Florida LLC Facing Lawsuit from Insurers Following Partial Sinking of M/V Neptunis Near Palm Beach Inlet
A group of maritime insurers, including Accelerant Specialty Insurance Company and Hadron Specialty Insurance Company, has filed a federal lawsuit in the Southern District of Florida against Shellback Aquatics LLC. The legal action, filed under Case No. 0:26-cv-60413-EA, seeks a declaratory judgment to void a marine insurance policy following the partial sinking of the 28-foot vessel M/V Neptunis. The plaintiffs contend that the Florida-based company breached several critical warranties and failed to disclose material facts that would have impacted the underwriting of the policy.
Maritime Insurers Seek to Void Coverage After Partial Sinking of Vessel Due to Alleged Poor Maintenance
The dispute stems from an incident on September 18, 2025, when the M/V Neptunis experienced a partial sinking in the waters near the Palm Beach Inlet in Riviera Beach, Florida. Following the event, Shellback Aquatics LLC submitted a claim under its marine insurance policy, which provided 100,000 dollars in hull coverage. However, a post-loss investigation conducted by marine surveyors allegedly revealed that the vessel was in a state of disrepair. The insurance companies assert that the sinking was not caused by an accidental external event, such as a collision or grounding, but rather by water ingress through degraded wood and a broken hatch gasket. They further allege that the vessel’s automatic bilge pump was inoperable and the high-water alarm had been disconnected, rendering the boat unseaworthy at the time of the voyage.
Lawsuit Alleges Shellback Aquatics LLC Breached Survey Compliance Warranty and Hidden Vessel Deficiencies
A central focus of the complaint involves a pre-purchase survey conducted in February 2025 which identified several necessary repairs. The plaintiffs allege that Anthony Russo, acting on behalf of Shellback, signed letters of compliance warranting that all findings had been addressed. Nevertheless, a side-by-side comparison between the pre-purchase survey and the post-loss inspection allegedly showed that multiple deficiencies remained unrepaired. These outstanding issues reportedly included degraded wood that was never replaced, broken stanchions, unrepaired cracked welds, and unsecured batteries. The insurers argue that the failure to complete these specific repairs constitutes a breach of the policy’s express survey compliance warranty, which should void the insurance agreement from its inception.
Criminal History Non-Disclosure and Unauthorized Liability Waivers Cited in Federal Maritime Complaint
The litigation also highlights alleged misrepresentations regarding the vessel’s named operator, Captain Lucas Smith. The insurers claim their investigation discovered that Captain Smith had a history of criminal charges and convictions, including possession of marijuana, burglary, and theft, dating back to 1999 and 2000. These records were reportedly not disclosed on the insurance application signed in February 2025. Additionally, the plaintiffs allege that Shellback breached a liability waiver warranty by using its own version of a release form for charter guests instead of the specific Concept Special Risks Limited release required by the policy terms. The insurers maintain that under the doctrine of uberrimae fidei, or utmost good faith, they would not have issued the policy under the same terms had these facts been known.
Plaintiffs Argue No Coverage Exists for Engine and Mechanical Damage Without Accidental External Event
In addition to the warranty breaches, the insurance companies are invoking a specific policy exclusion regarding mechanical and electrical parts. The policy generally excludes damage to engines and electrical systems unless the damage is the direct result of an accidental external event like fire, lightning, or impact with a floating object. Because the insurers believe the sinking was caused by wear and tear, lack of maintenance, and gradual deterioration of the hull and hatch components, they are asking the court to declare that no coverage exists for the significant mechanical damage sustained during the partial sinking. The complaint characterizes the root cause of the loss as a failure of the insured to maintain the vessel in a seaworthy condition.
Contact a Marine Insurance Litigation Lawyer if Your Vessel Claim Has Been Denied or Challenged
Boat owners and maritime companies facing insurance coverage disputes or claim denials should understand that marine insurance contracts are governed by unique and often strict legal doctrines. Insurance providers frequently investigate maintenance records, survey compliance, and the accuracy of initial applications to identify potential breaches of warranty that could void a policy. If you are involved in a maritime insurance dispute involving allegations of unseaworthiness or non-disclosure, it is essential to seek legal guidance. Our team of experienced maritime attorneys is available to help you navigate the complexities of federal admiralty law and protect your interests in court.
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Disclaimer: Our firm does not represent the plaintiff in this case and is not involved in the litigation. The information provided is a summary of allegations based on publicly available court filings. We make no representations about the truth of these allegations, are not commenting on the merits of the case, and are not predicting any outcome.
