STATE STATUTORY BAD FAITH CLAIM AGAINST INSURER DENIED ON BASIS OF CHOICE OF LAW PROVISION REQUIRING APPLICATION OF MEXICAN LAW
Deep Sea Financing, LLC filed suit against British Marine as an alleged loss payee under a policy of marine hull insurance issued by British Marine to Dragados Mundiales del Caribe S.A. de C.V., covering a dredge and other equipment owned by Dragados. When the dredge ran aground on an environmentally sensitive reef near Puerto Cancun, Mexico, various claims were made under the policy, including a claim by Deep Sea. When Deep Sea’s written demand was not accepted by British Marine, it filed suit in Georgia state court seeking statutory bad faith penalties. British Marine removed the case to federal court and filed a separate interpleader action naming Dragados and Deep Sea. In Deep Sea’s action, Deep Sea moved for partial summary judgment on its statutory bad faith claim. The contract — which was originally negotiated as reinsurance to a Mexican primary policy that later became unnecessary, and so was converted to a primary policy under British Marine’s typical “London terms,” — nevertheless still included (whether inadvertently or not) a choice-of-law provision requiring application of Mexican law. British Marine argued this provision precluded the statutory claim under Georgia law, and the court agreed. Deep Sea moved for reconsideration, but the court stuck by its initial decision. Deep Sea Financing, LLC v. British Marine Luxembourg, S.A., CV 409-022 (USDC S.D. Ga. Sept. 1, 2010).
This post written by John Pitblado.
