Federal judge orders insurance case over boat's sinking to arbitration

By Marian Johns | May 23, 2019

TAMPA — A case involving an insurer alleging the sinking of a Florida man's boat was not accidental but due to a hull defect has been sent to arbitration by a Tampa federal judge.

According to the May 5 filing in the U.S. District Court for the Middle District of Florida, defendants ACE American Insurance Company and others asked the court to dismiss and compel arbitration in a lawsuit filed by plaintiff Marshall Scott Gray. 

The lawsuit involves Gray's recreational marine insurance policy coverage with ACE. Gray's 36-foot Glasstream boat, "Amazing II," hit an object in a channel in November 2017, which resulted in a hole in the bottom of his boat, causing it to sink and capsize within minutes, according to the court filing. 

ACE argues that Gray's boat sank because of a "hull defect" not the accident, and that the case should go to arbitration per the insurance policy's terms.


Gray has rejected arbitration and argues his policy is "ambiguous and illusory" and that the Federal Arbitration Act (FAA) in this case "must yield to Florida law" due to the McCarran-Ferguson Act.

U.S. District Judge William Jung disagreed, saying "because no Florida insurance statute has been cited that would be invalidated, impaired or superseded by the FAA, the FAA applies."

Jung also concluded that the "language is clear" in Gray's insurance policy regarding arbitration and any controversy or claims regarding the policy. The court, therefore, stayed the case and ordered the parties to arbitration with it being subject to be reopened "on motion of either party at the conclusion of the arbitration process."

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