[wcarey]

#2 you could read, "[He] tells the sailor's story to the mistresses, because mistresses love stories", which does have a possessive genitive.

[thaumasiotes]

Fair enough. I might have thought more about that if nautae had been one of the options for "which word is genitive?"

[jthnews]

Yes, I think that was the original intention. I changed the option to - Nautae in "Nautae fābulam dominīs nārrat quia dominae fābulās amant." - for the time being, so at least it isnt't flat out wrong while I think of something better.