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FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
LA REUNION FRANCAISE SA,
No. 99-55487
Plaintiff-Appellant,
D.C. No.
v. CV-98-07771-CBM
BRAD BARNES,
OPINION
Defendant-Appellee.
Appeal from the United States District Court
for the Central District of California
Consuelo B. Marshall, District Judge, Presiding
Argued and Submitted
December 6, 2000--Pasadena, California
Filed May 3, 2001
Before: Dorothy W. Nelson, Melvin Brunetti, and
Alex Kozinski, Circuit Judges.
Opinion by Judge D.W. Nelson
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COUNSEL
Steven E. Goldman, Goldman & Hellman, New York, New
York, and B. Alexander Moghaddam, Cogswell, Nazakawa &
Chang, Long Beach, California, for appellant La Reunion
Francaise SA.
Alex Hardiman, Haffner & Hardiman, Marina del Rey, Cali-
fornia, for appellee Brad Barnes.
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OPINION
D.W. NELSON, Circuit Judge:
La Reunion Francaise ("La Reunion"), a French insurance
company, appeals a district court order dismissing its declaratory
judgment action for lack of subject matter jurisdiction.
The district court held there was no admiralty jurisdiction
under 28 U.S.C. § 1333 over the disputed marine insurance
policy because La Reunion failed to prove that the insurance
contract was "wholly maritime in nature," or that the nonmaritime
elements of the contract were incidental or severable.
We conclude that the insurance contract is wholly
maritime in nature. Therefore, we reverse and remand for the
district court to exercise its admiralty jurisdiction.
I. FACTUAL AND PROCEDURAL BACKGROUND
On February 10, 1997, La Reunion issued an insurance policy
to Brad Barnes ("Barnes") for his twenty-foot powerboat
valued at $64,000. Barnes renewed the policy for a second
year in February 1998. The policy covered damage to the boat
and insured against liability and theft. In addition, the policy
included two conditions. Use of the boat was limited to the
inland waters of California, and Barnes was required to store
the boat on land for six months out of the year.
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Barnes reported his powerboat as stolen from its dry dock
storage location on May 15, 1998. After he submitted a claim
for its insured value, La Reunion filed this action seeking to
rescind the insurance contract because Barnes failed to disclose
on his application that several of his trucks, automobiles,
and motorcycles had been stolen. Barnes filed a motion
to dismiss under Fed. R. Civ. P. 12(b)(6) which also challenged
the court's subject matter jurisdiction. The district
court dismissed the claim for lack of jurisdiction, and La
Reunion filed this timely appeal.
II. STANDARD OF REVIEW
We review de novo a district court's dismissal for lack of
subject matter jurisdiction. See Brady v. United States, 211
F.3d 499, 502 (9th Cir. 2000), cert. denied, 121 S. Ct. 627
(2000). The district court's findings of fact relevant to its
determination of subject matter jurisdiction are reviewed for
clear error. See United States ex. rel Newsham v. Lockheed
Missiles & Space Co., 190 F.3d 963, 968 (9th Cir. 1999), cert.
denied, 530 U.S. 1203 (2000).
III. DISCUSSION
We must determine whether a federal court has admiralty
jurisdiction over a marine insurance policy that, besides covering
damage to a boat while on the water, requires the policyholder
to store his boat on land for half the year, insures
against theft while on land, and limits navigation of the boat
to inland waters of California.
"A contract is within admiralty jurisdiction if its subject
matter is maritime." Royal Ins. Co. of American v. Pier 39
Ltd., 738 F.2d 1035, 1036 (9th Cir. 1984); Aqua-Marine Constructors,
Inc. v. Banks, 110 F.3d 663, 671 (9th Cir. 1997) ("It
is . . . the subject matter (rather than the place of execution
or place of performance) of a contract which determines the
existence of federal maritime jurisdiction over a contractual
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claim."). There is no clear test for whether the subject matter
of a contract is maritime. Instead, we look to precedent and
reason by analogy. See Kossick v. United Fruit Co., 365 U.S.
731, 735 (1961) ("Precedent and usage are helpful insofar as
they exclude or include certain common types of contract: a
contract to repair or to insure a ship is maritime, but a contract
to build a ship is not." (citations omitted)); Royal Ins. Co.,
738 F.2d at 1036.
We have recognized repeatedly that marine insurance
policies are maritime contracts for purposes of admiralty
jurisdiction. See Simon v. Intercontinental Transp., 882 F.2d
1435, 1441 (9th Cir. 1989) (citing New England Marine Ins.
Co. v. Dunham, 78 U.S. (11 Wall.) 1 (1870)); Royal Ins. Co.,
738 F.2d at 1036; Stanley T. Scott & Co., Inc. v. Makah Dev.
Corp., 496 F.2d 525, 526 (9th Cir. 1974). Even so the label
"marine insurance policy" alone is not enough to guarantee
jurisdiction over a contract dispute. "For an insurance policy
to be within admiralty jurisdiction, the interests insured, and
not simply the risks insured against, must be maritime." Royal
Ins. Co., 738 F.2d at 1036. Thus, a policy covering a beach
house against damage from the sea is not a maritime contract,
but insurance for a vessel is clearly within the scope of admiralty
jurisdiction. See id. at 1036-37.
Barnes contends there is no admiralty jurisdiction over the
policy because its limitation to the "inland waters of California
only" means he is not allowed to use his boat on navigable
waters. This argument clearly fails. Even if admiralty jurisdiction
over marine insurance contracts depended on the navigability
of the waters involved, jurisdiction would be proper in
this case. California's inland waters include the Sacramento
River and the San Joaquin River, see Gray v. Reclamation
Dist. No. 1500, 163 P. 1024, 1027 (Cal. 1917), both of which
are navigable. Nevertheless, the navigability of the waters is
dispositive only in the tort context.1 See Sisson v. Ruby, 497
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1 Our decision in Seven Resorts, Inc. v. Cantlen, 57 F.3d 771, 774 (9th
Cir. 1995), does not collapse the tort and contract inquiries into one navi-
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U.S. 358, 362 (1990) (jurisdiction over tort cases depends on
whether the incident has "a potentially disruptive impact on
maritime commerce"); Victory Carriers, Inc. v. Law, 404 U.S.
202, 205-06 (1971). For historical reasons, cases interpreting
the scope of admiralty jurisdiction in the tort context have
focused on the navigability of the waterways in which the tort
occurred, whereas jurisdiction in contract cases depends on
the subject matter of the contract. See Kossick , 365 U.S. at
735 ("The boundaries of admiralty jurisdiction over contracts
--as opposed to torts or crimes--being conceptual rather than
spatial, have always been difficult to draw."); Simon v. Intercontinental
Transport, 882 F.2d 1435, 1440 (9th Cir. 1989)
("Two distinct tests have evolved for determining the reach of
this jurisdictional grant: a locality test for tort claims and a
subject matter test for contract claims."). Because the underlying
claim in this case is a dispute over an insurance contract,
we look to the subject matter of that contract and evaluate its
maritime character.
Generally, the subject matter of a contract must be
"wholly maritime in nature to be cognizable in admiralty." Id.
at 1442. However, there are two exceptions to this rule. If the
nonmaritime elements of a contract are "merely incidental" to
its primary maritime nature, or if the maritime obligations in
the contract can be severed from the nonmaritime provisions
and adjudicated separately without prejudice to the parties,
then the case can be heard in admiralty. Id. The district court
dismissed La Reunion's claim because it failed to prove the
policy was wholly maritime in nature or that provisions
requiring that the boat be stored on land for half the year and
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gability test. Seven Resorts holds only that the rental contract at issue in
that case was not a maritime contract for purposes of admiralty jurisdiction.
While we said that "admiralty jurisdiction over both tort and contract
issues requires a connection to navigable waters, " id., we did not reject the
subject matter test that our case law and Supreme Court precedent have
consistently applied in determining whether a contract claim falls within
admiralty jurisdiction.
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providing insurance against theft while on land were incidental
or severable. We disagree.2
After reviewing the entire contract, we conclude that the
subject matter of this insurance policy is wholly maritime in
nature. The fact that Barnes is required to store his boat on
land for six months of the year and that the policy provides
coverage for theft on land does not change the policy's essential
character. These provisions are maritime in nature in that
they "relate[ ] to a ship in its use as such, or to commerce or
to navigation on navigable waters, or to transportation by sea,
or to maritime employment." Aqua-Marine, 110 F.3d at 670-
71. As the Second Circuit recognized in finding admiralty
jurisdiction over a similar policy:
There are few objects--perhaps none--more essentially
related to maritime commerce than vessels.
They have no utility on land; they are taken ashore
solely to make or keep them fit for use in the water,
or to transport them from one body of water to
another. Furthermore, taking smaller boats ashore for
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2 We note that the district judge improperly relied on St. Clair v. City of
Chico, 880 F.2d 199, 201 (9th Cir. 1989), for the proposition that
"[p]laintiff bears the burden of establishing, by affidavits or other evidence,
that subject matter jurisdiction does in fact exist." St. Clair held
that a plaintiff bears this burden of production after a defendant challenges
the facts underlying the jurisdictional allegations in a complaint based on
evidence outside the pleadings. See 880 F.2d at 201. Only at that point
does the burden shift to the plaintiff to produce extrinsic evidence. La
Reunion alleged in its complaint that the district court had jurisdiction
under 28 U.S.C. § 1333 over its marine insurance policy. Attached to its
complaint was a copy of that policy. Barnes did not challenge the substance
of these allegations, only their formal sufficiency. As a result, there
was nothing that an affidavit or additional evidence could provide that was
not already in the complaint or the attached exhibits. See St. Clair, 88 F.2d
at 202 ("Where . . . the extra-pleading material demonstrates that the controlling
questions of fact are undisputed, additional discovery would be
useless."). Therefore, the district court should not have imposed a heightened
burden on La Reunion to provide evidence beyond the pleadings.
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these purposes is important or essential to their use
on the water. The risk of theft of boats is an important
concern of maritime commerce.
Sirius Ins. Co. v. Collins, 16 F.3d 34, 36-37 (2d Cir. 1994).
Storing a boat on land and insuring against theft during transport
both concern how to protect the boat for its use on the
water. Moreover, requiring storage for half the year and limiting
use of the boat to inland waters minimizes the risk to the
insurer from damage to the boat "in its use as such." Aqua-
Marine, 110 F.3d at 670.
IV. CONCLUSION
Based on the maritime nature of the insurance policy, we
reverse the order dismissing this case and remand to the district
court to exercise its admiralty jurisdiction over La
Reunion's claim.
REVERSED AND REMANDED.
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