Whether the federal court has jurisdiction over a coverage dispute of a purported maritime policy was the issue in New Hampshire Ins. Co. v. Home Savings and Loan Co. of Youngstown, Ohio, No. 08-3902, 2009 U.S. App. LEXIS 21133 (6th Cir. Sept. 24, 2009).
National Marine, a yacht dealer and marina operator, purchased a "Yacht Dealer/Mariana Operator's" general liability policy from New Hampshire Insurance Company ("NHIC"). The policy insured National Marine against loss or damage to its inventory, loss or damage to third-party property while in its custody, personal injury or property damage occurring on its boats or at its marina, and loss or damage to its tools and equipment. The policy also had "Truth in Lending Errors and Omissions Liability Coverage," to insure against "damage due to the unintentional violation of any Federal or State Consumer Credit Act."
National Marine was sued in state court for fraudulent misrepresentations and failure to deliver boats with clean title. National Marine sought coverage under the "Truth in Lending" provision of the policy. NHIC provided coverage under a reservation of rights, but then sued in federal court to resolve the coverage issues. NHIC asserted jurisdiction under 28 U.S.C. 1333(1), federal maritime jurisdiction. The complaint requested the policy be rescinded for misrepresentation or a declaration that there was no coverage. The district court assumed jurisdiction under 1333(1), but dismissed NHIC's action, concluding it had discretion to accept or deny jurisdiction under the Declaratory Judgment Act.
The Sixth Circuit questioned whether federal jurisdiction existed under 28 U.S.C. 1333(1) and whether the underlying claims arose under a "maritime contract." Ultimately, the court determined the policy was not a maritime contract because its primary object did not relate to maritime commerce. Instead, the policy related to boats as objects of commerce, i.e., "stock for sale", and not as agents of maritime commerce. Further, the marina operations portion of the policy related to fixed structures such as wharves instead of particular vessels. Consequently, although the district court properly dismissed the case, dismissal was appropriate due to lack of subject matter jurisdiction.
