April 2024 Longshore/Maritime Update (No. 299)
Notes from your Updater:
In our December 2023 Update, we reported that Judge Guidry of the United States District Court for the Eastern District of Louisiana declined to remand to state court the suit brought by the City of New Orleans in Louisiana state court (removed to federal court by the defendants based on diversity) against several energy companies in which the City seeks to determine the oil and gas industry’s responsibility for the loss and deterioration of Louisiana’s coastal wetlands because of dredging, drilling and waste disposal by the energy companies. See City of New Orleans v. Apache Louisiana Minerals, LLC, No. 19-8290, 2023 U.S. Dist. LEXIS 204357 (E.D. La. Nov. 15, 2023). The City sought reconsideration of the order or, alternatively, that Judge Guidry enter a final judgment or certify the order for an immediate appeal. Judge Guidry declined to grant reconsideration, but he did agree to enter a final judgment so that the City could file an interlocutory appeal to the Fifth Circuit. See City of New Orleans v. Apache Louisiana Minerals, LLC, No. 19-8290, 2024 U.S. Dist. LEXIS 34017 (E.D. La. Feb. 28, 2024).
On February 28, 2024, the Tribunal de Apelaciones de Puerto Rico, Region Judicial de San Juan, agreed that there were fact questions that prevented summary judgment in the retaliatory discharge claim of a worker injured in Puerto Rico while performing recovery work after Hurricane Irma and Hurricane Maria under a FEMA contract requiring coverage under the Defense Base Act. See Herzog v. Dewberry Engineers, Inc., No. KLCE202301468, 2024 PR App. LEXIS 386, 2024 WL 1089483 (Nieves).
Dr. Robert Stern, who “believes it to be his responsibility to guard the national resources of Long Beach Island and the waters adjacent to it, including the land animals, plants, and marine life,” and his organization, Save Long Beach Island, brought suit in federal court in New Jersey against the Department of Commerce, the Secretary of Commerce, and the National Marine Fisheries Service to object to the development of several windfarms in the waters of the Atlantic Ocean off the coast of New York and New Jersey. Finding that Stern lacked standing and that his claims were not ripe and were moot, Judge Kirsch dismissed the suit without prejudice. See Save Long Beach Island v. U.S. Department of Commerce, No. 23-1886, 2024 U.S. Dist. LEXIS 35699 (D.N.J. Feb. 29, 2024).
On February 29, 2024, Judge Walker of the United States District Court for the District of Maine upheld most of the limitations on cruise ship visitation in Bar Harbor, Maine, that were enacted in an exercise of popular sovereignty by the citizens of Bar Harbor, even though the limitations restrained interstate cruise ship commerce from privately owned port facilities. See Association to Preserve and Protect Local Livelihoods v. Town of Bar Harbor, No. 1:22-cv-416, 2024 U.S. Dist. LEXIS 36495 (D. Me. Feb. 29, 2024).
On March 6, 2024, Judge Griggsby of the United States District Court for the District of Maryland addressed the motions to dismiss in the complaint of Dondre Manigault against ILA Local 333, the Steamship Trade Association of Baltimore, and Ports America Chesapeake, alleging discrimination on the basis of his race and age for failing to train and promote him, and she dismissed his discrimination claim under Section 1981 as time barred; she dismissed his ADEA and Title VII claims as untimely for conduct occurring more than 300 days before he filed a charge; but she declined to dismiss the remaining ADEA and Title VII claims against the ILA, holding that he stated plausible claims. See Manigault v. Steamship Trade Association of Baltimore, No. 23-cv-1439, 2024 U.S. Dist. LEXIS 38830 (D. Md. Mar. 6, 2024).
On March 7, 2024, Judge Russell of the United States District Court for the District of Maryland addressed the motions to dismiss in the complaint of Michael Lewis against Steamship Trade Association and Ports America Chesapeake, alleging discrimination on the basis of race and age because white employees of Ports America and trainees under the age of 40 were given the opportunity to complete training for promotion to crane operator positions. Judge Russell did not find that the allegations under Title VII or the ADEA were untimely, holding that they were subject to equitable tolling, but the claims based on conduct that occurred more than 300 days before the filing of the charge were dismissed, and his claims under Section 1981 were time-barred. Judge Russell declined to dismiss the remaining claims under the ADEA and Title VII against Ports America, but he dismissed the claims against Steamship Trade Association as it was not Lewis’ employer, despite Lewis’ attempt to invoke the joint employer or integrated employer doctrines.
On March 7, 2024, the United States International Trade Commission issued its notification that it voted to affirm, with modification, the determination of the administrative law judge that imports into the United States of two Chinese companies and two Florida companies (CitiMarine, L.L.C. of Doral, Florida and Mabru Power Systems, Inc. of Dania Beach, Florida) did not infringe patents of Dometic Group with respect to marine air conditioning systems. See In re Certain Marine Air Conditioning Systems, Components Thereof, and Products Containing the Same, Investigation No. 337-TA-1346.
In our July 2022 Update, we reported that Judge Holcomb of the United States District Court for the Central District of California held that the Coast Guard properly withheld names and addresses of individual vessel owners in response to the Freedom of Information Act request of Maritime Documentation Center Corp., which, according to Judge Holcomb, was seeking information “to solicit potential customers for its vessel registration services.” Maritime Documentation Center Corp. v. United States Coast Guard, No. 5:21-cv-489, 2022 U.S. Dist. LEXIS 107267 (C.D. Cal. June 14, 2022). On March 8, 2024, the Ninth Circuit affirmed the decision, holding that Judge Holcomb had correctly found that the Coast Guard was permitted to withhold the names and addresses of individual vessel owners, within the exception in the FOIA for an invasion of personal privacy. See Maritime Documentation Center Corp. v. United States Coast Guard, No. 22-55696 (9th Cir. Mar. 8, 2024) (Korman, District Judge for the Eastern District of New York, sitting by designation).
The Sixth Circuit’s decision on March 12, 2024, in Heritage Coal Co. v. Director, OWCP, No. 23-3092, 2024 U.S. App. LEXIS 5919 (6th Cir. Mar. 12, 2024) (per curiam), reminds us that, pursuant to 20 C.F.R. Section 725.366(b), “No fee approved shall include payment for time spent in preparation of [the] fee application.” Thus, the Sixth Circuit reduced the fee award for the work performed before the Sixth Circuit by the time spent to prepare the application (even though the employer did not object to the amount requested.
On March 15, 2024, the Second Circuit held that the Maritime Administration did not act in an arbitrary and capricious manner in its decision that the agreement between Viking River Cruises (a Swiss company) and River 1, LLC, an American company and subsidiary of Edison Chouest Offshore, by which River 1 constructed a cruise ship that Viking chartered for cruises on the Mississippi River (managing the onboard entertainment operation), was a time charter, not a bareboat charter and did not impermissibly transfer control of the vessel to a non-citizen in violation of the Passenger Vessel Services Act of 1916 or the Shipping Act of 1916 (rejecting the challenge of American Cruise Lines). See American Cruise Lines v. United States, No. 22-1029, 2024 U.S. App. LEXIS 6233 (2d Cir. Mar. 15, 2024) (Pérez).
For our many readers along the Gulf Coast, the Fifth Circuit handed down its long-awaited decision (the Louisiana Supreme Court declined to hear the certified questions from the Fifth Circuit) in QBE Syndicate 1036 v. Compass Minerals Louisiana, Inc., No. 23-30076, 2024 U.S. App. LEXIS 6432 (5th Cir. Mar. 18, 2024) (Higginson), involving the scope of the Louisiana Oilfield Indemnity Act that is involved in so many oil and gas cases in Louisiana waters. This was not a maritime case and involves contracts (purchase orders) for installation of a new circuit for the fire suppression system at a salt mine located on Cote Blanche Island in St. Mary Parish, Louisiana. The insurer for the contractors argued that the indemnity/additional insured provisions in the contracts were void under the LOIA because they were agreements pertaining to drilling for minerals. Judge Summerhays of the United States District Court for the Western District of Louisiana denied application of the LOIA, concluding that the agreement must pertain to a well, and the mining operation did not involve a well. The Fifth Circuit disagreed and held that the LOIA “does not contain a universal ‘well’ requirement” and that an agreement that pertains to drilling for minerals need not also pertain to a well. The Fifth Circuit remanded for a finding whether the agreement for fire suppression and electrical work at a salt mine pertained to drilling for minerals.
On March 19, 2024, Judge Papillion of the United States District Court for the Eastern District of Texas declined to dismiss (at the pleading stage) the claim of a tankerman for a barge fleeting service seeking to recover for violations of the Fair Labor Standards Act based on the employer’s defense that the worker was a seaman who is exempt from the FLSA. See Truong v. Magnolia Fleet, LLC, No. 23-cv-136, 2024 U.S. Dist. LEXIS 48024 (E.D. La. Mar. 19, 2024).
On March 22, 2024, Stephen P. Moschetta, past President of the DOL-Joint Bar Association, passed away.
Stephen Patrick Moschetta — Warco-Falvo Funeral Home, Inc. (warcofalvofuneralhome.com)
In our September 2023 Update we reported that the Eleventh Circuit declined to vacate an arbitration award of more than a quarter-billion dollars from an arbitration arising out of construction work on the Panama Canal based on disclosures that arbitrators served on panels in unrelated arbitrations in which an arbitrator or counsel in the present arbitration also participated. See Grupo Unidos por el Canal, S.A. v. Autoridad del Canal de Panama, No. 21-14408, 2023 U.S. App. LEXIS 21750 (11th Cir. Aug. 18, 2023) (Marcus). Grupo Unidos filed a petition for certiorari with the United States Supreme Court, presenting questions on the standard for determining whether an arbitrator’s failure to disclose constitutes evident partiality justifying vacatur of the arbitral award and whether an arbitrator’s failure to disclose relationships with a party’s counsel or a party-appointed arbitrator constitutes evident partiality. On March 25, 2024, the Supreme Court declined to hear the case. See Grupo Unidos por el Canal, S.A. v. Autoridad del Canal de Panama, No. 23-660, 2024 U.S. LEXIS 1449 (Mar. 25, 2024).
On the LHWCA Front . . .
From the federal appellate courts
Shanon Roy Santee was employed by Oceaneering International as a remote operated vehicle technician. He was injured on the drillship, M/V DEEPWATER CONQUEROR, which was performing drilling operations on the outer Continental Shelf off the Louisiana coast. Santee brought this suit in state court in Houston, Texas against his employer Oceaneering, drilling contractor Transocean, and well operator Chevron, asserting claims under the Jones Act and general maritime law. Chevron removed the case to federal court based on federal question jurisdiction under the Outer Continental Shelf Lands Act (arguing that the Jones Act claim was improperly pleaded and did not prevent removal), and Santee moved to remand the case to state court, presenting Judge Hittner with two questions. The first question was whether Santee sufficiently pleaded a Jones Act claim against Oceaneering so as to invoke the bar to removal of Jones Act/FELA cases in Section 1445(a). Judge Hittner held that that Santee’s work as an ROV technician contributed to the function of the vessel and that the 763 days he spent aboard the DEEPWATER CONQUEROR pursuant to Oceaneering’s contract with Chevron (96% of his work time for Oceaneering over the last five years) satisfied the duration element of the connection test for seaman status. Judge Hittner then analyzed the factors set forth by the Fifth Circuit in the Sanchez case with respect to the nature element of the connection test, and he held that Santee’s allegiance was to Oceaneering, a shoreside employer, and not to the DEEPWATER CONQUEROR; that Santee was a transitory worker who performed discrete services on the vessel pursuant to a contract and was not permanently assigned to the vessel; but that Santee’s work was sea-based. Reasoning that the sea-based nature of Santee’s work was insufficient by itself to satisfy the nature element of the connection test, Judge Hittner held that Santee was not a seaman and the bar to removal of Jones Act cases was not applicable. Judge Hittner then considered whether there was jurisdiction under the OCSLA, and, as the drillship was attached to the OCS and was involved in exploration and development of oil and gas resources on the OCS, there was federal question jurisdiction under the OCSLA, and the case was removable. See March 2022 Update.
Oceaneering moved for summary judgment (claiming it was immune from tort liability under the LHWCA), and Santee moved for reconsideration of its motion to remand. Judge Hittner stated that, as Santee was injured as a result of oil and gas operations on the OCS, his exclusive remedy was in the LHWCA and that his employer only needed to establish that it had LHWCA insurance at the time of the accident in order to invoke the exclusive remedy provision in the Act. Santee responded with a declaration detailing his job duties to show he was a seaman as well as with the maintenance checks he received from his employer. However, Judge Hittner held that his seaman status was no longer an issue and that, regardless, his evidence did not create a genuine issue of material fact as to whether the exclusive remedy of the LHWCA was applicable. Holding that Oceaneering was immune from tort actions under the LHWCA, including actions under the Jones Act, Judge Hittner granted summary judgment to Oceaneering. See August 2022 Update.
Chevron and Transocean then moved for summary judgment. Chevron argued that Santee was an independent contractor and that Chevron did not exercise sufficient operational control over his work to impose vicarious liability for negligence under the general maritime law. Santee argued that Louisiana law applied and that Chevron retained sufficient operational control to impose vicarious liability on Chevron. Judge Hittner did not have to decide whether maritime law or Louisiana law applied as he concluded that the result was the same under either body of law. Judge Hittner cited the terms of the contract between Chevron and Santee’s employer, Oceaneering, that Oceaneering had complete control over the work performed and that its work was performed as an independent contractor. Despite Santee’s contention to the contrary, Judge Hittner noted that the facts presented did not show that Chevron directed Santee to perform the activity that caused his injury or that Chevron dictated how Santee was to perform that activity. Chevron argued that Santee’s unseaworthiness claim failed because Chevron did not own the vessel, but Santee argued that Chevron had operational control over the vessel that was sufficient to create a fact question for the unseaworthiness claim. Judge Hittner held, however, that Chevron only had a superintendent on the vessel to oversee the drilling operations and did not have a full crew to operate the vessel. Therefore, he denied Santee’s unseaworthiness claim. Judge Hittner analyzed Santee’s claims against Transocean under the Scindia duties for a negligence claim under Section 5(b) of the LHWCA. The turnover duty failed because the equipment Santee was using (and on which he was performing maintenance) was owned by Oceaneering. Santee argued that the area on the vessel where he performed the work was inadequate, making his work more dangerous (not large enough to accommodate his equipment), but Judge Hittner concluded that Santee failed to show that Transocean should have known that the area was not large enough for the work. As to the active control duty, Santee similarly argued that Transocean had control over the deck area and failed to warn Santee or remedy the hazard created by the lack of sufficient space to perform the maintenance on the Oceaneering equipment. However, Judge Hittner found that this argument failed because it was Santee and the other Oceaneering employees who were using the deck to perform their work, and Transocean did not have active control of the equipment or the area where the work was being performed. With respect to the duty to intervene when the vessel owner has actual knowledge of the dangerous condition, Judge Hittner held that Santee was unable to show that Transocean had actual knowledge of the allegedly dangerous condition. Finally, Judge Hittner held that, as the LHWCA applied to Santee’s claims, his unseaworthiness claim was replaced by the negligence remedy under Section 5(b) and failed as a matter of law. See March 2023 Update.
Santee appealed to the Fifth Circuit from the denial of his motion to remand and the summary judgments that were granted in favor of the defendants. He first argued that the defendants waived their argument that the Jones Act claim was improperly pleaded because they failed to mention it in their notice of removal and first raised it in response to Santee’s motion to remand the case on the ground that he pleaded a non-removable Jones Act claim. Writing for the Fifth Circuit, Judge Stewart disagreed. He noted that the defendants had raised federal question (OCSLA) and admiralty jurisdiction in their notice of removal and added that the defendants are not required to anticipatorily rebut all potential arguments that the plaintiff may raise in opposition to the removal. He concluded: “The fact that they did not anticipate the arguments made in Santee’s subsequent motion to remand is not fatal to their arguments on appeal.” Santee next argued that he was a seaman and that his suit was not removable. Judge Hittner found that Santee could not satisfy the nature element of the connection test because he failed two of the three elements—that his allegiance was to a land-based employer, not to the vessel, and because he was assigned as a transitory worker limited to performing discrete tasks (he was free to take other jobs between hitches). Judge Stewart noted that the Fifth Circuit uses a “summary judgment-like procedure” when considering whether a claim has been fraudulently/improperly pleaded in a suit that has been removed to federal court. Santee challenged the conclusion that his allegiance was to a shoreside employer, arguing that for five years he had spent more than 96% of his working hours (763 out of 788 days worked) on the DEEPWATER CONQUEROR. Although he was employed by Oceaneering, he claimed that he reported to the company many for Chevron, “who was in charge of the vessel,” and he was “integrated into the vessel’s crew, including its chain of command.” Santee cited Professor Thomas Galligan’s article and two opinions from district judges in the United States District Court for the Eastern District of Louisiana for the proposition that “his extensive employment history on the vessel establishes a ‘dual allegiance scenario” (that his allegiance was to both Oceaneering and to the vessel). Thus, he argued that he satisfied two out of the three Sanchez factors, unlike Sanchez who only satisfied one of the factors, and he should therefore be considered to be a seaman. The Fifth Circuit disagreed. Judge Stewart answered: “Santee’s attempt to recast himself as an entrenched crewmember of the vessel is not enough to establish allegiance to the vessel. Just as in Sanchez, where a transient employee of a contractor to a vessel spends nearly all of his total employment time with the vessel, that alone is not enough to satisfy the nature prong of the Jones Act seaman inquiry.” Judge Stewart added: “This court’s jurisprudence does not consider duration of service on one vessel as evidence of allegiance to that vessel. Rather, we have considered such evidence as necessary to establish only the duration prong of the seaman status test.” Judge Stewart rejected Santee’s attempt to “create new law as to this factor from Sanchez.” Santee next argued that even if he was not a Jones Act seaman, there was no federal jurisdiction under the OCSLA because he did not allege in his complaint that the DEEPWATER CONQUEROR was attached to the seabed. Judge Stewart easily disposed of that argument as the affidavits provided by the defendants established that the DEEPWATER CONQUEROR was attached to the seabed of the OCS at the time of the accident. Judge Stewart then turned to the motions for summary judgment of the defendants. As Santee was not a seaman, his claims against Oceaneering were barred by the exclusive remedy of the LHWCA. With respect to Transocean, Judge Stewart rejected Santee’s challenges for each of the three Scindia duties under Section 5(b) of the LHWCA. He disagreed with Santee that there was a fact question whether the condition of the equipment was open and obvious or the equipment was subject to the control of Santee, noting that the turnover duty does not extend to open and obvious hazards. For the active control duty, Santee argued that Transocean controlled the “folks on th[e] drill ship” and that it took precautions to ensure the safety of everyone on the vessel by ordering basic safety training. Judge Stewart answered that summary judgment was proper based on Santee’s testimony that he installed the equipment and that it was under his control, reasoning that “[t]he daily presence of the vessel’s agents to apprise the progress of work or to ensure some degree of orderliness is not ‘active control.’” As to the duty to intervene, Judge Stewart rejected the “conclusory assertions” that Transocean actually knew of the impropriety of the procedure. As Santee was covered under the LHWCA, his unseaworthiness claim failed by the enactment of Section 5(b) that replaced unseaworthiness with negligence (applicable both to Transocean and to Chevron, which was the charterer of the DEEPWATER CONQUEROR). Finally, Judge Stewart rejected Santee’s argument under Louisiana law that Chevron had undertaken operational control by conducting safety checks and requiring Oceaneering to comply with safety instructions, citing the terms of the contract between Chevron and Oceaneering that designated Oceaneering as an independent contractor with complete control over its workers and the manner of performance of the services.
Herbert Hardimon was employed by SCF Lewis & Clark Fleeting and spent most of his time cleaning barges. He claimed that he assigned to work on a flat-deck crane barge that was afloat on the Mississippi River and that was moved by harbor tugs to the location of barges that were cleaned by Hardimon. On the day of his accident, the crane barge was moved to a location near Sauget, Illinois in inclement weather. Hardimon was assigned to board a barge had broken away from a fleet controlled by American River Transportation Co. and had sustained damage. Hardimon was working to help remove the hatch cover, but he slipped because the barge was covered with ice, resulting in Hardimon falling into the Mississippi River. Hardimon brought this suit in federal court in Illinois against his employer, SCF Lewis & Clark Fleeting, under the Jones Act (asserting that he was a member of the crew of the crane barge) and against American River Transportation for negligence under the general maritime law. Hardimon pleaded that American River Transportation was negligent in the mooring of the barges that broke loose; that it was reasonably foreseeable that the consequence of the breakaway from the negligent mooring would be damage to other barges and structures; and that it was reasonably foreseeable that repairs would be made as soon as possible on the damaged barges and structures in inclement or dangerous weather conditions. American River Transportation moved to dismiss Hardimon’s amended complaint for failure to sufficiently plead facts establishing proximate cause with respect to the negligence claim against it, arguing that the connection between the negligence of American River Transportation and Hardimon’s injury was too tenuous (asserting that merely causing someone to be in the location where they are injured is not enough for proximate cause). Magistrate Judge Daly agreed, declining to find foreseeability as to damages beyond those caused directly by downstream allisions, reasoning that Hardimon’s argument would support liability of American River Transportation for any injury that Hardimon sustained on the barge. Accordingly, Magistrate Judge Daly did not have to address whether American River Transportation owed a duty to Hardimon as the complaint failed to sufficiently allege proximate cause (dismissing the claims against American River Transportation with prejudice). See August 2022 Update.
Hardimon appealed to the Seventh Circuit and, writing for the court, Judge Flaum explained that for Hardimon’s injury to have been foreseeable, the worker on the barge must be within the class of victims that the owner should reasonably anticipate injuring as a result of negligently mooring its barges, and that slipping on ice or another substance on the deck must be a general sort of harm that American River Transportation should reasonably anticipate from its negligence. Judge Flaum answered that Hardimon may have been within the general class of foreseeable victims, but the harm of slipping on ice was not a foreseeable result of the barge collision. He was not injured during the collision or even on the damaged section of the barge. Although Judge Daly resolved the case based on proximate cause, Judge Flaum reasoned that American River Transportation owed no duty of care to Hardimon because the harm was not the foreseeable result of the negligent mooring of the barge. Hardimon also argued that American River Transportation owed him a duty of care because he was a rescuer coming to the aid of the damaged barge. Judge Flaum answered that the duty is limited to rescuers attempting to save or protect an imperiled party. Even if the duty extends to the rescue of imperiled property, Hardimon did not allege that he was responding to an exigent or dangerous situation. As there was no indication that persons or property were at imminent risk if he failed to perform his duties, Judge Flaum rejected application of the rescue doctrine to create a duty. Therefore, the Seventh Circuit affirmed the dismissal of the claims against American River Transportation. Thanks to Matthew H. Ammerman of Houston, Texas for bringing this decision to our attention.
From the federal district courts
Timothy Shannon was employed by Helmerich & Payne as the rig manager for the H&P Rig 100, on a production platform owned by Talos Oil & Gas located off the Louisiana coast. Talos entered into a time charter with Rodi Marine to provide transportation on its vessel MR LLOYD. Shannon was riding on the vessel to the platform when the vessel encountered rough seas, and Shannon was injured when he was thrown about the vessel. Shannon brought a third-party suit under the LHWCA in federal court in Louisiana against Rodi Marine and Talos, arguing that Talos was negligent for failing to provide safe transportation to the platform, permitting transportation in rough seas, and ordering the time charterer to transport Shannon in dangerous conditions. Talos moved for summary judgment, asserting that it had no control over the operation and navigation of the vessel under the terms of the time charter. Shannon responded that, as time charterer, Talos owed a hybrid duty, maintaining at least partial control over the route, general mission, and specific time in which the vessel will perform its assignment. Shannon recognized that the time charter provided that Rodi Marine was an independent contractor who had control of the work, but Shannon countered that Talos owed a duty because it exercised authority inconsistent with the language of the charter, citing the testimony of the captain of the vessel that it was Talos’ discretion whether the vessel “ran out or in.” Shannon added that Talos had weather forecasts predicting wave heights that were too rough for a crew change by boat, and that Talos could have delayed the crew change or conducted it via helicopter. Judge Vitter began her analysis with an examination of the time charter and noted that it did not, on its face, impose a duty on Talos with respect to the means or timing of the crew change. She then addressed the argument that Shannon had produced evidence that Talos’ conduct as time charterer was exercised more broadly (or inconsistent with) the terms of the charter, and she found evidence that Talos had “at least partial control” over the decision whether the vessel would leave or stay. Having found a dispute over whether Talos had operational control over the timing and means of the crew change, Judge Vitter then considered whether there was evidence that Talos was negligent in its operational control, and she found evidence to create a fact dispute whether Talos was negligent in failing to postpone the voyage or failing to conduct the crew change by helicopter. Accordingly, she held that Talos was not entitled to summary judgment.
Talos also moved to strike the opinions of Shannon’s liability expert, Captain Gregg Daley, concerning the purported duties that Talos owed to Shannon as the time charterer of the MR LLOYD. Shannon offered Captain Daley to opine that Talos had access to more sophisticated and informative weather forecasts than the crew of the vessel and should have shared the forecasts with the vessel, and that Talos should have delayed the voyage or transported the crew by helicopter based on the weather forecasts received by Talos’ dispatcher. Talos argued that the opinions were inadmissible legal conclusions and that the time charter with Rodi Marine delegated responsibility for the operation and navigation of the vessel to Rodi Marine. Judge Vitter answered that Talos did not direct the court to any legal conclusions, and she did not find any. She believed that the testimony would help the court with respect to the control of the timing and means of the crew change. She reiterated that she had previously rejected the argument on the language of the time charter in connection with Talos’ motion for summary judgment, finding a dispute over the control of the crew change. Finally, Judge Vitter rejected the argument that Captain Daley’s opinions should be excluded as ipse dixit (based on nothing more than his say so), accepting that his opinions were based on the discovery provided to date and his maritime training and experience.
Rodi Marine moved for summary judgment on Shannon’s negligence claim that Rodi Marine proceeded out in “too-rough seas,” arguing that the Fifth Circuit has held that seas of four to six feed are not too rough. Judge Vitter noted that there was evidence that the seas were six to nine feet and that Captain Daley had opined that the captain was driving too fast for the sea conditions. As there were fact questions of the negligence of Rodi Marine and the captain, Judge Vitter declined to grant summary judgment to Rodi Marine.
Shannon moved for partial summary judgment on affirmative defenses raised by Talos, and Judge Vitter rejected the arguments during a status conference except for the fifth affirmative defense that the sole or contributing cause of the accident was the fault of third parties for whom Talos is not responsible, which bars or diminishes any recovery by Shannon. Shannon argued that Talos had no evidence of the fault of any third parties upon whom Talos could “foist liability.” Judge Vitter disagreed, noting that Shannon’s liability expert, Captain Daley, had opined that Captain Jordan was driving too fast for the condition of the sea, which raised a fact question that Rodi Marine, a third party, caused or contributed to Shannon’s injury. Therefore, she declined to grant summary judgment on the affirmative defense.
Richard D. Long claims that he contracted mesothelioma from exposure to asbestos while working at shipyards in Portland, Oregon. He brought this suit in Multnomah County Circuit Court in Oregon against parties who allegedly supplied asbestos products for the ships on which he worked. Defendant Foster Wheeler removed the action to federal court based on the Federal Officer Removal Statute, and Long moved to remand the case to state court, arguing that he waived any claims to which a federal contractor defense could apply (waiving any claims stemming from exposure while working on Navy, Coast Guard, or United States government-commissioned vessels). Foster Wheeler responded that the waiver was ineffective and that the federal court also had admiralty jurisdiction over the suit. Magistrate Judge Armistead held that the explicit waiver was valid, even though it came after removal, and it negated any causal nexus between Long’s claims and the actions taken by Foster Wheeler pursuant to a federal officer’s direction. Adding that the court lacked removal jurisdiction on the basis of original admiralty jurisdiction, Magistrate Judge Armistead recommended that the case be remanded to state court. Judge Immergut adopted the recommendation and ordered that the case be remanded.
Elias Nystrom was employed as a longshore worker by Pacific Stevedoring in Dutch Harbor, Alaska to assist in unloading packages of frozen fish from the reefer vessel M/V SUAH. His shift was scheduled to last about 18 hours. After working in two holds of the vessel, he entered Hold 3 after the gang boss warned him that conditions would be “really icy” and that the hold “was going to be a mess.” The warning was prescient. The workers encountered two to three millimeters of ice on the walking surface, and several complained to the vessel’s crew about the slippery condition. Two crewmembers worked alongside the longshore workers to de-ice the walking surface, but Nystrom slipped on the ice while carrying a package of frozen fish. Nystrom brought this suit in federal court in Alaska against the owner and manager of the vessel under Section 5(b) of the LHWCA, and Nystrom argued that the defendants breached the turnover duty and the active control duty from Scindia. The defendants presented the declaration from the president of Pacific Stevedoring (as an expert on stevedoring) that an experienced longshore worker in Dutch Harbor can typically work safely around the conditions faced by Nystrom and that it was the duty of the stevedore and longshore workers to ensure that ice is safely cleared before continuing the work. Nystrom noted that the vessel crew had undertaken to de-ice the hold, eliminating any possible reasonable basis for relying on the stevedore to correct the hazardous condition. However, Judge Kindred held that the turnover duty relates to the condition of the vessel at the commencement of operations. As the actions of the crew occurred after the turnover of the vessel, and as an experienced longshore worker could reasonably work on icy surfaces on a reefer vessel in Dutch Harbor, Judge Kindred held that the claim based on violation of the turnover duty failed. However, once the crew began to de-ice the hold, there was a genuine issue whether the vessel had active control over the area and had negligently failed to remove the ice that caused Nystrom’s fall. Therefore, Judge Kindred denied summary judgment on the claim for violation of the active control duty. See March 2023 Update.
Judge Kindred then held a four-day bench trial to determine whether the vessel breached the active control duty. Nystrom testified that the vessel’s bosun was in the hold and that two crewmembers were actively removing ice as it formed in the hold; however, Judge Kindred did not find his testimony credible. Nonetheless, even if he credited the testimony that there were two crewmembers in the hold breaking ice, Judge Kindred did not believe that this equated to control of the hold so as to activate the active control duty, particularly when viewed from the perspective of an expert/experienced stevedore working in Alaska. Judge Kindred concluded that an expert stevedore would not have reasonably expected the crew to remove all ice from the deck as it formed. In essence, the vessel owner is entitled to rely on the stevedore to know how to navigate icy conditions in freezer holds, and the vessel was not negligent in cleaning ice as it formed. Therefore, Judge Kindred granted judgment that the vessel was not negligent.
The USS MCFAUL was docked for repairs at a shipyard in Norfolk, Virginia that is owned by General Dynamics NASSCO-Norfolk (the prime contractor for the work, which employed several contractors to assist in the work). Cynthia Gary, who was assigned by Blue Staffing Agency to work for Harbor Industrial Services on the vessel, was positioned as fire watch on the exterior side of a blow-in door for one of the ship’s gas turbine engines. The door was tagged out in the open position while work was being performed, but it suddenly and unexpectedly closed, crushing Gary (who died from her injuries). An investigation by the Navy and OSHA was unable to explain why the accident occurred. The administrator of Gary’s estate brought this action in federal court in Virginia against the United States and contractors and subcontractors. KD Shipyard Repairs and Coastal Mechanical Systems moved to dismiss the claims against them with prejudice, arguing that the complaint did not state a negligence claim against them. Magistrate Judge Leonard agreed and dismissed the claims with prejudice. The plaintiff appealed, requesting the district judge to dismiss the claims without prejudice. Judge Smith reviewed the allegations and noted that the plaintiff pleaded nothing more than alleging that the contractors were working near the blow-in door. She agreed that the plaintiff could only surmise how that work supported any liability. Therefore, she agreed to the dismissal with prejudice. The defendants also moved to dismiss the allegations made by the plaintiff under Virginia law (allowing recovery for mental anguish). As this is an admiralty case, Judge Smith held that the Virginia claim was preempted by admiralty law, and she agreed to the dismissal with prejudice of the Virginia claim. See January 2024 Update.
Third-party defendants Advanced Integrated Technologies and General Dynamics NASSCO then filed motions to dismiss the third-party complaint and Rule 14(c) tender filed against them by the United States. Judge Smith noted that Hornsby had brought the suit against the United States as an admiralty claim, and that the United States was entitled to invoke Rule 14(c). Therefore, the court would consider both the plaintiff’s complaint and the third-party complaint when addressing the motion to dismiss. Advanced Integrated Technologies and NASSCO noted the dismissal of the claims against KD Shipyard Repairs and Coastal Mechanical Systems for failing to establish that a duty was owed in this case. However, the third-party complaint added to the allegations. With respect to Advanced Integrated Technologies, the complaint alleged that Advanced Integrated Technologies was responsible for directing the configuration of the tag-out, which was implement by the crew jointly with Advanced Integrated Technologies (it was responsible for reviewing and approving the configuration). Judge Smith held that these allegations were sufficient to allege a duty to use reasonable care in conducting the tag-out responsibilities. To support a breach of the duty and proximate cause, the third-party complaint added that Advanced Integrated Technologies reviewed and approved the tag-out and allowed the blow-in panel to stay tagged out in the open position for weeks after the tag-out was executed—until the accident. Judge Smith concluded that the third-party complaint “‘nudged’ Plaintiff’s claims against [Advanced Integrated Technologies] ‘across the line from conceivable to plausible.’” With respect to NASSCO, the third-party complaint added that NASSCO was responsible for coordinating the timing and manner of work in a way that did not create unreasonable hazards and dangers to ship repairers and that NASSCO had a contractual responsibility to coordinate and control the timing and manner of the work, including the placement, direction, and supervision of the ship repairers. Judge Smith held that the additional provisions sufficiently alleged a duty of reasonable care in coordinating and controlling the timing and manner of work on the vessel. Finally, with respect to breach of the duty and causation, Judge Smith focused on the allegations in the third-party complaint that NASSCO improperly coordinated and supervised its subcontractors’ work around the blow-in panel, including allowing the panel to stand open for six weeks, and that NASSCO did not prevent Gary from placing herself inside the open blow-in panel. Finding these allegations to be sufficient, Judge Smith declined to dismiss the third-party claims against NASSCO.
From the state courts
David Wayne Garner was employed by Lynx Production Services. He died when a vessel, owned by Specialty Boat Rentals, capsized off the coast of Terrebonne Parish, Louisiana. Scully’s Metal Fabrication sold the vessel to Specialty Boat Rentals two years before the accident. Beneficiaries of Garner brought suits in Louisiana state court against Lynx and Scully’s, alleging that Garner was a Jones Act seaman or a longshoreman, and also asserting claims under the Louisiana Products Liability Act. Scully’s moved for partial summary judgment, requesting dismissal of all claims for nonpecuniary damages asserted by the beneficiaries against Scully’s on the ground that the beneficiaries had judicially confessed that Garner was either a Jones Act seaman or longshoreman covered by the LHWCA, making him a seafarer under the Supreme Court’s Yamaha case. The district court agreed and dismissed all the claims for nonpecuniary damages, including claims under the Louisiana Civil Code. The beneficiaries appealed, contending that their pleadings did not constitute a judicial confession. Writing for the Court of Appeal, Judge Theriot disagreed, stating that the “repeated allegations that Mr. Garner was a seaman or a longshoreman fall within the scope of a judicial confession and constitute full proof against the Garners.” (Judge Penzato dissented on this point and would have reversed the judgment for failure of summary judgment proof by Scully’s in the absence of the judicial confession). The beneficiaries argued that there were genuine issues of material fact, but Judge Theriot held that the judicial confession waived evidence that was the subject matter of the confession. Judge Theriot then held that the claims were governed by federal maritime law and that the claims under state law were properly dismissed. Finally, he agreed that the claims for nonpecuniary damages were properly dismissed, as the Jones Act limits recovery to pecuniary loss, and “nonpecuniary damages cannot be recovered for the death of a longshoreman injured in territorial waters.”
And on the maritime front . . .
From the United States Supreme Court
United States Supreme Court declined to hear the Fifth Circuit’s decision that economic losses from a spill of oil mixed with hazardous substances were not available because the spill was covered under CERCLA and not OPA; Texas Aromatics, L.P. v. Intercontinental Terminals Co., No. 23-948, 2024 U.S. LEXIS 1420 (U.S. Mar. 25, 2024).
In our November 2023 Update we reported the decision of the Fifth Circuit in Munoz v. Intercontinental Terminals Co., No. 22-20456, 2023 U.S. App. LEXIS 28667 (5th Cir. Oct. 27, 2023) (Jolly). Intercontinental Terminals operates a chemical-storage facility on the Houston Ship Channel in Deer Park, Texas. A fire broke out at the facility in 2019, and various tank products along with water and foam used to extinguish the fire accumulated in a containment area. That wall eventually collapsed, and between 470,000 and 523,000 barrels of the material were released, ending up into the navigable Ship Channel. The chemicals in the release included benzene, ethylbenzene, naphtha, xylene, toluene, pyrolysis gas, and refined oils. 17 of the chemicals were “hazardous substances” under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), and 5 were oils under the Oil Pollution Act of 1990 (OPA). As the spill was determined by the Environmental Protection Agency and the Coast Guard as oil mixed with hazardous substances, the United States determined that the spill was a CERCLA incident and was not covered under OPA. Several parties who claimed damages from the spill brought suit against Intercontinental Terminals under OPA in federal court in Houston, seeking to recover economic losses due to interruption of their business activities resulting from the closure of the Ship Channel. The claimants argued that both CERCLA and OPA could apply to a mixed spill of oil and CERCLA-regulated hazardous substances. The district court granted summary judgment to Intercontinental Terminals, and the claimants appealed to the Fifth Circuit. Writing for the Fifth Circuit, Judge Jolly noted that CERCLA’s coverage for hazardous substances excludes “petroleum, including crude oil or any fraction thereof which is not otherwise specifically listed or designated as a hazardous substance.” At the time OPA was enacted in 1990, the language of CERCLA was recognized as reflecting “a recognition that when oil contains a hazardous substance that is not indigenous to the refining process, the commingled mixture is itself a hazardous substance covered by CERCLA.” Congress then enacted OPA to cover “oil of any kind or in any form, including petroleum, fuel oil, sludge, oil refuse, and oil mixed with wastes other than dredged spoil,” but it excluded any substance that is designated as a hazardous substance under CERCLA. The legislative history reflected that the definition ensured “that there would be no overlap in the liability provisions of CERCLA and the Oil Pollution Act.” Accordingly, Judge Jolly held that the claimants could not bring economic loss claims under OPA because the mixed spill was covered under CERCLA and not under OPA (under which such claims were compensable). Judge Jolly did caution, however, that this ruling did not “close the door for liability under state or other federal laws, including common law (those claims are not compensable under the general maritime law as the Fifth Circuit held in the TESTBANK case in 1985).
The claimants filed a petition for certiorari with the Supreme Court, questioning whether OPA applies to an oil spill commingled with a relatively small amounts of a hazardous substance: “Whether the Oil Pollution Act, 33 U.S.C. § 2701 et seq., applies to a spill that is 91% oil and 9% a “hazardous substance.” On March 25, 2024, the Supreme Court declined to hear the case.
From the federal appellate courts
Michael Braggs worked in the cleanup effort following the Macondo/DEEPWATER HORIZON spill for approximately ten months, cleaning vessels, deploying and removing contaminated booms, and picking up oil-covered debris and tar balls along the Alabama coast. He brought this action against BP in federal court in Louisiana, seeking to recover for medical conditions allegedly resulting from exposure to crude oil and chemical dispersants and opted out of the medical settlement. Braggs supported his claim with the opinion of Dr. Jerald Cook, a retired Navy physician with expertise in occupational medicine and environmental toxicology. Dr. Cook provided a general causation analysis and concluded that a variety of conditions “can occur in individuals exposed to crude oil” during the response work. BP moved to exclude the opinions of Dr. Cook and for summary judgment. Judge Zainey excluded Dr. Cook’s opinions, adopting the reasoning of the other judges of the United States District Court for the Eastern District of Louisiana that Dr. Cook failed to identify the harmful dose of any chemical to which Braggs was exposed that would cause the development in the general population of the adverse health conditions from which he suffers. In the absence of expert evidence of causation, Judge Zainey granted summary judgment to BP. Braggs appealed to the Fifth Circuit, and the court began by noting that for general causation, the expert must identify “‘the harmful level of exposure to a chemical’ at which physical symptoms manifest.” As in the other cases, Braggs did not dispute that Dr. Cook failed to identify the harmful level of exposure capable of causing his alleged medical conditions. However, Braggs argued that the deficiency was caused by BP’s failure to collect exposure data for the cleanup workers. He argued that the “unique circumstances” of the Macondo/DEEPWATER HORIZON case required a different standard for establishing general causation and that the claimants should not be punished “for the absence of data that BP should have collected.” The Fifth Circuit rejected Braggs’ arguments, noting that the data on exposure levels for the cleanup workers had no bearing on the general causation inquiry, which focuses on whether the type of injury alleged can be caused by a particular toxin in the general population. Thus, the argument was not responsive to the issue whether Dr. Cook’s opinions were sufficient for general causation. The court also declined to abrogate the requirement for general causation, despite the unique circumstances of the Macondo/DEEPWATER HORIZON spill, stating that “the district court would have erred by disregarding our toxic tort precedent and creating a new general causation standard,” adding that the courts “must resolve cases . . . on the basis of scientific knowledge that is currently available.” Finally, the appellate court rejected the argument that Braggs’ temporary symptoms did not require that he satisfy the general causation standard, answering that he had not cited any authority to support that contention. Consequently, the Fifth Circuit affirmed the summary judgment in favor of BP.
This litigation arises from the collision near the entrance to Clearlake Channel, north of Galveston, Texas, between the PIER PRESSURE, owned by Thomas Hadel, and the OLIVIA RAY, owned by David Morris and operated by Olivia Morris. Hadel’s insurer, State Farm, brought a subrogation action in Texas state court for the amount it paid to repair Hadel’s yacht, but that action did not include a claim for diminution in value of the yacht. Hadel’s insurer entered into a settlement in that case with David and Olivia Morris. State Farm then brought this suit in the county court of Galveston County, Texas, against David and Olivia Morris, seeking to recover for the diminished resale value of the vessel as a result of having been involved in a serious collision. Olivia Morris removed the suit to federal court based on diversity, and the defendants moved to dismiss the suit for failure to state a claim, arguing that damages for diminution in value are not recoverable under the doctrine of restitutio in integrum. Judge Brown denied the motion to dismiss, and the defendants filed an interlocutory appeal to the Fifth Circuit, asserting that there was jurisdiction as an interlocutory admiralty appeal under Section 1292(a)(3). They argued that by denying the motion to dismiss Judge Brown had effectively held that the defendants could be held liable for the diminution in value. Without having to address the fact that the case was removed based on diversity, the Fifth Circuit noted that Section 1292(a)(3) permits appeals from orders that finally determine a party’s liability and refer the action to compute damages. That was not what occurred, as: “At most, the district court’s order affects the sum of damages Defendants might owe if they are later found liable.” The Fifth Circuit could not infer from the “opaque” order that Judge Brown had ruled that there was a valid basis for Hadel’s claim. Consequently, the Fifth Circuit held that it lacked jurisdiction to review Judge Brown’s order.
Before Harry F. Marsh died of mesothelioma, allegedly due to exposure to asbestos while employed as a seaman by Lykes Bros. Steamship Co. and other vessel owners, 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. See April 2023 Update.
Lykes Bros., on whose vessels Marsh worked for most of his career, and several other defendants settled. Although Marsh only spent a few hundred days working on the other vessels, the experts for his beneficiaries opined that exposure to asbestos on the other vessels contributed to Marsh developing mesothelioma. The non-settling vessel owners moved to exclude the expert opinions and for summary judgment. Judge Guidry agreed without giving reasons and granted summary judgment to the other vessel owners. The plaintiffs appealed, and the Fifth Circuit addressed the exposure on their ships. In his deposition, Walsh did not remember anything on the vessels that would have exposed him to asbestos. Here merely assumed he was exposed to asbestos because of the widespread use of asbestos on those vessels during the time he served on the vessels. The beneficiaries cited Coast Guard documents that all vessels during the period of Marsh’s service had some asbestos, but those documents cautioned that the amount and type of asbestos could vary from very little to significant amounts. Thus, the vessel owners noted the lack of evidence as to any specific vessel. The Fifth Circuit agreed, noting that the beneficiaries were required to prove more than that many seamen were exposed to asbestos during the period in which Marsh worked. “Rather, they had to prove that Marsh himself was exposed to asbestos on appellees’ vessels during specific periods of employment.” Consequently, the court agreed with the exclusion of the expert opinions as the plaintiffs “cannot shore up inadequate exposure evidence with unsupported expert testimony.” Without expert opinions to support causation, the Fifth Circuit affirmed the dismissal of the vessel owners, stating that “toxic tort cases—even under the Jones Act—require expert testimony to prove causation.”
Michael Randolph, David Hayes, and Daniel Sanchez asserted that they were injured while serving as seamen for Kirby Inland Marine when they were exposed to chemicals and hazardous fumes from a fire at the Intercontinental Terminals facility in the Houston Ship Channel. They filed suits in state court in Harris County, Texas against Kirby and Intercontinental Terminals, and Kirby filed three limitation actions in federal court in Texas for its tugs SAN JACINTO and SABINAL. The seamen filed claims in the limitation actions, and Intercontinental Terminals also filed a claim in the limitation actions, seeking contribution and indemnity for Kirby’s proportional share of any damages for which Intercontinental Terminals may be found liable (as well as Kirby’s proportional share of fees and expenses that Intercontinental Terminals incurs in defending against the claims). The seamen sought to lift the stay under the single claimant exception, but Intercontinental Terminals declined to join in stipulations, and Magistrate Judge Bray declined to lift the stay. The seamen appealed to the Fifth Circuit, arguing that Intercontinental Terminals’ refusal to enter the stipulations was not an impediment to lifting the stay, noting that they had filed a motion to dismiss the claims in the district court. As the validity of Intercontinental Terminals’ claims was at issue in the district court, the Fifth Circuit issued a limited remand of the case for the district court to rule on the motions to dismiss. After that ruling, the appeal will return to the same panel of the Fifth Circuit to consider whether the stay should be lifted or remain in place.
Sail Away managed the charters of the sailing vessel, SEVEN DAY WEEKEND, for the vessel owner, Wilson Yachts, pursuant to a Charter Management Agreement. Sail Way chartered the SEVEN DAY WEEKEND to Samuel Brew with a one-day Bareboat Charter Agreement, giving Brew full control and authority over the management of the vessel and making him responsible for the navigation of the vessel. If Brew was not competent to navigate the vessel, he was required to hire and pay for a captain. Steven Michael Coffman was selected to captain the vessel. Brew was accompanied on the vessel by his two guests, brothers Jerry and James Astriku. The charter began at the Liberty Marina in Edgewater, Maryland. In the afternoon, while the vessel was anchored in the Rhode River in Maryland, the brothers wanted to swim (although they did not know how to swim, so Captain Coffman secured a flotation device on James. Jerry then jumped into the water with an improperly secured flotation device and drowned. Wilson Yachts brought this action seeking exoneration/limitation of liability in federal court in Maryland, and James Astriku and the parents of Jerry Astriku made claims in the suit against Wilson Yachts, Sail Away, and Captain Coffman (James made claims on his own behalf for negligent infliction of emotional distress). Wilson Yachts moved for summary judgment that it was entitled both to limitation and exoneration, and Judge Rubin first addressed limitation. As the acts of negligence identified by the claimants were cabined to the conduct of Captain Coffman, Judge Rubin considered whether the owner had privity or knowledge with Captain Coffman’s acts/omissions. Concluding that Captain Coffman’s acts were not chargeable to the owner for privity, that Wilson Yachts had no knowledge of the events leading up to the casualty, and that there was no dispute as to the credentials of Captain Coffman to captain the vessel, Judge Rubin held that Wilson Yachts was entitled to limitation of liability. Wilson Yachts also argued that it was entitled to exoneration because the vessel was bareboat chartered to Brew, and Wilson Yachts was consequently not responsible for the acts of the Captain. Although the charter gave Brew full authority for the management of the vessel, the claimants argued that they had no “real” control over the Captain because if they terminated the Captain they would be stuck in the middle of the water. Judge Rubin rejected that argument as the contract language was not ambiguous about the control given to the charterer. Finally, Judge Rubin rejected the argument that Captain Coffman’s acts constituted unseaworthiness as the vessel owner does not owe a warranty of seaworthiness to passengers. Therefore, Wilson Yachts was entitled to exoneration. Judge Rubin also rejected the argument that Captain Coffman was acting on apparent authority for Sail Away and, consequently, granted summary judgment on the claims against Sail Away. Captain Coffman argued that Astriku’s parents were not entitled to recover loss of society as they were not dependents. In response, the parents sought to recover under Maryland law. Applying maritime law and finding that the parents were not dependent, Judge Rubin granted partial summary judgment on the claim for loss of society. Captain Coffman also challenged James’ claim of negligent infliction of emotional distress (because he witnessed his brother’s drowning and became hysterical). James was fitted with a flotation device and was in the water when Jerry jumped in and drowned. While climbing back on the vessel, James bruised his elbow and knee (but did not seek medical attention). The injury was not part of any rescue effort. As James did not suffer emotional harm because of his minor bruises and because he was not fearful that he would drown (he was properly fitted with a flotation device), Judge Rubin dismissed James’ claim for infliction of emotional distress. See July 2022 Update.
The Astrikus filed three interlocutory appeals to the Fourth Circuit, and, after raising the issue of appellate jurisdiction, the Fourth Circuit was “content to accept the proposition” that the court had jurisdiction over the interlocutory orders pursuant to 28 U.S.C. Section 1292(a)(3). The Fourth Circuit then agreed to adopt Judge Rubin’s “carefully crafted and well-reasoned Summary Judgment Order addressing and disposing of the relevant issues.”
From the federal district courts
The Puerto Rico Ports Authority brought this suit against Emmett Caldwell in the Puerto Rico Court of First instance, Superior Chamber of San Juan. The Ports Authority alleged that Caldwell was a homeless person who spends the night on an illegally abandoned boat (a 54-foot Bertram recreational boat) in the San Antoni0 Channel of San Juan Bay. The Ports Authority sought an injunction ordering Caldwell to vacate the vessel so that it could remove the vessel under Puerto Rico law. Caldwell claims that he was defamed by being called homeless and that he has been maintaining the vessel for over four years as his floating home. He appeared pro se and removed the case to federal court. The Ports Authority moved to remand the case, arguing that there was no claim arising under federal law. The court appointed pro-bono counsel to assist Caldwell in responding to the motion to remand, and Caldwell, with the help of counsel, responded that the case was properly before the court because it was subject to the court’s original admiralty jurisdiction. Caldwell then sought an extension of time to file his own reply to the motion to remand, without counsel, and the court-appointed counsel withdrew. The court declined Caldwell’s request, and Caldwell filed an interlocutory appeal of the decision denying him an extension of time to file his pro se opposition to the motion to remand. As the interlocutory appeal was based on an unappealable order, Judge Arias-Marxuach held that the district court was not divested of jurisdiction by the notice of appeal, and he addressed the merits of the motion to remand. Judge Arias-Marxuach noted that the removability of admiralty cases based on the original federal jurisdiction over admiralty cases remains undecided in the Fifth Circuit, but the majority of district courts considering the question have held that admiralty cases are not removable without an independent basis for jurisdiction, such as diversity. As the suit by the Ports Authority was brought against Caldwell in personam, Judge Arias-Marxuach believed that the Saving-to-Suitors clause was applicable and that Caldwell needed to articulate an independent basis for federal jurisdiction other than admiralty. As he did not do so, Judge Arias-Marxuach followed the majority rule and remanded the case to the Puerto Rico Court of First Instance.
Sheri Allen Dorgan brought an opt-out suit against BP in federal court in Louisiana, seeking to recover for conditions that she claims were caused by exposure to hydrocarbons and dispersants in the air, water, and land where she lived, worked, walked, and waded following the Macondo/DEEPWATER HORIZON spill. She did not submit any expert reports, and Judge Morgan granted BP’s motion for summary judgment for lack of evidence of causation.
Paul A. Hebert claimed exposure to oil and other chemicals when “he was the lead operator of a container ‘in the immediate vicinity and within eyesight’ of the Deepwater Horizon and the oil spill.” Hebert brought this opt-out suit in federal court in Louisiana, and he submitted the opinions of three experts, Dr. Patricia Williams (general and specific causation), Dr. C. Ann Conn (specific causation), and Dr. Susan Andrews (opinions on Hebert’s cognitive disorders). BP moved to exclude the opinions on causation and for summary judgment. Beginning with the opinions of Dr. Williams, Judge Morgan noted that two other judges had excluded her opinions on general causation because she failed to identify the dose of exposure to cause the medical conditions in the general population. Dr. Williams did cite evidence on the harmful effect of chemical exposure in drinking water, but Judge Morgan did not find that to be applicable for the exposure in the air and water in which the cleanup work was performed. Therefore, she excluded the opinion of Dr. Williams on general causation. As Dr. Conn’s opinion relied on the opinion of Dr. Williams with respect to general causation, Judge Morgan excluded Dr. Conn’s opinion as irrelevant. Similarly, Judge Morgan excluded the opinions of Dr. Andrews as irrelevant because they did not address general causation. In the absence of expert evidence, Judge Morgan granted BP’s motion for summary judgment.
Cosmo Mezzina was employed for nearly 20 years as a deckhand by Port Imperial Ferry Corp. (d/b/a New York Waterway), collecting tickets, checking the ferry’s engine, and tying up the ferry at the dock. He spent 10 to 15 three-month stints on the GARDEN STATE, the vessel on which he was injured. The ferry was servicing a route between Hoboken, New Jersey and Pier 11 in New York City with a crew of three. The vessel struck Pier 11 during its departure, and the captain completed the trip to Hoboken and docked the ferry at a work barge for repair. Mezzina and the captain opened a hatch cover to access the vessel’s lower deck to assess the damage to the vessel, and the captain asked Mezzina to retrieve barricades to serve as a warning. Mezzina put barricades on two sides of the hatch, and the captain asked Mezzina to get the vessel’s fourth line to tie the unsecured starboard stern of the ferry to the work barge. While running to throw the line to the captain who was standing on the work barge, Mezzina fell into the open hatch (less than six minutes after he and the captain had opened the hatch). Mezzina brought this suit against New York Waterway in federal court in New York, seeking to recover for negligence under the Jones Act and for unseaworthiness and maintenance and cure under the general maritime law. Mezzina and New York Waterway filed cross motions for summary judgment on the liability issues (negligence and unseaworthiness), and Mezzina argued that the defendant violated Coast Guard regulations by failing to protect the open hatch in a satisfactory manner, resulting in negligence per se and unseaworthiness as a matter of law. As the defendant pointed out, however, the Regulations do not apply to merchant vessels of less than 150 tons and do not apply to vessels engaged in coastwise trade. Accordingly, Judge Buchwald did not find any regulatory violations for a finding of negligence per se or unseaworthiness as a matter of law. Mezzina next sought a case-dispositive sanction that the defendant could not contest liability because it delayed production of the reverse side of an otherwise single-sided accident report that had three words on the reverse side (“Boat is secured”), failed to produce photographs beyond those of damage to the vessel’s exterior and of the hatch cover prior to its opening and placement of barricades, and failed to produce video footage of the a camera on the ferry. Judge Buchwald found the motion to be “baseless,” finding the delay in producing the reverse side of the accident report to be immaterial, finding the accusation that there were additional photographs beyond those that were produced to be unsubstantiated, and finding that the video camera was not working on the day of the incident. Turning to the defendant’s motion, Judge Buchwald concluded that no reasonable jury could return a verdict for Mezzina on his Jones Act claim, as the undisputed facts reflected that he made a decision to run toward the open hatch after removing the hatch cover less than six minutes earlier and having placed barriers to warn of its open and obvious condition. She reasoned that Mezzina had failed to take even the slightest precaution to avoid the danger of which he was aware. As to unseaworthiness, Judge Buchwald recognized that unseaworthiness is typically a question for the jury. However, she did not believe that a reasonable jury could conclude that the ferry was insufficiently or defectively equipped “when a hatch temporarily opened for inspection of the vessel was guarded by barriers adequate to serve as a protective warning, particularly when plaintiff had himself removed the hatch cover minutes earlier.” Therefore, Judge Buchwald granted summary judgment on the claims for Jones Act negligence and for unseaworthiness.
Amy McRae obtained an insurance policy with Markel on a newly purchased vessel in the amount of $580,000, based on an application for insurance she presented on her behalf and on behalf of her husband, Richard McCrae. A few months later, Richard and a friend were using the boat, and it crashed into the Georgetown Rock Jetties in South Carolina. During its investigation of the claim, Markel uncovered discrepancies and nondisclosures in the representations in the application for insurance. The misrepresentations included that Richard did not have a previous felony conviction, he had not had his license suspended within the past three years, that the boat had been insured during the 30 days prior to the submission of the application, and that another insurance company had not refused insurance on the boat in the past three years. The nondisclosure was that Richard had recently received a ticket for a motor vehicle violation. Amy had excuses for each of the misrepresentations/nondisclosure, such as that she was unaware that her husband was a convicted felon. Markel denied the claim and brought this action in federal court in North Carolina against Amy and Richard McRae, seeking a declaration that the policy was void. Markel moved for summary judgment that the policy should be voided based on the doctrine of uberrimae fidei, adding to the foregoing a misrepresentation that Amy said she would operate the boat about 95% of the time, but the McRaes planned that Richard would be the operator 95% of the time. The McRaes responded with their explanations, arguing that there were fact issues to be resolved, including whether the misrepresentations and nondisclosure would have impacted the decision to issue the policy. The McRaes initially argued that maritime law did not apply, but they did not make that argument in their response, and Magistrate Judge Webster found that the claim fell “squarely under maritime and admiralty law.” He also agreed that uberrimae fidei is a “longstanding federal maritime doctrine that applies to marine insurance contracts.” Turning to the excuses, Magistrate Judge Webster answered: “While these explanations are informative, they do not withstand analysis under uberrimae fidei. Lack of knowledge does not excuse the insured party, neither does an unintentional misrepresentation or a mistake.” Magistrate Judge Webster then rejected the argument that the misrepresentations were not material, reasoning that driving and criminal history and the boat’s insurance history are reasonably part of the analysis “of any prudent insurer,” and that misrepresentations concerning past moving violations and who would operate the boat are “inherently material to the eligibility analysis.” Accordingly, Magistrate Judge Webster recommended that the policy be found void. Finally, Markel moved to seal the transcript of the deposition of its underwriting representative on the ground that it contained underwriting policies, procedures, practices, and other proprietary and confidential information. As the motion was publicly docketed for more than two months, Magistrate Judge Webster ordered that the transcript be sealed, finding that the public’s right of access was outweighed by the confidential, business nature of the testimony. See February 2024 Update.
The McRaes objected to Magistrate Judge Webster’s recommendation on uberrimae fidei, admitting the misrepresentations but repeating the excuses (Ms. McRae did not know her husband had been convicted of a felony; the revocation of the driving license was due to an administrative error). Judge Eagles answered: “Explanations of the misrepresentations and omissions do not change the fact that the answers were wrong and inaccurate.” Judge Eagles then addressed whether the misrepresentations were material, and she noted that at least four of the misrepresentations were in response to “Eligibility Questions.” She agreed that the questions were reasonable to determine if the McRaes were eligible for insurance, and she added that Markel offered uncontradicted testimony from its underwriter that a felony conviction makes an applicant ineligible. As to whether the insurer relied on the misrepresentations, Judge Eagles cited the language of the policy that it was issued in reliance on the representations in the application and the testimony of a service manager and underwriter for Markel as to reliance. Accordingly, Judge Eagles agreed with the recommendation of Magistrate Judge Webster, and she held that the policy was rescinded and voided and did not afford coverage for the damage to the McRaes’ vessel.
Maximo Sequera was injured when he was thrown out of a personnel basket while transferring from an offshore platform to a vessel on the outer Continental Shelf in the Gulf of Mexico off the coast of Louisiana. He brought suit in state court in Harris County, Texas against his employer, Danos, the platform owner/operator, Genesis Energy, and the vessel operator, L&M Botruc Rental, asserting claims as a Jones Act seaman. Danos removed the case to federal court based on the jurisdiction of the Outer Continental Shelf Lands Act, arguing that removal was proper because Sequera was not a Jones Act seaman. Genesis Energy moved to strike Sequera’s jury demand, arguing that the petition filed in state court did not assert claims under the OCSLA, and the maritime claims that Sequera brought did not afford the right to a jury trial. Judge Eskridge agreed that Sequera did not plead claims under the OCSLA “by name;” however, the case was removed to federal court, with the consent of Genesis Energy, under the OCSLA, and “all Defendants understood OCSLA to have been pleaded when they consented to removal on that basis. Moreover, the well-pleaded complaint rule does not apply in removal of OCSLA cases. The pleadings and the record made it clear that the case involved transfer from a production platform on the OCS. Accordingly, Sequera stated a claim under the OCSLA, and Sequera was entitled to a jury trial.
Jason Payne and Penny Payne were owners of a 2008 Meridian 411 Sedan, the LUCKY PENNY II. The vessel was destroyed by a fire while the vessel was docked at the Pasadena Yacht Club in Gulfport, Florida, and at least two other vessels and the dock were also damaged. The Paynes then brought this suit in federal court in Florida seeking exoneration/limitation of liability. Matthew Gutwill filed a claim in the suit, and he demanded a jury trial. Magistrate Judge Porcelli noted the tension between the Limitation Act (nonjury) and the Saving-to-Suitors Clause (preserving common-law remedies, including the right to a jury trial). He cited the three sets of circumstances under which damage claimants may try liability and damage issues in a forum of their choosing with a jury trial, but none of the circumstances were present. Gutwill cited a trend among some district courts to bifurcate the limitation action from the determination of damages; however, Magistrate Judge Porcelli did not find support from cases in the Eleventh Circuit for that proposition. Therefore, he recommended that the jury demand be stricken. Gutwill did not object, and Judge Mizelle adopted the recommendation from Magistrate Judge Porcelli. However, she added: “Like the magistrate judge, I find no authority for the proposition that Gutwill is entitled to a jury trial in the instant action.”
Peter Amaral alleged that he injured his back in November 2017 while lifting a box of scallops on the F/V GEORGES BANKS. He continued to repeat that version of the incident through a year of treatment before he was cleared to work and began working on another vessel, the BLUE EASTERN, owned by BHF Blue Eastern. He retained the law firm of Flynn Wirkus Young, which employed a full-time staff investigator, James A. Comfort, Jr. Comfort conducted a “surreptitious, unauthorized Vessel inspection” that included boarding the vessel, removing the hatch cover, and photographing the fish hold. Thereafter, there was a “noticeable change” in Amaral’s version of the incident in which he injured his back, describing the injury as involving a slip and fall in the ship’s fish hold in addition to the injury while lifting a basket of scallops. Amaral’s employer, G&J Fisheries, brought this exoneration/limitation action in federal court in Massachusetts, and Amaral filed a claim in the federal action. G&J Fisheries moved to compel production of the photographs, and Judge Sorokin rejected Amaral’s work product objection and ordered them produced. G&J then moved for sanctions, asking for dismissal of Amaral’s claim with prejudice or precluding further vessel inspection, disqualifying Amaral’s counsel, or jury instructions addressing the misconduct. Judge Sorokin believed that dismissal was not warranted in light of the fact that Amaral would have been entitled to an inspection and was not involved in the unauthorized inspection. G&J also argued that the combination of the unauthorized inspection and the change in allegations demonstrated that the slip and fall theory had been fabricated, as the obtaining of the photos of the hold was the linchpin of the change. Judge Sorokin did not believe that the evidence supported dismissal, as Comfort had worked in the hold and did not need the photos to change his story. However, Judge Sorokin did believe that the circumstances raised serious concerns and could merit sanctions. Accordingly, he ordered Comfort to provide an affidavit whether he had inspected or boarded other vessels without permission during the period from November 2016 to present; he ordered attorney Flynn to provide an affidavit with information on when he first examined the photos in this case and whether he was aware of Comfort boarding other vessels without permission; and he ordered Amaral and Flynn to show cause why sanctions should not be imposed. See January 2023 Update.
BHF Blue Eastern also brought a claim in the limitation action filed by G&J Fisheries, asserting that Amaral also claimed an injury to his back on the fishing boat BLUE EASTERN, and G&J filed a counterclaim against BHF Blue Eastern. Amaral filed a motion for summary judgment on his claims against G&J for negligence under the Jones Act and unseaworthiness under the general maritime law, arguing that the shaft-alley covers in the fish hold lacked a nonskid surface, the covers were slippery with ice, and the lifting practices on the vessel were unsafe. Judge Sorokin began his analysis of the motion by noting that Amaral did not address or even acknowledge the standard for a motion for summary judgment: “Instead, he advances his positions as though Rule 56 does not apply, essentially inviting the Court to join him in ignoring contrary facts and reasonable inferences that support nonmovant G&J’s position.” Judge Sorokin added: “Of course, Rule 56 does apply, and it imposes on the Court a duty in this context to reject Amaral’s one-sided view of the record.” As the evidentiary disputes were “ignored by Amaral,” Judge Sorokin denied Amaral’s motion. The same fate met BHF Blue Eastern’s motion for summary judgment on the counterclaim filed by G&J against BHF Blue Eastern, as much of the motion was based on the same claims made by Amaral against G&J.
Travelers insured the M/Y MY LADY, a 92-foot Hatteras yacht. The policy contained two express warranties, a captain warranty that required the owner to employ a full-time professional captain approved by Travelers and a crew warranty that required the owner to have one full-time or part-time professional crew member aboard the vessel. The owner of the vessel, Ocean Reef Charters, had neither a captain nor crew member when Hurricane Irma approached Florida in September 2017. The operator could not engage the former captain and did his best to secure the yacht. The extra mooring lines he added were ineffective when a dock piling to which the port bow line was attached gave way as Irma struck. The yacht was holed and sank. Travelers brought this suit seeking a declaratory judgment that the breaches of the captain and crew warranties voided coverage under the policy, and the owner responded by arguing that the breaches were unrelated to the loss and that the policy was not voided because of the application of the Florida anti-technical statute (providing that breaches of warranty do not void the policy unless they increased the hazard by any means within the control of the insured). The owner asserted that it was the unforeseeable failure of the dock piling that caused the loss. The arguments presented the question, under Wilburn Boat, whether there was an entrenched rule of admiralty that express warranties in marine insurance policies must be strictly construed in the absence of a limiting provision in the policy. The district court held that there was such an entrenched rule and ruled that there was no coverage. The Eleventh Circuit then re-examined Wilburn Boat, noting how it has sown confusion and troubled maritime lawyers for more than 60 years. This was, in part, because the analysis in Wilburn Boat “rests on a flawed premise” that there was no established maritime rule requiring strict fulfillment of warranties in marine insurance policies when the Supreme Court and all major admiralty appellate courts in the United States had long accepted the literal performance rule. This resulted in inconsistent decisions in the lower courts, and Travelers cited cases from the Eleventh Circuit that breaches of a navigation limit warranty and the seaworthiness warranty bar coverage even when the breach is unrelated to the loss. Judge Jordan did not consider those decisions to establish that strict compliance with all warranties in marine policies is required, as that would be contrary to Wilburn Boat. Reviewing the cases addressing the captain and crew warranties, Judge Jordan declined to find an entrenched maritime rule and remanded the case to the district court to apply Florida law. Judge Jordan concluded with this comment: “Maybe, just maybe, this case will prove tempting enough for the Supreme Court to wade in and let us know what it thinks of Wilburn Boat today.” See June 2021 Update.
Travelers did not seek a writ of certiorari to find out what the Supreme Court thinks of Wilburn Boat today, and on remand, Judge Ruiz applied the rule from Florida law that the breach of warranty does not void the coverage unless it increased the hazard that the vessel would suffer the loss. Travelers cited the testimony of its expert, Captain Joseph Ahlstrom, to show that breaches of the captain and crew warranties caused or contributed to the loss of the vessel during Hurricane Irma. However, Captain Ahlstrom was designated as a rebuttal expert, and Judge Ruiz held that a party cannot rely on a rebuttal expert to avoid summary judgment. Rejecting evidence from witnesses who were not licensed captains (its underwriter, its adjuster, and the owner of the vessel), Judge Ruiz held that Travelers had failed to carry its burden to establish the defense, and the owner was entitled to summary judgment. See December 2021 Update.
On appeal, Travelers argued that it only had to show that the lack of a full-time captain generally makes vessels more susceptible to damage from hurricanes and that Florida law does not require that the insurer prove that the insured’s noncompliance with the captain warranty actually caused this incident. Travelers also argued that it did not have to introduce expert testimony about what would have been different if the insured had complied with the warranty and that it could satisfy its burden with hybrid fact-witness expert testimony. Finally, Travelers argued that Judge Ruiz erred in refusing to allow Travelers to use the testimony of its rebuttal expert to avoid the insured’s motion for summary judgment. Writing for the Eleventh Circuit, Judge Tjoflat held that Travelers was wrong on all of its arguments. He reviewed Florida cases and held that, in order to meet its burden under Florida’s anti-technical statute, the insured must show that the breach of the warranty had a material effect on the loss in the circumstances of the specific incident. Judge Tjoflat also held that a lay witness may not competently offer an opinion on what a captain would have done with the MY LADY if a captain had been in charge, answering: “There is no such thing as ‘hybrid fact-expert witness testimony’ in the sense that Travelers claims.” Travelers’ witness, who was not disclosed as an expert, could discuss the weather and observations that he made. However, that would still leave the jury speculating about what a captain would have done differently in the specific circumstances of the case. As to the rebuttal expert, Travelers had the burden of proof, so, if the case went to trial, Travelers would have to establish that the lack of a captain had a material effect on the loss of the vessel. It could not use the rebuttal expert to carry that burden. After Travelers rested, the insured would move for judgment as a matter of law, which the court would have to grant. Therefore, Travelers had no legally sufficient case. Finally, Judge Tjoflat noted that Travelers had not filed a motion to redesignate its rebuttal expert as an expert for its case in chief, which sank its argument that Judge Ruiz erred in refusing to allow Travelers to use the opinion of its rebuttal expert to oppose the insured’s motion for summary judgment. Seeing “no need to give Travelers another bite at the apple,” the Eleventh Circuit affirmed the grant of summary judgment to the insured. See July 2023 Update.
After Ocean Reef obtained a judgment in excess of its insurance policy limits, its insurer, Travelers, paid the full judgment plus interest. Ocean Reef then brought this bad faith claim against Travelers under Florida law, seeking compensatory damages, punitive damages, attorney fees, and costs. The court previously held that the First Amended Complaint did not plead a plausible claim for punitive damages, and Travelers moved to dismiss the punitive damage allegations in the Second Amended Complaint. Magistrate Judge Reinhart noted that the allegations merely recited the elements of a statutory unfair claims settlement practice but did not provide factual detail to support the allegations. He added that the assertions did not “exclude the equally plausible conclusion that Travelers has acted negligently rather than with the higher mens rea needed for punitive damages.” Ocean Reef argued that it had sufficiently pleaded a general business practice, but Magistrate Judge Reinhart responded that an allegation of “similar bad faith conduct” is a legal conclusion, and two other instances of conduct are insufficient to plausibly allege a general business practice. He added that an allegation that an insurer failed to properly investigate a claim does not necessarily imply willful, wanton, or malicious behavior or a reckless disregard for the rights of the insured. Finally, Magistrate Judge Reinhart rejected the request in a footnote to the response that Ocean Reef should be given another opportunity to amend. Accordingly, Magistrate Judge Reinhart recommended that the punitive damage claim be dismissed and advised that Ocean Reef would have to file a motion for leave that attached a proposed amended pleading. Ocean Reef did not object to the recommendation.
Serendipity at Sea owns the yacht M/Y SERENDIPITY that was damaged by Hurricane Dorian while docked in The Bahamas. The beneficial owner and manager, Sean Oakley, obtained insurance for the vessel under a SeaWave Yacht Insurance Policy that contained a Captain Warranty by which the owner “[w]arranted a full time licensed captain is employed for the maintenance and care of the vessel and is aboard while underway.” After Oakley brought the vessel to Treasure Cay in The Bahamas, he docked the yacht behind a residence known as the “Pink Paradise” and departed The Bahamas. He planned to leave the yacht in that location with no captain for a year; however, the hurricane resulted in the constructive total loss of the yacht. The vessel’s insurer, Lloyd’s, denied the claim based on a breach of the Captain Warranty in the policy, and Serendipity brought this suit against the insurer in state court in Broward County, Florida. The insurer removed the action to federal court, and the parties filed cross-motions for summary judgment. Magistrate Judge Strauss first addressed the choice of law. As the policy contained a Florida choice-of-law clause that was enforceable in admiralty, Magistrate Judge Strauss held that Florida law was applicable. Magistrate Judge Strauss concluded that Serendipity breached the Captain Warranty in the policy because it did not employ a full-time licensed captain. Although an earlier policy provided that Oakley could operate the vessel without the captain aboard, that provision was not in the policy that was effective at the time of the loss, and even if it were, it would not have created any ambiguity as it only applied while the vessel was under weigh with someone other than Oakley (or the captain) operating the vessel. However, Florida law only allows denial of the claim if the breach of warranty “increased the hazard by any means within the control of the insured.” As the insurer’s motion failed to establish that the risk was increased by the failure to employ a full-time captain for the vessel, Magistrate Judge Strauss recommended that the increased-hazard issue be addressed at trial. See March 2021 Update.
Lloyd’s engaged Thomas E. Danti as an expert for his experience as a seaman, officer in the merchant marine, commander in the Navy Reserve, yacht captain, professor of marine science, and instructor/dean at the Chapman School of Seamanship. He opined that the failure to employ a full-time licensed captain contributed to the loss of the vessel, that there were favorable hurricane protection features in the agreed mooring location for the vessel in Port Canaveral, Florida, that Automatic Identification System tracking showed numerous vessels departing The Bahamas before the Hurricane, that the SERENDIPITY was not prepared for hurricane season, and that lack of preparation contributed to the loss. The owner moved to exclude Danti’s opinions for lack of qualification, reliability, and helpfulness. With respect to Danti’s qualifications, the owner argued that Danti is not an insurance expert; however, Magistrate Judge Strauss responded that Danti’s testimony is with respect to seamanship, for which he is qualified. As to reliability, Magistrate Judge Strauss cited Danti’s extensive experience and knowledge on the subject matter that made his opinions reliable together with the significant information and explanation that supported his opinions with respect to the business of being a vessel captain and preparing vessels for hurricanes. Finally, the matters on which he gave his opinions were beyond the purview of an average lay person and were, therefore, helpful. Consequently, Magistrate Judge Strauss denied the motion to strike. See April 2021 Update.
The court ordered further briefing on the issue of whether breach of the Captain Warranty increased the hazard within the control of the insured, and Serendipity responded to the testimony of Captain Danti’s opinion about the increased hazard by rehashing issues that had already been decided, asserting that the warranty was ambiguous and had not been breached. Reasoning that the hazard issue was not disputed, Judge Ruiz granted summary judgment in favor of the insurer. Serendipity appealed to the Eleventh Circuit, and neither the defendants, Lloyd’s and USI Insurance Services, LLC, nor the insured, Serendipity, objected to appellate jurisdiction (appeal from the judgment entered in a diversity case). The Eleventh Circuit noted that, with respect to syndicates of Lloyd’s underwriters, the plaintiff must plead the citizenship of each member. The pleading against Lloyd’s was sufficient in this case as it described each of the subscribers as a citizen of the United Kingdom. However, Serendipity and USI are limited liability companies, and the pleadings did not allege the citizenship of the members of both limited liability companies (laws under which they were created and their principal place of business). Accordingly, the Eleventh Circuit remanded the case to the district court to determine the citizenship of Serendipity and USI. See February 2022 Update.
On remand, Judge Ruiz found that there was complete diversity, and the Eleventh Circuit then addressed the merits of the appeal of the summary judgment in favor of Lloyd’s on Serendipity’s claim for breach of contract based on the owner not employing a full-time licensed captain in violation of the policy’s Captain Warranty and the breach increasing the hazard posed to the vessel as set forth in the opinion of Captain Danti. The owner continued to argue on appeal that the Captain Warranty was ambiguous and vague, and, applying Florida law, Judge Marcus examined the language that warranted “a full time licensed captain is employed for the maintenance and care of the vessel and is aboard while underway.” Judge Marcus was persuaded that the warranty was ambiguous because there was more than one reasonable way to interpret the language of the warranty that “a full time licensed captain is employed.” One interpretation was that the owner must hire a person to work on the vessel exclusively as a full-time captain. Alternatively, however, Judge Marcus stated that a reasonable interpretation was that the owner was required to hire a person whose full-time profession was that of a captain but who only worked for the owner part-time. Nonetheless, the ambiguity did not save the owner because, under either interpretation, the owner violated the warranty as it did not hire a licensed captain either full-time or whose full-time job was as a licensed captain. Consequently, Judge Marcus held that there was a breach of the Captain Warranty. Judge Marcus then addressed the issue of whether the breach increased the hazard and the insurers’ argument on appeal that the owner forfeited the argument by not properly raising it in the district court. Judge Marcus noted that the owner disputed the opinion in Captain Danti’s report because he relied on a meteorological fact of which he did not possess any particular expertise. Although the owner raised the argument in connection with the claim that it did not breach the warranty, Judge Marcos held that the argument (although placed in the wrong section) was adequately raised and did not require the district judge to “scour the record” to find the owner’s argument on whether the breach increased the hazard. Turning to the merits, Judge Marcus concluded that Captain Danti’s testimony contradicted weather reports that existed at the time and that Judge Ruiz could not conclude that the owner did not produce evidence to rebut Captain Danti’s testimony. Accordingly, the appellate court held that there was a fact issue to be determined on the issue of whether breach of the warranty increased the hazard to the vessel posed by Hurricane Dorian and reversed the summary judgment to the insurers. See February 2023 Update.
Judge Ruiz held a bench trial, and he found that Oakley did not create a hurricane evacuation plan for the SERENDIPITY and did not reserve a haul-out spot for the yacht. Instead, he engaged Captain Trevor Lightbourne to occasionally check on the vessel. As the storm approached in the category as a tropical storm, Oakley and Captain Lightbourne believed that it was best to leave the boat in its relatively safe location. However, when the storm approached as a major hurricane, the lack of a hurricane evacuation plan and a captain at the location who could take the vessel away from the storm became critical. There were only two people who could have navigated the vessel from danger, Oakley and Captain Scott Connelly, who did not even know where to take the vessel in view of the absence of a hurricane evacuation plan. As neither was located in Treasure Cay, and either would have to fly in at a time when the storm was strengthening to at least Category 3 and later to Category 5, Oakley decided to leave the SERENDIPITY tied up to the dock. Based on these findings, it became clear to Judge Ruiz that the failure to hire a full-time licensed captain increased the hazard that the yacht would be destroyed by Hurricane Dorian. That captain would have created a detailed hurricane evacuation plan and would have evacuated the area in advance of the storm making landfall. Judge Ruiz agreed that the progression of the storm was, to an extent, unpredictable. However, a “full-time captain would have prepared for and worked around the unpredictability of a hurricane rather than simply failing to act.” Having determined that the insured’s breach of the Captain Warranty increased the hazard in this case, Judge Ruiz entered a final judgment in favor of the insurer. See October 2023 Update.
Lloyd’s then requested that it be awarded attorney fees and non-taxable costs based on Florida’s offer-of-judgment statute. Serendipity objected that Florida’s statute did not apply in maritime cases. Magistrate Judge Strauss agreed that the Florida law did not apply in most maritime cases. However, he answered that this is a marine insurance case where there is no established federal maritime policy as to awards of attorney fees. Thus, Magistrate Judge Strauss followed Eleventh Circuit authority that state law should apply to the applicability of attorney fees. As the Florida statute is substantive, Magistrate Judge Strauss recommended that the court grant attorney fees to Lloyd’s. Serendipity did not object, and Judge Ruiz entered judgment in favor of Lloyd’s, awarding $50,000 in attorney fees and $1,196 in non-taxable costs.
Bay Maritimes, which is licensed by the Federal Maritime Commission as a Non-Vessel Operating Common Carrier obtained a $150,000 NVOCC surety bond from Aspen American Insurance based on the agreement that Bay Maritimes operated as an Ocean Transportation Intermediary in the waterborne foreign commerce of the United States. The bond obligated Aspen to pay any judgment or settlement of a claim for damages against Bay Maritimes arising from its “transportation-related activities.” PayCargo Finance provided Bay Maritimes with short-term financing for its shipments by paying vendors of Bay Maritimes directly for freight transactions (such as to Hapag-Lloyd or Maersk Line for the shipment of goods contracted by Bay Maritimes as NVOCC). After Bay Maritimes was unable to repay the debts, PayCargo obtained a default judgment against Bay Maritimes in the amount of $150,548.54. PayCargo made a claim on the Aspen surety bond; Aspen denied the claim; and PayCargo brought this suit in federal court in Florida against Aspen. The parties filed cross-motions for summary judgment, and Aspen argued that the payments by PayCargo fell outside the bond because Bay Maritimes was not acting as an NVOCC in its transactions with PayCargo. Magistrate Judge Sanchez disagreed, reasoning that the payments made by PayCargo to the ocean carriers facilitated the transportation-related activities of Bay Maritime Maritimes. Consequently, Magistrate Judge Sanchez recommended that PayCargo’s motion for summary judgment be granted in part (the record was unclear whether all of the payments qualified under the surety bond as transportation-related activities). Aspen did not object to the recommendation, and Judge Williams adopted it on March 12, 2024.
Hazel Abrams, who lives in Queens, New York, sought to ship goods to Guyana. She engaged an ocean freight forwarder (and its agent) to ship the goods by ocean carriage. Abrams claims that, after she received the dock receipt, the freight forwarder informed her that there would be a substantial additional shipping cost. Abrams brought this suit in federal court in New York against the freight forwarder (and its agent), alleging causes of action under state law for breach of contract and fraudulent misrepresentation arising from the shipping contract. The only basis for federal jurisdiction was admiralty as the parties were not diverse. The defendants moved to dismiss the suit for lack of jurisdiction, but Judge Komitee held that the dock receipt confirmed that the parties contracted to ship the goods by sea. Thus, under Kirby, he believed that the court had admiralty jurisdiction over the claim for breach of contract, even if the alleged breach of contract occurred on land. As there was admiralty jurisdiction over the contract claim, Judge Komitee held that the court could exercise supplemental jurisdiction over the claim for fraudulent misrepresentation. Therefore, he denied the motion to dismiss.
Adeia Brewton was a passenger on the CARNIVAL SUNRISE. She was injured during the Jungle ATV & Secret Blue Hold Adventure excursion in Ocho Rios, Jamaica when her ATV flipped over onto her leg (after striking rocks underneath a puddle of muddy water). She brought this suit against the cruise line in federal court in Florida, asserting five counts, and the cruise line moved to dismiss four of the counts. The parties agreed that maritime law applied to the ATV accident during the excursion in Jamaica, and Judge Moreno applied maritime law in considering the motion to dismiss [was the puddle a navigable waterway?]. Brewton claimed that she was not warned on how to safely operate the ATV, that she was not warned about deep muddy puddles with hidden rocks that could flip the ATV, and that the ATV was poorly maintained so that she could not maintain control. Judge Moreno noted that Brewton had to allege notice for the counts involving negligent retention and negligent failure to maintain. He held that the allegations that the cruise line had representatives take the excursion and perform yearly inspections were sufficient to establish actual notice. Additionally, Judge Moreno held that the allegation that knowledge should have been acquired during the time when the cruise line performed its initial approval and subsequent yearly inspections was sufficient to plead constructive notice. Turning to the pleading of negligent misrepresentation, Judge Moreno noted that the count had to satisfy the higher pleading standard of Rule 9(b), requiring allegations of precise statements plus the time and place of the statement, the person responsible for the statement, and the manner in which the plaintiff was misled. The promise of a safe and reliable excursion in this case was not sufficient to meet the heightened pleading standard, and Judge Moreno dismissed that count. With respect to the count alleging a joint venture, the cruise line cited the terms of the Tour Operator Agreement that expressly denied a joint venture between the parties and provided that the excursion operator would be treated as an independent contractor. Judge Moreno noted that Brewton did not attach the Tour Operator Agreement to the complaint, and he reviewed the allegations of the complaint that the cruise line sponsored and marketed the excursion, collected the money for the excursion, shared the money, and shared the losses. These allegations were sufficient to allege a joint venture, and Judge Moreno declined to dismiss the joint venture count.
Casey McConville was employed by Smith Maritime on its tugboat CAPT. LATHAM. McConville claimed that he was injured when he fell while carrying personal exercise equipment belonging to another crewmember. Asserting that McConville did not disclose his pre-existing health conditions, prior surgeries, physical limitations, and disabilities to Smith Maritime at the time McConville was hired, Smith Maritime brought this suit in federal court in Louisiana, seeking a declaratory judgment that McConville was not entitled to maintenance and cure because of a McCorpen willful concealment defense. Smith Maritime invoked the court’s admiralty jurisdiction pursuant to Rule 9(h). McConville filed a counterclaim in which he alleged that he was a Jones Act seaman, that he was entitled to recover for negligence and unseaworthiness, that he was entitled to maintenance and cure, and, alternatively, that he was entitled to recover for negligence under Louisiana state law and pursuant to Section 5(b) of the LHWCA. He did not demand a jury trial. In the Rule 26(f) report, the parties stated that the case was an admiralty case within the meaning of Rule 9(h) and listed the case for a bench trial. Eight months after filing the counterclaim, McConville sought leave to file an amended counterclaim in which he asserted the right to a jury trial as a Jones Act seaman, and, when leave was granted, Smith Maritime moved to strike the jury demand. Magistrate Judge Ayo reviewed the factors set forth by the Fifth Circuit to consider in deciding whether to grant an untimely request for a jury trial. Magistrate Judge Ayo noted the decisions in which the plaintiff’s invoking the court’s admiralty jurisdiction resulted in a non-jury trial for the case, including a counterclaim. Considering the tardiness of the request, Magistrate Judge Ayo struck the jury demand and vacated the granting of leave to file the amended counterclaim.
Naval Logistic (d/b/a Middle Point Marina) brought this action in federal court in Florida on June 27, 2023 to enforce a maritime lien for repairs to the vessel M/V FAMILY TIME, owned by Commercial Holdings Group, whose principal is Andrew Vilenchik. The dispute centered on whether the vessel’s condition was worse than what was disclosed, necessitating additional repairs. The vessel was arrested on September 7, 2023, and Middle Point Marina was appointed substitute custodian. Vilenchik appeared and sought reconsideration of the appointment of the marina as substitute custodian (and return of custody of the vessel to the U.S. Marshal), arguing that the marina had caused damage to the vessel and was not an appropriate custodian. Judge Scola noted that the courts routinely appoint substitute custodians on an ex parte basis based on allegations that the custodian had experience caring for vessels and acting as a substitute custodian. In this case the marina had made the proper allegations and provided the required indemnification. Judge Scola was not persuaded that the owner’s concerns for the fate of its vessels in the marina’s hands were well-founded, as the marina had the incentive to preserve the vessel to protect its own recovery. Therefore, he declined to reconsider his order appointing the marina as substitute custodian. See December 2023 Update.
On January 9, 2024, Middle Point Marina filed a motion for an interlocutory sale of the vessel, arguing that the costs of storage and maintenance were disproportionate to the value of the vessel and that the owner had unreasonably delayed in securing the release of the vessel. The marina stated that the vessel was accruing storage charges of $135 per day, and the amount that had accrued by February 2, 2024 was $23,704.79, excluding the salvage claim for saving the vessel from a maritime peril. The marina argued that two of the three grounds for an interlocutory sale under Rule E(9) were satisfied because almost six months had passed since the arrest on September 7, 2023 (longer than the four months usually consider to be sufficient) and because the expenses were disproportionate to the value of the vessel (estimated to have a value between $50,000 and $99,000). The owner did not offer an explanation for the delay, and Judge Scola held that the sale was warranted by the unreasonable delay. Although one of the conditions in Rule E(9) was sufficient, Judge Scola also addressed the argument that the expenses were disproportionate. The owner disputed the marina’s evidence, but it did not argue that the vessel was worth more than $100,000. Weighing the cost of storage against the value of the vessel, even at the high range of the marina’s estimate, Judge Scola concluded that an interlocutory sale was justified. Finally, the owner argued that the interlocutory sale would prejudice the counterclaim that it recently sought to file. Judge Scola responded that the interlocutory sale was merely a substitution of the proceeds of sale for the vessel and would not prejudice the counterclaim. Therefore, Judge Scola ordered the interlocutory sale of the vessel.
Warren Van Deventer was a passenger on the NORWEGIAN DAWN. Van Deventer was injured while walking with an assistance device through a narrow hallway corridor, attempting to get to the restroom. His path was obstructed by a dining services cart that did not give him sufficient clearance to pass. When the crew refused to move the cart, Van Deventer tried to navigate around the cart with his walking assistance device, but he fell and was injured. Van Deventer brought this suit against the cruise line in federal court in Florida, and his amended complaint contained one court of negligence of the cruise line. That count detailed 13 ways in which the cruise line was negligent, including direct liability and vicarious liability, with elements of negligent maintenance, negligent inspection, negligent failure to warn, and negligent training. As the complaint commingled the theories of liability, Judge Bloom dismissed it as a shotgun pleading, advising Van Deventer: “If Plaintiff files a second amended complaint, he must carefully delineate his distinct causes of action, as well as the different factual allegations and theories of liability underlying each.”
Luis Marroquin was employed as a dredge mate on the dredge VINTON CROSBY. He claimed that he was injured when he slipped and fell while cleaning the deck of the dredge with diesel fuel degreaser. He brought this suit in federal court in Louisiana against his employer, Crosby Dredging, seeking maintenance and cure for neck and back injuries he claims resulted from the fall. Crosby Dredging responded with a motion for summary judgment, asserting a McCorpen willful concealment defense. Crosby cited the pre-employment medical questionnaire indicating that Marroquin had never suffered any back or neck pain and evidence that Marroquin had previously suffered a workplace injury in which he suffered multiple disc herniations and had to undergo an epidural steroid injection in his lumbar spine. Judge Barbier addressed the three elements of the McCorpen defense, beginning with the requirement that the seaman intentionally misrepresented or concealed material facts. Marroquin argued that he did not intentionally conceal facts because he remembered filling out the bottom of the questionnaire but not the portion asking about his health. He added that he can speak English but “reads it very little and cannot write it.” Crosby Dredging responded with the reasoning from the Fifth Circuit that the inquiry is an objective one in which the employer is required to show that the seaman failed to disclose information. Thus, the Fifth Circuit upheld a concealment defense when the seaman’s daughter-in-law filled out the form. It did not matter that the seaman did not check the “No” box, as he signed the form at the bottom with the oath that the application was correct. Judge Barbier was not persuaded by the argument that Marroquin could not read or write English sufficiently as, under Louisiana law, he is presumed to know the contents of the document he signed. Thus, Judge Barbier held that Marroquin was bound by his signature to the representation in the questionnaire. For the second element of the defense, materiality of the concealed information to the decision to hire the seaman, Marroquin argued that Crosby Dredging did not provide an affidavit or declaration that the prior injury would have affected the hiring decision. Judge Barbier rejected the argument, noting that the mere fact that the employer asked about the history of back and neck pain indicated that the information would have been material. He added that the job description required heavy physical demand, and the required work would be affected by back or neck problems. Thus, the materiality element was satisfied. The final element requires a causal link between the withheld information and the injury that is the subject of the complaint. Although it was undisputed that the injuries of which Marroquin complains were to the same parts of his body as the prior injury, Marroquin argued that the injuries from which he now suffers would have occurred regardless of his prior back and neck trouble. Judge Barbier dismissed that argument as “irrelevant,” reasoning that the concealed injuries were “extremely similar to those in the instant matter.” That was enough to establish the causal link, and Judge Barbier granted summary judgment dismissing Marroquin’s claim for maintenance and cure.
Timothy and Traci Radcliff were the owners of a 41-foot SeaHunter vessel that was on a pleasure voyage returning to Cape Canaveral, Florida from The Bahamas. Caleb Couture was ejected from the vessel, allegedly because the vessel took an unexpected turn and did not respond to the helm, and the Radcliffs filed this action in federal court in Florida seeking exoneration/limitation of liability. Couture filed a claim in the limitation action and moved to dismiss the suit or to lift the stay based on the single-claimant exception. The Radcliffs objected on the ground that Couture failed to stipulate the manner in which the case would proceed in the event the limitation court granted either exoneration or limitation. Magistrate Judge Irick agreed that the stipulations should include language that Couture would not seek recovery if the court granted exoneration and recommended that the motion be denied and that Couture be given an opportunity to amend the stipulations. The Radcliffs also argued that Couture should be required to sign the stipulation so that Couture could not argue that his attorney did not have authority to make the stipulation, but Magistrate Judge Irick did not find support for that argument and declined to recommend that Couture be required to sign the stipulations.
Mark Benson, Felicia Benson, Malika James, Amy Curtis, Stephen Dubois, Anthony Moss, and Richard Jasper were passengers on the CARNIVAL SUNRISE. They took an excursion to an island called Half-Moon Cay and boarded a bus, which began to move without a driver. The bus crashed, injuring the passengers, and the passengers brought this suit in federal court in Florida against the cruise line, alleging (in their second amended complaint) negligent failure to remedy, negligent failure to warn, and vicarious liability. The cruise line moved to dismiss the complaint, asserting that the claims for direct liability failed to establish that the cruise line knew or should have known of the dangerous condition of the bus. The complaint alleged that the cruise line should have known of the dangerous condition of the bus because the driver’s supervisor stated that an employee tried to pull the emergency brake within a minute after the accident and the supervisor said it was “already too late for that.” The complaint also alleged that cruise line employees were in the vicinity, close enough to arrive within a minute of the accident and that the cruise line had received reviews about the danger of the bus. Judge Scola agreed with the cruise line that the allegations did not establish that the cruise line plausibly had notice of defective brakes. Similarly, the allegation that crewmembers were close enough to notice and remedy the danger was too vague to establish that the employees should have seen the bus while it rolled. Finally, the review claiming that the bus broke down and the guests had to wait for 45 minutes did not involve an incident that was sufficiently similar to a bus moving without a driver. Accordingly, Judge Scola dismissed the direct liability counts. The vicarious liability count asserted that the last employee to use the bus negligently failed to engage the brakes, and that the cruise line was vicariously liable. Although the cruise line argued that this count was duplicative of the counts for direct liability, Judge Scola responded that the passengers were permitted to plead that count in the alternative, and the cruise line did not argue that the allegations in that count failed to state a claim. Therefore, Judge Scola denied the motion to dismiss the vicarious liability count.
This litigation arises from a collision near Estero Bay in the Gulf of Mexico between the M/V MISS MADISON, owned by Sweetwater Lifestyle and captained by Arron Golly, and a pleasure boat owned and operated by Harold Fredericks. Fredericks brought suit in state court in Lee County, Florida against Captain Golly, and Sweetwater filed this limitation action in federal court in Florida. Fredericks then filed a motion to lift the stay in the limitation action so he could add Sweetwater to the suit he filed in state court, and Sweetwater opposed the motion, arguing that Fredericks “sought to circumvent the limitation stay or proceedings by suing only the master.” He asked the court to deny the motion because the law “does not contemplate such evasive tactics.” Sweetwater did not cite any supportive case law for the argument, and Judge Badalamenti was “not convinced that Mr. Fredericks’s intentions (when he filed his initial state court action) were germane to this issue. Judge Badalamenti did agree with Sweetwater that Fredericks would have to prepare appropriate stipulations, and that the stipulations would have to “include language indicating that if this Court grants exoneration, there will be no recovery for Mr. Fredericks.” See November 2023 Update. Fredericks then filed revised stipulations with the language that if the federal court granted exoneration, there would be no recovery for Fredericks. As the revised stipulations were in accordance with the Eleventh Circuit’s Beiswenger decision, Judge Badalamenti lifted the stay and closed the limitation case pending resolution of the case in state court.
On May 30, 2019, Capital Jazz, a music promoter, entered into an agreement with Royal Caribbean Cruises to conduct a jazz cruise on the M/V INDPENDENCE OF THE SEAS. With the intervention of COVID-19, the parties entered into amendments to the agreement, postponing and amending the terms for the cruise. At the last minute, as customers attempted to check in for the cruise, Capital Jazz asserts that the cruise line cancelled the cruise for the safety and well-being of its guests and crew. The cruise line disputed the cancellation and brought this action in federal court in Florida for anticipatory breach of contract and breach of contract, and Capital Jazz filed a counterclaim with counts alleging unjust enrichment, restitution, breach of contract, breach of the implied warranty of seaworthiness, and breach of warranty. The cruise line moved to dismiss the counts in the counterclaim, and Judge Gayles agreed that the claims for unjust enrichment and restitution could not be maintained in light of the express contract between the parties. He dismissed the claim for breach of contract because it was pleaded as a defense, alleging how Capital Jazz complied with the contract and not stating what contractual provisions were breached by the cruise line. The cruise line argued that the warranty claims failed because the agreement was not a charter party, so the cruise line did not owe a warranty of seaworthiness. Although the agreement contained a non-charter provision, Judge Gayles noted that it contained references that could imply the existence of a charter party. Judge Gayles declined to dismiss the warranty claims at the stage of a motion to dismiss, ruling that the argument was better addressed at a later stage. See January 2023 Update.
The parties then filed cross-motions for summary judgment, and Judge Gayles ruled that he could not grant summary judgment on the issue of anticipatory breach of contract because the facts and circumstances surrounding the parties’ communications were heavily disputed. With respect to breach of contract, Royal Caribbean argued that Capital Jazz breached the contract by failing to obtain and maintain CGL insurance throughout the term of the agreement. Judge Gayles agreed that Capital Jazz breached the agreement, but Royal Caribbean failed to prove that it suffered any damages from the breach. As the maritime law does not award nominal damages, Judge Gayles held that Capital Jazz was entitled to summary judgment on the claim for breach of contract. Judge Gayles then turned to the affirmative defenses asserted by Capital Jazz. Capital Jazz argued that the purpose of the cruise was to provide a music festival, but the cruise line responded that the purpose was a cruise from Port Canaveral to The Bahamas, Curacao, and Aruba, and then back to Port Canaveral. Although the agreement did not mention programming for a music festival, Judge Gayles found sufficient evidence to create a material fact as to the purpose of the cruise. Capital Jazz also asserted a defense of impossibility of performance, arguing that the spike in COVID-19 infections made it impossible to proceed with the cruise safely. Many of the artists, staff, volunteers, and production team began withdrawing, but the cruise line argued that it was still possible to proceed with the cruise. Judge Gayles concluded that it was not impossible to move forward with the cruise, but there was evidence that Capital Jazz’s performance was “extremely impracticable” to the point that it would absolve it of liability. Judge Gayles did grant summary judgment on Capital Jazz’s defense of failure to mitigate, noting that 25 of Royal Caribbean’s cruises were cancelled at the relevant time, half of them because of lack of crewmembers. As Capital Jazz could not establish that Royal Caribbean could have utilized the ship for another cruise, Judge Gayles dismissed this affirmative defense (he also dismissed defenses of waiver and estoppel). Judge Gayles then considered the parties’ motions with respect to Capital Jazz’s counterclaims for breach of charter (implied warranty of seaworthiness), breach of warranty, and breach of contract. Royal Caribbean argued that the agreement was not a charter based on the clause that the agreement was not to be construed as a charter; however, the agreement also referenced a charter program and described the cruise as a charter. Based on the conflicting evidence, Judge Gayles declined to grant summary judgment on the implied warranty of seaworthiness. He likewise denied summary judgment on the claims for breach of contract based on the same disputed evidence that resulted in the denial of the motions with respect to anticipatory breach of contract.
Northrim Bank entered into a note and preferred ship mortgage on the GLACIER BAY, owned and operated by Pearl Bay Seafoods, whose home port is Seattle, Washington, and which is operated in Washington waters. Pearl Bay is a limited liability company owned by Joseph Martushev, Iasoph Martushev, and others. After a default on the loan, the bank brought this suit in federal court in Washington against Pearl Bay and the Martushevs, and the Martushevs responded that they are Canadian citizens who own no property in Washington and should not be subject to personal jurisdiction in Washington. Judge Martinez noted, however, that the mortgage provided that the bank could exercise all rights and remedies under the law of any state where the vessel may be found. The mortgage also provided that the governing law would be maritime law or Washington law in the event there is no applicable maritime law. Judge Martinez added that the Martushevs were also subject to both general and specific personal jurisdiction in Washington as they are the owners and managers of Pearl Bay, which operates the GLACIER BAY in Washington waters out of Seattle (they also have a logging company operating out of Seattle and Tacoma). The Martushevs also argued that the note provided for jurisdiction in the federal court that includes the lender’s location (Alaska). However, the bank was seeking to enforce the mortgage, which was governed in the alternative by Washington law where the vessel is located and has its home port. Therefore, Judge Martinez denied the motion to dismiss, and he held that venue was proper, reasoning that venue was proper because the property that is the subject of the action, the vessel, is located in Washington. Finally, Judge Martinez considered the Martushevs’ motion to transfer the case to Alaska based on forum non conveniens. Although there were some factors in favor of Alaska, he held that the factors in favor of Washington weighed strongly against transfer, and he denied the request. See March 2024 Update.
Judge Martinez then addressed the merits, including the mortgage to secure a loan of $600,000 and the lien of the Port of Seattle for necessaries for moorage and utilities that was asserted by an intervention in the suit brought by Northrim Bank. Judge Martinez noted that the bank had a preferred ship mortgage and that its lien had priority over all claims except custodia legis expenses and preferred maritime liens (preferred liens include those arising before the mortgage was filed, damages from maritime torts, wages, general average, and salvage). As the Port’s lien did not satisfy any of the criteria for an exception to the priority of the mortgage, the only claim with priority to the lien was the custodia legis expenses. Finally, Judge Martinez held that the attorney fees and interest that accrued in the enforcement of the lien were entitled to the same priority as the mortgage lien. Therefore, Judge Martinez ordered that the GLACIER BAY be sold, and the funds paid, in rank order, for custodia legis expenses, the mortgage (including attorney fees and interest), and the Port’s necessaries.
After the court entered a default judgment in favor of Centennial Bank in its foreclosure of its mortgage on the M/V “WHY NOT,” the bank sought to recover attorney fees in the amount of $59,760. The bank requested fees for two attorneys and three paralegals. One attorney with 30 years of maritime experience billed at hourly rates of $525 and $625, and another with 16 years of commercial experience (8 years in maritime law) billed at hourly rates of $580 and $600. Magistrate Judge Goodman recommended that the court award fees at the hourly rates of $450 and $375 for these attorneys. The bank sought fees for paralegal work at hourly rates of $300 and $315, and Magistrate Judge Goodman recommended reduction to $125 and $100. Magistrate Judge Goodman then considered the hours spent by the attorneys/paralegals. The bank submitted records reflecting 137.75 hours, which the bank reduced by 18.25 hours. Despite the voluntary reduction, Magistrate Judge Goodman believed that the time was still excessive in a case in which no appearance was made by the defendant. He added that reductions were warranted for block billing, excessive time spent (including the billing based on increments of a quarter hour), duplicative work, and clerical tasks. Instead of performing a line-by-line reduction, Magistrate Judge Goodman recommended a 20% across-the-board reduction of the already reduced fees. Therefore, he recommended an award of $36,140.
Top Sealand, a non-vessel operating common carrier, received a cargo of 232 cartons of Forever 21 garments in Shanghai, loaded the cartons into an ocean container, and issued a bill of lading. The goods were shipped on the M/V NORTHERN PROMOTION and discharged in Los Angeles, California. The goods were damaged from water, moisture, and mold in the container, and cargo insurer Atlantic Specialty paid $108,522.88 for the damage. Atlantic Specialty then brought this suit against Top Sealand in federal court in California under the Carriage of Goods by Sea Act, for negligence, and for breach of bailment. Atlantic Specialty moved for summary judgment that Top Sealand was liable for breach of contract under COGSA, and Judge Scarsi noted that the NVOCC was not the actual carrier of the cargo, but it was considered a carrier in its relationship with the shipper of the cargo. Top Sealand argued that Atlantic Specialty failed to establish a prima facie case because it did not prove that the cargo was damaged between Shanghai and the Port of Los Angeles as opposed to during the transit from the Port of Los Angeles to its final destination where it was rejected by Forever 21. Judge Scarsi rejected that argument, reasoning that the container would not be subject to the type of water damage during the inland transit, and there was no indication of rain during that period. Therefore, Judge Scarsi held that Atlantic Specialty made out a prima facie case for liability under COGSA. Top Sealand argued that it had not been timely notified of the damage, and that failure was prima facie evidence that the cargo was delivered in the same condition as described in the bill of lading. However, Judge Scarsi found evidence that the cargo was damaged prior to discharge, so the insurer was able to prevail on its claim under COGSA. Turning to damages, Judge Scarsi declined to grant summary judgment based on the invoice price of $108,552.88 that was used to pay the insurance claim, finding a fact question as to the fair market value when the shipper represented the value of the cargo as $25,195 to U.S. Customs. Sealand moved for summary judgment, arguing that the insurer lacked standing to bring the claim because it was not the shipper of the cargo. Judge Scarsi rejected that argument, concluding that the cargo insurer had a future (now present) interest in the goods within the definition of “Merchant” in the bill of lading (and was also subrogated to the cargo interest under the subrogation agreement when it paid for the damage). Judge Scarsi also rejected the (q) clause argument that Top Sealand could not be liable without proof of its fault as the carrier has the burden to explain the loss in order to invoke the (q) clause as the Fifth Circuit explained in the Quaker Oats v. Torvanger decision. Finally, Judge Scarsi rejected Top Sealand’s argument that damages should be limited to $2 per kilogram of the gross weight of the cargo lost, concluding that the bill of lading did not provide for that limitation for a port-to-port shipment.
K&M Handling was the forwarding agent for two shipments of flowers from Colombia to Miami, Florida. Orange Flowers contacted Seaboard Marine to carry the flowers, and K&M Handling requested that Seaboard Marine stow the cargo in a refrigerated container at a certain temperature. K&M Handling alleges that Seaboard Marine did not do so, resulting in the flowers being unusable. Orange Flowers executed a transfer of rights that authorized K&M Handling to collect on its behalf for the loss, and K&M Handling then brought this suit in federal court in Florida against Seaboard Marine under the Carriage of Goods by Sea Act and for breach of contract. Seaboard Marine moved for summary judgment on the ground that K&M Handling lacked standing because it did not have an interest in the cargo or the bills of lading and because the assignment only transferred the right of recovery and not the title to the flowers. K&M Handling responded that it was named as the forwarding agent in the bills of lading and had a valid transfer of rights from Orange Flowers, which was named as a party in the bill of lading. Judge Bloom agreed that the assignment of the right to recover (as opposed to title to the goods) was valid, and she also agreed that K&M Handling had standing to bring the claim because it was engaged to bring the claim on behalf of Orange Flowers (additionally, K&M Flowers had incurred expenses as the forwarding agent). Consequently, Judge Bloom denied Seaboard Marine’s motion.
McArthur Griffin, a seaman employed by REC Marine on the DUSTIN DANOS, operated by REC Marine and owned by Offshore Transport, was injured during a personnel basket transfer on the vessel. He brought this suit in federal court in Louisiana against REC Marine and Offshore Transport, and the defendants asserted limitation of liability as a defense. The parties agreed that a jury would decide the issues of liability and damages and that if damages were awarded, the Judge would decide whether the defendants could limit liability. The jury found liability: REC Marine negligence (70%), Offshore Transport unseaworthiness (20%), and Griffin comparative negligence (10%). The jury awarded compensatory damages of $1,696,700. The jury also found that Griffin had reached maximum cure for his back injury, but not for his neck and shoulder injuries, and awarded $10,000 in maintenance but nothing for cure. Finally, the jury found REC Marine guilty of unreasonable, willful, wanton, and arbitrary failure to pay maintenance and cure and awarded $1.5 million in punitive damages. In the post-trial motions, REC Marine argued that maintenance and cure was not required because Griffin had not disclosed a prior neck injury suffered during a car accident (McCorpen defense). As REC Marine did not require a pre-employment physical, it had to establish that Griffin considered his neck injury to be important and that there were no reasonable grounds to support a good-faith belief that he was fit for duty. Judge Jackson believed that the evidence that Griffin did not miss a day of work after the car accident supported the finding that REC Marine did not establish a McCorpen defense. Judge Jackson also held that there was evidence to support the finding of willful/callous failure to pay maintenance and cure with evidence that REC Marine delayed investigating the incident, did not meaningfully investigate the incident, and continued to deny maintenance and cure unreasonably. Judge Jackson then considered the defendants’ arguments that the jury awarded excessive damages. The jury awarded $686,700 for future medical expenses, despite the fact that Griffin presented a chart at trial that only listed medical costs of $590,503. The defendants also challenged $121,286 for a second cervical fusion surgery that Griffin might need to undergo 20 years down the road. Judge Jackson agreed with both arguments and remitted the award for future medical expenses to $469,217. The defendants argued that the awards of $150,000 for past wage loss and $500,000 for future wage loss were excessive in light of the testimony of the plaintiff’s expert (and closing argument of counsel) that the past wage loss was $144,995 and the future loss was $321,589. Judge Jackson agreed and ordered the remittitur to those sums. Judge Jackson declined to conclude that the award of $10,000 in maintenance was duplicative of the award of lost wages, and he found sufficient evidence to support the awards of $100,000 for past general damages and $250,000 for future general damages. As to the award of $1.5 million for failure to pay $10,000 in maintenance, Judge Jackson noted that REC Marine’s conduct was “hardly reprehensible enough to support such a shocking sum” and that the issue of whether to submit the issue to the jury was a “much closer call” than for the other claims. REC Marine argued that the award should bear a 1:1 ratio to the maintenance award of $10,000, but Judge Jackson noted the recent decision from the Fifth Circuit in Kenai Ironclad (see November 2023 Update and the decision on remand in Kenai Ironclad discussed in the January 2024 Update) and held that an elevated level of punitive damages was appropriate but limited to the “constitutionally tenable” ratio of 9:1. Therefore, he remitted the award of punitive damages to $90,000. Finally, Griffin sought attorney fees of $348,150 at a rate of $500 per hour. REC Marine argued that Griffin did not plead for attorney fees, but Judge Jackson rejected that argument because REC Marine was on notice of the claim in Griffin’s Rule 26 Disclosures. REC Marine also argued that Griffin was not entitled to fees because the jury did not award fees, and fees were not listed on the verdict form. Stating that REC Marine had not cited cases to support that contention, Judge Jackson held that Williams was entitled to attorney fees [note the decision of the Fifth Circuit in Holmes v. J. Ray McDermott & Co., 734 F.2d 1110, 1121 (5th Cir. 1984), in which the court reversed the award of attorney fees made by the judge after the jury made its finding of willful and arbitrary failure to pay maintenance and cure, stating, “an award of damages in the form of attorneys’ fees for willful and arbitrary failure to pay maintenance and cure is a nonseverable part of the plaintiff’s cause of action, and an integral part of the merits of the case.”]. Judge Jackson rejected the argument that fees should be awarded to attorneys who have only practiced law since 2016 at a rate of $500 per hour, and he held that an hourly rate of $300 was appropriate. Judge Jackson also agreed with REC Marine that Griffin was only entitled to recover fees for the work on the maintenance and cure claim (reasoning that work on the maintenance and cure claim was not so intertwined with the Jones Act and unseaworthiness claims to make that work inseparable). Accordingly, he declined the request for attorney fees without prejudice to the plaintiff resubmitting the motion after differentiating the hours spent on the maintenance and cure claim (identifying any hours that were impossible to differentiate). See January 2024 Update.
In a supplemental motion on attorney fees, Griffin “endeavored to differentiate the hours spent on his maintenance and cure claim.” REC Marine challenged the billing practices, specifically, block billing, duplicative time entries, travel time, and vague and excessive entries. However, Judge Jackson declined to consider them as they were not raised in opposition to the first motion, and he considered the objections to be waived. Griffin differentiated the hours spent by color code. Green represented tasks that were related to maintenance and cure with little overlap with the other claims. Yellow represented tasks that were difficult to differentiate or that had overlap with the other claims. Although Griffin argued that he should receive fees for all of the yellow entries (or a minimal reduction of 10%), Judge Jackson disagreed and held that Griffin had litigated three different claims to trial but could only seek fees for one of the claims. Therefore, he granted attorney fees for a third of the amount sought for the yellow entries that were too difficult to differentiate (together with 100% of the amount for the green tasks that were attributed to the maintenance and cure claim). Based on the hourly rate of $300 per hour, the amount that Justice Jackson found to be fair and reasonable was $80,430. REC Marine moved to modify the judgment to provide that pre-judgment interest is not available on the award for Jones Act negligence. Judge Jackson agreed that the law was well-settled that there is no recovery of pre-judgment interest in a Jones Act case tried on the law side of the federal court. As the damages were susceptible to apportionment (based on the jury findings that negligence of REC Marine was a 70% cause of the damages, unseaworthiness was a 20% cause, and Griffin’s fault was a 10% cause), Judge Jackson awarded prejudgment interest on 20% of the past damages, representing the unseaworthiness portion (continuing to award pre-judgment interest on the maintenance and cure award). Judge Jackson added that punitive damages do not reflect damages to the plaintiff but are assessed to discourage improper conduct. Therefore, they were not subject to pre-judgment interest.
Doe and her cabinmate, who were passengers on the Carnival MIRACLE, were returning to their cabin after having a drink in the cabin of other passengers, James and John. James attempted to walk them back to their cabin, but Doe kept hiding from them. At some point, Doe slipped and hit her head, and James gave up on escorting her back to her cabin. Doe ended up in a storage closet where she asserts that she was sexually assaulted by a crew member. Doe does not recall going in or out of the closet, but she believed that the crewmember kept the door to the closet locked and would not let her leave. The cruise line asserted that Doe consented to the interaction and was free to leave the closet based on a report prepared by the FBI. Doe brought this suit against the cruise line, asserting several causes of action. The cruise line moved for summary judgment on the claim of false imprisonment, citing the FBI’s conclusion that Doe was free to leave the closet at any time (based on statements of the crewmember during the FBI investigation). Magistrate Judge Torres ruled that the statements of the crewmember were hearsay. As the crewmember was not available to corroborate his statements, there was no evidence to counter Doe’s allegation that she was locked in the closet, and Magistrate Judge Torres consequently granted summary judgment in favor of Doe on the false imprisonment claim. The cruise line moved for summary judgment on Doe’s claim for negligent infliction of emotional distress, and Magistrate Judge Torres agreed that the cause of action applies to mental or emotional harm that is not directly brought about by a physical injury but that manifests itself in physical symptoms. As Doe claimed emotional distress from a physical injury, Magistrate Judge Torres recommended that her claim for negligent infliction of emotional distress be dismissed. See July 2021 Update.
The case was tried to a jury before Judge Williams, and, on July 19, 2022, the jury returned a verdict that the passenger was falsely imprisoned by the cruise line’s crew member and that the crew member sexually assaulted the passenger. The jury declined to find that the crew member intentionally inflicted emotional distress on the passenger or that the cruise line was negligent. The jury awarded damages of $3,000 for medical and psychological treatment in the past, $240,000 for future medical and psychological expenses, $6,000,000 for pain, suffering, and anguish in the past, and $4,000,000 for future pain, suffering, and anguish (a total of $10,243,000). See August 2022 Update.
The cruise line filed a motion for new trial and a motion for remittitur, and Judge Williams denied the motions on May 11, 2023. Doe did not request any instruction to the jury on pre-judgment interest and asked the court to award pre-judgment interest on past damages in the final judgment. Doe sued under both admiralty and diversity, but she requested a jury trial based on the court’s diversity jurisdiction. The cruise line cited authority from other circuits that “arguably held” that failure to raise the issue of pre-judgment interest violates the province of the jury, but Magistrate Judge Torres did not believe that the decisions in the Eleventh Circuit precluded a judicial award of pre-judgment interest after a jury award as long as the past damages were properly segregated from future damages. Therefore, Magistrate Judge Torres recommended that pre-judgment interest be awarded on the discrete past damages found by the jury.
US Wind is the developer of a windfarm off the coast of Ocean City, Maryland. US Wind needed to install a Met Mast Tower (a meteorological tower to gather information about site conditions for the operation of the wind turbines), and it ordered the Met Mast from a Louisiana company. US Wind originally hired EPIC Applied Technologies as an installation contractor to transport and install the Met Mast, but EPIC fell into bankruptcy. One of EPIC’s contractors was InterMoor, and InterMoor agreed to work with other contractors to complete the project in the absence of EPIC, including working with the other contractors who had been hired. One of those contractors was All Coast, which was hired to transport and install the alignment frame that was necessary for the installation of the Met Mast, using its vessel the GREAT WHITE. US Wind’s insurer required that US Wind retain a marine warranty surveyor to assess the feasibility of plans for various stages of the wind farm project, including the suitability of vessels being used. American Global Marine’s bid was accepted, and American Global issued a Certificate of Approval for the sailaway of the GREAT WHITE. The vessel arrived late, however, because of adverse weather, and US Wind incurred significant losses as a result. US Wind brought this suit in federal court in Maryland against InterMoor in 2019 and added American Global as a defendant in 2021 on the basis that its approval should have considered the suitability of the vessel in anticipated weather conditions. American Global moved to transfer the case to Texas because InterMoor and American Global are both Texas entities and a majority of their witnesses are from Texas. Citing US Wind’s choice of its home forum, the fact that the target destination was off the coast of Maryland, and the familiarity of the court with the facts and issues after presiding over the case for two years, Judge Gallagher declined to transfer the case from Maryland to Texas. American Global then moved for judgment on the pleadings on the grounds that timely notice had not been given and its liability was limited to $50,000 based on the provisions of its standard Terms and Conditions, which it alleged were incorporated into its contract with US Wind. There was no reference to those Terms and Conditions in the Proposal that American Global sent to US Wind for execution; however, American Global argued that the Terms and Conditions were incorporated through the confidentiality footer on emails and in the Certificates of Approval and invoices. Judge Gallagher declined to rule based on the Certificates and invoices for lack of sufficient facts. The language in the email footers under the title “CONFIDENTIALITY NOTICE” contained several sentences about the confidentiality of the communication and agreeing to delete the email if received in error. At the end it contained an incomplete sentence: “All work undertaken subject to our standard terms and conditions of business (a copy of which is available on request).” Noting that the unclear language, buried in an incomplete sentence of an otherwise relatively standard confidentiality notice at the footer of corporate emails was sufficiently unclear to incorporate the Terms and Conditions, Judge Gallagher denied the motion for judgment on the pleadings. See October 2021 Update.
InterMoor chartered the barge MARMAC 261 under a time charter with MARMAC to transport the Met Mast. When weather conditions forced delays in the installation, US Wind requested that InterMoor deposit the Met Mast at US Wind’s facility in Baltimore. MARMAC told US Wind to work out the details with charterer InterMoor, but negotiations failed, and InterMoor directed MARMAC to return the Met Mast to Louisiana. On the return, the Met Mast was arrested by US Wind in North Carolina in a Rule D possessory action (while the Met Mast was on the barge), and InterMoor attached the Met Mast under Rule B as security for an action against US Wind for breach of contract. The Met Mast was released under a bond issued by US Wind, with US Wind and InterMoor splitting the custodia legis costs during the arrest/attachment. US Wind filed the action for breach of contract against InterMoor in federal court in Maryland, and the North Carolina suit was transferred to the federal court in Maryland. A suit by InterMoor against US Wind that was filed in federal court in Texas was dismissed for lack of personal jurisdiction over US Wind. MARMAC, which was not a party to the other actions, brought an action in federal court in Louisiana against InterMoor, in personam, and against the Met Mast in rem (asserting a maritime lien for trespass because US Wind failed to retake possession of the Met Mast, depriving MARMAC of the services of its barge). MARMAC also brought a Rule B attachment (and quasi in rem action against US Wind) for maritime trespass and for unjust enrichment because MARMAC had to pay storage for the Met Mast after it was removed from the barge. The Louisiana federal judge (Morgan) released the Met Mast from arrest and attachment on bond, and the Met Mast and US Wind filed motions addressed by Judge Morgan. MARMAC asserted a carrier’s lien against the Met Mast for the arrest, and US Wind argued that the court lacked jurisdiction over the in rem claim in Louisiana because the Met Mast was taken to Louisiana contrary to the instructions of US Wind and there was no purposeful availment of the Louisiana forum by US Wind. Describing that argument as irrelevant, Judge Morgan held that minimum contacts are not required for the arrest of the vessel and that once the procedures of Rule C were satisfied, the court had jurisdiction. Judge Morgan then addressed the issue of whether the arrest and attachment of the Met Mast in North Carolina prevented MARMAC from arresting it in Louisiana. As the Met Mast was released on a bond that was only applicable to damages sought by InterMoor, the bond/prior arrest did not provide security to MARMAC and did not prevent MARMAC from arresting the vessel in the subsequent proceeding. That was not the end of the story for the arrest, however. Judge Morgan found that the Met Mast was on the barge pursuant to the charter with InterMoor. That charter did not extend the carrier’s lien to cargo owned by third parties, and no notice of any carrier lien was given to owner US Wind. Accordingly, Judge Morgan held that MARMAC did not have a carrier’s lien on the Met Mast, and she dismissed the in rem claim. US Wind also argued that the court lacked general or specific personal jurisdiction with respect to US Wind, but Judge Morgan held that minimum contacts were not required for the quasi in rem jurisdiction over the Met Mast owned by US Wind. As MARMAC pleaded a prima facie claim of maritime trespass by abandoning the Met Mast on the barge, depriving MARMAC of the use of the barge, and as US Wind was not present within the district, Judge Morgan held that the requirements for the attachment and jurisdiction against US Wind were satisfied, and she declined to dismiss those claims. Finally, Judge Morgan declined to transfer MARMAC’s claims to the federal court in Maryland, considering that the barge, the Met Mast, and MARMAC are in Louisiana and that InterMoor is headquartered in Texas; however, she severed and transferred InterMoor’s cross-claim against US Wind to Maryland as it was substantially similar to the litigation in Maryland (involving breach of the contract between US Wind and InterMoor over the transportation of the Met Mast). See November 2021 Update.
InterMoor then filed a motion for partial summary judgment along with evidentiary motions in the action filed by US Wind against InterMoor in Maryland (the claims against InterMoor centered on InterMoor’s failure to install the Met Mast and the failure to turn over the Mast to US Wind after the project failed). InterMoor had entered into a Master Services Agreement with US Wind after EPIC stepped out of the picture, and InterMoor worked with US Wind, All Coast, and other contractors to prepare the GREAT WHITE for departure. However, InterMoor did not compare the operational limits of the GREAT WHITE with the expected weather conditions. When delays put the transportation into hurricane season and unfavorable weather, the installation was scrapped. Before addressing the merits of the claims against InterMoor, Judge Gallagher had to determine the applicable law. The MSA provided for the application of maritime law, but if maritime law is not applicable, then Texas law would apply. Consequently, Judge Gallagher agreed to apply maritime law and Texas law if no maritime law is on point. Judge Gallagher declined to strike the opinions of Michael Frampton and Scott C. McClure on the roles and responsibilities of an installation contractor on the offshore installation project. With respect to the motion for summary judgment, Count 1 of the complaint alleged breach of contract, and Count 2 alleged breach of warranty. The contract provided that all items furnished by InterMoor and incorporated into the work would be suitable, and US Wind argued that the use of the lift boat whose operating limits were incompatible with the expected weather conditions was a breach of contract. InterMoor argued that it was not responsible for the subcontractor’s vessel, but Judge Gallagher responded that InterMoor’s position was an artificially narrow reading of the contract and would allow it to transfer responsibility by delegating tasks to subcontractors. However, the scope of the work to be performed was vague and “unilluminating,” and Judge Gallagher could not grant summary judgment. With respect to US Wind’s claim that InterMoor failed to return the Met Mast to Baltimore once the project was called off, InterMoor argued that US Wind had not complied with the contractual requirement setting forth the procedure for additions to the scope of the contractual work. However, Judge Gallagher found sufficient evidence of authorization from emails from US Wind to unload the mast in Baltimore with an agreement to cover the cost. Therefore, she declined to dismiss that claim. US Wind also argued for rescission of the contract based on negligent misrepresentations, claiming that it should recover the $3.3 million it had paid and for which it received no benefit. Citing Texas law, Judge Gallagher held that rescission was not available for breach of contract or negligent misrepresentation when there is an adequate remedy at law. Accordingly, Judge Gallagher granted summary judgment to InterMoor that US Wind would be entitled to monetary damages, not rescission, for the claim of negligent misrepresentation. As there was a contract between the parties and as any claims falling outside the contract would be outside of InterMoor’s duties to US Wind, Judge Gallagher dismissed US Wind’s count seeking recovery based on unjust enrichment. Finally, US Wind argued that InterMoor interfered with contractual relations with subcontractors by refusal to return the mast and by instructing its subcontractors not to work with US Wind when InterMoor directed that the Met Mast be returned to New Orleans instead of being offloaded in Baltimore. Assuming that InterMoor had a legal right to seize US Wind’s property, Judge Gallagher considered the act of holding the Mast hostage arguably demonstrated sufficient malicious intent, particularly when combined with InterMoor’s discouraging its subcontractors from communicating with US Wind so that US Wind could negotiate directly with the subcontractors. Therefore, Judge Gallagher denied InterMoor’s motion with respect to the tortious interference claim. See December 2022 Update.
After a ten-day jury trial in October, 2023, the jury returned a verdict for US Wind on its claim for breach of contract for failing to furnish the appropriate expertise and labor to complete the project when it failed to check the compatibility of the GREAT WHITE’s operational limits against the expected weather conditions of the project site; by failing to be generally familiar with the nature of the work, the environment, and the difficulties that may be incident to performing the work; by failing to perform its responsibilities in a workmanlike manner; and by failing to comply with US Wind’s order for return of the meteorological tower to US Wind in Baltimore. The jury awarded $4,060,811.09 for the breach of contract. The jury found that InterMoor tortiously interfered with US Wind’s prospective economic relationship with All Coast and MARMAC and awarded $807,752.20 in damages for the tortious interference. The jury found that InterMoor acted with malice and awarded punitive damages of $750,000. The jury did not find that US Wind breached its contract with InterMoor, but it did find in favor of InterMoor on its claim for quantum meruit for providing services to US Wind with the reasonable expectation of payment, and it awarded $859,224.99 to InterMoor. The parties filed post-trial motions, and Judge Gallagher found sufficient evidence to uphold the jury’s verdict (and damages) for US Wind’s claim for breach of contract, although she did agree that the award should be reduced by the $400,000 settlement that US Wind made with American Global Maritime (based on the Texas one-satisfaction rule). Judge Gallagher set aside the verdict against InterMoor on tortious interference, finding that the evidence failed to demonstrate that a commercial relationship with either All Coast or MARMAC was likely to occur or was reasonably probable, and failed to establish that any prospective commercial relationship that was lost was an inevitable consequence of InterMoor’s allegedly tortious conduct. Judge Gallagher also did not find any additional harm to US Wind beyond what was compensated in the claim for breach of contract. Judge Gallagher declined to set aside the jury’s finding that US Wind did not breach its contract with InterMoor. As to the award for quantum meruit, US Wind argued that InterMoor had to elect between remedies at trial (contract and quantum meruit), but Judge Gallagher disagreed, answering that election of remedies only becomes relevant when a party obtains favorable jury findings on more than one theory. As to the quantum meruit theory on which InterMoor prevailed, US Wind argued InterMoor could not recover because there was a valid contract between the parties. However, Judge Gallagher agreed that the evidence fell within the exception to that rule as the project failed (InterMoor did not install the tower), and US Wind accepted the benefit of partial performance (whether US Wind derived any benefit and the amount of damages were for the jury to decide). Accordingly, Judge Gallagher issued a judgment in favor of US Wind on its claim for breach of contract (with a reduction of damages of $400,000 for the prior settlement, resulting in a total of $3,660,811.09) and in favor of InterMoor on its claim for quantum meruit in the amount of $859,224.99.
Gregory Shand bought a new 40-foot boat, the SVAHA, for $573,000 and insured it with GEICO Marine Insurance for $600,000. However, the vessel “led a troubled life” with multiple repairs by Amzim Marine and a host of other problems in its first year. The vessel underwent two successful voyages after installation of a portside interceptor, but it then began sinking and a hole was plugged. The vessel was removed from the water and then put back in the water. The starboard engine did not start. After two surveys, Amzim advised that the vessel was repairable (and GEICO offered to pay less than half of the purchase price), but the vessel sat without maintenance or cleaning for months. Eventually, Shand sold the vessel for $59,000. GEICO paid him $259,000 (after the deductible of $6,000) and brought this suit against Amzim in federal court in Florida, alleging negligence in repair. Shand intervened in the suit. Judge Chappell held a bench trial and heard a great deal of testimony of “things that might have gone wrong” that the Judge did not consider to be causally related to the sinking and that “all seem to be red herrings.” Judge Chappell focused on the duty owed by Amzim in connection with the installation of the interceptor. She concluded that GEICO and Shand did not provide persuasive evidence of the industry standard for installation of the interceptors, and it was, consequently, hard to find that Amzim violated a duty with respect to the installation. Moreover, with the many alleged causes of the sinking, Judge Chappell held that causation depended on speculation. Finally, she also found the evidence of damages to be speculative in light of the condition of the boat before the sinking and the “hodge-podge of damage estimates,” concluding that “the Court has no idea the damage sustained by SVAHA.” Accordingly, Judge Chappell entered judgment in favor of Amzim against both Shand and GEICO.
Ryan Denver is the owner of the M/V MAKE IT GO AWAY. He was operating the vessel with seven passengers aboard, traveling from Quincy to Boston’s inner harbor, when the vessel struck a fixed navigational aid (Daymarker No. 5) located east of Castle Island. At the time of the accident, the flashing green light at the top of the navigational aid was approximately 40 feet above the water above four exposed pilings that were not illuminated. There were dredging vessels located behind the navigation aid from Denver’s perspective. Denver did not see the pilings until it was too late because the moon had set, the pilings were not illuminated or affixed with reflective material, and the light above the navigation aid was absorbed by the lights of the dredging project. The passengers were not thrown into the water but entered the water when the vessel began taking on water. An unidentified vessel approached but departed without explanation. One passenger, Jeanica Julce drowned before Denver and the other passengers were rescued by the Coast Guard. Denver brought an action in federal court in Massachusetts, seeking exoneration/limitation of liability. Several passengers and the personal representative of Jeanica Julce filed claims in the suit and moved to dismiss the limitation action for two reasons. First, the claimants contended that Denver could not plausibly assert that he lacked privity or knowledge because he was navigating the vessel at the time of the allision, and only Denver could be liable for it. Judge Burroughs noted the conflicting precedents on this issue and held that the owner’s operation of the vessel at the time of the accident does not categorically defeat a limitation action. Instead, she considered whether it would be possible for the owner to demonstrate lack of privity or knowledge. She found “just enough” allegations that Denver acted reasonably based on the claim with respect to the illumination of the pilings, the lights from the dredging, and the claim that the drowning resulted from another vessel leaving the scene of the accident without rendering aid. Although the claimants invoked The OREGON and PENNSYLVANIA Rules, Judge Burroughs did not believe that the Rules altered the analysis. The OREGON Rule did not change the fact that Denver plausibly alleged that he was free of fault, and the claimants did not identify any specific navigational rule violated by Denver for application of the causation rule for The PENNSYVANIA. The claimants also argued that the limitation complaint failed to state a claim because Denver misidentified the vessel with an incorrect official number. As the misidentification was only a scrivener’s error and there was no question about the vessel that was involved in the allision, Judge Burroughs declined to dismiss the complaint on this ground. See October 2022 Update.
Judge Burroughs stayed the matter pending criminal proceedings against Denver (a six-count indictment from the Suffolk County grand jury), but she lifted the stay for the limited purpose of adjudicating the claimants’ motion for judgment on the pleadings. The claimants asked the court to dismiss the limitation claim and proceed with a jury trial to determine the percentage of fault between Denver and any joint tortfeasor or, alternatively to lift the stay of state proceedings so that the claimants could proceed in state court. Judge Burroughs declined to reconsider her prior ruling with respect to the “rehash” of arguments the claimants previously made with respect to The OREGON and PENNSYLVANIA Rules. The claimants raised a new argument—the Home Port Doctrine “to deny limitation of liability in instances where the vessel seeking limitation, the owner and the casualty all occur in local waters of the home port.” Judge Burroughs declined to apply the Doctrine to deny limitation at the pleading stage for two reasons. First, the decisions applying the Doctrine were from district courts in other circuits and were not binding in this court. Second, she noted that the cases did not treat the Doctrine as a categorical rule but instead as a factor to be considered in evaluating the negligence and privity of the owner, reasoning that a voyage in a home port suggests the opportunity for more detailed control by the owner. She agreed that the fact that the vessel was being operated in its home port may well bear on the negligence of Denver, but the fact that the vessel was operating near Boston harbor was not determinative at this early pleading stage. The claimants also argued that Denver was not only owner of the vessel but was also acting as master, and the master is not entitled to limitation of liability. After reviewing the cases involving single claimants and actions against the master, Judge Burroughs concluded that the court had discretion with respect to the stay against an owner who is also master of the vessel. Therefore, she lifted the stay so that the claimants could proceed against Denver as master of the vessel to allow the jury to determine where liability lies.
Denver and the MAKE IT GO AWAY were insured for hull and protection and indemnity coverage with Markel American Insurance. Denver brought suit in federal court against Markel for breach of contract and bad faith, and Markel counterclaimed seeking a declaration that the policy was null and void, that coverage was excluded, and that Denver breached express and implied warranties. Markel moved for judgment on the pleadings, noting that it ultimately did pay for the defense of Denver against the civil claims and that it validly reserved its rights under the policy to deny indemnity based on the criminal activity exclusion in the policy. Although Denver argued about the reasons that the claim was covered, Judge Burroughs did not find any breach of the terms of the policy in light of the defense being provided by Markel and Markel’s argument that the policy did not obligate it to pay while it was investigating the claim (the criminal proceedings were ongoing). She dismissed the count for breach of contract without prejudice to Denver filing an amended complaint with specific allegations that Markel was not providing a defense or that it breached a particular term in the Policy. Judge Burroughs reached a different result with respect to the claim for bad faith. She could not say conclusively that the delay in defending Denver was not excessive; however, she advised that she would “scrutinize this claim closely on any summary judgment motion,” and, based on the current record, she was “skeptical that facts can be developed” to adequately support the bad faith claim.
Cashman Equipment and Cashman Scrap & Salvage charter and sell oceangoing and inland barges and tugs servicing the marine construction, oil and gas, scrap and salvage, and marine remediation industries, operating 89 vessels. They owed more than $12 million to Bank of America, and the debt was secured by mortgages on several vessels. As part of a bankruptcy reorganization for the Cashman entities, WM Capital Partners 85 purchased the debt owed to Bank of America, but the Cashman entities defaulted on their obligations to WM Capital. WM Capital then brought this action against the Cashman entities, in personam, in federal court in Massachusetts, in which it sought relief that included an order for specific performance that the Cashman entities assign all of their title in the vessels and all of their rights and interest in the charters of the vessels to VM Capital. WM Capital argued that it was entitled to the relief it sought because the mortgages gave it remedies that included the right to seek specific performance, the right to take possession of the vessels and sell them, the right to direct the Cashman entities to surrender the vessels, and the right to seek equitable relief in aid of the other provisions. The Cashman entities argued that the remedies did not include equitable relief in the form of an order transferring title to the vessels to the defendants. Chief Judge Saylor disagreed, reasoning that “the right to ‘sell’ a vessel surely does imply the right to take title.” He added that the mortgages did not distinguish between in rem and in personam proceedings for granting relief. He therefore denied the Cashman entities’ motion to dismiss, stating that the claim for equitable relief in the form of a transfer of title to the vessels was “plausible on its face.” Chief Judge Saylor agreed that the liability for the debt had been established; however, he declined to grant summary judgment in favor of WM Capital because he wanted “to consider how to order relief in a manner that protects any remaining interest of the defendants or other creditors in the vessels once the relevant debts have been satisfied.”
Alvin Scott, a passenger on the CARNIVAL HORIZON, fell while walking to the dining area on Deck 10 of the vessel. A large amount of water had accumulated on the deck from an overflowing pool, and an employee of the cruise ship directed Scott with an alternative route (that still included walking across the wet pool deck). When he entered the dining area, Scott stepped across a carpeted runner and onto a tile floor where he slipped and fell. Scott brought this suit against the cruise line in federal court in Florida, alleging claims for direct negligence and vicarious liability for allowing the pool to overflow, directing him to walk across a wet area, and failing to cordon off the wet area. The cruise line moved for summary judgment that there was no evidence of a dangerous condition, the condition was open and obvious, there was no evidence of negligent maintenance or notice of the condition, there was no evidence of negligence of a crewmember to impute to the cruise line, and there was no expert evidence for medical causation. The cruise line argued that it had no record of the pool overflowing, Judge Moore held that Scott’s testimony was sufficient to create a fact dispute as to the dangerous condition unless it was blatantly contradicted by the record, and the absence of a record of a pool overflow was not sufficient to render Scott’s testimony incredible as a matter of law. Scott did not, however, contest the argument that the large accumulation of water was open and obvious. Agreeing with the cruise line that a reasonable person would have observed a large accumulation of water and appreciated the risk of slipping, Judge Moore granted summary judgment on the claim of failure to warn. To support his claim of negligent maintenance, Scott argued that the cruise line’s policies required that areas with a significant accumulation of water should be closed to passengers by a physical barrier. However, Scott failed to show how long the water had been on the deck, so there was no evidence that the cruise line failed to promptly address the issue. The cruise line argued that all of the direct liability claims should be dismissed because Scott did not establish notice to the cruise line. Scott argued that the presence of the crewmember in the area established that the cruise line had actual notice that he was directing the passenger to an area with a tile floor. Judge Moore disagreed, noting that Scott failed to cite authority that actual notice can be established by the knowledge of a crewmember. He added that knowledge of the condition alone is insufficient, and the cruise line must also know the condition is dangerous. Finally, actual or constructive notice was insufficient without evidence that the dangerous condition was detectable with sufficient time to allow for constructive knowledge. Finally, the cruise line argued that Scott could not establish causal connection for the injury to his back, for which he underwent surgery, because he did not properly disclose his retained medical expert or his non-retained treating physicians. Judge Moore agreed and held that all of Scott’s claims should be dismissed, including the vicarious liability claim, because he failed to carry his burden of establishing causation for his claimed injury.
Erick Escutia and minor E.E., were passengers on the CARNIVAL BREEZE (unfortunately the complaint refers to them together as “plaintiff”. Plaintiff (probably minor E.E.) was injured during the Deluxe Beach Sail, Snorkel & Beach Party excursion in Cozumel, Mexico (operated by Mexico Lisandra) when another passenger fell from an inflatable waterslide onto plaintiff. Eric Escutia (on his own behalf and on behalf of E.E.) brought this suit in federal court in Florida against the cruise line, Mexico Lisandra and its parent company (Fury Catamarans), and the manufacturer of the waterslide (Connelly Skis d/b/a Aquaglide). The cruise line and Connelly Skis filed motions to dismiss. Beginning with the cruise line’s motion to dismiss, Magistrate Judge Goodman agreed that the complaint was an impermissible shotgun pleading that needed to be repleaded for multiple reasons. First, the complaint incorporated all preceding and subsequent paragraphs into each count so that the counts contained irrelevant factual allegations and legal conclusions. That presented a bigger problem because, with several defendants, the counts against the defendants included allegations against other defendants. Additionally, the pleading was vague and contained nebulous and confusing allegations (for example, who was injured?). The cruise line asserted a defense that the suit was not brought within a year of the incident in violation of the shortened limitation period in the ticket. Accordingly, Magistrate Judge Goodman held that the individual claim of Erick Escutia was barred and should be dismissed with prejudice (the cruise line did not seek dismissal of the minor’s claim because of the saving provision for minors in 46 U.S.C. Section 30526(d)). The cruise line challenged the sufficiency of the allegations of notice for the negligence claim, which Magistrate Judge Goodman described as generic, conclusory, and speculative. Although the passengers asserted new facts and theories in their response to the motion to dismiss, Magistrate Judge Goodman answered that it was inappropriate to raise allegations in response to a motion to dismiss, and he recommended dismissal of the negligence count without prejudice. The cruise line also objected to the heightened duty of care alleged by the plaintiff—that the cruise line had a duty to operate safe excursions (with 22 ways in which the cruise line was purportedly negligent). Magistrate Judge Goodman noted that the dispute raised the question of whether the only duty owed by the vessel owner for injuries sustained off the vessel is the duty to warn. However, the Eleventh Circuit has not dispositively resolved whether the cruise line may have additional obligations if there is an agency relationship between the cruise line and the excursion operator. Thus, Magistrate Judge Goodman was not convinced that the plaintiff could never state a negligence claim other than for a failure to warn of known dangers beyond the point of debarkation. He recommended that, if in the amended pleading the plaintiff pleads a duty beyond the duty to warn, then the cruise line should research the proper duty and file another motion to dismiss. With respect to the negligence claim against the cruise line based on apparent agency, Magistrate Judge Goodman agreed that the plaintiff had set forth allegations of specific undertakings by the cruise line that could cause a third party to reasonably believe that the excursion was the agent of the cruise line. However, the apparent agency theory failed because the cruise ticket and excursion contract were clear that there was no principal/agent or joint venture relationship and that the cruise line had no liability for any injury resulting from the excursion. Therefore, Magistrate Judge Goodman recommended that the apparent agency claim (and the joint venture and third-party beneficiary claims) be denied. Magistrate Judge Goodman then considered the claim for negligent infliction of emotional distress. As the pleading referred to both Erick and E.E. as the plaintiff, it was difficult for Magistrate Judge Goodman to determine who was making the claim. If the claim was for Erick, Magistrate Judge Goodman held that it should be dismissed because it did not plead that he was in the zone of danger or that he suffered a physical manifestation as a result of the emotional distress. If the claim was brought on behalf of the minor, and if the minor is the one on whom the other passenger fell, then the claim was duplicative of the direct negligence claim. Therefore, Magistrate Judge Goodman recommended that the negligent infliction claim be dismissed without prejudice. The complaint also alleged that the defendants’ conduct was malicious, oppressive, and fraudulent, warranting punitive damages. Magistrate Judge Goodman noted the judges in the Southern District of Florida have differed in their opinions whether punitive damages can be recovered by passengers. However, the decisions allowing punitive damages have required exceptional circumstances or intentional wrongdoing, and the complaint in this case did not allege facts that satisfied that standard. Therefore, Magistrate Judge Goodman recommended that the claim for punitive damages be dismissed without prejudice. Connelly Skis d/b/a Aquaglide, moved to dismiss the complaint for lack of personal jurisdiction. Aquaglide’s principal place of business is in Washington; its products are designed in Oregon and manufactured in China; the products are sold to third-party distributors; the distribution center is in Missouri; Aquaglide has an independent distributor in Mexico; it has no third-party distributor, office, employees, or property in Florida; it does not control the products after they are sold; it does not know which distributor bought the slide involved in this case; and it does not know how the slide ended up in Cozumel. The plaintiff argued that there was general jurisdiction over Aquaglide in Florida because Aquaglide is owned by a company that is registered to do business in Florida. However, even if the parent were generally present in Florida, that would not subject Aquaglide to jurisdiction in Florida. And, even if some Aquaglide products made their way to Florida in the stream of commerce, that would not establish general jurisdiction. Similarly, as Aquaglide did not take any actions in Florida that caused or contributed to the accident in Mexico, Magistrate Judge Goodman held that the plaintiff failed to establish specific personal jurisdiction. Therefore, he dismissed Aquaglide for lack of personal jurisdiction.
Guilford Yacht Club operates a yacht club in Guilford, Connecticut. As it is necessary to regularly dredge the water around its marina for the safety of boats accessing the marina, Guilford leased a Mud Cat MFD dredge from Liquid Waste Technology d/b/a Ellicott Dredge and then sought to hire a dredge operator. None of the professional dredging companies agreed to perform the dredging, so Guilford hired Poolscape, the swimming pool installation/maintenance company that maintained Guilford’s pool, to operate the dredge. Guilford signed a contract for the lease of the dredge that included insurance and indemnity provisions in favor of Ellicott Dredge, and Ellicott Dredge agreed to provide training/supervision to set up the dredge and to orient Poolscape’s employees on the operation of the dredge. Ellicott Dredge’s employee, Robert Carufel, set up the dredge in the basin of the marina, but he did not deploy the dredge’s sponsons or spuds because of the location where the dredge was moored and because the spuds did not reach the bottom of the marina. When one of the Poolscape employees caused the boom arm to swing to the left, the dredge capsized, killing Poolscape employee James Willard and injuring Poolscape employee Richard Dziubinski. The movement of the boom arm without the stabilizers being deployed caused the capsizing. Ellicott Dredge brought this limitation action in federal court in Connecticut, and Guilford Yacht Club also filed a limitation action in the capacity as owner pro hac vice of the dredge. Ellicott Dredge filed a claim for contribution/indemnity against Poolscape and its owner, Michael Martocci, in Ellicott Dredge’s limitation action. Citing the exclusive-remedy provision for employers in the Connecticut Workers’ Compensation Act, Poolscape and Martocci moved for summary judgment on the contribution/indemnity action. Concluding that the claims were barred by Connecticut law, Judge Meyer granted summary judgment to Poolscape and Martocci. See October 2022 Update.
Poolscape moved for summary judgment on the claims for exoneration/limitation filed by Ellicott Dredge and Guilford Yacht Club. Starting with Ellicott Dredge, Judge Meyer undertook the two-step process of determining whether there was actional conduct, such as negligence, and then whether there was privity or knowledge of the owner. The parties disputed whether the failure to engage stabilizers was negligent under the circumstances, and there was also an issue of whether it was reasonable for Ellicott Dredge to believe that the worker in charge of the dredge was competent. Therefore, Judge Meyer declined to grant summary judgment to Poolscape. Poolscape and Guilford filed cross-motions for summary judgment on Guilford’s claim for limitation. Judge Meyer noted that Guilford “faces serious questions as to its ownership of the dredge,” reasoning that it would have to show that it had “virtually the responsibility of the record owner.” Guilford argued that it manned the dredge (by hiring Poolscape to operate it) and procured liability and property insurance. However, Judge Meyer pointed out that Guilford and Ellicott Dredge agreed to split maintenance and repair costs. Thus, Judge Meyer did not believe that Guilford established status as owner pro hac vice as a matter of law. Additionally, there were fact questions as to the negligence and privity of Guilford. Therefore, Judge Meyer denied both motions.
Shark Tech d/b/a Metal Shark Alabama brought this suit against Dean Gagnon seeking payment for work it performed on the M/V SEA WITCH (owned by Gagnon) at its Bayou La Batre shipyard. Gagnon filed a counterclaim for damage to the boat, seeking to recover for negligence, breach of contract, breach of duty as bailee, and breach of the warranty of workmanlike performance. Judge Moorer held a bench trial for 14 days and found in favor of Shark Tech in the amount of $139,419.57 and in favor of Gagnon in the amount of $289,419.57. Both parties sought attorney fees, and Judge Moorer agreed that Shark Tech was entitled to recover fees because it prevailed on its claim for unpaid invoices pursuant to its Work Order that provided for an award of attorney fees to collect unpaid amounts for the work performed under the Work Order. Shark Tech sought fees of $19,436 based on a rate of $250 per hour, and Judge Moorer, who sat through the trial, found that the number of hours sought was “incredibly reasonable,” and that the hourly rate was reasonable. Therefore, he awarded fees to Shark Tech in the amount of $19,436. Gagnon argued that he was entitled to attorney fees because Shark Tech breached its warranty of workmanlike performance and was, therefore, liable for foreseeable consequential damages. Judge Moorer distinguished the cases awarding fees as a foreseeable result of breach of the warranty of workmanlike performance as being fees spent in defending against an injury claim and not in prosecuting a claim for damages or indemnity. Finding no exception in this case to the general rule that attorney fees are not recoverable in admiralty cases, Judge Moorer denied Gagnon’s request for attorney fees.
KG Dongbu contracted with Panobulk to transport steel coils from Korea to New Orleans and then to Illinois and Ohio. Panobulk hired Cooper Consolidated to transport the coils by barge from New Orleans, and the coils were loaded onto barge LTD-237 (contracted by Cooper from its owner, Marquette Transportation). KG Dongbu hired Coastal Cargo to load the coils onto the barge, and Coastal allegedly damaged the barge, causing water to enter the hold and damage the coils. KG Dongbu brought this suit in federal court in Louisiana against Panobulk, Cooper Consolidated, and Coastal, and the defendants filed cross-claims against each other. A month after the deadline in the scheduling order for filing third-party claims, Coastal sought leave to file a third-party complaint against Marquette Transportation, asserting that the LTD-237 was unseaworthy. Cooper opposed the motion, arguing that, in addition to being late, the motion added nothing to the claims because Cooper had assumed the responsibility of providing a proper barge, and the other parties had no contractual relationship with Marquette. Judge Fallon did not believe the delay of a month was prejudicial, particularly because the parties were aware that Coastal intended to file the third-party action. On the merits, Judge Fallon reasoned that adding the owner of the barge would promote judicial efficiency as it would allow for complete resolution of the dispute in a single proceeding rather than in multiple proceedings. Accordingly, he granted leave to bring the barge owner into the litigation. See October 2023 Update.
Cooper filed two motions for summary judgment. The first motion sought to limit its liability to $500 per coil based on the package limitation in its Barge Transportation Agreement with Panobulk to transport the coils by barge from New Orleans to Lemont, Illinois (as the agreement was a private contract of affreightment that was not subject to the Harter Act). KG Dongbu argued that the limitation was not applicable because it was contained in an agreement between Cooper and Panobulk, and that it did not apply to the tort claims asserted by KG Dongbu. Panobulk argued that the Barge Transportation Agreement was ambiguous and unenforceable against its drafter, Cooper. Marquette asserted the same package limitation argument based on the Himalaya Clause in the Barge Transportation Agreement. In a second motion for summary judgment Cooper sought to apply the package limitation to the contribution and indemnity claim brought against it by Coastal Cargo. Finally, Coastal Cargo moved for summary judgment, asserting “a novel legal issue” that if the court limited liability to Cooper based on the package limitation, it should reduce the damages against Coastal Cargo by the proportionate share of Cooper’s fault based on the proportionate fault rule from McDermott v. AmClyde. Judge Fallon began with the enforceability of the package limitation between the parties to the Barge Transportation Agreement (Panobulk and Cooper). Finding the clause to be unambiguous, Judge Fallon held that Cooper was entitled to enforce the limitation against Panobulk. He then addressed the issue of whether Cooper could enforce the limitation against KG Dongbu. Cooper cited the Supreme Court’s decision in Kirby, in which the Court held that “carriers can enforce limitation provisions found in a contract between a carrier and an intermediary forwarder, against both upstream and downstream parties.” KG Dongbu argued that Kirby was only applicable in contracts for common carriage. Judge Fallon agreed that the contractual relationships between the parties were similar to those in Kirby, but he agreed with KG Dongbu that Kirby was limited to contracts of common carriage and that Cooper was not entitled to enforce the limitation against KG Dongbu. Judge Fallon then considered the issue of whether Marquette was entitled to enforce the limitation in the Barge Transportation Agreement. Judge Fallon noted that Marquette was included within the definition of “Carrier Party” within the agreement; however, the limitation only applied to the Carrier, which was defined as Cooper. Thus, he declined to apply the limitation to Marquette and also declined to hold that Marquette succeeded to the role of carrier and could thus invoke the limitation. Judge Fallon then addressed the argument that Coastal was entitled to a pro rata reduction in its share of liability because the court found that Cooper could enforce the package limitation against Panobulk. He considered that argument premature as the court was not considering the issue of liability. Finally, Judge Fallon held that Cooper could not enforce the package limitation against Coastal for Coastal’s contribution claim as Coastal was not a party to the Barge Transportation Agreement, concluding that the court “declines to distort basic principles of contract law to find the BTA to be binding on a litigant that had no bargaining rights in and was not a party to the contract.”
Nikki McIntosh filed a class action suit for passengers who were scheduled for a cruise on the LIBERTY OF THE SEAS from Galveston on August 27, 2017 (she later dropped the class action allegations and brought the suit in the name of 130 individuals). McIntosh complained that the cruise line did not cancel the cruise on account of Hurricane Harvey, which made landfall in Texas and Louisiana, until the day the vessel was scheduled to depart, forcing the passengers to travel to Galveston and surrounding areas as the storm approached, causing them physical and emotional injuries when they were forced to endure hurricane-force conditions at the Port. Judge King held that the cases could not proceed as a class action in light of the class-action waiver in the tickets, and he then held that the individual plaintiffs had not individually satisfied the requirement of $75,000 in controversy for diversity jurisdiction and that the claims did not fall within the admiralty jurisdiction. Therefore, he dismissed the case with prejudice for lack of subject matter jurisdiction. The Eleventh Circuit was not convinced that all of the plaintiffs failed to plead damages in excess of $75,000, noting that many passengers were trapped by a devastating storm, without power and with limited water and food, sustaining injuries to their bodies, impairment, and physical and mental pain and suffering. However, that alone was not enough to establish diversity. Alienage diversity must be complete so that there is no alien on both sides of the dispute. Thus, there would be no diversity between a corporation incorporated in a foreign state and another alien, regardless of the corporation’s principal place of business. It appeared that the cruise line is a citizen of Liberia (where it is incorporated), and some of the passengers were residents of Canada, Mexico, and the Philippines. Writing for the Eleventh Circuit, Judge Jordan remanded the case to reconsider whether the requirements for diversity jurisdiction were satisfied, noting that a dismissal for lack of jurisdiction should be without prejudice. Regardless of whether there was diversity, Judge Jordan instructed Judge King to consider on remand whether the claims satisfied the locality/connection test for admiralty jurisdiction as the outcome of that decision would determine whether state law or maritime law applied. Judge Jordan noted that the Eleventh Circuit had recognized a claim for negligent infliction of emotional distress under the maritime law (under different circumstances), but the plaintiffs never embarked on a cruise in this case, and the district court would have to determine whether to apply that maritime cause of action in this situation. See August 2021 Update.
In the district court, Judge Gayles referred the case to Magistrate Judge Torres to determine whether the court had subject matter jurisdiction, and Magistrate Judge Torres held an evidentiary hearing. He found that the cruise line employs a hurricane management team to make recommendations about the operation of vessels when there is a hurricane event. The team received input from the captain of the LIBERTY OF THE SEAS, but the members of the team were on land when they made decisions about whether to cancel this cruise. Beginning with the issue of whether there was admiralty jurisdiction, the cruise line argued that the connection/nexus test was satisfied for admiralty tort jurisdiction but that the locality test was not satisfied because the cancellation was made from the cruise line’s headquarters in Miami. Magistrate Judge Torres, however, analyzed the case based on the test for jurisdiction for admiralty contracts, as the tort theories stemmed from the negligent performance of the cruise line’s obligations under the ticket contracts, which are admiralty contracts. He noted that although the Supreme Court treated the Kirby case (“a maritime case about a train wreck”) as a contract case, the case involved both tort and contract claims because the court was asked to assess whether the rail carrier’s “tortious conduct led to the derailment of the train.” Although the “tort claims may arguably not directly satisfy a location test,” Magistrate Judge Torres believed that “they do satisfy the alternative conclusion that the tort claims are directly and proximately related to the Defendant’s performance of a maritime contract.” Therefore, he concluded that there was admiralty jurisdiction even though the locality test did not “squarely resolve the dispute.” Even if there were no admiralty jurisdiction based on the nature of the tort arising from the terms of the maritime contract, Magistrate Judge Torres believed that there was an independent basis for admiralty jurisdiction under the locality test because “the shore does not define the spatial limits of the location test.” He reasoned: “Just as a cruise line’s communications about a port-of-call can open the door to admiralty jurisdiction, so too can the cruise line’s communications about a departure port because embarkation is a unique and essential function of the cruise experience.” As the cruise line pressured the passengers to travel to the departure port because their failure to timely board the vessel would result in forfeiture of their ticket payments, the tortious conduct of the cruise line “effectively began on the cruise ship because purchasing a ticket to sail on a specific voyage of the Liberty of the Seas was a necessary precursor for the alleged tortious conduct.” Magistrate Judge Torres believed that the plaintiffs qualified as passengers from the moment they agreed to rendezvous with the ship at the port, even though the cruise was canceled and they did not board the vessel. Consequently, Judge Torres recommended that the court had admiralty jurisdiction and that the plaintiffs be allowed to replead to specify the citizenship of each of the plaintiffs so that it could be determined whether there was diversity jurisdiction. See October 2023 Update.
The cruise line objected to the recommendation that admiralty jurisdiction exists, arguing that the cruise ticket did not provide a basis for admiralty jurisdiction because the passengers’ claims for negligence and negligent infliction of emotional distress did not arise out of the cruise contract and that the tort claims failed to satisfy the locality test for admiralty jurisdiction because the cruise line’s dealings with the passengers did not occur on navigable waters. Judge Gayles, however, agreed with the “well-reasoned analysis” of Magistrate Judge Torres. He explained that the passengers would not be able to assert their tort claims were it not for the cruise ticket creating privity between the passengers and cruise line, adding that the cruise line had previously argued that the court could consider the terms of the ticket in connection with the motion. With respect to locality, he answered that the instructions “forcing” the passengers to arrive at a specific location for embarkation satisfied the locality prong of the test for admiralty jurisdiction. Accordingly, he held that admiralty jurisdiction exists over all the parties in the case.
“This case involves a luxury yacht sale gone wrong.” Krantz sold the yacht ARTHUR’S WAY to Forde for $900,000, financing the purchase with a note and preferred ship mortgage. Forde was not always timely on his monthly payments of $35,000, and Forde and Krantz eventually agreed on a final lump-sum payment of $220,000 with the details to be worked out with Krantz’s lawyer, Peter Terracciano. Terracciano emailed Krantz with instructions for the payment, but, ten minutes later, Forde received a second email, ostensibly from Terracciano, with updated wiring instructions. That email was from a fraudster who used a signature block with Terracciano’s real email address, but the email actually came from a different email address. Forde did not notice the discrepancy and wired the $220,000 payment to the fraudster’s account. Both parties tried to recover the funds, but the efforts were unsuccessful. Forde then deleted the yacht from the Coast Guard’s documentation system, transferred title to a foreign entity that he owned, and registered the yacht in the Cayman Islands. When Krantz began efforts to repossess the vessel, Forde brought this suit against Krantz in federal court in Florida, seeking declarations that the mortgage was improperly recorded and invalid and that he had paid off the note in full. Krantz counterclaimed for breach of the note and mortgage and moved for summary judgment. Forde argued that the mortgage had not been properly recorded with the Coast Guard and was not valid. However, Judge Altman found several problems with that argument. First, Forde did not produce evidence to support that claim. Second, even if the mortgage were invalid, that might be a defense to a third-party purchaser, but it did not excuse his failure to properly pay what was owed under the note. Third, a party cannot repudiate a contract while benefiting from its terms. If Forde believed the mortgage was invalid, he could have returned the yacht to Krantz and demanded reimbursement of the payments. “By absconding with the yacht, however, he’s forfeited any right to complain about the validity of the mortgage.” Judge Altman then addressed the question of whether Forde could be absolved of his breach of the payment obligation by the fact that his attempt to comply was interrupted by an independent criminal act. Reasoning that Forde should have exercised reasonable care after receiving conflicting emails with different wire instructions, Judge Altman concluded that Forde should suffer the loss associated with the fraud. Accordingly, Judge Altman held that Forde breached the payment obligation by failing to pay the final $220,000 he owed and that Krantz was entitled to recover damages on his counterclaim. See December 2023 Update.
During the pendency of the suit that he brought, Forde disappeared. According to Judge Altman, Forde either ran out of money to prosecute the suit or lost interest in it. The judgment entered by Judge Altman “finally caught Forde’s attention,” and he filed a Rule 60(b) motion seeking to reopen the case, or to reduce the money judgment, or to change the award so that it was only for money damages rather than awarding either money damages or the boat. Judge Altman rejected all of the arguments. He would not reopen the case so that Forde could subpoena the fraudster’s bank records because Forde could have taken that action before the judgment was finally issued. He declined to change the language of the judgment awarding damages or the boat (based on Forde’s argument that he no longer had the boat) because Forde could comply with the judgment by paying the amount owed. Finally, with respect to the calculation involved in the judgment, Judge Altman denied the request for lack of sufficient evidence; however, as Forde was acting pro se, Judge Altman gave Forde leave to file an amended motion to prove with documentary evidence his calculations.
This case involves the ocean carriage of cargo from West Palm Beach, Florida to Georgetown Guyana. Laparkan Trading issued bills of lading with Banks DIH as the consignee. The goods were offloaded in good condition to a warehouse at Guyana National Industrial Co.’s facility where a fire destroyed the cargo. Certain Underwriters paid Banks DIH for the loss and brought this subrogation action in federal court in Florida against Guyana National and Laparkan Trading under the Carriage of Goods by Sea Act, the Pomerene Act, and common law for negligence and breach of bailment obligations. The defendants moved to dismiss the complaint, and Judge Gayles began by considering the argument that COGSA did not apply because the loss did not occur until the cargo was discharged from the vessel. The Underwriters argued that it was possible that COGSA was extended to cover the period in which the goods were in the warehouse by the back of the bills of lading or other documents, but the Underwriters did not present that evidence to the court, and Judge Gayles held that the complaint failed to state a claim under COGSA. Judge Gayles also stated that the Underwriters failed to allege how Laparkan Trading would be liable under COGSA as it was not a party to the bills of lading (although he did not say so, the absence of the back of the bills of lading or other documents in the evidentiary record would preclude application of a Himalaya Clause). As to the claim under the Pomerene Act, Judge Gayles noted that he could dismiss the claim as inadequately pleaded because the complaint contained an incorrect citation to the Act, but he dismissed the claim on the merits, reasoning that the Pomerene Act applies to misdelivery of goods and not damage in a warehouse fire. Having concluded that the court lacked jurisdiction over the statutory claims, Judge Gayles declined to exercise supplemental jurisdiction over the common-law claims. He dismissed the complaint without prejudice for failing to adequately allege the federal claims and by declining to exercise supplemental jurisdiction over the common-law claims.
Overseas Moving, owned and controlled by Boaz Aviani, booked a shipment from New York to Ashdod, Israel with non-vessel operating common carrier Cargo Logistics. The description of the cargo was “202 pieces of medical and office equipment. ‘Personal Use Only Not for Resale No Commercial Value.’” Cargo Logistics then shipped the cargo on a ship operated by Zim Shipping Line. When the cargo arrived in Ashdod in August 2017, the consignee did not accept the cargo, and Cargo Logistics made multiple attempts to have the cargo either claimed or abandoned and destroyed so that the container could be returned to Zim. Overseas Moving represented to Cargo Logistics that the consignee was gathering documents necessary for customs clearance. The problem with customs clearance was allegedly that the cargo was misleadingly described as being for personal use when it was actually business property. As the property was not released, Zim charged Cargo Logistics demurrage and would not do anything with the container and cargo until it received an abandonment letter signed by Overseas Moving. It was not until May 2019 that Overseas Moving agreed to abandonment of the cargo. Cargo Logistics brought this suit, seeking to recover $165,140 in costs and $250,000 in lost profits because Zim would not ship cargo for Cargo Logistics. The suit was based on admiralty jurisdiction for breach of contract, negligent misrepresentation, and fraud. Judge Brodie first addressed the court’s jurisdiction, noting that the court had admiralty jurisdiction over the claims arising from the contract of carriage. Judge Brodie held that the tort claims of negligent misrepresentation and fraud failed the locality test for admiralty jurisdiction because the allegedly false statements were made on the bills of lading before the cargo was shipped and in emails to Cargo Logistics after the cargo arrived in Ashdod. However, as the claims for negligent misrepresentation and fraud arose out of the same events as the contractual claim involving the shipment of the cargo, Judge Brodie held that the court had supplemental jurisdiction based on the anchor admiralty contract claim. As Cargo Logistics did not allege a closer degree of trust between the parties than that of parties to a contract, Judge Brodie dismissed the negligent misrepresentation claim for lack of a special relationship. However, Judge Brodie held that the allegations that Overseas Moving made false assurances in specific emails that the cargo would be picked up after it arrived in Ashdod were sufficient to allege a fraud claim that was not duplicative of the contract claim as the fraud claims were made after the formation of the contract. Reasoning that maritime law allows for recovery of consequential damages, including lost profits, if such damages are a foreseeable result of the breach, and supplementing maritime law to the extent New York law was consistent with maritime law, Judge Brodie held that Cargo Logistics could pursue consequential damages, including lost profits from the loss of its business relationship with Zim. See October 2021 Update.
Overseas Moving then moved to exclude the testimony of Cargo Logistics’ experts, Kerri Kemp and Chad Rundle, and for summary judgment on Cargo Logistics’ claims for fraud and breach of contract as well as its claim for consequential damages resulting from its alleged lost profits. Kemp and Rundle are the chief operating officer and owner of Cargo Logistics. As they are not retained to provide expert testimony, Judge Brodie held that Kemp and Rundle were not required to provide expert reports in accordance with Rule 26(a)(2)(B) and that the summary of their testimony was sufficient under Rule 26(a)(2)(C). Judge Brodie also rejected the argument that their testimony should be excluded because they are an employee and owner of the plaintiff. Judge Brodie then considered the motion for summary judgment, beginning with the arguments that the fraud claim is duplicative of the contract claim, Cargo Logistics did not establish the fraudulent intent of Overseas Moving, and Cargo Logistics could not establish proximate cause. Finding that there was a fact question whether Overseas Moving made false statements regarding the reasons for the delay in retrieving the cargo from the dock and that the misrepresentations were collateral to the contract, Judge Brodie held that Cargo Logistics had established that the fraud claim was not duplicative of the contract claim. As she also found evidence that would allow a jury to conclude that Overseas Moving misrepresented the reason for the delay at customs to avoid having Cargo Logistics declaring the cargo abandoned and requiring Overseas Moving to pay for abandonment of the cargo, and that there was at least a three-month delay in initiating abandonment proceedings resulting in more demurrage and storage fees, Judge Brodie held that the other elements of the fraud claim were sufficient to be submitted to the jury. With respect to the claim for breach of contract, Cargo Logistics sought to recover its invoices for storage and demurrage fees even though it only paid a reduced rate of $28,689.45 after negotiation. However, Cargo Logistics invoiced Overseas Moving when it received invoices, and Judge Brodie held that there was a fact question whether Overseas Moving breached the terms of its contract when it failed to pay the invoices by the contractual deadline. The final issue involved Cargo Logistics’ claim that it lost profits in excess of $250,000 from the loss of business with Zim, and whether the lost profits were recoverable consequential damages because they were a foreseeable result of abandoning the cargo. Based on the testimony of Kemp, Cargo Logistics established that it could not book cargos with Zim, that specific customers refused to ship with Cargo Logistics because they required Zim as the carrier, and that the income from the specific clients was reduced. Judge Brodie held that the evidence was sufficient to present a jury question on lost profits.
Danny Campbell, a deckhand on the F/V DELMA ANN, fell over an unmarked chain on the Port of Newport’s commercial marina while taking out the trash from the vessel. The chain was used by the Port to temporarily secure a broken finger pier on the dock and was hanging about one inch above the dock. Campbell brought this suit under the Jones Act against his employer/vessel owner (Delma Ann) and against the Port for negligence. The Port brought a cross-claim against Delma Ann for indemnity based on the Moorage License Agreement between Delma Ann and the Port, and Delma Ann moved for summary judgment on the Jones Act claim and on the indemnity claim. Although the employer owes a duty to provide a seaman with a safe place to work, Judge McShane noted that the duty does not extend to premises over which the employer has no dominion or control or an opportunity to correct. Even if the vessel’s captain failed to warn Campbell of the chain (the captain had complained to the Port’s maintenance office and had stumbled over the chain himself), Judge McShane held that the failure was insufficient to establish negligence as there is no duty of the vessel owner with respect to the dock area controlled by a third party. Judge McShane also rejected the assertion that Delma Ann violated federal or state regulations and was negligent per se, concluding that the regulations did not apply. To support its claim based on the Moorage License Agreement, the Port argued that it was entitled to indemnity for injury resulting from the acts or omissions of Delma Ann or its employees. The Port argued that it was not necessary that Delma Ann be found negligent as long as its acts or omissions contributed to the injury. In this case, Campbell and the Port argued that Campbell was distracted while carrying the trash because another crewmember called out to him and tossed him another bag of trash. Campbell turned around to get the additional bag and tripped when he turned back to continue. Judge McShane was “unpersuaded,” citing the fact that Delma Ann did not have dominion or control over the area and reasoning that the agreement did not require indemnity for injuries that were not caused by the licensee. See December 2021 Update.
Campbell appealed from the grant of summary judgment on his Jones Act claim, arguing that the Supreme Court’s decision in O’Donnell had superseded the decision of the Ninth Circuit in Todahl that a Jones Act employer is not liable for injuries occurring on premises over which it has no dominion or control, but the Ninth Circuit disagreed and continued to adhere to its limitation on the duty of the seaman’s employer. Campbell also alleged that Todahl was distinguishable because the seaman in that case was injured on personal activities ashore, but Campbell was performing his duties as a deckhand by removing garbage from the vessel. However, the Ninth Circuit was not willing to create such a distinction. Finally, Campbell argued that the Port’s negligence in installing and maintaining the chain should be imputed to the employer under the operational activities rule as articulated by the Supreme Court in Hopson v. Texaco. However, the employer did not delegate any activities to the Port (the slip rental agreement with the Port precluded the Port from performing any activities on behalf of the vessel), and merely allowing the vessel to be moored at the Port did “not constitute the performance of a vital operational activity.” See February 2024 Update.
Delma Ann then sought costs of $9,567.70 from the seaman, and Campbell argued that awarding costs would have a chilling effect on future claims by injured seamen, that it would it would be a hardship on him to pay costs when he had undergone numerous surgeries that left him unable to work, and that there was an economic disparity between him and Delma Ann such that costs should not be awarded against him. Judge McShane was sympathetic to Campbell’s injuries, but he did not believe that the arguments were sufficient to overcome the presumption in favor of awarding costs to the prevailing party. McShane then sought a reduction of the costs, arguing that it was unnecessary to take the depositions as several of the depositions were not mentioned in the motion for summary judgment or were not used on the ultimate issue in the case. Judge McShane did not find that the depositions were unnecessary and awarded costs for the transcripts. Finally, Campbell argued that costs of videotaping some of the depositions should be denied because the videos “added nothing of substance and [were] not submitted in support of the Motion for Summary Judgment.” Judge McShane disagreed, reasoning that the videotaping occurred during the COVID restrictions, and Delma Ann reasonably believed it was necessary to have videos that could be played at trial if witnesses could not attend trial or were prohibited from doing so. Therefore, he awarded the full amount of costs sought by Delma Ann.
This litigation presents an insurance dispute involving the M/V DAGGA BOY (owned by Dagga Boy, LLC). The DAGGA BOY, a 53-foot Hatteras recreational vessel, was damaged by fire while moored for repairs at a dock located in New Orleans, Louisiana. The vessel was insured by Accelerant Specialty with a Private and Pleasure Yacht Insuring Agreement that contained a forum-selection clause for the federal district court where the insured or its insurance agent resides. After Accelerant denied the claim, the vessel owner filed suit against Accelerant in state court in Orleans Parish, Louisiana, demanding a jury. Accelerant responded by filing a declaratory judgment action in federal court under the court’s admiralty jurisdiction and by removing the suit brought in state court, citing diversity (and admiralty) as the jurisdiction for the removal. Once both cases were in federal court, Accelerant moved to dismiss the case that was originally brought in state court, asserting that the suit violated the forum-selection clause in the insurance agreement, and the cases were consolidated. The parties disputed the reason that Accelerant was seeking to dismiss the state action. The vessel owner argued that Accelerant was seeking to avoid the Louisiana bad-faith allegations in the state suit and to deny the owner its right to a jury trial (arguing that the basis for removal was diversity for which the owner would be entitled to a jury trial). Accelerant responded that choice-of-law was not an issue as the insurance agreement also contained a choice-of-law provision for entrenched admiralty law/New York law, and Judge Zainey agreed that choice-of-law was not at issue for the motion to dismiss. However, Judge Zainey did not believe that dismissal was necessary as he held that the court had subject matter jurisdiction over both cases. Recognizing that the question of whether the cases would be heard before a jury was still at issue, Judge Zainey advised that Accelerant must move to strike the jury demand within 30 days of the entry of the scheduling order. See November 2023 Update.
Accelerant then filed a motion to strike the jury demand and to dismiss the suit filed by the insured in state court. Accelerant argued that had it left the insured’s suit in state court, the state judge would have been required to dismiss the suit in order to give effect to the policy’s forum-selection clause, and that the same result should be reached after the case was removed to federal court. Judge Zainey initially stated that Accelerant was “on stronger footing” in having the jury demand stricken in the suit filed in federal court under the court’s admiralty jurisdiction; however, the situation was different with respect to the suit that was filed in state court in violation of the forum-selection clause. That suit was removed to federal court based on diversity, and the insured had a right to a jury trial in that suit under the Seventh Amendment. The fact that the suit was improperly filed in state court was now a moot point as it was pending in the correct federal forum after removal. Once it was removed based on diversity, Dagga Boy was entitled to a jury trial even if maritime law was the applicable law. As Accelerant’s motion sought dismissal of the state-filed suit or the striking of the jury trial in that action, Judge Zainey denied the motion.
This case arises from a fire that began on the Sea Ray pleasure boat owned by Brian and Summer Cox, which was docked at the Mill Creek Marina located on Lake Texoma near Pottsboro, Texas. The fire spread from the boat and damaged property belonging to the marina and several other parties, including the boat and “dockominium” owned by Jay Stamper and Sandra Peak. The Coxes filed this action seeking exoneration/limitation in federal court in Texas, and the marina, Stamper, and Peak filed claims in the federal action. Stamper and Peak filed a cross-claim against the marina, seeking damages for loss of their property and loss of the use and enjoyment of their property. The marina moved for summary judgment on the cross-claim, asserting that under maritime law Stamper and Peak could not recover for loss of use/enjoyment for property that was a total loss. Stamper and Peak argued that the acts/omissions of the marina occurred on land, and that Texas law should apply (allowing for recovery of loss of use). Judge Jordan believed that the decision of the Supreme Court in Sisson v. Ruby (fire on a vessel that spread to the dock and other vessels) was dispositive of both the locality and nexus requirements for the court’s admiralty jurisdiction in this case. He then considered the argument that the conduct of the marina occurred on land, but Judge Jordan answered that the claims against the marina “as a potential additional tortfeasor” did not negate the court’s admiralty jurisdiction as the Supreme Court recognized in Grubart, in which the Court explained that the “substantial relationship test is satisfied when at least one alleged tortfeasor was engaging in activity substantially related to maritime activity and such activity is claimed to have been a proximate cause of the accident.” In this case, “the conduct of the Coxes, the boat owners, ‘supp[lies] the necessary substantial relationship to traditional maritime activity.” Stamper and Peak also argued that the land-based injury to the dockominium should not be subject to admiralty jurisdiction, but Judge Jordan considered the land-based damage to be within the court’s admiralty jurisdiction based on the Admiralty Extension Act (the damage suffered by Stamper and Peak began on the Coxes’ boat on navigable waters). As Stamper and Peak did not contest the principle of maritime law “that in a case of total loss the owner is not compensated for the loss of use of the boat,” Judge Jordan held that Stamper and Peak could not recover for loss of use of any property that was deemed to be a total loss.
We previously looked at the supply of bunkers by Praxis Energy Dubai in our May 2021 Update. See Liberty Highrise Pvt. Ltd. v. Praxis Energy Agents DMCC, No. 20-cv-2427, 2021 U.S. Dist. LEXIS 62445 (S.D.N.Y. Mar. 31, 2021) (Abrams). Liberty Highrise, an Indian company and operator of the M.V. MENALON and M.V. GOLD GEMINI, ordered bunkers from Praxis Energy Dubai, a United Arab Emirates company, to be delivered to the vessels in Singapore. Praxis Dubai sent an invoice to Liberty for the bunkers for the MENALON, and Liberty transferred payment to Praxis Dubai’s bank account. With respect to the bunkers for the GOLD GEMINI, Liberty was directed to transfer the funds to the bank account of Praxis Singapore. There was confusion about the payments, and the bunkers were never delivered to the MENALON. Liberty then brought this suit against Praxis Dubai and Praxis Singapore for the retention of the payment/failure to deliver. The suit was brought in New York in accordance with the forum-selection clause in the Praxis General Terms and Conditions for the Sale of Marine Bunker Fuels and Lubricants that was incorporated into the transaction between Praxis Dubai and Liberty. Praxis Singapore sought to dismiss the complaint for lack of personal jurisdiction and forum non conveniens, arguing that Praxis Singapore was not bound by the terms that were agreed between Praxis Dubai and Liberty and that the New York venue was inconvenient because it had nothing to do with the transaction. Judge Abrams denied the motion, however, finding sufficient allegations that Praxis Singapore was an alter ego of Praxis Dubai to avoid the motion to dismiss. He did note that Liberty would have to submit evidence and not just allegations to establish liability on the part of Praxis Singapore. Judge Abrams also denied the defendant’s argument that Liberty had not established any of the requirements of the federal venue statute as this is an admiralty case, and forum-selection clauses are enforced in admiralty unless shown to be unreasonable. Finally, Judge Abrams rejected the defendant’s forum non conveniens argument as the defendant had not provided any reason why the parties’ choice of forum should not be given deference.
We have also looked at the supply of bunkers by Praxis Energy Dubai in our February 2023 Update. See Platina Bulk Carriers Pte Ltd. v. Praxis Energy Agents DMCC, No. 2:22-cv-1851, 2023 U.S. Dist. LEXIS 8534 (D.S.C. Jan. 17, 2023) (Gergel). Platina Bulk Carriers, time charterer of the M/V OCEANMASTER, ordered bunkers from Praxis Dubai, and Praxis Dubai arranged for the fuel to be delivered to the vessel by Al Arabia Bunkering. Praxis Dubai invoiced Platina for the fuel, and Platina paid the invoice. However, Praxis Dubai did not pay Al Arabia, and Al Arabia arrested the OCEANMASTER in Fujairah, U.A.E. Platina settled the claim with Al Arabia and received an assignment of Al Arabia’s rights against Praxis Dubai. Platina then brought an action in federal court in New York against Praxis Dubai (and several alleged alter egos) seeking to recover both for the amount of the fuel and for the time lost at Fujairah as a result of the arrest of the vessel (plus attorney fees in that action). The New York court held that Platina stated a prima facie case for piercing the corporate veil against the entities. Platina then filed suit in federal court in South Carolina against Praxis Dubai seeking a Rule B attachment of funds disbursed by the court in an unrelated action in which Praxis Dubai intervened. Praxis Dubai moved to dismiss the case for lack of personal jurisdiction and improper venue, and Judge Gergel rejected the argument on personal jurisdiction as contrary to the text and purpose of Rule B, explaining that the court acquires jurisdiction by the attachment up to the amount of the attached property. Praxis Dubai also argued that the New York forum-selection clause in the contract required that attachment be brought in New York. Judge Gergel acknowledged the clarity of the treatment of forum-selection clauses by the Supreme Court, but he cited the cases in which the courts found the language of forum-selection clauses not to be broad enough to extend to actions to obtain security by maritime attachment in a different venue for a favorable judgment in the selected forum. As the clause in this case did not provide for the “exclusive jurisdiction” of the New York courts, Judge Gergel denied the motion to dismiss and granted Platina’s motion directing the defendant to deposit the funds into the court registry.
Turning to the suit whose opinion is attached, Platina Bulk Carriers brought the action in federal court in New York against Praxis Dubai, Praxis Singapore, and other Praxis entities in connection with contracts to supply bunker fuel to vessels chartered by Platina (the OCEANMASTER and the OCEANBEAUTY). Platina sought to hold Praxis U.S. responsible for Praxis Dubai’s liabilities under a corporate alter ego theory, and Judge Buchwald held that Patina’s alter ego allegations were sufficient to deny the motion of the defendants to dismiss for lack of personal jurisdiction and venue. See October 2021 Update. Platina and Praxis U.S. then filed cross-motions for summary judgment on the claims seeking to pierce the corporate veil to hold Praxis U.S. liable for damages owed by Praxis Dubai. Judge Buchwald considered the several arguments made by Platina and held that the Praxis entities had maintained corporate formalities, that the undercapitalization of Praxis Dubai was not caused by domination of the other entities, that Praxis Dubai was not a mere shell carrying on business for the other entities, and that the entities maintained separate offices across the globe (although they shared common resources that included the email domain, accounting software, credit insurance, logo, and bunker nomination forms. She concluded that Praxis U.S. was not the alter ego of Praxis Dubai and that the court lacked personal jurisdiction over Praxis U.S.
Michael Bianchini brought suit in the district court of Plaquemines Parish, Louisiana against Sunland Construction and Venture Global Gator Express, seeking to recover for damage to oyster leases allegedly caused by dredging, pile driving, and other activities during the construction of natural gas pipelines in the vicinity of his oyster leases. Venture Global removed the suit to federal court in Louisiana (based on the original admiralty jurisdiction of the federal court) where it was consolidated with a limitation action filed by Sunland Construction. Bianchini moved to remand the case, arguing that original admiralty jurisdiction is not a basis for removal and, following the majority of district courts (the issue remains unresolved in the Fifth Circuit as noted in the N&W Marine case, see February 2024 Update), Judge Guidry remanded the case to state court.
Anna and Andrew Ajwani, passengers on the CARNIVAL PRIDE, purchased the Scenic Wildlife River Cruise excursion in Belize, during which the Ajwanis toured the river in Belize on a vessel named the TAKEOUT. There were no seatbelts or handholds, and after several large wakes, the Ajwanis were thrown from their seats and injured. The Ajwanis filed this suit in federal court in Florida against the cruise line, asserting counts for negligence, negligent selection and retention of the excursion operator, and agency and joint venture with the excursion operator. The Ajwanis also brought a claim against the excursion operator. The cruise line moved to dismiss the complaint, and Judge Gayles granted the motion. With respect to the negligence count and the count for negligent selection and retention, the Ajwanis alleged that the cruise line visited the excursion as part of the annual renewal process, but the Ajwanis failed to provide details about the process or how it put the cruise line on notice. The Ajwanis referred to prior complaints, comments, and injuries, but they did not provide any details how the situations were similar. As the allegations in both counts were conclusory, Judge Gayles dismissed the counts without prejudice. Although the excursion operator had not yet answered, Judge Gayles dismissed the negligence count against the excursion operator without prejudice for the same reason that he dismissed the negligence counts against the cruise line. Finally, Judge Gayles dismissed the claims against the cruise line based on agency and joint venture because these are still negligence claims and the underlying negligence claims had been dismissed.
From the state courts
After Wello and Mom’s vessel partially sank, it made a claim with its insurer, Clear Spring Property & Casualty Co. Clear Spring denied the claim based on Wello and Mom’s failure to disclose material facts in the insurance application, and Clear Spring filed a declaratory judgment action in Florida federal court in admiralty. A few months later, Wello and Mom brought this suit against Clear Spring in state court in Miami-Dade County, Florida, and Clear Spring filed a motion to dismiss in the state court based on the forum-selection clause in the policy that provided for exclusive jurisdiction in federal court, in particular the federal district court in which the insured (or its insurance agent) resides. Judge Diaz dismissed the suit, and Wello and Mom argued on appeal that the forum-selection clause was unenforceable because it was not negotiated and because it deprived Wello and Mom of the right to a jury trial. Citing the “well-entrenched rule of federal admiralty law” favoring the enforcement of forum-selection clauses in maritime contracts (including marine insurance policies), Judge Gordo, writing for the Florida Third District Court of Appeal, held that the presumption of validity of the clause applied notwithstanding the insured’s argument that it was deprived of the right to a jury trial. As Wello and Mom did not establish that enforcement was unreasonable and “so gravely difficult and inconvenient” as to deprive the insured of its day in court, the appellate court affirmed the decision of the lower court to dismiss the state suit. See January 2024 Update.
Wello and Mom moved for rehearing and clarification, and the Florida Court of Appeal denied the motion but withdrew its prior opinion and substituted an opinion that contained a clarification. The sentence setting forth the court’s response to Wello and Mom’s contention that the policy’s forum-selecti0n clause should be deemed unenforceable as it was not negotiated and deprived Wello and Mom of the right to a jury trial originally stated: “Contrary to Wello’s arguments, a forum selection clause which is not the subject of negotiations often retains its enforceability.” (Citing Carnival Cruise Lines v. Shute). The revised opinion stated: “Contrary to Wello’s arguments, an admiralty and maritime forum selection clause which is not the subject of negotiations often retains its enforceability.” (Citing Carnival Cruise Lines v. Shute).
Kenneth G. Engerrand
President, Brown Sims, P.C.
Houston
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Suite 1800
Houston, TX 77056
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New Orleans
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New Orleans, LA 70130
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Thanks to Christian A. Rivera Santos and Carolina A. Phillips for their help in preparing the April 2024 Update.
Quote:
Appellant testified to her belief that the police officers ordering her to leave were employed by “the United States corporation, . . . not the United States for America republic[,] . . . because our nation was hijacked in 1871, and we were made a corporation.” She added that we have “been under admiralty law ever since 1871[,]” and that Ulysses S. Grant was the last president of the republic, until he went through the British crown to get a loan that had to be paid off in gold.
Larson-Olson v. United States, No. 22-cm-0778, 2024 D.C. App. LEXIS 70, at *7 n.3 (D.C. App. Feb. 22, 2024) (Fisher).
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© Kenneth G. Engerrand, March 28, 2024; redistribution permitted with proper attribution.
