U.S. District Judge Robert Scola. Photo: Jill Kahn

A federal judge in Miami refused to dismiss a lawsuit brought by foreign nationals against a commercial general liability insurance carrier that insured a cargo barge and tugboat that was stranded in Cuba for nearly a year.

While on its way to deliver cargo from Fort Pierce to Gonaives, Haiti, the tugboat Billy G, ran out of fuel near Cuba in June 2013. The Cuban coast guard towed the Billy G to Moa, Cuba, where the captain and five crew members — Eddie Bodden, Feliz Terrero, Francisco Ortega, Marcelino Susana, Victor Lacayo Lopez and Julio Bringuez  — were simply stuck, some with untreated injuries.

"During that year they ate rats and insects in order to survive," U.S. District Judge Robert Scola wrote. After months without food, money or supplies, they were repatriated to their home countries.

The crew filed suit against Suncoast Shipping LLC in a Florida state court, alleging Suncoast's failure to repatriate them, failure to provide maintenance and cure, and failure to provide medical treatment; unseaworthiness; Jones Act negligence; and other claims. The lawsuit said Port St. Lucie-based Suncoast operated, controlled, managed and maintained the Billy G and its barge.

Suncoast's insurer, Travelers Property Casualty Co. of America, adjusted a small portion of the plaintiffs' claims and initially defended the state court action against Suncoast.

Ultimately, Travelers filed an action for declaratory relief against Suncoast, seeking to void the policy. Travelers did not name the crew as parties.

Scola entered a default judgment, voiding the policy on Suncoast's claims for the loss of the vessels.

Afterward, Travelers stopped defending the state court action and closed the plaintiffs' claims without further payment.

The state court entered final judgment against Suncoast and in favor of the plaintiffs. The plaintiffs then filed a lawsuit to recover the judgment from Travelers.

They maintained the Travelers coverage provisions encompassed their injuries, illnesses, medical expenses, repatriation expenses, Jones Act compensation and other damages, and argued the judgment in their favor against Suncoast gave them standing to bring a direct action against Travelers.

In response, Travelers asked the district court to dismiss the crew members' complaint, saying the policy did not cover the plaintiffs under Florida's nonjoinder statute and the policy was voided by the default judgment entered against Suncoast in federal court.

The district court denied Travelers' motion and ordered the company to respond to the lawsuit by Sept. 16. Scola rejected Travelers' contention that the plaintiffs could not bring an action under Florida Statutes Section 627.4136 providing for lawsuits "under the terms of [a] liability contract" because its policy was a "policy of indemnity not liability."

The district court explained the Travelers policy provided it would "make good to [Suncoast] … all such loss and/or damage and/or expense as [Suncoast] shall as owners of the vessel named herein have become liable to pay and shall pay on account of liabilities, risks, events, and/or happenings" as set forth in the policy.

The decision noted the policy identified 14 categories of losses, injuries, expenses, damages, charges and penalties covered by the policy, including 11 specifically introduced as "liability for" the corresponding damage.

The district court ruled the policy was "one of protection against liability" and, therefore, the plaintiffs properly pleaded their right to bring a direct action under the state law.

The district court also rejected Travelers' argument that the declaratory judgment it obtained against Suncoast in federal court, determining the policy was void ab initio, barred the plaintiffs' claims. The district court noted the plaintiffs "were not parties in that case" and not bound by the judgment.

The district court concluded that if Travelers wanted to defeat the plaintiffs' rights under the policy with a declaratory judgment action, "it should have made them parties to that suit."

The case is Bodden v. Travelers Property Casualty, No. 1:18-cv-25095 (S.D. Fla. Sept. 6). Attorneys involved include: For the plaintiffs: Louis Anthony Vucci, Louis A. Vucci P.A., Miami, William Wolk, Eaton & Wolk, Miami. For Travelers, defendant: Michael Conroy, lead attorney, and  Joanne Nachio, McAlpin & Conroy, Miami.

Read the decision:

Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. Meyerowitz is the Director of the Insurance Coverage Law Center and editor-in-chief of journals on insurance law, banking law, bankruptcy law, energy law, government contracting law, and privacy and cybersecurity law, among other subjects. Contact him at smeyerowitz@meyerowitzcommunications.com.