## Facts

- Lago Canyon, Inc. owned a yacht insured under a marine insurance policy issued by St. Paul Fire & Marine Insurance Company.
- While the yacht was moored at a dock, it partially sank and sustained substantial damage.
- Lago Canyon submitted a claim under the policy.
- St. Paul investigated and concluded the loss resulted from corrosion, which the policy expressly excluded.
- St. Paul filed a federal declaratory-judgment action designated as an admiralty claim under Federal Rule of Civil Procedure 9(h).
- Lago Canyon counterclaimed for breach of the insurance contract and demanded a jury trial.
- The district court denied the jury demand, conducted a bench trial, found corrosion caused the loss, and entered judgment for St. Paul.

## Issues

1. Whether an insured is entitled to a jury trial on a breach-of-contract counterclaim when the insurer brings a declaratory-judgment action over a marine insurance policy and designates the claim as an admiralty claim under Rule 9(h).
2. Whether the district court clearly erred in finding corrosion caused the loss, triggering the policy’s corrosion exclusion and barring coverage.

## Decision

- The Eleventh Circuit affirmed.
- The court held Lago Canyon had no right to a jury trial because the dispute involved a maritime contract and the insurer properly elected admiralty procedure under Rule 9(h).
- The court upheld the district court’s factual finding that corrosion caused the damage and that the corrosion exclusion applied, relieving St. Paul of liability.

## Legal Principles

- Marine insurance policies are maritime contracts within federal admiralty jurisdiction.
- When a plaintiff properly designates a maritime claim in admiralty under Rule 9(h), the case proceeds as an admiralty action and there is no Seventh Amendment jury-trial right.
- An insured’s counterclaim for breach of contract does not override the plaintiff’s Rule 9(h) admiralty election to create a jury-trial right.
- A district court’s cause-of-loss finding in a bench trial is reviewed for clear error on appeal.
- If an excluded peril (such as corrosion) is found to be the cause of loss, the exclusion bars recovery under the policy.

## Conclusion

The Eleventh Circuit held that the insurer’s Rule 9(h) admiralty designation precluded a jury trial despite the insured’s contract counterclaim and affirmed the bench-trial judgment that corrosion caused the loss and was excluded from coverage.


St. Paul Fire & Marine Ins. Co. v. Lago Canyon, Inc., 561 F.3d 1181 (11th Cir. 2009)