OPINION AND ORDER
BESOSA, District Judge.
Before the Court are Catlin (Syndicate 2003) at Lloyd's ("Catlin")'s motion for summary judgment, (Docket No. 134), and San Juan Towing & Marine Services, Inc. ("SJT")'s motion for summary judgment, (Docket No. 136). Having considered Catlin's motion and memorandum of law, (Docket No. 135); SJT's opposition, (Docket No. 140); and Catlin's reply, (Docket No. 146); the Court
A. Financial History Relating to SJT and the Dry Dock
On August 27, 2006, SJT — a Puerto Rico corporation in the Ship Repair business based in San Juan, Puerto Rico — purchased a floating drydock called the Perseverence for $1,050,000 from Formel Marine Services. (Docket Nos. 79 at 1; 81 at
During January 2011, SJT continued to advertise the drydock for sale for $1,350,000. (Docket Nos. 134-1 at 4; 139 at 2.) On January 3, 2011, Hendry Corporation offered to purchase the drydock for $700,000, and Mr. Payne, reporting the offer to Banco Popular, stated, "It seems to me that the [$700,000] offer I am attaching is very close to reality." Id. Over the course of that month, SJT and Hendry Corporation bargained over the selling price of the Perseverence. On January 21, 2011, SJT offered to sell the drydock to Hendry for $850,000; Hendry responded to SJT's counteroffer on January 21, 2011 with $775,000, and on January 29, 2011, SJT offered to sell the drydock to Hendry for $800,000. (Docket Nos. 134-1 at 5, 139 at 2-3.) Hendry did not ultimately purchase the Perseverence.
From 2006 to 2011, SJT had insured the drydock with RLI Insurance Company ("RLI"). (Docket No. 134-1 at 5; 139 at 3.) In 2006, SJT had hired the services of Marine Consultants, Inc. to perform a condition and valuation survey of the drydock. (Docket Nos. 139 at 9; 147 at 1.) In that survey, which was dated April 17, 2006, the Perseverence was valued at $1,500,000. Id. After purchasing the drydock on August 27, 2006, SJT modified it so that it could be towed from Louisiana to Puerto Rico. Id. Marine Consultants, Inc. then issued another condition and valuation report on November 21, 2006, in which it valued the drydock at $1,750,000. Id. The increase in value of the drydock from one report to another was due to the value added to the drydock by the modifications made to it. Id. The hull coverage for the drydock placed with RLI began in 2006, with a declared hull value of $1,750,000. Id. Mr. John Kirchhofer was the underwriter in charge of the SJT file with RLI. (Docket Nos. 139 at 10; 147 at 3.) Mr. Kirchhofer handled SJT's account at RLI up until he left RLI to work at Catlin, in January 2011. Id. On February 9, 2011, RLI advised SJT that it was cancelling the insurance mid-term, and on February 14, 2011, RLI issued a Notice of Cancellation/Nonrenewal, which stated the reason as "Loss History." (Docket No. 134-1 at 5; 139 at
Mr. John Toscani was the insurance broker for SJT who placed the marine insurance coverage for SJT with Catlin. (Docket No. 134-1 at Ex. 12, p. 20.) His relationship with SJT began roughly in 2002, and he ceased working with SJT shortly after the Perseverence sank and SJT submitted its insurance claim to Catlin. Id. at pp. 20 & 25. In 2011, Mr. Toscani "placed a package policy consisting of hull, P & I, ship repairs, legal, general liability and contractor's equipment" for SJT with Catlin, and he considered it a marine insurance policy. Id. at pp. 28-20. In placing the SJT account, Mr. Toscani communicated with Mr. John Kirchhofer at Catlin. Id. at p. 30. Mr. Kirchhofer had moved from RLI to Catlin and was working as a marine underwriter in Catlin's marine department. (Docket Nos. 134-1 at 6; 139 at 3.) All communications between Catlin and SJT, prior to the issuance of the insurance policy covering the Perseverence, were made through SJT's broker and were limited to phone and e-mail conversations. (Docket No. 137 at 2; 141 at 2.) On April 12, 2011, Mr. Toscani e-mailed Mr. Kirchhofer regarding insurance coverage for SJT. (Docket No. 134-1 at Ex. 18.) The e-mail advised that the drydock was "currently up for sale" and included a copy of the "SRLL/CGL Hull P & I policy with RLI, which depicted the Perseverence's value at $1,750,000. Id. Mr. Toscani did not provide Catlin with a copy of RLI's notice of cancellation. Id. On April 18, 2011, Mr. Kirchhofer sent Catlin's marine coverage quote via e-mail, and SJT accepted Catlin's quote on April 25, 2011. Id. at Ex. 19; Docket Nos. 134-1 at 9; 139 at 4. The Ocean Marine Insurance Policy No. HLO-3464-0411 ("the Policy") became effective April 29, 2011. (Docket No. 50-1.)
Endorsement 5 to the Policy provided coverage for the Perseverence. (Docket Nos. 50-1 at 54-56; 134-1 at 12; 139 at 8.) Endorsement 5 identifies the perils insured against:
(Docket Nos. 50-1 at 54; 134-1 at 12-13; 139 at 8.)
On May 17, 2011, SJT advised Damco Marine Management, Inc. that the drydock was still for sale for $800,000. (Docket Nos. 134-1 at 10; 139 at 5.) On June 5, 2011, Mr. Richard Ortego — Vice-President and General Manager Repair of Leevac Shipyards, LLC, a Louisiana-based company — traveled to Puerto Rico to look at the drydock. (Docket Nos. 137 at 2; 141 at 5.) Mr. Ortego has experience inspecting, preparing, and using floating drydocks. When he visited Puerto Rico, he inspected the Perseverence. (Docket Nos. 137 at 3;
On September 28, 2011, SJT was ballasting the drydock in its back portion in order to raise its front portion and perform repairs on the front. (Docket Nos. 137 at 7; 141 at 14.) The ballasting process included the use of two 175-cubic-feet water tanks (each holding up to 5 tons of water) and a 6,000- to 7,000-pound concrete block. Id. Before leaving work at noon to attend his son's school function, Mr. Payne gave instructions to SJT's welders. (Docket Nos. 137 at 8; 141 at 15.) Around 3:30 p.m., Mr. Jose Monge, SJT's foreman, also gave instructions to the employees to pick up all of their cables and to make sure they shut off the hose, which was filling up at least one of the water tanks. Id. Late in the evening between September 28 and September 29, 2011, the Perseverence sank while at its berth at Pier 15 in Miramar. (Docket Nos. 134-1 at 11; 139 at 7; 137 at 6; 141 at 13.) Neftali Padilla, a tug captain in the employ of Puerto Rico Towing, was returning to PRT's dock after providing towage services at San Juan Harbor when he saw the drydock sinking at its berth. Id. The drydock's back portion was completely underwater, and its front part was partially underwater. Id. Captain Padilla called Mr. Payne's cell phone to inform Mr. Payne that the drydock was sinking, and approximately 10 minutes later, at midnight, Captain Padilla called Mr. Payne again to inform him that the drydock was completely underwater. Id. Fifteen to twenty minutes later, Mr. Payne arrived at the pier. (Docket Nos. 137 at 8; 141 at 16.) Captain Padilla and Mr. Payne took a look at the sunken drydock together from the pier. (Docket Nos. 137 at 9; 141 at 16.) Captain Padilla noticed that a ball valve on the y-connector at the water main next to the drydock was in the open position. Id. There was a fire hose connected to the portion of the y-connector with the open ball valve, and by looking at the surface of the water, Captain Padilla could see that water was coming out of the fire hose. Id. He called Mr. Payne over to point his observations out to Mr. Payne, and Mr. Payne closed the ball valve to which the fire hose was connected. Id. At that time, anybody with access to the pier had access to the water main valve next to the drydock. (Docket Nos. 137 at 9; 141 at 17.)
At the time of its sinking, the drydock was scheduled to be inspected by a surveyor appointed by Banco Popular, and SJT owed $1,348,178 to Banco Popular on its line of credit secured by the drydock. (Docket Nos. 134-1 at 11-12; 139 at 8.) Divers were sent down by salvors after the drydock sank. Id. On November 3, 2011, the drydock was successfully refloated. (Docket Nos. 137 at 6; 141 at 13.) After being refloated, the drydock spent the last month of 2011's hurricane season — which
II. Summary Judgment Standard
The Court may grant a motion for summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R.Civ.P. 56(a). A fact is "material" if it has the potential to "affect the outcome of the suit under the governing law." Id. A dispute is "genuine" when it "could be resolved in favor of either party." Calero-Cerezo v. U.S. Dep't of Justice, 355 F.3d 6, 19 (1st Cir.2004).
The party moving for summary judgment has the initial burden of "demonstrat[ing] the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The party must demonstrate this absence with definite and competent evidence. See Maldonado-Denis v. Castillo-Rodriguez, 23 F.3d 576, 581 (1st Cir.1994). It must identify "portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any'" which support its motion. Id. (citing Fed.R.Civ.P. 56(c)). Once a properly supported motion has been presented, the burden shifts to the non-moving party "to demonstrate that a trier of fact reasonably could find in [its] favor." Santiago-Ramos v. Centennial P.R. Wireless Corp., 217 F.3d 46, 52 (1st Cir.2000) (internal citation omitted).
If the non-moving party establishes uncertainty as to the "true state of any material fact, the movant's efforts should be deemed unavailing." See Lopez & Medina Corp. v. Marsh USA, Inc., 694 F.Supp.2d 119, 123 (D.P.R.2010) (citing Suarez v. Pueblo Int'l, 229 F.3d 49, 53 (1st Cir.2000)). It is well-settled that "[t]he mere existence of a scintilla of evidence" is insufficient to defeat a properly supported motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). It is therefore necessary that "a party opposing summary judgment must `present definite, competent evidence to rebut the motion.'" Maldonado-Denis v. Castillo-Rodriguez, 23 F.3d 576, 581 (1st Cir.1994) (internal citation omitted). In making this assessment, the Court must take the entire record in the light most favorable to the nonmoving party and draw all reasonable inferences in its favor. Farmers Ins. Exch. v. RNK, Inc., 632 F.3d 777, 779-80 (1st Cir.2011). The Court does not, however, "make credibility determinations or weigh the evidence." Anderson, 477 U.S. at 255, 106 S.Ct. 2505. The Court may safely ignore "conclusory allegations, improbable inferences, acrimonious invective, or rank speculation." Ahern v. Shinseki, 629 F.3d 49, 54 (1st Cir.2010).
The First Circuit Court of Appeals has "repeatedly ... emphasized the importance of local rules similar to Local Rule 56 [of the District of Puerto Rico]." Hernandez v. Philip Morris USA, Inc., 486 F.3d 1, 7 (1st Cir.2007). Rules such as Local Rule 56 "are designed to function as a means of `focusing a district court's attention on what is — and what is not — genuinely controverted.'" Id. (quoting Calvi v. Knox County, 470 F.3d 422, 427 (1st Cir. 2006)). Local Rule 56 imposes guidelines for both the movant and the party opposing summary judgment. A party moving for summary judgment must submit factual assertions in "a separate, short, and concise statement of material facts, set forth in numbered paragraphs." Loc.
III. SJT's Motion for Summary Judgment Against Catlin
On November 8, 2011, Catlin filed a complaint against SJT alleging eight causes of action. (Docket No. 1.) SJT argues that summary judgment is warranted as to each cause of action. The Court addresses each cause of action in turn.
Uberrimae Fidei Claims
In its first cause of action, Catlin alleges that SJT breached its duty of utmost good faith and thus violated the doctrine of uberrimae fidei
1. Does Admiralty or State Law Govern?
Although the Perseverence is not a "vessel" under maritime law, (see Catlin (Syndicate 2003) at Lloyds v. San Juan Towing & Marine Services, Inc., 2013 U.S. Dist. Lexis 52307 (D.P.R.2013) (Besosa, J.) (Catlin I), at Docket No. 112), the Court previously found that admiralty subject matter jurisdiction exists because the Policy at issue is a marine insurance policy. (See Catlin (Syndicate 2003) at Lloyds v. San Juan Towing & Marine Services, Inc., 2013 U.S. Dist. Lexis 69255 (D.P.R. 2013) (Besosa, J.) (Catlin II), at Docket No. 121.) The Court stands by that determination, because "[t]he propriety of maritime jurisdiction over a suit involving a marine insurance policy is unquestionable." Giragosian, 57 F.3d at 54. Whether admiralty law controls over state law in a lawsuit over which the Court enjoys admiralty jurisdiction, however, is a discrete and "enigmatic" question. Albany Ins. Co. v. Wisniewski, 579 F.Supp. 1004, 1013 (D.R.I. 1984) (Selya, J.). In Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310, 313, 75 S.Ct. 368, 99 L.Ed. 337 (1955), "the Supreme Court chartered a course away from explicit application of admiralty law for maritime insurance contracts." St. Paul Fire & Marine Ins. Co. v. Halifax Trawlers, Inc., 495 F.Supp.2d 232, 237 (D.Mass.2007); see Wilburn Boat, 348 U.S. at 313, 75 S.Ct. 368 ("Since the insurance policy here sued on is a maritime contract[,] the Admiralty Clause of the Constitution brings it within federal jurisdiction. But it does not follow, as the courts below seemed to think, that every term in every maritime contract can only be controlled by some federally defined admiralty rule. In the field of maritime contracts ... the National Government has left much regulatory power in the States."). While the rules of admiralty law generally supersede local authority, a "gray area" exists with respect to maritime contracts. Halifax Trawlers, 495 F.Supp.2d at 237. The First Circuit Court of Appeals has held that in a case involving a marine insurance contract, state law will apply unless an established maritime rule controls the disputed issue, and that rule is materially different from state law." Pesante, 459 F.3d at 37 (internal quotation omitted).
a. Does a Well Established Maritime Rule Exist?
Presented twice with the issue, the First Circuit Court of Appeals has yet to
The majority of circuits are in agreement that uberrimae fidei controls in maritime insurance disputes. AGF Marine Aviation & Transp. v. Richard C. Cassin CIT Group/Sales Fin., Inc., 544 F.3d 255, 262-63 (3rd Cir.2008). "In the lion's share of federal cases, where the issue of non-disclosure is raised by an insurer seeking to vitiate a policy of maritime coverage, the traditional rule of uberrimae fidei has been applied." Halifax Trawlers, 495 F.Supp.2d at 238; see also Commercial Union Ins. Co. v. Detyens Shipyard, Inc., 147 F.Supp.2d 413, 423 (D.S.C.2001) ("The majority of courts faced with the application of uberrimae fidei to a marine insurance policy have found that utmost good faith applies."); Certain Underwriters at Lloyd's v. Johnston, 124 F.Supp.2d 763, 769 (D.P.R.1999) (Castellanos, J.) ("A vast host of federal district courts have very recently spoken on this subject and there is near unanimity of agreement that the time-honored doctrine of uberrimae fidei... continues to be[
The only circuit to disavow the doctrine of uberrimae fidei as "not entrenched federal precedent" is the Fifth Circuit Court of Appeals. See Albany Ins. Co. v. Anh Thi Kieu, 927 F.2d 882 (5th Cir.1991). The Fifth Circuit's position, however, has been heavily criticized and "contradicts the general sentiment in scholarly literature."
b. Does The
Uberrimae Fidei Doctrine Materially Differ From Puerto Rico Law?
SJT devotes much of its briefs to arguing that the Puerto Rico Insurance Code applies to the case for the following reasons: (1) the First Circuit Court of Appeals in Guerrido v. Alcoa S.S. Co., 234 F.2d 349, 355 (1st Cir.1956) recognized a congressional grant of power to the Puerto Rico legislature to contravene federal maritime law,
While it is true that the Puerto Rico Federal Relations Act continues to confer to the Commonwealth the ability to enact inconsistent regulations with the rules of admiralty and maritime law, see United States v. Zenon-Encarnacion, 185 F.Supp.2d 127, 130 (D.P.R.2001) (Dominguez, J.) (citing Guerrido, 234 F.2d at 355), the Puerto Rico legislature has declined to do so in the area of maritime insurance contracts. Lloyd's of London v. Pagan-Sanchez, 539 F.3d 19, 25 (1st Cir.2008). Citing thirteen provisions of the Puerto Rico Insurance Code — including Section 1101 — the First Circuit Court of Appeals explicitly acknowledged that "the Puerto Rico legislature has expressed its intent to exclude maritime insurance contracts from its statutory provisions governing the interpretation and construction of insurance contracts." Pagan-Sanchez, 539 F.3d at 25; Cf. Zenon-Encarnacion, 185 F.Supp.2d at 130 ("Since Congress gave the Legislature of Puerto Rico full power to provide compensation for marine workers injured in Puerto Rican waters to the exclusion of the remedies against their employers provided by the American maritime law, Puerto Rico did just that."). The First Circuit Court of Appeals' decision in Pagan-Sanchez thus forecloses SJT's arguments that (1) section 405 brings insurance contracts covering drydocks under
2. Did SJT Violate
Uberrimae Fidei as a Matter of Law?
In its complaint, Catlin alleges that SJT "misrepresented, concealed or omitted material facts it had a duty to disclose when seeking coverage." (Docket No. 1 at 4.) The doctrine of uberrimae fidei implicates two distinct but closely related aspects: non-disclosure and misrepresentation. Schoenbaum, § 19-14 at p. 408. Premised on the belief that the "assured is in the best position to know of any circumstances material to the risk [and] must reveal those facts to the underwriter," Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 13 (2d Cir.1986), "the strict maritime rule of uberrimae fidei [provides that] an insured must make full disclosure of all material facts of which the insured has, or ought to have, knowledge ... even though no inquiry be made." Grande v. St. Paul Fire & Marine Ins. Co., 436 F.3d 277, 283 (1st Cir.2006) (internal quotations and citations omitted). "The obligation to disclose [also] includes the duty not to misrepresent." Wisniewski, 579 F.Supp. at 1014 (internal citation omitted). The duty of utmost good faith thus "places a high burden on the assured." Schoenbaum, § 19-14 at p. 412. When the insured fails to disclose to the insurer all circumstances known to it and unknown to the insurer, which materially affect the risk, the policy is voidable at the option of the innocent party. King v. Aetna Ins. Co., 54 F.2d 253, 254 (2d Cir.1931). The same is true for a material misrepresentation by the insured. Wisniewski, 579 F.Supp. at 1015. It is of no consequence whether the insured's misrepresentation or non-disclosure occurred "due to fraud, negligence, accident, or mistake." Schoenbaum, § 19-14 at p. 412; see also Wisniewski, 579 F.Supp. at 1015 ("If a policy of marine insurance is issued upon false and material representations, the absence of fraud or of an intent to deceive will not save the contract from rescission."); Sun Mut. Ins. Co. v. Ocean Ins. Co., 107 U.S. 485, 510-511, 1 S.Ct. 582, 27 L.Ed. 337 (1883) ("It is the duty of the assured to place the underwriter in the same situation as himself; to give to him the same means and opportunity of judging of the value of the risks; and when any circumstance is withheld, however slight and immaterial it may have seemed to himself, that, if disclosed, would probably have influenced the terms of the insurance, the concealment vitiates the policy.").
An insured's representations about, and/or concealment of, the true value of the object to be insured directly pertains to the subject matter of the risk, and thus "overstating value is one of the most frequent subjects of breach of the duty of good faith." Schoenbaum, § 19-14 at p. 413 n. 44. The over-valuation of an insured object by the insured is a misrepresentation of a material fact that voids the policy, and failure to disclose material information regarding the subject matter of the risk similarly vitiates the policy. See King, 54 F.2d at 255 ("[C]oncealment of an overvaluation so excessive as to make the risk speculative vitiates the policy. The valuation of a vessel at sixteen times what she had just cost the insured likewise makes the risk speculative; the insured has less incentive to protect her than he would had he paid a sum some where [sic]
Due to remaining genuine disputes of material fact, however, the Court cannot at this stage determine whether SJT indeed misrepresented or concealed material information when it applied to insure the Perseverence with Catlin. Both parties admit that SJT put the Perseverence up for sale between 2009 and the time it sank in September, 2011, but they disagree as to (1) the appropriate value of the drydock when Catlin issued the Policy, and (2) whether, when, and to what degree information regarding the Perseverence's value was ever disclosed to Catlin. Although the Perseverence was initially advertised for $1,350,000 in 2009, SJT acknowledged to Banco Popular in January 2011 that a $700,000 offer is "very close to reality." SJT also claims, however, that "the amounts in the advertisements do not reflect what may have been the fair market value of the dry dock, prior to the inception of the policy ... because SJT was not a willing seller." (Docket No. 140 at 9.) Moreover, Catlin specifically asserts that SJT failed to disclose that "at the time SJT requested $1,750,000 in coverage from Catlin, the drydock was being advertised for sale with an asking price of $800,000." (Docket No. 141 at 3.) Yet Mr. Toscani in his April 12, 2011 e-mail to Mr. Kirchhofer explicitly revealed that the drydock was "currently up for sale," albeit without including the advertising price in the e-mail. The e-mail also indicates that Mr. Toscani and Mr. Kirchhofer had spoken on the telephone and had discussed
Furthermore, the parties do not agree on material facts underlying the issue of whether SJT concealed from Catlin material information regarding the Perseverence's risk. Catlin claims that SJT did not disclose that it had offered to sell the drydock for $800,000 in January 2011 or that it considered $700,000 to be the market value for the drydock. Evidence potentially demonstrates, however, that Catlin may have already understood the risks of insuring the Perseverence through Mr. Kirchhofer, who had been the underwriter in charge of the SJT file with a previous insurer, RLI. In his deposition, for example, Mr. Kirchhofer admitted that he did not ask Mr. Toscani about the loss history of the drydock, and that he "had familiarity with the risk." (Docket No. 141-2 at 6-7.) Mr. Toscani's April 12, 2011 e-mail also indicates that Mr. Kirchhofer was aware that the Perseverence was "currently up for sale" just days before Catlin issued the marine insurance policy. The extent of Mr. Kirchhofer's — and thus Catlin's — knowledge about the Perseverence's risk and value implicates the "weighting of evidence," and a trial — as opposed to summary judgment — is thus the proper arena to gauge a witness' credibility. See Reliance Nat'l Ins. Co. (Europe), Ltd. v. Hanover, 246 F.Supp.2d 126, 127 (D.Mass.2003). Furthermore, the question of whether the insured concealed a material circumstance is an issue for the trier of fact. Wisniewski, 579 F.Supp. at 1016 (citing King v. Aetna Ins. Co., 54 F.2d 253, 255 (2d Cir.1931) and 2 J. Arnould, Law of Marine Insurance and Average (10 British Shipping Laws) § 637 (15th ed.1961)). Because the facts as presented are in dispute as to whether or not SJT complied with the uberrimae fidei doctrine's representation and disclosure requirements, SJT's motion for summary judgment on Catlin's first and second causes of action is
B. Catlin's Denial of Insurance Coverage
In its alternative seventh cause of action, Catlin claims that the drydock coverage under the Policy applies only to certain "named perils," and that because the claim SJT submitted was not due to an enumerated peril, SJT's claim is not covered. (Docket No. 1 at 6.) SJT, in contrast, claims that the Policy was an "all risk" policy that covers its loss. A named perils policy provides coverage that is limited to the specific perils insured against, while an all risk policy is insurance in which "all losses attributable to external causes are covered," subject to specific exclusions. N.W. Mut. Life Ins. Co. v. Linard, 498 F.2d 556, 561 (2d Cir.1974); By's Chartering Serv., Inc. v. Interstate Ins. Co., 524 F.2d 1045, 1047 n. 2 (1st Cir.1975). Whether a policy is a named perils policy or an all risk policy is significant to the legal standard used to determine coverage. If a court regards a policy as a "named perils" policy, "then [the] plaintiff has the burden of coming forward with a preponderance of competent evidence that the sinking of the [object] was caused by a covered occurrence." Miller Marine Servs., Inc. v. Travelers Prop. Cas. Ins. Co., 2005 WL 2334385, 2005 A.M.C. 2601 at *4 (1st Cir.2005) (unreported) (citing Linard, 498 F.2d at 561). On the
1. All Risk Policy v. Named Perils Policy
Endorsement 5 outlines the coverage for the Perseverence:
(Docket No. 134-2 at 67.) The parties take issue with the meaning of the second half of the coverage provision. SJT claims that the phrases "causes of whatsoever nature arising on shore or otherwise" and "all other [p]erils, [l]osses, and [m]isfortunes" reflect an all risk policy. (Docket No. 138 at 17.) Catlin disagrees, arguing that the phrase "all other [p]erils, [l]osses, and [m]isfortunes" must not be read to render the entire [p]erils clause superfluous, and that pursuant to the doctrine of ejusdem generis, the Policy covers only the enumerated "perils of the sea" and "similar perils." (Docket No. 135 at 25-26 ("To ignore the lengthy description of covered [p]erils articulated in the clause would effectively render the entire clause a `literary embellishment.'") (citing Feinberg v. Ins. Co. of N. Am., 260 F.2d 523, 527 (1st Cir.1958))). Fatalistically, Catlin does not justify how "other causes of whatsoever nature arising either on shore or otherwise" supports its conclusion that the Policy is a named perils policy.
The Court finds that the Policy covering the Perseverence constitutes an all risk policy, not a named perils policy. Two cases that interpret nearly identical coverage provisions
The legal authority upon which Catlin relies is consistent with that holding. Many of the cases and treatises address the historical nature of the "all other [p]erils" language typically included in marine insurance policies and also point out the English courts' conclusion that "all other [p]erils" is ejusdem generis, "intended to incorporate only perils of the same nature" and indicative of a named perils policy. (See sources cited in Docket No. at 22-28.) While those cases provide consistent legal precedent, they are inapposite to this case for failing to shed light on the impact of the dual coverage provisions "other causes of whatsoever nature arising either on shore or otherwise" and "all other perils, losses, and misfortunes."
The Court agrees with SJT that the wording included in Endorsement 5 "reflects Catlin's intent to offer all risk coverage as opposed to coverage for named perils and perils similar to those listed in the clause." (Docket No. 138 at 17.) It also agrees with Catlin's contention that "if `all risk' coverage was intended, it would have been much simpler and easier to say `all risk'" instead of including language that resembles typical named perils coverage. (Docket No. 135 at 28.) Catlin may have intended for Endorsement 5 to be "based on a traditional form consistently construed for over a century" as a named perils policy, (Docket No. 142 at 20), but ultimately, the effect of the "causes of whatsoever nature arising either on shore or otherwise" and "all other perils, losses and misfortunes" language indicates an intent to provide more than mere named perils coverage.
2. Proximate Cause of SJT's Loss
Under an all risk policy, the insured must show that the loss or damage suffered was fortuitous. Dow Chem. Co. v. Royal Indem. Co., 635 F.2d 379, 386 (5th Cir.1981) ("[A]n all risk policy will be allowed for all fortuitous losses not resulting from misconduct or fraud...."); Linard, 498 F.2d at 561 n. 5 ("Even an `all risks' policy is subject to the proposition that the damage must have been due to some fortuitous circumstance or casualty.") (internal citations omitted); Texas E. Transmission v. Marine Office-Appleton & Cox Corp., 579 F.2d 561, 564 (10th Cir.1978) ("[R]ecovery under [an all risks] policy will generally be allowed, at least for all losses of a fortuitous nature, in the absence of fraud or other intentional misconduct of the insured.... No case has been found denying the above proposition...."). Accordingly, SJT bears the initial burden of establishing that a loss occurred to the Perseverence and that it was due to some fortuitous event or circumstance.
The Court finds that genuine issues of material fact remain as to the proximate cause of SJT's loss. SJT has submitted an explanation of how the sinking of the Perseverence occurred: that "somebody left the fire hose and the manholes at the drydock's deck open, even
The evidence here "tend[s] to support conflicting inferences" of why the Perseverence sank. See Mandel v. Boston Phoenix, Inc., 456 F.3d 198, 207 (1st Cir.2006). The testimony of Captain Padilla and Mr. Payne supports the inference that the drydock sank due to the running water from the fire hose and open manholes on the drydock's deck. Testimony from Catlin's expert that wasted bulkheads throughout the drydock allowed water ingress and progressive flooding, however, also supports a conclusion that the drydock sank as a result of its poor condition. Because the determination about the proximate cause of SJT's loss can go both ways, the Court declines to resolve the issue at this time. See Montfort-Rodriguez, 504 F.3d at 228; Montfort-Rodriguez v. Rey-Hernandez, 504 F.3d 221, 229 (1st Cir.2007) ("Summary judgment cannot be predicated on so vacillatory a record.") (citation and internal quotations omitted). Accordingly, it is remains unclear whether SJT's damage occurred due to some fortuitous circumstance or casualty that is covered under the all risk policy, and summary judgment is
C. Catlin's Third, Fourth, Fifth, and Eighth Causes of Action
SJT argues that Catlin's alternative third,
Seaworthiness, as discussed above, applies only to vessels. See In re McAllister Towing of Virginia, Inc., 2000 A.M.C. 2164, 2168 (E.D.Va.2000); Detyens Shipyard, 147 F.Supp.2d at 421-22. Because there are no warranties of seaworthiness on a non-vessel, and the Court previously held that the Perseverence is not a vessel pursuant to federal admiralty law, (Docket No. 112 at 28), the Court
Catlin's alternative fifth cause of action is that SJT failed to comply with a "Condition of Coverage" under the Policy — to "provide routine and necessary maintenance to the Drydock." (Docket No. 1 at 5.) To the extent that this cause of action relies upon the seaworthiness clauses of the Policy, (Docket No. 50-1 at 7), this claim is also
D. SJT'S Claims for Attorneys' Fees, Punitive Damages, and Demand for a Jury Trial
1. Attorneys' Fees
The "American system" generally requires each party to pay its own attorneys' fees unless a statute or contract permits recovery. Mullane v. Chambers, 333 F.3d 322, 337-38 (1st Cir.2003). Puerto Rico law grants attorneys' fees in certain circumstances, and, pursuant to such law, the First Circuit Court of Appeals allows attorneys' fees in diversity cases, where appropriate. Templeman v. Chris Craft Corp., 770 F.2d 245, 250 (1st Cir. 1985) (citing Pan Am. World Airways, Inc. v. Ramos, 357 F.2d 341, 342 (1st Cir. 1966)). In admiralty cases, however — even when the Court could hear the case through diversity jurisdiction — the Court does not apply Puerto Rico law regarding attorneys' fees; rather the Court applies admiralty law. Id.; see also Clarendon Am. Ins. Co. v. Fernandez Rodriguez, 1999 A.M.C. 2885 (D.P.R.1999) (stating "[a]lthough attorneys' fees are awarded in admiralty cases for disputes which are normally not the subject of admiralty, the case at bar [sic] does not hinge on an aspect which remains unaddressed by maritime law, but rather on an allegation of a breach of a maritime insurance contract."). "Under admiralty law, a court has inherent power `to assess attorneys' fees when a party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons.'" Id. (quoting Gradmann & Holler GMBH v. Cont'l Lines, S.A., 679 F.2d 272, 274 (1st Cir.1982) (internal quotations omitted)).
In its opposition for summary judgment, SJT contends that attorneys' fees are recognized by the current state of Puerto Rico law. (Docket No. 140 at 12-13.) This case, however, is an allegation of a breach of a maritime insurance contract, and, accordingly, the Court applies admiralty law in deciding whether an award of attorneys' fees would be appropriate. The Court does not find that either party has acted "in bad faith, vexatiously, wantonly, or for oppressive reasons." Accordingly, Catlin's motion to strike SJT's demand for attorneys' fees is
2. Punitive Damages
Catlin demands that the Court strike SJT's request for punitive damages because Puerto Rico law governs whether punitive damages are available in a maritime insurance action, and punitive damages do not exist under Puerto Rico law. (Docket 135 at p. 22.) SJT failed to respond to Catlin's motion to strike punitive damages.
Because admiralty law controls the Policy at issue and punitive damages are available under admiralty law, the Court finds that punitive damages cannot be barred as a remedy in this case. Accordingly, Catlin's motion to strike SJT's demand for punitive damages is
3. Jury Trial
When a plaintiff identifies his or her claim as an admiralty or maritime claim, the plaintiff does not have a right to a trial by jury. Matter of Armatur, S.A., 710 F.Supp. 404, 406 (D.P.R.1989); Fed. R.Civ.P. 38(e). When a defendant brings a counterclaim to a plaintiff's admiralty claim, and it is so intertwined with the main action that the resolution of both claims hinges on the same factual determinations, the defendant's counterclaim cannot be heard by a jury. Clarendon Am. Ins. Co., 1999 A.M.C. at 2885 (citing Harrison v. Flota Mercante Grancolombiana, S.A., 1979 A.M.C. 824, 848-49, 577 F.2d 968 (5th Cir.1978)); see also Royal Ins. Co. of Am. v. Hansen, 125 F.R.D. 5, 9 (D.Mass.1988) (quoting Ins. Co. of N.A. v. Virgilio, 574 F.Supp. 48, 51 (S.D.Cal.1983)) (holding that a defendant's counterclaim — that is based on the breach of the same maritime insurance contract as the main claim — cannot be granted a jury trial because the resolution of the defendant's claim would dispose of all or part of the plaintiff's action. "The net result would be to resolve the case in a jury trial despite the plaintiff's 9(h) election.").
As in Clarendon and Royal Ins. Co. of Am., SJT's counterclaim stems from the same marine insurance contract as the main claim. The resolution of the counterclaim and the main claim thus hinges on determining the same facts. Granting SJT's request for a jury trial would, therefore, dispose of all or part of Catlin's action by jury despite Catlin's 9(h) election. Accordingly, SJT's counterclaim cannot be heard in a trial by jury, and Catlin's motion to strike SJT's demand for trial by jury is
For the reasons discussed above, the Court
First, and as mentioned above, Catlin's complaint did include two uberrimae fidei causes of action due to SJT's alleged concealment, omissions, and misrepresentation of material facts. (Docket No. 1 at 4-5.) Catlin's responses to SJT's First Set of Interrogatories — which requested that Catlin "[e]xplain the basis for each contention by which [Catlin] claim[s] there is no coverage under the Policy for the Claim ..." — were sufficient to inform SJT of Catlin's theory for those claims; on April 3, 2012, Catlin specifically identified "the value of the drydock" as a fact "material to the risk insured" that SJT failed to disclose when seeking coverage of the Perseverence. (Docket No. 147-1 at 6.) Second, uberrimae fidei does not require a showing of fraud, and thus SJT's argument that Catlin's pleading is insufficient pursuant to Rule 9(b) is misplaced. See A/S Ivarans Rederei v. P.R. Ports Auth., 617 F.2d 903, 905 (1st Cir.1980) ("Whether the nondisclosure of a known fact material to a marine risk was intended or not is beside the point; such nondisclosure voids the policy."); 37 Am.Jur.2d Fraud and Deceit § 9 (2010) ("Breach of fiduciary duty or contract uberrimae fidei is usually called `constructive fraud,' whereas the term `legal fraud' is generally used to characterize a misrepresentation made with knowledge of its falsity.").
234 F.2d at 355; Docket No. 138 at 5.
Misrepresentations, omissions, concealment of acts, and incorrect statements shall not prevent a recovery under the policy unless:
When the applicant incurs in any of the actions enumerated in subsections (1), (2) and (3) of this section, the recovery shall only be prevented if such actions or omissions contributed to the loss that gave rise to the action.
Even if the Court was persuaded by Catlin's argument that the Policy's "all other perils" language was designed to mirror a named perils policy, however, it would regard the inclusion of the "other causes of whatsoever nature arising either on shore or otherwise" language as rendering the Policy coverage ambiguous. Accordingly, it would construe the Policy in favor of the insured, SJT. See Littlefield v. Acadia Ins. Co., 392 F.3d 1, 8 (1st Cir.2004) ("If an insurance policy provision is susceptible to more than one reasonable interpretation, and an interpretation provides coverage, the policy contains an ambiguity and will be construed against the insurer.") (internal citation omitted). Ambiguities in a contract should be construed against the party who drafted it. Gonzalez v. Coop. Seguros de Vida de P.R., 117 D.P.R. 659 (1986) (citing Laws P.R. Ann. tit 31 § 3478 and holding that ambiguities in a contract should be construed against the drafting party).