting for Yacht Insurance
residents Taunia and Chris Kittler are the sole members of
Galilea, LLC ("Galilea"), a Nevada limited
liability company. In 2014, Galilea purchased a sixty-foot
yacht ("the Yacht"). This case concerns the scope
of the insurance coverage Galilea bought for the Yacht.
year after purchasing the Yacht, the Kittlers submitted to
Pantaenius America Ltd. ("Pantaenius") an online
request for an insurance quote. Pantaenius specializes in
obtaining and administering yacht insurance policies, acting
as an agent for insurance underwriters. Following the quote
request, the Kittlers electronically exchanged several
documents with Pantaenius. According to Galilea, the Kittlers
also spoke with a Pantaenius representative over the phone to
discuss the materials needed to complete an insurance
application. The Kittlers say they informed the Pantaenius
representative on one call that it would be difficult to
submit a hand-signed application because the Kittlers were,
at the time, sailing the yacht in the Caribbean, en route
from Florida to San Diego via the Panama Canal. Pantaenius
nonetheless required a hand-signed application, so the
Kittlers docked in Puerto Rico to locate the necessary
equipment to print and scan a signed application.
application for insurance listed three different
underwriters: AGCS Marine Insurance Company, Liberty Mutual
Insurance Company, and Torus National Insurance Company
(collectively, "Underwriters"). The application
noted that one or more of these Underwriters would "be
assigned at the time of binding [insurance]
application also included arbitration and choice-of-law
terms. The arbitration term provided, in relevant part:
Any dispute arising out of or relating to the relationship
between Pantaenius America Ltd and/or our participating
underwriters and the insured shall be settled by arbitration
administered by the American Arbitration Association
["AAA"] in accordance with its Commercial
Arbitration Rules. . . . The dispute shall be submitted to
one arbitrator. . . . The place of arbitration shall be New
York, New York.
application also provided that the "relationship"
and the Agreement "shall be governed by the laws of New
after Galilea submitted the signed application, Pantaenius
issued an insurance binder providing preliminary coverage for
up to two weeks from the date of application.The binder set a
coverage limit of $1, 566, 500, based on the "total
agreed fixed value" of the Yacht; established a covered
"Cruising Area" that extended south to 30.5 degrees
north latitude; named the three Underwriters as the issuing
insurance companies; incorporated the forthcoming
policy's terms and conditions; and attached a document
with those anticipated terms.
formal insurance policy issued a day later. Pantaenius
formally signed the insurance policy on behalf of the three
Underwriters. The policy provided that it would be
"effective only when the insured vessel(s) are within
the 'cruising area' specified."
choice-of-law and forum selection provisions in the
policy's terms and conditions were different from those
in the application. Both the policy and the application
called for arbitration in New York pursuant to AAA rules. But
the scope of the choice-of-law provision and arbitration
clause differed. The policy provided:
This insurance policy shall be governed by and construed in
accordance with well established and entrenched principles
and precedents of substantive United States Federal Maritime
Law, but where no such established and entrenched principles
and precedents exist, the policy shall be governed and
construed in accordance with the substantive laws of the
State of New York, without giving effect to its conflict of
laws principles, and the parties hereto agree that any and
all disputes arising under this policy shall be resolved
exclusively by binding arbitration to take ...