Opinion ID: 1264869
Heading Depth: 1
Heading Rank: 2

Heading: Marina Operations: Contracts Related to Particular Vessels vs. Fixed Structures

Text: Construing those provisions of the policy that relate to the operation of the marina presents a more difficult question. At first blush, the case law seems to support the notion that the terms of the marina operation provisions of this policy bear directly on maritime commerce. For example, in Sisson v. Ruby , the Supreme Court considered the maritime nature of a marina for purposes of maritime jurisdiction in a tort case, and offered the following assessment: Docking a vessel at a marina on a navigable waterway is a common, if not indispensable, maritime activity. At such a marina, vessels are stored for an extended period, docked to obtain fuel or supplies, and moved into and out of navigation. Indeed, most maritime voyages begin and end with the docking of the craft at a marina. We therefore conclude that, just as navigation, storing and maintaining a vessel at a marina on a navigable waterway is substantially related to traditional maritime activity. 497 U.S. at 367, 110 S.Ct. 2892. On closer inspection, however, we conclude that the case law actually suggests that insurance covering marina operations are not necessarily maritime contracts. In discussing the importance of marina operations in Sisson, the Court was concerned with determining whether there was a substantial relationship between the activity giving rise to the incident and traditional maritime activity. Id. at 364, 110 S.Ct. 2892. That inquiry, however, is relevant only in the maritime tort context; jurisdiction predicated on a maritime contract requires no such inquiry. The distinction between maritime tort and contract law is significant, especially in this context where the Court has emphasized that the storage and maintenance of a vessel at a marina on navigable waters is substantially related to `traditional maritime activity' given the broad perspective demanded by the second aspect of the [maritime tort] test. Id. at 367, 110 S.Ct. 2892 (emphasis added). Unlike the test applied in the context of maritime contracts, maritime tort jurisdiction is broad enough to support  any other activities traditionally undertaken by vessels, commercial or noncommercial.  Id. (emphasis added). As Kirby makes clear, this broad perspective is not applicable in the context of maritime contracts where the requisite inquiry is more focus[ed], and where we must determine whether the contract implicates a commercial activity. 543 U.S. at 25, 125 S.Ct. 385 (The conceptual approach vindicates that interest by focusing the Court's inquiry on whether the principal objective of a contract is maritime commerce.). The contract at issue in Sisson also is distinguishable on the grounds that it related to a specific boat, not the marina itself. The policy at issue here relates specifically to the marina, and expressly excludes owned water craft from coverage. ROA at 40. For these same reasons, the Court's decision in Foremost Ins. Co. v. Richardson, 457 U.S. 668, 102 S.Ct. 2654, 73 L.Ed.2d 300 (1982), likewise offers little guidance to resolving the question before us sub judice. Next we consider Wilburn Boat, in which an insurance provider had insured the claimant's houseboat against loss from fire and other perils. While moored on the lake, the boat was destroyed by fire. The insurer refused to cover the claim and the claimant filed suit in state court. 348 U.S. at 311, 75 S.Ct. 368. The insurer removed the case to federal court, and the federal court decided that the insurance policy at issue was a maritime contract sufficient to establish maritime jurisdiction. Id. at 312 n. 4, 75 S.Ct. 368. The Supreme Court accepted without comment the conclusion that insurance of a boat against fire while moored on a lake was a maritime contract, apparently presuming that the insurance policy constituted a maritime contract for purposes of the jurisdictional inquiry. Id. at 313, 75 S.Ct. 368. Once again, though, the contract related to a specific vessel, not a fixed structure at which the boat happened to be docked. Moreover, although the craft at issue in the case was a small houseboat, the Court noted that the craft had been purchased by merchants primarily to use for commercial carriage of passengers. Id. at 311, 75 S.Ct. 368. We find these two elements of the policy at issue in Wilburn Boat to be conceptually significant. See also Kirby, 543 U.S. at 24, 125 S.Ct. 385 (finding that two bills of lading were maritime contracts because their primary objective is to accomplish the transportation of goods by sea from Australia to the eastern coast of the United States). Finally, we feel compelled to discuss M/G Transport Services, Inc. v. Water Quality Insurance Syndicate, 234 F.3d 974 (6th Cir.2000). In that case, this Court approved in a very conclusory fashion the district court's exercise of jurisdiction under § 1333(1), relying on Stanley T. Scott & Co., Inc. v. Makah Development Corp., 496 F.2d 525, 526 (9th Cir.1974), for the proposition that a marine insurance policy is a `maritime contract' for purpose of admiralty jurisdiction. 234 F.3d at 976-77. Although this statement could be read to support the notion that all insurance policies touching on maritime concerns are maritime contracts, we do not read our decision in M/G Transport so broadly. Although we offered very little analysis as to why the insurance contract at issue there fell within the scope of our maritime contract jurisdiction, there are some contextual clues. For instance, we noted that the insured was a subcontractor hired to transport[ ] coal via inland waterway to the Tennessee Valley Authority pursuant to a contract between R. & F. [the general contractor] and the United States. Id. at 975. We also noted that the contract involved specialized marine pollution liability insurance, id. at 976, and thus presumably covered the operation of specific vessels operated by the company and related directly to the commercial activities specified in the coal transportation contract. In light of the particular facts of the case and applying the conceptual approach prescribed by the Supreme Court, we read our decision in M/G Transport to comport with the emphasis that Kirby places on whether the contract's purpose is to effectuate maritime commerce. 543 U.S. at 27, 125 S.Ct. 385. A survey of relevant case law supports the conceptual themes we have identified in these cases, especially the distinction between contracts related to the operation of a particular vessel involved in a commercial transaction and those related to fixed structures. For instance, the Ninth Circuit's decision in Royal Insurance, supra, suggests that contracts associated with fixed structures rather than a specific vessel generally are not maritime contracts. 738 F.2d at 1037 (Wharfage contracts are maritime if wharfage is provided to a specific vessel.... If there is no connection to a specific vessel, however, contracts relating to wharves generally are not within admiralty jurisdiction.). Even the Supreme Court has attached significance to this distinction, noting that a ship or vessel, used for navigation and commerce, though lying at a wharf, and temporarily made fast thereto, as well as her furniture and cargo, are maritime subjects, whereas a fixed structure that is not used for the purpose of navigation generally is not. Cope v. Vallette Dry-Dock Co., 119 U.S. 625, 627-28, 7 S.Ct. 336, 30 L.Ed. 501 (1887) (holding that a libel against a dry-dock [1] does not fall within the admiralty jurisdiction of the federal courts). The D.C. Circuit also offered an insightful discussion of this conceptual distinction in Upper Steamboat Co. v. Blake, 2 App. D.C. 51 (D.C.Cir.1893): That wharves, piers, docks, or landing places, are essential as means of conducting maritime trade and commerce, must of course be conceded. But does it follow that all contracts relating to such wharves and docks are maritime contracts? It has been said that the admiralty jurisdiction, in cases of contract, depends primarily upon the nature of the contract, and is limited to contracts, claims and services purely maritime, and touching rights and duties appertaining to commerce and navigation. It is clear, says the Supreme Court, in the case last referred to, that a contract for the use of a wharf by the master or owner of a ship or vessel is a maritime contract, and, as such, that it is cognizable in the admiralty; that such a contract, being one made exclusively for the benefit of the ship or vessel, a maritime lien in the case supposed arises in favor of the proprietor of the wharf against the vessel for payment of reasonable and customary charges in that behalf for the use of the wharf, and that the same may be enforced by a proceeding in rem against the vessel, or by suit in personam against the owner.... But is there not an essential difference between a claim or demand for wharfage, as understood in the laws and usages of navigation, and a claim for rent as such of a wharf, under a contract that, assuming it to be valid as between the parties, creates the relation of landlord and tenant? Under such contract, the rent is payable, though a vessel should never approach the wharf, or though the wharf may be used for purposes quite foreign to the maritime trade. It could hardly be contended that a contract for building or repairing a wharf is embraced in the class of contracts denominated maritime, any more than it could (and not with as much propriety) be contended that a contract to build a ship is a maritime contract; and it has been expressly held by the Supreme Court of the United States that a contract for building a ship is not of a maritime character, and therefore not within the admiralty jurisdiction.... Nor can we suppose that a contract for the sale of a wharf could be regarded as a maritime contract; and if not, why should a lease of a wharf that may be for a long term, with annual rent reserved, and, as may be, with conditions and stipulations for repairs or rebuilding the same from time to time, be regarded as a maritime contract, and as such cognizable only in a court of admiralty? We are clearly of opinion that the lease of a wharf, supposing it valid, is not a maritime contract, in any proper sense, but is a contract relating to realty, and must be performed on the land. Id. at 56-57 (citations omitted). Although these cases deal with wharves and dry-docks rather than the operation of a marina, we find them informative to the extent that they suggest a conceptual distinction between a contract relating to a particular vessel involved in a commercial operation as opposed to the overarching operation of a fixed structure that happens to involve boats. Simply because a contract involves a marina does not mean it necessarily is a maritime contract. We must look at the nature of the contract and, in the case of an insurance policy, consider the specific interests insured. Applying that distinction in this case, we conclude that this insurance policy covering a yacht dealership and a marina falls outside the scope of our maritime jurisdiction, despite the fact that some of the services provided by the marina may relate incidentally to or facilitate maritime commerce. Like other courts that have addressed similar issues, we also are reluctant to open the courthouse doors to a surge of litigation concerning transactions that may only tangentially involve a maritime business or a ship owner merely because one is a party in the dispute. Illinois Constructors Corp. v. Morency & Assoc., 794 F.Supp. 841, 843 (N.D.Ill.1992). [2] This concern is all the more pressing where, as here, the contract at issue is multifaceted and covers a diverse range of interests, many of which have little bearing on maritime commerce.
We therefore REVERSE the district court's assumption that it has jurisdiction and VACATE its analysis of the abstention issue, but AFFIRM its judgment dismissing NHIC's claims, although on different grounds.