Guam News - Guam News
Guam - The floating drydock, The Machinist, or more commonly known as "Big Blue," may be floating again after it sank in January 2011, but its owner, Mathews Pothen, is suing his insurance agencies for $7.2 million.
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The owner of Guam Shipyard, Mathews Pothen, says his insurance agencies breached the insurance contract because they won't cover his losses. But the insurance agencies have filed a counter claim, saying they have proof big blue was not insurable.
It was just over a year ago when Big Blue, the floating dry dock, was brought back up from the depths of the ocean. Big Blue sank between January 2 and January 3, 2011.
Initial reports indicate hatches were left open during the three-day weekend. Still, the Navy had to conduct its own investigation. After Big Blue was brought back to life, Pothen sent an insurance claim to Zurich American Insurance and Starr Indemnity and Liability Company, his insurance agencies for Big Blue. But, according to Pothen, he received a letter from Zurich, saying Guam Shipyard failed to provide satisfactory proof of loss.
Pothen then filed a lawsuit in the District Court of Guam for damages incurred by Big Blue's sinking worth close to $400,000. He's also suing for $6.8 million for breach of contract. Pothens filed the lawsuit on grounds of anticipatory denial of coverage; or, as Pothens believed at the time, that Zurich and Starr Insurance were planning to deny his claim.
Zurich, however, fired back, asking the court to dismiss the case because they argued that one can't sue for something that hasn't happened yet. Zurich said they simply wanted more proof that something hazardous occurred as a result of Big Blue's sinking.
However, upon further investigation, Zurich eventually discovered that the entire insurance contract, at the time of the sinking, should have been completely void. Why? They say that Big Blue was not Navy certified--a condition Guam Shipyard had agreed to in the insurance contract in the absence of Zurich's ability to conduct inspections themselves.
In fact, Zurich Insurance says Big Blue lacked a Navy certification warranty as early as November 1, 2010 and up until the time it sank on January 2 or 3, 2011. The warranty expired on October 31, 2010.
So why was Big Blue not Navy certified? Zurich says it may be more than just unintentionally allowing the certification to lapse. Aside from Navy certification, Zurich says Guam Shipyard hired a third party engineering firm to issue commercial certification for Big Blue.
In November 2010, just two months before Big Blue sank, Heger Drydock of Massachusetts sent a surveyor to inspect Big Blue for certification. But the surveyor refused to certifiy the drydock. The surveyor noted at the time that the dry dock was in poor condition.
"In the opinion of the surveyor, this dry dock is at a cross roads. This dock will need a large investment," the report said.
"There was no way I was going to be certifying the dock," the surveyor added.
Further, Zurich Insurance also claims Pothen refused to allow video and photographs to be taken of the drydock during follow up inspections for the insurance agency. They are asking the court to compel Pothen to produce video inspections of the dry dock.
A hearing date has been set for August 29 at the District Court of Guam. Pothen refused to comment on the case, saying it was still in litigation.
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