American Steamship Owners Mutual Protection and Indemnity Association v. PLC

Background

The American Steamship Owners Mutual Protection and Indemnity Association, Inc., referred to in the opinion as the American Club, is a mutual insurance association covering shipowners and charterers in commercial operations. Carnival PLC chartered two cruise-line vessels to subsidiaries of Global Maritime Inc. The subsidiaries entered those vessels, along with four other vessels, in a fleet insurance arrangement with the American Club for policy years beginning in 2016.

The American Club issued Certificates of Entry identifying the two Global Maritime subsidiaries as members, Global Maritime as manager, and Carnival as a co-assured. The certificates stated that the member and any named co-assureds were liable to pay mutual premiums under the American Club’s bylaws. The bylaws also stated that a co-assured was jointly and separately liable for all sums owed to the association for the fleet.

The American Club alleged that $1,978,198.05 remained unpaid on Global Maritime’s account. It demanded payment from Carnival, but Carnival did not pay. The American Club sued for breach of contract, account stated, and attorney’s fees.

Motion-to-dismiss standard

Carnival moved under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal for failure to state a legally sufficient claim. At this stage, the court accepts well-pleaded factual allegations as true and asks whether they plausibly show an entitlement to relief. The court does not weigh evidence or resolve factual disputes. The parties agreed that New York contract law applied.

Carnival’s arguments and the court’s analysis

Carnival first argued that it had not assented to the insurance contract. The court rejected that argument because Carnival received a Certificate of Entry that identified it as a co-assured and stated that co-assureds were liable for premiums. The court held that this language put Carnival on inquiry notice of its obligation. The court also stated that the certificate specifically incorporated the bylaws, which separately provided for a co-assured’s joint and several liability for sums owed for the fleet.

Carnival next argued that it did not qualify as a co-assured under the bylaws. The court found a conflict between the bylaws’ general definition of “co-assured” and another provision allowing coverage for “any other co-assured.” Because contractual ambiguities are generally resolved in the plaintiff’s favor at the pleading stage, the court concluded that Carnival qualified as a co-assured for purposes of the motion.

Carnival also argued that the American Club had not produced evidence showing that Carnival entered vessels with the American Club or was liable for the entire fleet premium. The court held that the American Club did not need to prove those facts at the motion-to-dismiss stage. It found the complaint’s allegations—that Global Maritime and Carnival entered vessels as a fleet and that Carnival was jointly and separately liable as a co-assured—sufficient for the claim to proceed. The court also rejected Carnival’s argument that it lacked an insurable interest in vessels it did not own, stating that under New York law only an insurer may raise lack of insurable interest as a defense to liability.

Finally, the court held that the American Club plausibly alleged an account stated. An account stated is a claim based on an account presented to a party, treated as correct, with a promise to pay; acceptance and a promise to pay may sometimes be inferred when the recipient keeps the statement without timely objection. Although the allegations were sparse, the complaint alleged that the American Club demanded payment, Carnival accepted the amount without rejection or protest, and the amount remained unpaid. The court therefore treated the account-stated claim as sufficiently pleaded, while noting that Carnival’s contrary factual account was not resolved on this motion.

Disposition

The court denied Carnival’s motion to dismiss. The clerk was directed to terminate the motion, and the parties were directed to submit a case-management plan within 21 days of the order.