December 2023 Longshore/Maritime Update (No. 295)
Notes from your Updater:
The Department of Labor has announced the National Average Weekly Wage that is applicable for the 12-month period beginning October 1, 2023. The National Average Weekly Wage is $963.29. Consequently, the maximum compensation rate for total disability and death for the period beginning on October 1, 2023, and extending to September 30, 2024, is $1,926.58, and the minimum compensation rate (not always the minimum rate and not applicable to employees covered by the Defense Base Act) payable for disability incurred after October 1, 2023, is $481.65 per week. Cost-of-living adjustments effective on October 1, 2023, are 5%, using the statutory cap for the third consecutive year.
On November 1, 2023, Judge Chhabria of the United States District Court for the Northern District of California “reluctantly” denied the motion to remand in the suit brought by the Pacific Coast Federation of Fishermen’s Associations and its members (crab fishermen, fishing businesses, and local fishermen’s marketing associations along the West Coast) against several energy companies claiming financial injuries due to lost fishing opportunities caused by climate change based on removal jurisdiction under the Class Action Fairness Act. See Pacific Coast Federation of Fishermen’s Associations v. Chevron Corp., No. 18-cv-7477, 2023 U.S. Dist. LEXIS 196339 (N.D. Cal. Nov. 1, 2023).
On November 6, 2023, a federal jury in California convicted Captain Jerry Boylan of violating the Seaman’s Manslaughter Statute in connection with the deaths of 33 passengers and a crew member who were trapped on the dive boat CONCEPTION in 2019 after a fire broke out on the vessel near Santa Cruz Island in the Pacific Ocean. See United States v. Boylan, No. 2:22-cr-482 (C.D. Cal.).
On November 7, 2023, the Fourth Circuit rejected the employer’s Lucia challenge to the appointment of the Administrative Law Judges by the Secretary of Labor who heard a claim for compensation benefits under the Black Lung Benefits Act. One of the Administrative Law Judges had been originally appointed through the competitive service, but on the recommendation of Chief Administrative Law Judge Stephen R. Henley, the Secretary of Labor, R. Alexander Acosta, ratified the appointment of the incumbent Administrative Law Judges. Writing for the Fourth Circuit, Judge Rushing held that the appointment satisfied the Appointments Clause of the Constitution, and she then addressed the argument that the Administrative Law Judges were unconstitutionally insulated from the President’s removal authority. The appellate court did not have to reach the constitutional issue, however, because the employer had to establish that the alleged constitutional violation caused it harm. The employer did not assert that it was harmed by the allegedly unconstitutional limitations on the President’s ability to remove Administrative Law Judges hearing LWHCA/Black Lung cases, and there was no evidence that the Secretary of Labor desired to or attempted to remove the Administrative Law Judges. Therefore, the appellate court declined to decide the constitutional issue with respect to removal and denied the petition for review. See K&R Contractors, LLC v. Keene, No. 20-2021, 2023 U.S. App. LEXIS 29632 (4th Cir. Nov. 7, 2023) (Rushing). Note: on November 29, 2023, the Supreme Court held oral argument in No. 22-859, Securities and Exchange Commission v. Jarkesy, discussed in the Update as recently as August 2023, to again address the constitutionality of the adjudicatory role of Administrative Law Judges. The issues presented to the Court include whether Congress violated Article II by granting for-cause removal protection to administrative law judges in agencies whose heads enjoy for-cause removal protection.
In our March 2023 Update, we reported that the Supreme Court (in Chevron USA, Inc. v. Plaquemines Parish, No. 22-715) declined to grant a writ of certiorari to consider the affirmance of a remand to the state court by the Fifth Circuit in Plaquemines Parish v. Chevron USA, Inc., No. 22-30055, 2022 U.S. App. LEXIS 28733 (5th Cir. Oct. 17, 2023). That appeal involved cases filed in Louisiana state courts by coastal Parishes against energy companies seeking to recover restoration costs for loss of land along the Louisiana Gulf Coast allegedly resulting from production practices carried out by the energy companies going back to World War II.
After the Supreme Court declined to hear the petition from the energy companies, Judge Zainey of the United States District Court for the Eastern District of Louisiana issued an order remanding to state court the suit brought by Plaquemines Parish and the State of Louisiana against a host of energy companies. The energy companies argued that they had threaded the needle to satisfy the “acting under” requirement for federal officer removal because that case involved a World War II-era refinery contract. Judge Zainey was unpersuaded, answering that the refinery contract satisfied neither the acting-under nor the related-to requirements (the energy company “may have acted under a federal officer when refining oil in Port Arthur, Texas but it did not act under a federal officer when producing that oil in Louisiana”). See Parish of Plaquemines v. Northcoast Oil Co., No. 18-5228, 2023 U.S. Dist. LEXIS 67290 (E.D. La. Apr. 18, 2023). The energy companies appealed the order of remand to the Fifth Circuit (No. 23-30304), and Judge Zainey stayed the order of remand pending the appeal. Judge Morgan of the United States District Court for the Eastern District of Louisiana reached a similar result in Parish of Plaquemines v. Rozel Operating Co., No. 18-5189, 2023 U.S. Dist. LEXIS 81541 (E.D. La. May 10, 2023). The energy companies appealed the order of remand (No. 23-30336), and Judge Morgan stayed the order of remand pending the appeal. See June 2023 Update. On June 13, 2023, Judge Summerhays of the United States District Court for the Western District of Louisiana declined to reconsider his decision remanding 42 lawsuits (removed under the Federal Officer Removal Statute) that were brought by several Louisiana parishes against energy companies based on violations of permits under the State and Local Coastal Resources Management Act of 1978 and associated regulations, rules, and ordinances in connection with the defendants’ oil exploration and production activities in coastal parishes. See Parish of Cameron v. Apache Corp. (of Delaware), No. 2:18-cv-688, 2023 U.S. Dist. LEXIS 103010 (W.D. La. June 13, 2023). Judge Summerhays granted a stay of the remand pending appeal, and the energy companies filed a notice of appeal to the Fifth Circuit (No. 23-30422). Judge Fallon also stayed remand orders pending appeal to the Fifth Circuit in Parish of Jefferson v. Destin Operating Co., No. 2:18-cv-5206 (appeal No. 23-30225); Plaquemines Parish v. Exchange Oil & Gas Co., No. 2:18-cv-5215 (appeal No. 23-30291); and Plaquemines Parish v. Great Southern Oil & Gas Co., No. 2:18-cv-5227 (appeal No. 23-30303). See August 2023 Update. On October 11, 2023, the Fifth Circuit granted the motion to lift and vacate the stay pending appeal in Plaquemines Parish v. Chevron USA, Inc., No. 23-30291, 2023 U.S. App. LEXIS 27249 (5th Cir. Oct. 11, 2023) (Higginson) in a published order, concluding that the balance of equities weighed against issuance of a stay.
Meanwhile, the energy companies requested that the Supreme Court issue a stay of the trial scheduled to begin in state court in Cameron Parish, Louisiana on November 27, 2023 (the energy companies argued that the case should be transferred to a venue where the jurors did not have a financial interest in the outcome). See No. 23A364, BP America Production Co. v. Parish of Cameron, Louisiana. On November 7, 2023, the Supreme Court declined to grant the stay.
In our November 2023 Update, we noted that on October 27, 2023, the Federal Energy Regulatory Commission reaffirmed its decision approving the construction and operation of liquefied natural gas export facilities on the Texas Gulf Coast after the United States Court of Appeals for the D.C. Circuit reversed and remanded FERC’s prior approval in Vecinos para el Bienestar de la Comunidad Costera v. FERC, 6 F.4th 1321 (D.C. Cir. 2021). On November 14, 2023, a panel of the Fifth Circuit held that the Texas Commission on Environmental Quality acted arbitrarily and capriciously under Texas law by failing to explain why it declined to impose certain emissions limits on a new liquified natural gas plant and export terminal in Port Arthur, Texas that Port Arthur LNG plans to build when those limits had been previously imposed on Rio Grande LNG. See Port Arthur Community Action Network v. Texas Commission on Environmental Quality, No. 22-60556, 2023 U.S. App. LEXIS 30309 (5th Cir. Nov. 14, 2023) (Graves).
The Update has reported the litigation involving the Biden Administration’s executive order pausing new oil and gas leases on public lands and in offshore waters. Louisiana and other states challenged the executive order in the United States District Court for the Western District of Louisiana, and Chief Judge Doughty issued a nationwide preliminary injunction that enjoined officials in the Department of Interior from implementing the pause. See Louisiana v. Biden, No. 2:21-cv-778, 2021 U.S. Dist. LEXIS 112316 (W.D. La. June 15, 2021). On August 17, 2022, the Fifth Circuit ruled that Chief Judge Doughty’s order and accompanying memorandum lacked sufficient specificity and remanded the case for further proceedings without reaching the merits of the Government’s challenge to the injunction. Louisiana v. Biden, No. 21-30505, 2022 U.S. App. LEXIS 22872 (5th Cir. Aug. 17, 2022) (Higginbotham). The next day, Chief Judge Doughty granted a permanent injunction enjoining the Government from implementing the pause on public lands and offshore waters as set forth in the executive order with respect to the thirteen states that were plaintiffs in the lawsuit. See Louisiana v. Biden, No. 2:21-cv-778, 2022 U.S. Dist. LEXIS 148570 (W.D. La. Aug. 18, 2022). In separate litigation, the D.C. Circuit held that the Department of Interior adequately considered the option of not leasing in connection with two proposed offshore leases but remanded the suit for consideration of potential deficiencies in the enforcement of safety and environmental regulations. See Gulf Restoration Network v. Haaland, No. 20-5179, 2022 U.S. App. LEXIS 24368 (D.C. Cir. Aug. 30, 2022) (Katsas). In Louisiana v. Haaland, No. 2:23-cv-1157 (W.D. La. Sept. 21, 2023), the State of Louisiana, the American Petroleum Institute, Chevron, and Shell sought to halt the withdrawal of 6 million acres from Lease Sale 261. Judge Cain agreed with the plaintiffs and granted a preliminary injunction, enjoining the United States from implementing the acreage withdrawal. He ordered the United States to proceed with Lease Sale 261 by September 30, 2023. The United States and environmental groups appealed to the Fifth Circuit, and on September 25, 2023, an administrative/motions panel of the Fifth Circuit kept in place the preliminary injunction but amended it to hold that the sale is ordered to take place by November 8, 2023, noting that no extension of that date would be granted. The administrative panel explained: “This is only a ruling that, pending this appeal of the preliminary injunction, a stay of the injunction is DENIED except to change the date by which Lease Sale 261 is to occur” (the panel added that its decision is subject to review by the merits panel once the appeal is submitted). Louisiana v. Haaland, No. 23-30666 (5th Cir. Sept. 25, 2023). On October 26, 2023, the Fifth Circuit ordered that the preliminary injunction that was entered on September 25, 2023, and amended by the motions panel on September 25, 2023, was stayed pending the decision of the merits panel. The case was then set for oral argument before the merits panel on November 13, 2023. On November 14, 2023, the Fifth Circuit dismissed the appeal of four intervening environmental groups and amended the preliminary injunction, as requested by the United States, to require that the deadline for conducting Lease Sale 261 will be 37 days from the date of issuance of the mandate by the Fifth Circuit (giving the United States time to publish notice of the sale in the Federal Register). See Louisiana v. Haaland, No. 23-30666, 2023 U.S. App. LEXIS 30316 (5th Cir. Nov. 14, 2023) (Clement).
On November 15, 2023, 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. 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).
On November 24, 2023, the Ninth Circuit affirmed the denial of a towing company’s motion to arbitrate the claim by a deck engineer for violations of the California Labor Code, agreeing that the arbitration provision in the collective bargaining agreement entered into by the International Organization of Masters, Mates, and Pilots, Pacific Maritime Region, was not broad enough to encompass the statutory wage claims brought by the seaman (the court questioned the assumption of the parties that the Federal Arbitration Act applied in light of the Act’s exemption of contracts of employment of seamen). See Miles v. Brusco Tug & Barge, Inc., No. 22-15588, 2023 U.S. App. LEXIS 31230 (9th Cir. Nov. 24, 2023) (per curiam).
On November 27, 2023, the Ninth Circuit affirmed the remand to state court of suits brought by the City and County of San Francisco and the City of Oakland against five energy companies (alleging that the production and promotion of fossil fuels is a public nuisance under California law). The Ninth Circuit noted that the arguments for jurisdiction under the OCSLA and based on federal question jurisdiction over a federal enclave had previously been rejected by the court. See City of Oakland v. BP PLC, Nos. 22-16810, 22-16812, 2023 U.S. App. LEXIS 31263 (9th Cir. Nov. 27, 2023) (per curiam).
On November 28, 2023, the First Circuit affirmed the dismissal of the suit brought by the Harbormaster of Gloucester, Massachusetts against city officials, in which he alleged the city officials retaliated against him and violated his First Amendment rights because he provided expert opinions against a local fishing captain in a maritime tort dispute. The court agreed that the city officials were entitled to qualified immunity from the suit. See Ciarametaro v. City of Gloucester, No. 22-1700, 2023 U.S. App. LEXIS 31442 (1st Cir. Nov. 28, 2023) (Kayatta).
The Supreme Court announced that it will hear oral argument on January 17, 2024, in Loper Bright Enterprises v. Raimondo, No. 22-451, the case challenging the authority of the National Marine Fisheries Service to require fishing vessels to carry federal observers. The Court will consider whether it should overrule the use of Chevron deference.
On the LHWCA Front . . .
From the federal appellate courts
This opinion involves a claim brought under the LHWCA by Shiloh (no first name), pro se, seeking benefits for an injury he sustained to his low back on February 10, 2018, while working for his self-insured employer, Huntington Ingalls. Huntington Ingalls paid temporary disability benefits (total and partial), but it argued that Shiloh was no longer entitled to benefits after June 23, 2018. The dispute was tried by Administrative Law Judge Markley, who agreed that Shiloh was not entitled to disability after June 23, 2018, that Shiloh was temporarily partially disabled from May 21, 2018 to June 23, 2018, and that Shiloh was not entitled to reimbursement for certain of his claimed medical expenses. Shiloh appealed to the Benefits Review Board, which vacated the finding that Huntington Ingalls had established suitable alternative employment from May 21 to June 23 but affirmed her decisions on all other issues. The BRB remanded the case for ALJ Markley to consider whether the jobs identified by the employer’s vocational expert were suitable given Shiloh’s age, education, and background. On remand, ALJ Markley held that Huntington Ingalls had successfully identified three jobs as suitable alternative employment and that Shiloh was, therefore, temporarily partially disabled from May 21 to June 23 (with a weekly loss of wage-earning capacity of $592.27). During the remand, Shiloh filed a petition for review of the decision of the Benefits Review Board with the Fourth Circuit, and the Fourth Circuit dismissed his petition as the order from the BRB, remanding the case to the ALJ, was not a final order. After ALJ Markley’s second decision, denying Shiloh’s claim for temporary total disability, Shiloh decided to skip the appeal to the BRB and filed a petition for review of the ALJ’s decision directly with the Fourth Circuit. Noting that the appellate court only has jurisdiction over final orders of the BRB, the Fourth Circuit dismissed the petition for lack of jurisdiction (the court added that if the petition was meant to again seek review of the prior decision from the BRB, that decision was not final and was not appealable).
From the federal district courts
Michael Hyatt was employed by Alabama Shipyard, a ship repair and ship breaking and scrapping business located on the Mobile River in Alabama. Alabama Shipyard purchased the jack-up rig HERCULES 202 (cold stacked seven miles offshore Louisiana) to be brought to its facility in Alabama to be scrapped. Alabama Shipyard time chartered the M/V MISS WYNTER, an offshore supply vessel, from ABR Logistics to transport Hyatt and other employees of Alabama Shipyard to the HERCULES 202 for a dead tow of the jack-up to the shipyard. Hyatt was a crane operator who was going to use the crane on the jack-up to bring the other employees on the rig; however, Hyatt would have to board the jack-up from the MISS WINTER using the sole remaining ladder on the jack-up. While Hyatt was attempting to transfer to the ladder, the MISS WINTER crashed into the ladder, crushing Hyatt’s hand. Hyatt brought this suit against ABR Logistics in federal court in Louisiana under Section 5(b) of the LHWCA, and ABR Logistics brought a third-party complaint against Alabama Shipyard seeking indemnity and additional insurance coverage under the time charter. ABR Logistics and Alabama Shipyard filed cross-motions for summary judgment, and Judge Fallon began by considering the reciprocal indemnity provision in the charter. Finding Section 5(b)’s provision voiding indemnity in favor of the vessel against the employer of a worker covered under the LHWCA to be applicable, Judge Fallon could not “escape the conclusion that such indemnification for vessel negligence is barred.” He then turned to the requirement that Alabama Shipyard obtain comprehensive general liability insurance naming ABR Logistics and its vessels as additional insureds. Judge Fallon noted that a contractual provision obligating the employer to procure insurance and name the vessel owner as an additional insured is not voided by Section 5(b). The charter contained insurance requirements for both Alabama Shipyard and ABR Logistics. The charter required that ABR Logistics’ policy delete the watercraft exclusion; however, the charter did not require that the Alabama Shipyard policy delete the watercraft exclusion. Alabama Shipyard did obtain liability insurance, but that policy contained a watercraft exclusion that barred coverage for ABR Logistics as an additional insured. As ABR Logistics did not request deletion of the watercraft exclusion, Alabama Shipyard did not breach the charter with the insurance it obtained. And, although the policy provided by Alabama Shipyard did afford coverage for its indemnity obligation, that insurance coverage was not invoked because the indemnity was invalid under Section 5(b). Therefore, Judge Fallon granted summary judgment to Alabama Shipyard on the contractual claims of ABR Logistics.
And on the maritime front . . .
From the federal appellate courts
Brannon Finney and Bryan Howey entered into a Seine Permit Contract by which Howey was permitted to use Finney’s Southeast Alaska Salmon Seine permit for the 2015 Southeast Alaska Salmon Seine Season. Alleging that Howey failed to pay $17,500 under the contract, Finney brought this suit against Howey in federal court in Alaska based on admiralty and federal question jurisdiction. A default judgment was entered against Howey, and Howey then moved to set aside the default under Rule 60(b). Magistrate Judge Reardon recommended denial of the motion, and Judge Gleason agreed. Howey appealed the denial to the Ninth Circuit, arguing that the default was void because the district court lacked subject matter jurisdiction. Writing for the Ninth Circuit, Judge Gilman of the Sixth Circuit (sitting by designation) held that the contract at issue in this case (the Seine Permit Contract) was a maritime contract that gave the court admiralty jurisdiction over the suit. Judge Gilman reasoned that the contract gave Finney the right to fish for salmon in Alaskan and federal waters. He concluded: “Because fishing is an economic activity that takes place at sea, the Seine Permit Contract advances maritime commerce and is therefore maritime in nature.” Therefore, the Ninth Circuit affirmed the denial of the motion to set aside the default.
Vigor Marine sold its three-section drydock, constructed in 1956, to a shipyard in Mexico to be scrapped. Vigor then contracted with Western Towboat to tow the drydock from Seattle, Washington to Ensenada, Mexico, using the tug OCEAN RANGER. A surveyor noted significant corrosion but opined that the drydock was appropriately prepared and rigged for the tow in an extended configuration with the bow and stern sections attached. The surveyor did require that the tow avoid heavy head or beam seas to avoid pitching or rolling. The Navy operating manual for the drydock provided that the bow and stern sections should be detached and docked on the center section, and Vigor’s sales contract required that the three sections be detached and carried on a heavy-lift ship. During the tow the drydock began taking on water and listing, and the tug headed toward San Francisco Bay to seek assistance. After communicating with the Coast Guard, the tug concluded it was unsafe to enter San Francisco Bay in the event the drydock sank. The Coast Guard approved the tow entering Monterey Bay where the drydock sank .92 miles inside the Monterey Bay Marine Sanctuary. The National Oceanic and Atmospheric Administration informed Vigor, Western Towing, and the Mexican shipyard of their liability under the National Marine Sanctuaries Act for damages from the sinking in the sanctuary, and Western filed this action against Vigor, seeking recovery for its services under its towing agreement and a declaratory judgment against the United States exculpating it of liability in any forthcoming enforcement action under the NMSA. Chief Judge Martinez first held that the court lacked subject matter jurisdiction, based on lack of ripeness and standing, of the action against the United States as NOAA has not taken any final action against the parties. Chief Judge Martinez then turned to the claims between Western and Vigor. He denied Vigor summary judgment that Western had breached the towing agreement by failing to adequately perform its duties when it proceeded into Monterey Bay and stood by while the drydock sank in a marine sanctuary as the contract did not contain a requirement that the tug keep the tow in a safe place to sink. Chief Judge Martinez then addressed the knock-for-knock indemnity provisions in the towing agreement and held that claims arising out of or relating to damage to a party’s own property could not be recouped (such as Vigor’s loss of the drydock); however, that did not bar Vigor from recouping costs incurred as a result of Western’s negligent injury to third parties. With respect to Vigor’s claim that Western was negligent, Chief Judge Martinez declined to find that the last clear chance doctrine or THE PENNSYLVANIA Rule applied; however, he concluded that Western breached its duty of prudent seamanship as a matter of law when it allowed the drydock to sink in the marine sanctuary. Although Western objected that its crew was unaware that the drydock was inside the sanctuary and was unaware of the legal, environmental, or economic consequences of the sinking in the sanctuary, Chief Judge Martinez held Western was negligent as a matter of law with respect to its lack of cognizance of the vessel’s position in relation to the sanctuary. Western moved for reconsideration of the decision on the awareness of the tug’s crew of the sanctuary. Chief Judge Martinez recognized that there were factual disputes about whether the crew knew that the tug had entered a sanctuary, but it was their failure to be aware of the hazards presented by the sanctuary to a tug, together with their lack of positional awareness, that led to the finding of negligence. Additionally, Western argued that it was not negligent for the tug to release the line on the drydock while it was in the sanctuary as it was necessary to save the life of its crew in the emergency presented by the sinking drydock. Chief Judge Martinez responded that it was not the response to that emergency that was the source of the fault but the failure to exercise prudent seamanship in entering the sanctuary with a sinking drydock. See July 2021 Update.
Chief Judge Martinez conducted a bench trial of the case, and on the final day of trial, Western argued that Vigor was not entitled to recover damages on its counterclaim against Western because Vigor’s insurers paid for a portion of the damages Vigor incurred from its exposure to liability under the NMSA. After holding that Vigor was a real party in interest and could maintain the counterclaim, Chief Judge Martinez addressed the question of whether the collateral source rule applied when Vigor had been partially reimbursed for its losses and there was a waiver of subrogation in the towing agreement. Concluding that the payments were not “benefits from a wholly independent source which Vigor had the foresight to arrange,” Chief Judge Martinez held that the collateral source rule did not apply and that Vigor could not recover to the extent it had been paid by its insurers. See November 2021 Update. On December 16, 2021, Chief Judge Martinez issued his findings of fact and conclusions of law from the bench trial on the cross-motions of Western and Vigor for breach of contract and Vigor’s counterclaim for maritime negligence from the sinking of the drydock in the sanctuary. Chief Judge Martinez concluded that neither party could prevail on the claims for breach of contract, allocated fault for the sinking of the drydock as 60% to Vigor and 40% to Western, and awarded Vigor 40% of the $100,000 expended by Vigor to cooperate with NOAA. Western’s argument that it was entitled to recover the hire under the Tow Agreement was subject to an exception for loss arising from the negligence of Western. As Western’s negligence contributed to the sinking of the drydock, Chief Judge Martinez held that Western was not entitled to recover the contractual hire. Chief Judge Martinez denied Vigor’s counterclaim for breach of contract based on Western’s failure to render reasonable assistance when the drydock became disabled, rejecting the argument that the entry into the sanctuary with the sinking dock breached the contract, noting that the contract only required that Western either proceed to the nearest safe port or stand by the tow, and the standing by could occur in the sanctuary. Comparing the fault of the parties, Chief Judge Martinez found Western to be negligent in voyage planning and navigating into the sanctuary with the sinking drydock. However, he considered that Vigor’s fault saddled Western with a nearly impossible task of managing the unwieldy drydock that should not have been certified as suitable for tow under the circumstances. Consequently, he reduced Vigor’s recovery by 60%. See January 2022 Update.
After the six-day bench trial that resulted in Chief Judge Martinez dismissing Western’s claim for breach of contract and awarding Vigor $40,000 on its counterclaim for maritime negligence, Western and Vigor filed motions for attorney fees, each arguing that it was the prevailing party under the Tow Agreement (the “substantially prevailing party” was entitled to recover its reasonable legal fees and costs). Western argued that it was the “substantially” prevailing party because the court found Vigor was 60% comparatively negligent on its maritime negligence claim. Vigor argued that it was the “substantially” prevailing party because Western took nothing on its claims and Vigor received judgment in its favor of $40,000. Judge Martinez agreed with Vigor because it defeated all of Western’s claims and received a significant judgment in its favor and because Western did not prevail except to the extent that damages were not as high as prayed for. Thus, Vigor was entitled to recover reasonable attorney fees under the Tow Agreement. See July 2023 Update.
Both parties appealed, and Judge Fletcher, writing for the majority of the panel of the Ninth Circuit, first addressed the grant of summary judgment that Western was negligent in allowing the drydock to sink in the Sanctuary. Agreeing with Chief Judge Martinez that it was undisputed that the captain failed to understand the hazards presented by the Sanctuary to a tug towing a sinking drydock, Judge Fletcher affirmed the grant of partial summary judgment to Vigor on liability. Judge Fletcher then addressed Vigor’s argument that the collateral source rule allowed it to recover all of its mitigation damages ($415,441.67) even though it had been reimbursed by its insurance carrier for all but $100,000 of the expenditures. Judge Fletcher agreed with Chief Judge Martinez that the insurance policy was not a wholly independent source because Western had required Vigor to purchase insurance, and Western determined its fee based, in part, on Vigor purchasing insurance. Judge Fletcher did not disturb the allocation of fault, finding no clear error in Chief Judge Martinez’s findings, and he declined to address Western’s argument that the parties agreed in the Tow Agreement not to seek a negligence recovery for any insurance deductible, reasoning that the argument had been waived. Judge Fletcher did reverse the award of prejudgment interest against Western as it ran from the date that the drydock sank rather than from the date of the expenditures. Judge VanDyke dissented from the holdings that Western waived its argument that under the Tow Agreement the parties agreed to hold each other harmless for any portion of the other’s insurance deductible and would have concluded that the agreement held Western harmless for the portion of the deductible awarded by Chief Judge Martinez for Western’s negligence.
Susan Dorety brought this action in federal court in California alleging that her husband, Michael Dorety, contracted COVID-19 during a Hawaiian cruise on the GRAND PRINCESS, resulting in his death. The cruise was to celebrate their 40th wedding anniversary. She brought claims under state law and sought damages that included pecuniary loss and loss of society and loss of consortium. The cruise line moved to dismiss the claims under state law, arguing that they were preempted by the application of the Death on the High Seas Act. Judge Klausner conducted an evidentiary hearing on the issue of whether Michael contracted COVID-19 on the high seas and found that it was more likely than not that, considering his symptoms and incubation period, that the greatest likelihood of exposure was when the vessel was on the high seas. Accordingly, Judge Klausner held that DOHSA applied and preempted the state claims. When Susan declined to file an amended complaint, Judge Klausner dismissed the suit with prejudice. Susan appealed to the Ninth Circuit, which held that Judge Klausner erred in concluding that the cruise line had met its burden to show that Michael contracted COVID-19 on the high seas. Judge Klausner looked at evidence of Michael’s symptoms, possible sites of exposure, and the average incubation period. However, the Ninth Circuit held that he failed to account for symptoms other than fever, noting that he had loss of appetite, fatigue, trouble breathing, and a cough before his fever developed. If those symptoms were considered (occurring 5 to 6 days before the fever), the exposure would have been in the territorial waters of Hawaii. The fact that his fever did not occur until five days later did not undermine the likelihood that the earlier symptoms arose from his exposure to and development of COVID. Susan introduced evidence that Michael may have been exposed to COVID on the tender boat, and the cruise line’s expert could not eliminate that possibility. Calling the record inconclusive, the Ninth Circuit held that the party with the burden of proof, the cruise line, had to bear the consequences of failing to carry that burden. Finding clear error, the Ninth Circuit reversed the dismissal of the suit on the ground that the cruise line failed to establish that DOHSA applied.
On June 14, 2020, Captain Curtis Snyder was operating Intrepid Marine’s vessel when it collided with another vessel occupied by claimants, Nicholas Cachussie, Adrienne Cachussie, and Cheryl Watkins. Three days later, on June 17, 2020, claimants’ counsel sent a letter to Intrepid Marine explaining that counsel represented the claimants for losses sustained in the collision and that the collision caused significant injuries. The letter requested information on insurance coverage, including the amount of coverage, so that counsel could properly advise his clients of certain legal rights. The letter advised the owner not to discard or alter evidence, requested documents, and advised that the claimants would pursue legal remedies if evidence was spoliated. A second letter was sent to Intrepid’s insurer a few days later advising of the representation. It was more than six months later, however, on February 22, 2021, that Intrepid Marine filed this limitation action in federal court in Florida, and the claimants responded that the action was not filed within six months of written notice of a claim. Magistrate Judge Flynn recommended that summary judgment be granted to the claimants, concluding that the initial letter provided Intrepid Marine with notice of a reasonable possibility of a claim that exceeded the vessel’s value. Magistrate Judge Flynn found notice from seeking information related to a potential claim, placing blame on Intrepid Marine, requesting information about insurance, requesting production of documents, and requesting preservation of evidence “in very serious terms.” Intrepid appealed the recommendation to Judge Honeywell and argued that the letter did not make a claim, noting that there was no demand for any amount and no assertion that the claims could exceed the vessel’s value. However, Judge Honeywell agreed with Magistrate Judge Flynn that seeking information about a potential claim was sufficient, and she recommended entry of judgment in favor of the claimants that the limitation action was untimely. [Compare the analysis of the Ninth Circuit in Martz v. Horazdovsky, Nos. 20-35985, 21-15187, 2022 U.S. App. LEXIS 12536 (9th Cir. May 10, 2022) (discussed in our June 2022 Update), in which the appellate court held “the writing must convey to the vessel owner the claimant’s actual intent to initiate a claim”].
Judge Honeywell adopted the recommendation of Judge Flynn and dismissed the limitation action on December 8, 2022. Intrepid Marine filed a motion for reconsideration within 30 days of the final judgment, and Judge Honeywell denied the motion for reconsideration on August 22, 2023. On September 25 and September 27, 2023, Intrepid Marine filed notices of appeal to the Eleventh Circuit. On November 13, 2023, the Eleventh Circuit sua sponte dismissed the appeal as untimely, noting that the notice had to be filed within 30 days of the denial of reconsideration, which was September 21. The notices were late and could not invoke appellate jurisdiction.
From the federal district courts
On June 8, 2021, the MV REDONDO SPECIAL was operating in the Santo Monica Bay area of the Pacific Ocean when a passenger, Briana Brittain, claims to have suffered a personal injury. On March 30, 2022, counsel for Brittain made a policy-limits demand on the vessel’s marine insurer. On June 3, 2022, the owner of the vessel filed this limitation action in federal court in California, and the court issued a monition requiring claims to be filed by July 15, 2022. The vessel owner mailed a copy of the court’s notice to Brittain and published notice in the Los Angeles Daily Journal and the Daily Breeze. No claims were filed by July 15, and the court entered a default on July 20, 2022. The vessel owner moved for a default judgment as to non-appearing claimants, and the court granted the motion on August 29, 2022. More than a year later, on September 21, 2023, Brittain filed a motion to set aside the default judgment, arguing that she had provided evidence to the owner’s insurance carrier and its attorneys to support her claim prior to the filing of the limitation action and that she had exchanged emails with counsel for the vessel with respect to settlement both before and after the filing of the complaint. She argued that the communications and settlement negotiations constituted an appearance in the limitation action, which required the vessel owner to provide her with notice of the request for entry of the default judgment. She argued that the failure to provide her notice of the default was a violation of her right to due process. As her request was more than a year after the judgment, Judge Snyder held that her motion had to satisfy Rule 60(b)(4), requiring a lack of subject matter jurisdiction or personal jurisdiction or a denial of due process. Judge Snyder did not consider the lack of notice during participation in settlement negotiations to establish a violation of due process, and she found no justification for waiting a year after being provided actual notice. Judge Snyder was not willing to “unwind a complicated set of events” and denied the motion to set aside the default.
Joseph Pine served as a fireman on the USS CONSTELLATION between 1965 and 1967, working on pumps, generators, valves, and steam-driven machinery. He regularly installed and removed gaskets, exposing him to asbestos dust. He was diagnosed with malignant mesothelioma in 2015 and died a month later. His widow, Lydia Pine, brought this suit in the Philadelphia Common Pleas Court against several suppliers and manufacturers of asbestos-containing products. The case was removed to federal court, and John Crane is the sole remaining defendant. The federal court previously held that maritime law governed the case because Pine was a sea-based Naval worker, and the allegedly defective product was produced for use on a vessel at sea. The court also held that there was sufficient evidence to present a triable products liability case against John Crane. John Crane then moved for summary judgment on Lydia’s claim for non-pecuniary and punitive damages, arguing that they were not recoverable under maritime law and that Pennsylvania law did not apply. Judge Diamond reviewed the Jones Act, Death on the High Seas Act, and general maritime law, and he noted that Congress had deliberately created the distinction that survival damages were available in the employment context but not in other circumstances. Thus, Lydia was not entitled to maintain a survival action for Joseph’s pre-death pain and suffering or medical expenses. This preclusion also extended to punitive damages (except for willful failure to pay maintenance and cure), and Judge Diamond granted summary judgment on Lydia’s claim for nonpecuniary and punitive damages. As Pine was a seaman, Judge Diamond held that the remedies under the general maritime law could not be supplemented by remedies under state law. Finally, Judge Diamond addressed the issue of whether Lydia was entitled to a jury trial. The case was originally filed in state court and was removed based on diversity. Although maritime law was applicable, the independent basis for jurisdiction permitted the demand for a jury trial.
Patrick Burnett was employed by Premier Offshore Catering as a catering hand on the derrick barge THOR, owned and operated by the Thor Interests. As Hurricane Zeta approached Port Fourchon, Louisiana, the THOR sought safe harbor and was tied to the Martin Energy Services Dock No. 16 with its assist tug, CROSBY ENDEAVOR, operated by Crosby Tugs. The storm surge from the hurricane caused the THOR and CROSBY ENDEAVOR to break away from the dock on October 28, 2020 and to come into contact with other vessels and property along the Bayou Lafourche channel. Burnett and another Premier catering hand, Lewis Andrews, filed suit in Texas state court against Premier, the operator of the THOR, and others, and Burnett’s suit was removed to federal court where it has been stayed by the filing of limitation actions by the Thor Interests and by Crosby Tugs. Burnett filed claims in both limitation actions, and, beginning in December 2020, the Thor Interests requested that Burnett undergo an independent medical examination. However, Burnett has undergone at least four invasive surgeries, three of which occurred after the court ordered him to submit to a medical examination (five days after the order, Burnett allegedly underwent a five-level lumbar surgery, and he had two subsequent corrective surgeries). The Thor Interests and Premier then moved for sanctions. Magistrate Judge Roby noted that both Burnett and his attorney, J. Kyle Findley, had a duty to preserve evidence of Burnett’s back condition, and the duty arose when Burnett made a claim for cure and the THOR interests made the demand for a medical examination. As there was a duty to preserve the pre-surgical condition of his back, Magistrate Judge Roby addressed whether there was intentional spoliation of evidence of that condition when Burnett underwent surgery without having the requested and ordered IME, and she concluded that there was. She described the response of Burnett and his counsel to the defendants’ request: “However, rather than cooperate in the process, Burnett’s counsel challenged the request, the form of the evaluation, and in response to the Motion to Compel, filed a motion to bifurcate. This type of conduct disregards the Federal Rule of Civil Procedure 1, which requires cooperation in the discovery of evidence.” She found that the conduct “could not have been asserted for any reason other than intentional delay resulting in a change in Burnett’s presurgical condition” and she described the contention from Burnett’s counsel about the timing of the back fusion in short proximity to the court’s order (a “unique scenario that led to the surgery being performed days after the Court’s IME order”) to be “ludicrous.” The question was then presented whether there was prejudice from the spoliation. The defendants argued that Burnett’s physical condition had been irreversibly changed, resulting in a total of more than $1 million in medical expenses. Magistrate Judge Roby agreed that “prejudice abounds.” After finding that Burnett’s lawyer acted in bad faith, Magistrate Judge Roby considered whether Burnett acted in bad faith. She ordered a limited deposition of Burnett, and she found that portions of his testimony were “not accurate” and were “totally unbelievable.” She concluded that “Burnett’s counsel failed to uphold his duty of candor to the Court” and that “Burnett and his counsel’s deliberate and intentional disregard of this Court’s Order and their duty of candor, warrants sanctions.” Consequently, she recommended sanctions against Burnett and his attorney that the cost of the five-level laminectomy and fusion ($459,735) should not be recovered, that post-laminectomy procedures in the amount of $377,551.87 should not be recovered, that an adverse inference should be given regarding the precursor surgery ($142,828), and that attorney fees should be awarded to the Thor Interests and Premier for the filing of the motion for sanctions. See August 2023 Update.
Burnett advised the court that he had settled his claims with the parties who filed the spoliation/sanctions motion and that the motion was accordingly moot. The movants agreed to release and waive any claims that Burnett or Findley committed any sanctionable conduct. Findley urged the court to deny the spoliation/sanctions motion and to vacate Magistrate Judge Roby’s recommendation as the matter had been resolved. Judge Zainey agreed that the settlement did moot the issue whether elements of damages should be excluded as a sanction for spoliation. However, he noted that the sanctions arose from the bad faith violation and flouting of an order issued by a United States Magistrate Judge. Judge Zainey was “pleased that Burnett had managed to settle his claims against the THOR interests and Premier;” however, he emphasized that the “settlement does nothing to ameliorate the offense committed against the Court.” He added: “The Court remains persuaded that the bad faith conduct committed by Burnett and Findley—conduct that demonstrates an utter disrespect for the rule of law—merits sanctions that are not mooted simply because of the private settlement reached in this case.” Judge Zainey did not vacate Magistrate Judge Roby’s report and recommendation and instead adopted her decision. Judge Zainey advised that Magistrate Judge Roby “is certainly free to craft another form of sanction if she concludes that the settlement, which purports to include a release as to Findley too, would preclude the THOR interests and Premier from seeking attorney fees.”
Edward Barnett was piloting the MISS JUNE, a 24-foot work boat owned by Moran Environmental Recovery, in the Cooper River in North Charleston, South Carolina on the night of July 6, 2018, when it allided with a contraction dike owned and operated by the United States. Barnett was killed, and his personal representative brought this action in federal court in South Carolina against the United States, alleging that the navigation lights on the dike were not functioning properly at the time of the collision so that the dike was not visible to approaching boaters. A bench trial was held before Judge Norton, and the United States argued that the discretionary function exception to the Suits in Admiralty Act deprived the court of jurisdiction, arguing that the claim was based on discretionary actions of the United States in connection with the number, type, and characteristics of lighted aids to navigation on or near the dike. The plaintiff argued that, once the United States chose to install a system of aids to navigation near the dike, it was obligated to use due care in maintaining the lights. Judge Norton agreed that the discretionary function exception applied to the claims relating to background lighting, flashing rhythms, or candela, but that it did not apply to the government’s maintenance of the lights. Judge Norton noted that three of the four lights on the dike were operating, so that the dike’s extension into the river was well lit. Consequently, Judge Norton did not believe that the United States breached its duty to Barnett. He concluded that the failure to maintain the aid to navigation closest to the shore on the dike did not proximately cause the allision with the middle-to-far side of the dike where the lights were operating. Turning to the fault of the decedent, neither party directly addressed THE PENNSYLVANIA Rule, but Judge Norton concluded that the decedent posted crew member David Rafferty at the stern of the boat, rather than the bow, and that the decedent had not posted a proper lookout in violation of Inland Rule 5. Additionally, Judge Norton found that the decedent was proceeding at an unsafe speed, in violation of Inland Rule 6. These violations triggered application of THE PENNSYLVANIA Rule with respect to causation. Finally, Judge Norton applied THE OREGON Rule and its presumption that a moving vessel that allides with a stationary and visible object is at fault. Judge Norton found that the dike was visible, and that the decedent had knowledge of its existence and location as he had piloted that stretch of the river hundreds of times. Consequently, Judge Norton found the decedent was solely negligent for failing to comply with the statutory navigation rules and for failing to overcome the presumption from THE OREGON Rule, and he denied recovery to the plaintiff against the United States. See February 2023 Update.
The plaintiff moved for reconsideration of the court’s findings and conclusions, essentially rehashing arguments that were previously rejected by Judge Norton. Judge Norton aptly summarized his reason for denying the motion: “While Barnett disagrees with the court’s application of the discretionary function exception, the Oregon Rule, and the Pennsylvania Rule, and disagrees with the court’s conclusions as to breach of duty and superseding cause, mere disagreement does not support a Rule 59(e) motion.” Judge Norton did, however, grant the United States leave to file a late bill of costs, finding excusable neglect because the government attorney did not believe the bill of costs was due until after the ruling on the motion for reconsideration.
Tonzip Maritime sought to attach property of Coral Energy as security for its action (in the United Kingdom High Court of Justice) involving Coral Energy’s alleged breach of a charter for the carriage of oil from Russia to Turkey on Tonzip’s vessel. Tonzip brought this suit in federal court in California seeking to attach (pursuant to Supplemental Rule B) bank accounts belonging to Coral Energy that were held by garnishee ING Bank. Judge Calabretta initially denied the application for a writ of attachment because Tonzip failed to provide the court with evidence that Coral Energy, a Singapore company, had accounts with the bank that could be found within the district. Tonzip then renewed its application for a writ of attachment, citing evidence that the Bank has accounts for Coral Energy and that the bank has an agent located within the district. Once again, Judge Calabretta did not believe that Tonzip had established quasi in rem jurisdiction. The documentation of the accounts came from Ing Belgium, Brussels, Geneva Branch, located in Geneva, Switzerland. There was no indication that Coral Energy had an account in the district or even in the United States. And there was no evidence that the bank had any ties to the district beyond an agent for service of process. Therefore, Judge Calabretta declined to authorize issuance of the writ of attachment.
L3Harris entered into a fixed-price subcontract with BAE Systems to provide ship repair services to the U.S.S. VICKSBURG (BAE Systems was the prime contractor with the U.S. Navy). Beginning in March 2020, L3Harris’ performance of the subcontract was impacted by the COVID-19 pandemic, as BAE Systems directed L3Harris to continue performing the work, resulting in additional costs from COVID-19 testing, increased sick leave, protective measures, increased cleaning processes, and inefficiencies caused by social distancing. L3Harris claimed that its costs increased by $863,315.45 due to the pandemic. L3Harris also claimed that BAE Systems engaged in acts and omissions that interfered with the performance of the subcontract. L3Harris then brought this suit in federal court in Virginia against BAE Systems for the increase in expenses related to COVID plus costs related to the constructive changes to L3Harris’ performance due to BAE Systems’ conduct. BAE Systems filed a partial motion to dismiss, asserting that the claims for pandemic and delay-related expenses were not compensable because the subcontract was a fixed-price subcontract and L3Harris was only entitled to reimbursement if BAE Systems ordered changes to the scope of the work. L3Harris responded that the pandemic was an excusable delay so that compensation for the costs was allowed under a constructive acceleration theory (work is ordered to comply with the original deadline despite excusable delay being present). Although BAE Systems argued that L3Harris did not establish that BAE Systems had required L3Harris to meet the original schedule despite excusable delay, Magistrate Judge Krask held that L3Harris had sufficiently alleged, with reasonable inferences, that BAE Systems directed L3Harris to perform within the existing schedule, despite excusable delay, and that L3Harris had incurred increased costs as the result. Therefore, Magistrate Judge Krask declined to dismiss the claim for pandemic-related expenses. BAE Systems also sought dismissal of several claims based on constructive changes to the scope of the work under the subcontract. However, the basis of the claims was not a change in the scope of the work but, instead, claims that BAE Systems and its contractors committed acts or omissions that caused L3 Harris to encounter delays and increased costs. Although L3Harris argued that delays could constitute constructive changes to the work, Magistrate Judge Krask declined to hold that delay-related claims were compensable as constructive changes to the scope of the work, and he dismissed those claims.
Benicia Marina entered into a rental agreement in 1995 with Stephen David, owner of the M/V IDA LOUISE, by which Benicia Marina agreed to provide the vessel a berth at its marina in Benicia, California. David stopped paying the rent for the berth in January 2022 and owed more than $30,000 to Benicia Marina. Later in 2022, David sold the vessel to Lady Benjamin Philip Diaz Cannon. Benicia Marina then arrested the vessel in federal court in California in February 2023, and Lady Benjamin filed an answer and counterclaim (wrongful arrest and failure to maintain the vessel). Lady Benjamin did not post security to release the vessel, and Benicia Marina moved for an interlocutory sale, claiming that the vessel was subject to deterioration and the expense of keeping the vessel was disproportionate to the debt. Lady Benjamin opposed the sale, arguing that Benicia Marina had exacerbated the deterioration of the vessel and that the delay was not unreasonable. She argued that the arrest should be vacated because Benicia Marina did not provide her with notice of the debt, and she sought countersecurity in the event she was required to post security for the vessel. She also argued that David had tried to make rent payments, but Benicia Marina had refused to accept them. Judge Calabretta held a hearing and concluded that the arguments presented by Lady Benjamin did not deny the existence of a lien on the vessel and only went to the scope and amount of the lien. Thus, there was sufficient cause for the arrest of the vessel. As to Lady Benjamin’s argument that she had not received invoices or notice of the debt, Judge Calabretta answered that no notice was required because a maritime lien is a “secret” lien that “may operate to the prejudice of a bona fide purchaser without notice.” Judge Calabretta also noted that Lady Benjamin’s motion to vacate the arrest came after months of delay, which she attributed to housing insecurity after she was displaced from the vessel, which was her place of residence. She claimed that Benicia Marina’s intent in arresting the vessel was not so much to recover the debt but to displace her and the vessel from the marina because of the dilapidated state of the vessel and her living on the vessel without the marina’s permission. Judge Calabretta was not concerned with the motivation of Benicia Marina, however, as it presented a valid lien and was entitled to assert that lien on the vessel. Therefore, he declined to vacate the arrest. As to the request for an interlocutory sale, Lady Benjamin argued that she was attempting to repair the vessel and that its deterioration was caused by the neglect of Benicia Marina. Judge Calabretta answered that Lady Benjamin did not dispute that the vessel was deteriorating, and he added that the court’s order appointing Benicia Marina permitted basic maintenance and minor repairs but not major repairs. He concluded that the work performed by the marina was in line with the court order. As the vessel had incurred more than $20,000 in custodial expenses to date, as the value of the vessel in its deteriorating condition was probably as scrap, and as Lady Benjamin had made no effort to post security or secure the release of the vessel, Judge Calabretta ordered the interlocutory sale of the vessel.
“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.
Naval Logistics (d/b/a Middle Point Marina) brought this action in federal court in Florida to enforce a maritime lien for repairs to the vessel M/V FAMILY TIME, owned by Andrew Vilenchik. The dispute centered on whether the vessel’s condition was worse than what was disclosed, necessitating additional repairs. The vessel was arrested, and Naval Logistics 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 protect the vessel to protect its own recovery. Therefore, he declined to reconsider his order appointing the marina as substitute custodian.
J.K., a seven-year-old passenger on the GRAND CLASSICA, was injured when she was descending a ladder to exit from her bunkbed on the vessel and the ladder fell backward. An investigation revealed that the ladder had been improperly attached to the upper bunk. J.K sustained an ugly wound to her leg when her leg struck a metal component protruding from the side of the ladder, leaving a scar that Judge Dimitrouleas did not believe required further treatment after healing. After a bench trial, Judge Dimitrouleas agreed with the plaintiff that the ladder was not properly secured and constituted a dangerous condition. Although there had not been prior incidents of this type, Judge Dimitrouleas found that the cruise line had actual notice because its crew members assembled the bunk and saw its condition. They had placed the ladder in its position without removing the end table, as required in the instructions, which did not allow sufficient space to secure the ladder. Judge Dimitrouleas found that the dangerous condition was not open and obvious because the ladder appeared to be properly secured. Therefore, the cruise line was liable for failing to assemble the bunk bed in accordance with its instructions and failing to warn of the dangerous condition. Judge Dimitrouleas found no fault on the part of J.K.’s parents for failing to supervise J.K.’s use of the ladder or on the part of J.K. as she was properly facing the bunkbed when she tried to climb down the ladder before the ladder fell backward. He awarded damages for past medical expenses of $2,802.32, past pain and suffering of $40,000, and future pain and suffering of $20,000 (a total of $62,802.32).
The limitation actions brought by Skanska in connection with the damage to the Pensacola Bay Bridge and other property when its barges broke free during Hurricane Sally return to the Update (see September 2023, February 2022, September 2021, and August 2021 Updates). Claims were filed in the limitation actions (brought for the barges that broke loose and struck the bridge and other property) on behalf of the United States and others who sustained property damage from the barges and on behalf of economic loss claimants who sought to recover for the period that the bridge was out of service. Judge Collier of the United States District Court for the Northern District of Florida held a bench trial and found that Skanska was negligent and that it was not entitled to limitation of liability. Those decisions were affirmed by the Eleventh Circuit, and the claimants sought a total of $230,855.54 in costs. Magistrate Judge Cannon awarded the claimants $100,476.37.
After the denial of limitation, the first property damage case to go to trial in Florida state court resulted in a verdict on November 15, 2023 of $1.689 million to Deluna Oyster Co., owner of an oyster farm, which claimed that its crop of 800,000 oysters was destroyed by two of the Skanska barges that broke away. The jury found that Skanska owed $446,016 in property damage and $1,244,761 in lost revenue.
The liftboat SEACOR POWER capsized in the Gulf of Mexico during severe weather, resulting in damage to a pipeline owned by Energy XXI Pipeline. EPL Oil & Gas leases wells and platforms that are connected to the pipeline, and EPL owns hydrocarbons that are transported through the pipeline. Both entities are affiliates of Cox Operating, and other Cox Operating entities were involved in the maintenance and operation of the pipeline and the sale of the hydrocarbons. The owner and operator of the liftboat filed this limitation action in federal court in Louisiana, and Energy XXI Pipeline and other Cox affiliates brought claims for damage to the pipeline and losses resulting from deferred production of the oil. The owner of the liftboat moved for summary judgment that none of the claimants could bring a claim for economic loss because they did not have a proprietary interest in the damaged pipeline or had not sustained an economic loss. The owner of the pipeline, which sustained physical damage, did not own the oil. The entities that owned the oil, did not own the damaged pipeline. The entities that owned the oil argued that they had a sufficient proprietary interest in the pipeline to avoid the economic loss rule from Robins Dry Dock, but Judge Milazzo disagreed and held that the court would not ignore the corporate separateness of the different entities, reasoning that doing business as separate entities confers the benefit of limited liability for the entities, but does not allow them to be treated as a single entity in order to be able to recover economic losses for one entity when the physical damage was sustained by another entity.
The sinking of the 88-foot Leopard vessel PETRUS returns to the Update (insurance claims were discussed in the July 2023 Update). After the vessel sank in the Miami River, it was recovered and placed in dry storage. Middle Point Marina agreed with the vessel owner to tow the vessel to its shipyard in Miami, and the owner expected the vessel to be hauled out of the water on its arrival. There was a dispute over whether the vessel should be “washed” before haul out or “watched.” Two days later, the vessel sank. The shipyard salvaged the vessel and hauled it out of the water and blocked it on land at the facility. The vessel owner did not pay the fees owed to the shipyard, and the shipyard arrested the vessel. The owner filed a counterclaim for breach of contract/warranty of workmanlike performance and negligence, and the shipyard moved to dismiss the counterclaim. Judge Moore agreed to the dismissal without granting leave to amend, and the owner appealed. The Eleventh Circuit agreed that the counterclaim did not properly plead a case of breach of contract as it asserted a breach of an oral contract for allowing the vessel to sit unattended in the water, but the counterclaim did not allege that the shipyard agreed to watch or attend the vessel. The owner argued in response to the motion to dismiss that the counterclaim was meant to allege that the shipyard agreed to “watch” the vessel, but the counterclaim only alleged that the shipyard would “wash” the vessel and then haul it out. As there was no contract requiring the shipyard to watch or attend the vessel before it sank, the Eleventh Circuit agreed that there could be no claim for breach of an implied warranty. The appellate court rejected the argument that there must have been a breach of warranty to use reasonable care and skill to ensure the safety of the boat because the boat sank. The vessel owner pleaded the negligence claim in the alternative, in the event the court concluded that there was no contract. Although Judge Moore applied the economic loss doctrine to bar the negligence claim on the ground that there was a contract between the parties, the Eleventh Circuit did not have to decide that issue because the court concluded that the counterclaim failed to allege sufficient facts to show that the shipyard had a duty to protect the vessel from the injury caused by the second sinking and that the shipyard failed to do something in breach of such a duty. The allegation that the shipyard should have known that the vessel was liable to sink again, after having been salvaged, put back in the water, and towed to the shipyard, was insufficient when the complaint alleged that the vessel was going to remain in the water until it had been washed. The Eleventh Circuit noted that Judge Moore concluded that an amendment would be futile in denying leave to amend, but the appellate court held that Judge Moore had not explained why an amendment would be subject to dismissal. The Eleventh Circuit recognized that Judge Moore may have had good reason to be suspicious of the desire to substitute “watch” for “wash” in describing the contract, but the court could not say that the amendment would necessarily fail. Therefore, the case was remanded to Judge Moore to revisit the issue whether leave to amend should be granted. See October 2022 Update.
Although the shipyard argued that the vessel owner was only amending the complaint to change the word “wash” to “watch,” as discussed by the Eleventh Circuit, the owner asserted that the counterclaim should be amended to allege seven new claims, failure to place a watchman on the vessel, failure to properly watch the vessel, failure to act as a competent watchman, failure to call emergency services, failure to take steps to protect the vessel once it began taking on water, breach of a contractual duty to notify emergency salvage services and to conduct an emergency haul when the vessel flooded, and breach of a bailment duty. However, Judge Moore noted that the only request with respect to amendment was within responsive pleadings and was not in a motion to amend the counterclaim. Judge Moore stated that he need not grant leave to amend without a proper request, especially with facts that were present at the time the original counterclaim was filed. Therefore, he dismissed the counterclaim with prejudice with no leave to amend.
Keith Smith and Jacob Langley were killed when the recreational boat in which they were traveling struck an unmarked piling in the Lower Colorado River. Their beneficiaries brought this suit against the United States (and the Army Corps of Engineers and three government officials) in federal court in Texas under the Federal Tort Claims Act and the Army Maritime Claims Settlement Act. The defendants moved to dismiss the suit for lack of subject matter jurisdiction, and Magistrate Judge Edison recommended dismissal of the suit against the Army Corps of Engineers and the three officials as the United States is the responsible party. With respect to the “relatively obscure” Army Maritime Claims Settlement Act, Magistrate Judge Edison noted that the statute does not contain a private right of action or waiver of sovereign immunity. Therefore, he recommended dismissal of that claim for lack of subject matter jurisdiction. Turning to the Federal Tort Claims Act, Magistrate Judge Edison cited the requirement in the statute barring suit unless the plaintiff has filed an administrative claim with the appropriate federal agency and either obtained a written denial or waited six months after presentation of the claim. The beneficiaries did present administrative claims with the Corps of Engineers, but they filed suit a month and a half before the end of the six-month waiting period. Finding no “wiggle room” in the statute or cases, Magistrate Judge Edison held that a suit filed before the expiration of the six-month period is untimely and cannot become timely by the passage of time after the complaint is filed. Therefore, he recommended that the case be dismissed for lack of subject matter jurisdiction under the FTCA. Finally, Magistrate Judge Edison addressed the request of the beneficiaries that they be allowed to file an amended complaint because the six-month period had now expired. Citing decisions that Congress intended complete exhaustion before invoking the judicial process and that allowing an amendment “would render the exhaustion requirement meaningless,” Magistrate Judge Edison declined to permit an amendment to the complaint.
This case arose from injuries sustained by Michael Bohannon, Stephanie Dobner, and their minor children on the bank of the Colorado River near Bullhead City in Mohave County, Arizona, when Jason McDaniel, operating a personal watercraft owned by Bullhead & Laughlin Jet Skis, lost control of the watercraft, jumped off, and the unmanned craft allided with and injured the Bohannon family. The family brought suit in Arizona state court against McDaniel, Bullhead & Laughlin, and others, and Bullhead & Laughlin brought this limitation action in Arizona federal court. The Bohannon family then brought tort claims in the limitation action against Bullhead & Laughlin and its manager, Edward Washington, and against claimants in the limitation action, Mohave County and Bullhead City. The Bohannon family brought third-party claims in the limitation action, naming McDaniel, Travelle Dupree and Kellea Smith (who allegedly chartered the craft along with McDaniel), Golden Entertainment, Edgewater Gaming, and Regency Gaming (which allegedly employed Bullhead & Laughlin), and Prime Insurance Co. (which allegedly issued an insurance policy to Bullhead & Laughlin). Judge Tuchi questioned whether the court had jurisdiction over the claims brought by the Bohannon family and, after briefing, addressed the court’s jurisdiction against the parties named by the Bohannon family. The answer was easy for the claims against Bullhead & Laughlin and Washington as they are the claims for which Bullhead & Laughlin sought to limit liability. Mohave County and Bullhead City sought indemnity and contribution from Bullhead & Laughlin and Washington, and those were claims that would cause a multiple-claimant inadequate fund situation to arise. Therefore, Judge Tuchi held that the court had jurisdiction to adjudicate those claims. As to the Bohannon family’s claims against the other parties (non-vessel owners), Judge Tuchi noted that courts have power to adjudicate all of the claims against the claimants in the limitation action, so there was jurisdiction to hear the Bohannon family claims against Mohave County and Bullhead City. He considered the situation to be different, however, with respect to non-claimants, McDaniel, Dupree, Smith, Golden, Edgewater, and Regency. They did not submit themselves to the jurisdiction of the court bv filing a claim, and he held that the court did not have authority to adjudicate those claims in the limitation proceeding. That did not mean that the court would not consider the alleged negligent acts of the third parties in determining the fault and privity of Bullhead & Laughlin, leaving the court in the “impractical position” by which the Bohannon family will argue that the third parties were negligent but unable to recover against them unless they relitigate the same issues in state court. Accordingly, Judge Tucci decided to stay the limitation action to allow the Bohannon family to pursue their claims in state court against the third parties. That will create a record of evidence that can later be used in the limitation action against Bullhead & Laughlin. Finally, The Bohannon family asserted a claim for declaratory relief against Bullhead & Laughlin’s insurer, Prime. Prime denied coverage to Bullhead & Laughlin and instituted a declaratory judgment action against Bullhead & Laughlin in Utah state court. The Bohannon family asked Judge Tuchi to either declare that Prime wrongfully denied coverage or to stay the Utah state action and to require Prime to bring its claim in the limitation action. As the Bohannon family was not a party to the insurance contract and did not have a judgment against Bullhead & Laughlin, the family lacked standing to seek relief against Prime, and Judge Tuchi dismissed the claim. Nolting that the limitation action was stayed, Judge Tuchi declined to stay the Utah insurance proceeding and to require Prime to bring its claim in the stayed limitation action.
Passenger Carlene Canyes was injured on the CARNIVAL HORIZON when she bent down to retrieve a bottle that had fallen out of a refrigerator in her cabin and hit her head on a metal latch securing the upper berth to the cabin ceiling when she stood up. The cruise line moved to exclude Canyes’ experts and for summary judgment on all of the counts asserted by Canyes in her suit against the cruise line in federal court in Florida. For the count of negligent maintenance, Canyes argued that the cruise line created a dangerous condition in her cabin by leaving the upper berth in the down or open position, which created the risk that the passenger would strike her head. However, the evidence showed that bunk was left in the down position during the duration of the voyage and that there was no evidence that it was necessary to raise the upper berth daily to meet the standard of reasonable care. Accordingly, Judge Bloom dismissed the count alleging negligent maintenance. The cruise line moved to dismiss the count asserting that it breached its duty of reasonable care, arguing that it lacked notice of the dangerous condition posed by the latch. The cruise line claimed that there were no similar incidents in the past three years, but the corporate representative did identify an incident in which a passenger hit her head on a metal part of the bunk bed in her cabin while placing her luggage underneath the bed. The cruise line argued that the incident was not sufficiently similar to put it on notice of the danger with respect to the latch and the refrigerator in Canyes’ cabin but, analyzing the danger as hitting the passenger’s head on a metal component of bunk beds in the cabin, Judge Bloom considered the incidents to be sufficiently similar to deny summary judgment on the second count. With respect to negligent design, Judge Bloom held that the evidence that the director of the New Builds Department is “involved” with decisions about placement of the bunk bed and refrigerator to be sufficient to avoid summary judgment. Judge Bloom did grant summary judgment on the claim for negligent failure to warn, reasoning that any ordinarily prudent person would have noticed the latch and the danger it posed. It was therefore open and obvious, and the cruise line had no duty to warn of its danger. Judge Bloom then addressed the Daubert challenges to the passenger’s experts. She denied the challenges to the report of Dr. Nicholas D.A. Suite as the report was not in the record. She declined to exclude the testimony of neuropsychologist Cheri Surloff, who admitted that she is not qualified to opine on Canyes’ Diffusion Tensor Imaging evaluation, because she could rely on medical analysis of the evaluation. Judge Bloom declined to exclude the life care plan of Tamar Fleisher or the vocational testimony of Amanda M. Sizemore as their opinions were based on review of medical records and reliable methodology. As economist Kenneth Eugene Lehrer relied on the permitted opinions of Sizemore and Fleisher, Judge Bloom declined to exclude his opinions. Judge Bloom declined to exclude the opinion of Jose Pizarro that Canyes’ brain showed indications of a post-traumatic axonal shearing injury based on an analysis of diffusion tensor imaging, citing the decision of another judge in the district that DTI is a reliable method, especially when used in conjunction with other medical tests and assessments. Judge Bloom allowed the testimony of Roy Scott that the cabin did not comply with standards promulgated by the American Bureau of Shipping and the International Labor Organization, noting that the standards are “probative” of the standard of care, but she excluded his testimony that was based on a photograph of a cabin on a Disney Cruise Line vessel. Judge Bloom excluded the opinion of Melissa Ortiz-Becher, a clinical psychologist, on the causation of Canyes’ symptoms from the accident on the ship, concluding that basing the correlation on a temporal relationship between the accident and symptoms was unreliable and insufficient methodology.
Opinion Fowler, King, Daniels, Payton, and Robertson
Floyd Ruffin brought a Back-End Litigation Option suit against BP for exposure to harmful toxins while working as a clean-up worker, boom deployer, boom recoveree, and boom decontaminator for five months after the Macondo/DEEPWATER HORIZON oil spill. Ruffin presented the opinion of Dr. Benjamin Rybicki, an epidemiologist, with respect to causation for Ruffin’s diagnosis of Prostatic Adenocarcinoma, but Judge Lemelle held that his opinion failed to comply with the Fifth Circuit’s requirements because it did not provide an expert dose at the general causation level and did not provide an opinion on specific causation. Ruffin’s remaining expert was a toxicologist, Dr. James Clark. However, Judge Lemelle excluded his opinions because he made no harmful-dose or exposure-dose findings and did not evaluate general causation based on toxicity (disease association or the Bradford Hill factors). Instead, he provided a toxicity assessment based on EPA thresholds. As the exposure assessment report did not identify the level of toxins that is harmful and that could be associated with the symptoms, it failed the requirements to support general causation (he also did not provide an opinion on specific causation). Accordingly, Judge Lemelle granted summary judgment to BP.
Julian Fowler, Clifton King, Robert Daniels, Jr., Alexzander Payton, and Carrie Robertson claimed exposure to crude oil and dispersants from the DEEPWATER HORIZON/Macondo spill. These plaintiffs presented expert reports of Dr. Jerald Cook to support the general causation requirement for their claims. BP moved to exclude Dr. Cook’s opinions and, in the absence of expert evidence of causation, that it should be granted summary judgment. Judge Vance agreed and dismissed all of these suits. The plaintiffs moved for reconsideration, arguing that the court should not require Dr. Cook to identify a harmful level of exposure to particular chemicals that cause the conditions experienced by these plaintiffs, that BP had a duty to protect the cleanup workers and violated the duty (spoliation) by failing to conduct biomonitoring (based on the affidavit of Dr. Linda Birnbaum and explaining why there is inadequate data on causation), and that the GuLF study presented a reliable basis for Dr. Cook’s opinions. Judge Vance answered that these arguments had already been rejected and concluded that the plaintiffs’ “recitation of duplicative and meritless arguments that have already been exhaustively considered does not entitle [them] to a second bite at the apple.”
Nadya Sandoval was injured on Freedom Marine Sales’ pontoon boat in the navigable waters near Sanibel, Florida, and Freedom Marine Sales brought this limitation action in federal court in Florida. Freedom Marine Sales asked the court to issue its monition and injunction, but Magistrate Judge Dudek declined to do so, noting that the ad interim stipulation was deficient because Freedom Marine Sales promised to issue a letter of undertaking or deposit a surety bond following a demand by the claimant. Magistrate Judge Dudek noted that the same language was found to be insufficient by Judge Tuite in the Mongelli case (discussed in the September and October 2023 Updates), and denied the request, stating that Freedom Marine could refile the ad interim stipulation after correcting the deficiency, as Mongelli did. See November 2023 Update.
Freedom Marine then amended its petition with a statement of the value of its interest in the vessel, amended its ad interim stipulation, and submitted a letter of undertaking signed by a representative of insurer Chubb, guaranteeing payment up to the value of the vessel together with costs and interest at 6%. As the pleadings were now sufficient, Magistrate Judge Dudek approved the ad interim stipulation and ordered the issuance of the monition.
Taylor Energy was the lessee of Mississippi Canyon Block 20 in the Gulf of Mexico and the owner and operator of a platform on the lease that was connected to 28 wells. During Hurricane Ivan in 2004, there was a progressive seafloor failure that caused the platform to topple, resulting in the rupture of several wells and discharge of oil. Despite mitigation efforts, the Coast Guard determined that some of the wells were continuing to discharge oil in 2018 and continuing thereafter. Taylor Energy was designated as the responsible party under the Oil Pollution Act, and it spent more than $485 million at the direction of the United States to address the ongoing discharge. Taylor Energy engaged in extensive litigation with the United States and set aside approximately $666.3 million to address continuing pollution issues and decommissioning. Taylor Energy also litigated with its pollution insurers and entered into a settlement in connection with its 2004 pollution coverage. Between 2009 and 2018, QBE issued 9 pollution policies to Taylor Energy with per-incident limits of $35 million for offshore facilities. Taylor Energy reported no incidents to QBE under those policies. After the United States entered into a consent decree with Taylor Energy, the Coast Guard sent a letter to QBE demanding payment of $315 million (policy limit of $35 million for the nine policies from 2009 to 2018) based on unpaid removal costs. QBE then filed this lawsuit action against Taylor Energy in federal court in Louisiana (based on admiralty, the OCSLA, and federal question from OPA), seeking a declaratory judgment that there was no coverage under the policies for the removal costs claimed by the United States. Taylor Energy moved to dismiss the action for lack of a case or controversy, arguing that it had not made a claim under the policies and that QBE was merely seeking an advisory opinion to use as ammunition against the United States “under the guise of a non-existent controversy with Taylor.” Judge Zainey agreed with QBE that it had alleged a concrete injury as it faced exposure for millions of dollars under the policies. However, Judge Zainey agreed with Taylor Energy that the injury was not caused by Taylor Energy, which had settled with the United States and had not made any claim against QBE under the policies. Judge Zainey added that the lawsuit could not have been brought by QBE against the United States because of sovereign immunity, and that the United States would be free to re-litigate any adverse ruling as it was not a party to the action. Concluding that QBE did not have standing to bring this action and that any amendment to the pleading would be futile, Judge Zainey dismissed the complaint for lack of subject matter jurisdiction.
Zach Lewis and Ashley Whaley were allegedly injured when their fishing boat collided with Callan Marine’s dredge pipe near Galveston Bay. Lewis and Whaley filed suit against Callan Marine in state court in Galveston County, Texas, and Callan Marine filed this limitation action in Texas federal court. Lewis and Whaley filed claims in the limitation action, and a default was entered against any other claims on October 28, 2022. The parties proceeded through discovery for a trial date of November 13, 2023, and a pre-trial conference was held on October 16, 2023, in which the parties discussed trial procedures. The next day, October 17, less than a month before trial, the claimants moved to lift the stay, which was “vigorously” opposed by Callan Marine. Magistrate Judge Edison was sympathetic with Callan Marine’s situation, stating: “It certainly would have been more professional—not to mention courteous—for Claimants’ counsel to have filed, or at least mentioned, that they were contemplating moving to lift the stay at any point before, or during, our pretrial conference.” Callan Marine argued that Peninsula Marine, operator of the tug towing the dredge pipe, was a potential claimant that would have to approve the stipulations to lift the stay. Callan Marine reasoned that the claimants would “presumably join” Peninsula Marine in the state court matter as soon as the stay was lifted, and that Peninsula Marine would then “presumably file a claim in this limitation action.” Magistrate Judge Edison answered that the Texas two-year statute of limitations had run to add Peninsula Marine [in a maritime limitation case?], and, regardless, the claimants stipulated that they would not file claims against Peninsula Marine. Considering that stipulation to constitute a judicial estoppel, Magistrate Judge Edison held that the only claimants had properly stipulated to protect Callan Marine’s right to limitation and that the delay in moving to lift the stay was not a basis for declining to lift the stay. Magistrate Judge Edison described the argument that the claimants had submitted themselves to the federal court for two years was “a bit much protestation” as the claimants “were hauled out of their forum of choice into this court by Petitioner.” He stayed the federal suit unless and until the claimants receive a judgment in state court in excess of the limitation fund.
Canpotex Shipping, which chartered the M/V KAVO PLATANOS, contracted with O.W. Bunkers (U.K.) to have bunkers delivered to the vessel in Vancouver, Canada. O.W. Bunkers contracted with Aegean Maritime to deliver the fuel, which was accepted by the vessel’s chief engineer. O.W. declared bankruptcy, and Aegean Maritime was never paid for the bunkers. Aegean Maritime sent Canpotex a notice to pay for the bunkers, but Canpotex declined to pay Aegean. Aegean Maritime then brought this suit in federal court in Washington against the vessel, in rem, and against Canpotex and the owner of the vessel, in personam. The court authorized the arrest of the of the vessel (including the bunkers on the vessel) as well as a writ of attachment. Canpotex posted security to secure the release of the vessel. The federal court in Washington stayed the suit for six years pending resolution of similar cases in New York in which the courts generally held that under United States maritime law, subcontractors (like Aegean Maritime) did not have a valid lien unless they could show that O.W. Bunkers was acting as an agent of the vessel to engage specific subcontractors. On facts like those in the KAVO PLATANOS case, O.W. Bunkers was not considered an agent, and the subcontractor that delivered the fuel did not have a maritime lien. Canpotex moved to dismiss the complaint and for return of the security it posted (plus interest). Aegean Maritime focused on its in personam claims for breach of contract and unjust enrichment, arguing that Greek law applied to the claim for breach of contract. Canpotex responded that Aegean had filed suit in the Court of Piraeus and that the Greek courts had found that Aegean Maritime did not have a viable contract claim against Canpotex. However, the appeal of that decision was scheduled to be heard before the Greek Supreme Court on January 15, 2024. Judge Chun agreed that the case should not be dismissed before briefing addressed the decision of the Greek Supreme Court. Moreover, Judge Chun believed that Aegean Maritime had plausibly alleged an unjust enrichment claim under Canadian law. As Aegean Maritime had shown a reasonable probability of success on its contract and unjust enrichment claims, Judge Chun declined to vacate the attachment or return the security.
Steven Anthony Finch was a passenger on the CARNIVAL CONQUEST on a voyage from Miami, Florida to Cozumel, Mexico. Teven began suffering throat pain, inability to fully open his mouth, hypertension, and hyperglycemia accompanied by tachycardia. A nurse evaluated Steven in his cabin, but she did not elevate his treatment to a higher level. His symptoms worsened, and, after a second examination in his cabin, he was taken to the ship’s medical center where he was evaluated by a physician. He was monitored, but his condition worsened, and he was transported off the vessel and brought to a medical center in Key West before being transferred to a hospital where he died from cardiopulmonary arrest, aspiration pneumonia, sepsis, multiorgan failure, septal myocardial infarction, and three additional cardiopulmonary arrests. Steven’s widow, Shelly Dawn Finch, brought suit against the cruise line in federal court in Florida for failing to provide adequate medical care; negligence of the doctor, nurse, and medical staff; and negligent hiring and retention of medical personnel. The cruise line moved to dismiss the first and third counts (as shotgun pleadings that commingled multiple causes of action) and for dismissal of relief that was barred by the Death on the High Seas Act. Shelly argued that the first count was permissible because it alleged a single cause of action for negligent medical care that enumerated 27 breaches of the duty of care. However, Judge Bloom noted that several of the alleged breaches were elements of other causes of action, particularly negligent hiring and training. The count was an impermissible shotgun pleading because it alleged numerous and inconsistent breaches of duty for different causes of action with different elements, requiring different findings. Turning to the third count, negligent hiring and retention, Judge Bloom explained that these are different actions with different elements. Liability for negligent retention occurs after employment has begun when the employer should know of the employee’s unfitness but fails to take appropriate action. As the count comingled the causes of action, it was improper. Finally, citing the pleading that Steven was aboard an isolated vessel traveling across the Gulf of Mexico when he sought medical treatment, the cruise line argued that the relief sought (for pain and suffering, mental anguish, loss of capacity for enjoyment of life) and for a jury trial was barred by the Death on the High Seas Act. As Judge Bloom could not determine at the pleading stage whether DOHSA applied, she held that DOHSA did not currently bar the relief sought by Shelly.
Opinion negligence/unseaworthiness
Carlos Gonzales, a resident of Texas, alleges that he was performing dredging work for Weeks Marine as a deckhand on a vessel in Florida when he injured his shoulder, bicep, and neck, and that delayed medical treatment exacerbated his injuries. He brought this suit in federal court in Louisiana against Weeks Marine under the Jones Act and general maritime law. Weeks Marine moved to dismiss the suit for lack of personal jurisdiction based on Gonzales’ contentions that the dredging operation in Florida was not properly staffed and the workers were not properly trained and based on Weeks Marine’s claim that the safety decisions were made by its on-site project manager in Florida; however, Judge Fallon found the issues to be disputed and declined to dismiss the suit. See August 2022 Update. Weeks Marine then moved for partial summary judgment on the negligence and unseaworthiness claims, arguing that there was no negligence because the cause of Gonzales’ injury was his failure to require assistance with a task that Gonzales knew required more than one person, and there was no unseaworthiness because the vessel was not improperly staffed, the crew was not incompetent, and the crew was not engaged in an improper method for the work. Judge Fallon rejected the argument on negligence as Gonzales responded that he was sent to do a job he had not done before for Weeks Marine, he received no training or safety instruction, and he did not know the weight of the pin he was lifting until it was in his hands. Similarly, Judge Fallon rejected the argument on unseaworthiness based on Gonzales’ assertions about the unavailability of other crew members to assist and the violation of Weeks Marine’s buddy system. Weeks Marine also moved for summary judgment on Gonzales’ claims for nonpecuniary damages for past and future mental anguish and past and future bodily impairment and disfigurement, claiming that those damages were not recoverable in claims for Jones Act negligence and unseaworthiness, and on Gonzales’ claims for attorney fees and punitive damages for wrongful denial of maintenance and cure. As Gonzales represented that he no longer intended to seek non-pecuniary damages for mental anguish and scarring/disfigurement, Judge Fallon granted partial summary judgment on those damages. With respect to the claim for punitive damages/attorney fees, Gonzales alleged there was a three-day wait for his MRI scan and ten-day wait for Gonzales’ appointment with Dr. Crenshaw in Jacksonville, Florida, and that Weeks Marine declined to authorize surgery for his neck. Judge Fallon noted that the bar is high for punitive damages, requiring a showing of bad faith or arbitrary and capricious conduct, but the reasons for the delay were disputed, and Judge Fallon declined to grant summary judgment on that claim. As for the neck surgery, Weeks Marine obtained a medical examination that did not connect his neck injury with the accident. Judge Fallon agreed that it was not unreasonable to request a medical examination; however, he found disputed facts as to the records and reports upon which Weeks Marine relied to determine that the neck injury was unrelated. Therefore, he declined to grant summary judgment on the punitive damage claim.
Offshore Aviation bareboat chartered the M/V MEG L. SKANSI, an offshore supply vessel, from its owner, Skansi Marine. The vessel had been in “cold stack” in the Harvey Canal near New Orleans, Louisiana for about three years. Offshore Aviation needed a Coast Guard subchapter I vessel, and the MEG was a subchapter L vessel. After discussions about helping to outfit the vessel as a subchapter I vessel, Offshore Aviation communicated with outside vendors to procure the equipment to outfit the vessel for certification under subchapter I, and the final version of the charter party provided that the MEG would be delivered with a subchapter I certificate of inspection. After the expenditures by Offshore Aviation, the vessel received the subchapter I certification of inspection. The vessel did experience issues with its main engines and RPM performance, which Offshore Aviation paid to repair. At the expiration of the charter, the parties agreed to continue the charter on a month-to-month basis while the parties negotiated for an extension. Eventually, the parties entered into a new twelve-month bareboat charter, beginning on August 30, 2021, with revised terms, including optional extensions and a cancellation clause. In January 2022, Offshore Aviation became concerned that Skansi Marine was going to sell the MEG to a competitor of Offshore Aviation, so it decided to cancel the charter. Skansi Marine refused to accept the cancellation, insisting that the cancellation clause was not satisfied. Offshore Aviation sought to redeliver the MEG and performed work on the vessel based on deficiencies from the on-charter survey. Skanski Marine disagreed about what was required for redelivery, and its personnel and third parties performed work on the vessel. Skanski Marine brought this suit against Offshore Aviation in federal court in Louisiana, alleging that Offshore Aviation breached the charter party by prematurely cancelling the charter and by failing to return the vessel in the same condition in which it was chartered to Offshore Aviation. Skansi Marine sought $267,796.43 for the repair work on the vessel and lost profits of $1,062,675.25 for the loss of use of the MEG from May 1, 2022 until March 23, 2023 (325 days at $3,269.77 per day). Judge Ashe conducted a bench trial of the case and held that Offshore Aviation breached the charter party because the cancellation provision, read as a whole, was not triggered unless Skansi Marine disturbed the quiet enjoyment of the MEG. As the charter was not properly cancelled, even after the vessel was returned to Skansi Marine, Judge Ashe ruled that Offshore Marine owed charter hire at the contractual rate of $1,700 for the balance of the term of the charter (121 days until August 29, 2022)—a total of $205,700. Judge Ashe also found that Offshore Aviation breached the charter by failing to return the vessel in the same condition as in the on-charter survey, and he awarded $267,796.43 for the work performed by Skansi Marine. As the charter included language that Offshore Aviation was entitled to retain the rights to the equipment it installed on the MEG unless it notified Skansi Marine of its intent to abandon it, Judge Ashe held that Offshore Aviation was entitled to a credit of $123,800 for the equipment installed on the vessel. The contract provided that the “prevailing party” would be entitled to attorney fees. As both parties prevailed in some respects, Judge Ashe ordered the parties to provide briefing to address what portion of Skansi Marine’s costs and fees may be reasonably and equitably awarded in light of the issues on which it prevailed and those on which it did not.
Peter Rocco D’Ancona was the owner of the TALKIN TRASH. According to the pleadings, Town & Country Marina and Vic’s Marina East own and operate Town & Country Marina in Center Moriches, New York. Before June 30, 2018, the marina took possession of the vessel to conduct repairs, but they cracked or broke a hose that served to expel carbon monoxide from an onboard generator in the engine compartment. From June 30, 2018 to July 1, 2018, D’Ancona and Clemendina Sgambati were passengers on the vessel while it was docked at Slip 4 at Cherry’s Bar in Fire Island, New York. They allegedly died from carbon monoxide poisoning from gas that escaped from the broken hose. The D’Ancona Estate brought an action in New York state court against Town & Country, and the Sgambati Estate brought an action in New York state court against Town & Country and the D’Ancona Estate. The D’Ancona Estate then brought this action in federal court in New York seeking to limit its liability for the TALKIN TRASH. After the limitation court declined to stay claims against the non-vessel defendants, the D’Ancona Estate settled with the Sgambati Estate, and the D’Ancona Etate moved for summary judgment in the limitation action on Town & Country’s claims for contribution and indemnity. That caused the limitation court to ask for briefing on the admiralty jurisdiction for the limitation action. After determining that the locality test for admiralty jurisdiction was satisfied where the incident took place on a vessel docked on navigable waters, Magistrate Judge Scanlon considered the connection test and whether the possibility of an emergency response when a person is injured on a docked vessel may have the potential to disrupt maritime commerce. She noted that at least three circuits have relied on the potentially disruptive effect of a maritime emergency to sustain admiralty jurisdiction even when the activities or vessels were recreational. However, she added that the potential danger to shipping from a maritime emergency response may be more significant when the rescue is at sea than when the rescue is at the dock. In this case, Magistrate Judge Scanlon focused on the fact that the vessel was docked overnight, the passengers were presumably sleeping (they were not navigating the vessel), and there was no potential for damage or obstruction of other vessels (as there would be if the incident had been a fire, for example). Consequently, she recommended that the action be dismissed for lack of admiralty jurisdiction. However, if admiralty jurisdiction were found to exist in the case, she recommended that the contribution/indemnity claims against the D’Ancona Estate be dismissed under AmClyde based on the settlement between the D’Ancona Estate and the Sgambati Estate. See March 2023 Update.
The D’Ancona Estate objected to Judge Scanlon’s recommendation for the dismissal of the action for lack of admiralty jurisdiction. The Estate focused on the first prong of the connection test, whether, based on its general features, the incident has a potentially disruptive impact on maritime commerce. The Estate argued that the issue should be framed as whether a fatal machinery malfunction aboard a vessel at a commercial wharf carries the potential to disrupt maritime commerce. Judge Komitee rejected that framework as too general to capture the type of risks that the incident could pose, and the Estate then argued that, even with a more specific inquiry related to the carbon monoxide leak, there was a risk of explosion with a heavy concentration of the gas. However, the Estate only established a level of carbon monoxide sufficient to cause the deaths in the cabin. Any attempt to extend that level beyond what occurred to reach the level for a risk of explosion was rejected by Judge Komitee as nothing more than a “fanciful risk.” In the absence of evidence of how the leak carried the potential not just to harm those in the cabin but to disrupt surrounding maritime commerce, Judge Komitee held that the court lacked admiralty jurisdiction and dismissed the limitation action.
Gary Crothers, owner of Kohala Coast Enterprises, believed that he located a shipwreck covered by a coral reef in the near-shore waters of the Big Island of Hawaii. He brought this suit in federal court in Hawaii in 2012 seeking a determination that Kohala was the owner of the vessel or, alternatively, for a salvage award. The court appointed Kohala as the substitute custodian and ordered Kohala to refrain from touching the vessel until it obtained all necessary federal, state, and local permits. In the decade since then, Kohala has not made much progress in obtaining permits; however, the court declined to dismiss the suit in 2022 after Kohala received what it called a Nationwide Permit from the Army Corps of Engineers authorizing it to dredge or excavate approximately 10.7 cubic yards of material (that permit specifically noted that it did not obviate Kohala’s obligation to obtain other authorizations required by law before commencing work). In the following year, Kohala did not make any additional progress in obtaining permits, so Judge Mollway dissolved the order for the arrest of the vessel and for the appointment of Kohala as substitute custodian and dismissed the suit for want of prosecution.
Ashley Parkey purchased a half-day fishing trip for herself and her three minor children from Ryan S. Carter, a professional sports fisherman who operates as the managing member of Live Action Sportfishing, a sports fishing charter company in Key West, Florida. Carter took Parkey and her children fishing on the boat in the fishing flats near Key West, and Carter started dropping dead fish into the water to attract sharks. Parkey’s son, C.J.T., hooked a lemon shark, and Carter instructed C.J.T. to reach down and grab the shark’s fin so that Parkey could take a photo. The shark grabbed C.J.T.’s left hand with its teeth, resulting in a full or partial amputation of his left middle finger. Parkey brought this suit against Carter and Live Action, alleging eight causes of action that include intentional infliction of emotional distress, negligence, negligent training and supervision, and negligent infliction of emotional distress. The defendants moved to dismiss all the counts, and Judge Scola addressed the arguments for each of the counts. To sustain a claim for intentional infliction of emotional distress, Judge Scola held that the plaintiffs would have to establish outrageous conduct on the part of the defendants that went beyond all possible bounds of decency and was regarded as atrocious and utterly intolerable in a civilized community. Accepting the allegations as pleaded, Judge Scola reasoned that Parkey had alleged distressing events but not ones that rose to the level of outrageousness. Therefore, he dismissed the counts alleging intentional infliction of emotional distress. As to the counts alleging negligence, Parkey correctly stated a standard of reasonable care but then proceeded to allege a heightened duty. In response to the motion to dismiss, Parkey argued that the defendants did owe a heightened duty of care, which was not supported by the decisions of the Eleventh Circuit. Accordingly, Judge Scola dismissed the negligence counts to the extent they alleged a heightened standard of care but declined to dismiss them to the extent the alleged a standard of reasonable care. The claims of negligent infliction of emotional distress were brought by Parkey on her behalf and on behalf of her other two children. Parkey alleged that they were in sufficient proximity to the shark attack to bring the claims; however, Judge Scola did not believe that they were at immediate risk of physical harm from the shark (which remained in the water). Therefore, he dismissed the claims for negligent infliction of emotional distress. Finally, Judge Scola noted that the allegations did not demonstrate that the defendants’ conduct amounted to conscious disregard for the rights of others, which is necessary under the Eleventh Circuit’s Amtrack case for an award of punitive damages. Therefore, he struck all the claims for punitive damages.
Arnold L. Pritt and his wife, Ruth A. Pritt, brought this suit in Massachusetts state court, asserting that Arnold was exposed to the defendants’ asbestos products while he worked in shipyards and on ships at sea and in port during his employment by the Navy. The case was removed to federal court, and Ruth continued to prosecute the claim after Arnold died. Ruth sought to amend her complaint, and John Crane objected to her survival claim for pain and suffering and medical bills, her claim for loss of consortium and society in the wrongful death claim, and her claim for punitive damages for the wrongful death claim, arguing that they were not permitted by the Jones Act or the Death on the High Seas Act. Ruth argued that the Jones Act was not applicable because John Crane was not the employer of her husband and that DOHSA did not apply because Arnold’s injuries were indivisible between the high seas and territorial waters. Magistrate Judge Bowler agreed with Ruth on both points, stating that the Jones Act did not apply because the complaint was against a product manufacturer and not Arnold’s employer [contrary to Scarborough v. Clemco Indus., 391 F.3d 660 (5th Cir. 2004)], and that DOHSA did not limit the recoverable damages when the exposure to asbestos occurred on the high seas and in territorial waters. Finding no overlap between statutory and decisional law, Magistrate Judge Bowler held that punitive damages and damages for loss of consortium could be recovered by Ruth under the general maritime law and that there were “no established and inflexible rules that would convince [her] to withhold the remedies sought by plaintiff under the Massachusetts wrongful death statute.” Finally, reasoning that “it makes little sense to recognize plaintiff’s right to wrongful death damages but strip her of the rights that were afforded to her husband prior to his death,” Magistrate Judge Bowler held that a survival remedy was available in this case. See August 2023 Update.
John Crane objected to the recommendation, and Judge Gorton began by addressing whether there was a survival remedy. Citing Batterton, John Crane argued that recognition of the remedy should be left to Congress, but Judge Gorton disagreed, noting that the Jones Act (allowing) and Death on the High Seas Act (not allowing) were not in conformity. Therefore, there was no controlling precedent after Batterton, and Magistrate Judge Bowler’s recommendation was not clearly erroneous or contrary to law. John Crane objected to the recovery for loss of consortium and punitive damages, and Judge Gorton reasoned that Magistrate Judge Bowler’s logic in distinguishing Miles “flouts Batterton’s holding, which directs courts to ‘look primarily to . . . legislative enactments for policy guidance.’” He set aside the ruling on loss of consortium, stating that “permitting plaintiff to seek damages for loss of consortium would undermine uniformity between maritime statutory law and maritime common law and would ignore the Supreme Court’s ruling in Miles.” He set aside the ruling on punitive damages “because Miles forecloses the award of punitive damages in wrongful death claims brought pursuant to general maritime law.” See November 2023 Update.
Ruth moved the district court to certify, for an interlocutory appeal, the decision that she was not entitled to recover punitive damages or loss of consortium under the general maritime law. Judge Gorton declined to do so, stating that a decision on damages would not resolve the litigation and would only partially impact the damages phase of the trial. Therefore, he did not consider the dispute over damages to be a controlling question of law for which certification was proper.
Gulf Island Shipyards contracted with Wärtsilä Defense to purchase a propeller shaft to be used for a construction project for the U.S. Navy. Wärtsilä Defense contracted with Martin Bencher to arrange for the shipping of the cargo from Trieste, Italy to New Orleans, Louisiana, and Martin Bencher issued a Combined Transport Bill of Lading for the shipment (naming Wärtsilä Defense as the shipper and Gulf Island as the consignee). Martin Bencher then contracted with Mediterranean Shipping Co. (a vessel operating common carrier) to transport the propeller shaft. MSC issued a Sea Waybill for the shipment, identifying Martin Bencher (Scandinavia) as the shipper and Martin Bencher USA as the consignee. The shaft was damaged when it was dropped during its discharge from the vessel in New Orleans, and Gulf Island initiated this suit against MSC in federal court in Louisiana based on the Carriage of Goods by Sea Act, alternatively the Harter Act, and, alternatively, negligence/bailment. MSC moved to transfer the case to New York based on the forum-selection clause in the Sea Waybill, and Judge Lemmon transferred the case. Gulf Island added Martin Bencher as a defendant for the same causes of action and added a claim for breach of contract that Martin Bencher failed to obtain insurance on the cargo. Martin Bencher moved for summary judgment on the COGSA/Harter/negligence claims based on the one-year statute of limitations in COGSA, and Gulf Island responded that it was too early to determine what law applied to the claims. As the complaint alleged that the damage occurred while the shaft was being discharged from the vessel, however, Judge Vyskocil held that COGSA, not the Harter Act, applied, and that COGSA preempted the state negligence/bailment claim to the extent it would have a longer statute of limitations than COGSA. As the amended complaint naming Martin Bencher was filed more than a year after the discharge, Judge Vyskocil held that the COGSA claim was time-barred unless the amended complaint related back to the filing of the original complaint (Gulf Island did not claim there was a mistake in the parties’ identity that would allow a relation back). Similarly, the amended complaint did not allege grounds for applying equitable estoppel for the negligence claim. As to the claim against Martin Bencher for breach of contract for failing to procure required insurance, Judge Vyskocil found the allegations failed to identify any provision containing the requirement and that the pleading was entirely conclusory. Therefore, she dismissed that claim without prejudice. MSC moved for partial summary judgment that its liability was limited by COGSA’s package limitation to $1,500, as the Sea Waybill identified three packages. Gulf Island invoked the “fair opportunity” doctrine (that it did not have the opportunity to declare a higher value, citing the Waybill that was attached to MSC’s motion for summary judgment. In its reply, MSC attached a version of the Waybill which presented the opportunity to declare a higher value, and Judge Vyskocil noted that it appeared to be fatal to Gulf Island’s argument. Considering the different versions of the Waybill that were submitted, Judge Vyskocil found a fact dispute that would have to be resolved and that precluded summary judgment. See May 2023 Update.
MSC moved for reconsideration, arguing that there was no genuine dispute that the MSC Waybill that was filed with its reply brief was the operative version of the Waybill and that version clearly limited recovery to $500 per package (alternatively, MSC moved to refile its motion for partial summary judgment to include the Waybill that was attached to the reply with declarations attesting that it is the operative version of the Waybill). MSC argued that the complete version of the Waybill (the critical third page was missing from the initial filing) was not available until the filing of its reply brief, but Judge Vyskocil responded that MSC’s story did not “add up.” She noted that the versions of the Waybill differed in various ways, not just the missing page, and MSC did not attempt to explain the differences. Thus, she was left unable to determine what shipping documents “were provided to what parties and when.” Judge Vyskocil noted that it might turn out that MSC was correct about which Waybill governed, but she could not decide that based on what had been presented. She then chided MSC, stating: “While MSC complains that the issue could be resolved more efficiently at the summary judgment stage, MSC squandered that opportunity by electing to file a premature motion, which was based entirely on a document that MSC now claims (without any support) to be defunct.” She continued: MSC should not have filed its motion, and wasted the resources of its adversary and this Court until it had done its diligence and obtained the as-issued MSC Waybill. The Court will not give MSC another (unjustified) bite at the apple.” See July 2023 Update.
In answer to MSC’s counterclaim, Gulf Island filed a Rule 14(c) tender of the counterclaim to Martin Bencher, which was already named as a defendant in the suit by Gulf Island and which was the subject of a crossclaim from MSC. Martin Bencher moved to dismiss the tender, arguing that it was improper because it remained a party to the lawsuit on the crossclaim. Gulf Island argued that the tender was proper because Gulf Island was not a party to the MSC Waybill upon which MSC based its counterclaim against Gulf Island and that Gulf Island was tendering that counterclaim to Martin Bencher, which was a party to the contract. As the same result could be reached by a crossclaim, Judge Vyskocil held that Gulf Island failed to state a claim under Rule 14(c) because it asserted the claim against a third-party defendant that was already a party to the action. As the proper mechanism by which to claim against Martin Bencher with respect to MSC’s counterclaim against Gulf Island was a crossclaim, Judge Vyskocil granted Gulf Island leave to amend its answer to MSC’s counterclaim.
KLM Consulting, a Wyoming limited liability company headquartered in Texas, exports products from Texas to Douala, Cameroon. KLM arranged with Maersk Agency, the general agent in the United States for ocean carrier Maersk A/S to ship personal property from Houston to Cameroon. The cargo arrived in the United Arab Emirates and did not arrive until months later in Cameroon. Claiming that the delay resulted in lost revenue of $250,000, KLM brought suit in Texas state court against Maersk Agency, and the freight forwarder, Panacea Shipping. Maersk Agency removed the case to the federal court in Texas, and Judge Hittner held that the case was removable under COGSA, which governed the claim for delay. He transferred the case to the federal court in New York, in accordance with the forum selection clause in the Sea Waybill issued by Maersk, and Maersk Agency moved for summary judgment based on the provision in the Sea Waybill that prohibited any claim against any agent of the carrier (the Sea Waybill even identified Maersk Agency as an agent of the carrier, Maersk A/S). KLM did not oppose the motion, and Judge Engelmayer agreed with Maersk Agency and held that KLM’s case against it failed as a matter of law.
Karen Donnelly was a passenger on the HARMONY OF THE SEAS. She was injured on the cruise line’s private island in The Bahamas, Coco Cay, when she was struck by a motor scooter that was rented to another passenger, Carmen Aponte, who was 84 years old, frail, and who allegedly suffered from early signs of dementia and lacked the dexterity to operate a motorized scooter. Donnelly brought this action in federal court in Florida against the cruise line and the companies that rented the scooter to Aponte, and the cruise line moved to dismiss the complaint for comingling causes of action for direct negligence and vicarious liability and for comingling causes of action for negligence and design/manufacturing defect. Chief Judge Altonaga disagreed and held that the claims against the cruise line were sufficiently pleaded. The scooter defendants argued that Donnelly had not properly pleaded the duty owed or causation for a negligence claim. Chief Judge Altonaga disagreed, reasoning that Donnelly plausibly alleged that the scooters created a general zone of foreseeable danger of harm to cruise ship passengers walking near them and that, consequently, the defendants owed the passengers a duty of reasonable care. The breach was established by the defendants’ renting the scooter despite the warning to customers on their website advising against renting if they have not previously used one or felt uncomfortable using the joystick. Finally, the scooter defendants argued that the claim for vicarious liability against the scooter defendants was not appropriate because the scooter was not a dangerous instrumentality and instead was a “benign device” that traveled at “incredibly low rates of speed.” Chief Judge Altonaga declined to dismiss that count, answering that the argument presented a question to be developed on a more complete factual record.
The insurance and contractual issues in this case arise from the claims of Devin Barrios, an employee of Centaur, who was injured while offloading a generator from River Ventures’ vessel in connection with the construction of a concrete rail by Centaur on United Bulk Terminals’ Dock in the Mississippi River. Barrios brought suit against River Ventures and Centaur, resulting in a judgment in favor of Barrios against River Ventures under Section 5(b) of the LHWCA. River Ventures sought indemnity and additional insurance (as a contractor of UBT) from Centaur pursuant to the Master Service Agreement between Centaur and UBT that applied to the construction of the rail. The dispute raised the question whether the contract was maritime or subject to Louisiana law. In the wake of the decision of the Supreme Court in Kirby and the decision of the en banc Fifth Circuit in Doiron, Judge Milazzo applied a three-part test (first enunciated by Judge Rosenthal in Texas) to determine if a non-oilfield contract is maritime: did the work performed under the contract involve maritime commerce, did it involve work from a vessel, and did the contract provide or did the parties expect that a vessel would play a substantial role in completing the contract. Applying the first prong of that test, Judge Milazzo held that the contract was a land-based contract so that Louisiana law applied, and the indemnity and additional insured provisions were invalid under the Louisiana Construction Anti-Indemnity Act. The Fifth Circuit disagreed with the three-prong test applied by Judge Milazzo and adopted the test proffered by River Ventures that, in order to determine if a mixed-services contract is maritime, the “contract (1) must be for services to facilitate activity on navigable waters and (2) must provide, or the parties must expect, that a vessel will play a substantial role in the completion of the contract.” Judge Smith rejected a separate initial test whether the contract involved maritime commerce as that is what the two prongs of Doiron, as extrapolated in Barrios, were designed to determine. Judge Smith then determined that the test was satisfied in this case as the dock was over the Mississippi River, and the vessels involved in the construction (and the accident) were on navigable waters. The contract also required substantial use of vessels as Centaur’s bid expressed that the price for the work was “significantly higher” because of the necessity of vessels in the project, and Centaur’s project manager admitted that the work could not have been done properly without a crane barge. The fact that Centaur’s workers, like Barrios, may have performed a majority of their work on the dock did not alter the conclusion that the parties expected a substantial role for vessels in the construction. (See December 2019 Update).
On remand, River Ventures and its insurer, XL Specialty, and Centaur and its insurer, Travelers, disputed the insurance coverage for River Ventures under the Travelers P&I policy and whether Centaur breached the contract if the Travelers’ policy did not afford coverage to River Ventures. Travelers argued that the P&I policy excluded coverage for Barrios’ injury because it contained a crew/employee exclusion for “injury of any crew, seaman or other employee of the Assured regardless of whether they be employees of the Assured or any Additional Assured named in the Policy.” River Ventures argued that “the Assured” referred to the particular insured against whom a claim has been asserted and did not apply to Barrios’ claim against River Ventures. Travelers argued that “the Assured” referred to Centaur so that the exclusion excluded claims for injuries to Centaur employees against River Ventures. Judge Milazzo agreed with Travelers that the exclusion unambiguously excluded Barrios’ claim against River Ventures as he was an employee of Centaur. With that ruling, River Ventures argued that Centaur had breached the MSA because Centaur was required to obtain a P&I policy of “not less than the P&I SP-23 (revised 1/56) form of policy or its equivalent” and that form insures the crew and injuries to third parties without a crew/employee exclusion. Despite that language, Centaur argued that the MSA required Centaur to obtain a maritime employers liability endorsement to its workers’ compensation policy that would cover the crew. Considering the MSA provisions to be ambiguous, Judge Milazzo held that summary judgment was not proper on River Ventures’ claim for breach of contract against Centaur. See August 2021 Update.
River Ventures and XL appealed to the Fifth Circuit, arguing that the language of the exclusion in Travelers’ policy was ambiguous because it contained superfluous or redundant language, the interpretation suggested by Travelers conflicted with other provisions of the policy, and the interpretation conflicted with the requirements of the Master Service Agreement of which Travelers was aware because its additional insured provision incorporated the requirement from the Master Service Agreement. Substituting the names of the parties into the exclusion would provide that the policy excluded any crew, seaman, or other employee of Centaur, regardless of whether they be employees of Centaur or River Ventures. The Fifth Circuit recognized that the Exclusion “could have been written more efficiently” and that its use of “the Assured” was “certainly awkward.” However, the appellate court believed that the Exclusion unambiguously precluded coverage for all employee claims, regardless of whether the entity seeking coverage was the employer of the injured employee. As Barrios was an employee of Centaur, the court held that the Exclusion applied to preclude coverage for Barrios’ claim against River Ventures, even though Barrios was not an employee of River Ventures. To the extent that the Travelers policy did not afford the coverage required in the Master Service Agreement, the court held that the policy controlled and remanded the case to the district court to address River Ventures’ claim against Centaur for breach of contract. See May 2022 Update.
On remand, Judge Milazzo held a bench trial on the claims of River Ventures and XL that Centaur breached its contract (to which River Ventures was a third-party beneficiary) by failing to obtain a P&I policy that included crew/employee liability coverage that would extend to the claim of Barrios against River Ventures as an additional insured and member of the defined “UBT Group.” Judge Milazzo previously found the requirement that Centaur obtain P&I coverage of “not less than the P&I SP-23” to be ambiguous. Therefore, she allowed expert testimony on whether Centaur was required to obtain a P&I policy that included crew coverage. As there was crew coverage in the workers’ compensation/employers liability policy for Centaur and UBT (which did not extend to River Ventures), Judge Milazzo found that the parties could not have intended there to be duplicative crew coverage in the P&I and employers liability policies. Therefore, in order that there not be duplicative coverage for Centaur and UBT, she held that the parties intended there to be no coverage for the crew on the P&I policy that afforded additional insurance protection to River Ventures. And the requirement of the equivalent of the coverage in the SP-23 form, whose first coverage grant is for injury to any person, is subject to modification, and does not mandate coverage for injuries to any person if that person is a crew member.
Niranjana Trivedi, a passenger on the QUANTUM OF THE SEAS, claims that she was injured by an aggressive massage method in which the masseuse in the Vitality of the Sea Spa used her elbow to apply excessive force while massaging Trivedi. Trivedi brought this suit against the cruise line and spa operator in federal court in Florida with counts of negligence against the cruise line and spa operator. More than a year after the incident, Trivedi filed an amended complaint that added a count of battery against the spa operator. The defendants moved to dismiss the complaint. Judge Bloom held that the complaint adequately alleged negligence of both defendants (alleging that the masseuse was an agent/employee of the cruise line in one count and an agent/employee of the spa operator in another count). Judge Bloom then considered whether the battery count was timely because it was filed more than a year after the incident. As it arose out of the same conduct or occurrence as the original complaint and did not contain any new allegations that would prejudice the defendant, Judge Bloom held that the battery count related back and was timely. The spa argued that the pleading did not allege that the battery occurred in the course of employment, but Judge Bloom held that it was sufficient that the count alleged that the masseuse was working in the spa aboard the vessel. However, even assuming that the alleged battery was outside the scope of the masseuse’s employment, there was authority that it was not necessary that the passenger allege the tort occurred within the scope of the employee’s employment because the cruise line is a common carrier and the tort occurred during the “contractual period.” Therefore, Judge Bloom declined to dismiss the battery claim.
Archie Slater was employed on a floating production storage and offloading unit (FPSO), the TURRITELLA, located in the Gulf of Mexico off the coast of Louisiana, and was injured while aboard an emergency rescue craft during abandon-ship drills. Slater brought this action in federal court in Louisiana against Crowley Marine, Shell Offshore, and Marine Management Services, seeking to recover as a seaman for negligence, unseaworthiness, and maintenance and cure, alleging that the defendants were his employers and the owners/operators of the TURRITELLA. The day before Slater filed this action, Marine Management Services filed suit against Slater in federal court in Alabama (where Slater lives) seeking a declaratory judgment with respect to its maintenance and cure obligations to Slater. Marine Management moved to transfer the Louisiana suit to the federal court in Alabama, citing the first-to-file rule when related cases are pending before two federal courts. Analyzing whether there was a substantial overlap between the cases, Judge Morgan considered the “core issue” in the Louisiana case to be the injuries Slater allegedly suffered on the TURRITELLA and that the Alabama suit sought a declaratory judgment as to the maintenance and cure owed for the same injuries. The Louisiana case involved additional parties and additional claims, but all of the claims arose from the same core issue. As there was a substantial overlap in the cases, Judge Morgan ordered the Louisiana case transferred to the federal court in Alabama.
Kevin Hobbs injured his back while employed by American Commercial Barge Line as a deckhand on the M/V BOB STITH in St. Louis, Missouri, when he picked up a heavy wire spool to make a tow and slipped, asserting that there was no nonskid surface. Hobbs continued working on other vessels, reporting pain with inconsistent statements about the cause. Three years after the first incident, Hobbs brought this suit in federal court in Indiana, based on diversity, asserting claims for negligence under the Jones Act and unseaworthiness and maintenance and cure under the general maritime law (including a claim for punitive damages for willful and arbitrary denial of maintenance and cure). ACBL moved for partial summary judgment, arguing that Hobbs was not entitled to maintenance and cure because he intentionally concealed pre-existing back injuries (citing McCorpen) and on his claim for punitive damages. Before he was hired, Hobbs underwent a pre-employment physical and an assessment of his fitness for duty. He provided his medical history on a form supplied by an assessment provider and on a Coast Guard Application for Merchant Mariner Medical Certificate, circling “N” when asked about prior back, neck, or head injuries. ACBL introduced evidence that Hobbs had been evaluated for back pain on three separate dates in relation to a fall and a subsequent vehicular accident and argued that the concealment of his pre-existing back condition was material to its decision to hire him. Hobbs responded that he was not guilty of intentional concealment because the conditions did not require serious treatment, that ACBL would have hired him anyway because he was cleared for full duty, and that evidence that the injuries were to the same general part of his body was not the same as proof that the current claims were manifestations/aggravations of the old injury. Chief Judge Pratt believed that the decision was “a close call,” but she believed that Hobbs presented a fact question. She noted that the evidence from ACBL only stated that had Hobbs disclosed his prior back condition, “this information would have been material to [its] decision to hire [him].” She concluded that there were questions as to whether ACBL would have permitted Hobbs to work or continue to work had the disclosures been made. Chief Judge Pratt reached a different result in connection with ACBL’s argument that Hobbs could not recover punitive damages because ACBL acted in good faith in reliance on Hobbs’ own statements and representations. Hobbs did not present evidence that ACBL’s decision was arbitrary and capricious and instead argued that the court should deny the motion because the obligation to pay maintenance and cure was continuing and he should be able to seek punitive damages at trial. Considering the failure to present evidence to support punitive damages to be fatal to the claim, Chief Judge Pratt dismissed the claim for punitive damages with prejudice.
Omni2Max worked with Ocean Services to obtain a maritime contract with the federal government. Omni2Max served as the prime contractor on bids because of its security clearance and experience, and Ocean Services provided maritime experience and vessels. Omni2Max chartered the M/V OCEAN VALOR from Ocean Services using a BIMCO time charter party contingent upon award of a Military Sealift Command contract to Omni2Max, and Omni2Max was eventually able to obtain the MSC contract, but there were differences between the MSC contract and the BIMCO charter that created a conflict between Omni2Max and Ocean Services. The MSC contract required the hiring of a vessel coordinator, Hairston Hamby. Ocean Services, which was required to provide the crew under the BIMCO time charter, denied that it was obligated to pay for the vessel coordinator, who provided no services contemplated under the charter party. Under the MSC contract, the government considered the vessel off hire when there was an engine malfunction, but Ocean Services charged Omni2Max daily charter hire during that period. Ocean Services filed this action in federal court in Washington, seeking a declaratory judgment that Omni2Max owed all of the amounts under the terms of the time charter and that the time charter did not incorporate the terms of the MSC contract. The parties filed cross-motions for summary judgment, with Ocean Services arguing that Omni2Max should pay its invoices in accordance with the BIMCO charter and Omni2Max arguing that the MSC contract was incorporated into and amended the terms of the BIMCO charter. Reasoning that the BIMCO charter’s terms hinged on the execution of the MSC contract and that Ocean Services had notice and sophisticated knowledge of the terms of the MSC contract, Judge Chun held that the MSC contract was incorporated into the BIMCO contract, the contracts would be construed together, and Ocean Services was bound by the terms of the MSC Contract.
Alain Rioux, parent of minor K.R., brought this action in federal court in Florida against the cruise line for the alleged sexual assault of K.R., a passenger on the CARNIVAL HORIZON, by a crew member on the vessel. The cruise line asserted fourteen affirmative defenses, and Rioux moved to strike six of the defenses for failure to give notice of a plausible basis for the defense. Judge Bloom declined to strike the defense that the incident was the result of an intervening and unforeseeable criminal act by the crew member. She noted that intervening or superseding cause is a valid affirmative defense and that, despite the evidence that the cruise line was on notice of a serious problem with assaults in the cruise line industry, the issue of foreseeability was a fact question to be presented with a motion for summary judgment or at trial. Judge Bloom did strike the defense that the assailant was acting outside the scope of his employment, holding that the defense was invalid as a matter of law because the cruise line is strictly liable for an assault on a passenger by a crew member (noting that the complaint alleged intentionally tortious conduct of the crew member and negligence of the cruise line in failing to enforce an adequate safety management system to prevent sexual assaults). Rioux objected to the defense that the parents were comparatively negligent and were responsible for the supervision of their minor child in accordance with the terms of the Ticket Contract. Rioux argued that the complaint sounded in tort, not contract, but Judge Bloom held that comparative negligence was a valid affirmative defense and that the reference to the contract was a means to bolster that defense. Judge Bloom did strike the defense that the action was governed by the terms and limitations in the Ticket Contract, citing another judge in the district who held that the defense was barred by statute. Finally, Judge Bloom declined to strike the defenses that the plaintiff failed to mitigate her damages, diminishing her recovery, and that her injuries were the result of a pre-existing injury or condition, stating that these are valid affirmative defenses and that they need not meet the pleading requirements of Iqbal and Twombly.
This case arises because the M/ JOSHUA CHOUEST, an offshore supply vessel owned by Reel Pipe that was cold stacked at the LaShip docking facility in Houma, Louisiana, became unmoored when Hurricane Ida made landfall in August 2021, and crashed into the M/V SHELIA BORDELON. Bordelon Marine, owner of the SHELIA BORDELON, brought this suit against LaShip in federal court in Louisiana, and Judge Fallon held a bench trial at which he addressed the liability of LaShip for the incident. Judge Fallon noted that the JOSHUA CHOUEST had been deballasted and cold stacked under the care, custody, and control of LaShip for nearly three years. The hurricane made landfall as a category 4 storm, and the location was exposed to winds gusting between 125 and 135 mph for a ninety-minute period. The mooring lines that secured the bow of the JOSHUA CHOUEST became over-stressed and parted under a wind force of 479,000 pounds. The Bordelon vessels, however, remained securely moored because the direction of the winds pushed them toward the dock, whereas the same winds pushed the JOSHUA CHOUEST away from its dock and toward the SHELIA BORDELON. Bordelon cited the presumptions from THE OREGON Rule (moving vessel allides with a moored vessel or stationary structure) and THE LOUISIANA Rule (collisions or allisions involving a drifting vessel), and LaShip invoked the Act of God defense (that the accident could not have been prevented by human skill and precaution). Finding that LaShip had established that it acted reasonably in the mooring of the JOSHUA CHOUEST considering the anticipated weather conditions, Judge Fallon held that LaShip had successfully rebutted the presumptions and that it was not liable for the damage to the SHELIA BORDELON.
From the state courts
Daniel Crowder was working as a mate on Ingram Barge’s tow boat when he injured his knee while pulling on a ratchet during a trip on the Mississippi River. Crowder brought suit against Ingram Barge under the Jones Act and general maritime law in the Circuit Court of St. Louis County, Missouri, and the jury awarded damages of $3,325,999, reduced by 25% for the comparative fault of Crowder (leaving an award of $2,493,750). Ingram Barge appealed to the Missouri Court of Appeals, arguing that it was error to admit the testimony of Crowder’s economist, Dr. Rebecca Summary, because her methodology was flawed, and her opinions lacked evidentiary support. Writing for the Court of Appeals, Judge Page held that Dr. Summary’s calculations for an offset to the loss of wage earning capacity, based on records of Crowder’s self-employment, her assumption that Crowder would have advanced to a higher position within Ingram Barge, based on the testimony of Crowder’s vocational rehabilitation specialist, and her testimony based on disputed evidence of the nature and extent of his disability were based on sufficient methodology to survive the admissibility challenge. Ingram Barge also challenged the amount of the award, citing the admission of Crowder at trial that he was not disabled as a result of the injury to his knee. However, Judge Page cited the evidence that it was no longer safe for Crowder to work as a mate, the fact that he was 37 years old at the time of his injury, the testimony of his pain, anxiety, and depression, and his inability to engage in the recreational activities he previously enjoyed to uphold the verdict.
Sergio Nasini was diagnosed with malignant mesothelioma in May 2012 and died on June 8, 2013. On August 27, 2021, his beneficiaries brought suit in state court in Orleans Parish, Louisiana against the owners/operators of vessels on which he served and suppliers of products containing asbestos under the Jones Act and general maritime law. The defendants filed a peremptory exception of prescription, arguing that the suit was barred either by the three-year maritime statute of limitations or by the one-year prescriptive period under Louisiana law. The beneficiaries opposed the exception, arguing that no medical professional explained to them the cause of Sergio’s illness and that one of the beneficiaries first learned of the relationship between mesothelioma and asbestos exposure on a radio program in late 2020 or early 2021. Judge Giarrusso held a hearing and found that the link between asbestos and mesothelioma and the link between seafaring and mesothelioma were well known where Sergio lived, that his daughter accompanied him to his doctor appointment, and his daughter had access to a computer at work where a simple Google search would have shown the link between seafaring and mesothelioma. Therefore, Judge Giarrusso held that the claims were untimely under federal and state law. The beneficiaries appealed, and, writing for the Court of Appeal, Judge Atkins first addressed the standard for the application of the discovery rule to the federal and state limitation periods, reasoning that the cause of action does not accrue until the plaintiff discovers, or reasonably should have discovered, both the injury and its cause. Judge Atkins then found that Judge Giarrusso did not err in his finding that the beneficiaries failed to satisfy the discovery rule. Therefore, the Court of Appeal affirmed the dismissal of the claims with prejudice.
Kenneth G. Engerrand
President, Brown Sims, P.C.
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Quote:
If Judge Ashe erred when he failed to recuse in these cases, that error was harmless. Nonetheless, as the arguments on this appeal support, potential conflicts of interest must be taken seriously by every member of the judiciary. The litigants and the public need to be confident in the impartiality of those who will decide legal disputes. This appeal is fair warning to each of us of the importance of assuring the reality and appearance of that impartiality.
Street v. BP Exploration & Production, Inc., No. 22-30393 c/w Nos. 22-30394, 22-30395, 22-30396, 22-30397, 22-30496, 22-30499, 22-30500, 22-30501, 22-30502, 22-30503, 22-30504, 22-30505, 22-30506, 22-30508, 22-30512, 22-30513, 22-30514, 22-30515, 22-30516, 22-30517, 22-30518, 22-30519, 22-30520, 22-30521, 22-30522, 22-30523, 22-30524, 22-30525, 22-30528, 22-30529, 22-30532, 22-30535, 22-30536, 22-30542, 22-30592, 22-30593, 22-30596, 22-30599, 22-30604, 2023 U.S. App. LEXIS 28008 (5th Cir. Oct. 20, 2023) (Southwick).
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© Kenneth G. Engerrand, November 30, 2023; redistribution permitted with proper attribution.
