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Rosela v. American Power Boat Association

United States District Court, D. Maryland

November 16, 2017

CARRIE ANN ROSELA et al., Plaintiffs,


          Ellen Lipton Hollander United States District Judge

         This case arises from unquestionably tragic events that occurred on June 28, 2015, during the “Thunder on the Narrows” powerboat race on the waters of the Kent Narrows in Maryland. During the race, the driver of a hydroplane lost control, veered off the race course, and crashed at high speed into other boats located in the spectator area, injuring many attendees and killing seven-year-old Julianne Addison Rosela. ECF 37 (Third Amended Complaint) at 6; id. ¶ 34. Plaintiffs, [1] the surviving family of the decedent and the other injured spectators, filed suit against numerous defendants, including the American Power Boat Association (“APBA”); the Kent Narrows Racing Association (“KNRA”); the owners and the operator of the power boat; and Everest National Insurance Company and Specialty Insurance Group, Inc. (collectively, “SIG”), [2]the insurance companies that insured the race. Id. ¶¶ 19-31.[3]

         Suit was initially filed in August 2016. ECF 1 (Complaint). Since then, plaintiffs have filed three amended complaints, the most recent of which was filed in March 2017. See ECF 27 (Amended Complaint); ECF 29 (Second Amended Complaint); ECF 37 (Third Amended Complaint). Plaintiffs assert 41 counts, generally alleging negligence and related claims, including a survival and wrongful death action. ECF 37, ¶¶ 143-517. As to the two defendants that are Maryland corporations, jurisdiction is founded on admiralty, under 28 U.S.C. § 1333. As to all other defendants, jurisdiction is based on diversity, under 28 U.S.C. § 1332.[4]

         SIG has twice moved to dismiss the claims against the insurance companies. ECF 53; ECF 89. SIG first moved to dismiss under Fed.R.Civ.P. 12(b)(6) in April 2017, arguing that it owed no legal duty to plaintiffs. ECF 53 (“Motion 1”). Plaintiffs oppose Motion 1. ECF 71; ECF 72; ECF 72-1 (collectively, “Opposition 1”).[5] SIG has replied. ECF 78; ECF 79.[6] Several months later, following limited discovery, SIG submitted a “Supplemental Rule 12(b)(6) Motion to Dismiss and/or Rule 56 Motion for Summary Judgment.” ECF 89 (“Motion 2”). Motion 2 is supported by 14 exhibits. ECF 89-1 through ECF 89-14. Plaintiffs have moved to strike Motion 2 or, in the alternative, they oppose it. ECF 90 (“Opposition 2”). SIG has replied. ECF 91.

         In analyzing the motions, I am mindful that plaintiffs do not seek recovery under the policy of insurance issued by SIG; they do not allege breach of contract. See ECF 37. Rather, they allege that SIG was not a mere insurer. See ECF 37, ¶¶ 42, 54. According to plaintiffs, SIG, on behalf of APBA and KNRA, assumed the duty to assure, inter alia, that the design of the course and other safety standards were met, in order to protect third parties. Id. ¶¶ 73, 74. But, plaintiffs assert that SIG failed to abide by minimum safety standards and failed to exercise due care. See Id. ¶¶ 67, 68. For example, plaintiffs allege that SIG established the buffer between the race course and the spectator area, which was allegedly inadequate, and approved the design of the race course. Id. ¶¶ 67-68; 71-73.

         No hearing is necessary to resolve the motions. See Local Rule 105.6. For the reasons that follow, I shall deny both motions.

         I. Factual Background [7]

         In February 2015, KNRA began organizing the 25th Thunder on the Narrows, a boat race cosponsored by the APBA. ECF 37, ¶¶ 36-37. In order to gain the sponsorship and official sanction of the APBA, KNRA needed to procure insurance for the race. Id. ¶ 56. SIG, APBA's “exclusive agent in providing coverage for APBA and its member organizations” (id. ¶ 56) is alleged to have established a consistent business relationship with APBA and to have regularly attended APBA's annual meetings. Id. ¶¶ 54, 56. According to plaintiffs, SIG was responsible for the approval of APBA regattas, and for ensuring compliance with basic minimum safety standards. Id. ¶ 55. In this capacity, plaintiffs allege that SIG, either on its own or in collaboration with the APBA, developed a “Regatta Insurance Application.” Id. ¶ 58. The entire process of assuring compliance with minimum safety standards, plaintiffs contend, was administered by SIG. Id. ¶ 60. The application required KNRA to submit a scaled diagram of the race course layout, including the location of the spectator fleet. Id. ¶ 59. The application, allegedly drafted by SIG, indicated that the spectators should be located at least 250 feet outside the outer course markers. Id. ¶ 43.

         KNRA submitted the application and the diagram, but the diagram was not to scale and was labeled with the proviso “Drawing NOT to Scale!” Id. ¶ 65. In the diagram, the spectator fleet (where spectators could watch the race from their boats) is shown as being “within feet” of the outside markers. Id. ¶ 68. Plaintiffs allege that SIG had actual knowledge that the course in question “could not possibly provide a 250 foot buffer between the outside course buoys and the spectator fleets.” Id. ¶ 67. A true 250 foot buffer would have placed the spectators on land, rather than watching from their boats. Id. ¶ 68. Nevertheless, SIG accepted the application and the diagram, and issued certificates of insurance for the race. Id. ¶ 71. Thereafter, the APBA agreed to sanction the race, allegedly on the basis of SIG's approval. Id. ¶¶ 72-73.

         On the day of the race, plaintiffs were directed to view the race from an area “just a few feet” beyond the course markers. Id. ¶ 123. They observed from recreational boats, located in the designated spectator fleet area, as determined by SIG, APBA, and KNRA. Id. ¶ 125. And, on June 28, 2015, at approximately 4:45 P.M., one of the racing boats veered off the course and crashed into a string of the spectators' boats. Id. ¶¶ 134-35. Seven-year-old Julianne Addison Rosela drowned (id. ¶ 141), and other plaintiffs suffered substantial physical injuries. Id. ¶ 139. This suit followed.

         Additional facts are included in the Discussion.

         II. Choice of Law[8]

         As noted, this Court's jurisdiction as to the claims against SIG is founded on diversity. See 28 U.S.C. § 1332. A federal court sitting in diversity must apply the law of the state in which the court is located, including the forum state's choice of law rules. Colgan Air, Inc. v. Raytheon Aircraft Co., 507 F.3d 270, 275 (4th Cir. 2007). Thus, Maryland law applies. And, regarding tort claims, Maryland applies the law of the state where the alleged harm occurred (“lex loci delicti”). See, e.g., Proctor v. Washington Metropolitan Area Transit Auth., 412 Md. 691, 726, 990 A.2d 1048, 1068 (2010).

         In this case, the crash giving rise to the claims occurred “on the navigable waters of Kent Narrows, located entirely within the geographic boundaries” of Maryland. ECF 37, ¶ 34. Therefore, I shall apply Maryland tort law to the motions.

         III. Motion 1


         As noted, Motion 1 is a motion to dismiss under Fed.R.Civ.P. 12(b)(6). ECF 53. A defendant may test the legal sufficiency of a complaint by way of a motion to dismiss under Rule 12(b)(6). In re Birmingham, 846 F.3d 88, 92 (4th Cir. 2017); Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 165-66 (4th Cir. 2016); McBurney v. Cuccinelli, 616 F.3d 393, 408 (4th Cir. 2010), aff'd sub nom. McBurney v. Young, 569 U.S. 221 (2013); Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). A Rule 12(b)(6) motion constitutes an assertion by a defendant that, even if the facts alleged by a plaintiff are true, the complaint fails as a matter of law “to state a claim upon which relief can be granted.” Whether a complaint states a claim for relief is assessed by reference to the pleading requirements of Fed.R.Civ.P. 8(a)(2). That rule provides that a complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” The purpose of the rule is to provide the defendants with “fair notice” of the claims and the “grounds” for entitlement to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007).

         To survive a motion under Fed.R.Civ.P. 12(b)(6), a complaint must contain facts sufficient to “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570; see Ashcroft v. Iqbal, 556 U.S. 662, 684 (2009) (“Our decision in Twombly expounded the pleading standard for ‘all civil actions' . . . .” (citation omitted)); see also Willner v. Dimon, 849 F.3d 93, 112 (4th Cir. 2017). But, a plaintiff need not include “detailed factual allegations” in order to satisfy Rule 8(a)(2). Twombly, 550 U.S. at 555. Moreover, federal pleading rules “do not countenance dismissal of a complaint for imperfect statement of the legal theory supporting the claim asserted.” Johnson v. City of Shelby, __ U.S.__, 135 S.Ct. 346, 346 (2014) (per curiam).

         Nevertheless, the rule demands more than bald accusations or mere speculation. Twombly, 550 U.S. at 555; see Painter's Mill Grille, LLC v. Brown, 716 F.3d 342, 350 (4th Cir. 2013). If a complaint provides no more than “labels and conclusions” or “a formulaic recitation of the elements of a cause of action, ” it is insufficient. Twombly, 550 U.S. at 555. Rather, to satisfy the minimal requirements of Rule 8(a)(2), the complaint must set forth “enough factual matter (taken as true) to suggest” a cognizable cause of action, “even if . . . [the] actual proof of those facts is improbable and . . . recovery is very remote and unlikely.” Twombly, 550 U.S. at 556 (internal quotation marks omitted).

         In reviewing a Rule 12(b)(6) motion, a court “must accept as true all of the factual allegations contained in the complaint” and must “draw all reasonable inferences [from those facts] in favor of the plaintiff.” E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 440 (4th Cir. 2011) (citations omitted); see Semenova v. Maryland Transit Admin., 845 F.3d 564, 567 (4th Cir. 2017); Houck v. Substitute Tr. Servs., Inc., 791 F.3d 473, 484 (4th Cir. 2015); Kendall v. Balcerzak, 650 F.3d 515, 522 (4th Cir. 2011), cert. denied, 565 U.S. 943 (2011). But, a court is not required to accept legal conclusions drawn from the facts. See Papasan v. Allain, 478 U.S. 265, 286 (1986). “A court decides whether [the pleading] standard is met by separating the legal conclusions from the factual allegations, assuming the truth of only the factual allegations, and then determining whether those allegations allow the court to reasonably infer” that the plaintiff is entitled to the legal remedy sought. A Society Without a Name v. Virginia, 655 F.3d 342, 346 (4th. Cir. 2011), cert. denied, 566 U.S. 937 (2012).


         In Motion 1, SIG argues that its decision to issue an insurance policy to other defendants to insure the race does not give rise to liability in tort to plaintiffs, because it owed no legal duty to plaintiffs. ECF 53 at 4-5, 10. SIG maintains that its liability is limited to its contractual obligations, under the applicable insurance policy, for covered losses caused by an insured. Id. at 4-5.

         According to SIG, plaintiffs allege liability under the principle articulated in the Restatement (Second) of Torts § 315, as interpreted ...

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