Sealink, Inc. v. Frenkel & Co., Inc.

Sealink, Inc. (plaintiff) was a Puerto Rico-based maritime-cargo-carriage business. Sealink owned a cargo vessel known as the M/V Sealink Express. Kristian Meszaros, an industry veteran, was Sealink’s president and chief executive officer. Frenkel & Company, Inc. (defendant) was an insurance broker whom Sealink hired to help Sealink obtain maritime insurance. In connection with this process, Meszaros filled out an application that required Meszaros to acknowledge that (1) the information provided was complete and accurate, (2) underwriters would rely on the information provided, (3) any misrepresentation or omission could result in an immediate policy cancellation and the denial of any claims, and (4) Sealink had a continuing obligation to provide updated information. Meszaros sent the application to Frenkel. Frenkel confirmed that Meszaros signed the application but did not otherwise review it. Frenkel obtained several policies for Sealink, including a hull and machinery (H&M) policy. Frenkel provided Sealink with a copy of the policy but did not include a contract form known as a MAR 91, which called for policy disputes to be litigated in England. In July 2000, the Sealink Express was declared a constructive total loss due to a fire, leading Sealink to file a claim under the H&M policy. In February 2001, Frenkel notified Sealink that the policy underwriter denied Sealink’s claim due to serious misrepresentations and nondisclosures regarding Sealink’s prior bankruptcy applications and other issues. Litigation ensued, which resulted in Sealink’s recovery of $25,000 from the H&M underwriters. In 2004, Sealink sued Frenkel, alleging, among other things, that Frenkel was negligent by failing to obtain proper insurance and properly negotiate Sealink’s claims. Specifically, Sealink alleged that Frenkel should have thoroughly reviewed its insurance application for completeness and correctness rather than just ensuring that Meszaros signed it. Sealink further alleged that Frenkel should have notified Sealink about the MAR 91 form’s forum-selection clause. Frenkel moved for summary judgment, arguing, among other things, that its alleged negligence did not proximately cause Sealink’s injury. The court also considered whether the case arose under its admiralty jurisdiction.