974 F. Supp. 2d 64
D.P.R.2013Background
- Catlin and San Juan Towing moved for summary judgment on their respective claims concerning the Perseverence drydock loss.
- SJT purchased the Perseverence for 1,050,000 in 2006, financed by a Banco Popular loan secured by the drydock.
- The drydock was insured from 2006 onward; insurance was placed with Catlin in 2011 by broker Toscani.
- The Perseverence sank in September 2011 at Pier 15, Miramar, leading to insurance disputes over coverage and cause of loss.
- Endorsement 5 to the policy purportedly covers all risks, while Catlin contests whether the policy is all-risk or a named-perils form.
- The court concluded the policy is all-risk, and addressed uberrimae fidei duties, causation, seaworthiness defenses, and related fee/tax/trial issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether uberrimae fidei governs | Catlin contends SJT violated utmost good faith by nondisclosing/misrepresenting risk. | SJT argues uberrimae fidei is not applicable to this maritime contract or Puerto Rico law governs. | Uberrimae fidei is applicable; factual disputes remain, denying summary judgment on this issue. |
| Whether Endorsement 5 creates all-risk or named-perils coverage | Catlin argues language confines to named perils; all others are not covered. | SJT argues Endorsement 5 broadening defeats all-risk interpretation. | Policy is all-risk coverage; Endorsement 5 is not a named-perils clause. |
| Proximate cause of SJT’s loss under all-risk policy | SJT’s evidence shows sinking due to open hoses and ball valves; loss is fortuitous and covered. | Catlin asserts corrosion and drydock condition caused the sinking; fact questions persist. | Material facts about proximate cause remain; summary judgment denied as to causation. |
| Seaworthiness claims (absolute/negative warranties) viability | Catlin asserts seaworthiness warranties breach voids coverage ab initio. | SJT contends seaworthiness claims are applicable; vessel/not a vessel for maritime purposes. | Seaworthiness-based claims dismissed; Perseverence not a vessel under admiralty for these claims. |
| Attorneys’ fees, punitive damages, and jury trial rights | Catlin seeks to strike or limit certain remedies and trial forms. | SJT seeks admiralty-appropriate remedies and jury trial where applicable. | Attorneys’ fees denied; punitive damages available under admiralty law; jury trial denied for counterclaim. |
Key Cases Cited
- AGF Marine Aviation & Transp. v. Richard C. Cassin CIT Group/Sales Fin., Inc., 544 F.3d 255 (3d Cir.2008) (uberrimae fidei in marine insurance context)
- Inlet Fisheries, Inc. v. Certain Underwriters at Lloyd’s, 518 F.3d 645 (9th Cir.2008) (state vs federal choice-of-law in marine insurance)
- Guerrido v. Alcoa S.S. Co., 234 F.2d 349 (1st Cir.1956) (Puerto Rico maritime law application; territorial control)
- Pagan-Sanchez v. Lloyd’s of London, 539 F.3d 19 (1st Cir.2008) (PR Insurance Code preemption and marine insurance scope)
- Labarca v. Underwriters at Lloyd’s, 260 F.3d 3 (1st Cir.2001) (perils of the sea and policy interpretation)
- Lanosa Fruit S.S. & Importing Co. v. Universal Ins. Co., 302 U.S. 556 (1938) (proximate cause and all-risk coverage considerations in maritime policy)
- The Caledonia, 157 U.S. 124 (1895) (seaworthiness warranty implication for voyage insurance)
- Halifax Trawlers, Inc. v. Salinas, 495 F. Supp. 2d 232 (D. Mass.2007) (maritime contract diversity with state law interaction)
- Wisniewski, 579 F. Supp. 2d 1014 (D. Mass.2008) (material misrepresentation and nondisclosure under marine insurance)