United States Court of Appeals
For the First Circuit
No. 00-2142
UNDERWRITERS AT LLOYD’S, AND THE
COX SYNDICATE AT LLOYD’S,
Plaintiff, Appellee,
v.
CARLOS H. LABARCA,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Jaime Pieras, Jr., U.S. Senior District Judge]
Before
Torruella, Circuit Judge,
Campbell and Bownes, Circuit Judges.
Carlos J. Quilichini for appellant.
José F. Sárraga with whom Jorge L. Arroyo were on brief for
appellee.
August 2, 2001
CAMPBELL, Senior Circuit Judge. On June 5, 1999, the
M/V GYPSY sank at her slip in San Juan Bay Marina, San Juan,
Puerto Rico. Defendant Carlos Labarca, the owner of the GYPSY,
filed a claim with the vessel’s insurer, plaintiff Underwriters
at Lloyd’s (“Underwriters”). Underwriters denied coverage under
the marine insurance policy, asserting that the policy
explicitly excluded coverage for two reasons: (1) GYPSY was
unseaworthy and her unseaworthy condition caused her to sink,
and (2) the loss of the vessel was due to repairs, restoration
or remodeling. Underwriters then filed a declaratory judgment
action with the district court for the purpose of deciding the
rights of the parties under the insurance policy. On
Underwriters’ motion for summary judgment, the district court
held that, on the undisputed facts, the vessel was unseaworthy
at the time she sank and that her unseaworthy condition was the
cause of the sinking, thus relieving Underwriters of any
obligation under the insurance policy. Labarca appeals.
I. Factual Background
The relevant facts are undisputed.
Underwriters issued a contract of marine insurance to
Labarca for his boat, GYPSY, for one hundred seventy thousand
dollars. That policy became effective on July 15, 1998 and was
up for renewal on July 15, 1999. Under the policy, Underwriters
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agreed, subject to various terms and conditions, to pay Labarca
for “direct physical loss or damage to the Vessel [resulting]
from any external cause, including direct physical loss or
damage to the Vessel caused by any hidden defect (excluding the
cost of repair or replacement of the defective part) . . . .”
This promise was limited by the following exclusion: “[W]e will
not pay for any damage or loss of the Vessel . . . caused, in
whole or in part by . . . [y]our failure to maintain the Vessel
in a sound and reasonably fit condition; or loss or damage
occurring during or resulting from repairs, restoration or
remodeling.” The policy also contained a warranty on the part
of the insured owner, Labarca,
that the Vessel shall be maintained in a
seaworthy condition at all times. In the
event of a loss or damage affecting the
seaworthiness of the Vessel, the Vessel
shall be restored to a seaworthy condition
as soon as reasonably possible and the
Vessel will not be operated pending
completion of such repair without Our
express written approval.1
Several days before the GYPSY sank at her slip, Labarca
and a mechanic, whom he hired, removed two of the four air-
1 The policy defined the term “warranty” “whereby the
Insured Person undertakes to do or not to do something or to
fulfill some condition . . . . If the Insured Person does not
strictly comply with the terms of a Warranty, cover under this
policy may not exist or cease and any loss that occurs at that
time or thereafter may not be paid.”
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conditioning units from the vessel in order to paint the
vessel’s interior. All four of the vessel’s air-conditioning
units were cooled with raw sea water that was pumped, via a
single Oberdorfer brand Model 104M pump, through four individual
hoses that ran from the ocean into each unit. When two of the
four units were removed, the two hoses that carried sea water to
those two units were left unsealed at the ends that would have
been attached to the units. The other two air-conditioning units
remained installed on-board.
On June 4, 1999, after working aboard the GYPSY,
Labarca returned home but left running the air-conditioning
system aboard the vessel. He did not know that two of the four
hoses connected to the pump that supplied raw sea water to all
four units were left unsealed after the previous day’s work.
The next morning, he was told that overnight the vessel had sunk
at its slip in perfectly calm waters.
Experts for both the plaintiff and the defendant agree
that the boat sank because of sea water intrusion through the
two uncapped hoses, resulting from the fact that the air-
conditioning system was left running when Labarca disembarked
from the GYPSY on the evening of June 4, 1999. This had caused
water to be pumped through all four houses simultaneously, two
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of which cooled the remaining two air-conditioning units and two
of which dumped sea water into the vessel.
Also, one marine surveyor, Doug Wagner, hired to
investigate the sinking of the GYPSY, found a one-inch uncapped
through-hull fitting on the starboard side of the vessel
approximately 2.75 inches above the load waterline. A 1998
marine survey performed on the GYPSY in order to obtain the
marine insurance policy at issue did not mention this uncapped
through-hull fitting.
II. Discussion
When ruling in Underwriters’ favor at summary judgment,
the district court relied on its determination that the GYPSY
was unseaworthy due to the two unsealed air-conditioner hoses.
By this reasoning, Labarca had thus breached his warranty of
seaworthiness thereby losing coverage under the policy for the
damage to the vessel proximately caused by its unseaworthy
condition. We review the district court’s decision on summary
judgment de novo, considering the record in the light most
favorable to Labarca. See Acevedo-Garcia v. Vera-Monroig, 204
F.3d 1, 4 (1st Cir. 2000). We affirm the district court’s
ruling for the reasons that follow.
A warranty of seaworthiness is an absolute duty owed
by a ship owner to its crew and, in this case, to its insurer,
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to provide “a vessel and appurtenances reasonably fit for their
intended use.” Mitchell v. Trawler Racer Inc., 362 U.S. 539,
550 (1960); Carr v. PMS Fishing Corp., 191 F.3d 1, 3 (1st Cir.
1999); Ferrara v. A.V. Fishing Inc., 99 F.3d 449, 453 (1st Cir.
1996). “The duty includes maintaining the ship and her
equipment in . . . proper operating condition, and can be
breached either by transitory or by permanent defects in the
equipment.” Ferrara, 99 F.3d at 453. Even “temporary and
unforeseeable malfunction or failure of a piece of equipment
under proper and expected use is sufficient to
establish . . . unseaworthiness.“ Hubbard v. Faros Fisheries,
Inc., 626 F.2d 196, 199 (1st Cir. 1980). See also Trawler
Racer, 362 U.S. at 549 (“[T]he duty [of seaworthiness] is [no]
less onerous with respect to an unseaworthy condition . . .
which may only be temporary”).
The duty of seaworthiness applies no less to the
quality of the vessel’s equipment and working procedures than to
the integrity of the vessel’s physical structure. For example,
in Michalic v. Cleveland Tankers, Inc., 364 U.S. 325, 331
(1960), the Supreme Court held that the evidence was sufficient
to create a jury question as to whether a wrench with a worn
grip that slipped from a crewman’s hand and damaged his foot was
unfit for its intended use rendering the vessel unseaworthy.
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And in Martinez v. Sea Land Servs. Inc., 763 F.2d 26, 27 (1st
Cir. 1985), this court held that the vessel was unseaworthy when
a crewman was injured after the plastic sleeve covering one of
the boxes of soft drinks he was carrying aboard came loose,
causing him to twist his back. We ruled that “the seaworthiness
warranty of fitness for duty extends to material in which ships’
stores [such as those destined for the crew’s consumption on
board] are wrapped.” See also Usner v. Luckenback Overseas
Corp., 400 U.S. 494, 499 (1971) (“[O]ur cases have held that the
scope of unseaworthiness is by no means . . . limited [to
defective conditions of a physical part of the ship itself.] A
vessel’s condition of unseaworthiness might arise from any
number of circumstances.”); Vargas v. McNamara, 608 F.2d 15, 18
(1st Cir. 1979) (holding that sufficient evidence existed from
which a jury could conclude that the vessel was unseaworthy due
to the unsafe procedure crewman were directed to employ for
cleaning the engine room); Webb v. Dresser Indus., 536 F.2d 603
(5th Cir. 1976) (failure to provide proper foot apparel for ice
and snow conditions to seaman ordered ashore to pick up supplies
is an unseaworthy condition). When, as in this case, it is
undisputed that the vessel’s equipment, such as its air-
conditioning system, was temporarily rendered unfit for its
intended use, and that this unseaworthy condition was the
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proximate cause of the vessel’s sinking, see Ferrara, 99 F.3d at
453, coverage under the marine insurance policy is properly
denied for breach of the warranty of seaworthiness.
Two further points merit comment. First, a finding of
unseaworthiness is not affected by whether the owner was or was
not negligent or at fault. See Trawler Racer, 362 U.S. at 548
(reaffirming that “the duty to provide a seaworthy ship depends
not at all upon the negligence of the ship owner or his
agents”); Ferrara, 99 F.3d at 453 (same). The fact that the
air-conditioning system could have been run safely had Labarca
thought to seal the disconnected hoses does not change the fact
that operating the air conditioning system with the unsealed
hoses created an unseaworthy condition, as the result of which
the GYPSY sank. See Hubbard, 626 F.2d at 200. Second, when a
vessel sinks in calm waters a presumption of unseaworthiness
arises. See Pace v. Ins. Co. of North America, 838 F.2d 572,
577 (1st Cir. 1988). It is for the insured to rebut the
presumption by producing competent evidence from which a
factfinder could determine that the vessel sank for some reason
other than the alleged unseaworthy condition. See Insurance Co.
of North America v. Lanasa Shrimp Co., 726 F.2d 688, 690 (11th
Cir. 1984). Labarca did not provide evidence capable of
rebutting this presumption.
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On appeal, as he did below, Labarca contends that the
sinking of the GYPSY was caused by a latent defect, to wit, the
one-inch uncapped through-hull fitting on the starboard side of
the vessel. He argues that because he had no knowledge of the
uncapped through-hull fitting, and because the marine survey in
1998 did not discover it, it is just the type of latent defect
the policy protects against (“We will pay for . . . direct
physical loss or damage to the Vessel caused by any hidden
defect . . . .”, see note 2 infra). Alternatively, Labarca
argues that the sinking caused by the intrusion of sea water
from the unsealed air-conditioner hoses is a fortuitous act of
the kind covered by a typical “perils of the sea clause” in a
marine insurance policy taking the accident out from under the
seaworthiness warranty. See Pace, 838 F.2d at 576 (“Even
supposing [the defective equipment] was unseaworthy, its
contribution to the sinking would not be dispositive if the jury
found another, covered cause was the predominant efficient cause
of the loss.”).
The district court rejected both of these arguments out
of hand, as do we. For one: the undisputed proximate cause of
the GYPSY’s sinking was not the uncapped through-hull fitting on
the starboard side but the intrusion of sea water pumped from
the ocean into the vessel through the two unsealed air-
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conditioner hoses. There is no evidence whatsoever that the
one-inch through-hull fitting, which was above the waterline,
would have caused the boat to sink on a calm night were it not
for the unsealed air-conditioner hoses.2 And two: the marine
insurance policy under which Labarca insured the GYPSY has no
“perils of the sea” clause on which Labarca relies in
analogizing his act of turning on the vessel’s air-conditioning
system with sailing into a storm or a submerged object. See
Ferrara, 99 F.3d at 454 (stating that “a submerged object
lurking below the surface of apparently navigable waters” is a
peril of the sea). Moreover, even were we to consider the
“external cause” language in the “Perils Insured” paragraph3 to
include the fortuitous acts typically covered by a “perils of
the sea” clause, we could not conclude that turning on a partly
2 We doubt the uncapped through-hull fitting was, in any
case, a latent defect, but need not decide this given the
absence of evidence that the through-hull fitting was the
proximate cause of the sinking.
3 That paragraph, quoted in relevant part supra, states in
full:
PERILS INSURED
Subject to all the terms and provision in this
policy of insurance, We will pay for direct physical
loss or damage to the Vessel [resulting] from any
external cause, including direct physical loss or
damage to the Vessel caused by any hidden defect
(excluding the cost of repair or replacement of the
defective part) minus any applicable deductible shown
on the Declaration page.
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disassembled air-conditioning system aboard a vessel is a “peril
of the sea” against which marine insurance policies protect.
See, e.g., R.T. Jones Lumber Co., Inc. v. Roen Steamship Co.,
270 F.2d 456, 458 (2d Cir. 1959) (stating that “[p]erils of the
sea are understood to mean those perils which are peculiar to
the sea, and which are of an extraordinary nature or arise from
irresistible force or overwhelming power and which cannot be
guarded against by the ordinary exertions of human skill and
prudence”). The sinking of the GYPSY was likely (and not at all
fortuitous) given that sea water was allowed to pour into the
vessel through the disconnected air-conditioner hoses earlier
left unsealed. See, e.g., Commercial Union Ins. Co. of New York
v. Daniels, 343 F. Supp. 674, 677 (S.D. Tex. 1972) (holding that
a sea valve left open causing the boat to sink at its mooring
was not a peril of the sea, as the latter clause “covers only
fortuitous events” rather than events that although unfortunate
are nonetheless “certainties”). See also 2 Thomas Schoenbaum,
Admiralty and Marine Law, § 10-28 (3d ed. 2001) (citing cases
that hold that negligence or fault prevents a vessel owner from
coming within the definition of a peril of the sea such that
“[a] collision or stranding due to negligent navigation” or
“[l]ack of due diligence in providing a seaworthy vessel is
fatal to establishing the defense of peril of the sea”).
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It is true that while the duty of seaworthiness is
implied in every marine insurance policy, see The Caledonia, 157
U.S. 124, 132 (1895), it is not an indefinite warranty and does
not apply at all times. See, e.g., West v. United States, 361
U.S. 118, 122 (1959) (determining that “it would be an unfair
contradiction to say that the owner held the vessel out as
seaworthy” where vessel was turned over to ship repair
contractor for complete overhaul for sole purpose of making her
seaworthy); Roper v. United States, 368 U.S. 20, 21-22 (1961)
(where vessel is not “in navigation” -- i.e., no longer used to
travel the seas -- it carries no warranty of seaworthiness).
Labarca’s marine insurance policy implied as much in the
seaworthiness clause by eliciting the additional promise from
the insured that “[i]n the event of a loss or damage affecting
the seaworthiness of the Vessel, the Vessel shall be restored to
a seaworthy condition as soon as reasonably possible and the
Vessel will not be operated pending completion of such repair
without Our express written approval.” Here, however, the risk
to the vessel caused by removal of the two air-conditioners was
readily capable of being resolved at all times by the simple
expedient of capping the hoses or else refraining from operating
the air-conditioning system until the two units that were
removed had been reconnected. In such circumstances, given the
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ease with which the equipment could safely be temporarily
removed, we think Labarca’s warranty of seaworthiness remained
in effect throughout the occurrence of the events that
proximately caused the sinking of the GYPSY.4
In sum,
[w]hat has been said is not to suggest
that [Labarca] is obligated to furnish an
accident-free ship. The duty is absolute,
but it is a duty only to furnish a vessel
and appurtenances reasonably fit for their
intended use. The standard is not
perfection, but reasonable fitness; not a
ship that will weather every imaginable
peril of the sea, but a vessel reasonably
suitable for her intended service.
Trawler Racer, 362 U.S. at 550. Although the air-conditioning
system aboard the GYPSY need not, therefore, have been perfect,
it was obviously left so as to be both unfit for its intended
use and highly dangerous to the vessel’s continued viability.
The judgment below is affirmed. Costs to appellee.
4
Concluding, as we do, that the district court was correct
in holding that Underwriters had no obligation to Labarca on the
ground that the GYPSY was unseaworthy, we do not reach the
merits of Underwriters’ second stated explanation for declining
coverage under the policy, that being the policy’s exclusion for
“loss or damage occurring during or resulting from repairs,
restoration or remodeling.”
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