Yacht owner’s lawsuit against Lloyd’s runs aground

A federal appeals court has upheld lower court rulings in favor of Lloyd’s of London and a boatyard in litigation filed by the owner of a submerged yacht.

Coral Gables, Florida-based Kol B’Seder Inc. owns a yacht, Sababa, that suffered engine troubles that required years to fix, and underwent major repairs to its rudder and hull over an eight-year period, according to Tuesday’s ruling by the 11th U.S. Circuit Court of Appeals in Atlanta in Kol B’Seder Inc. v. Certain Underwriters at Lloyd’s of London et al.; Glass-Tech Corp.

In the two years preceding the submersion, the yacht continued experiencing problems even during short trips, and needed repairs and sometimes replacements for its anchor winch, generator, batteries and bilge pumps, among other parts, according to the ruling.

One to two months before the submersion, the yacht may have touched bottom in what is known as a “grounding,” the ruling said.

While preparing to take the yacht on a longer trip, Kol B’Seder’s sole managing member, Noreen Sablotsky, sailed it to Glass-Tech’s boatyard in Miami on a Friday for it to be hauled out of the water for repairs.

She understood Glass-Tech would not haul the yacht out of the water until the following Monday. She did not inform Glass-Tech the boat had not received bottom maintenance in more than three years, according to the ruling.

On Sunday, a Glass-Tech employee discovered the vessel had become partially submerged, and the boat yard hauled it out of the water and took measures to preserve the vessel. Ms. Sablotsky never paid Glass Tech for the work it performed on the yard, nor for the cost of continuing to store the vessel when no arrangements were made to pick it up, according to the ruling.

A surveyor hired by Lloyd’s, Kol B’Seder’s insurer, subsequently concluded the yacht suffered from design and installation defects in the external rudder logs, as well as extensive deterioration and water damage in the external rudder and other parts of the yacht, “all of which he identified as causes of the submersion,” according to the ruling.

Lloyd’s denied coverage based on an exclusion in its policy for wear and tear, design defects and any claims caused by a lack of repair and due diligence in maintenance.

Kol B’Seder filed suit against Lloyd’s in U.S. District Court in Miami. Claims and counterclaims were also filed by Kol B’Seder and the boatyard in connection with the incident.

The District Court granted Lloyd’s and the boatyard summary judgment in the case, which was unanimously affirmed by a three-judge appeals court panel.

Lloyd’s was entitled to summary judgment in the case, said the ruling. All the issues identified in the surveyor’s report “identified as the likely causes of the Sababa’s submersion fall within” its policy exclusions, said the ruling, which also upheld dismissal of the litigation against the boatyard.

Lloyd’s attorney Neil Bayer, a partner with Kennedys Americas LP in Miami, said the trial court issued a “great decision” in the case, and the 11th Circuit “went well beyond that and did a really thoughtful examination of the record,” issuing a “really strong and valid opinion.”

Scott A. Wagner, of Wagner Legal in Miami, who represents Glass-Tech, said, “We totally agree with the 11th Circuit opinion affirming the district’s summary judgment rulings, and will be filing for attorneys’ fees and costs in the district court in short order.”

Kol B’Seder’s attorney could not immediately be reached for comment.