Aerospace Insurance Update: September 2012 -- Insurance Pool’s Managing Agent Has Standing to Seek Declaratory Relief and Recoup Payments


[author: Andrew Houghton]

U.S. Court of Appeals, 11th Circuit

In Global Aerospace, Inc. v. Platinum Jet Management, LLC, No. 11-133802012 WL 2913499 (11th Cir. July 17, 2012), affirming the district court’s entry of a $20 million default judgment in favor of Global Aerospace, Inc., the 11th Circuit Court of Appeals rejected Platinum Jet’s argument that Global lacked standing to sue in its own name without joining the pool of three insurers it represented and because Global itself suffered no monetary loss.

The matter has a protracted history, beginning when Global defended and settled claims arising out of a 2005 crash of an aircraft operated by Platinum Jet.  Subsequently, following a federal grand jury indicting the principals of Platinum Jet for violation of laws regulating the operation and maintenance of its aircraft, Global sued in Florida federal court Platinum Jet for a declaration of no coverage and for breach of contract to recover amounts paid under the policy.  Platinum Jet failed to timely respond to the complaint and the district court entered a default judgment in favor of Global for approximately $20 million in defense and indemnity costs.  Arguing that Global lacked standing, Platinum Jet relied on deposition testimony that the funds used to pay the underlying claims were not Global’s own funds but the funds provided by insurers in the pool managed by Global who were not joined in the suit.  According to Platinum Jet, Global suffered no injury in fact.

In its reasoning, the 11th Circuit addressed Global’s claims for declaratory relief and for monetary relief separately.  The court concluded that Global did have standing to seek declaratory judgment that it owed no obligation under the policy that it issued in its own name to Platinum Jet.  Noting that there was no dispute that Global controlled and directed all actions with respect to Platinum Jet’s insurance claims, Global was entitled to seek a determination that it had no obligation with respect to those claims.

With respect to the breach of contract claim, the court agreed that Global has “representative standing” and therefore could seek monetary damages, on behalf of the pool insurers who did suffer an injury in fact, for Platinum Jet’s breach of the policy.  The court noted that in the Pooling Agreement, the insurers designated Global to act as their agent and authorized Global to issue policies, handle claims, litigate and receive funds.  Global consistently held itself out to Platinum Jet as acting on behalf of the pool insurers.  Finally, Platinum Jet never questioned or objected to Global’s authority as the agent of the pool insurers.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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