CA1: is it a warranty provision and is it breached? (and a Bottomry book)

ING Insurance SA v. Pagan-Sanchez, No. 07-1709 (8/21/08). A guy gets his boat insured.  He doesn’t seem to take care of it too well, and they don’t put fire extinguishers where they should.  It gets wrecked.  His insurers seek a declaratory judgment saying that they don’t have to pay. 

The dispute resolves around the language of the contract and the provisions of the contract dealing with maintenance and fire extinguishers are “warranty” provisions, the breach of which by the insured party is a breach of the contract.  The First says that they are.  The first says that the “prevailing view” is that performance under a maritime insurance contract is excused if the insured parties breach the warranty. The First admits that there is no Puerto Rican law on the subject. 

Strangely, the First condemns counsel for the insurers for talking too much about New York law.  But what really seems to be going on is that counsel for the insurers, during the litigation consented to the substantive law of Puerto Rico, even though the language of the contract includes a provision naming New York as the “choice of law.”  So, the First says, “We are not certain that counsel, as a matter of litigation strategy, may vary the express terms of a choice of law clause.”  So, we know that is an open issue in the First.

If you have enjoyed reading about this case (as an ethical and detail-oriented lawyer would), you may enjoy James Allan Park, A System of the Law of Marine Insurances: With Three Chapters on Bottomry, on Insurances on Lives, and on Insurances Against Fire, available on Google Books here.