April 2023 Longshore/Maritime Update (No. 287)
Notes from your Updater:
For our readers who are interested in the Black Lung Benefits Act, the Department of Labor issued a notice of proposed rulemaking on January 19, 2023 with respect to self-insuring liability under the statute. The Department of Labor extended the time for comments to April 19, 2023.
Black Lung Benefits Act Self-Insurers Notice
The following order in Intersal, Inc. v. Wilson, No. 15 CVS 9995, 2023 NCBC LEXIS 29 (N.C. Super. Wake Cty. Feb. 23, 2023) (Earp), on cross motions for summary judgment is the latest decision in the long-running battle between North Carolina and a marine search-and-rescue company related to recovery efforts for the QUEEN ANNE’S REVENGE and the EL SALVADOR:
On February 27, 2023, the Washington Court of Appeals vacated the violations assessed by the Washington Department of Labor and Industries against Seattle Bulk Shipping (a bulk transfer business that leases property from the City of Seattle on Harbor Island and handles transloading of commodities but does not transfer cargo onto or off of a vessel) on the ground that the facility did not qualify as a “marine terminal.” See Seattle Bulk Shipping, Inc. v. Department of Labor and Industries, No. 83782-6-1, 2023 Wash. App. LEXIS 383 (Wash. App. Div. 1 Feb. 27, 2023) (Coburn).
On February 28, 2023, President Biden nominated Julie Su to replace Marty Walsh (who resigned to serve as Executive Director of the National Hockey League Players’ Association) as Secretary of Labor.
In our March 2023 Update we discussed the decision of Judge Zilly from the Western District of Washington in Powers v. United States, finding a fact question that was sufficient to allow a suit to proceed against the United States based on a “worsened the situation” theory (that the Coast Guard’s decision that no boat was in distress terminated rescue efforts of other potential rescuers). Accordingly, Judge Zilly declined to dismiss the suit against the United States for the delay in rescuing the operator of a capsized boat. Judge Williams from the District of New Jersey reached a different result in a case involving the negligence of the Coast Guard with respect to rescue efforts from a capsized vessel in In re Adrian Avena, No. 1:21-cv-515 (D.N.J. Nov. 14, 2022). Judge Williams’ dismissal of the United States is currently on appeal to the Third Circuit (No. 22-3132 c/w No. 22-3228). Thanks to Lisa Reeves with Reeves McEwing in Philadelphia, Pennsylvania for bringing this case to our attention.
The liability of a freight forwarder and a non-vessel operating common carrier under state law in connection with injuries to two workers who were unloading a shipment of marble slabs from a container that they allege was improperly secured was addressed in Suazo v. Ocean Network Express (North America), Inc., No. 20-cv-2016, 2023 U.S. Dist. LEXIS 35245 (S.D.N.Y. Mar. 2, 2023) (Ramos).
A jury in federal court in Florida before Judge Scola rendered a verdict in favor of Carnival Corp. in a patent and contract dispute between Carnival and its contractor, DeCurtis Corp., over a “guest engagement system” that “uses wireless sensing technology to enable a host to seamlessly engage with guests throughout the host’s facilities.” See Carnival Corp. v. DeCurtis Corp., No. 1:20-cv-22945 (S.D. Fla. Mar. 10, 2023) (Scola).
The ongoing dispute whether the City of Chicago can impose an amusement tax on a company that operates sightseeing boat tours on Lake Michigan and the Chicago River was again addressed by the Illinois appellate courts on March 14, 2023. Wendella Sightseeing pays license fees to the City for the right to operate and charter its tour boats and water taxis from the city-leased dock on Michigan Avenue. However, Wendella objected when the City amended its amusement tax ordinance in 2008 and sought to impose the tax on the operation of Wendella’s vessels on navigable waters. The Illinois First District Appellate Court held in 2019 that the amusement tax ordinance, as applied to Wendella, was preempted by the federal Rivers and Harbors Appropriation Act of 1884 (as amended by the Maritime Transportation Security Act of 2002). Chicago amended its amusement tax ordinance specifically to assess a tax on “tour boat operators,” and Wendella again argued that the tax was preempted. Cook County Circuit Court Judge Curry agreed that the amended version of the amusement tax was preempted by federal law, resulting in the second appeal to the state appellate court. Although noting that there is a presumption against finding preemption, particularly in the context of state and local taxation, the appellate court considered the language of the federal law to be clear in preempting the tax on tour boat operators. See Wendella Sightseeing Co. v. City of Chicago, No. 1:21-1371, 2023 Il. App. (1st) 211371 (Il. App. (1st) Mar. 14, 2023) (Cobbs).
On March 16, 2023, Judge McNulty dismissed the claims brought by former employees of Port Imperial Ferry Corp. d/b/a NY Waterway (operator of a fleet of commercial ferries and boat maintenance facilities) that their employer violated the Clean Water Act by routinely dumping raw sewage, boat fuel, oil, and other materials into New Jersey and New York waterways and that the employees were essentially fired in retaliation for the complaint. Judge McNulty held that the plaintiffs failed to comply with the 60-day pre-suit notification requirement in the Clean Water Act, that the court thereby lacked jurisdiction over the CWA claims, and the remaining allegations also had to be dismissed. See United States ex rel. Khatchikian v. Port Imperial Ferry Corp., No. 2:16-cv-2388, 2023 U.S. Dist. LEXIS 44344 (D.N.J. Mar. 16, 2023) (McNulty).
On March 17, 2023, Antonio A. Rios, Director, Division of Federal Employees’, Longshore and Harbor Workers’ Compensation, issued Industry Notice 197 and advised:
Effective March 08, 2023, the forms listed below have been updated and are available in fillable format online on the Longshore website Forms page as outlined in the attached Industry Notice 197. These forms have also been altered so it is not necessary to download them. You may complete them online by clicking on the website link for each form. Then you can submit them by uploading through the SEAPortal link on the form or by mail. The update reflects feedback from our stakeholders who have previously reported receiving error messages when attempting to view a form. Currently, this update is for the Longshore forms described above only.
- LS-4: Attorney Fee Approval Request
- LS-5: Application for Special Fund Relief
- LS-6: Commutation Application
- LS-7: Request for Intervention
- LS-8: Settlement Approval Request Section 8(i)
- LS-9: Stipulation Approval Request
On March 19, 2023, Judge Brown of the United States District Court for the Southern District of Texas issued a preliminary injunction blocking the Biden Administration’s revised definition (that would have taken effect on March 20, 2023) of the Waters of the United States within the Clean Water Act (noting that the Supreme Court heard oral argument this term in the Sackett case involving the proper test to determine the extent of Waters of the United States). The injunction applies in the states of Texas and Idaho, but Judge Brown declined to grant a nationwide injunction. See Texas v. United States EPA, No. 3:23-cv-17, 2023 U.S. Dist. LEXIS 45797 (S.D. Tex. Mar. 19, 2023) (Brown).
On March 27, 2023, the Fifth Circuit held that the United States Army Corps of Engineers is not required to prepare a supplemental environmental impact statement (purportedly required by the National Environmental Policy Act) in response to increased frequency of opening of the Bonnet Carré Spillway to protect New Orleans, reasoning that the increased frequency was the result of “routine managerial actions” that were carried on from the outset of the project (that did not require a supplemental statement) and not a change in managerial philosophy (that would require a supplement). See Harrison County, Mississippi v. U.S. Army Corps of Engineers, No. 21-60897, 2023 U.S. App. LEXIS 7242 (5th Cir. Mar. 27, 2023) (Engelhardt).
On the LHWCA Front . . .
From the federal appellate courts
William Price claimed that he was injured while working as an auto mechanic for the Department of the Air Force and brought this claim against the Air Force under the LHWCA, as extended by the Non-Appropriated Funds Instrumentalities Act. His case was tried to an administrative law judge, who determined that Price was entitled to temporary partial disability benefits from February 9 to March 19, 1997 but denied his claim for compensation after March 19, 1997. Price appealed to the Benefits Review Board, which affirmed the denial of compensation after March 19, 1997, but which held that Price was entitled to temporary total disability from February 9 to March 19, 1997. The BRB modified the ALJ’s decision and remanded the case to the ALJ for a specific calculation of the award of benefits (including the credit to which the Air Force was entitled for compensation that had been paid). Price did not wait for the new award from the ALJ and petitioned for judicial review of the BRB’s decision with the Eleventh Circuit. The appellate court sua sponte inquired about the finality of the BRB’s decision, and the Air Force moved to dismiss the petition for lack of jurisdiction. The Eleventh Circuit then issued this decision, noting that when the BRB determines liability but remands to an ALJ for recalculation of the award, the Board’s order is not a final order. Accordingly, the appellate court dismissed the petition for review for lack of jurisdiction.
From the federal district courts
Romare J. Green, was employed as a longshore worker on the M/V COSCO CAMELLIA in the Port of Savannah. He alleged that he was exiting the vessel on a steep gangway when the handrail collapsed, causing him to fall off the gangway and land on the dock. He brought suit against the vessel owner and operator in Georgia state court, and the defendants removed the case to federal court based on diversity. The parties agreed that the gangway-connecting pin came out of place, causing the handrail to collapse. Green proffered four experts to opine about the duties of the defendants and on what caused the pin to come out, and the vessel interests moved to exclude their opinions. Joseph Crosson is an engineer specializing in metallurgical and weld/fastener-related structural failures, mechanical failures, and ship-casualty investigations. He opined that the locking pin must not have been inserted correctly and worked itself out with vibration. The defendants claimed that the opinion was not backed up by any methodology and was essentially based on a process of elimination that there were no other explanations for the pin to come out other than that it was not installed correctly. The defendants also objected that Crosson did not perform any testing or inspect the vessel. Magistrate Judge Ray found Crosson’s process of elimination to be an acceptable methodology in the scientific and engineering communities and reasoned that a consideration of what he inspected or consulted was an issue involving the weight and credibility of his opinion that was subject to cross-examination. Patricia Fletcher has 14 years of experience in maritime vessel operations and safety as a marine operations superintendent, port manager, vessel agent, and vessel planner who opined that the gangway remained under the control of the vessel, it was not turned over to the stevedore, and it was the duty of the ship’s crew to rig the gangway and inspect it to be sure that the locking pin was engaged. She also opined that the locking pin must not have been inserted correctly. Although Green argued that her experience working on vessels during cargo operations and as a vessel superintendent supported her opinion on responsibility for the gangway, Magistrate Judge Ray noted that there was no explanation how her experience supported her conclusions. Additionally, nothing in her background suggested that she had the experience to opine on the cause of the failure of the locking pin. Therefore, Magistrate Judge Ray held that all of Fletcher’s opinions would be excluded. Richard Galuk, an expert in engineering and failure analysis, opined that the detachment of the handrail was caused by the failure of the ship’s crew to properly secure the handrail and by the failure of the crew and surveyors to perform proper maintenance, inspections, and surveys of the gangway and its components. Green argued that Galuk’s opinion were based on his familiarity with the concepts applicable to customary and safe gangway operations, and Magistrate Judge Ray agreed that his experience could support a reliable opinion. However, Green did not explain how that experience led to the conclusions that Galuk reached (he failed to connect the specific experience with the opinions about the cause of the locking pin’s failure). Therefore, Galuk’s opinions were excluded. William Williams, a maritime safety expert with 27 years of experience in the Navy, consulting on port safety, and experience as the Vice President of Health, Safety, and Environment for A.P. Moller-Maersk operations in the Americas, opined that the gangway remained under the control of the vessel, it was not turned over to the stevedore, and the vessel had the continuing responsibility to inspect the gangway to ensure that the fasteners were properly engaged and that the gangway was safe for use. The defendants challenged the opinions because the duties of the vessel were set forth by the Supreme Court in Scindia, and Magistrate Judge Ray agreed that the opinions were impermissible legal conclusions and would be excluded. Finally, Magistrate Judge Ray held that Williams’ opinions about Green’s having to use the gangway and doing nothing to cause his fall were within the scope of his experience relative to gangways and were not excluded.
Aries Marine owned the liftboat RAM XVIII, which was sent to house workers who were working on a platform in the West Delta region of the outer Continental Shelf off the coast of Louisiana (the workers were employed by Fluid Crane and United Fire). The vessel jacked up, and a construction crew worked until the next day when the vessel began to list and sank. Aries filed a limitation action in federal court in Louisiana, and seven workers on the rig filed claims against Aries under Section 5(b) of the LHWCA. Aries moved for summary judgment that it was entitled to exoneration of liability or, alternatively, limitation of liability. Judge Africk found a fact dispute whether the captain of the liftboat performed a preload before jacking up to ensure that the leg pads for the vessel were on stable ground and would not punch through the seabed. If the preload was not performed, Judge Africk concluded that the failure would constitute negligence under the vessel’s active control, in violation of the duty enunciated by the Supreme Court in the Scindia case. Turning to the limitation issue, Judge Africk noted that with respect to seagoing vessels, the privity or knowledge of the master at or before the beginning of the voyage is imputed to the owner. Aries did not dispute that the liftboat was a seagoing vessel (the accident did occur on the outer Continental Shelf more than 12 nautical miles from the coast). Thus, to the extent there was negligence of the captain before the voyage, it would be imputed to the owner. Judge Africk also cited evidence that the owner allegedly provided an unqualified captain whom it had failed to adequately train, and he declined to grant summary judgment as to limitation of liability. The vessel owner also moved to dismiss the punitive damage claims brought against it under Section 5(b) of the LHWCA on the ground that punitive damages are only recoverable against a third-party tortfeasor by a longshore worker who is injured in state territorial waters (and for lack of evidence of willful and wanton conduct). Judge Africk noted that the Fifth Circuit has not decided the question whether punitive damages may be recoverable under Section 5(b), and he declined to grant summary judgment on the punitive damage claim. See February 2023 Update.
Fugro USA was hired to assist in positioning the liftboat by providing GPS positioning and performing a sonar scan for debris or obstructions on the sea floor. It provided plats that showed where prior vessels had been placed in the area, but the images Fugro provided only showed the impressions left by vessels that Fugro had helped to position. Therefore, it was possible that there were holes and impressions in the area that were not reflected in the data provided by Fugro to Aries. Fugro moved for summary judgment on the negligence claims asserted against it, noting that the claimants had placed the blame for the listing of the liftboat on Aries’ captain’s failure to conduct a preload (or conducted an improper preload). In response to Fugro’s motion for summary judgment, the claimants argued that Fugro owed them a duty to advise the captain that there could be additional can holes in the area, that there were dark spots on the sonar images that might be additional can holes, and to exercise stop work authority when one leg of the liftboat penetrated deeper than had been expected. Judge Africk assumed for the motion that Fugro had a duty, but he could not find causation for any of the alleged failures because, ultimately, the accident occurred because, as the claimants alleged, the captain failed to properly preload the vessel. The claimants’ expert confirmed that when the failure of the vessel occurs after the preloading, the preload was not adequate. As the preloading was not the responsibility of Fugro, Judge Africk dismissed the claims against Fugro.
Fieldwood, the owner of the platform, chartered the liftboat to provide worker housing in support of work taking place on its platform. Fieldwood moved for summary judgment on the ground that, as the time charterer, it had no control over the vessel and assumed no liability for the negligence of the crew. Judge Africk noted that time charterers owe a “hybrid duty” arising from contract and tort to avoid negligent actions within the sphere of activity over which they exercise at least partial control. He added that a time charterer may be liable for directing the vessel to encounter natural hazards, such as dangerous weather or sea conditions. The claimants argued that Fieldwood was negligent by directing the liftboat to be positioned on the east side of the platform when it knew the conditions were hazardous and by limiting the scope of the marine surveyor (Fugro) to not include geo-technical data. As the claimants’ expert opined that it was likely that either soil samples existed for the location or that penetrations were known by Fieldwood, which, if credited, would permit a finding that Fieldwood had notice of the hazardous conditions and contributed to the failure, Judge Africk denied summary judgment to Fieldwood.
Judge Africk then considered the contracts between the parties for their indemnity obligations. Fieldwood entered into Master Service Contracts with both Fluid Crane and United Fire (employers of the claimants) by which Fluid Crane and United Fire agreed to indemnify Fieldwood for injuries to employees of Fluid Crane and United Fire. The indemnity extended to Fieldwood’s contractors (such as Fugro and Aries) if they entered into contracts with Fieldwood to extend indemnity (for injuries to their employees) to subcontractors of Fieldwood (such as Fluid Crane and United Fire). Fieldwood and Fugro entered into a Master Service Contract by which Fugro agreed to provide similar indemnity to Fieldwood and its contractors. Likewise, Fieldwood and Aries entered into a Master Service Contract by which Aries agreed to provide similar indemnity to Fieldwood and its contractors. Therefore, the contracts between Fieldwood, on the one hand, and Aries, Fugro, Fluid Crane, and United Fire contained provisions by which each party agreed to indemnify the others for injuries to its own employees. Consequently, Fluid Crane and United Fire were obligated to indemnify Fieldwood, Aries, and Fugro for the claims brought by the employees of Fluid Crane and United Fire if the indemnity provisions were valid under applicable law. The validity question required a determination whether Louisiana law or maritime law applied. If maritime law applied, the agreements were valid. If Louisiana law applied, the indemnity was invalidated by the Louisiana Oilfield Indemnity Act. Judge Africk applied the requirement from the Fifth Circuit’s Doiron case (whether the contract provided or the parties expected that a vessel would play a substantial role in the performance of the contract) to determine whether the contracts were maritime or not. The contracts at issue were the contracts between Fieldwood and Fluid Crane and United Fire to perform work on Fieldwood’s platform. Although Aries and Fugro were involved with the role of the liftboat, that expectation was not relevant to the contracts between Fieldwood and Fluid Crane and United Fire. Judge Africk distinguished cases in which the contract documents provided for the use of a vessel. In this case, “Aries and Fugro may have expected the vessel to play a substantial role in the completion of the work, but the same cannot be said of Fluid Crane and United Fire.” Therefore, Judge Africk concluded that Louisiana law applied, and he denied indemnity from Fluid Crane and United Fire to Aries and Fugro. He did not, however, hold that the LOIA invalidated the requirement for payment of defense costs when the indemnitee was found to be free from fault. Thus, if Aries were ultimately found free from fault, it would be entitled to reimbursement of its defense costs. Judge Africk had granted summary judgment on liability in favor of Fugro, so Fugro was entitled to recover its defense costs. Fluid Crane requested that Judge Africk order the defense costs be split evenly between Fluid Crane and United Fire, despite the fact that only one of the seven claimants was an employee of United Fire. Judge Africk agreed that, under Louisiana law, the defense obligation was incapable of division. Therefore, he ordered that the defense obligation be divided in equal portions between Fluid Crane and United Fire. See March 2023 Update).
One of the workers employed by Fluid Crane, Gilberto Gomez Rozas, was an undocumented immigrant who was not authorized to work in the United States. During his deposition and in discovery, Rozas repeatedly invoked the protection against self-incrimination in the Fifth Amendment, refusing to answer questions related to his citizenship and personal history. Aries argued that his claim should be dismissed with prejudice because Rozas had perpetrated a fraud on the court (and to deter future parties from similar conduct). In the alternative, Aries sought a sanction that Rozas be precluded from recovering past and future lost earnings at United States wage rates. Judge Africk noted that the party invoking the Fifth Amendment cannot hope to gain an unequal advantage against the party he has chosen to sue and that the defendant should not be required to defend against a party who refuses to reveal the very information which might absolve the defendant of liability. Thus, the Fifth Circuit has enunciated a balancing test that dismissal is appropriate only when less burdensome remedies would be an ineffective means of preventing unfairness to the defendant. In this case, Rozas did not commit perjury or provide false documents, but his invocation of the Fifth Amendment during depositions and discovery impeded Aries’ ability to investigate the claim for damages. Consequently, Judge Africk decided that the lesser sanction of precluding Rozas from seeking future wage loss awards at United States rates was the appropriate sanction. With respect to past wage loss, Rozas testified that he had not been working so it had been four years since he prepared tax returns. The parties did not brief the issue of extending the sanction to past wage losses, so Judge Africk did not address the issue of past wage losses at this time.
The death of Thomas Deem from mesothelioma allegedly caused by exposure to asbestos-containing products during his employment as an apprentice and journeyman outside machinist at the Puget Sound Naval Shipyard, returns to the Update. In the January 2020 Update, we reported that Judge Settle had held that the trigger for the three-year maritime statute of limitations for the widow’s wrongful death case was not the worker’s death but the date of his diagnosis of a work-related disease. Applying that same rule to defendants in opinions issued in January 2020, Judge Settle likewise dismissed actions that were not brought within three years of Deem’s diagnosis—the date his widow was aware of his work-related injury. See February 2020 Update. Deem’s widow appealed to the Ninth Circuit, which distinguished between a survival claim, brought to recover for the worker’s injury, which accrues when the worker knew or should have known of his injury and its cause, and a wrongful death action for the damages suffered by the decedent’s beneficiaries, which cannot accrue until the decedent’s death. Thus, with respect to the wrongful death claim, the Ninth Circuit held that, if the cause of death is known at the time of death, the wrongful death suit under the general maritime law can be brought for three years thereafter. See June 2022 Update.
On remand from the Ninth Circuit, Judge Settle addressed the motions for summary judgment of product suppliers John Crane, Crosby Valve, and William Powell. Co-workers David Wingo and Lawrence Foster signed declarations in which they recalled that they had used John Crane asbestos gasket products while working at the Puget Sound Naval Shipyard. However, they could not recall seeing Deem work on or near the John Crane gaskets. Although Wingo’s declaration stated that he saw Deem inhale dust from the removal and replacement of asbestos-containing gaskets, packing and insulation associated with valves manufactured by Crosby, Wingo could not state in his deposition whether he (Wingo) ever worked on a Crosby valve. Similarly, Wingo and Foster did not testify that they worked with or around Powell valves at the shipyard. Accordingly, Judge Settle held that the fact that asbestos material was present and the fact that there was asbestos dust in the environment did not carry the burden to establish substantial exposure under the general maritime law and did not provide support for the expert opinions about asbestos exposure, which were based on speculation. Therefore, Judge Settle dismissed the claims.
Micah Rene Hewitt was employed by Pelstar Mechanical Services, which performed work for W&T Offshore, owner of a platform on the outer Continental Shelf off the coast of Louisiana. Pelstar provided Hewitt to W&T as a “fill-in” mechanic to replace W&T’s regular mechanic on the platform, who took temporary leave. Four days later, Hewitt was injured while helping to load a crate into a grocery box when the crate fell on his foot. Hewitt brought this suit in federal court in Louisiana against W&T under the Outer Continental Shelf Lands Act, the LWHCA, general maritime law, and Louisiana law. W&T filed a motion for summary judgment, arguing that Hewitt was its borrowed servant and that the LHWCA provided the exclusive remedy for Hewitt against W&T. The parties debated the application of the Ruiz factors, and Chief Judge Brown noted that no single factor is determinative, but the Fifth Circuit has considered control to be the central factor. Chief Judge Brown cited Ruiz for the proposition that “a careful distinction must be made between authoritative direction and control, and mere suggestion as to details or the necessary co-operation, where the work furnished is part of a larger undertaking.” W&T argued that its person-in-charge on the platform directed Hewitt’s schedule and assignment, that Pelstar was not involved in Hewitt’s work, and that Pelstar had no contact with Hewitt after he went to work on the platform as a substitute for the W&T mechanic. Hewitt responded that the provisions of the master service agreement between W&T and Pelstar provided that Pelstar was working as an independent contractor and that its employees were not to be considered to be servants or employees of W&T. Hewitt argued that W&T had failed to overcome that clear pronouncement, citing evidence that Hewitt determined his work each day, did not attend formal meetings, and did not receive instruction on his job as a mechanic. W&T objected that Hewitt relied in part on his own deposition testimony that was self-serving, but Chief Judge Brown answered that he was not using ultimate or conclusory statements but provided testimony as to his own experience on the platform. Based on the contract provision and the testimony and conduct highlighted by the parties, Chief Judge Brown found factual disputes that would be resolved by the jury. Based on the fact findings, she would then determine Hewitt’s borrowed-servant status as a matter of law, applying the Ruiz factors.
Crowley Government Services operated the USNS 1ST LIEUTENANT JACK LUMUS pursuant to a contract awarded by the Military Sealift Command. Crowley contracted with Detyens Shipyards in Charleston, South Carolina for repairs to the vessel, and the contract required Detyens to comply with Crowley’s Lock-Out/Tag-Out Procedure. Detyens removed the lifeboats and stays from the davits but left the davit arms, rigging them in the upright position using a temporary wire rope and clamps. Several months later, the wire rope holding a davit arm in place failed, releasing the davit arm and killing Juan Antonio Villalobos Hernandez. Investigations revealed that an electrical arc from an unknown source caused the wire to fail. Hernandez’s beneficiaries brought this action in federal court in South Carolina, alleging causes of action against the United States (through its agent Crowley) based on Section 5(b) of the LHWCA and based on the South Carolina wrongful death and survival statutes. The principal contention was that the United States was liable for failing to require Detyens to use a stopper bar as a secondary restraint on the davit arm. Judge Gergel ruled that the sole remedy against the United States was for vessel negligence, and United States moved for summary judgment that it did not violate the Scindia standards for vessel negligence. The plaintiffs argued that the United States violated the turnover duty because it should have required that Detyens use the stopper bar. Judge Gergel answered that the turnover duty applies to the vessel’s equipment at the commencement of operations. However, there was no latent hazard that was not known to the shipyard and that would not be obvious to a skilled contractor. For the active control duty, the plaintiffs argued that the Government exercised active control over the davit repairs because Crowley was involved in implementing the Lock-Out-Tag-Out Procedure (after all the davit was secured using what was called a Crosby clamp). Although the plaintiffs produced evidence that the Government exercised some control over the davits, the plaintiffs did not establish that Crosby should have known that using only Crosby clamps (without a stopper bar) to secure the davits posed an unreasonable risk of harm to the workers (Judge Gergel noted that Detyens had used Crosby clamps to secure davit arms for years without incident). Finally, the beneficiaries argued that the United States breached the duty to intervene by allowing Detyens to perform the repairs without implementing a secondary restraint, claiming that actual knowledge that an errant electrical current might weaken the wire ropes was not required, but rather that the decedent’s injury must be reasonably foreseeable. Judge Gergel again cited the evidence that Detyens had used Crosby clamps for years without incident and concluded that there was no evidence that Crowley (or the Government) knew of any danger from using only the clamps to secure the davits. Consequently, Judge Gergel granted summary judgment to the United States and dismissed the suit.
Frank P. Ragusa, Jr. claimed that he was exposed to asbestos while working at Avondale’s Westwego Yard in Louisiana as a tacker in the construction of barges and as a crane operator on the deck of a Zapata rig in the Mississippi River. He was diagnosed with mesothelioma and brought this suit in Louisiana state court, asserting claims under Louisiana law for negligence and intentional tort against Avondale and other defendants. Avondale removed the action to federal court and moved for summary judgment based on the exclusivity of the compensation remedy under the LHWCA. Travelers, insurer for executive officers of Avondale, also moved for summary judgment on the same ground. Judge Barbier initially addressed whether the LHWCA was applicable, which involved two steps. He first held that the LHWCA, after it was amended in 1972 to extend ashore, was applicable to the exposure, even though some of the exposure pre-dated the 1972 Amendments, because the LHWCA bases the date of injury in an occupational exposure case on manifestation (Ragusa’s date of injury was, consequently, in 2021 when he was diagnosed with mesothelioma). Judge Barbier then considered the situs and status requirements for coverage under the LHWCA, as amended, and held that Ragusa’s work as a tacker (building barges) and as a crane operator (on the deck of a ship) satisfied the situs and status tests so as to be covered under the LHWCA. Judge Barbier then considered Ragusa’s argument that the LHWCA did not preempt the state tort claims, citing the “twilight zone” of concurrent jurisdiction between state and federal compensation statutes. Noting that the concurrent jurisdiction did not extend to state tort claims against a worker’s employer, Judge Barbier held the state tort claims were preempted by the LHWCA. Although he agreed with Avondale that the LHWCA did not include an exception for intentional torts, Judge Barbier also held that the facts of the case were insufficient to support an intentional claim, stating, “assuming that Avondale was aware that there was a major risk, or even a probability that Ragusa would contract mesothelioma, Ragusa has failed to bring sufficient evidence whereby a reasonable jury could conclude that Ragusa’s contracting mesothelioma was inevitable.” As the tort immunity in the LHWCA extends to co-employees (and their liability insurer under the Louisiana Direct Action Statute), Judge Barbier also granted summary judgment to Travelers.
Velma Lee Thompson brought suit in Louisiana, seeking to recover for mesothelioma that she allegedly contracted from exposure to asbestos dust while washing clothes of family members who were employed at Avondale Shipyard in Westwego, Louisiana. Avondale removed the case based on the Federal Officer Removal Statute, claiming that during the period that her family members worked at the shipyard, 35 of the 37 vessels under construction were federal vessels that were constructed under the direction of the Navy, Coast Guard, and Maritime Administration. Thompson filed a motion to remand, arguing that Avondale did not show the exposure was sufficiently related to Avondale’s actions under the direction of federal officers. Judge Guidry disagreed with Thompson, noting that the “related-to” standard is broad, does not require a direct causal nexus, and has been found where the plaintiff was “likely exposed to asbestos being used under the direction of a federal officer.” Based on the fact that 35 of the 37 ships under construction at the time of employment of the family members were federal vessels, Judge Guidry concluded that it was likely that the family members were exposed to or worked with asbestos products destined for the federal vessels. Consequently, he denied the motion to remand.
From the state appellate courts
Assignments of structured settlements under the LWHCA continue in the face of the anti-assignment language of Section 16 of the LHWCA (see September 2022 Update, discussing the decision of the Texas Court of Appeals in Great Plains Management, holding that the assignment of the right to receive structured settlement payments from an 8(i) settlement violated Section 16 and was not valid). In the Metropolitan Tower case, Donald Hill settled his claim against Dyncorp and its insurer CNA for benefits under the LHWCA as extended by the Defense Base Act in connection with injuries he suffered while working in Afghanistan. The settlement included a structured settlement annuity agreement with MetLife. After the approval of the settlement, Hill sought to transfer his LHWCA payments to Genex Capital Corp. in accordance with the Arkansas Structured Settlement Protection Act in consideration of a discounted lump sum, and Genex assigned its interest to Roosevelt Land Partners. Judge Batson of the Clark County Circuit Court in Arkansas approved the transfer of the structured payments to Roosevelt, and MetLife appealed to the Arkansas Court of Appeals, arguing that the assignments violated Section 16 of the LHWCA. Writing for the appellate court, Judge Abramson noted the different treatment given by courts to Section 16, as discussed by the Texas appellate court in Great Plains Management, and he reached the same conclusion as the Texas appellate court that the assignments contravene the anti-assignment provision in Section 16: “We hold that 33 U.S.C. § 916 prohibits the assignment or transfer of any benefits or compensation payable pursuant to the LHWCA, including those payments under a structured settlement annuity agreement because such compensation is ‘due or payable’ under the LHWCA.” Therefore, the decision of the circuit court approving the transfers was reversed.
And on the maritime front . . .
From the United States Supreme Court
The United States Supreme Court agreed to decide whether the court hearing a marine insurance dispute should determine whether a choice-of-law clause in an insurance policy violates a strong public policy of the forum state before applying the chosen law to the insurance dispute.
On March 6, 2023, the United States Supreme Court agreed to hear the petition for a writ of certiorari filed by Great Lakes Insurance in Great Lakes Insurance v. Raiders Retreat Realty Co., No. 22-500. The Supreme Court agreed to hear this question: Under federal admiralty law, can a choice of law clause in a maritime contract be rendered unenforceable if enforcement is contrary to the “strong public policy” of the state whose law is displaced? The discussion in the Update of the decision from the Third Circuit follows (together with the Update’s discussion of the decision of Chief Judge Altonaga from the Southern District of Florida for comparison in Clear Spring Property & Casualty Co. v. Viking Power LLC.
Great Lakes Insurance SE v. Raiders Retreat Realty Co., No. 21-1562, 2022 U.S. App. LEXIS 24409 (3d Cir. Aug. 30, 2022) (Ambro).
Raiders Retreat Realty, a Pennsylvania company, insured its yacht RAIDERS with Great Lakes Insurance, headquartered in the United Kingdom, for $550,000. The vessel ran aground and incurred at least $300,000 in damage, but Great Lakes denied the claim on the ground that Raiders misrepresented the vessel’s fire-suppression system’s operating ability and the policy was void from its inception. Great Lakes brought this action in admiralty in federal court in Pennsylvania, seeking a declaration that the policy was void and that it owed no coverage for the grounding, and Raiders responded with a counterclaim that included several extra-contractual liability claims based on Pennsylvania law. Great Lakes moved for judgment on the pleadings that the extra-contractual claims were not valid under New York law, which was applicable to the policy under a choice-of-law provision. Judge Robreno held that New York law applied and dismissed the extra-contractual claims. Raiders filed an interlocutory admiralty appeal under Section 1292(a)(3), and, writing for the Third Circuit, Judge Ambro held that the interlocutory appeal was proper under Section 1292(a)(3) because the dismissal of the extra-contractual claims determined the rights of the parties on those claims. He then addressed the issue whether to enforce the New York choice-of-law clause and the argument that the principles enunciated by the Supreme Court in the Bremen and Shute cases with respect to forum-selection clauses should be used in determining the validity of choice-of-law provisions in maritime contracts such as the insurance policy on the yacht (the Supreme Court held that forum-selection clauses are facially valid and should be honored unless there is a compelling and countervailing reason rendering enforcement unreasonable, such as when the enforcement would contravene a strong public policy of the forum where the suit is brought). Great Lakes argued that the construct used for forum-selection clauses was “utterly irrelevant” in connection with choice-of-law clauses, and the district court agreed, concluding that public policy of a state where the case was filed could not override the presumptive validity under maritime law of choice-of-law clauses where the chosen forum has a substantial relationship to the parties or the transaction. Judge Ambro disagreed, reasoning that the principle of generally enforcing choice-of-law provisions in marine insurance contracts “is not altogether separate” from the regime for forum-selection clauses. Holding that the framework enunciated in Bremen and Shute extended to the choice-of-law provision in the Great Lakes policy, Judge Ambro remanded the case to the district court to consider whether Pennsylvania has a strong public policy that would be thwarted by application of New York law. See October 2022 Update. [This opinion should be compared with the opinion in Clear Spring Property & Casualty Co. v. Viking Power LLC and Great Lakes Insurance SE v. Andersson, discussed below, which was also summarized in the October 2022 Update].
Clear Spring Property & Casualty Co. v. Viking Power LLC, No. 21-62306, 2022 U.S. Dist. LEXIS 162223 (S.D. Fla. Sept. 8, 2022) (Altonaga).
The M/Y MISS DUNIA was destroyed by a fire in August 2021 during coverage under a policy issued by Clear Spring Property and Casualty Co. and Certain Underwriters at Lloyd’s of London that insured the hull for up to $1,925,000. The policy provided that a breach of any of the policy’s warranties would void the policy from inception. It also contained a warranty that fire-extinguishing equipment would be properly installed and maintained in good working order, including weighing the tanks once a year and certification/tagging and recharging as necessary. The vessel had handheld fire extinguishers and two fixed fire extinguishers, but the last time they were professionally inspected, weighed, and certified was December 2018 (although they were checked but not weighed). After the fire, the insurers denied the claim, supported by the opinion of their fire expert, Adam Goodman, that the maintenance of the fire extinguishers fell short of the manufacturer’s requirements and industry standards. The vessel owner responded that the fire-suppression system functioned correctly on the day of the fire and any breach of the warranty was unrelated to the damage. The insurers brought this action in federal court in Florida seeking a declaratory judgment that the policy was void ab initio and that there was no coverage for the loss. Both parties filed motions for summary judgment, and Chief Judge Altonaga began by considering the applicable law. The policy contained a provision for the application of principles of entrenched maritime law and, in its absence, New York law. As the Eleventh Circuit had recently applied New York law based on a similar clause, Chief Judge Altonaga applied New York law to the warranty provision. As New York law permits marine insurers to deny coverage for breaches of promissory warranties regardless of whether the breach is causally connected to a later loss, Chief Judge Altonaga held that the policy was void and that summary judgment should be granted to the insurers.
This litigation arises from the collision between the ACX CRYSTAL, chartered by Nippon Yusen Kabushiki Kaisha (NYK Line), and the U.S. Navy destroyer USS FITZGERALD in Japanese territorial waters, killing seven sailors and injuring at least forty others. Although NYK Line’s vessels call in United States ports, the CRYSTAL had not called in the United States and was on an intra-Asia trade route. Two suits were filed against NYK Line in federal court in Louisiana on behalf of injured and deceased sailors, and Judge Africk dismissed the cases for lack of personal jurisdiction, holding that NYK Line was not subject to general jurisdiction in the United States. (See July 2020 Update). On appeal, the Fifth Circuit panel began by analyzing Fed. R. Civ. P. 4(k)(2), which provides that in cases arising under federal law, federal courts have personal jurisdiction to the constitutional limit, provided that no state could exercise jurisdiction. That rule was drafted in response to the 1987 decision of the Supreme Court in Omni Capital, in which the Court affirmed the decision of the Fifth Circuit that the district court lacked jurisdiction over the defendants in a case arising under federal law when the federal law was silent as to service of process and the state long-arm statute did not reach the defendants. Thus, litigants were unable to bring an action under federal law against a foreign defendant who was outside the reach of the state long-arm statute. The effect of the amendment to the federal rule is that state courts remain subject to the 14th Amendment Due Process Clause in determining whether defendants are subject to personal jurisdiction in state courts, and the constitutional limits of personal jurisdiction in federal courts in cases arising under federal law are limited by the Fifth Amendment’s Due Process Clause. In the latter case, the court looks to the contacts of the defendant with the United States. As maritime law is federal law for purposes of Rule 4(k)(2) [but not, ironically, for purposes of federal question jurisdiction], the Fifth Circuit noted that the Fifth Amendment’s due process inquiry was applicable to the suits against NYK Line. The plaintiffs argued that the requirements of due process under the 14th Amendment differ from those in the Fifth Amendment, and they proposed a national jurisdiction test. They argued that the court should look to a defendant’s national contacts with the inquiry whether a foreign (non-U.S.) defendant who is not amenable to jurisdiction in any state court, was doing systematic and continuous business in the United States, and whether the claim in suit was related to that business. The plaintiffs reasoned that concerns over federalism, which have been critical in recent 14th Amendment due process cases such as Daimler AG v. Bauman, are not applicable in cases brought in federal court under federal law using Fifth Amendment due process, and the Fifth Circuit panel added that a distinction between the two due process clauses was supported by the limited constitutional rights of foreign defendants. Although the judges on the Fifth Circuit panel found the plaintiffs’ arguments to be persuasive, the Fifth Circuit had previously applied Daimler’s due process analysis for general jurisdiction to a case in which jurisdiction was based on Rule 4(k)(2). Following the Fifth Circuit’s rule of orderliness, the panel was bound by the prior decision. As Judge Africk had correctly followed the Fifth Circuit’s existing application of Daimler’s due process analysis for general jurisdiction, the panel affirmed that NYK Line was not subject to personal jurisdiction in this case. However, two of the members of the panel (Judges Elrod and Willett) concurred to state that the case presented “a good vehicle” for the court to grant en banc consideration of the due process standard for personal jurisdiction in cases under Rule 4(k)(2). See June 2021 Update.
The Fifth Circuit agreed to en banc rehearing, and 12 members of the court agreed with Judge Africk that NYK Line was not amenable to the general jurisdiction of American courts despite its contacts with the United States. Writing for the majority, Judge Jones first rejected the argument that NYK Line, as a foreign corporation, had no Fifth Amendment due process rights, particularly in view of the decisions of the Supreme Court affording foreign corporations due process rights under the Fourteenth Amendment. The question was what standard governed personal jurisdiction over foreign defendants sued on federal claims in federal court under the Fifth Amendment. The plaintiffs argued that the due process inquiry under the Fifth Amendment was simply whether the defendant was doing enough systematic and continuous business in the United States that it could be subject to suit in federal court. Judge Jones reasoned that this “novel theory” eschewed the distinction between general and specific personal jurisdiction, dressing a general jurisdiction theory in specific jurisdiction garb. Instead, Judge Jones held that the Fifth Amendment due process test for personal jurisdiction required the same minimum contacts with the United States as the Fourteenth Amendment requires with a state. Although the plaintiffs argued for an admiralty exception, Judge Jones recognized that admiralty subject matter jurisdiction is broad, extending to torts on the high seas, but she found no support in the Fifth Amendment for the admiralty exception, stating that “shibboleths cannot carry the plaintiffs’ argument.” Applying the Fourteenth Amendment standard for general jurisdiction (the plaintiffs did not claim that NYK Line was subject to specific jurisdiction), Judge Jones held that the contacts would have to be so substantial and of such a nature as to render it at home in the United States. Undoubtedly, NYK Line’s contacts were substantial. However, they were only a minor portion of its worldwide contacts. Accordingly, the majority affirmed Judge Africk’s rulings that NYK was not amenable to the general jurisdiction of American courts despite its contacts with the United States.
Five judges (in three opinions authored by Judges Elrod, Higginson, and Oldham) dissented from the importation of Fourteenth Amendment standards into the Fifth Amendment due process analysis, with Judge Elrod comparing the reasoning to putting new wine into an old wineskin. See September 2022 Update.
On March 20, 2023, the Supreme Court declined to hear the petition for a writ of certiorari filed by Stephen Douglass and the other plaintiffs, which presented these questions:
- Whether the Fifth Amendment’s Due Process Clause requires a foreign defendant to be at home – the test for state-court general jurisdiction under the Fourteenth Amendment – when jurisdiction under Federal Rule of Civil Procedure 4(k)(2) is invoked, which would make that Rule a nullity.
- Whether personal jurisdiction exists under Article III of the Constitution, which endows federal courts with admiralty jurisdiction, and the law of nations when a foreign ship collides with an American ship, in this instance an American warship, on the high seas.
From the federal appellate courts
John Newbold and his nephew Jason Rodgers were fishing in Bayou D’Arbonne in Louisiana in a 14-foot flat-bottom aluminum boat owned by Rodgers. Rodgers turned the boat westward into an intersecting waterway and it struck a “Do Not Anchor or Dredge” pipeline sign, the top of which was located six inches below the water surface. Newbold was thrown from the boat and died from his injuries. The intersecting waterway was two 50-foot pipeline right-of-ways that were owned by Kinder Morgan and SNG Operator. Newbold’s beneficiaries brought this suit in Louisiana state court against Kinder Morgan and SNG Operator, and the defendants removed the suit to the Louisiana federal court based on diversity. The defendants moved for summary judgment, arguing that Louisiana law applied and Louisiana’s recreational use statutes barred any recovery. This argument required a finding that the case did not fall within the admiralty jurisdiction and that admiralty law did not apply. The defendants presented evidence that the pipeline sign was located in an area of wetlands with perennial emergent grassy vegetation that can tolerate semi-permanent, but not permanent flooding. The area is subject to seasonal flooding from the Ouachita River, but the area of the sign was 58 feet from the location where vegetation stopped, and 67% of the time the base of the pipeline sign was on dry land. Reasoning that a waterway is navigable if, in its ordinary condition, trade and travel may be conducted over it in the customary modes of trade and travel on water, Judge Doughty held that the area could not be used for navigation in its ordinary condition because it was dry 67% of the time and was outside of the navigable waters of Bayou D’Arbonne. As Louisiana law applied, Judge Doughty dismissed the claims with prejudice. See July 2022 Update.
Newbold’s beneficiaries appealed to the Fifth Circuit, and Judge Engelhardt began his analysis with the proposition that the Commerce Clause gives the United States a dominant servitude over the navigable waters of the United States. However, that servitude does not burden land that is only submerged when the river floods, and flood waters on land that is unburdened by the navigational servitude are not navigable for purposes of federal law. The beneficiaries argued that the Corps of Engineers had the right to permanently flood lands in the Refuge where the allision occurred that lie below 65 feet above mean sea level. As the allision occurred at 55 feet above mean sea level, the beneficiaries claim that the allision occurred within the navigational servitude. Judge Engelhardt agreed that the navigational servitude extends laterally to the entire water surface and bed of a navigable waterway that is below the ordinary high-water mark, and the ordinary high-water mark is set at the line of the shore established by the fluctuations of water. Therefore, if the Corps permanently flooded the Refuge, the water would likely be navigable. However, as the Corps did not permanently flood the Refuge, the water was not navigable. The beneficiaries also argued that the allision occurred below the ordinary high-water mark of Bayou D’Arbonne. They advocated a vegetation test (from the Third Circuit) that the ordinary high-water mark should be determined by finding the land upon which the waters have visibly asserted their dominion so that the value for agricultural purposes has been destroyed. Judge Englehardt noted that the location of the allision was on land that was dry 67% of the time and where vegetation was not destroyed, as it required mowing with some regularity. And, more importantly, the Bayou did have an unvegetated channel that was 597 feet wide at the location where the boat split off to fish near the sign, which was located 58 feet away from the unvegetated channel. Judge Engelhardt noted that the Eleventh Circuit had described a definition as ludicrous that would have extended the navigational servitude to areas adjacent to the low water channel that revert to a swampy or even dry condition as the waters recede. Accordingly, he held that the unvegetated channel established the ordinary high-water mark of the Bayou. Finally, the beneficiaries argued that there was a fact question whether the location of the allision was susceptible of being used in its ordinary condition as a highway for commerce so as to be navigable in fact (The Daniel Ball). Judge Engelhardt noted that navigability is not destroyed by the waterway being interrupted by occasional natural obstructions or portages, but the essential point was whether the waterway afforded a channel for useful commerce. The only evidence the beneficiaries presented for a commercial purpose for the channel was the sign to warn expected boat traffic, and Judge Engelhardt found that to be insufficient to establish potential commercial value so that the water could be called navigable. Therefore, the appellate court affirmed the determination that there was no admiralty jurisdiction and that the suit was barred under state law.
Caterpillar Financial and Eksportfinans provided a loan to Marfield to build an offshore construction vessel, the M/V CABALLO MAYA, and Marfield executed First, Second, and Third Preferred Naval Mortgages to Eksportfinans and Caterpillar that were recorded in Panama. Caterpillar and the Norwegian Government provided a loan to Shanara Maritime to build another offshore construction vessel, the M/V CABALLO MARANGO, and Shanara executed First and Second Preferred Naval Mortgages to Caterpillar, Norway, and KFW IPEX-Bank (for cranes) that were recorded in Panama. The vessels were chartered to Oceanografia for use in Mexico, and the Mexican government seized the vessels in connection with a criminal investigation of Oceanografia. Grupo R, a Mexican oil and gas conglomerate, agreed to purchase the vessels in an agreement subject to English law with a London arbitration agreement. When Shanara and Marfield were unable to obtain release of the vessels from the Mexican government, in violation of the purchase agreements, Grupo initiated a London arbitration with Shanara and Marfield, and the panel entered awards of $5 million each against Marfield and Shanara. Shanara and Marfield made no loan payments to the lenders on any of the mortgages, including Caterpillar’s providing of additional financing. Grupo filed this suit in federal court in Texas to confirm the arbitration awards and to attach the vessels under Texas law so they could be sold to satisfy the arbitration awards. The vessels had been released from the Mexican seizure and were located in Galveston, Texas. The lenders intervened in the case and sought a judgment against Marfield and Shanara in personam and against the vessels in rem. The vessels were re-arrested under Rule C, and Judge Bennett ordered the vessels sold. The MAYA was sold for $1.7 million, and Caterpillar was the successful bidder for the MARANGO for $5 million based on a credit bid (Caterpillar had to post a bond of $4.95 million to confirm the sale). Judge Bennett confirmed the arbitration awards (under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards) and then held a bench trial to determine the priorities between Grupo’s state-created liens and the lenders’ ship mortgages under Panamanian law. Judge Bennett held that Marfield and Shanara were in default on their loans/mortgages and the mortgages outranked the state-created liens arising from the attachment of the vessels under Texas state law. Grupo appealed to the Fifth Circuit, which held that Panama law governed the substance of the liens, and the law of the forum (United States maritime law) governed the ranking of the liens. The Grupo liens arose when the vessels were attached under Texas law and ranked in the lowest category (attachment liens). The Fifth Circuit addressed the issue of the validity of the mortgages under the Commercial Instruments and Maritime Liens Act and Panama law, and the lenders argued that their Panamanian mortgages were classified with the rank of preferred ship mortgages (arising when there is a failure to pay), Under the CIMLA, a mortgage on a foreign vessel is preferred if it is properly executed and recorded under the laws of the nation where the vessel is registered. Grupo argued that the preferred mortgages were invalid and unenforceable against third parties (such as Grupo) because they did not include loan repayment schedules or their corresponding payment dates. Judge Bennett considered testimony from competing experts and held that the mortgages were valid and enforceable under Panama law, and the Fifth Circuit concluded that Judge Bennett correctly held that the mortgages were enforceable under CIMLA and Panama law, giving them priority over the state-created attachment liens. Grupo also argued that Caterpillar and KFW waived their lien positions for the judicial sales of the vessels. Grupo asserted that Caterpillar was provided an unfair benefit because it did not have to place any money in the court’s registry for the credit bid on the MARANGO, and that KFW forfeited its in rem claim by failing to seek substitute security. As Grupo was the only party to move for substitute security, it argued that it was the only party to preserve its lien claims. Noting that Grupo did not offer any authority for its assertion that a secured creditor’s failure to seek substitute security forfeits its lien, the Fifth Circuit affirmed the decision of the district court on the validity, enforceability, and priority of the liens.
From the federal district courts
Michael Dorris, Jr., Christina Dorris, and Jennifer Tressler and twelve minors rented a 22-foot pontoon boat from Under the Bridge Watersports for pleasure cruising and tubing on the Isle of Wight Bay, a coastal bay in Maryland. Prior to boarding the vessel, the adults signed a Participant Agreement by which they released Under the Bridge for any claims arising from the activity, including negligent acts or omissions of Under the Bridge. They also signed a portion of the Agreement by which they agreed to indemnify Under the Bridge for any claims on behalf of the minors. The vessel’s capacity plate stated that it could carry 16 people or 2,270 pounds, and Under the Bridge selected the vessel based on the number of guests (15) without considering their weight. Under the Bridge’s dockhand gave the guests instructions on navigation and safety and instructed them on “trimming” the vessel in the event the vessel became lodged on a sandbar (turn off the engine, lift the propeller, push the vessel off the sandbar, and restart the engine with the propeller down). Michael Dorris sailed the vessel into Chesapeake Bay, and the vessel became lodged on a sandbar. The passengers were unable, however, to power the vessel after they freed it from the sandbar and the vessel became caught in a strong current that pushed the vessel into a bridge. The passengers went overboard, but all were eventually rescued by the Coast Guard. Under the Bridge brought this limitation action in federal court in Maryland, and the passengers brought claims in the limitation action. They claimed that the vessel became stuck on the sandbar because it was overloaded and that the owner was negligent with respect to the mechanical failure in the trim mechanism. Under the Bridge and the claimants filed motions for summary judgment, and the claimants based their arguments on the opinion of Stephen B. Mason (who handles insurance claims and performs risk inspections for major watercraft insurance carriers). Mason opined that the vessel was overloaded for normal use and that the overloading, coupled with the mechanical failure, caused the accident. He testified that the failure of the trim mechanism would have left the vessel just as much at the mercy of the current with one passenger as it would with 15 passengers and that he did not have an opinion why the trim mechanism failed (Judge Russell found it notable that the Coast Guard Report stated that the trim mechanism was found in the down position after the incident and the investigation revealed that it was fully functional). Turning to the two allegations for fault, Judge Russell held that the claimants could not successfully argue that the owner was liable for negligence based on the alleged mechanical failure because their expert testified that he did not know what caused the failure and the failure could have occurred without any negligence on the part of the owner. That conclusion then doomed the theory of negligence for overloading the vessel because the expert testified that the vessel would have been equally at the mercy of the current if there were one person or 15 on the boat. Thus, the claimants could not demonstrate that the overweight condition was the proximate cause of the incident. Judge Russell also considered the owner’s argument that the passengers were barred by the release/indemnity in the Participant Agreement. He reasoned that exculpatory clauses and indemnity agreements are enforceable under both maritime law and Maryland law and that the provisions in the Participant Agreement were unambiguous and understandable, clearly providing for the release of liability for the negligence of the owner. Although the claimants argued that the clause should be unenforceable because the owner was grossly negligent, Judge Russell held that the claimants could not satisfy the more relaxed standard for simple negligence. Accordingly, Judge Russell granted summary judgment to Under the Bridge and denied summary judgment to the passengers.
Leonardo Tundidor, a passenger on the CARNIVAL SENSATION, fell on what he alleged was slippery tile flooring in the Plaza Aft Lounge of the vessel while participating in a scavenger hunt. He brought claims for direct and vicarious liability against the cruise line in this suit in federal court in Florida, and the cruise line moved for summary judgment with respect to negligent design, causation, open and obvious danger, notice, and vicarious liability. The cruise line argued that the negligent design claim failed because there was no evidence that the cruise line participated in or approved the choice of flooring in the Aft Lounge. However, the Occupational Safety Manger for the cruise line testified that the tile was part of the original construction and was based on specifications from the cruise line’s architect that had been approved by the cruise line. The cruise line challenged causation because no witness saw any kind of liquid on the floor; however, Tundidor presented testimony from passengers that before the scavenger hunt, passengers were sitting on the floor and placed their drink glasses on the floor. The witnesses did not see anyone mop or try to clean the floor after it was cleared for the scavenger hunt. Therefore, Magistrate Judge Otazo-Reyes held that there was a fact question whether there was liquid on the floor. The cruise line moved for summary judgment that the danger of running on a tile floor in one sock and one dress shoe is open and obvious so that there was no duty to warn. However, Magistrate Judge Otazo-Reyes held that the cruise line had unduly narrowed the danger alleged by the passenger, noting that the passenger’s expert had opined about the slippery condition of the tile when wet, dry, and traversed in socks. Magistrate Judge Otazo-Reyes reasoned that the presence of an unreasonably slippery surface is generally not open and obvious because a reasonable observer would not be alerted to the degree that the floor was slippery. Although the cruise line argued that it lacked notice, Tundidor identified prior incidents, including an incident in which a passenger who was wearing socks and participating in a scavenger hunt on the SENSATION in the Aft Lounge slipped on the floor. Thus, Magistrate Judge Otazo-Reyes denied summary judgment on the notice issue. Finally, with respect to the claim for vicarious liability, Tundidor argued that there was negligence by cruise line employee Christian Williams, host of the scavenger hunt, for failing to advise the participants not to run during the game (in violation of the cruise line’s written policy advising hosts to inform guests at the outset of the game of the “no running” rule). This was exacerbated when Williams announced that participants had to present a sock with a hole in it to win a prize and the participant did not have to take off the sock. Consequently, Magistrate Judge Otazo-Reyes recommended that summary judgment be denied.
The M/V BOONE, owned by Legacy, sank in the Mississippi River while it was being towed by American Commercial Barge Line’s tug, M/V DAVID A. LEWIS JR. A third-party’s vessel, the M/V RAY A. ECKSTEIN, struck the sunken BOONE. Legacy filed this action for limitation of liability in federal court in Illinois, and ACBL filed a claim against Legacy seeking to recover expenses it paid to the owner of the ECKSTEIN. Legacy counterclaimed against ACBL for breach of contract for failing to complete the tow with proper care, for bailment (failing to return the barge in good condition), and for negligence and gross negligence. ACBL moved for summary judgment on Legacy’s counterclaim. Legacy and ACBL had entered into agreements for the movement of barges, but this was the first time Legacy had contracted for the movement of a tug. The arrangement was made with a telephone call from Legacy’s president, and ACBL followed up with an email confirming the booking and stating that it was subject to ACBL’s standard terms and conditions (with a link to the standard terms on ACBL’s website). The email added that Legacy’s tender of the tug for towing would be deemed an acceptance of the terms and conditions. Legacy’s president never looked at the terms, and ACBL argued that it was not liable for breach of contract because the terms relieved ACBL of any duty to inspect the BOONE and obligated Legacy to indemnify ACBL for damages. No details were provided about the conversation in which the tow was requested, and Judge Gilbert found fact questions whether the contract was a simple agreement to tow the BOONE or whether the terms and conditions were incorporated into the contract. Accordingly, he declined to grant summary judgment on the contract claim. With respect to the bailment claim, Judge Gilbert noted the Supreme Court’s decision in Stevens v. THE WHITE CITY, holding that towage does not create a bailment relationship between the tug and towed vessel. However, he cited the criticism of the non-bailment rule and exceptions that had been created by some courts. However, as the Seventh Circuit has not established any exceptions to the Stevens non-bailment rule, Judge Gilbert held that there was no presumption of negligence (based on bailment law) and that Legacy would have to establish negligence on the part of ACBL. That took the court to the claims for negligence and gross negligence. Judge Gilbert reviewed the obligations under the general maritime law. The tug owes the owner of the tow the duty to exercise reasonable care, and that duty includes the duty to notice obvious conditions of unseaworthiness in the towed vessel (but not to conduct a detailed inspection). The owner of the towed vessel owes the duty to ensure that the vessel is sufficient to withstand the ordinary perils to be encountered during the tow. As there were fact questions with respect to the condition of the tug and what caused its sinking, Judge Gilbert declined to grant summary judgment on the claims involving negligence and gross negligence. Recognizing that the general maritime law contains principles involving presumptions and burdens of proof in the towage context, he directed the parties to submit trial briefs on the legal presumptions and burdens of proof. Finally, Judge Gilbert found that ACBL was not entitled to summary judgment on Legacy’s claim of breach of an implied warranty of workmanlike performance based on the same factual disputes that prevented summary judgment on the negligence claim.
Vantage Travel Service sells luxury cruises and tours, and Lynn Hammond and David Horn booked a trip to Egypt on Vantage’s vessel, M/S NEBU. Hammond and Horn purchased a Travel Protection Plan from Vantage to insure the cost of the trip (the Plan was underwritten by United States Fire Insurance Co.). Vantage rescheduled the trip twice because of construction delays, and Horn was diagnosed with Chronic Obstructive Pulmonary Disease and had to cancel the trip. He sought a full refund under the Travel Protection Plan, but Vantage only offered a refund in future travel credit, not cash. Hammond and Horn attempted to initiate an arbitration with the American Arbitration Association in accordance with the arbitration clause in the Travel Protection Plan, but the AAA declined to administer the claim because Vantage had not registered its arbitration clause with the AAA’s Consumer Clause Registry or completed the other steps in the AAA’s registration process for consumer claims. Hammond and Horn then brought this suit in Texas state court against Vantage and United States Fire for breach of contract and violations of Texas consumer and insurance statutes, and United States Fire removed the case to federal court. Vantage moved to compel arbitration, and Hammond and Horn argued that Vantage had waived its right to compel arbitration. Judge Hanks agreed that Vantage had waived its right to compel arbitration by failing to comply with the AAA’s registration protocols for consumer claims, stating that arbitration “has been had” in accordance with the arbitration agreement.
Opinion Al’Lisha, Charlene, and Terika Jones
Sammie Jones claimed myriad medical conditions resulting from toxic exposure from the DEEPWATER HORIZON/Macondo blowout near his residence in Gautier, Mississippi. David Landrieu claimed exposure at Grand Isle, Louisiana. Denise Richoux asserted exposure from clean-up work at Grand Isle, Louisiana. Rachel Maneen alleged exposure at Pascagoula, Florida (“Indiana River”). Barbara Pearson claimed exposure near her residence in Biloxi, Mississippi. Donald Joseph Scott and Nicole Leigh Scott, individually and for their minor children and Corey Scott, asserted exposure at Lafitte, Louisiana. Charlene Jones claimed exposure at Moss Point and the Gulf waters of Mississippi, and Al’Lisha Jones and Terika Jones claimed exposure near their residence in Moss Point, Mississippi and on their father’s clothing. As these plaintiffs failed to support their claims with expert testimony as to causation, Judge Milazzo granted summary judgment for lack of evidence of causation and dismissed the suits.
Timothy Bennett Miller claimed exposure to crude oil and dispersants in the environment in Gulfport, Biloxi, Waveland, and Bay St. Louis, Mississippi after the Macondo/DEEPWATER HORIZON spill. Wesley Michael Loftus claimed exposure at Moss Point and Bay St. Louis, Mississippi. Robert Anthony Franks asserted that he was exposed at Dauphin Island and Mobile, Alabama. Brenda Joyce Jackson alleged exposure at Biloxi, Woolmarket, Pass Christian, and Petit Bois Island, Mississippi. Charlie David Hodge claimed exposure at Mobile, Alabama and Venice Louisiana. Alvin Holifield alleged exposure at Mobile, Theodore, and Dauphin Island, Alabama. Theresa Hurd claimed exposure in Picayune, Mississippi, and Steven Marcell Hurd claimed exposure from beach cleanup and decontamination near Biloxi and Pascagoula, Mississippi and New Orleans, Louisiana. Whirlee Powell alleged exposure while performing cleanup near Gulfport, Pass Christian, “Petit Boyd,” Ship Island, Horn Island, and Cat Island, Mississippi. Cedric Isom asserted that he was engaged in cleanup near Gulfport, Pass Christian, Pascagoula, Long Beach, Petit Bois Island, Ship Island, and Horn Island, Mississippi. Robert Carlos Ramey claimed exposure from cleanup sites in Mississippi and Alabama, including Waynesboro and Meridian, Mississippi, and Pine Hills and Pennington, Alabama. Marvin Jones alleged exposure at Dauphin Island, Alabama, and Pascagoula, Mississippi. Arlene Hinton, Daniel Hatcher, Ray Sylvester Brown, Cheryl Lakisha Fielder, Amanda Victoria Upchurch, William Shephard Fast, and Richard Terrell Magee asserted that they were exposed to oil and dispersants during their work in the clean-up of the spill. Stephan Kolian alleged exposure to oil and dispersants while working as a scientific diver in the Gulf of Mexico in the Main Pass, Mississippi Canyon, and Grand Isle areas, and Roderick Belton claimed exposure as a clean-up worker at Dauphin Island and Theodore, Alabama. William Arthur Bowden, Jr., alleged that he was exposed to toxic chemicals at Dauphin Island, Theodore, and Mobile, Alabama; Biloxi, Mississippi; and Pascagoula, Florida. Kendrick Sharonta Liddell alleged exposure as a recovery technician, cleaning oil and oil-soaked debris at Moss Point and Pascagoula, Mississippi. Chadwick Barrington asserted exposure as a beach cleanup worker in Florida and Alabama. Jimmy Briggs alleged that he lived in Long Beach, Mississippi and suffered exposure to crude oil and chemical dispersants as a nearby resident. Mario De’Shannon Durr claimed exposure as an onshore clean-up worker, picking up oil, tar balls and oil-soaked debris from the beaches of Mississippi, Alabama, and Florida. These plaintiffs presented the expert report of Dr. Cook to support the causation requirement for their claims. BP moved to exclude Dr. Cook’s opinions, and the plaintiffs asked the court to allow Dr. Cook’s expert testimony as a sanction for BP’s alleged spoliation of evidence of the plaintiffs’ exposure. Judges Fallon, Vance, Milazzo, and Vitter agreed that Dr. Cook’s opinions should be excluded and then addressed the spoliation argument. They noted that spoliation is a sanction for the destruction of evidence, but the plaintiffs argued in these cases that BP should have gathered data. Without a duty to collect the data and as no such evidence existed, there could be no spoliation. Additionally, the admission of a deficient expert report would not be the cure even if there were spoliation. Consequently, Judges Fallon, Vance, Milazzo, and Vitter granted summary judgment to BP and dismissed these actions with prejudice.
Shadronica Street claimed exposure from cleanup efforts near Cat Island and Long Beach, Mississippi. She presented the opinion of Dr. Jerald Cook, an occupational and environmental physician, to carry her burden on causation. BP moved for the exclusion of the expert opinion and for summary judgment. Street filed a supplemental opinion with an affidavit of Dr. Linda Birnbaum, the Director of the National Institute of Environmental Health and Sciences from 2009 to 2019. She stated that it was not possible to plausibly establish the quantitative exposure to a given chemical at a given level during the BP response and that Dr. Cook used the best available methodologies. However, Judge Vitter noted that the affidavit did not cure the deficiencies in Dr. Cook’s report, which were still insufficient on general causation and were excluded. Consequently, without expert support, the case was dismissed with prejudice.
Robert Leland Regan, III, and Laura Guillory Regan alleged exposure to oil and dispersants at Destin, Navarre (Opal Beach), and Pensacola (Fort McRae), Florida. They supported their claims with expert opinions of William J. Rea (M.D.) from the Environmental Health Center and Nancy A. Didriksen (Ph.D.). BP moved for summary judgment on the ground that the Regans had not provided admissible expert testimony to establish causation. In the first place, Dr. Rea had passed away before his testimony could be elicited. However, even if there were an exception to the hearsay rule, Judge Milazzo did not believe that Dr. Rea’s opinions were sufficient on causation because he did not identify a particular chemical to which the Regans were exposed or the dose. The Regans did not fare any better with the reports of Dr. Didriksen for their neuropsychological consultation as the opinion focused on personality traits, memory, and other behavioral qualities. The opinions did not analyze the probable level of exposure or opine on the minimum level of exposure that could cause the conditions claimed by the Regans. Therefore, Judge Milazzo dismissed all of their claims.
Cher Griffin Brown asserted that she developed a long list of adverse medical conditions (including constipation, headaches, and sinus problems) from exposure to crude oil and chemical dispersants while working as a shoreline cleanup worker on the beaches of Biloxi, Gulfport, and Pascagoula, Mississippi. Brown designated Dr. Jerald Cook as her expert on causation, and BP moved for summary judgment, arguing that there was no admissible expert testimony to satisfy the requirement for specific causation. Brown did not contest the argument that she did not provide expert evidence, but she argued that expert testimony was not necessary to establish causation for conditions where causation was within the common knowledge of a layperson (citing Louisiana cases). BP argued that the exception to the requirement for expert testimony was not applicable in this maritime case, but Judge Milazzo noted that other judges in the Eastern District of Louisiana had applied a “relaxed rule” in maritime cases when the nature of the injury was within the common knowledge of lay persons. Thus, Judge Milazzo had to determine which medical conditions were within common knowledge of lay people (where no expert opinion on specific causation was required). After contrasting a case where the plaintiff complained of “irritant symptoms,” such as nausea, coughing, headaches, dizziness, and respiratory problems (no expert needed), with a case where the plaintiff developed lung cancer (expert opinion required), Judge Milazzo held that Brown’s complaints of hypertension, chest pain, and joint pain were not within the common knowledge of lay persons, but the conditions of headache and sore throat were likely within the knowledge of lay people and did not require an expert opinion. Consequently, Judge Milazzo granted BP’s motion for summary judgment in part and dismissed some of Brown’s claims.
Kara Lemquist, a passenger on the CARNIVAL MAGIC, fell on a ramp adjacent to a wedding chapel on Half Moon Cay in The Bahamas and brought this action against the cruise line in federal court in Florida. She claimed the cruise line was negligent for failure to inspect and maintain the ramp (and negligent failure to warn) and was negligent in the design of the ramp. The cruise line moved to dismiss the claims, arguing with respect to the inspection/maintenance and warning claims that Lemquist failed to adequately plead notice of the danger of the ramp. Applying admiralty law because Lemquist was traveling back to the ship along the only safe means of ingress and egress [even though it was on the island], Chief Judge Altonaga held that Lemquist adequately pleaded notice from a combination of factors: the ramp had been in place since 2015, the cruise line regularly visits the location, the ramp allegedly violated applicable industry standards, and there were prior falls on similarly configured ramps. Chief Judge Altonaga came to a different conclusion with respect to the allegation that the cruise line failed to design and install the ramp in a reasonably safe manner. Lemquist emphasized that the cruise line owned, operated, and controlled Half Moon Cay and its facilities and frequently visited them. However, Lemquist did not plead that the cruise line participated in or was in any way implicated in the allegedly unsafe design. As there was no description of how the cruise line was involved in the design, Chief Judge Altonaga dismissed that claim.
Marek Matthews worked overseas as a seaman and captain for Tidewater from 1982 to 2016, becoming a lawful permanent resident alien in Miami, Florida in 2007. Matthews signed multiple Working Agreements with Tidewater through the years that included an English choice-of-law provision and a forum-selection clause for the High Court of Justice in London. Matthews alleged that he sustained kidney damage and prostate and bone cancer from exposures on Tidewater vessels in the Red Sea, and he brought this action in Louisiana state court under the Jones Act and general maritime law (invoking the Saving-to-Suitors Clause), asserting that he was hired from Tidewater’s New Orleans office, underwent physical examinations over the years in Houma, Louisiana, and called his boss in New Orleans when he had a major problem. Tidewater removed the suit to federal court and moved to dismiss the case on the basis of forum non conveniens, arguing that Matthews had no claim under the Jones Act or general maritime law because he was not a citizen or permanent resident alien of the United States at the time of the exposure, the exposure occurred outside the territorial waters of the United States, and Matthews was injured while employed on vessels servicing oil wells in the Red Sea (arguing that Egyptian law applied by application of the Lauritzen/Rhoditis factors). Although Matthews argued that Judge Vitter must first resolve the choice of law before considering the forum non conveniens argument, Judge Vitter held that order of proceeding advocated by Matthews contradicted the Fifth Circuit’s analysis in In re Air Crash based on the Supreme Court’s Piper decision. Judge Vitter then considered the mandatory London forum-selection clause and held that it was valid and enforceable. As the clause was valid, Judge Vitter reviewed the public interest factors in light of the rule that the factors would justify refusal to enforce the clause only in “truly exceptional circumstances.” As her analysis of the factors weighed in favor of dismissal, Judge Vitter dismissed the case on the basis of forum non conveniens.
Wapiti Energy owns oil storage barges in Louisiana waterways and insured the barges with hull and P&I coverage issued by Clear Spring. When Hurricane Ida struck Louisiana in 2021, Wapiti’s barge SMI 315 broke free and washed aground on marshland owned by ConocoPhillips (coincidentally, Conoco was the charterer of the barge in the leading wreck removal case in the Fifth Circuit interpreting the requirement that the removal be compulsory by law). The barge’s hull remained intact, no oil leaked, and there was no immediate threat of leakage from the grounded barge. Wapiti received bids for removal of the barge and submitted them to Clear Spring pursuant to the wreck removal coverage under the P&I policy (when removal is compulsory by law). Clear Spring paid for the hull damage under the hull policy, but it declined to pay the $926,840.32 for the removal of the barge. Wapiti brought this suit against Clear Spring in federal court in Texas under admiralty and diversity jurisdiction for breach of contract (citing the wreck removal provision in the P&I policy and the sue and labor clause in the hull policy) and for extracontractual remedies under Texas law. The parties brought opposing motions for summary judgment and Judge Ellison granted the insurer’s motion. With respect to the wreck removal coverage, Judge Ellison cited the interpretation from the Fifth Circuit that there must be a governmental order for removal or a legal duty imposed by statute or by the general maritime law. Wapiti argued that it had an obligation to the landowner to remove the barge, particularly because the barge was carrying crude oil. Judge Ellison disagreed, stating that Wapiti had not identified authority establishing that a non-negligent owner was liable for the cost of removing a wrecked vessel on a third party’s land. ConocoPhillips made no formal demand for removal, and the barge did not interfere with its operations. Judge Ellison did not foreclose the possibility that environmental risks may impose obligations on owners of wrecked ships, but there was no immediate threat of pollution from the barge. Wapiti also argued that the removal was compulsory pursuant to the Wreck Act (applicable to a wreck in a navigable channel). Although the barge ended up primarily in marshland, Wapiti argued that the barge was partially within the navigable waterway. Noting that ships do not use the waterway for navigation, Judge Ellison held that the barge was not blocking traffic and the Wreck Act did not apply. Turning to the sue and labor clause in the hull policy, Judge Ellison reasoned that coverage was for expenditures made by the owner to benefit the insurer to reduce or eliminate a covered loss. Concluding that Wapiti did not establish that its efforts were designed to mitigate the insurer’s losses, Judge Ellison held that there was no coverage for the removal under the hull policy.
The collision between the destroyer U.S.S. JOHN S. MCCAIN and the Liberian merchant vessel M/V ALNIC MC, resulting in the deaths of ten sailors and injuries to more than 40 others, returns to the Update (see January, February, April, and November 2020 Updates). Both ships were bound for destinations in Singapore, and they collided approximately 24 nautical miles from the Singapore mainland. The claimants sought to apply the test set forth by the Supreme Court in Jones Act cases in Lauritzen v. Larsen, 345 U.S. 1 (1953) (as expanded by the Court in Hellenic Lines Ltd. v. Rhoditis, 398 U.S. 306 (1970)). However, Judge Crotty held that the Lauritzen/Rhoditis test was unsuited to deciding a choice-of-law question involving a collision halfway around the globe involving a U.S. Navy warship based in Japan and a Liberian-flagged vessel. Although there was a dispute between Malaysia and Singapore over sovereignty of the area in question, Judge Crotty applied Singapore law to the collision based on the fact that the vessels were both headed to Singapore and were in the Singapore Traffic Separation Scheme.
Judge Crotty split the trial of the case into two phases and tried the liability issues in five days in November 2021. In a 70-page opinion, Judge Crotty apportioned 80% of the fault to the JOHN S. MCCAIN and 20% of the fault to the ALNIC. He then addressed whether the owner of the ALNIC was entitled to limit its liability to $16,768,480. As the owner engaged Stealth Maritime to manage the vessel, Judge Crotty looked to its privity or knowledge “as a proxy” for the owner. In this case, Stealth Maritime was aware of deficient staffing practices and other “risky behavior” and “allowed ALNIC—one of the worst vessels the Stealth Marine Superintendent had ever audited—to again travel through one of the busiest shipping lanes in the world.” This was sufficient to establish privity or knowledge. However, Judge Crotty noted that the Limitation Act, as amended, broadens the privity or knowledge for seagoing vessels to the master at or at the beginning of the voyage. Finding that the captain planned, before the voyage, to understaff the bridge, Judge Crotty ruled that there was additional support for denying limitation to the owner of the ALNIC. Applying Singapore law, Judge Crotty held that the United States should recover 20% of its damages and the owner of the ALNIC should recover 80% of its damages, with those damages offset. He awarded prejudgment interest in accordance with Singapore law. Going forward, Judge Crotty held that the wrongful death and injury claims for the sailor-claimants would proceed with a Phase II trial, and he reserved the questions whether the sailor-claimants would be entitled to a jury and whether the owner of the ALNIC would be entitled to contribution from the United States. See July 2022 Update. Both the United States and Energetic Tank filed interlocutory appeals.
After issuing a correcting order, nunc pro tunc, with respect to damages and certifying the decision for appeal pursuant to Rule 54(b), Judge Crotty addressed the contribution claim brought by the owner of the ALNIC against the United States in connection with the claims of the sailors on the JOHN S. MCCAIN. Judge Crotty set forth the issue: The sailor-claimants brought suit against the owner of the ALNIC but not against the United States. Under admiralty law, a tortfeasor, such as the owner of the ALNIC, which pays more than its apportioned share of an injured party’s damages, may generally seek contribution from the other tortfeasors. However, the United States, which was found to be 80% at fault, is a sovereign with sovereign immunity. Although Judge Crotty previously held that Singapore law applied to the substantive issues of liability and damages, the question was presented whether Singapore law would incorporate American sovereign immunity law to bar the contribution claim. Judge Crotty noted that federal sovereign immunity is a jurisdictional matter, and he could apply American sovereign immunity principles even though foreign law provided the applicable substantive law for the case. One jurisdictional bar is the Feres–Stencel doctrine, which provides sovereign immunity against certain claims by military service members (and claims for contribution/indemnity with respect to those claims). The owner of the ALNIC argued that the United States waived its claim to sovereign immunity through the Public Vessels Act and the Suits in Admiralty Act. However, Judge Crotty held that both statutes incorporate an exception to their waiver of immunity: the Feres–Stencel doctrine. Reasoning that Feres and Stencel are directly on point, and declining to overrule the cases as wrongly decided, Judge Crotty dismissed the contribution claim for lack of jurisdiction. See November 2022 Update.
Having addressed the allocation of fault, Judge Crotty turned to the determination of damages. Although he held that Singapore law governed the substantive aspects of the case, he agreed with the parties that the issue whether a jury would decide the damages was governed by federal law. Judge Crotty noted the conflict between the concursus of claims in a limitation action and the Saving-to-Suitors Clause, which preserves common law remedies that include the right to a jury trial and the balance whereby an independent basis for jurisdiction, such as diversity, may provide for the right to a jury. As limitation was denied to the owner of the ALNIC, the issues were whether the requirements for diversity jurisdiction were satisfied for the claimants and what was the effect of the Death on the High Seas Act. Judge Crotty found that there was diversity over the claims and then addressed the effect of the application of DOHSA, which, according to the Supreme Court in Tallentire, was designed to “provide a uniform and effective wrongful death remedy for survivors of persons killed on the high seas.” In contrast to Judge Durkin’s decision In re Lion Air Flight JT 610 Crash (discussed in our February 2023 Update), that the presence of diversity did not give the claimants the right to a jury trial in federal court on DOHSA claims (there were no survivors and, consequently, no injury claims), Judge Crotty was persuaded that there was an exception to the non-jury result when there is a wholly independent jurisdictional predicate and an independent cause of action. In this case, the wrongful death claimants did not allege any independent causes of action that would entitle them to a jury trial. However, claims were also brought by injured claimants, who did not allege a cause of action under DOHSA, and there was diversity jurisdiction for their claims. As the wrongful death and injury claims arose from the same accident, Judge Crotty held that, a jury trial should be held on both the wrongful death and injury claims based on principles of judicial economy.
Alisha Stewart is a professional water skier who spent her summers from 2017 to 2019 working in the Wisconsin Dells for the Tommy Bartlett water ski show held on Lake Delton. In order to participate, Stewart had to join USA Water Ski and sign a Participant Waiver and Release of Liability Assumption of Risk and Indemnity Agreement. During a practice session, Anthony Wang was operating a boat and towing Stewart as she practiced barefoot water ski maneuvers on Lake Delton. She struck a buoy, fracturing her foot, and brought this suit in Wisconsin state court against Wang. Wang removed the suit to federal court based on diversity and moved for summary judgment that Stewart’s claims were barred by the waiver of liability in the agreement she signed. The threshold question was whether admiralty law or Wisconsin law applied to determine the validity of the waiver. Stewart submitted evidence that Lake Delton was formed in 1927 by the damming of Dell Creek at its confluence with the Wisconsin River. This formed a lake that is wholly within the state of Wisconsin. On the upstream end it was fed by Dell Creek and its tributaries. The downstream end was the dam. This did not resolve the issue whether Dell Creek flowed through any other state and whether the dam allowed maritime traffic to reach the Wisconsin River, which flowed into other states. Judge Petersen took judicial notice of Google Maps and satellite images of Lake Delton. The maps demonstrated that the Dell Creek stream system was located wholly within Wisconsin and that the dam did not allow passage by a boat or other commercial traffic. Therefore, Judge Peterson held that the lake was not navigable and that Wisconsin law applied to the waiver. Applying Wisconsin law, Judge Peterson held that the waiver was unenforceable as a matter of public policy because it was overbroad and ambiguous and because Stewart was afforded no opportunity to bargain its terms. Therefore, Wang’s motion for summary judgment was denied.
This litigation arises from a multiple-barge breakaway that originated at Jack’s Run Fleet at approximately Mile 4 on the Ohio River and continued downriver to the Emsworth Lock and Dam. Several barge owners filed lawsuits from the incident, and the defendants included Borghese, which owned the CORI WIELAND and bareboat chartered the JAMES GARRETT (which were on fleet watch at the time of the breakaway). Borghese filed a limitation action in federal court in Pennsylvania. After the parties submitted expert reports, Judge Horan addressed challenges to the expert opinions (and experiments). Borghese tendered the opinion of Richard J. Mancini, a certified consulting meteorologist, to discuss the decisions of the president of Borghese in the lead up to the breakaway and as to the cause of the movement of the subject vessels. The barge owners objected and requested that the court limit Mancini’s testimony to opinions sounding in meteorology, and Judge Horan agreed, striking Mancini’s opinions about the effect of the forecasts on Borghese and the actions taken. One of the claimants engaged Bartley J. Eckhardt, a forensic engineer, to determine whether a broken U-bolt that was found at the fleeting area contributed to the incident. Eckhardt reported the results from an experiment he performed in which he attempted to determine if rings (fabricated by his company’s laboratory) would warp or “potato chip” when placed under tension and appear similar to the condition of the mooring ring at the fleeting area. Borghese objected that the experiment’s comparison to the conditions of the breakaway was crude, informal, and inherently unreliable because it did not sufficiently replicate the conditions involved in the breakaway. Concluding that the experiment “misses the mark of a fair comparison in several regards,” Judge Horan excluded the results of the experiment. Borghese proffered Thomas P. O’Donnell and Joseph M. Turek, who investigated the breakaway, to provide an opinion on the cause of the breakaway. O’Donnell and Turek blamed the failure of the U-bolt on physical and metallurgical conditions that were affected by lack of maintenance. One of the parties objected on the ground that the opinions were unreliable because they failed to analyze alternative causes, particularly whether the breakaway was initiated by the breaking of the U-bolt or by the parting of a wire rope. Judge Howard did not, however, find the criticism to be a basis to decline to admit the testimony. The opinions were grounded in physical evidence. The fact that there were differences in the testimony and opinions went to the credibility of the opinions, not its admissibility. Borghese also proffered David J. Bizzak to opine whether the actions of Borghese in maintaining the fleet were a cause of the breakaway and to reconstruct the manner in which the breakaway occurred. Bizzak stated that shoaling due to sediment deposits prevented Borghese from narrowing the fleet and that the increased load on the fleet from the rising river level and dense ice flow caused the breakaway. He added that the failure of the anchor D-ring occurred because of decreased strength of the material due to cold temperatures and notches in the ring from years of use. The objection to his opinions was that Bizzak was not qualified to render opinions in maritime matters and metallurgy and that he did not provide a reliable method with respect to the force exerted on the fleet. Borghese responded that Bizzak did not need maritime experience to discuss forces that acted on the fleet, but Judge Horan reasoned that, as Bizzak was not an expert in structural engineering, civil engineering, maritime construction, meteorology, metallurgy, or the fleeting of barges, his opinions on ice formation, river conditions, metallurgy, and fleet management would not be admitted.
Kathy Salas claimed that she was injured while working as a deckhand/stewardess on the yacht M/Y EXODUS, owned by God’s Blessing Ltd (with Roger West as the principal shareholder and beneficial owner of the vessel). After Salas’s lawyer sent a written notice of claim to counsel for God’s Blessing, the owner and beneficial owner brought this limitation action in federal court in Florida. Salas filed a claim in the limitation action, asserting counts under the Jones Act and general maritime law, and the court granted her motion to lift the stay so that she could pursue those counts in state court (based on stipulations approved by the Eleventh Circuit in Beiswenger). Salas then brought the same counts under the Jones Act and general maritime law against God’s Blessing and Roger West in state court (breaching the stipulations because she demanded that the state court deny the owner/beneficial owner’s right to limit liability). The state court dismissed Salas’s case with prejudice, and Salas did not appeal that order. God’s Blessing and West then moved the federal court for summary judgment that they were exonerated of all liability to Salas based on res judicata from the state dismissal. Chief Judge Altonaga found that the order of dismissal in the state action extinguished all of Salas’s causes of action and, by res judicata, exonerated the owner/beneficial owner of all responsibility in the limitation action. Accordingly, Chief Judge Altonaga exonerated the owner/beneficial owner and dismissed Salas’s claim in the limitation action with prejudice.
Kurt Sprengle worked as a seaman on tugs operated by Smith Maritime in the transportation of goods between the United States and Latin America. He was injured on Smith Maritime’s tug, ELSBETH II while connecting the tug to a barge owned by BOA Barges that was to be transported to Columbia. Sprengle was spooling the pickup line around a cathead on the deck of the tug. Two crew members of the barge heaved the pickup line to the workers on the tug. Sprengle and the First Mate on the tug saw that the pickup line was worn, frayed, and thin, and they threw it back to the barge. The barge crew threw it back, claiming it was the line they used all the time. When neither the First Mate nor the Captain (who was standing above Sprengle and operating the cathead) intervened, Sprengle believed he had no choice but to use the worn and frayed line. He spooled the line around the cathead to lift the pennant chain toward the deck of the tug, but the pickup line parted and struck Sprengle across the face. Sprengle brought suit against Smith Maritime and BOA Barges in federal court in Florida, and Smith Maritime moved to dismiss the claims for unseaworthiness, retaliatory discharge, and maintenance and cure. Smith Maritime argued that the pickup line from the barge was not an appurtenance of the tug, and there was no unseaworthiness of the tug. Judge Howard held, however, that equipment temporarily brought on the vessel by others can be unseaworthy, and the line became an appurtenance of the tug when it was attached to the cathead. Although the crew rejected the line as insufficient, when the crew misused the line in the unsafe condition, an unseaworthy condition arose because of the dangerous misuse (taxing the line beyond its limit). Consequently, Judge Howard ruled that Sprengle stated a claim for unseaworthiness. Judge Howard also held that Sprengle stated a claim for retaliatory discharge based on Sprengle’s claim that he was terminated two months after Smith Maritime’s former counsel wrote a letter to its insurer about Sprengle’s ability to return to work, noting that his chances for return were nil if he did not drop his claim against Smith Maritime. Smith Maritime argued that Sprengle was not entitled to maintenance and cure, citing medical records that indicated Sprengle had reached maximum cure. As the argument was presented in a motion to dismiss and the records were not attached to the complaint, Judge Howard declined to consider the medical evidence and denied the motion.
When Hurricane Harvey made landfall near Corpus Christi, Texas as a Category 4 hurricane, the drillship DPDS1 was docked with two tug boats helping keep the drillship in place. Nonetheless, the drillship broke free from its moorings, propelling the two tugs (ENTERPRISE and ARCTURUS) into adjacent semisubmersible rigs (owned by Noble) damaging the rigs, sinking one tug, and damaging the other. The drillship grounded in the ship channel, and the tug CONSTELLATION was assigned to assist the drillship. Later, when the hurricane came back ashore, the drillship refloated and allided with a research pier. The owners of the drillship and tugs brought limitation actions, and claims and counterclaims were filed in the limitation action. A question arose in the limitation action brought by Paragon whether it could bring the limitation action with respect to the drillship DPDS1. Before the storm, Paragon had moved the DPDS1 to Port Arthur, Texas, removing two of its thrusters before the voyage. The drillship was cold stacked with no maintenance and no running equipment, and it deteriorated accordingly. When the dock in Port Arthur was no longer available, the DPDS1 was towed to the Gulf Copper dock near Corpus Christi in May 2017. Paragon was unable to find a buyer for the drillship, and it appeared likely that the drillship would have to be scrapped. Nonetheless, the drillship remained fully outfitted with cranes, winches, electrical generators, and navigational lights, and a two-person maintenance crew stayed aboard to secure the craft and monitor its equipment. As Hurricane Harvey approached Corpus Christi in 2017, Paragon sought to tow the drillship offshore and obtained certification of its seaworthiness from a surveyor. However, the DPDS1 was at the dock when the Hurricane struck. The DPDS1 remained afloat after the storm and was towed back to the Gulf Copper dock and then to Brownsville, Texas, where it was scrapped. Paragon filed a motion for partial summary judgment, seeking a ruling that the DPDS1 was a vessel for purposes of the Shipowners’ Limitation of Liability Act. Judge Rodriguez agreed with Paragon, reasoning that the craft was capable of carrying things or people over water and that a reasonable observer would conclude that it was a vessel based on its physical characteristics and activities. Although the claimants in the limitation action cited Paragon’s intent to scrap the vessel, Judge Rodriguez noted the recent Fifth Circuit decision in Southern Recycling (see January 2021 Update), in which the owner transported a barge to a shipyard to be scrapped. The barge lost status as a vessel when the contractor cut gaping holes in the bow that prevented the barge from transporting people or property. As the DPDS1 still appeared to a reasonable observer to be capable of serving as a vessel, Judge Rodriguez held that it was a vessel subject to limitation of liability. See March 2021 Update.
Judge Rodriguez held a bench trial and noted that there were two discrete events for which liability had to be apportioned, the initial breakaway of the drillship and the damages incurred from that breakaway, and the subsequent refloating and allision with the research pier. Judge Rodriguez held that Paragon was solely at fault for the initial breakaway and the damages resulting from that breakaway; however, he allocated fault for the refloating and damage to the research pier at 50% for Paragon and 50% for Signet, owner of the CONSTELLATION. Signet and Paragon disputed whether a master charter agreement or Signet’s tariff provided for the allocation of responsibility between the parties. There was a dispute in the testimony whether the hiring of the tugs was pursuant to the master charter agreement, and Judge Rodriguez resolved the dispute by concluding that Signet did not agree that the master charter agreement would govern the work. As to the tariff, Judge Rodriguez found an oral agreement that Signet would work under the terms of the tariff, and he agreed that the oral agreement was valid under the general maritime law. Paragon raised defenses to application of the tariff, including that the tariff did not cover services to vessels that are aground or in distress. However, Judge Rodriguez held that a party may waive a provision in a contract intended for that party’s benefit and that Signet did that in this case. Paragon also argued that the tariff could not govern because it was a contract of duress or of adhesion, but Judge Rodriguez did not find either defense applicable, and he also concluded that Paragon’s conduct had ratified the agreement to work under the tariff. Accordingly, liability between Paragon and Signet was allocated in accordance with the provisions of the tariff. See May 2022 Update.
Judge Rodriguez then issued a lengthy opinion, reiterating his findings of fault, denying limitation for Paragon because its managing agents had privity with the design of the mooring system and Paragon’s decision regarding evacuation, assessing damages, and applying the tariff to the damages. Signet sought damages for the constructive total loss of the ENTERPRISE, and Judge Rodriguez awarded $1,735,607.78 for wreck removal, $41,412.17 for surveyor expenses, and $3,600,000 for the damage to the vessel (fair market value before the accident minus salvage value). Judge Rodriguez denied recovery for loss of charter hire under the established rule that the owner is not compensated for loss of use in the case of a total loss. With respect to the ARCTURUS, which was not a constructive total loss, Judge Rodriguez awarded $1,517,311.08 in repair costs, $37,055.74 in salvage expenses, and $54,225.74 in surveyor fees. Judge Rodriguez rejected Signet’s claim for profits from lost charter hire, reasoning that the evidence supported the conclusion that any profits would have been significantly lower and may have been fully elusive in the dampened market after Hurricane Harvey. Under the tariff, Judge Rodriguez held that Signet was entitled to contractual indemnity from Paragon for damage to the Noble semisubmersible rigs and awarded judgment to Signet for its $875,000 settlement for the Noble rigs. As the tariff provided for indemnity proportionate to fault, as Signet and Paragon both settled with the University of Texas for the damage to its research pier, and as the parties agreed that their settlements did not reflect liability beyond 50% of the damage to the pier, Judge Rodriguez held that neither party was responsible to indemnify the other with respect to the damage claim presented by the University of Texas. Although Signet requested pre-judgment interest at an initial rate of 5% to 6% and a rate of 17.5% after mid-2019, Judge Rodriguez considered that rate to be excessive and awarded pre-judgment interest at 4%. See September 2022 Update.
Signet then sought recovery of attorney fees, expenses, and costs from Paragon in connection with the Noble and Paragon claims and costs in connection with the Signet claim. Signet argued that, with respect to the Noble claim, that it was the prevailing party as Judge Rodriguez held that Paragon was 100% responsible for the allision of the Signet tugs with Noble’s rigs and the tariff required that Paragon indemnify Signet indemnify Paragon to the extent of Paragon’s negligence. Additionally, the tariff provided for recovery of attorney fees, expenses, and costs by the prevailing party. Although Paragon argued that Signet could only recover amounts incurred after the entry of judgment (which made it the “prevailing party”), Judge Rodriguez agreed with Signet that the natural construction of the provisions allowed Signet to recover the fees, expenses and costs for litigating the claim. With respect to Signet’s fees, expenses, and costs for defending against Paragon’s claim for damages to the drillship, Paragon argued that Signet did not recover indemnity from Paragon so as to invoke the indemnity clause. Judge Rodriguez noted that Paragon did not recover indemnity because Paragon did not prove its entitlement to recover from Signet. If Paragon had proven it was entitled to recover, the tariff would have required Paragon to indemnify Signet. Therefore, Signet was the prevailing party and entitled to fees, expenses, and costs, As Signet was the prevailing party with respect to its claim, it was entitled to recover taxable court costs. Judge Rodriguez then addressed the request of Signet for $1,515,842.75 in attorney fees. Paragon challenged over 4,600 billing entries, and Signet accepted some of the objections, reducing the request by $109,593.75. Judge Rodriguez overruled the challenges based on block billing, clerical functions, travel time, and work on claims/issues that were part of the common issues but also related to issues upon which it did not prevail or claims involving other parties; however, Judge Rodriguez did sustain objections to work that was solely devoted to the Gulf Copper claim, the UT claim, or the American Club and to work that was on issues not pursued in the litigation. He awarded $1,362,042.84 in fees, non-taxable expenses of $353,499.48, and taxable costs of $60,072.48. As no appeal had been taken, Judge Rodriguez declined to rule on Signet’s request for appellate attorney fees and costs (without prejudice), stating that it was an issue to be addressed “following the resolution of an appeal.”
James Stokes’ vessel, MIDNIGHT EXPRESS, sank while moored in Ocean View, Delaware during heavy rain from Hurricane Michael in October 2018. He brought this suit against the hull insurer for the vessel, Markel, in Florida state court, and Markel removed the case to federal court. Chief Judge Altonaga transferred the case to the federal court in Delaware, and the parties filed motions with respect to experts, choice of law, and summary judgment. Stokes argued that the court should strike the reports of Markel’s experts, Robert K. Taylor and Matthew Schmahl. Taylor, Markel’s expert engineer and naval architect, conducted a float test and leak test, but Stokes’ expert testified that the tests were not conducted in accordance with industry standards and did not provide reliable support for Taylor’s opinions. The assertions from Stokes’ expert did not, however persuade Judge Stark that Taylor had employed improper methodology, and Judge Stark declined to strike Taylor’s opinions. Stokes objected to the opinions of Schmahl, a marine surveyor with nearly 40 years of experience, and Judge Stark considered him to be qualified to discuss whether damage to component parts was caused by submersion and that his opinions were not duplicative of Taylor’s more general opinions on causation. Before considering the merits, Judge Stark had to decide the applicable law. As the suit was originally removed to federal court as a diversity case, Judge Stark applied Florida conflicts principles, including giving effect to the policy’s choice-of-law provision that maritime law would apply to the policy except that state law would apply when no substantive maritime principle or precedent was applicable. This left a decision to be made when there was no established maritime law. Regardless of whether maritime or state choice-of-law applied to determine what state law to apply to the contract, Judge Stark held that Florida law did not apply. Florida applies lex loci contractus, and the contract was not executed in Florida. Stokes purchased the insurance and executed the policy in the District of Columbia, although he used the boat for most of the year in Florida and was in Florida when he negotiated and accepted the terms of an endorsement that extended the contractual period. Thus, Judge Stark held that the law of the District of Columbia would apply to the contract claims in the absence of an established maritime principle. There was a conflict in the legal principles that would apply to the tort claims, so Judge Stark applied the Florida significant relationships test and held that the law of the District of Columbia would apply with respect to representations made by Markel during the purchase of the policy by Stokes in the District of Columbia. Turning to the merits, Markel argued that the loss was not fortuitous or accidental, that a design defect was the proximate cause of the loss, and that the vessel was unseaworthy, in violation of the policy’s seaworthiness warranty. The policy included a sudden accidental damage clause, which the parties agreed was synonymous with the fortuity doctrine. Judge Stark considered the fortuity doctrine to be an entrenched principle of admiralty law, applying when a loss is unforeseen, unexpected, unintended, unavoidable, or caused by the insured’s own negligence, but not when it results from intentional misconduct of the insured or an inherent defect or normal wear and tear. Although heavy rainfall can be considered to be a fortuitous event, there were disputes about the severity of the rain, whether design defects caused the loss, and whether the vessel was seaworthy. Judge Stark held that, under maritime law, courts consider the predominant or determining cause, and that, when two causes appear to exist, the court should consider the cause that rendered the loss inevitable (rejecting application of the concurrent causation doctrine under state law as it did not apply under admiralty law). As the parties presented different views of what caused the loss, the determination of coverage would depend on which party was found to be correct on causation. The fact dispute precluded summary judgment on the contract claim. Applying D.C. law to the tort claims, Judge Stark held that tort claims may be sustained concurrently with a contract claim only if they are based on conduct distinct from the conduct underlying the contract claim. The claims for negligent misrepresentation and fraud did not satisfy that requirement and were dismissed (as they were not independent of the contract); however, the claim for fraudulent inducement leading up to the procurement of the policy was independent and survived the motion for summary judgment. See May 2022 Update.
Stokes filed a new complaint that alleged breach of contract and six other claims, and Markel moved for summary judgment on all of the claims other than the claim for breach of contract. Judge Bibas of the Third Circuit, sitting by designation, dismissed all of the other claims. He dismissed the claim for a declaratory judgment as it sought the same relief as the claim for breach of contract. Stokes’ claim for conversion (because Markel kept the boat after determining that it was not a total loss) did not state a tort claim independent of the contract, and Stokes will be able to address this alleged wrongdoing in his contract claim. Judge Bibas dismissed the claim for breach of an implied covenant of good faith and fair dealing under D.C. law on the ground that there is no such claim under D.C. law and the covenant is a theory about which contractual duties were breached. Judge Bibas did not find a private right of action under D.C. law for unfair claim settlement practices and dismissed that claim, and he found that Stokes did not adequately plead a claim for breach of the D.C. Consumer Protection Procedures Act. Finally, although his fraud claim was previously dismissed, Stokes repleaded it under D.C. law, claiming that it was distinct from his prior pleading under the laws of the Eleventh Circuit. Finding that it was, again, insufficiently pleaded, Judge Bibas dismissed it.
Orleck Naval Museum owns a former Navy destroyer, the USS ORLECK, which was docked without permission using Grey Rock’s mooring dolphin on the Calcasieu River in Lake Charles, Louisiana. Grey Rock alleges that when Hurricane Laura struck Southwest Louisiana in August 2020, the ship and its moorings were pulled away from the dolphin, resulting in damage to the dolphin. Grey Rock brought this suit against Orleck Naval Museum and its insurer in federal court in Louisiana under the court’s admiralty jurisdiction, and the defendants moved for summary judgment, arguing that any damages awarded for repair of the dolphin were subject to reduction for depreciation “to the extent the repairs add new value to, or extend the useful life of, the mooring dolphin.” Grey Rock cited the defendants’ admission that the dolphin was believed to be about 30 years old and produced evidence of pre-storm wear and tear. Judge Cain did agree with the defendants that if repair or replacement costs were awarded, the court must consider whether the costs would add value to the dolphin and, accordingly, reduce the damages if value were added or the useful life were extended. However, Judge Cain declined to make any determination on these issues as damages had not been awarded and there were fact questions on the depreciation issues. Accordingly, he denied the motion.
Mid-Atlantic, owner of the barges MSJ-102 and MSJ-107, entered into demise charters of the barges with Olde Yankee. At the end of the charters, Mid-Atlantic claimed that Olde Yankee had failed to repair damages to the barges, and Olde Yankee brought this action in federal court in Pennsylvania, seeking a declaratory judgment that it had complied with its obligations under the charters. Mid-Atlantic counterclaimed, asserting claims for breach of contract and maritime negligence and seeking recovery for the cost of repairs as well as consequential damages from its inability to re-charter the barges until the repairs were completed. For the negligence counterclaim, Mid-Atlantic sought purely economic damages. Olde Yankee moved for partial summary judgment on the negligence claim, arguing that Mid-Atlantic had recast its claim for breach of contract as a negligence claim and that all of the tort duties alleged were grounded in the charter parties. Therefore, Olde Yankee contended that the case “fits squarely” with Pennsylvania’s gist-of-the-action doctrine, which limits the remedies arising from contractual obligations to contract claims. Mid-Atlantic responded that maritime law recognizes an independent tort action against a demise charterer and that Pennsylvania law did not apply. Finding no gap in maritime law that would allow Pennsylvania law to supplement the maritime remedies, Judge Rufe denied summary judgment to Olde Yankee on its assertion of the Pennsylvania’s gist-of-the-action doctrine. Olde Yankee also argued that Pennsylvania’s economic-loss rule barred recovery, but Judge Rufe again disagreed that Pennsylvania law applied and, instead, applied the economic-loss rule from Robins Dry Dock. As Mid-Atlantic asserted that there was physical damage to the barges from their handling by Olde Yankee, the economic-loss rule from Robins Dry Dock did not bar the negligence action seeking economic damages.
North Star entered into a contract with Eastern Shipping Group to build a fishing boat, the NORTH STAR, at the Eastern shipyard in Panama City, Florida. North Star obtained a builder’s risk policy with Norwegian Hull Club as the lead underwriter. The construction progressed to the stage that the structure was out of the drydock and was afloat at the outfitting pier. However, the structure was awaiting a small amount of work and final sea trials before it was commissioned and delivered. That is when Hurricane Michael made landfall with the eye of the CAT 4/5 hurricane passing over Panama City. The structure broke loose from its mooring and grounded, causing substantial damage. The underwriters paid more than $70 million, but the parties disputed the amount of the agreed value for the structure, and the underwriters brought this declaratory judgment action in federal court in Florida based on the court’s admiralty jurisdiction. North Star filed a counterclaim (at law) based on diversity jurisdiction and demanded a jury. The underwriters moved to strike the jury, arguing that the complaint was brought in admiralty and that the owner was not entitled to a jury on a counterclaim in a maritime proceeding. Judge Hinkle agreed that no jury was allowed if the complaint sounded in admiralty. He then addressed the distinctions with respect to whether a contract is maritime in which the focus is “on experience—on distinctions entrenched in precedent—more than on logic.” Judge Hinkle found “little logic in the rule that a contract to build a new vessel is nonmaritime, [but] a builder’s risk policy insuring the vessel while under construction is maritime.” Although North Star cited authority applying state law to a dispute over a builder’s risk policy covering a vessel under construction, Judge Hinkle answered that the case established that the policy was maritime as the court in that case applied state law as the maritime rule based on Wilburn Boat. As the builder’s risk policy was a maritime contract, the vessel owner was not entitled to a jury on its counterclaim. Judge Hinkle noted that at a pretrial conference (during which he took under advisement the issue of admiralty jurisdiction) he had said that he would empanel an advisory jury if he concluded that North Star was not entitled to a jury trial. After deciding the issue of admiralty jurisdiction, however, Judge Hinkle reconsidered whether to empanel an advisory jury and held that the “better exercise of discretion” was not to have an advisory jury (citing the complexity of the case, the involvement of multiple experts, and the fact that the judge might have questions for the attorneys or witnesses that he would not be able to ask in the presence of a jury). Accordingly, he held that the case would be tried to the court.
James Ly rented a 15-foot skiff from Bay Dreamer d/b/a Bobbie’s Boats and Motor Rental to go fishing with his fishing buddies Phillip Kang and Dr. Joshua Liao in the Oyster Creek Channel in New Jersey. A 36-foot, 600 horsepower vessel that was operated by George Lesenskyj struck the skiff at the port stern, where Kang was seated, and Kang died as a result of the collision. No whistle or other sound device was used by either Lesenskyj or Ly to avoid a collision. Ly and his wife brought suit against Lesenskyj in federal court in New Jersey, and Lesenskyj brought a third-party claim against Bay Dreamer. Bay Dreamer filed a motion for summary judgment on the third-party claim, arguing that the experts for Ly blamed Lesenskyj for the collision and that there was no basis for liability against Bay Dreamer. Ly and Lesensky responded that the skiff did not have a signaling device, such as a whistle, which violated Inland Rule 33 (a vessel of less than 12 meters shall be provided with some means of making an efficient sound signal), and the violation was presumptively a cause of the loss under THE PENNSYLVANIA Rule. Bay Dreamer responded that all of its rental boats have whistles and that its employees check for a whistle before each boat goes out. As the existence of the whistle was a disputed issue and as all of the other elements of THE PENNSYLVANIA Rule were satisfied, Judge Quraishi held that the Rule was met unless Bay Dreamer could rebut the presumption. Judge Quraishi did not find such a rebuttal because Ly testified that he was aware of a potential collision for up to 30 seconds before impact, which would have given him or Kang time to blow the whistle and as Lesenskyj testified that, even though he did not see the skiff, he would have brought his boat to a stop if he heard a whistle. Finally, Bay Dreamer argued that there was no expert opinion analyzing the Inland Rules and it should have summary judgment in the absence of expert testimony about the operation of the Rules. Judge Quraishi disagreed and denied the motion for summary judgment. Lesenskyj moved for summary judgment on Ly’s claim for negligent infliction of emotional distress (and Bay Dreamer moved to exclude certain evidence on the issue). The parties disputed whether maritime law or state law governed the NIED claim arising from the collision of two boats on navigable waters. Finding a federal common-law standard from maritime cases following the Supreme Court’s FELA zone-of-danger test, Judge Quraishi applied maritime law and the zone-of-danger test (limiting recovery to plaintiffs who sustain a physical impact or who are placed in immediate risk of physical harm). Lesenskyj argued that Ly did not establish that he so feared the impact that he experienced post-traumatic stress disorder and that his claim was actually based on witnessing his friend die. However, Judge Quraishi cited expert evidence “that can be construed as attributing Ly’s PTSD to the apprehension of immediate physical harm to his person,” and that was sufficient to create a fact question whether the PTSD was caused by witnessing his friend die or from fear of being harmed in the collision. Finally, Lesenskyj argued that graphic evidence of Kang’s death (he was allegedly struck by the propeller) should not be admitted in Ly’s suit, but Ly argued that the evidence should be admitted to prove whether there was a whistle anywhere on the vessel. Judge Quraishi reserved the issue to be decided in a motion filed before trial.
This case involves a collision between two recreational vessels in dense fog in the Gulf of Mexico off the coast of Naples, Florida. James Schneider owned a 34-foot fishing boat, WHISKEY TANGO FOXTROT, that was being operated at the time by Robert Slade. Dr. Julie Leonard owned and operated a 24-foot Boston Whaler, PARADOX. The Schneider vessel was headed south in the Gulf of Mexico approximately two miles from shore. As the vessel encountered the dense fog, Schneider turned over navigation to Slade, turned on the navigation lights, and functioned as the lookout. According to Leonard’s expert, the Schneider vessel was travelling at approximately ten miles an hour at the time of the collision. The Leonard vessel was headed north-northeast when it encountered the fog. Dr. Leonard brought the vessel’s speed to near zero because of condensation on the windshield, put on a life jacket, turned on the navigation lights, and sounded the horn (every two to five minutes). She then resumed her speed, getting up to 36 miles an hour at least twice prior to the collision, but traveling at 29 miles per hour at the time of the collision. Neither party sounded the horn of his/her respective vessel within two minutes of the collision. About three seconds before the collision, Schneider saw the Leonard vessel coming directly at his vessel and yelled, “boat, boat, boat.” Slade asked where and started to turn to port. Dr. Leonard saw the Schneider vessel at a distance of about 75 to 100 feet and made a hard turn to starboard while throttling to full speed. The starboard bow of the Schneider vessel struck the port bow of the Leonard vessel, knocking Leonard into the windshield and then onto the deck. There was significant damage to the Leonard vessel, and the parties stipulated to damages for Dr. Leonard’s injuries of $400,000. Schneider brought this action for limitation of liability in federal court in Florida, and the issues of fault and privity were tried to Judge Steele. Judge Steele began his analysis of responsibility with what is usually the second issue, privity, because the answer was “clearcut.” As Schneider was in operational command of his vessel and participated in almost all of the acts that were alleged to be negligent (including Slade’s conduct), Judge Steele held that Schneider was not entitled to limitation of liability. Dr. Leonard asserted a number of faults of Slade and Schneider. She argued that the collision would have been avoided if Slade had turned to starboard, but Judge Steele found that the Schneider vessel had not started the turn at the time of the collision. She argued that the failure to sound a signal every two minutes was a violation of the navigation rules that invoked THE PENNSYLVANIA Rule presumption of fault, but Judge Steele concluded that the failure did not impact the collision because Dr. Leonard could not have heard the signal as a result of the speed of her vessel. Instead, Judge Steele attributed 100% of the fault for the collision to Dr. Leonard for traveling at an excessive speed in the fog.
After the vessel owner (Amis) withdrew the M/V AMIS INTEGRITY from its charter to 24 Vision (Head Charter) for failure to pay charter hire, the subcharterer (Dry Bulk Singapore) arrested the vessel in this suit in federal court in Oregon. The owner entered a restricted appearance, filed an answer and counterclaim (for wrongful arrest), and obtained countersecurity for the counterclaim. The owner, and other entities that were sued as alter egos, moved to dismiss the in personam claims for lack of personal jurisdiction, and Judge Brown agreed that the court did not have either general or specific jurisdiction over the defendants. The in rem claims and counterclaim were not dismissed and remained pending where the vessel was arrested. See May 2021 Update.
The vessel then moved to vacate the arrest (for lack of a maritime lien) and for partial summary judgment based on the Head Charter’s prohibition-of-lien clause and because the owner properly withdrew the vessel. The vessel also moved for summary judgment on the claims of tortious interference, conversion, and unjust enrichment (as in personam claims improperly pleaded against an in rem defendant) and for summary judgment on its wrongful arrest counterclaim. The subcharterer moved for summary judgment on the vessel’s counterclaims for breach of contract and unjust enrichment, arguing that the vessel did not have legal capacity or standing to prosecute the claims. Judge Immergut first addressed the motion to vacate the arrest and held that the subcharterer did not have a maritime lien because the Head Charter contained a prohibition-of-lien clause and the subcharterer was on notice of the clause because it was provided a copy of the Head Charter. Additionally, Judge Immergut held that Amis properly withdrew the vessel because it had not been paid (although the subcharterer had paid hire to the charterer), and Judge Immergut rejected the argument that the subcharterer had a lien for “pre-payment” of hire. Judge Immergut then turned to the vessel’s motion for summary judgment on the subcharterer’s claims of unjust enrichment, conversion, and intentional interference. The judge first concluded that maritime law does not afford a lien for these claims, but the subcharterer requested that the arrest under Rule C (for which a lien was necessary) be converted to an attachment under Rule B. Judge Immergut recognized that an improper arrest can be converted to an attachment if the conversion does not prejudice the defendant, but she found that a conversion at this late stage of the litigation (32 months after the complaint was filed) would prejudice the defendant. With respect to the vessel’s counterclaim for wrongful arrest, Judge Immergut stated that the vessel had to show that the subcharterer acted in bad faith, with malice, or with gross negligence. Although the subcharterer was certainly aware of the prohibition-of-lien clause (and allegedly misrepresented to the court that the terms of the Head Charter were not disclosed), Judge Immergut found sufficient factual disputes (including the subcharterer’s belief about a lien for pre-paid hire) to deny summary judgment on the wrongful arrest counterclaim. Judge Immergut did agree with the subcharterer that the vessel did not have standing or legal capacity to prosecute counterclaims for breach of contract and unjust enrichment based on payments made by the owner on invoices for bunkers that were incurred by the subcharterer that were not paid by the subcharterer.
Ohara Corp. contracted with Foss Maritime to perform repairs to Ohara’s fishing boat ENTERPRISE at Foss’s shipyard in Seattle, Washington. The repairs were conducted during the winter of 2016 to 2017, and the vessel was delivered to O’Hara in January 2017. O’Hara alleged that the vessel had continuous problems after returning to fishing in Alaska, and that the problems were caused by the shipyard’s failure to properly install the stern tube and align the propulsion shaft, which necessitated extensive repairs. O’Hara’s hull insurer, United States Fire, paid O’Hara more than half a million dollars under the policy and brought this suit against Foss Maritime in federal court in Washington in November 2021.The insurer asserted causes of action for breach of contract, breach of the warranty of workmanlike performance, and negligence. Foss Maritime moved for summary judgment, citing exculpatory provisions within the contract for repair. Paragraph 4 of the contract was entitled “LIMITED WARRANTY.” It granted O’Hara a limited warranty for the work, but the warranty expired six months from the date of the completion of the work, and the provision added that the shipyard would be discharged from all liability for defective workmanship or loss or damage unless O’Hara made a claim in writing within six months of the completion of the work and brought suit within one year after completion. Paragraph 5 disclaimed any warranty other than the limited warranty granted in Paragraph 4, and Paragraph 6 provided that the exclusive remedy for breach of warranty, negligence, or strict liability was replacement or repair of a defective item and that the shipyard was not liable for breach of warranty, negligence, or strict liability unless the damage was caused by the gross negligence of the shipyard. The aggregate liability was limited to $300,000. Foss Maritime argued that the contract discharged it from all liability unless the vessel owner gave notice in six months and filed suit within one year, but United States Fire argued that the limitation only applied to warranty claims because the provision was included in the paragraph named “LIMITED WARRANTY.” Judge Jones was not persuaded because the language of that paragraph was broad, disclaiming “all liability for defective workmanship or material or for loss or damage” unless the notice and suit provisions were followed. Additionally, Judge Jones believed that the provisions in Paragraph 6 were applicable, stating that the exclusive remedy under any legal theory was repair/replacement by the shipyard, and O’Hara did not have the problems with the vessel repaired by Foss Maritime. As the Ninth Circuit has upheld exculpatory clauses for negligence absent evidence of overreaching, and as there was no evidence of overreaching, Judge Jones held that the insurer’s claims were barred as a matter of law. Finally, the insurer requested leave to add a cause of action for gross negligence, alleging that Foss representatives told the president of O’Hara that Foss knowingly disregarded the installation procedure for the stern tube that was prepared by O’Hara’s naval architect. The request to amend was made after the deadline in the scheduling order, and the insurer had to establish good cause in accordance with Rule 16. As the employees allegedly made this revelation before the deadline to amend, Judge Jones held that the insurer did not meet the good cause standard for Rule 16 and declined to permit an amendment. Thanks to Matthew Ammerman of Houston, Texas for bringing this case to our attention.
Maine Maritime Museum filed a limitation action in federal court in Maine after the knock-down of its SCHOONER MARY E while the vessel was carrying passengers on a Kennebec River cruise that set out from Bath, Maine. Three individuals filed claims in the limitation action, and each settled with Maine Maritime Museum. After the time passed for the filing of additional claims, the Museum filed a motion for default and for a decree of exoneration as to all non-appearing claimants. Judge Torresen held that the complaint did not plead sufficient facts to support a decree of exoneration, even if all of the facts were accepted as true (thin on facts and heavy on legal conclusions). Consequently, she declined to hold that the Museum should be exonerated. For the same reason, she declined to find that the Museum had established that it was without privity or knowledge and entitled to limitation of liability. See August 2022 Update.
A few months later, with the understanding that the Museum had mailed notice to known potential claimants, Judge Torresen granted the Museum’s motion for entry of default judgment and exoneration against claimants who had not timely brought claims. Three months later, James Dotson filed a motion for relief from the judgment of default and exoneration, arguing that he was an employee of a company that was involved in the rescue effort (Bath Iron Works) and that he was injured during the rescue. He claimed that he did not receive any mailed notice and that he did not see the printed notice in the Portland Press Herald as he lives an hour away from Portland in Boothbay, Maine. He alleged that he received notice by reading about settlements on Facebook. The Museum objected that Dotson did not have standing to file the motion because he was not a party to the action, but Judge Torresen disagreed, citing a decision from the Fifth Circuit that persons who “could have been parties to the action” have standing to file a Rule 60 motion. She then addressed the merits of the motion and the Museum’s argument that it was only required by Supplemental Rule F to mail a copy of the notice to every person known to have made a claim against the vessel. However, in this case, Judge Torresen had ordered the Museum to do more than what is required by Rule F. Before she would enter a default and exoneration, she ordered the Museum to mail notice to “all known potential claimants.” As the Museum was aware of Bath Iron Works’ involvement in the rescue, Judge Torresen believed that it was “extremely unlikely” that first responders like Dotson “were not known potential claimants.” In weighing the equities, Judge Torresen noted that the Limitation Act “has been roundly criticized,” and she added: “I am aware of no other area of the law wherein a potential tortfeasor can race into court to force the people it may have injured to file their claims within months of an incident upon pain of losing all right to do so.” Finding it “particularly disturbing” that the Museum would fight to preclude the claim of a rescuer for its vessel, Judge Torresen granted Dotson’s motion for relief from the judgment.
Dawn Earls brought suit in Texas state court alleging that she was a guest passenger on a boat owned and operated by Kimon Papasideris and Orange Beach Adventures and that she was injured when she fell into a gap between the sun deck and hull of the vessel. The defendants removed the case to federal court based on the court’s admiralty jurisdiction, and Earls moved to remand the case to state court. Following the majority rule that the court would have had original jurisdiction if the action had been filed in state court but that “‘original jurisdiction’ evaporated” when Earls filed suit in state court, Magistrate Judge Bryan recommended that the case be remanded to state court. Citing the language from the Fifth Circuit in the Sangha v. Navig8 decision that the issue of removability of maritime cases “is not clear,” Magistrate Judge Bryan recommended that Earl’s request for attorney fees and expenses to oppose the removal be denied. Thanks to James Mercante of Rubin, Fiorella, Friedman & Mercante in New York, New York for bringing this case to our attention.
The owner and captain of the M/V BELLA GIORNATA hired E.C. Ruff Marine to perform repairs on the vessel’s hydraulic system. At the conclusion of the work, the owner declined to pay the ship repairer, citing improper and unworkmanlike repairs and the fact that the repairs had to be re-done by a third party. The ship repairer then brought this action in federal court in Florida against the vessel to foreclose on a maritime lien for necessaries and against the vessel owner for breach of contract. The ship repairer moved for summary judgment on both claims, arguing that the work was authorized by the owner and performed by the ship repairer. Judge Smith, however, held that the ship repairer also had to prove that the repairs were provided at a reasonable price in order to succeed on the claims against the vessel and the owner. As the reasonableness of the charges was “disputed vigorously” by the parties, Judge Smith declined to grant summary judgment.
Marianela Susana was aboard the ferry, M/V BROOKLYN, owned by NY Waterway, Port Imperial Ferry Corp., and BillyBey Ferry Co., when the ferry docked at Pier #11 near Wall Street in Manhattan. Susana, who typically uses a walker with four wheels, boarded the ferry with a hand-held cane. When departing the ferry, she tripped and fell, with her attorney alleging that her fall was due to black brackets (locks) attached to an HVAC system. Although the brackets (allowing crew to access the HVAC system) were supposed to be fastened while the vessel was occupied with passengers, Susana’s lawyer asserted that they were open and extended, causing her to trip. During her deposition, however, Susana gave a different version of how she fell, claiming that she tripped on the coaming at the bottom of a door. Susana brought suit against the owners of the ferry in state court in New York, and the defendants removed the case to federal court based on admiralty jurisdiction and diversity. The defendants moved for summary judgment on the merits, citing maritime law, and Susana cited New York law in response. Judge Cronan first addressed whether admiralty or state law applied, and he held that Susana’s fall on the vessel while it was docked “is the type of incident that poses such an insignificant effect on maritime commerce that federal admiralty jurisdiction is not implicated,” reasoning that the incident involved a recreational visitor, not someone engaged in maritime employment whose injury might endanger the safety of the vessel or risk a collision. Following New York law, Judge Cronan held that the testimony that Susana tripped over the coaming did not state a claim for negligence and that her statement that she tripped over a piece of black metal was ambiguous and confusing and did not create a fact question of fault. The defendants also sought sanctions because Susana missed her appointments for medical examinations, but Judge Cronan noted that he had not ordered the attendance and had merely extended discovery in order that the examinations be completed (although the judge had warned that her failure to comply with discovery deadlines may result in sanctions). Therefore, he did not grant sanctions based on violation of any order. However, Judge Cronan noted that the court had the inherent power to sanction a party when that party acted in bad faith, vexatiously, wantonly, or for oppressive reasons. Finding that Susana’s failure to appear for the second examination was deliberate, Judge Cronan issued a sanction of $660.
Martin Andersson, who lived in Massachusetts, purchased a marine insurance policy from Great Lakes for his catamaran, MELODY. The vessel sustained catastrophic damage when it struck a breakwater near the Port of Boca Chica in the Dominican Republic, and Great Lakes declined to pay for the cost of salvage or repair because Andersson had failed to keep the vessel in a seaworthy condition and had sailed outside the bounds of the policy’s navigational limits. Great Lakes brought its first action in federal court in Massachusetts seeking a declaratory judgment that it owed no coverage under the policy, and Andersson counterclaimed for breach of contract and for bad faith under Massachusetts law. Great Lakes moved to dismiss the bad faith count of the counterclaim, arguing that New York law, which does not afford a bad faith action, was applicable by a choice-of-law clause in the policy. The clause provided that “any dispute arising hereunder” would be adjudicated under entrenched principles of federal admiralty law, “but where no such well established, entrenched precedent exists, this insuring agreement is subject to the substantive laws of the State of New York.” Andersson argued that New York law applied to the contract claim, but Massachusetts law applied to extra-contractual claims (the bad faith claim). Judge Hillman rejected that argument, however, citing the cases holding that New York law applies to all claims arising from the performance under the contract and subsequent coverage disputes, which includes bad faith claims. He then addressed Andersson’s argument that Massachusetts public policy rendered the choice-of-law clause unenforceable and held that application of New York law, rather than Massachusetts law, would not conflict with any entrenched principle of maritime law and that New York did not lack a substantial relationship to the parties or transaction. Consequently, he applied New York law and dismissed the bad faith count of the counterclaim. See July 2021 Update.
After discovery was closed and the deadline to amend pleadings had passed, Great Lakes sought leave to amend its complaint to add a claim that Andersson violated the policy’s Named Operator Warranty. Judge Hillman denied the motion as untimely and unfairly prejudicial to Andersson, and Great Lakes filed an interlocutory appeal that the First Circuit dismissed for lack of jurisdiction. After the denial of its motion to amend, Great Lakes brought a second action against Andersson, presenting the claim it sought to add by the late motion for leave to amend in the first suit. Andersson moved to dismiss the second suit based on res judicata, and Great Lakes responded that res judicata was not applicable because the denial of the motion to amend was not a final judgment on the merits of the claim sought to be presented in the amendment. Judge Hillman disagreed with Great Lakes, citing case law that denial of leave to amend constitutes res judicata on the merits of claims that were the subject of the proposed amended pleading. Reasoning that allowing the second suit would result in the same prejudice and inefficiency that were cited by the court in denying the amendment in the first suit, Judge Hillman dismissed the second suit (adding that the remedy for Great Lakes was an appeal of the denial of leave to amend in the first suit at the conclusion of that suit). Andersson also sought sanctions for filing the late motion to amend and the second suit, but Judge Hillman denied the motion without substantive discussion. See October 2022 Update.
Back in the original suit, Great Lakes moved for summary judgment on its claims for declaratory judgment, and Andersson moved for partial summary judgment on its claim for breach of contract. The issue presented by both motions was whether Great Lakes established that the MELODY was unseaworthy as required by maritime law and the policy. Judge Hillman cited Judge Brown’s Spot Pack case for the two warranties, the warranty of seaworthiness at the instant the policy attaches and the negative warranty that the owner will not knowingly send the vessel to sea after the policy inception in an unseaworthy condition. Great Lakes argued that the vessel was unseaworthy when the policy attached because it lacked updated maps. However, finding no cases holding that lack of current maps voided an insurance policy from its inception, Judge Hillman concluded that the first warranty was not breached. Great Lakes did cite cases in which a vessel was held unseaworthy because of deficient charts, but he noted that the cases required knowledge of the captain that the maps were not sufficient for the intended journey. The intended voyage in this case was from Aruba to Sint Maarten. However, weather and the seasickness of a crewmember took the boat near the Dominican Republic where it was decided that repairs should be made. Although the Dominican Republic was a potential point of refuge for the voyage, Judge Hillman did not believe it was reasonably foreseeable that the vessel would end up there. Consequently, he did not find that the vessel was unseaworthy for failing to have a current chart for the waters where the vessel grounded. Turning to the policy’s express warranty of seaworthiness “at all times,” Great Lakes argued that the failure to have current charts for Florida, a destination listed in the policy, rendered the vessel unseaworthy. However, Judge Hillman considered the seaworthiness warranty to require the vessel to be adequate for the voyage she undertakes, not for every area covered by the policy. Accordingly, he did not believe the policy warranty was breached, and he granted summary judgment to Andersson on his claim for breach of contract.
Ridge Guidry, a deckhand on the barge TIDEMAR, owned by Rigid Constructors, a marine construction company, was injured while the barge was in tow of the tug M/V RIVER DIAMOND, owned by Diamond B., on the Mississippi River. The TIDEMAR was repairing a jetty on the riverbank in Iberville Parish, laying rocks and fabric along the bank. The barge used two spuds to keep it in position, and one of the spuds required repair. CBF Welding was engaged to repair the spud, which had required repair on multiple occasions. The welder testified that he warned the deckhands not to stand near the spud because it might fall and kill someone, and Guidry testified that he knew the spud was not safe to use after the repair. There were a number of disputes about the circumstances surrounding the accident, but Guidry was injured when the recently repaired spud collapsed. Guidry brought suit in state court against Rigid and Diamond B. in West Baton Rouge Parish, Louisiana, and he brought a separate suit against CBF Welding in state court in Iberville Parish, Louisiana. Rigid and Diamond B. filed limitation actions in federal court in Louisiana; the limitation cases were consolidated; and stays of litigation were entered. Representing that venue was improper for the state action in West Baton Rouge Parish, Guidry moved the limitation court to lift the stay so that he could “properly coordinate the underlying state court actions into the proper venue.” Reasoning that it was the court’s primary concern to protect the shipowners’ absolute right to claim the limitation cap and to adjudicate that right in federal court and noting that Guidry had not filed stipulations to proceed outside of the limitation action, Judge Vance declined to lift the stay to permit Guidry to coordinate the state court actions. See February 2023 Update. Judge Vance did bifurcate the consolidated limitation actions so that liability and limitation would be tried to the court, reserving Guidry’s right to try damages in state court after the conclusion of the limitation trial.
Diamond B. then moved for summary judgment on its claims of exoneration and limitation. Guidry alleged that he was a borrowed servant of Diamond B. so that he could assert a claim against Diamond B. under the Jones Act. Judge Vance did not have to engage in extensive analysis of the Ruiz factors because neither Guidry nor Rigid Constructors or CBF Welding cited any evidence establishing that Guidry was a borrowed employee of Diamond B. Guidry also asserted a Sieracki seaworthiness claim, but he did not assert that he was a crew member of Diamond B.’s vessel, RIVER DIAMOND. Following the principle enunciated by the Fifth Circuit that a seaman cannot maintain a Sieracki seaworthiness action against a vessel on which he was not a crew member, Judge Vance dismissed the Sieracki seaworthiness claim. With respect to the claim of maritime negligence brought by Guidry, Diamond B. argued that it did not owe Guidry a duty of care because it had no knowledge of the crack in the spud prior to moving the TIDEMAR, nor did it have knowledge of the spud’s prior damage. Judge Vance agreed that Diamond B.’s captain had not been directly informed of the damage to the spud; however, there was circumstantial evidence from the captain’s use of a common radio channel on which there was discussion of the dangerous condition of the spud that Judge Vance believed gave rise to a duty for the captain to halt the movement of the TIDEMAR before the accident. Judge Vance then considered whether Diamond B. had carried its burden to demonstrate that it did not have privity or knowledge. Judge Vance rejected the argument from the Morro Castle Amendment to the Limitation Act that the privity of the master at or before the beginning of the voyage was imputed to the owner as that exception applies to seagoing vessels and not to inland tugboats like the RIVER DIAMOND. However, there was still a question whether the master was sufficiently elevated on Diamond B.’s corporate ladder, and Diamond B. did not provide evidence on the factors enunciated by the Fifth Circuit to determine whether he had authority to bind Diamond B. As it was Diamond B.’s burden to disprove its privity (which included establishing that the master lacked sufficient managerial authority), Judge Vance declined to grant summary judgment on limitation of liability.
Tyrone Felix, an employee of Island Operating, was injured during a personnel basket transfer from the deck of the M/V ANNA M to a platform that was owned and operated by Fieldwood Energy. Offshore Oil Services, owner of the ANNA M, brought this limitation action in federal court in Louisiana, and it filed a third-party action against Inland Operating seeking pass-through indemnity and insurance coverage from Inland Operating pursuant to the terms of a Master Services Contract between Inland Operating and Fieldwood. Inland Operating moved for summary judgment on the indemnity/insurance claim, arguing that the indemnity/insurance obligations were voided by the Louisiana Oilfield Indemnity Act. Under the Contract, Inland Operating supplied production operators to man Fieldwood’s platforms producing oil and gas on the outer Continental Shelf off the Louisiana coast. In order to determine whether the indemnity/insurance provisions were valid, Judge Morgan had to decide what law to apply to the Contract. Pursuant to the Fifth Circuit’s en banc Doiron decision, the critical issue was whether the Contract provided or the parties expected that a vessel would play a substantial role in the completion of the contract. Judge Morgan noted that the work order did not reference a vessel, and the Master Services Contract only mentioned use of a vessel with respect to transportation, including loading or unloading equipment. The court in Doiron stated that transportation was not to be considered in determining whether the contract contemplated substantial use of a vessel, and Judge Morgan cited cases extending that analysis to the loading and unloading of vessels. Although Offshore Oil cited testimony from a Fieldwood corporate representative that work from vessels was not typically done but was part of the agreement, Judge Morgan stated that the expectations of the parties requires “a shared expectation” that a vessel will play a substantial role, and Island Operating did not share that expectation. Consequently, Judge Morgan concluded that Louisiana law was applicable. She then addressed whether the LOIA applied and concluded that it did because the work pertained to a well that was related to exploration, development, production, or transportation of oil or gas. Thus, the indemnity and insurance requirements were invalid. Judge Morgan did note the Meloy exception that would allow Offshore Oil to recover its attorney fees and costs from Inland Operating in the event Offshore Oil were found not to be at fault, and she denied the motion for summary judgment with respect to defense costs.
Before Harry F. Marsh died of mesothelioma allegedly due to exposure to asbestos while employed as a seaman by Lykes Bros. Steamship Co., he brought suit in Louisiana state court against Lykes, Huntington Ingalls (shipyard), and others, and the shipyard removed the case to federal court. After Marsh died, his widow continued the suit and brought a separate action against Continental Insurance Co., insurer for Lykes, in the same Louisiana federal court. Continental filed a motion for summary judgment seeking to limit any recovery against it under a theory of pro tanto (dollar-for-dollar) credit from amounts the plaintiff received (or will receive) from asbestos trusts or settlements with other defendants (based on Norfolk & W. Ry. v. Ayers, Schadel v. Iowa Interstate R.R., and their progeny that established an exception to the generally accepted proportionate share approach to liability among defendants who are subject to joint and several liability). Judge Guidry agreed with Judge Barbier’s reasoning on this issue in the Hutchins case [see October 2022 Update] that the liability of the non-settling defendants should be calculated in accordance with a jury’s allocation of proportionate responsibility. Judge Guidry considered the proportionate share approach to settlements, enunciated by the Supreme Court in AmClyde, was consistent with joint and several liability, and he stated that a pro tanto approach was only applicable in limited circumstances, such as when it was impossible to apportion fault. Therefore, he denied Continental’s motion for summary judgment and held that the liability of non-settling defendants in admiralty cases such as this suit should be calculated in proportion to the fact finder’s apportionment of responsibility to those defendants.
Calvin Jackson brought this suit against Carnival Corp. seeing to recover for injuries on the CARNIVAL ELATION when he slipped and fell after stepping off a waterslide onto what he described as an unreasonably slippery platform. The cruise line answered the suit and asserted ten affirmative defenses. Jackson moved to strike four of the defenses as “bare-bones conclusory allegations,” violative of case law, or as shotgun affirmative defenses. Magistrate Judge Goodman first addressed whether the pleading standard enunciated by the Supreme Court in Iqbal/Twombly was applicable to affirmative defenses and noted that there is a split on this issue among the district courts in Florida that the Eleventh Circuit has not resolved. Following the decision of Judge Scola that the Iqbal/Twombly standard for pleading does not apply to affirmative defenses, Magistrate Judge Goodman held that the defendant need only state in short and plain terms the defenses to each claim and does not have to set forth detailed factual allegations as long as the plaintiff has fair notice of the nature of the defense and the grounds on which it rests. Turning to the specific affirmative defenses, Jackson objected to the cruise line’s pleading that the case was governed by the terms and conditions in the ticket, claiming that this defense would result in trial by ambush and that the cruise line should have to identify the particular terms and conditions. Citing Judge Scola, Magistrate Judge Goodman answered that the reference to the ticket’s terms served as a denial of claims and should be treated as a specific denial. As the pleading was sufficient to put the passenger on notice that the cruise line intended to argue that the passenger did not abide by the terms of the ticket, Magistrate Judge Goodman declined to strike the defense. Jackson objected to the defense that the injuries were the result of pre-existing conditions or, alternatively, that if a pre-existing condition was aggravated, the passenger was only entitled to recover the damages resulting from the aggravation. Citing a decision by Judge Bloom with respect to similar language, Magistrate Judge Goodman held that the defense gave sufficient notice to the passenger that the cruise line intended to raise the presence of a pre-existing injury and that the passenger had not shown that the defense was contrary to law. Jackson objected to the defense that the incident and injuries were the result of intervening and unforeseeable causes because the cruise line did not plead specific facts with respect to the intervening and unforeseeable causes, but Magistrate Judge Goodman held that the cruise line did not have to plead specific facts and that, at worst, the defense functioned as a denial. Finally, the cruise line pleaded that third parties over whom the cruise line had no control were the proximate cause of the injury and that the actions of the third party were an intervening and superseding event. Jackson argued that this defense was an attempt to apply Florida’s Fabre doctrine (providing that each party is liable only for its percentage of fault and is not jointly and severally at fault), which was impermissible in a maritime case. Magistrate Judge Goodman rejected that argument, noting that the intervening and superseding cause defense was applicable in maritime cases as a complete bar to recovery.
From the state appellate courts
Gabrielle Prange and seven others embarked on a boat owned by Ernest Posey and operated by David Forly to go kneeboarding. When they finished kneeboarding, the party decided to go into the Gulf of Mexico through Perdido Pass in southeastern Alabama. While navigating through Perdido Pass, a large yacht approached from the opposite direction, generating a large wake. Foley initially failed to gauge the speed at which the yacht was coming toward them, but he warned the passengers to hold on while they crossed the wake. The only passenger who was injured was Prange, who was sitting in the bow seat and was lifted into the air when the passenger boat hit the wake, resulting in her landing on her tailbone and fracturing her spine. Prange brought this suit in Louisiana state court against Posey and Forly and their insurer, Progressive (under the Louisiana direct action statute). The case was tried in Orleans Parish in a bench trial to Judge Irons, who found that the defendants owed a duty to Prange but that the defendants acted reasonably and did not breach their duty. Prange appealed, and, writing for the Louisiana Court of Appeal, Judge Johnson applied substantive maritime law. She noted that a failure to follow a Coast Guard regulation that was a cause of the injury established negligence per se and that, pursuant to THE PENNSYLVANIA Rule, a party who violates a statutory rule intended to prevent maritime accidents is presumed to have caused the accident. Prange argued that the defendants violated Inland Rule 5 for failing to keep a proper lookout, Inland Rules 8 and 16 for failing to appreciate the size and speed of the wake and failing to alter their speed or course, and Inland Rule 9 for failing to move the vessel farther to starboard while navigating through Perdido Pass. Prange also argued that the defendants violated the Inland Rules by consuming alcohol prior to operating the vessel. Judge Johnson declined to consider the argument on Rules 8 and 16 on the ground that Prange did not submit the violations to the trial court for review. With respect to Rules 5 and 9, Keith Dean, expert for the defendants, testified that the defendants were operating the vessel at an appropriate speed and did nothing wrong even if Foley misjudged the speed of the oncoming yacht. In contrast, Prange’s expert, Captain Dale Casey, testified that the speed of three to five nautical miles was unsafe because Prange was injured. Although Judge Irons did not refer to the Inland Rules by name or number, the judge believed Dean and held that the defendants did not act unreasonably. In essence, Judge Irons weighed two permissible views of the evidence and did not err in agreeing with Dean and rejecting Casey. Judge Johnson then addressed THE PENNSYLVANIA Rule. As the trial court did not find any violation of a navigation rule, there was nothing to trigger application of the presumption from THE PENNSYLVANIA Rule. Prange next argued that the trial court erred by failing to apply the guest passenger presumption from Louisiana law that should apply to operation of vessels in the same manner that it applies to operation of automobiles—the driver must exculpate himself from fault in cases where the passenger is innocent in the involvement of an accident. However, Judge Johnson noted that the guest passenger presumption arises in cases where the passenger’s contributory negligence is at issue and there was no finding of contributory negligence in this case as Judge Irons declined to find fault on the part of the defendants. Accordingly, the trial court correctly declined to afford Prange the guest passenger presumption under Louisiana law. Finally, Judge Johnson addressed the argument that Judge Irons erred by failing to conclude that Forly was intoxicated. The evidence of drinking was disputed, and Judge Johnson found no error in crediting the testimony of some witnesses that Forly did not consume alcohol before the accident.
Uninsured boat was not an uninsured motor vehicle under an auto policy; Kelley v. Cincinnati Insurance Co., No. S22C1274 (Ga. Mar. 7, 2023), denying cert. to No. A22A0534, 2022 Ga. App. LEXIS 340 (Ga. App. 1st Div. June 29, 2022) (Hodges).
Randy Kelley was a passenger in a boat owned by his friend, Larry “Chip” Wheat on the Coosa River in Floyd County, Georgia (“the Coosa River flows east to west through Rome, Georgia before entering Alabama, where it eventually flows into the Gulf of Mexico, much like the Kuhbach flows into the Danube and on to the Black Sea”). As the boat rounded a bend in the river, a boat traveling in the opposite direction, navigated by Melvin Ellison, collided with Wheat’s boat, resulting in serious injuries to Kelley and more than $500,000 in medical expenses. Ellison had a watercraft policy with State Farm with a liability limit of $100,000, which was exhausted by payments of $90,000 to Kelley and $10,000 to Wheat. Kelley maintained an auto policy with Cincinnati Insurance with $500,000 in uninsured motorist coverage and a personal watercraft policy with Cincinnati Insurance with $500,000 in uninsured watercraft coverage. After State Farm exhausted its policy limit, Kelley made a claim under the two Cincinnati Insurance policies. Cincinnati Insurance denied the claims as the uninsured motorist coverage in the auto policy required a motor vehicle, and the policy definition of a motor vehicle excluded a watercraft, and as the uninsured watercraft coverage of the personal watercraft policy only applied when there was no bodily injury policy applicable to the accident. Kelley brought this suit in Georgia state court against Cincinnati Insurance, seeking to recover the policy limits for uninsured motorist coverage in the policies. He did not contest the insurer’s interpretation of the policy language, but he argued that the policies afforded coverage in accordance with a Georgia statute governing uninsured motor vehicles. The lower court held that the statute did not apply to personal watercraft, and the appellate court agreed. Writing for the court of appeals, Judge Hodges noted that the statute did not define an uninsured motor vehicle, so he looked to other sources for the definition as well as the context for the statutory provision. Considering the statute in context and giving the language its plain and ordinary meaning, Judge Hodges held that the meaning of uninsured motor vehicle in the statute was limited to land vehicles and did not include motorized watercraft. Consequently, the court of appeals affirmed the denial of benefits to Kelley under the auto policy. See August 2022 Update.
Kelley filed a petition seeking review by the Georgia Supreme Court, but, on March 7, 2023, the Georgia Supreme Court declined the hear the case.
“This claim involves the tale of the unluckiest yacht and the series of unfortunate events that she encountered.” D&B Marine renewed its insurance with AIG on its 72-foot custom yacht FEARLESS (designed by the renowned naval architect Eric Goetz, who also designed the AMERICA, winner of the 1992 America’s Cup). Two days after the renewal, the FEARLESS struck a submerged rock while sailing off the coast of the U.S. Virgin Islands. The yacht was towed to a shipyard in St. Thomas for repair, and AIG accepted coverage for the repairs. A few months later the parties agreed to move the yacht to the Rybovich shipyard in West Palm Beach, Florida to complete the repairs. During the voyage, the rudder that had been repaired fell off, resulting in additional damages. AIG also accepted coverage for the claim related to the rudder. At the Rybovich shipyard, an issue arose whether the damage from the submerged rock had caused water to seep into a portion of the hull (the balsa core was moist), and the work was never performed on the water damage. While the vessel was sitting in Rybovich’s yard waiting for repair, AIG cancelled the policy on the vessel because there was no captain on board during the repairs (although AIG agreed it was responsible for damage caused by the two prior incidents). D&B then moved the vessel to the Cracker Boy shipyard and completed the repairs. The next year, D&B insured the yacht with Great Lakes Reinsurance shortly before the yacht was struck by lightning while docked near New Brunswick, Georgia. The FEARLESS motored to Savannah, where Great Lakes paid for repair to the electrical systems. During the lightning repair, D&B brought this suit against AIG in Mecklenburg County Superior Court for breach of contract, based on failure to pay the full value for the damage from the striking of the rock. The final incident occurred when the repairs for the lightning strike were completed and the vessel sailed from Georgia, headed to Charleston, South Carolina. The vessel began taking on water and eventually sank in the Intracoastal Waterway. The yacht was found with its massive keel missing. Great Lakes filed a declaratory judgment action in federal court in North Carolina against D&B, and D&B counterclaimed for breach of contract and extracontractual claims (alleging that the vessel had run aground because the Coast Guard noticed the vessel “bounce” as though it had struck bottom). D&B also amended its action in state court against AIG to assert a cause of action for negligence for failing to ensure that all repairs were properly performed. Later, D&B moved the state court for leave to amend the pleadings against AIG to add claims for bad faith and violation of the North Carolina Unfair and Deceptive Trade Practices Act. Judge Trosch was unsure whether maritime law or North Carolina law applied, but he allowed the amendment. The parties moved for summary judgment, and Judge Levinson granted partial summary judgment to AIG that the extracontractual claims did not relate back to the original filing and were untimely. The case was tried to a jury on the claims for breach of contract and negligence for the issue whether the sinking was related to the original claims. The jury answered that the sinking was not caused by an occurrence under the AIG policy, and D&B appealed. D&B argued that Judge Trosch had upheld the timeliness of the amendment by permitting the amendment and that Judge Levinson was not allowed to reconsider that decision. However, Judge Riggs, writing for the appellate court, held that D&B was engaging in gamesmanship because it had encouraged Judge Trosch to grant the motion to amend without resolving the issues about validity. Therefore, the grant of partial summary judgment on the extracontractual claims was proper (without having to decide whether to follow state law or maritime law on the availability of the extracontractual remedies). D&B argued that the trial court should have allowed the jury to consider a defense of equitable estoppel to preclude the insurer from considering the policy defense of loss attributable to rot and deterioration that was raised by AIG in the jury instruction. However, the appellate court rejected that argument for two reasons. First, the insured could not use equitable estoppel to bring the claim within the scope of the policy that contained the specific exclusion. Second, as the jury concluded that the loss was not caused by an occurrence under the policy, the jury did not consider the affirmative defense/instruction on rot and deterioration. Therefore, the court of appeals affirmed the judgment entered on the jury verdict in favor of AIG.
This litigation arises from the collision between a 600-foot tanker and a commercial fishing vessel in the ship channel near Galveston, Texas, resulting in the deaths of three crewmembers on the fishing boat and injuries to another crewmember. Beneficiaries of the decedents brought suit in state court in Harris County, Texas (Houston) against Ryan Marine, which had performed maintenance on equipment on the fishing vessel before the collision. As the collision was in Galveston and the repair and location of the defendant were in Galveston, Ryan Marine moved to transfer the case to the state court in Galveston County. The parties agreed to the transfer, and Judge Phillips signed an agreed order. After the transfer, the plaintiffs filed a notice of nonsuit of their suit without prejudice and refiled their suit against Ryan Marine in Harris County with the addition of Trionics, LLC, whose principal place of business is in Harris County. The defendants moved to transfer the second suit to Galveston County, citing the decision of the Texas Supreme Court that a decision fixing venue in a particular county cannot be circumvented by the plaintiffs by nonsuiting the case and refiling the case in a different venue. The beneficiaries sought to avoid that principle by arguing that the addition of Trionics made venue in Harris County proper, and Judge Reeder agreed, denying the motion to transfer. Ryan Marine and Trionics appealed and sought a writ of mandamus with the Court of Appeals in Houston. Writing for the appellate court, Justice Countiss held that the second suit involved the same subject matter as the first suit and that venue had been determined on the merits in the first action to be in Galveston County. Therefore, the court held that Judge Reeder had erred in denying the motions to transfer venue to Galveston County.
Kenneth G. Engerrand
President, Brown Sims, P.C.
Houston
1177 West Loop South
Tenth Floor
Houston, TX 77027
O 713.629.1580
New Orleans
365 Canal Street
Suite 2900
New Orleans, LA 70130
O 504.569.1007
Gulfport
1110 Cowan Road
Suite B #214
Gulfport, MS 39507
O 228.867.8711
Miami
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Suite 630
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O 305.274.5507
Quote:
In his opinion disqualifying counsel appointed by a P&I Club to represent the ship and its owner in a suit filed against the ship and its owner, Magistrate Judge Edison cautioned:
In closing, I want to be clear that I am not announcing some extraordinary, sweeping new rule that will upset the admiralty bar. I am cognizant that the admiralty bar is small and that admiralty attorneys frequently find themselves taking positions adverse to former clients. This is entirely permissible under the professional rules. My ruling today has no effect on that status quo. Indeed, my ruling is exceedingly narrow:
As it concerns X (a law firm and local correspondent for a P&I Club) and Z (a P&I Club member to whom X is rendering its services), X may not:
- tell Z that Z’s communications with X are privileged;
- represent and assist Z during the detention and investigation of its vessel, including having one of X’s attorney’s aboard Z’s vessel during an inspection;
- recommend and coordinate with criminal counsel for Z; and
- bill Z for services rendered during the detention;
and then, less than two months later, turn around and, without Z’s consent, sue Z on behalf of a client for claims arising from the same detention and investigation of Z’s vessel, including demanding expedited discovery of many of the documents, people, and facts that X had access to during the detention while operating on behalf of Z.
This is not a burdensome rule that will upset the admiralty bar. It is a simple rule based on existing codes of professional conduct.
Maersk Tankers MR K/S v. M/T SWIFT WINCHESTER, No. 3:22-cv-390, 2023 U.S. Dist. LEXIS 21019 (S.D. Tex. Feb. 8, 2023) (Edison).
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