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Progressive Gulf Insurance Co. v. Burke

United States District Court, W.D. Virginia, Roanoke Division

May 10, 2019

PROGRESSIVE GULF INSURANCE COMPANY, Plaintiff and Counter-Defendant,
WILLIAM BURKE, Defendant and Counter-Claimant.


          Elizabeth K. Dillon United States District Judge.

         In this declaratory judgment action, the parties dispute whether Progressive Gulf Insurance Company is obligated to provide insurance coverage for the loss of a yacht owned by William Burke, which sank at its dock on Smith Mountain Lake, behind Burke's house. Burke has also filed a counterclaim, seeking the full amount of coverage available under the insurance policy.

         Pending before the court is Progressive's motion for summary judgment (Dkt. No. 18), in which it contends that it has no duty to provide any coverage for that loss because Burke failed properly to winterize the yacht, which was the cause of the damage. As a result of this failure, Progressive argues that at least two specific terms of the policy bar coverage. Because the court agrees that, based on the undisputed facts, at least one of the provisions bars any coverage for the loss here, it will grant plaintiff's motion for summary judgment, declare the rights and obligations of the parties accordingly, and dismiss with prejudice Burke's counterclaim.

         I. BACKGROUND

         This case falls within the court's diversity jurisdiction because Burke is a citizen of Virginia, Progressive is an Ohio corporation with its headquarters and principal place of business located in Ohio, and the amount in controversy exceeds $75, 000.

         Progressive's motion for summary judgment set forth a numbered statement of undisputed facts, citing to the record. Although Burke filed a response, it was primarily a two-page summary of Burke's legal position. (Mem. Opp'n to Mot. Summ. J., Dkt. No. 20.) He made no attempt to respond to specific facts or to cite any specific portions of the record, as required by Federal Rule of Civil Procedure 56(c). Thus, the court will deem the facts set forth by Progressive undisputed, see Rule 56(e), with a few exceptions. First, while admitting that he deviated from the winterization procedure recommended by the manufacturer, Burke claims that the deviation was “justified by local usage and custom.” He claims that he and his son have significant experience maintaining and piloting boats on Smith Mountain Lake and have opined that their winterization process was in accordance with local usage. (Mem. Opp'n to Mot. Summ. J. 1.) He supports this only with a general reference to “statements attached to [Progressive's] motion.” (Id.) Burke contends that this dispute precludes summary judgment because the relevant policy exclusions referenced in Progressive's brief-according to him-allow for deviation by local custom. The court will address these arguments in context in Section II infra.

         Because the parties are familiar with the facts and because they are largely undisputed, the court will not discuss them in detail but, instead, simply incorporates pages 2 through 8 of Progressive's memorandum in support of its summary judgment. In this opinion, the court touches only upon the facts significant to its analysis.

         A. The Sinking of the Yacht

         The yacht owned by Burke is a 2006 custom catamaran motor-yacht, the Calusa Explorer (the Vessel).[1] The Vessel includes two air conditioning units (the A/C units), which were installed more than ten years ago. According to the reports of Progressive's two experts, the Vessel sank because it had not been properly winterized. In particular, neither Burke nor his adult son, Travis-to whom Burke had delegated winterization tasks-properly winterized the A/C units. The manufacturer's instructions for the A/C units required (for a boat that would be stored on the water throughout this region's winter) that all water in the A/C be replaced with antifreeze and that the Vessel's sea cocks be closed.[2] But it is undisputed that neither of these steps were taken. Burke and Travis believed (incorrectly, according to both the manufacturer's instructions and Progressive's experts) that they did not have to winterize that system. Because there was water left in the Vessel's raw-water inlet, when the temperatures stayed low enough, that water froze. It then expanded and caused part of the A/C system called the “strainer bowl” to crack and break free of its mount. That, in turn, allowed lake water entering the Vessel through its open seacock to flow unimpeded into and out of the broken strainer, flooding the Vessel until it sank. The sinking occurred in early January 2018 during the overnight hours.

         B. The Policy

         Approximately one month before the Vessel sank, in December 2017, Progressive issued a “Virginia Boat and Personal Watercraft” insurance policy (the Policy) to Burke. By its terms, the Policy provided coverage for the Vessel through December 2018, including coverage for its storage and use of navigable waters. The Policy was an “Agreed Value Policy, ” with a coverage limit of $150, 000, a figure supplied by Burke as his estimate of the value of the yacht and all belongings on it. There are several portions of the Policy that Progressive relies upon to contend that it has no obligation to cover the losses due to the sinking.

         The first is an exclusion from coverage for a loss “that occurs because a covered watercraft has not been properly winterized in accordance with the manufacturer's specifications, subject to local customs.” (Policy 15, 17, Dkt. No. 1-1.) The second is set forth in a portion of the policy titled “Your Representations to Us Regarding Your Covered Watercraft.” It states:

You represent to us that, at the inception of this policy, your covered watercraft is in seaworthy condition. Violation of this representation will void this policy from its inception.
You further represent to us that you will continue to maintain your covered watercraft in a seaworthy condition and to comply with all federal safety standards and provisions. This policy does not cover any loss or damages caused by your failure to maintain your covered watercraft in seaworthy ...

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