          United States Court of Appeals
                        For the First Circuit

No. 13-2491


                 CATLIN (SYNDICATE 2003) AT LLOYD'S,

                         Plaintiff, Appellee,

                                  v.

              SAN JUAN TOWING AND MARINE SERVICES, INC.,

                        Defendant, Appellant.


          APPEAL FROM THE UNITED STATES DISTRICT COURT
                 FOR THE DISTRICT OF PUERTO RICO

         [Hon. Francisco A. Besosa, U.S. District Judge]


                                Before

                  Torruella, Thompson, and Kayatta,
                           Circuit Judges.



     Manuel Sosa-Báez, with whom Ian P. Carvajal and Saldaña,
Carvajal & Vélez-Rivé, P.S.C., were on brief, for appellant.
     James W. Carbin, with whom P. Ryan McElduff and Duane Morris
LLP, were on brief, for appellee.




                           February 6, 2015
          TORRUELLA, Circuit Judge.     This is an appeal from a

decision of the United States District Court for the District of

Puerto Rico sitting in admiralty.    The trial involved a maritime

insurance policy issued by Appellee Catlin (Syndicate 2003) at

Lloyd's ("Catlin"), to cover the floating drydock1 PERSEVERANCE

owned by Appellant San Juan Towing and Marine Services ("SJT"), a

ship repair company based in San Juan, Puerto Rico.   At trial, the

district court concluded that the insurance policy was void ab

initio by reason of SJT's violation of the doctrine of uberrimae

fidei in its application for the policy.2    See Catlin (Syndicate


1
    A "floating drydock" is a floating structure that can be
partially submerged to a predetermined depth by flooding its
ballast tanks. After a ship to be repaired is docked into position
on the partially submerged structure, the structure, with the ship
aboard, is refloated by pumping the water out of the ballast tanks
until the pontoon deck is clear of water, and then the repairs can
be performed on the ship. This is distinguishable from what is
commonly referred to as a graving drydock, which is a permanently
fixed, land-based basin with entrance enclosures constructed at or
near the water's edge, into which, when the basin is filled with
water, a ship enters. After the entrance enclosures are closed,
the basin is pumped dry of water, exposing the underwater portions
of the vessel's hull to be repaired or worked on. See O'Leary v.
Puget Sound Bridge & Dry Dock Co., 349 F.2d 571, 573 (9th Cir.
1965)(quoting the Department of the Navy, Bureau of Yards and
Docks); see also JML Trading Corp. v. Marine Salvage Corp., 501 F.
Supp. 323, 325 n.2 (E.D.N.Y. 1980); Md. Cas. Co. v. Lawson, 101
F.2d 732, 733 (5th Cir. 1939) ("A floating dock receives a vessel
when the dock is submerged, after which the watertight compartments
of the dock are pumped out and the buoyancy of the dock raises the
vessel.")
2
   Uberrimae fidei means roughly "utmost good faith." See Black's
Law Dictionary 1754 (10th ed. 2014); see also Grande v. St. Paul
Fire & Marine Ins. Co., 436 F.3d 277, 282 (1st Cir. 2006). Under
this doctrine, the insured in a maritime insurance contract is
required "to disclose to the insurer all known circumstances that

                               -2-
2003) at Lloyd's v. San Juan Towing & Marine Servs., Inc., 979 F.

Supp. 2d 181, 186 (D.P.R. 2013) ("Catlin IV").               The district court

erred in deeming the contract void ab initio; rather, we find that

it    was   voidable.      We    therefore      affirm,   albeit    with   a   minor

modification       of    the    lower    court's   holding    to    reflect     this

correction.

                                  I.     Background

A.    Factual History

               In 2006, SJT retained the services of Marine Consultants,

Inc. ("Marine Consultants") to perform a condition and valuation

survey of the floating drydock PERSEVERANCE. In that survey, which

was    dated     April    17,    2006,    the   PERSEVERANCE       was   valued   at

$1,500,000.       Thereafter, on August 27, 2006, SJT purchased the

PERSEVERANCE for $1,050,000.             Subsequently, SJT made improvements

to the floating drydock, modifying it so that it could be towed

from Louisiana to Puerto Rico.               Marine Consultants then issued

another condition and valuation report on November 21, 2006, in

which it valued the floating drydock at $1,750,000.                  This $250,000

increase in value from the first report to the second was the

result of the value added to the floating drydock due to the


materially affect the insurer's risk, the default of which . . .
renders the insurance contract voidable by the insurer." Windsor
Mount Joy Mut. Ins. Co. v. Giragosian, 57 F.3d 50, 54-55 (1st Cir.
1995); accord Black's Law Dictionary (10th ed. 2014) 808 (defining
utmost good faith as "[t]he state of mind of a party to a contract
who will freely and candidly disclose any information that might
influence the other party's decision to enter into the contract").

                                          -3-
improvements and modifications that allowed the PERSEVERANCE to be

towed to Puerto Rico.

           By 2009, and as late as 2011, due to declining business

and increasing financial distress, SJT was actively trying to sell

the PERSEVERANCE.      SJT had initially advertised the sale price in

2009 as $1,350,000.     In February 2010, SJT advertised the floating

drydock   for   sale   in    Boats    &    Harbors   --   a     marine   industry

publication -- for $1,350,000.         During January 2011, SJT continued

to advertise the PERSEVERANCE for sale at $1,350,000.                On January

3, 2011, a potential buyer offered to purchase the floating drydock

for $700,000. As negotiations progressed throughout the month, SJT

lowered   the   PERSEVERANCE's       purchase     price    to    $850,000,   and

eventually, on January 29, 2011, to $800,000. That potential buyer

ultimately did not consummate the purchase.

           In April 2011, SJT again advertised the PERSEVERANCE for

sale in Boats & Harbors.      This time the asking price was $800,000.

Five months later, on September 4, 2011, SJT agreed to sell the

PERSEVERANCE to Leevac Shipyards ("Leevac"), a Louisiana-based

company, and on September 19, 2011, SJT signed a purchase-and-sale

agreement in which it accepted Leevac's offer to purchase the

floating drydock for $700,000.            The deal later fell through.

           Between August 2006 and February 2011, SJT insured the

PERSEVERANCE    with   the   RLI     Insurance   Company      ("RLI"),    with   a

declared hull value of the PERSEVERANCE under this policy of


                                       -4-
$1,750,000, presumably based on the second Marine Consultants

condition and valuation report dated on November 21, 2006.                 In

February   2011,    RLI   cancelled   the     drydock's    insurance   policy,

cryptically stating "Loss History"3 as the reason for said action.

           Thereafter, at SJT's request, SJT's insurance broker,

John Toscani ("Toscani"), who was located in New York, approached

Catlin   seeking,    through   Lloyd's,       a   marine   insurance    policy

"consisting of hull, [protection and indemnity], ship repairs,

general liability and contractor's equipment" (emphasis added).

SJT's broker represented that the PERSEVERANCE's prior insurance

coverage was for $1,750,000, but did not provide Catlin with a copy

of RLI's notice of cancellation.            The parties agree that SJT did

not provide additional representations suggesting that this was the

actual value of the PERSEVERANCE, and Catlin's representative, Mr.

Kirchhofer, testified that he did not ask for more information on

the floating drydock's value or condition, but rather assumed that

the value was in line with that number. Most importantly, SJT also

did not disclose information regarding substantial, preexisting

damage to the PERSEVERANCE's hull, which had been evident since at

least April 2010.




3
   A loss history reflects the decline in value of an asset due to
some kind of adverse event (e.g., vandalism or a natural disaster).
Loss histories are often included in loss history reports or
similar documentation, allowing insurers to verify the condition of
the property more efficiently.

                                      -5-
            Thereafter,   the   Catlin   policy   --   the   Ocean   Marine

Insurance Policy (the "Policy") -- became effective in April 2011,

with a total insurable value of $1,840,000.        The Policy, however,

contained an endorsement that modified its terms to list the

insured value at $1,750,000, the same stated amount in the previous

RLI policy.    Additionally, the total limit of liability for each

loss occurrence was set at $1,000,000.

            On September 28, 2011, the PERSEVERANCE was berthed at

Pier 15, in San Juan, Puerto Rico.       At the direction of Mark Payne

("Payne"), one of SJT's principals, the floating drydock was

ballasted4 for the purpose of performing maintenance on parts of

the hull.   Payne instructed the repairmen to add ballast water to

the floating drydock's stern compartments to allow access to the

forward sections to be repaired.            Thereafter, Payne left the

PERSEVERANCE'S    berthing      area   on   personal    business.        At

approximately 3:30 p.m., before he left for the day, SJT foreman

José Monge gave instructions to the repairmen to pick up and shut

off the water hose that was still filling at least one of the

floating drydock's ballast tanks.

            Late that evening, SJT tug Captain Padilla ("Padilla")

returned to Pier 15 after a towing assignment and found the


4
   See supra note 1. The act of ballasting involves pumping water
into the floating drydock's "ballast tanks," which are empty when
the boat is fully afloat and thus keep the drydock buoyant.
Pumping water into the tanks reduces the buoyancy of the drydock,
causing it to ride lower in the water.

                                   -6-
PERSEVERANCE with its aft section completely underwater and its

forward part awash.    Padilla proceeded to call Payne on his cell

phone to inform him of the dire situation the PERSEVERANCE was in,

but ten minutes later, at about midnight, called him again to

inform him of the total sinking of the PERSEVERANCE. Payne arrived

shortly thereafter and, together with Padilla, observed that a fire

hose connected to a water main on the dock was still pumping water

into the sunken drydock, with the valve on shore still in an open

position. Payne proceeded to shut the valve, which was easily seen

and accessible to anyone who wished to turn off the flow of water.

          Refloating   the   PERSEVERANCE    turned   out   to   be   a

challenging process, taking nearly one month to complete.        After

being refloated, the PERSEVERANCE was inspected and the damage

assessed by expert marine surveyors.        The surveyors found the

underside of the floating drydock to be substantially rusted and

decayed, the existence of which SJT had known about but failed to

disclose to Catlin when it sought coverage under the Policy.      This

damage explained why refloating the PERSEVERANCE –- a drydock that

was designed specifically to be able to submerge and refloat using

its ballast tanks -- had been so difficult.     During the month of

December 2012, the drydock was sold for scrap for $40,000.00.

          SJT proceeded to file a claim with Catlin, alleging the

total loss of the PERSEVERANCE, in the amount of $1,750,000.

Catlin denied this claim, relying on the discrepancy between the


                                -7-
amount    the   PERSEVERANCE    was    insured   for    according   to    the

Endorsement ($1,750,000) and its actual market value (approximately

$700,000 to $800,000), as evidenced by the sale price advertised to

potential buyers around the time when SJT sought the quote for the

Policy.

B.   Procedural History

           To afford a better understanding of the final resolution

of this appeal, we deem it appropriate to include a résumé of the

procedural history of this case before the district court.                 On

November 8, 2011, Catlin filed a declaratory judgement complaint

against SJT, invoking both admiralty (28 U.S.C. § 1333) and

diversity (28 U.S.C. § 1332) jurisdiction.             Catlin alleged eight

admiralty or maritime claims and sought to void the Policy pursuant

to the doctrine of uberrimae fidei.         In turn, SJT filed a separate

diversity suit against Catlin, demanding recovery for the full

insured value of $1,750,000 under the Policy for the loss of the

PERSEVERANCE.       Catlin     counterclaimed     and     the   cases    were

consolidated.

           1.   Catlin I

           On April 8, 2013, the district court granted SJT's motion

for partial summary judgment and dismissed without prejudice the

claim brought by Catlin, concluding that under the recently decided

case of Lozman v. City of Riviera Beach, 133 S. Ct. 735 (2013), the

court lacked admiralty jurisdiction over this controversy because


                                      -8-
the PERSEVERANCE was not a "vessel."5     See Catlin (Syndicate 2003)

at Lloyd's v. San Juan Towing & Marine Servs, Inc., Civil Nos. 11-

2093 (FAB); 11-2116 (FAB), 2013 U.S. Dist. LEXIS 52307, at *37-38

(D.P.R. Apr. 8, 2013) ("Catlin I").      This ruling was based on the

court's determination that the PERSEVERANCE did not meet the Lozman

test for determining whether a floating structure was a "vessel"

for admiralty jurisdiction purposes because "a reasonable observer,

looking   to   the   PERSEVERANCE's    physical   characteristics   and

activities, would not consider it to be designed to any practical

degree for carrying people or things on water."       Id. at *37.

          2.   Catlin II

          On May 13, 2013, the district court entertained a motion

for reconsideration of its ruling in Catlin I. Although the court

continued to adhere to its finding that the PERSEVERANCE failed to

meet the Lozman standard as to what constitutes a vessel for the

purposes of admiralty jurisdiction, it nevertheless concluded that

admiralty jurisdiction was present because the central issue of the

controversy concerned a maritime contract -- i.e., the Policy --

the "primary objective" of which was "essentially maritime [in]

nature" and "relates to navigation, business or commerce of the

sea." Catlin (Syndicate 2003) at Lloyd's v. San Juan Towing &



5
    In so ruling, the district court rejected the Report and
Recommendation issued by the magistrate judge, who had found (prior
to the announcement of the new Lozman test) that the PERSEVERANCE
was a "vessel."

                                 -9-
Marine Servs., Inc., 946 F. Supp. 2d 256, 260 (D.P.R. 2013)

("Catlin II"); see also Norfolk S. Ry. Co. v. James N. Kirby, Pty

Ltd., 543 U.S. 14, 24-25 (2004).               It also ruled that Catlin's

complaint     properly   pleaded     diversity     jurisdiction      and   found

diversity to be an alternate ground for the exercise of federal

jurisdiction, even if not in admiralty.              See Catlin II, 946 F.

Supp. 2d at 267.

             3.   Catlin III

             On July 30, 2013, the district court once again opined on

the dispute, this time regarding the outstanding motions for

summary judgment filed by Catlin and SJT, respectively.                    Catlin

(Syndicate 2003) at Lloyd's v. San Juan Towing & Marine Servs.,

Inc., 974 F. Supp. 2d 64 (D.P.R. 2013) ("Catlin III").                         In

substance, the court concluded that notwithstanding its finding

that   the   PERSEVERANCE      was   not   a   "vessel,"   federal    admiralty

jurisdiction and law did attach to this controversy because the

interpretation of a maritime contract was at issue (as per Catlin

II).   Id. at 74-76.     Furthermore, the district court held that the

doctrine     of   uberrimae    fidei's     representation    and     disclosure

requirements together constituted an "entrenched federal precedent"

that would apply to this case if the facts alleged by Catlin were

proven to be correct.          Id. at 75-76.       The court, however, was

unable to decide the merits of these contentions because there were

factual matters in dispute that needed to be resolved in a trial


                                      -10-
and not via summary judgment.            Id. at 79-80.   In ruling on the

question as to the risks covered by the Policy, an alternate issue

raised by Catlin's denial of coverage, the district court found

that the Policy was an "all risk insurance policy," as contended by

SJT.    Id. at 83.    Summary judgment, however, could not be entered

on behalf of SJT on this issue because there were factual issues in

dispute as to whether the PERSEVERANCE sank due to "fortuitous

circumstance[s] or casualty . . . covered under the all risk

policy." Id. at 84. These outstanding factual issues needed to be

resolved through a trial.

            4.    Catlin IV

            On October 8, 2013, after a bench trial, the district

court   resolved     the   merits   of   this   controversy.   See   Catlin

(Syndicate 2003) at Lloyd's v. San Juan Towing & Marine Servs.,

Inc., 979 F. Supp. 2d 181, 191 (D.P.R. 2013) ("Catlin IV"). Having

already ruled in Catlin III that uberrimae fidei was an entrenched

doctrine governing maritime insurance contracts, the court made

findings of fact in support of its eventual conclusion that SJT had

failed to comply with the doctrine of uberrimae fidei in its

application for the Policy, and was therefore barred from recovery

thereunder.      Id. at 186-191.

                              II.   Discussion

            The application of the doctrine of uberrimae fidei to

this controversy (as decided in Catlin III), which in modern


                                     -11-
American jurisprudence is extant only in the context of maritime

insurance,6 depends on the outcome of the central issue raised by

SJT both here and below: whether Puerto Rico's Insurance Code, P.R.

Laws Ann. tit. 26, §§ 1101 et seq. ("the Code"), is the controlling

substantive law in this controversy rather than general federal

maritime law.   SJT contends that Section 1110 of the Code contains

specific   provisions    that     address   the    issue    of    whether

representations   made   during   negotiations    to   obtain    insurance

coverage affect an insured's ability to collect on a policy.          SJT

alleges that these statutory provisions contravene and prevail over

the doctrine of uberrimae fidei pursuant to the Jones Act of 1917

("Jones Act"), 48 U.S.C. § 749,7 and our holding in Guerrido v.

Alcoa S.S. Co., 234 F.2d 349, 355 (1st Cir. 1956).         We conclude,

based on our de novo review, that it does not.


6
   See Giragosian, 57 F.3d at 54 n.3 ("The sole remaining vestige
of the doctrine is in maritime insurance."); Thomas J. Schoenbaum,
The Duty of Utmost Good Faith in Marine Insurance Law: A
Comparative Analysis of American and English Law, 29 J. Mar. L. &
Com. 1, 39 (1998). At one time, good faith was a requirement of
general contract law. See generally Eric M. Holmes, A Contextual
Study of Commercial Code Faith: Good-Faith Disclosure in Contract
Formation, 39 U. Pitt. L. Rev. 381 (1978) (providing an analysis of
the historical development of the concept of good faith).
7
   The Jones Act granted U.S. citizenship to the people of Puerto
Rico and established a "civil government" with a locally-elected
legislative branch. 39 Stat. 951. Various statutory provisions of
the Jones Act were repealed or amended with the enactment of the
Puerto Rican Federal Relations Act of 1950 ("PRFRA"), which remains
extant law today.    See 48 U.S.C. §§ 731-916.    Furthermore, the
PRFRA authorized the people of Puerto Rico to organize a government
pursuant to a constitution of their own adoption, but subject to
Congressional approval. Id. § 731(a)-(d).

                                  -12-
A. Does Federal Admiralty Law Apply to this Controversy?

            As a general rule, in the absence of established and

governing federal admiralty law, the states have largely unfettered

power to regulate matters related to marine insurance. See Wilburn

Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310, 321 (1955) ("We,

like Congress, leave the regulation of marine insurance where it

has been -- with the States."); Commercial Union Ins. Co. v.

Pesante, 459 F.3d 34, 37 (1st Cir. 2006) ("Generally, in cases

involving   a   marine   insurance   contract,   we   will   apply   state

law . . . .").

            Under Sections 7 and 8 of the Jones Act, now codified at

48 U.S.C. §§ 747-749, because Puerto Rico has control over its

harbors and navigable waters, we are required to treat Puerto Rico

like a state.      However, in the absence of a federal statute

expressly made applicable to Puerto Rico, Sections 8, 9, and 378 of

the Jones Act grant Puerto Rico more power to legislate in the

admiralty and maritime field than if it were a state, insofar as

the act authorizes inconsistent Puerto Rico laws. 48 U.S.C. § 749,

821.9 Moreover, this Court has held that:


8
  The PRFRA repealed the last paragraph of Section 37 of the Jones
Act, which dealt with local legislative authority to create
executive departments
9
   Section 8 of the Jones Act, 48 U.S.C. § 749 states in relevant
part:
      All laws of the United States for the protection and
      improvement of the navigable waters of the United States
      and the preservation of the interests of navigation and

                                 -13-
          [T]he rules of admiralty and maritime law of
          the United States are presently in force in
          the navigable waters of the United States in
          and around the island of Puerto Rico to the
          extent that they are not locally inapplicable
          either because they were not designed to apply
          to Puerto Rican waters or because they have
          been rendered inapplicable to these waters by
          inconsistent Puerto Rican legislation.

Guerrido, 234 F.2d at 355.     The exercise of that power by Puerto

Rico can have the effect of rendering conflicting non-statutory

federal maritime law "locally inapplicable."    Id.

          SJT contends that Section 1110 of the Code should be

deemed to be the kind of conflicting local legislation that can

render inapplicable non-statutory admiralty law, including the

doctrine of uberrimae fidei.    Section 1110 states:

          All statements and descriptions in any
          application for an insurance policy or in
          negotiations therefor, by or in behalf of the
          insured, shall be deemed to be representations
          and not warranties.        Misrepresentations,
          omissions, concealment of acts, and incorrect
          statements shall not prevent a recovery under
          the policy unless:
                 (1) Fraudulent; or
                 (2) material either to the acceptance
                 of the risk, or to the hazard assumed
                 by the insurer; or
                 (3) the insurer in good faith would
                 either not have issued the policy, or
                 would not have issued a policy in as
                 large an amount, or would not have
                 provided coverage with respect to the
                 hazard resulting in the loss, if the
                 true facts had been made known to the


     commerce, except as so far as the same may be locally
     inapplicable, shall apply to said island and waters and
     to its adjacent islands and waters.

                                -14-
                   insurer    as  required   either   by
                   application   for   the   policy   or
                   otherwise.
           When the applicant incurs in any of the
           actions enumerated in subsections (1), (2),
           and (3) of this section, recovery shall only
           be prevented if such actions or omissions
           contributed to the loss that gave rise to the
           action.

P.R. Laws Ann. tit. 26, § 1110.       Therefore, SJT urges us to apply

the more favorable Section 1110, in lieu of the stricter uberrimae

fidei doctrine.

           We disagree with SJT's contention. This provision is not

relevant to the present case because the applicability provision of

the Code, Section 1101, expressly excludes ocean marine insurance

from the ambit of the Code.     Section 1101 states:

           (1)The applicable provisions of this chapter
           [i.e. Chapter 11] shall apply to insurances
           other than ocean marine . . . insurance[] as
           defined in subsection (2) . . . .
           (2)For the purposes of subsection (1) of this
           section and this title, 'ocean marine...
           insurance[]' shall include only:
                  (a)Insurances upon vessels, crafts,
           hulls, and of interests therein or with
           relation thereto.
                  (b)Insurance of marine builders' risks
                  . . . .

See P.R. Laws Ann. tit. 26, § 1101 (emphasis added).          This Court

has previously ruled that in enacting this provision, Puerto Rico

intended   "to   exclude   maritime   insurance   contracts   from   [the]

statutory provisions [in the Code] governing the interpretation and

construction of insurance contracts."      Lloyd's of London v. Pagán-



                                  -15-
Sánchez, 539 F.3d 19, 25 (1st Cir. 2008); see also Reifer-Mapp v.

7 Maris, Inc., 830 F. Supp. 72, 76 (D.P.R. 1993).

            It is exactly the kind of coverage described in Section

1101 of the Code that was provided to SJT by Catlin in the Policy:

            Coverage:   Hull,   Protection   &   Indemnity
            including Collision & Towers Liability, Marine
            General Liability including Ship Repairers
            Liability, Equipment . . . .

(emphasis added). Therefore, there can be no doubt that the Policy

is an ocean marine insurance policy within the meaning of Section

1101, because the PERSEVERANCE is a "craft" and/or a "hull," and

the Policy covers maritime interests and risks.           As previously

stated, the Policy was procured for SJT by Toscani, who "placed a

package policy consisting of hull, P&I, ship repairs, legal,

general liability and contractors equipment" (emphasis added), with

Catlin.    Indeed, Toscani admitted that he considered the Policy to

be   a   marine   insurance   policy.    It   contained   Endorsement   5

("Drydock"), which provided coverage for the PERSEVERANCE, and

specifically identified the perils insured against as principally

those related to the seas and related maritime risks:

            TOUCHING THE ADVENTURES AND PERILS which we,
            the said Assurers, are contended to bear and
            take upon us, they are of the Seas, Rivers,
            Lakes, Harbours, . . . or other causes of
            whatsoever nature arising either on shore or
            otherwise, causing Loss of or injury to the
            Property hereby insured, and of all other
            Perils, Losses, and Misfortunes that have or
            shall have come to the Hurt, Detriment, or
            Damage of the said Dock . . . or any part
            thereof.

                                  -16-
          The district court's findings regarding the PERSEVERANCE

support the conclusion that the Policy covered a structure within

the ocean marine insurance exception to the Code:

          The Perseverance consisted of a horizontal
          platform called a pontoon, which measured 150
          feet long, 70 feet wide, and 5 feet tall. It
          had a superstructure -- its "wingwalls" --
          which consisted of two vertical elements 120
          feet long, four feet wide, and sixteen feet
          tall. The top of the port wingwall was fitted
          with one semi-sheltered steel control room.
          The Perseverance had a raked bow and two tow
          pads to connect it to a towing vessel, and
          according to Payne [SJT's marine manager],
          "[t]he drydock was specially outfitted and
          prepared for the voyage to San Juan [from
          Louisiana, of approximately 2000 miles]. Upon
          arrival   in   San    Juan,   most   of   the
          Perseverance's     temporary    modifications
          [including wire towing cable, towing chains,
          emergency retrieving line, emergency drag
          rope, emergency tow wire, and all emergency
          tow wire attachment clips] required for
          navigation, except for the raked bow, were
          removed and were not replaced.     Additional
          modifications of the dry dock were then made,
          including the "installation of two steel
          gangways, shore power cable, a pneumatic
          manifold and an electrical distribution
          panel."

Catlin I, 2013 U.S. Dist. LEXIS 52307, at *6-8.10 Further factual
findings by the court help to support this conclusion:

          The Perseverance was secured and attached to
          the southwestern end of the outfitting Pier 15
          in Miramar, a location that was adjacent to an
          apron designed by the Puerto Rico Ports
          Authority ("Ports Authority") for rental


10
   These findings were adopted by the district court as part of its
findings in Catlin IV; they are not challenged on appeal.       See
Catlin IV, 979 F. Supp. 2d at 182 n.1.

                               -17-
           to . . . SJT. The area occupied by . . . SJT
           contained mooring lines, support equipment and
           machinery, grounding connection, electricity,
           and compressed air. At the pier, the
           Perseverance received electrical power from
           generators located on shore . . . when needed.
           A shoreside pneumatic line fed compressed air
           to the dry dock, and the wing wall was
           connected directly to a grounding lug on the
           pier with a three-quarter-inch grounding wire.
           At least one gangway -- chained both to the
           dry dock and the pier -- provided access to
           the Perseverance, which was tied to the dock
           with more than ten three-inch-diameter mooring
           lines and numerous spring lines. . . .
                  At the time that it sank, the
           Perseverance . . . had been non-operational
           for almost a year. Between the time it arrived
           in 2007 and when it sank in 2011, the dry dock
           was occasionally moved ten or fifteen feet
           within its assigned area at the pier. The
           movement [was] done for the purpose of
           returning the dry dock back to its original
           position after raising and repairing a vessel,
           and was accomplished by the use of ropes
           pulled by either harbor workers or a pickup
           truck.

Id. at 8-9.

           Finally, based on the evidence presented, the district

court   found   as   follows:       "The   Perseverance     was   designed,

constructed, and used to provide marine maintenance and repair

services to vessels," and "[i]ts intended use [was] to lift

floating equipment for inspection and repair."          Id.

           We again note that the Policy expressly included "hull"

coverage for the PERSEVERANCE.        At a minimum, the description of

the   PERSEVERANCE   adopted   by    the   trial   court,   and   previously

described, is undoubtedly encompassed within the term "hull" as


                                    -18-
used in Section 1101's definition of ocean marine insurance under

the Code.      See David Auburn et al., Oxford American Writer's

Thesaurus 442 (1st ed. 2004) (listing "structure" as one synonym of

"hull").11

             Not to be ignored is the obvious fact that we are dealing

with a floating structure, at least one that should be floating



11
   The question of whether a maritime structure is a vessel, craft
or hull under section 1101 of the Code is, of course, a question of
Puerto Rico law, not federal law. However, in the only case in
which the Puerto Rico Supreme Court has interpreted the relevant
sections of the insurance code, to which SJT points in support of
their argument, the court turned to federal law in general, and the
federal law of admiralty in particular, as a source of guidance.
See Quiñones v. G. Amer. Ins. Co., 97 D.P.R. 368 (1969); see also
Hernández v. S.S. Mut. Underwriting Ass'n, Ltd., 388 F. Supp. 312
(D.P.R. 1974) (interpreting the Puerto Rico Insurance Code solely
via federal law). Accordingly, we do likewise.
     While the term "hull" is ill-defined in federal admiralty law,
in contrast to "vessel," which has been the subject of extensive
and ongoing discussion, it is nonetheless clear that the term is
applicable to a structure such as the PERSEVERENCE.       See Eric
Sullivan, The Marine Encyclopaedic Dictionary 209 (5th ed. 1996)
(defining a hull as the "[s]hell or body of a ship").
Interestingly, the origin of this nautical term appears to be
botanical:

     hull [OE] The notion underlying the word hull is of
     'covering' or 'concealing.' It originally meant 'peapod'
     - etymologically , the 'covering' of peas - and comes
     ultimately from the same Indo-European source as produced
     English cell, clandestine, conceal, hall, hell, and
     possibly colour and holster. It is generally assumed that
     hull 'main body of a ship,' which first appeared in the
     15th century, is the same word (a ship's hull resembling
     an open peapod), although some etymologists have
     suggested that it may be connected with hollow.

John Ayoto, Dictionary of Word Origins 289 (1990). As a floating
drydock unquestionably has the form of a shell afloat in the water,
it can be aptly described as a hull.

                                  -19-
under normal conditions, even when partly flooded to take on a ship

in need of repairs.    It is difficult to countenance the existence

of a structure that not only floats on pontoons, performs essential

maritime repair work on the water, and is capable of being towed

(and in fact has been towed thousands of miles on the open ocean)

without concluding that it is a "hull" or a "craft."

           We need to discuss one final argument raised by SJT

before entering into a discussion of the merits of whether the

uberrimae fidei doctrine applies to this controversy: namely, SJT's

contention that the controlling definition for what constitutes

"marine and transportation insurance" is contained in Section 405

of Code, and not Section 1101.      See P.R. Laws Ann. tit. 26 § 405.

According to SJT, because Section 405(d) "includ[es] dry docks" as

one of the structures covered by Section 405's definition of

"marine insurance," the Policy in this case, which covers a

floating   drydock,   is   not   within   the   ocean   marine   insurance

exclusion contained in Section 1101.        See id. Thus, SJT alleges

Section 405 bars application of uberrimae fidei.

           There are at least two fundamental reasons why SJT's

argument on this issue is flawed.          The first is that a plain

reading of Section 1101 clearly establishes that the controlling

definition for the entire Code as to what is marine insurance is

found in that section of the Code. Section 1101(2) specifically

states that for "purposes of subsection (1) of this section [which


                                   -20-
establishes     the     exclusion    of    ocean   marine     insurance    from

application     of    the   Code]    and    this    title,    'ocean      marine

. . . insurances' shall include only: (a) Insurances upon vessels,

crafts, hulls, and of interests therein or with relation thereto."

P.R. Laws Ann. tit. 26, § 1101 (emphasis added).              That definition

supercedes all other conflicting language in Title 26, of which

Section 405 is a part, even assuming there is such a conflict.

           The second point is that there is no such conflict

because the "dry docks" referred to in Section 405(1)(d) are

totally different structures than the floating drydock involved in

the   present   case.    All   the   utilities     referred   to   in   Section

405(1)(d) are fixed, land-based structures, e.g., "piers, wharves,

docks and slips, and other aids to navigation and transportation,

including dry dock and marine railways, dams and appurtenant

facilities for the control of waterways." No legislative intent is

discernible from this language to support the conclusion that we

should include a movable, floating structure within that fixed,

land-based conglomerate.         Thus, Section 405 does not have any

bearing on floating drydocks.12

           In the present case, there is no local legislation that

is "inconsistent" with federal admiralty law.            Thus, based on the

meaning of the terms craft and hull, the factual findings of the



12
    See note 1, supra, for the distinction between floating and
fixed dry docks.

                                     -21-
district court as to the PERSEVERANCE's structure and function, the

language of the Policy and the circumstances surrounding its

procurement, and the clear dictate of Section 1101, the Policy is

expressly excluded from the ambit of the Code by the "carve out"

delimited in Section 1101.

B. Is Uberrimae Fidei an Entrenched Precept of Federal Admiralty
Law Applicable to this Controversy?

             Presented twice with this issue previously, we have not

yet taken an authoritative stance on whether uberrimae fidei is an

established rule of maritime law.                   See Pesante, 459 F.3d at 38

("While we have never actually decided the issue, it is true that

we have questioned whether uberrimae fidei is an established rule

of maritime law."); Giragosian, 57 F.3d at 54 n.3 ("[I]t is

debatable whether the doctrine can still be deemed an 'entrenched'

rule    of   law.").       The    question     of    whether      a   doctrine    is   an

established rule of maritime law, though seemingly abstruse, is of

vital    importance       in    admiralty    cases     as    it    can   prove    to   be

dispositive in controversies such as the dispute at hand.                        This is

because for marine insurance contract cases, we only apply federal

maritime rules that are established and settled; otherwise we would

look to state law.             See Pesante, 459 F.3d at 37; Giragosian, 57

F.3d at 54.

             Marine    insurance      is     vital    to    the    adequate   flow     of

commerce.     The nature of the risks that are covered by maritime

insurance     is   such    that,     given    the    urgent       necessity   for      the

                                           -22-
placement of this type of insurance coverage that is often present

in the business of maritime commerce, as well as the extreme

distances that often separate the insurance seeker and the insurer,

it is imperative that the insurer be provided with truthful and

valid information about the risk the insurer is asked to undertake

by the party most able to provide such data: the insured.

             Although this court had not yet held definitively that

uberrimae fidei is an established rule of maritime law, we do so

now, thus joining the near-unanimous consensus of our sister

circuits,13 ruling without further equivocation that the doctrine

of uberrimae fidei is an established rule of maritime law in this

Circuit.14    This ruling should hardly be surprising.   As early as


13
    See, e.g., N.Y. Marine & Gen. Ins. Co. v. Cont'l Cement Co.,
LLC, 761 F.3d 830, 839 (8th Cir. 2014) (recognizing that uberrimae
fidei is "established federal precedent"); AGF Marine Aviation &
Transp. v. Cassin, 544 F.3d 255, 263 (3d Cir. 2008) (same); Certain
Underwriters at Lloyd's, London v. Inlet Fisheries Inc., 518 F.3d
645, 650-54 (9th Cir. 2008) (same); HIH Marine Servs., Inc. v.
Fraser, 211 F.3d 1359, 1362 (11th Cir. 2000) (same); Puritan Ins.
Co. v. Eagle S.S. Co. S.A., 779 F.2d 866, 870 (2d Cir. 1985)
(same). The Fifth Circuit is alone in holding that uberrimae fidei
is "not entrenched federal precedent." Albany Ins. Co. v. Anh Thi
Kieu, 927 F.2d 882, 889 (5th Cir. 1991) (internal quotation marks
omitted). This view, however, has been heavily criticized. See,
e.g., Inlet Fisheries Inc., 518 F.3d at 652-54 (disparaging the Anh
Thi Kieu decision as logically flawed and concluding that it "does
violence" to established law).
14
    Our adoption of uberrimae fidei does not violate the Supreme
Court's warning in Wilburn Boat Co., 348 U.S. at 316, not to create
new admiralty rules that govern marine insurance policies. See
Inlet Fisheries Inc., 518 F.3d at 650-51 ("[T]he Supreme Court in
Wilburn Boat expressed a reluctance for federal courts to fashion
new admiralty rules, not a desire to do away with existing ones.").
Uberrimae fidei is a judicially created admiralty rule that

                                 -23-
1828, the Supreme Court characterized an insurance contract as "a

contract uberrimae fidei."    McLanahan v. Universal Ins. Co., 26

U.S. 170, 185 (1828).   In fact, 100 years later, "the doctrine was

referred to as a 'traditional' aspect of insurance law."15    N.Y.

Marine & Gen. Ins. Co., 761 F.3d at 839 (quoting Stipcich v. Metro.

Life Ins. Co., 277 U.S. 311, 316 (1928)).       Even following the

Supreme Court's Wilburn Boat Co. decision in 1955, which held that

states should have the primary say in matters of marine insurance,

348 U.S. at 321, the circuit courts –- including the Fifth Circuit

prior to its Anh Thi Kieu decision in 1991 –- routinely applied

uberrimae fidei as a federal admiralty rule to marine insurance

contracts because it was so well-established.   See Inlet Fisheries

Inc., 518 F.3d at 651-52 (citing, e.g., Ingersoll Milling Mach. Co.

v. M/V Bodena, 829 F.2d 293, 308 (2d Cir. 1987); Fireman's Fund

Ins. Co. v. Wilburn Boat Co., 300 F.2d 631, 646 (5th Cir. 1962) (on

remand from the Supreme Court)).




substantially predates Wilburn Boat Co. and has been reapplied time
and time again even after the Wilburn Boat Co. decision.       See,
e.g., Inlet Fisheries Inc., 518 F.3d at 653 (observing that
uberrimae fidei is a 200-year-old rule); see also McLanahan v.
Universal Ins. Co., 26 U.S. 170, 185 (1828) (discussing uberrimae
fidei in the context of insurance).
15
   As one commentator has put it, "'no rule of marine insurance is
better established tha[n] the utmost good faith rule.'"      Inlet
Fisheries Inc., 518 F.3d at 653-54 (alteration in original)
(quoting Thomas J. Schoenbaum, The Duty of Utmost Good Faith in
Marine Insurance Law: A Comparative Analysis of American and
English Law, 29 J. Mar. L. & Com. 1, 11 (1998)).

                                -24-
           Then, in 1991, the Fifth Circuit held in Anh Thi Kieu

that uberrimae fidei was not established maritime law, a decision

that the Ninth Circuit has characterized as an "abrupt[] change[]

[in] course".   Id. at 652 (referencing Anh Thi Kieu, 927 F.2d at

889-90).   "Ironically, were it not for the Anh Thi Kieu decision

itself, there would be little cause at all to doubt that uberrimae

fidei is indeed firmly entrenched maritime law."   Id.

           We find it instructive that following our 2006 decision

in Pesante, in which we questioned whether uberrimae fidei was an

established rule of maritime law, 459 F.3d at 38, three of our

sister circuits –- the Third Circuit in 2008, the Ninth Circuit in

2008, and the Eighth Circuit in 2014 –- formally recognized the

doctrine as established admiralty law. See N.Y. Marine & Gen. Ins.

Co., 761 F.3d at 839; AGF Marine Aviation & Transp., 544 F.3d at

263; Inlet Fisheries Inc., 518 F.3d at 654.   Moreover, the Second

and Eleventh Circuits –- courts that have recognized uberrimae

fidei as an established maritime rule since at least the 1980s16 -–

have recently reaffirmed the vitality of uberrimae fidei within

their respective jurisdictions.   See, e.g., St. Paul Fire & Marine

Ins. Co. v. Matrix Posh, LLC, 507 F. App'x 94, 95 (2d Cir. 2013);

I.T.N. Consolidators, Inc. v. N. Marine Underwriters Ltd., 464 F.

App'x 788, 790 n.3 (11th Cir. 2012) (per curiam). Therefore, based


16
   See Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 13 (2d Cir. 1986);
Steelmet, Inc. v. Caribe Towing Corp., 747 F.2d 689, 695 (11th Cir.
1984).

                               -25-
on both the policy rationales supporting uberrimae fidei and the

longstanding history and consistent application of the doctrine by

most of the circuits, we formally recognize uberrimae fidei as an

established admiralty rule within this Circuit.

C.   Did SJT Violate Uberrimae Fidei?

           We finally proceed to an analysis of the application of

uberrimae fidei to this case.17        At the bench trial, Richard

Thompson   ("Thompson"),   a   hull    inspector   who   surveyed   the

PERSEVERANCE, testified that he found "heavy wastage" in the

drydock's hull during an April 2010 inspection.          After Thompson

notified SJT of the rust and deterioration problems, SJT admitted

that "those damages were pre-existing."     Because the PERSEVERANCE

was not in prime condition and business was slow, SJT offered to

sell the floating drydock to potential buyers at a price between

$700,000 to $800,000, which presumably approximated its actual

value at the time.   Indeed, in April 2011 -- the same month that

the Catlin Policy took effect -- SJT advertised the PERSEVERANCE

for sale at a price of $800,000.       Yet, SJT, in its request for

marine insurance coverage from Catlin, represented to Catlin that

the PERSEVERANCE had been previously insured by RLI for $1,750,000




17
   Our standards of review for a bench trial are well known; the
district court's factual findings are protected by clear error
review. Giragosian, 57 F.3d at 53.

                                -26-
–- $700,000 more than what SJT paid for the drydock originally.18

We agree with the district court that Catlin could have reasonably

assumed the value presented to it in the previous insurance policy

from RLI as the actual value and evaluated its risks based on the

conditions it would have reasonably expected from a drydock of that

value.      SJT's    failure     to     disclose     the   true   value    of   the

PERSEVERANCE,     what     SJT   paid    for   the    PERSEVERENCE,       and   the

PERSEVERANCE's level of deterioration, therefore, are all material

facts, the nondisclosure of which violates uberrimae fidei.                     See

N.H. Ins. Co. v. C'Est Moi, Inc., 519 F.3d 937, 939 (9th Cir. 2008)

("The purchase price of a vessel is unquestionably a fact material

to the risk, as it provides an objective measure of the vessel's

worth and the corresponding risk of insuring the vessel." (internal

quotation marks and citation omitted)); Pesante, 459 F.3d at 38

(explaining that a material fact is "that which can possibly

influence   the     mind   of    a   prudent   and    intelligent    insurer     in

determining whether it will accept [a] risk" (internal quotation

marks omitted)); Grande, 436 F.3d at 283 ("[T]he strict maritime


18
   It is true that the second Marine Consultants report valued the
PERSEVERANCE at $1,750,000 in November 2006, due to the value added
by the improvements made to the ship to prepare it for towing. Yet
continuing to represent this amount as the drydock's actual value
more than four years later fails to account for subsequent
depreciation, damage, and decay, particularly in the absence of
further major improvements to the vessel. Moreover, we find no
error in drawing an inference that the drydock's advertised sale
price of $800,000 in April 2011 better approximated the actual
value of the PERSEVERENCE than an outdated valuation report from
four years earlier.

                                        -27-
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." (last

alteration in original) (internal quotation marks omitted)).

          Under uberrimae fidei, when the marine insured fails to

disclose to the marine insurer all circumstances known to it and

unknown to the insurer which "materially affect the insurer's

risk," the insurer may void the marine insurance policy at its

option.   Giragosian, 57 F.3d at 55.   In other words, the policy

becomes voidable.19   See id. at 54-55.   As discussed above, the

evidence conclusively shows that SJT failed to disclose material

information about the PERSEVERENCE's actual value and preexisting




19
    The district court concluded that under uberrimae fidei, the
Policy was void ab initio, meaning that there was never an
enforceable contract to begin with. See Black's Law Dictionary
1805 (10th ed. 2014). However, as the Supreme Court has described
it, and as we conclude now, uberrimae fidei renders a marine
insurance contract voidable –- the contract is deemed valid until
being voided at the election of the insurer. See, e.g., Stipcich,
277 U.S. at 316 ("Insurance policies are traditionally contracts
uberrimae fidei and a failure by the insured to disclose conditions
affecting the risk, of which he is aware, makes the contract
voidable at the insurer's option."). Moreover, our prior cases
that did not adopt uberrimae fidei as well-established law also
describe the doctrine as one that renders an insurance contract
voidable, not void ab initio. See, e.g., Pesante, 459 F.3d at 38
("[I]f we were to find that the doctrine of uberrimae fidei is an
established rule of maritime law, we would hold that the policy was
voidable as a matter of law.").

                               -28-
deteriorated condition prior to Catlin determining whether it would

accept the risk.   Catlin was free, therefore, to void the policy.20

                          III.   Conclusion

           SJT violated the doctrine of uberrimae fidei in its

procurement of the Policy.   Thus, Catlin was entitled to void the

Policy.   The decision of the district court is affirmed, however,

its holding is modified to reflect that the contract was voidable,

not void ab initio.

           Affirmed.




20
   One might argue that there is a distinction between an insurance
policy that pays the insured amount versus an insurance policy that
pays the actual value in the event of a total loss of the drydock,
and the facts in this case are not clear as to whether Catlin would
have paid up to the liability limit ($1,000,000) or the market
value (approximately $700,000 to $800,000, based on the prices at
which SJT was willing to sell the vessel). However, this question
is immaterial, as uberrimae fidei looks solely to whether SJT
satisfied its duty of disclosing all material facts known to it.
Regardless of the factual uncertainty in this respect, we find that
SJT violated uberrimae fidei under either set of circumstances.
Clearly, in the first scenario, in which Catlin owed the full
liability limit of $1,000,000 in the event of total loss, then the
actual value of the PERSEVERANCE would be a material fact, the
nondisclosure of which would violate uberrimae fidei. See Cassin,
544 F.3d at 265; N.H. Ins. Co., 519 F.3d at 939. As to the second
scenario, had Catlin known that the PERSEVERANCE was being offered
for sale at less than forty-six percent of its insured value, it,
like any reasonable insurer, likely would not have agreed to issue
the $1,750,000 insurance policy in the first place. See, e.g.,
Pesante, 459 F.3d at 38.

                                 -29-
