Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_15-cv-00630/USCOURTS-casd-3_15-cv-00630-5/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1331in Fed. Question: Insurance Contract

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

BEAR, LLC,

Third-Party Plaintiff,

v.

MARSH USA, INC.,

Third-Party Defendant.

Case No.: 15-cv-00630-BTMBLM

FINDINGS OF FACT AND 

CONCLUSIONS OF LAW

On November 6–17 and 28–29, 2017, the Court held a bench trial on 

Plaintiff Bear, LLC’s (“Bear”) claims against Third-Party Defendant Marsh USA, 

Inc. (“Marsh”). The Court’s findings of fact and conclusions of law are set forth 

below. 

I. FINDINDS OF FACT

A. Procuring Insurance for the Polar Bear

In 2004, Marsh began serving as Bear’s yacht insurance broker. Larry 

Jodsaas (“Jodsaas”), Bear’s sole owner, owned a boat named the Aphrodite for 

which Marsh procured insurance with Chartis (“AIG”) as the insurer. Katherine 

Harris Johnson (“Johnson”) was the sole Marsh Yacht Insurance Practice broker 

assigned to Bear’s account. In March 2008, while Jodsaas still owned the 

Aphrodite, Johnson learned that Jodsaas was building another boat, the Polar 

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Bear. The boat would be a 102-foot steel hull motor vessel, which Jodsaas 

predicted would be completed by the Spring of 2008. However, due to numerous 

construction delays including a fire caused by welding, the Polar Bear was not 

launched until 2011. 

Throughout this time, Jodsaas and Johnson communicated every few 

months via phone calls and emails about the status of the Polar Bear. In June 

2010, Johnson and a colleague traveled to Seattle to visit local shipyards and 

during that trip met with Roger Trafton (“Trafton”), Captain of the Polar Bear, at 

the Aleutian Yachts1 boatyard. Trafton oversaw the Polar Bear’s construction 

and served as Jodsaas’ agent in all matters involving the Polar Bear including 

insurance matters. Johnson introduced herself to Trafton as a yacht insurance 

specialist and expressed her interest in procuring insurance for the Polar Bear. 

Trafton gave Johnson a tour of the Polar Bear. 

In September 2010, in anticipation of the Polar Bear’s delivery date,

Jodsass and Johnson began discussing insurance. She emailed him an 

application for the new vessel and Trafton assisted Jodsaas in filling it out. After 

receiving a completed application, Johnson, at Jodsaas’ direction, requested 

quotes from numerous insurers including ACE Ltd. (“ACE”), Federal Insurance 

Company (“Chubb”), AIG, Lloyd’s of London (“Lloyd’s”), and LEAD Yacht. Marsh 

secured terms from Chubb, AIG, ACE, and Lloyd’s, all of which offered 

$17,250,000 agreed-value hull coverage in the event of a total loss. Using a 

template Marsh created, Johnson prepared the 2010 Risk Management Review 

and 2010 Yacht Insurance Proposal for Jodsaas and Trafton to review and 

compare the various insurance options for the Polar Bear. The proposal included 

quotes and terms from AIG, ACE, Lloyd’s, and Chubb. The proposal also 

included explanations and warnings about material terms, including provisions 

 

1 Aluetian Yachts later changed its name to Citadel Yachts. 

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related to waivers of subrogation, contractual liability exclusions, and policy 

conditions that apply during periods of time that the Polar Bear would be in a 

shipyard. Trafton reviewed the proposal with Jodsaas. Among the factors most 

important to Jodsaas were the cost of the policies and navigational limit terms. 

Lloyd’s offered the most inexpensive option coupled with the lowest deductible, 

and was the only insurer to offer a no claims bonus. On November 8, 2010, 

Johnson held a conference call with Trafton and Jodsaas to review the proposal. 

Jodsaas expressed that he was leaning towards the Lloyd’s policy. On March 

18, 2011, after requesting revisions to the Lloyd’s terms per Jodsaas’ instruction, 

Johnson again held a conference call with Jodsaas and Trafton to discuss the 

revised terms. At this point, it had become clear that Jodsaas was only 

considering the Lloyd’s policy. Johnson continued to check in with Jodsaas and 

made a recommendation that the Lloyd’s policy would get him “the most bang for 

[his] buck.” 

Jodsaas ultimately made the decision to bind with Lloyd’s. On August 23, 

2011, Jodsaas signed a confirmation of binding instructions form, as well as an 

acknowledgment form. The confirmation of binding instructions form provided an 

overview of the policy Jodsaas was purchasing. He ultimately purchased a 

policy with Lloyd’s, British Marine, and Water Quality Insurance Syndicate 

(“WQIS”). The acknowledgment form served as additional warning that the 

policy Jodsaas was purchasing had exclusions and warranties that may require 

action on his behalf and could impact or void coverage, including the 

Maintenance and Repair Clause (“Repair Clause”). By signing the form, Jodsaas 

acknowledged that Marsh had sufficiently explained the warranties’ implications 

and that he understood them. Without his signature on these forms, Johnson 

could not have moved forward with binding the Lloyd’s policy. The policy 

became effective as of August 23, 2011. On October 20, 2011, Jodsaas 

received from Marsh the original policy along with a cover letter that again 

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warned him of the warranties and exclusions contained in the policy. It strongly 

recommended that Jodsaas contact a maritime attorney and Marsh before 

signing any contracts with shipyards, marinas or any third-party vendors. 

Generally, the only time of the year Johnson contacted Jodsaas or Trafton

was during the renewal process. In July 2012, Johnson reached out to Jodsaas 

to begin the renewal process. She instructed him to complete a luxury yacht 

insurance application and advised him that once received, she would seek 

renewal terms from the same underwriters unless otherwise advised. Trafton 

returned the application and stated no objection to seeking renewal terms from 

the same underwriters, including Lloyd’s. After obtaining renewal quotes, 

Johnson created a Yacht Insurance Renewal Proposal for Jodsaas and Trafton 

to review. In 2012, Lloyd’s, British Marine, and WQIS offered the same terms as 

in 2011. Like the 2011 proposal, the 2012 proposal included explanations of 

material terms in the policy. Jodsaas approved the renewal terms and Johnson 

bound coverage. Johnson sent Jodsaas a Confirmation of Coverage, as well as 

the original policy with an attached cover letter, both of which contained the same 

warnings as the previous year. That same year, Jodsaas received a no claims 

bonus for having filed no claims during the 2011–2012 policy term. 

In July 2013, Johnson again contacted Jodsaas and sent him an insurance 

application to begin the renewal process. Trafton filled out the application and 

returned it to Johnson. On page three of the application, in the “number of yard 

periods planned for next 12 months” section, Trafton had made a handwritten

mark. It appears to be “1” with a squiggly line over it. The Court finds it to be an 

indication of one yard visit in 2014. Despite the handwritten notation, Johnson did 

not follow up with Trafton or Jodsaas and instead retyped the application she 

forwarded to the underwriters without any indication of a yard visit. Johnson 

obtained renewal quotes from the underwriters and prepared the 2013 proposal 

which again included the terms and warnings of the policy. Lloyd’s, British Marine, 

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and WQIS offered the same terms as the two previous years. That year, Lloyd’s 

also reduced its premium by $9,740.51. Like the prior two proposals, the 2013 

proposal warned Bear about the Repair Clause in the policy. 

It stated:

Policy Conditions that Apply During Yard Periods

Maintenance and Repair Clause: 

The policy will remain in full force while the yacht is undergoing maintenance, 

repair of any part or replacement of any part like for like. However, NO 

COVERAGE is provided in respect of refit, alteration, rebuild, remodeling, 

major repairs, any and all hot work other than soldering, OR where the yard 

has requested any waiver of subrogation.

Prior to any coverage being provided, the insured must submit the following 

for underwriters’ specific agreement in writing:

 Full details and schedule of the work;

 Provide underwriters with a copy of the shipyard’s Ship Repairers 

Liability Insurance

Non compliance of any of the timeframes stated above will, in normal 

circumstances, void the insurance, at the discretion of the participating 

underwriters. Underwriters reserve the right to amend the terms and 

conditions hereunder, and to charge the appropriate additional premium. 

Jodsaas indicated to Johnson that Trafton would handle insurance matters 

moving forward. Trafton signed the confirmation of binding instructions and 

acknowledgment forms on behalf of Jodsaas. As she had done in previous years, 

Johnson bound coverage and sent Trafton and Jodsaas a Confirmation of 

Coverage and the original policy, both containing the same warnings about the

policy’s terms and warranties. The 2013 policy, like the two previous policies, 

contained the following relevant provisions:

CONDITIONS PRECEDENT 

Maintenance and Repair Clause

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It is hereby understood and agreed that this insurance will remain in 

full force whilst your yacht is undergoing annual maintenance, repair of 

any part or replacement of any part like for like. 

Notwithstanding the foregoing it is a conditions precedent that if 

the vessel is currently undergoing or may undergo major refit or 

repairs, alterations, remodeling or where hot work is being 

undertaken (other than soldering) or that the yard has requested

a waiver of subrogation from the Owner or his Legal 

Representative(s), then prior agreement must be obtained from 

participating insurers hereunder. 

Furthermore the Owner or his Legal Representative(s) must provide a 

copy of the current shipyards Ship Repairers Legal Liability insurance 

documentation and a full update or schedule of works being carried out 

during the period of this insurance and obtain Underwriters specific 

agreement (in writing). 

Underwriters participating hereon reserve their rights to amend the 

terms and conditions of this insurance and to charge an appropriate 

additional premium. 

(Emphasis added). 

B. Destruction of the Polar Bear

On May 6, 2014, while on its way to Marine Group Boat Works, LLC 

(“MGBW”) in Chula Vista, California for maintenance work, the Polar Bear ran 

aground on the Zuniga Jetty at the entrance to the San Diego Bay. The impact 

damaged the bottom of the hull, port and starboard sides of the keel, and the aft 

port stabilizer shaft. After a stop at the Harbor Police dock for some emergency 

repairs, the Polar Bear traveled on its own to the MGBW boatyard arriving on May 

7, 2014, where it was to be repaired. As a safety measure, the Polar Bear was

accompanied by a diver and two small towboats. Trafton did not call Marsh to 

inform it about the accident. 

On May 7, 2014, just before the Polar Bear was hauled out, Trafton signed 

a written contract with MGBW. The service contract provided that the Polar Bear

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would be hauled out, blocked and launched for a total of $3500. The contract was 

double-sided but Trafton only signed the front-side. The back-side contained 

several provisions, including an “owner assumption of risk” clause, an “owner’s 

exclusive remedy” clause, and an “indemnity, insurance and waiver of subrogation” 

clause. Trafton did not notify Marsh nor independently acquire Lloyd’s consent 

prior to signing the contract. 

From May 22, 2014 through early June, 2014, Trafton executed numerous 

work change orders for repairs to the Polar Bear, including a May 22, 2014 order 

for welding (hot work) repairs to the hull. Trafton did not notify Marsh nor 

independently acquire Lloyd’s consent prior to executing the work change orders. 

On June 17, 2014, Jodsaas spoke with Patrice M. Grossinger, Jodsaas’ personal 

insurance broker from Marsh, and informed her that the Polar Bear hit some rocks 

as it traveled back from Mexico. He communicated that it resulted in $250,000 in 

damage, but that he had not notified or filed a claim with Johnson because the 

damage was less than the deductible2. Grossinger advised him to contact Johnson

if costs got any higher. On June 19, 2014, the Polar Bear caught fire while welders

from Universal Steel Fabrication, Inc. (“USF”) performed hot work. The fire 

resulted in the Polar Bear’s total loss.

On June 20, 2014, Marsh learned that the Polar Bear had been consumed 

by a fire and provided Lloyd’s with a notice of loss. On March 20, 2015, Lloyd’s

denied coverage because Bear failed to satisfy the conditions precedent under the 

Repair Clause. 

C. Court Proceedings

In December 2014, Bear filed an action against MGBW and USF for 

negligence and gross negligence, among other claims. On May 25, 2017, Bear 

settled with MGBW for $9.2 million, resolving all claims between the two parties. 

 

2

In fact, Jodsaas was in error. The deductible under the cost favorable Lloyd’s policy was $121,500. 

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USF never appeared in the action and the Court granted Bear default judgment on 

December 12, 2017. 

In March 2015, Lloyd’s filed this action seeking declaratory relief that it 

justifiably denied coverage for Bear’s claim relating to the losses suffered to the 

Polar Bear. Bear filed counterclaims against Lloyd’s and a third-party complaint 

against Marsh, asserting claims for breach of oral contract, breach of fiduciary 

duty, and negligence. On April 21, 2017, the Court granted Lloyd’s summary 

judgment, holding that Bear had breached the terms of the Repair Clause and 

Lloyd’s justifiably denied coverage. On May 17, 2017, the Court granted and 

denied in part Marsh’s motion for summary judgment. The Court held that Marsh 

obtained insurance for the Polar Bear that provided it with $17,250,000 in 

coverage. The Court also held that Marsh satisfied the standard duties imposed 

under Florida law in procuring insurance for the Polar Bear. 

II. JURISDICTION AND APPLICABLE LAW

The Court has admiralty jurisdiction over this action because it directly 

relates to Bear’s marine insurance policy. See Stanley T. Scott & Co. v. Makah 

Dev. Corp., 496 F.2d 525, 526 (9th Cir. 1974) (holding that a marine insurance 

broker’s claim against the insured to recover its advanced premium was

“integrally related to the marine insurance policy” and therefore fell within 

admiralty jurisdiction). Ordinarily, with regard to marine insurance policies, state 

substantive law applies in the absence of an established federal maritime rule, 

federal statute, or a need for uniformity in admiralty practice. Certain 

Underwriters at Lloyd’s, London v. Inlet Fisheries, Inc., 518 F.3d 645, 649–50 

(9th Cir. 2008). Substantive state law also applies to disputes arising from 

contracts for the procurement of maritime insurance. See Illinois Constructors 

Corp. v. Morency & Assocs., Inc., 802 F. Supp. 185, 187 (N.D. Ill. 1992). The 

parties here do not submit that established federal maritime rules apply and the 

Court has not identified any. Therefore, state law applies to Bear’s claims. 

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A court sitting in admiralty must apply federal maritime choice-of-law rules. 

Aqua-Marine Constructors v. Banks, 110 F.3d 663, 670 (9th Cir. 1997). Here, as 

already held by the Court at the pleading stage, Florida law applies to Bear’s 

claims against Marsh because it is the state with the “‘most significant’ 

relationship to the substantive issue in question.” Id. at 673 (quoting Albany Ins. 

Co. v. Anh Thi Kieu, 927 F.2d 882, 891 (5th Cir. 1991)). The insurance policies 

were procured by Marsh’s Ft. Lauderdale, Florida Yacht Insurance Practice. 

Johnson, Marsh’s representative from the Florida office, discussed and 

negotiated the terms of insurance policies on Bear’s behalf. Accordingly, the 

Court applies Florida law to the substantive issues in the action. 

III. FURTHER FINDINGS OF FACT AND CONCLUSIONS OF LAW

Bear brings negligence and breach of heightened fiduciary duties claims 

against Marsh. To prevail on either of these causes of action, Bear must show 

by a preponderance of evidence that: (1) Marsh and Bear engaged in a special 

and fiduciary relationship requiring Marsh to advise Bear on its insurance 

coverage; (2) Marsh breached its duty by failing to advise and recommend that 

Bear purchase a Chubb policy or a Ship Repairer’s Liability (“SRL”) policy; (3) but 

for the breach, Bear would have purchased a policy that would have paid for the 

Polar Bear’s loss; and (4) such breach resulted in $17,250,000 in damages. See 

Tiara Condominium Ass’n, Inc. v. Marsh, USA, Inc., 991 F. Supp. 2d 1271, 

1279–80; see also Southtrust Bank v. Exp. Ins. Servs., 190 F. Supp. 2d 1304, 

1309–10 (M.D. Fla. 2002). 

As discussed below, the Court holds that Bear and Marsh did not engage in 

a special relationship so as to give rise to a heightened duty to advise Bear on its 

insurance coverage. Additionally, even if they did maintain a special relationship, 

Bear has not established that Marsh breached its duty in recommending the 

Lloyd’s policy over the Chubb policy. As to the SRL policy, though Marsh should

have followed up with Bear about the handwritten mark on the 2013 insurance 

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application, Bear’s claims nevertheless fail because it cannot prove causation. 

The Court discusses each element below. 

A. Existence of Special Relationship

As a threshold matter, the Court must determine whether Bear has proven 

by a preponderance of evidence that it engaged in a special relationship with 

Marsh. In Florida, and in other states, the general rule is that insurance brokers 

have no duty to advise clients about their insurance needs. Tiara Condominium 

Ass’n, Inc., 991 F. Supp. 2d at 1280. Only where a special relationship exists 

have courts departed from the general rule and found that a broker assumed a 

heightened duty to advise. Id. at 1281. However, a finding of a special 

relationship is rare and an exception to the general rule of no duty to advise. Id.; 

Voss v. Netherlands Ins. Co., 8 N.E.3d 823, 829 (N.Y. 2014). 

Whether an insurance broker shared a “special relationship” with its client 

is a question of fact. Tiara Condominium Ass’n, Inc., 991 F. Supp. 2d at 1281–

82. In determining whether such a special relationship exists, a trier of fact may 

look to a non-exhaustive list of factors including: (1) representations by the 

broker about its expertise; (2) representations by the broker about the breadth of 

the coverage obtained; (3) the length and depth of the relationship; (4) the extent 

of the broker’s involvement in the client’s decision making about its insurance 

needs; (5) information volunteered by the broker about the client’s insurance 

needs; and (6) payment of additional compensation for advisory services. Id. at 

1281. After reviewing all of the evidence presented at trial, the Court holds that 

Bear has not met its burden in demonstrating that it maintained a special 

relationship with Marsh. 

Bear argues that Marsh’s and Jodsaas’ long-term relationship serves as 

evidence of a special relationship. In addition to managing Jodsaas’ personal 

insurance lines, Marsh began serving as Jodsaas’ yacht insurance broker in 

2004 when Marsh procured insurance for the Aphrodite. Bear points to the 

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communications between Johnson, Jodsaas, and Trafton as evidence of a close 

working relationship. However, a review of those communications reveals that it 

was not a deep working relationship beyond what is expected between an 

insurance broker and his or her client. During the time leading up to the launch 

of the Polar Bear, Johnson periodically checked in with Jodsaas about the 

yacht’s delivery date. Due to numerous construction delays, the launch date was 

repeatedly pushed back. Johnson routinely inquired about the Polar Bear’s 

progress to ensure that Marsh went to market for terms and secured insurance in 

time for its delivery date. Bear also points to Johnson’s visit to the shipyard in 

2010 as evidence of a deep relationship. However, Johnson was already in 

Washington making visits to other shipyards and as she, Damon Nasman, and 

even Scott Jarvie testified, brokers visit shipyards in an effort to gather business. 

Moreover, after Marsh placed insurance for the Polar Bear in 2011, Johnson 

generally only spoke to Jodsaas and Trafton, via phone or email, during the 

renewal process once a year. In the nearly 10 years that Marsh served as 

Jodsaas’ broker, Johnson never met Jodsaas in person and only met Trafton 

once during her 2010 visit to the shipyard. The Court finds that these 

communications are what would ordinarily be expected of a typical broker-client 

relationship. While not a factor the Tiara court identifies, it is also worth noting 

that neither Trafton nor Jodsaas found it important to inform Marsh or Johnson 

about the Polar Bear’s accident. This too dispels Bear’s argument that it 

engaged in a deep relationship with Marsh. 

Bear also argues that Marsh held itself out as a yacht insurance expert 

and because Jodsaas and Trafton relied on this representation and its 

advisement in choosing the Lloyd’s policy in 2010, a special relationship existed 

between the two. In supporting its argument, Bear relies on the 2010 Risk 

Management Review and yearly insurance proposals that Johnson gave to 

Jodsaas and Trafton. Additionally, Bear points to Johnson’s title of “client 

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advisor” as evidence of establishing a special relationship. Notwithstanding the 

fact that Jodsaas and Trafton did not pay particular attention to the content of 

these documents, detrimental to Bear’s argument is the fact that Marsh provided 

these services to all of its clients. While Johnson’s title is that of a “client 

advisor,” it is of little significance given that every broker within the Yacht Practice 

holds that title. As to the documents Johnson provided to Bear, they were 

standard templates that Marsh uses for every client. In fact, Bear did not pay 

extra compensation for these services. They were undertaken by Marsh in an 

effort to obtain Bear’s business. Upon receiving the terms of each carrier, 

Johnson inserted the terms and explanations using language that senior client 

advisors had previously approved. Though Johnson eventually recommended 

the Lloyd’s policy as the most cost effective choice, this was only after it became 

clear that Jodsaas was primarily interested in Lloyd’s because it was the most 

inexpensive policy. At every step during the original placement and subsequent 

renewals, Johnson checked in with Jodsaas and Trafton and acted only after 

being directed to do so. Johnson could not have gone to market for the terms 

nor could she have placed the insurance without Jodsaas and Trafton authorizing 

her to do so. Indeed, witness testimony from Johnson, Debbie Philibert, and 

Nasman supports that the placement of insurance for the Polar Bear was in line 

with standard practice. While Jarvie may not provide his clients with these types 

of insurance proposals explaining the terms of the policies he procures, the Court 

is not convinced that his personal practice is demonstrative of the industry 

standard. 

Perhaps in an effort to counter the fact that Marsh offers these services to 

all of its clients, Bear argues that the mere nature of the policy, namely its 

complexity and the need for a broker to serve as a liaison between an insurer 

and insured, should demand a finding of a special relationship. Bear is 

effectively asking the Court to find that all brokers within Marsh’s Yacht Practice 

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maintain a special relationship with their clients given the nature of the policy and 

the services rendered. As stated above, a special relationship is only found in 

rare circumstances and such a categorical finding would contravene the purpose 

of the exception. The Court is not willing to expand the exception beyond its 

intended narrow scope. 

Additionally, Marsh was not compensated by Bear for its services. Instead, 

Marsh received a commission from Lloyd’s for brokering insurance to Bear. 

Accordingly, the Court holds that Bear has not shown by a preponderance 

of evidence that it maintained a special relationship with Marsh so as to trigger a 

heightened duty to advise Bear on coverage. 

B. Breach 

Notwithstanding the Court’s finding of no special relationship, even if Marsh 

and Bear did engage in a special relationship, Bear has not proven that Marsh 

breached a heightened duty to advise. Bear argues that Marsh breached its 

heightened duty by failing to recommend the Chubb policy over the Lloyd’s policy 

and by failing to recommend the SRL policy in 2013. The Court discusses each 

alleged breach below. 

1. Failure to Recommend Chubb Policy in 2011

Bear argues that Marsh breached its heightened duty to advise when it 

failed to recommend the Chubb policy over the Lloyd’s policy in 2011. 

Bear contends that Marsh provided Bear with an erroneous insurance 

proposal in 2010 that misrepresented the costs and terms of each policy. Bear 

alleges numerous errors within the proposal including an omission of a second 

Chubb policy option, a discrepancy in the number of crew required under the 

Lloyd’s policy, and an erroneous comparison of all four policies. Above all, Bear 

submits that Marsh failed to properly advise Bear because it provided a proposal 

that made the four carriers appear comparable when in reality the Lloyd’s policy 

was an inferior choice because it contained the Repair Clause. Bear primarily

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relies on the testimony of Michael Fitzgerald to support its argument that Marsh 

should have recommended the Chubb policy because it was far and away the 

superior option. According to Fitzgerald, he would not have recommended the 

Lloyd’s policy because it contained the Repair Clause which was onerous to an 

insured. 

In a bench trial, the district court judge “acts as both gatekeeper and 

factfinder.” Goodpaster v. City of Indianapolis, 736 F.3d 1060, 1068 (7th Cir. 

2013). The Judge must determine both the admissibility of the expert evidence 

under Federal Rule of Evidence 702 and whether it is credible. Id. “[G]reat 

weight” is given to a district court’s credibility determinations of expert witnesses, 

which constitute findings of fact. Id. at 1069. Here, the Court does not find 

Fitzgerald’s testimony to be credible for several reasons3. Prior to this case, 

Fitzgerald had never reviewed a Chubb, AIG, or ACE policy. He also had never 

dealt with the Repair Clause and had no experience with how it applied in either 

a non-loss or loss situation. Furthermore, Fitzgerald’s testimony was 

contradicted by that of Johnson, Philibert, and Nasman, who the Court finds to be 

very credible. The Court does not credit Fitzgerald’s opinion that the Repair 

Clause is onerous and thus renders the Lloyd’s policy inferior to the other policies 

offered in the 2010 proposal. 

The evidence reveals that Johnson outlined the terms and conditions of all 

four carriers in the 2010 proposal, including several warnings concerning 

contractual liability waiver provisions and the Repair Clause under the Lloyd’s 

policy. The proposal disclosed the possibility that an additional premium would 

be charged in connection with the Repair Clause. Notwithstanding a potential 

10% additional premium under the Lloyd’s policy, it still was the least expensive 

option and was the only policy that offered a no claims bonus. Lloyd’s is a 

 

3 The Court also does not find Trafton, Posner, and Darby to be credible. 

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reputable insurer within the yacht insurance market that Trafton was familiar with 

and had worked with throughout the years. There is no evidence to indicate that 

Lloyd’s was not suitable to provide insurance for a steel-hull boat because of the 

Repair Clause. In fact, several industry brokers testified to the contrary. 

Moreover, whether it was under the Lloyd’s policy or Chubb policy, an insured in 

a non-loss situation could not waive subrogation for hot work without notice to the 

insurer and would be charged an additional premium. In fact, the additional 

premium is typically higher with Chubb. Even under a loss situation, if the 

insured provides notice to the insurer, both the Chubb and Lloyd’s policies 

operate the same. Thus, considering that the cost of the premium was an 

important factor to Jodsaas and that Lloyd’s provided the most coverage for the 

least amount of money, the Court finds that Marsh did not breach any heightened 

duty to advise by not recommending the Chubb policy over the Lloyd’s policy. 

Perhaps other brokers may have recommended the Chubb policy in this 

instance, but the fact that Johnson did not does not amount to a breach of duty. 

2. Failure to Recommend SRL Policy in 2013

Bear’s second theory of liability rests on Marsh’s failure to recommend an 

SRL policy in 2013 after receiving the insurance application for that year. The 

Court heard extensive testimony over the 2013 application. There is a dispute of 

fact as to whether the handwritten mark was either a “1” that had been scratched 

out or a “3” that had been scratched out and replaced by a “1.” The Court finds 

that Trafton wrote “1” to indicate an anticipated yard visit for 2014. Regardless, 

Johnson did not confirm whether it was an intentional mark and submitted the 

application to Lloyd’s stating no yard visit without clarifying with Trafton first. 

Bear argues that had she followed up, Trafton would have gathered the 

necessary information regarding the planned yard visit. Based on that 

information, she then should have recommended an SRL policy to supplement 

the existing coverage from Lloyd’s. Marsh, on the other hand, argues that 

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despite Johnson’s failure to clarify, she still would not have recommended an 

SRL policy because the Lloyd’s policy would have provided sufficient coverage 

for the Polar Bear during planned shipyard visit. While the Court does find that a 

reasonable broker would have followed up with Trafton to clarify the discrepancy 

on the application, Bear’s claim still fails because it cannot show causation. 

C. Causation 

Lastly, Bear’s claims fail because it has failed to show by a preponderance 

of evidence that Marsh’s alleged breaches caused Bear’s damages. It is worth 

noting that Bear must prove that Chubb or the underwriters under the SRL policy 

would have paid $17,250,000 for the Polar Bear’s total loss. Bear appears to 

argue that it only needs to prove that the accident was a fortuitous loss and that it 

occurred during the policy period. It contends that the burden should then shift to 

Marsh to show that the loss is excluded or otherwise not covered. Bear, 

however, is charged with showing that it would have been paid $17,250,000, as 

those are the alleged damages it suffered as a result of Marsh’s breach of its 

duty to advise. 

1. Failure to Recommend Chubb Policy in 2011

Even if Marsh breached its heightened duty of care in not recommending 

the Chubb policy over the Lloyd’s policy in 2011, Bear is still unable to 

demonstrate that it would have purchased the Chubb policy and that Chubb 

would have paid Bear for the Polar Bear’s loss.

There is ample evidence to demonstrate that Jodsaas’ principle concern in 

choosing a policy in 2011 was the cost of the premium. Upon reviewing the 

insurance proposal, Jodsaas expressed his interest in the Lloyd’s policy and 

directed Johnson to seek revised terms under the Lloyd’s policy in an effort to 

make the premium even less expensive. While Trafton testifies now, nearly 

seven years later, that had Marsh advised against the Lloyd’s policy or 

recommended the Chubb policy they would have considered purchasing Chubb,

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it is not sufficient to satisfy Bear’s burden of proof. The Court finds the selfserving testimony not to be credible and finds as a fact that Jodsaas would not 

have purchased a policy that offered less coverage at a higher premium cost. 

Moreover, Bear has not proven by a preponderance of evidence that 

Chubb would have paid Bear $17,250,000 for the Polar Bear’s total loss 

notwithstanding Trafton’s and Jodsaas’ failure to notify it of the March 6th jetty 

strike and subsequent major repairs. The Chubb policy lists several duties an 

insured must satisfy after suffering a loss, including immediately notifying Chubb, 

an agent, or a broker of the loss, cooperating with and assisting Chubb in 

facilitating the investigation and adjustment of a loss, and taking all reasonable 

means that are necessary to protect the property from further loss or damage. 

The evidence demonstrates that Bear did not provide Marsh or Lloyd’s with 

notice of the jetty strike. Bear’s attempts to reconcile its failure to provide Marsh 

with notice of the jetty strike and subsequent major repairs by arguing that it 

provided immediate notice after the fire on June 19, 2014. However, Bear has 

submitted no evidence to support that Chubb would have ignored Bear’s initial 

breach of its duty to notify and paid for a loss that was caused by work performed 

in connection with the original unnoticed accident. 

Based on the evidence submitted at trial, the Court cannot find that Marsh’s 

alleged failure to recommend the Chubb policy in 2011 caused Bear to suffer

$17,250,000 in damages. 

2. Failure to Recommend SRL Policy in 2013

In order to prevail on its claim that Marsh should have recommended an 

SRL policy in 2013, Bear must demonstrate by a preponderance of the evidence 

that with that policy in place, it would have recovered $17,250,000. 

Bear argues that had Johnson followed up on the 2013 insurance 

application, Trafton would have informed her of an intended yard visit which 

would have led Johnson to secure coverage from Lloyd’s and/or an SRL policy. 

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However, Bear’s argument fails for several reasons. First, Trafton did not know 

the details of the yard visit until April 2014. Without this information, as 

unrebutted testimony revealed, Johnson could not purchase an SRL policy. 

Second, even if Johnson had followed-up and learned of the intended yard visit, 

Johnson would still not have recommended an SRL policy because a routine 

yard visit would have already been covered under Bear’s existing Lloyd’s policy. 

Lastly, even if Marsh had secured coverage either under the Lloyd’s policy 

or SRL policy for the planned yard visit, Bear would still not recover for the Polar 

Bear’s loss because the SRL policy would not extend to an unplanned visit and

Lloyd’s would still require notice and prior approval for the subsequent major 

repairs. 

In an effort to rewrite history, Bear argues that had Johnson secured 

additional coverage, she would have re-advised Trafton on the conditions under 

the Repair Clause, causing Trafton to eventually comply with the terms and notify 

Marsh and Lloyd’s of the jetty strike. Indeed, if Trafton had provided notice of the 

original loss, the Polar Bear would have been covered. The entire case turns on 

Jodsaas’ and Trafton’s failure to provide notice. The Court has already ruled that 

Johnson satisfied her standard duty as a broker by explaining and warning 

Jodsaas and Trafton about the policy’s conditions. Based on the evidence 

before it, Bear has not shown by a preponderance of evidence that Trafton, 

having been warned over a dozen times before, would have complied with the 

Repair Clause after being warned once more. Such a finding would be based on 

pure speculation. Accordingly, Bear’s claim fails on this ground as well. 

//

//

//

//

//

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III. CONCLUSION

For the reasons discussed above, the Court finds in favor of Defendant

Marsh and against Plaintiff Bear on its claims for negligence and breach of 

fiduciary duty. The Clerk shall enter judgment for Marsh and against Bear. 

IT IS SO ORDERED. 

Dated: April 20, 2018

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