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Underwriters at Lloyd's v. LaBarca

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APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO [Hon. Jaime Pieras, Jr., U.S. Senior District 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

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