MIAMI — A Royal Caribbean excursion operator's insurance carrier lost its legal attempt to dismiss a bad faith insurance claim and to compel arbitration in a case involving a woman who became a quadriplegic after a zip line accident in St. Lucia.
According to the May 10 U.S. District Court for the Southern District of Florida filing, one of the defendants, AIG Insurance Hong Kong Limited (AIG), asked the court to dismiss the bad faith insurance complaint by plaintiffs Lynn McCullough and William McCullough and motion to take the action to arbitration.
The case stems from a shore excursion that the McCulloughs participated in while on a Royal Caribbean cruise stop in St. Lucia. Lynn McCullough, who was not properly secured to the zip line harness, fell almost 50 feet and is now a quadriplegic.
The McCulloughs sued Royal Caribbean, several insurance companies and the operators of the cruise ship excursion, Rain Forest Adventures, Rain Forest Sky Rides, Rain Forest Tram and Harald Joachim von der Goltz, who was insured by AIG.
AIG's policy that covered von der Goltz included liability coverage of up to $5.15 million, according to the court filing. However, a "dispute clause" in the policy excludes "bodily injury" with AIG offering a $350,000 settlement during arbitration.
AIG contested the claim coverage due to the "dispute clause" and said the McCulloughs’ third party bad faith insurance claim should be "dismissed and sent to arbitration in accordance with the disputes clause of the policy" due to the fact that "coverage under the Policy has not been determined." AIG also attempted to argue that "the McCulloughs stand in the shoes of von der Goltz for purposes of their bad faith insurance claim" so they should adhere to the policy's terms.
The McCulloughs argue they are not subject to the arbitration clause because their claim is for "common law bad faith, a Florida cause of action separate and apart from the underlying insurance action" and also they "are not signatories to the arbitration agreement or assignees of the policy."
U.S. District Judge Darin Gayles concluded that AIG "offers no 11th Circuit precedent" to counter the court's rejection of "using arbitration by estoppel and other equitable theories to bind non-signatories to arbitration in cases arising under the convention."
Gayles ruled that since "there is no agreement signed by both parties, the McCulloughs cannot be compelled to arbitrate" and concluded the McCulloughs' bad faith claim "was premature" as his reasoning for having the case stayed.