The Maritime Advocate–Issue 703



1. Federal Court Enforces Diveboat Limitation Exclusion in Scuba Diving Death Claim
2. The Jones Act Explained
3. Bailee Liability Insurance
4. ShipNEXT
5. Almost No Disasters Are Natural
6. People and Places

FOB Network News

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1. Federal Court Enforces Diveboat Limitation Exclusion in Scuba Diving Death Claim

Jason Minkin, Jonathan A. Cipriani and Katherine A. Martin of BatesCarey in Chicago have sent in a note discussing a recent US case, Travelers Prop. Cas. Co. of Am. v. Barkley, 16-61768-CIV, 2017 WL 3593953 (S.D. Fla. Aug. 21, 2017), in which the court enforced the commercial marine insurance policy’s diveboat limitation exclusion for a wrongful death claim arising out of a scuba diving accident.

The U.S. District Court for the Southern District of Florida determined that a commercial marine insurance policy’s exclusion for “[b]odily injury, loss of life, or illness of any person while in the water or arising as a consequence of being in the water” barred coverage for a wrongful death claim arising out of a scuba diving accident. The holding is a reminder that a court will not read an ambiguity into an insurance contract where there is no reason to disregard the policy’s plain language.

On July 30, 2014, Joseph Grosso was transported on the M/V Scubatyme III (the “Vessel”) to a dive location in Pompano Beach, Florida. Grosso completed one dive before deciding to re-descend in the water to retrieve a lobster. During Grosso’s second dive, the captain steered the Vessel away from Grosso to pick up other divers. When the Vessel returned, Grosso was found unresponsive approximately fifteen feet below the water, without his regulator, and was tangled in the dive flag line. Unfortunately, Grosso died as a result of the accident. His survivors filed a wrongful death action, naming as one of the defendants Douglas Barkley, the mate and deckhand responsible for supervising the divers.

Underwriters at Lloyd’s, London, agreed to provide a defense to Barkley pursuant to a professional liability insurance policy under which Barkley was a named insured. Barkley also sought coverage under a separate commercial marine insurance policy, issued by Travelers Property Casualty Company of America, under which Barkley also qualified as an additional insured. Travelers conditionally accepted Barkley’s defense while reserving its rights to withdraw its defense based on any applicable policy exclusions.

Following a settlement in the underlying wrongful death action, Travelers sued Barkley for declaratory judgment, contending that Grosso’s drowning death was not covered by its policy. Barkley counterclaimed, seeking a declaration that Travelers had a duty to defend the wrongful death action and to indemnify Barkley and Lloyd’s, Barkley’s assignee, for Travelers’ fifty percent share of the defense costs.

Travelers’ policy obligated Travelers “to pay sums that . . . a covered person under this policy become[s] legally obligated to pay a result of the ownership, operation or maintenance of the insured vessel because of . . . bodily injury or loss of life.” The policy also contained a diveboat limitation endorsement which excluded from coverage claims involving “[b]odily injury, loss of life, or illness of any person while in the water or arising as a consequence of being in the water.”

As a threshold issue, Travelers argued that the wrongful death claims did not even fall within the policy’s insuring agreement because Grosso’s death was not “a result of the . . . operation . . . of the insured vessel.” The court found that this language was not dispositive for either side. Applying Florida law, the court reasoned that Grosso’s death would have been “a result” of the operation of the vessel if his death “originated from, grew out of, flowed from, was incident to or had a connection with the operation of the Vessel” that was “more than a mere coincidence.” The court concluded that the facts did not clearly indicate whether Grosso’s death was causally related to his abandonment. Accordingly, the court turned to Travelers’ next argument: that the diveboat limitation endorsement barred coverage because Grosso’s death occurred in the water.

Barkley raised three arguments against application of the exclusion. First, he argued that the exclusion was so broad that it rendered the Travelers policy illusory, swallowing up the policy’s coverage for bodily injury and death as result of negligent operation of the vessel. The court disagreed. Contrary to Barkley’s position, the exclusion only applied to a subset of claims-those happening in the water-and not to any injury or death that occurred onboard the Vessel. Accordingly, the policy was not illusory.

Next, Barkley argued the exclusion was ambiguous. Barkley reasoned that the diveboat limitation endorsement was ambiguous because it was unclear whether there would be coverage for any liability arising out of the operation of a scuba diving charter that resulted in the death of a passenger. The court disagreed with Barkley that the endorsement was unclear, finding that it “plainly exclude[d] coverage for injuries and loss of life in water” and noted that a drowning death while scuba diving would be unambiguously excluded by the terms of the endorsement.

Finally, Barkley contended that Travelers “effectively confessed liability” by providing a defense and paying a portion of the global settlement in the underlying wrongful death action. However, because Travelers reserved its rights, the court found those actions did not constitute confessions of liability.

Because the policy excluded coverage for Grosso’s drowning death, the court concluded that Travelers did not have a duty to defend Barkley in the underlying wrongful death action, and was not obligated to reimburse Lloyd’s for any costs incurred in defense of that action. The Travelers decision is a reminder that, where the meaning of a policy’s exclusionary language can be determined by its plain language, a court will not read in any ambiguities or deem it illusory.

2. The Jones Act Explained

Matthew Yglesias, writing in the Vox Blog refers to the Puerto Rico emergency and says the Jones Act represents “protectionism and exploitation at its worst”. .

3. Bailee Liability Insurance

Singapore correspondent M.Jagannath of NAU compares the bailment insurance policies often purchased by frugal local or regional companies with a full blooded transport liability policy which will cover bailment on terms as part of a bigger whole. A useful effort since the subject of bailment often causes uncertainty and consternation amongst transport operators the world over.

Bailee’s Liability Insurance Policy

The HFW P&I Week this year centres on a fictional case study involving a collision in the Chinese port of Ningbo between a capesize bulk carrier and a 10,000 TEU container vessel operated by a US container line. As a result of the incident, the capesize ploughs into a busy working berth, knocking down two ageing gantry cranes in the Chinese port. The container vessel comes off no better: she is holed, takes in water and calls in LOF salvors to rescue her. During the salvage, an explosion occurs, GA is declared and ultimately the undamaged containers are transhipped to a new vessel for on-carriage. Resulting claims are pursued by a wide range of claimants in numerous jurisdictions.

HFW have 12 presentations developing the case study this year on a wide range of issues arising out of the incident including the value of VDR evidence, liability and quantum in FFO claims, dangerous goods misdeclarations, unsafe port allegations, off hire, US crew personal injuries and GA recoveries against cargo interests. Our presenters will address the inevitable multi-jurisdictional dimensions of the casualty, including the US personal injury claims, the Chinese regulatory regime and the cargo claims brought in Brazil, Hong Kong, the US and China. Please click on the banner below for a copy of the programme

4. ShipNEXT

Yulianna Vilkos has sent in word of ShipNEXT, ” a first global digital marketplace for shipping that matches cargo owners and ship operators in a quick and cost-efficient way.”

She says an entrepreneur behind Odessa-based shipping company Varamar Group is behind the launch of ShipNEXT Recognizing that current time and cost inefficiencies hamper the industry’s global recovery and further development, Alexander Varvarenko has created a digital solution that does not only save time and money for its users, but marks the beginning of a new chapter in the history of shipping.

ShipNEXT refers to BIMCO (Baltic and International Maritime Council) and the recognition of the project’s importance for the industry. The company is in talks with commodity traders about potential cooperation. Dragon Capital, one of the largest eastern European investment banks, is participating in the project.

In its first phase, ShipNEXT’s software will ‘read’ an emailed cargo request or ship position and automatically match cargos with ships using over 70 various databases and complex algorithms. It will minimize human error and increase efficiency by automating multiple routine checks and calculations relating to ship and port data, distances, restrictions, risk zones and rules of carriage by sea, among many others.

In the next phases, to be gradually rolled out over the next 18 months, ShipNEXT will integrate various aspects and sectors of the market. It is designed to be a one-stop online platform for fixing all types of cargo, tendering and negotiations, contract management, reporting, post fixing and operations, and even ratings of its users. ShipNEXT will also facilitate the increased transparency in ship finance by providing banks with real-time charter rates, statistics and analysis.

Alexander Varvarenko, Founder and CEO of ShipNEXT says:-

“ShipNEXT was born of the desire to change the outdated shipping practices and make life easier for traders, ship owners and other market participants. In it we have combined Artificial Intelligence and latest digital technology with our 17-year industry experience in shipping dry-bulk, steels and heavy and oversized cargo, and it took us over 1.5 years to develop.”

[It has been a while since we have been notified of a start-up along these lines. Back in the late 1990s the early excitement to marry interaction on internet exchanges with shipping’s intermediary industries was very great. But it foundered against entrenched interests and conservatism. We hope ShipNEXT has a better trip–ed]

5. Almost No Disasters Are Natural

Courtesy of the Browser we ran across this piece by Thomas Wells which appears in the philosopher’s Beard:-

A natural disaster is a disaster because it involves a lot of human suffering. What does the word “natural” add? “We use it to demarcate the edges of responsibility. We don’t use it very well. When a fridge catching fire causes an inferno in which 80 people die, we demand answers about how it was allowed to happen – so that it never happens again. We should do the same when government incompetence allows our cities to be flooded or shaken to the ground”

6. People and Places

The Women’s International Shipping and Trading Association (WISTA) has elected Despina Panayiotou Theodosiou, CEO of TOTOTHEO Maritime, as International President and Diane Edwards, General Manager People, Systems and Technology Ports of Auckland as International Secretary at their 37th International Annual General Meeting in Rotterdam, The Netherlands on October 4, 2017.

Despina Panayiotou Theodosiou is the CEO of TOTOTHEO Maritime, a leading maritime technology and satellite communications enablement business. She has served on the Executive Committee of WISTA International as Secretary for the last two years and is the founding President of WISTA Cyprus. Panayiotou Theodosiou is on the board of the Cyprus Shipping Chamber. She is taking over the position from Karin Orsel, CEO of MF Shipping Group, who has held this role for the last six years.

Diane Edwards is the General Manager People, Systems and Technology at the Ports of Auckland Limited. Working with the port since 2011 following a consultancy roll at the New Zealand Ministry of Transport and roles with P&O Nedlloyd and Maersk New Zealand, Diane has had an eclectic career which includes teaching, banking, accounting, IT, training change management and human resources. In her six years with Ports of Auckland Limited she has helped revitalize the port through technological innovation and coalition building with the port workers.

WISTA International is the leading network of decision making women in shipping and trading around the world. WISTA International is guided by the Executive Committee: Despina Panayiotou Theodosiou, President, WISTA Cyprus; Diane Edwards, Secretary, WISTA New Zealand; Rachel Lawton, Treasurer, WISTA UK; Jeannie Grasso, Member, WISTA USA; Sangam Gupta, Member, WISTA India;Katerina Stathopoulou, Member, WISTA Hellas; Naa Densua Aryeetey, Member, WISTA Ghana.

From the Avo Archive

The website of this newsletter contains all the editorial material since the inception of the Maritime Advocate as a print based quarterly in 1997 under the founding aegis of John Guy, Chris Hewer and Manfred Arnold. Readers can go to the site and search the database on the home page in its entirety. If you are looking for an old case, an old controversy or you would just like to see how many times you and your firm have featured in our annals feel free to access the archive. It is like this e-zine, free to Readers and we always appreciate the support of advertisers and sponsors.

Seeing as we had a maths joke this week, we searched for items which had some kind of numeric fun. This small item appeared in Issue 434 of April 29th, 2010:-

Metric is not always the answer

For instance it plays havoc with folk wisdom i.e.

A miss is as good as 1.6 kilometers.

Put your best 0.3 of a meter forward.

Spare the 5.03 meters and spoil the child.

Give a man 2.5 centimeters and he’ll take 1.6 kilometers.

Peter Piper picked 8.8 liters of pickled peppers.


Two mathematicians were having dinner in a restaurant, arguing about the average mathematical knowledge of the general public. One mathematician claimed that this average was woefully inadequate, the other maintained that it was surprisingly high.

“I’ll tell you what,” said the cynic, “ask that waitress a simple math question. If she gets it right, I’ll pick up dinner. If not, you do”. He then excused himself to visit the men’s room, and the other called the waitress over.

“When my friend comes back,” he told her, “I’m going to ask you a question, and I want you to respond `one third x cubed.’ There’s twenty bucks in it for you.” She agreed.

The cynic returned from the bathroom and called the waitress over. “The food was wonderful, thank you,” the mathematician started. “Incidentally, do you know what the integral of x squared is?”

The waitress looked pensive; almost pained. She looked around the room, at her feet, made gurgling noises, and finally said, “Um, one third x cubed?”

So the cynic paid the check. The waitress wheeled around, walked a few paces away, looked back at the two men, and muttered under her breath, “…plus a constant.”

Divine Intervention

A farmer purchased an old, run-down, abandoned farm with plans to turn it into a thriving enterprise. The fields were grown over with weeds, the farmhouse was falling apart, and the fences were broken down.

During his first day of work, the town preacher stops by to bless the man’s work, saying, “May you and God work together to make this the farm of your dreams!”

A few months later, the preacher stops by again to call on the farmer. Lo and behold, it’s a completely different place. The farm house is completely rebuilt and in excellent condition, there is plenty of cattle and other livestock happily munching on feed in well-fenced pens, and the fields are filled with crops planted in neat rows.

“Amazing!” the preacher says. “Look what God and you have accomplished together!”

“Yes, reverend,” says the farmer, “but remember what the farm was like when God was working it alone!”

[Paul Dixon]