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Travelers prevails in litigation over diver's drowning

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A Travelers Cos. Inc. unit has prevailed in litigation with Lloyd’s of London over the issue of whether it was obligated to defend and indemnify a mate and divemaster who worked on a boat where a diver drowned, says a federal appeals court, in upholding a lower court ruling.

Brothers Joseph Grosso and Nicholas Grosso boarded the M/V Scubatyme III for a lobster dive off the coast of Pompano Beach, Florida, in July 2014, according to Monday’s ruling by the 11th U.S. Circuit Court of Appeals in Atlanta in Travelers Property Casualty Co. of America vs. Salt ‘N Blue L.L.C., Robert Wranovics, Douglas Barkley, Glenn Grosso, et al. Mr. Barkley was a mate and divemaster on the vessel.

After completing their dives, the Grossos returned to the vessel, according to the ruling. Nicholas had exhausted his air supply, but Joseph wanted to re-enter the water to retrieve a lobster he had marked with a buoy. Although no one checked his air supply, he was allowed to re-enter the water without a dive buddy, according to the ruling.

During Mr. Grosso’s second dive, Mr. Wranovics, the boat’s captain, steered the vessel away to pick up other divers.  When he returned, Mr. Wranovics found Mr. Grasso had drowned, with his body tangled in a line with a buoy attached to it.

Mr. Grosso’s estate filed a wrongful death action in state court, alleging the vessel’s owner, Salt ‘N Blue, Mr. Wranovics and Mr. Barkley had breached the duty of care owed Mr. Grosso by allowing him to re-enter the water without a dive buddy and leaving the dive site to collect other divers.

Lloyd’s defended Mr. Barkley in the underlying litigation because he was a named insured under a Lloyd’s-issued professional liability insurance master policy.

In 2016, Mr. Barkley’s counsel demanded Travelers join in defending and indemnifying Mr. Barkley in the underlying litigation because Mr. Barkley was also a named insured under a commercial marine insurance policy issued by Travelers unit Travelers Property and Casualty Co. to Salt ‘N Blue. Travelers agreed to defend Mr. Barkley subject to a full reservation of rights.

The underlying litigation was settled for an undisclosed amount in November 2016. Although it paid sums for Mr. Wranovics and Salt ‘N Blue, Travelers allegedly refused to participate in funding the settlement of the claims against Mr. Barkley. Lloyd’s paid the entire settlement demand, and Mr. Barkley assigned his rights to recovery under the Travelers policy to Lloyd’s.

Travelers then filed suit in U.S. District Court in Miami, seeking a declaration it was not obligated to defend Mr. Barkley. The District Court ruled in Travelers’ favor, which was upheld by a unanimous three-judge panel on appeal.

Travelers’ policy included a “dive boat limitation endorsement” that excluded “loss of life” that occurred “while in the water,” said the ruling. Mr. Barkley “urges this Court to bypass plain meaning” because the endorsement is ambiguous, said the ruling.

Although Mr. Barkley asserts the endorsement is “‘susceptible to more than one reasonable interpretation,’ he does not elaborate on this conclusory statement…Therefore, Barkley has waived the argument that the exclusion is ambiguous when considered in isolation,” said the ruling, in upholding the lower court’s ruling that Travelers did not have a duty to defend or indemnify Mr. Barkley.