February 2025 Longshore/Maritime Update

January 31
2025


February 2025 Longshore/Maritime Update (No. 309)

Notes from your Updater:

On December 20, 2024, Judge Abelson of the United States District Court for the District of Maryland entered default judgments in favor of a ship repairer in a suit for trademark infringement, breach of contract, cybersquatting, and defamation after the principal of several entities brought his vessel to the shipyard for repair and was dissatisfied with the work. See Talaria Co. v. Duplessie, No. 23-cv-468, 2024 U.S. Dist. LEXIS 230278 (D. Md. Dec. 20, 2024).

On January 2, 2025, the Eleventh Circuit reversed the decision of Judge Gayles of the United States District Court for the Southern District of Florida (adopting the recommendation of Magistrate Judge Otazo-Reyes), that the defendants did not commit Helms-Burton trafficking in Florida with respect to an alleged conspiracy to transport wind turbines from China to Puerto Carupano, Cuba through Miami, Florida. See North American Sugar Industries, Inc. v. Xinjiang Goldwind Science & Technology Co., No. 23-10126, 2025 U.S. App. LEXIS 35 (11th Cir. Jan. 2, 2025) (Lagoa).

For a discussion of the attachment of a lien in favor of the Internal Revenue Service on the payment made by BP to Payroll Management, Inc. to compensate for economic loss from the Macondo/DEEPWATER HORIZON blowout, see In re Payroll Management, Inc., No. 22-12336, 2025 U.S. App. LEXIS 426 (11th Cir. Jan. 8, 2025) (per curiam).

On January 10, 2025, the Ninth Circuit affirmed the decision of Chief Judge Gleason of the District of Alaska that Kanaway Seafoods (d/b/a Alaska General Seafoods) was not required to pay compensation or overtime pay to the employees at its seafood processing plants in Naknek and Ketchikan, Alaska and its fish camp in Egegik, Alaska (including members of the beach gang who are responsible for dock repair and putting boats in the water) for their on-call time and sleep time when they resided at their employer’s premises and were confined to company property under a closed campus policy due to the COVID-19 pandemic, reasoning that the workers were called in to work infrequently and were able to engage in a range of personal activities while on call. See Flaherty v. Kanaway Seafoods, Inc., No. 23-4223, 2025 U.S. App. LEXIS 502 (9th Cir. Jan. 10, 2025) (per curiam).

On January 13, 2025, the United States Supreme Court declined to grant a writ of certiorari to review the decision of the First Circuit in Nantucket Residents against Turbines v. U.S. Bureau of Ocean Energy Management, No. 23-1501, 100 F.4th 1 (1st Cir. Apr. 24, 2024), with the residents asserting that the approval of the Vineyard Wind 1 Project for wind turbines off the coast of Nantucket, Massachusetts violated the Endangered Species Act with respect to the North Atlantic Right Whale. See Nantucket Residents against Turbines v. United States, No. 24-337, 2025 U.S. LEXIS 212 (U.S. Jan. 13, 2025).

The Update has previously discussed the preemptive force of the Federal Aviation Administration Authorization Act of 1994, deregulating interstate transportation industries (see discussion of Federal Insurance Co. v. ClearFreight Inc. in the July 2024 Update). On January 13, 2025, the United States Supreme Court declined to grant a writ of certiorari to review the decision of the Eleventh Circuit in Gauthier v. Hard to Stop LLC,      No. 22-10774, 2024 U.S. App. LEXIS 16696 (11th Cir. July 9, 2024) (per curiam), holding that personal injury claims against freight brokers for negligent hiring of an unsafe motor carrier are preempted by the Federal Aviation Administration Authorization Act. The question presented was: “Whether a wrongful death or personal injury claim against a freight broker that is based on the broker’s negligent hiring of an unsafe motor carrier to provide motor vehicle transportation invokes the state’s safety regulatory authority ‘with respect to motor vehicles,’ and, thus, falls within the safety exception.” See Gauthier v. Total Quality Logistics, LLC, No. 24-592, 2025 U.S. LEXIS 229 (U.S. Jan. 13, 2025).

On January 16, 2025, Stephanie Brown, Acting Director, Division of Longshore and Harbor Workers’ Compensation of the United States Department of Labor, issued Industry Notice No. 204, announcing that the Department of Labor has published a final rule adjusting penalties under the Inflation Adjustment Act for 2025, applicable to penalties assessed after January 15, 2025.

Section 14(g) of the LHWCA: Failure to Report Termination of Payments

The penalty amount has increased from $356 to $365.

20 C.F.R. § 702.236 now states:

Any employer failing to notify the district director that the final payment of compensation has been made as required by § 702.235 shall be assessed a civil penalty in the amount of $365 for any violation for which penalties are assessed after January 15, 2025. The district director has the authority and responsibility for assessing a civil penalty under this section.

Section 30(e) of the LHWCA: Penalty for Late Report of Injury or Death

The maximum penalty amount has increased from $29,221 to $29,980.

20 C.F.R. § 702.204 now states:

Any employer, insurance carrier, or self-insured employer who knowingly and willfully fails or refuses to send any report required by § 702.201, or who knowingly or willfully makes a false statement or misrepresentation in any report, shall be subject to a civil penalty not to exceed $29,980 for each such failure, refusal, false statement, or misrepresentation for which penalties are assessed after January 15, 2025. The district director has the authority and responsibility for assessing a civil penalty under this section. When assessing this penalty, the District Director considers how many penalties, if any, have been assessed against the employer in the previous two years. A graduated penalty schedule is then consulted to determine the penalty amount. However, the District Director has broad discretion to increase or decrease the amount of the penalty assessed based on aggravating or mitigating factors. The District Director also considers whether the employer is considered to be a small business as defined by the Small Business Regulatory Enforcement Fairness Act when determining the penalty amount.

Section 49 of the LHWCA: Discrimination Against Employees Who Bring Proceedings  The penalty amount has increased from a $2,922 minimum and a $14,608 maximum, to a $2,998 minimum and $14,988 maximum.

20 C.F.R. § 702.271(a)(2) now states:

Any employer who violates this section, and has penalties assessed for such violation after January 10, 2025, shall be liable for a penalty of not less than $2,998 or more than $14,988 to be paid (by the employer alone, and not by a carrier) to the district director for deposit in the special fund described in section 44 of the Act, 33 U.S.C. 944; and shall restore the employee to his or her employment along with all wages lost due to the discrimination unless the employee has ceased to be qualified to perform the duties of employment.

Industry Notice No. 204

On January 21, 2025, the Benefits Review Board issued an order consolidating appeals and directing briefing addressed to the timing of appeals filed with the Board. The Board also invited the filing of amicus curiae briefs (within 30 days) addressing these issues:

  1. Given the United States Supreme Court’s holding in Harrow v. Department of Defense, 601 U.S. 480 (2024), is the time specified for filing an appeal with the Board a jurisdictional requirement or a claims processing rule? See 33 U.S.C. § 921(a).
  2. If the time specified for filing an appeal with the Board is a claims processing rule under Harrow and a notice of appeal is filed after that time, who has the burden to raise the timeliness of the notice of appeal before the Board?
  3. When and how must the issue of timeliness, equitable tolling, or both be raised?
  4. If the appropriate party fails to raise the issue of an appeal’s timeliness, how do forfeiture, waiver, or equitable estoppel apply, if at all?
  5. When may the Board raise the issue of an appeal’s timeliness on its own initiative?

The order in Dominguez v. Bethlehem Steel Corp., BRB No. 24-0222 c/w BRB No. 24-0201 and BRB No. 24-0390 BLA, is linked:

Order

On January 21, 2025, Judge Moore of the United States District Court for the Southern District of Florida dismissed without prejudice the consolidated class actions of used boat sellers (alleging a conspiracy to fix commissions and refusal to deal) against boating brokerages, yacht broker associations, and multiple listing services (imposing an anti-competitive rule that requires all brokers to make a non-negotiable offer of buyer-broker compensation when listing a vessel on a multiple listing service). Judge Moore reasoned that “this Court cannot infer an illegal agreement from Defendants’ mere participating in trade associations that contain similar, non-binding recommendations regarding brokers’ commission fees” and “this Court cannot conclude that Defendants’ actions amounted to anything more than their unilateral and reasonable decision to conduct business with licensed professionals, rather than individuals who may be unexperienced or unfamiliar with the process of selling a used yacht.” See Ya Mon Expeditions, LLC v. International Yacht Broker’s Association, Inc., No. 1:24-cv-20805 (S.D. Fla. Jan. 21, 2025).

On January 22, 2025, an ad hoc Committee of the International Centre for Settlement of Investment Disputes declined to annul an arbitration award in excess of $8 billion in favor of subsidiaries of ConocoPhillips against Venezuela in connection with the appropriation by Venezuela of the interests of the ConocoPhillips entities in the Corocoro Project (an offshore project for the extraction of light to medium crude oil) and the Petrozuata and Hamaca Projects (for the extraction of extra-heavy oil in Venezuela’s Orinoco Oil Belt region). See ConocoPhillips Petrozuata B.V. and Bolivarian Republic of Venezuela, ICSID Case No. ARB/07/30 (International Centre for Settlement of Investment Disputes Jan. 22, 2025).

Decision on Annulment

On the LHWCA Front . . .

From the federal appellate courts

Ninth Circuit agreed with ALJ’s grant of modification to employer based on medical evidence and the lack of credibility of the claimant; Tounkara v. Director, OWCP, No. 23-1368, 2024 U.S. App. LEXIS 32690 (9th Cir. Dec. 26, 2024) (per curiam).

Opinion

On Feruary 9, 2015, Administrative Law Judge Odegard issued an order awarding temporary total disability benefits to Fousseini Tounkara, an employee of Glacier Fish Company, for cataracts which resulted from exposure to electric arc welding while Tounkara performed fire watch duties on vessels at Glacier Fish’s facility in Seattle, Washington. Glacier Fish moved for modification of the order on May 9, 2019, and Tounkara sought a modification that he was permanently and totally disabled. A formal hearing was held before ALJ Timlin (Tounkara was unable to secure counsel and represented himself). ALJ Timlin considered that Tounkara lacked credibility, citing his erratic, uncooperative, evasive, and intimidating behavior at his required vocational examination and the opinions of his physicians that Tounkara is not disabled, ALJ Timlin concluded that Tounkara could perform his usual work and could not establish a prima facie case. ALJ Timlin also concluded that there was suitable alternative employment, and that Tounkara had not diligently sought employment after reaching maximum medical improvement on August 5, 2016. Therefore, ALJ Timlin granted the employer’s request for modification (but did not order repayment of past benefits), and denied Tounkara’s request for modification. The Benefits Review Board affirmed the findings that Tounkara had no restrictions and could return to his usual employment since reaching MMI and denied Tounkara’s requests for reconsideration. Tounkara filed a petition for review with the Ninth Circuit, which found substantial evidence to support the finding that Tounkara was no longer entitled to disability benefits, reasoning: “The ALJ permissibly weighed the medical evidence and discounted Tounkara’s subjective complaints.” The court added: “The ALJ’s determination that Tounkara lacked credibility does not conflict with the clear preponderance of the evidence, nor is it ‘inherently incredible or patently unreasonable.’” Therefore, the Ninth Circuit denied the petition for review.

From the federal district courts

Boarding agreement required contractor to indemnify liftboat owner for injury to employee of subcontractor on the liftboat; subcontractor employee was not a seaman as his connection to the liftboat was not substantial in duration or nature; liftboat owner did not violate any of the Scindia duties to employee of contractor; silence about insurance and indemnity in quote presented in response to proposal resulted in denial of claim for insurance and indemnity; Judge declined to exclude opinions of liability expert who did not refer to industry standards but who had not yet been deposed; In re M/V RAM XVII, No. 6:22-cv-998, 2024 U.S. Dist. LEXIS 221517, 224629, 234414, 234415 (W.D. La. Dec. 6, 11, 30, 2024) (Hicks).

Opinion Indemnity Tolunay-Wong

Opinion Jones Act/LHWCA

Opinion Amdrill, Westfield, and TWE

Opinion Expert Perkin

Lloyd Engineering contracted with Tolunay-Wong Engineers to conduct geotechnical studies of soil core samples from the Gulf of America off the coast of Texas. Tolunay-Wong subcontracted with Amdrill to provide the crew and equipment to drill for and obtain the soil core samples to be studied for the contract with Lloyd Engineering. Lloyd Engineering time chartered a liftboat, the M/V RAM XVII, from its owner, Aries Marine, to provide transportation, a work platform, and living quarters for the employees of Lloyd Engineering, Tolunay-Wong, and Amdrill. Aries Marine and Tolunay-Wong entered into a Boarding Agreement that allocated responsibility for injuries arising out of use of Aries Marine’s vessels. The RAM XVII was elevated in position on the outer Continental Shelf off the coast of Texas, and Lloyd Engineering and Tolunay-Wong supervised the operation of soil boring and sampling equipment by Amdrill personnel. Dylan Rose, an employee of Amdrill, was injured while working as a driller helper for Amdrill on the deck of the RAM XVII, when he was struck in the leg by part of the boring equipment. Rose brought a suit in state court in Lafayette Parish, Louisiana against Amdrill, Aries Marine, and Tolunay-Wong. Rose settled his claims against Amdrill, and Aries Marine filed this action in federal court in Louisiana seeking exoneration/limitation of liability. Rose filed a claim in the limitation proceeding and also named Tolunay-Wong and Lloyd Engineering. Aries Marine moved for summary judgment that it is entitled to defense, indemnity, and insurance coverage from Tolunay-Wong pursuant to the terms of the Boarding Agreement. Tolunay-Wong did not respond, and Judge Hicks reasoned that the Boarding Agreement is a maritime contract based on the factors set forth by the Fifth Circuit in Doiron. Judge Hicks added that the indemnity provisions were enforceable and, as Tolunay-Wong’s insurer, Axis, denied coverage, Tolunay-Wong was in breach of its obligations and was liable to defend and indemnify Aries Marine and to reimburse Aries Marine for its expenses, including attorney fees.

Aries Marine also moved for summary judgment that Rose is not a seaman and is a maritime worker covered under the LHWCA. Judge Hicks evaluated whether Rose’s connection to the RAM XVII was substantial in both nature and duration. With respect to duration, Rose testified that he spent about 25% of his time working offshore and 75% on land while working as a driller helper for Amdrill. However, other than the two days leading up to and including the day of the incident, there was no evidence that Rose worked on a vessel or fleet of vessels under the control of Aries Marine. Citing the Fifth Circuit’s 30% rule-of-thumb for workers who divide their time between land-based and vessel-related service, Judge Hicks concluded: “Two days does not add up to 30 percent.” Turning to the Sanchez factors for the nature element, Judge Hicks noted that Rose did not work exclusively on Aries Marine vessels or sail with the RAM XVII once the drilling was finished. Accordingly, Rose failed the nature element and was not a seaman.  Therefore, Rose was covered by the LHWCA, and Judge Hicks considered the Scindia duties to determine whether Aries Marine was liable as owner of the RAM XVII. The drilling was under the control of Amdrill, and no employees of Aries Marine were involved. Aries Marine was not aware that there was “chatter” in the casing, and it was unaware that Rose would put his foot on the casing head. There were no problems before the incident occurred, and the equipment involved in the accident was owned by Amdrill. Thus, there was no evidence that Aries Marine failed to exercise ordinary care when it turned over the liftboat to Amdrill, there was no evidence that Aries Marine maintained any control of the area, and there was no evidence that Aries Marine had notice of the danger. Consequently, Judge Hicks dismissed all of Rose’s claims against Aries Marine.

Judge Hicks then considered motions addressing the issue whether Tolunay-Wong, Lloyd Engineering, and Aries Marine were named as additional insureds on the insurance policy issued by Westfield Insurance to Amdrill. Tolunay-Wong submitted a proposal to Amdrill for work by Amdrill on the project that required Amdrill to name Tolunay-Wong and Lloyd Engineering as additional insureds. Tolunay-Wong argued that Amdrill accepted this proposal by issuing a quote to Tolunay-Wong in response. Judge Hicks first held that the contract between Amdrill and Tolunay-Wong was a maritime contract because the services were drilling and sampling operations from a vessel. He then considered whether Amdrill’s quote constituted an acceptance of Tolunay-Wong’s proposal. Judge Hicks noted that Amdrill submitted an offer that included quotes for various parts of the project that it would perform, and Tolunay-Wong accepted Amdrill’s offer. The Amdrill quote made no mention of insurance certificates or naming of Tolunay-Wong, Lloyd Engineering, or Aries Marine as insureds, and it did not mention indemnity for Aries Marine. The Westfield insurance policy agreed to name additional insureds when Amdrill agreed in writing to do so; however, as Amdrill did not agree in writing to name them as additional insureds, Judge Hicks held that they were not named (Judge Hicks also held that insurance certificates issued by the broker did not alter the lack of additional insurance). Reasoning that Amdrill’s quote was silent as to insurance and indemnity and only responded with pricing and fees, and citing the “fundamental principle of contract law that silence does not constitute acceptance of a contract,” Judge Hicks held that Amdrill and Westfield were entitled to summary judgment that Tolunay-Wong, Lloyd Engineering, and Aries Marine were not named as additional insureds and that they were not entitled to indemnity.

The next issue considered by Judge Hicks was the Daubert motion filed by Lloyd Engineering, challenging the opinions of Rose’s expert, Gregg Perkin, on negligence, liability, dangerous acts, and action below the standard of care in the industry. Lloyd Engineering argued that Perkin’s conclusions were unsupported by expert analysis of industry standards, that there was an enormous analytical gap between the facts and conclusions, and that Perkin has been “excluded by numerous courts all over the country for this same sort of ‘analysis.’” Judge Hicks noted that Perkin’s deposition had not been taken, and at this stage, the absence of references to any industry guidelines or standards did not require that his testimony be excluded. His opinions and conclusions appeared to stem from his knowledge and experience from more than 55 years of work with energy-related and other industries. However, Judge Hicks did caution that Perkin could not express legal conclusions or opine on legal standards.

Worker supplied by contractor who did not require daily instruction and who was not closely supervised was a borrowed servant, and the LHWCA was his exclusive remedy; Harper v. W&T Offshore Inc., No. 24-cv-1101, 2024 U.S. Dist. LEXIS 231489 (E.D. La. Dec. 23, 2024) (Africk).

Opinion

Jeffery Harper, an employee of Danos LLC, was working as a production operator on W&T Offshore’s platform in East Cameron Block 321 on the outer Continental Shelf of the Gulf of America, off the coast of Louisiana, pursuant to a master service contract between Danos and W&T. Harper tripped and fell on a valve handle that was protruding into a passageway, and he brought this suit in federal court in Louisiana against W&T. W&T moved for summary judgment that Harper was a borrowed employee of W&T and that Harper’s exclusive remedy against W&T was compensation under the LHWCA. Judge Africk reasoned that borrowed employee status is evaluated as a matter of law except with respect to fact disputes on the Ruiz factors enunciated by the Fifth Circuit. Judge Africk started with the “central issue,” who had control over the employee and the work he is performing, distinguishing between “authoritative direction and control, and the mere suggestion as to details or the necessary cooperation where the work furnished is part of a larger undertaking.” Harper stated that he never received work instructions from Danos while laboring on W&T platforms. There were daily meetings at which the overview of everyone’s job scope was discussed, but Harper was not typically told where to work or what to do. He had been trained on how to perform his job duties and did not receive instructions. Although W&T contended that the work assignments were more specific, Judge Africk did not have to resolve the dispute because Harper’s version did not dispute that W&T had the authority to tell Harper where to work and that W&T was the only point of managerial contact on its platforms. Harper’s ability to work independently with minimal instruction did not defeat a finding of borrowed servant status. There was a contract between W&T and Danos that prohibited borrowed employee status, but the behavior of the parties and lack of supervision from Danos suggested that the parties altered that agreement. As the other factors pointed to Harper being a borrowed servant, Judge Africk held that the contract did not bar a finding that Harper was a borrowed servant. Although Danos supplied Harper with his tools and with his personal protective equipment, Judge Africk noted that W&T provided the place of performance, lodging, food, and transportation, and W&T had the authority to remove Harper from its platforms. Harper remained an employee of Danos, but he did not maintain contact with Danos while on the platform. Danos continued to pay Harper, but W&T furnished the funds to pay Harper based on time sheets that were approved by W&T. As the Ruiz factors favored a finding that Harper was a borrowed servant, Judge Africk held that Harper’s suit against W&T was barred by the exclusive remedy provision in the LHWCA.

From the state courts

Longshore worker who was injured when a utility tractor rig hauling a steel coil to the ship tipped over was not owed a duty of care by the cargo owner that contracted with a third party to ship the steel coil; Hernandez v. Taihan Electric, USA, Ltd., No. B333793, 2024 Cal. App. Unpub LEXIS 7568 (Cal. App. 2d Dist. Nov. 27, 2024) (Ashmann-Gerst).

Opinion

Taihan Electric purchased 102 steel coil reels that it sought to ship to South Korea. Tiahan contracted with freight forwarder Silverstar Express to arrange for the shipment of the reels, and Silverstar loaded them onto flat trailers for shipment to the Port of Long Beach. Silverstar then contracted with trucking company Kydo Enterprises to transport the reels to the Port. Matthew Hernandez, a longshore worker, was hauling one of the reels to the cargo ship when the utility tractor rig tipped onto its side, injuring Hernandez. Hernandez brought this suit in the Superior Court of Los Angeles County, California against Taihan Electric and others, alleging that the defendants failed to properly load and secure the cargo on the trailer/chassis, leading to a risk of overturning. Taihan Electric moved for summary judgment on the ground that it owed no duty to Hernandez with respect to the negligent acts of the independent contractors who loaded the cargo. Hernandez responded that the coil reel presented a “peculiar risk” such that Taihan Electric was liable for the contractors’ negligence in failing to properly secure and load the coil reel. Judge Kim granted summary judgment to Taihan Electric, concluding that Hernandez had not established that the coil reel presented a peculiar risk, and Hernandez appealed. Writing for the Court of Appeal, Judge Ashmann-Gerst noted that California recognizes the common-law rule that an individual who hires an independent contractor is generally not liable for injuries caused by the negligence of the contractor, subject to an exception for work that is inherently dangerous (a form of vicarious liability). The complaint did not, however, allege any theory of vicarious liability. Thus, there was no viable theory of liability against Taihan Electric, and the appellate court affirmed the granting of summary judgment.

And on the maritime front . . .

From the federal appellate courts

District judge’s order remanding seaman’s suit against medical contractor on cruise ship because the arbitration agreement in her contract with the cruise line was not applicable to provide federal jurisdiction under the New York Convention was not reviewable on appeal; Van der Merwe v. Vanter Cruise Global, Inc., No. 24-13586, 2024 U.S. App. LEXIS 32907 (11th Cir. Dec. 31. 2024) (per curiam), dismissing appeal from No. 1:24-cv-22643 (Oct. 2, 2024) (Moore).

Opinion 11th Circuit

Opinion District Court

Elis Carneiro Pereira was working as a bar server on the CRYSTAL SERENITY when she fell ill. Her husband brought this suit in state court in Miami-Dade County, Florida against Vanter Cruise Global, a subsidiary of Vanter Cruise Health Services, which contracted to operate and manage the medical clinic on the CRYSTAL SERENITY. He asserted claims under the Jones Act and Florida law, alleging that she was not provided with proper medical treatment, resulting in her total incapacity. Vanter Cruise Global removed the case based on diversity and federal question, citing an arbitration agreement subject to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), and it moved to dismiss the case for lack of personal jurisdiction and to compel arbitration. The plaintiff moved to remand the case to state court. Judge Moore noted that Jones Act claims are generally not removable; however, they are removable when subject to the New York Convention, which has a strong presumption in favor of arbitration of international commercial disputes. “Thus, if plaintiff’s claims fall within the scope of an arbitration agreement under the Convention, this case is properly removed and shall be compelled to arbitration.” Vanter Cruise Global asserted that when it provided medical services to the crew, it did so as the agent of Pereira’s employer. Therefore, the claims against it were subject to the arbitration agreement in the collective bargaining agreement between her employer and the Norwegian Seafarers’ Union. The agreement was silent with respect to contractors except where a third party has “assumed the responsibility for the operation of the vessel to take over the duties and responsibilities imposed on owners.” However, Judge Moore did not believe that providing health care to the seamen satisfied the language that the contractor “assumed the responsibility for the operation of the vessel to take over the duties and responsibilities imposed on owners.” Additionally, Judge Moore did not believe that the scope of the arbitration agreement (that the claim must be “relating to the Seafarer’s service for the Company”) was broad enough to encompass the claims in the suit. He reasoned that the injuries did not “relate to” her employment as a bar server. As there was no diversity between the parties, Judge Moore ordered the case remanded to state court. Vanter Cruise Global filed an appeal to the Eleventh Circuit, and the Eleventh Circuit dismissed the appeal, sua sponte, for lack of appellate jurisdiction, noting that a remand for lack of federal subject matter jurisdiction is “unreviewable on appeal.”

Suit in state court by the City of New Orleans against natural gas pipeline operators and the utility company that provides natural gas utility services to its customers in New Orleans and that owns three natural gas pipelines, asserting that the defendants allowed pipeline canals to widen and erode to a point that they now threaten the City’s storm buffer, was removable to federal court; New Orleans City v. Aspect Energy, L.L.C., No. 24-30199, 2025 U.S. App. LEXIS 1481 (5th Cir. Jan. 23, 2025) (Stewart).

Opinion

This opinion from the Fifth Circuit is the latest in the many cases brought by governmental entities in Louisiana, asserting that companies involved in the production and transportation of oil and gas caused damage to the coastal zone in Louisiana.

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, 2022). That appeal involved cases filed in Louisiana state courts by Louisiana 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-cv-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. See December 2023 Update.

On May 29, 2024, the Fifth Circuit (with a dissent by Judge Oldham) held that the actions of the energy companies with respect to oil production did not have a sufficient connection with the governmental direction in their federal refinery contracts during World War II to permit removal of the cases under the Federal Officer Removal Statute. Accordingly, the Fifth Circuit affirmed the remand of the suits by Louisiana parishes against the energy companies. See Plaquemines Parish v. BP America Production Co., No. 23-30294, 2024 U.S. App. LEXIS 12890 (5th Cir. May 29, 2024) (Davis).

The energy companies sought rehearing en banc, and, on October 31, 2024, the Fifth Circuit declined to grant rehearing en banc by a vote of 7-6, with 4 judges not participating in the consideration of the request for rehearing en banc. See Plaquemines Parish v. BP America Production Co., No. 23-30294 c/w No. 23-30422, 2024 U.S. App. LEXIS 27775 (5th Cir. Oct. 31, 2024).

The opinion on January 23, 2025 from the Fifth Circuit involves the suit brought by the City of New Orleans against pipeline operators and Entergy New Orleans, in which the City asserts that the defendants allowed pipeline canals to widen and erode to a point that they now threaten the City’s storm buffer, in violation of Louisiana’s State and Local Coastal Resources Management Act of 1978. New Orleans brought suit in state court in Orleans Parish, Louisiana, and the operators removed the case to federal court based on diversity. All of the pipeline operators are citizens of other states, and Entergy New Orleans, which provides natural gas utility services to its customers in New Orleans owns three natural gas pipelines that were acquired or constructed prior to the effective date of the SLCRMA and were subject to the statute’s Historical-Use Exception. Therefore, the operators argued that Entergy New Orleans was improperly joined and there was complete diversity with the remaining defendants. Judge Guidry agreed that Entergy New Orleans was improperly joined, denied the motion to remand, and entered a final judgment dismissing Entergy. New Orleans appealed. Writing for the Fifth Circuit, Judge Stewart reasoned that the core of the City’s argument is that “Entergy should have acted to prevent widening and erosion of its canals. While it might be prudent policy to require coastal pipeline operators to monitor and maintain their decades-old canals, that policy is not found in SLCRMA.” Judge Stewart concluded: “Because Entergy constructed or purchased its pipeline canals before SLCRMA’s effective date in 1980, and because Entergy has done nothing since then that constitutes a ‘use’ under the statute, there is no reasonable basis to predict that the City can recover on its claims against Entergy.” Accordingly, as there was complete diversity (excluding Entergy), the Fifth Circuit affirmed the denial of the City’s motion to remand (also rejecting the argument that the State of Louisiana should be considered to be the real party in interest and defeat diversity jurisdiction, noting that the City was the master of its complaint and chose to file the suit on its own behalf).

From the federal district courts

Order on stay

Order on reconsideration

Naval Logistic (d/b/a Middle Point Marina) brought this action in federal court in Florida on June 27, 2023 to enforce a maritime lien for repairs to the vessel M/V FAMILY TIME, owned by Commercial Holdings Group, whose principal is Andrew Vilenchik. The dispute centered on whether the vessel’s condition was worse than what was disclosed, necessitating additional repairs. The vessel was arrested on September 7, 2023, and Middle Point Marina was appointed substitute custodian. Vilenchik appeared and sought reconsideration of the appointment of the marina as substitute custodian (and return of custody of the vessel to the U.S. Marshal), arguing that the marina had caused damage to the vessel and was not an appropriate custodian. Judge Scola noted that the courts routinely appoint substitute custodians on an ex parte basis based on allegations that the custodian had experience caring for vessels and acting as a substitute custodian. In this case the marina made the proper allegations and provided the required indemnification. Judge Scola was not persuaded that the owner’s concerns for the fate of its vessel in the marina’s hands were well-founded, as the marina had the incentive to preserve the vessel to protect its own recovery. Therefore, he declined to reconsider his order appointing the marina as substitute custodian. See December 2023 Update.

On January 9, 2024, Middle Point Marina filed a motion for an interlocutory sale of the vessel, arguing that the costs of storage and maintenance were disproportionate to the value of the vessel and that the owner had unreasonably delayed in securing the release of the vessel. The marina stated that the vessel was accruing storage charges of $135 per day, and the amount that had accrued by February 2, 2024 was $23,704.79, excluding the salvage claim for saving the vessel from a maritime peril. The marina argued that two of the three grounds for an interlocutory sale under Rule E(9) were satisfied because almost six months had passed since the arrest on September 7, 2023 (longer than the four months usually considered to be sufficient) and because the expenses were disproportionate to the value of the vessel (estimated to have a value between $50,000 and $99,000). The owner did not offer an explanation for the delay, and Judge Scola held that the sale was warranted by the unreasonable delay. Although one of the conditions in Rule E(9) was sufficient, Judge Scola also addressed the argument that the expenses were disproportionate. The owner disputed the marina’s evidence, but it did not argue that the vessel was worth more than $100,000. Weighing the cost of storage against the value of the vessel, even at the high range of the marina’s estimate, Judge Scola concluded that an interlocutory sale was justified. Finally, the owner argued that the interlocutory sale would prejudice the counterclaim that it recently sought to file. Judge Scola responded that the interlocutory sale was merely a substitution of the proceeds of sale for the vessel and would not prejudice the counterclaim. Therefore, Judge Scola ordered the interlocutory sale of the vessel. See April 2024 Update.

The parties then filed cross-motions for summary judgment. Middle Point Marina argued that it notified Vilenchik that he would have to remove the vessel after he refused to approve the revised estimates for the cost of additional repairs, and this was a breach of the Agreement for which storage charges were owed. Vilenchik argued that he created a fact question on Middle Point Marina’s contract claim because he submitted an affidavit in which he argued that Middle Point Marina had caused damage to the vessel. Judge Scola answered that the claims made by Vilenchik were not responsive to the claim that Middle Point Marina provided necessaries (storage) for the vessel and that Vilenchik breached the contract by failing to remove the vessel. Vilenchik also argued that Middle Point Marina had not refuted the affirmative defenses raised by Vilenchik in the answer, but Judge Scola responded that the defendant, not the plaintiff, has the burden of proof with respect to affirmative defenses. Therefore, Judge Scola granted Middle Point Marina’s motion for summary judgment, but he deferred ruling on the amount of damages, costs, and attorney fees until the conclusion of the case. Vilenchik moved for summary judgment that he was not individually liable as the principal of the vessel owner, Commercial Holdings Group. However, Judge Scola noted that Vilenchik had signed the Shipyard Agreement and placed his name on the line marked “Owner.” Additionally, Middle Point Marina disputed whether Vilenchik ever mentioned that Commercial Holdings Group was the owner. Therefore, Judge Scola denied Vilenchik’s motion. See September 2024 Update.

Vilenchik moved for reconsideration on the granting of summary judgment to Middle Point Marina, arguing that there was a fact issue whether Vilenchik represented himself as owner of the vessel so as to be a proper defendant. Judge Scola responded that the argument was arguably waived by the failure to raise it in opposition to the motion for summary judgment. However, Judge Scola reiterated that Vilenchik had signed the agreement and placed his name on the line marked “Owner,” which warranted granting of the motion for summary judgment. Although Vilenchik submitted an affidavit disputing ownership of the vessel, Judge Scola did not believe that the affidavit, standing alone, was probative evidence that would rebut the motion for summary judgment. Therefore, he declined to grant reconsideration. As the parties stipulated to the damages, Judge Scola granted a final judgment in favor of Middle Point Marina for pre-arrest storage fees, custodia legis expenses, arrest costs, and attorney fees and costs. See October 2024 Update.

The defendants filed a notice of appeal to the Eleventh Circuit on September 27, 2024, and the defendants moved for a stay pending appeal. The defendants argued that Middle Point Marina did not need a bond because it had the vessel in its possession, having bought the vessel with a value between $50,000 and $99,000 for $100, and that value was more than the judgment for $40,437.30. Judge Scola, however, did not believe that the defendants’ argument provided a basis for dispensing with the ordinary requirement for the posting of a bond unless the defendant establishes his ability to satisfy the judgment and maintain that degree of solvency during the appeal. Therefore, he addressed the amount that should be required for the bond. Middle Point Marina argued that the bond should be at least $275,000, claiming that attorney fees and costs for the appeal would be at least $100,000, but Judge Scola noted the local rule that security to stay execution should be in the amount of 110% of the judgment to provide security for interest and costs. As the defendants offered a bond of 125%, Judge Scola agreed to stay execution of judgment (and post-judgment discovery) upon the posting of a bond of $50,535.38 (rejecting the addition of conditions such as the requirement that the defendants not dissipate assets) as the bond was sufficient). Judge Scola also rejected, on December 17, 2024, Middle Point Marina’s motion for reconsideration, arguing that the bond should include the attorney fees it was seeking, claiming that $94,669.61 was uncontested and that the fees on appeal should also be included. As Judge Scola had previously declined to include attorney fees in the bond, he denied the request for rehearing.

Allegation of wet condition on stairs in water park area of ship was insufficient to establish notice of a dangerous condition to the cruise line; Benson v. NCL (Bahamas) Ltd., No. 1:24-cv-22926, 2024 U.S. Dist. LEXIS 218380 (S.D. Fla. Dec. 3, 2024) (Goodman).

Recommendation

Debra Benson, a passenger on the NORWEGIAN ENCORE, slipped and fell while descending wet stairs from Deck 17 to Deck 16. Benson brought suit against the cruise line in federal court in Florida, and the cruise line moved to dismiss the complaint for failure to properly plead notice. Benson argued that the cruise line had notice because the stairs are in a water park on the vessel and are used by wet passengers, the vessel has been in use for four years, and the crew are positioned to vigilantly watch the area and such that the wet condition of the stairs could have been easily observed and remedied. However, Magistrate Judge Goodman noted that there was no specificity as to the nature of the slippery condition, whether it was dangerous, how long it existed, or whether the crew was aware of it. Therefore, Magistrate Judge Goodman recommended that the complaint be dismissed with leave to amend.

Judge dismissed civil rights suit (violating the passenger’s rights by allowing a dog in the aisle) filed in New York by a passenger on a Massachusetts ferry and declined to transfer the case in light of the passenger’s admitted forum shopping; Budinski v. Massachusetts, No. 6:24-cv-6449, 2024 U.S. Dist. LEXIS 218715 (W.D.N.Y. Dec. 3, 2024) (Wolford).

Opinion

Kenneth G. Budinski, a resident of New York, claims that he boarded a ferry in Hyannis, Massachusetts, operated by Woods Hole, Martha’s Vineyard and Nantucket Steamship Authority, that was bound for Nantucket Island. During the voyage, he tripped over a large dog lying in the aisle and received no assistance from the crew except to advise him to get the name of the owner of the dog. Asserting that he sustained “life-altering and business injuries” and that he will “likely succumb to the health issues produced by the egregious negligence of” the ferry operator, Budinski brought suit in federal court in New York against the Commonwealth of Massachusetts, as agent of the ferry operator, seeking $100,000,000 (“The damages will be significant since I was nearing completion on a seminal book.”). His claim was based on the Fourteenth Amendment that the state shall not deprive a person of life, liberty, or property without due process, as “my life has been taken.” He explained that the State’s allowing animals on public transport “is failing to grant its citizens their right to life guaranteed by our constitution.” The ferry operator appeared and moved to dismiss the complaint for lack of subject matter jurisdiction, lack of personal jurisdiction, improper venue, and failure to state a claim. Chief Judge Wolford first addressed and rejected Budinski’s argument that venue was proper in New York because Budinski is a New York resident. Budinski also argued that venue was proper in New York because the cause of the accident, animals in public transit, occurs in all 50 states, and because of the “record for judicial excellence and demonstrated tolerance for pro se litigation” of this court. However, Chief Judge Wolford noted that the ferry operated in and did not leave the waters of Massachusetts and was operated by a corporation headquartered in Massachusetts. Therefore, venue was not proper in New York. Chief Judge Wolford then considered whether a transfer was in the interest of justice. As the incident occurred less than six months ago, she could not envision any problem with time limitations. As Budinski admittedly chose the district as a means of forum shopping, Chief Judge Wolford declined to transfer the case and dismissed the suit without prejudice.

Judge declined to grant protective order for sealing of documents related to the NTSB investigation of the DALI allision with the Key Bridge, advising that confidential information should be redacted to allow the remainder of the document to be publicly accessible; In re Grace Ocean Private Ltd., No. 1:24-cv-941, 2024 U.S. Dist. LEXIS 218908 (D. Md. Dec. 3, 2024) (Bredar).

Opinion

This litigation arises from the allision between the DALI and the Francis Scott Key Bridge. The owner and manager of the DALI, Grace Ocean Private and Synergy Marine, brought this action seeking exoneration/limitation in federal court in Maryland, and Judge Bredar issued a Protective Order governing the use of confidential information in the litigation. The parties sought to amend the protective order to accommodate the concerns of the National Transportation Safety Board, which is conducting an investigation of the allision, that the Protective Order did not adequately cover its documents. Although Judge Bredar expressed his intent to accommodate the interests of the NTSB to the extent feasible, he balanced the interests of the parties and NTSB with the public’s presumptive right of access to the judicial process. He explained that the proposal would “permit parties to file documents wholly under seal, without any publicly viewable version, so long as the documents contain any confidential information.” Judge Bredar warned that “any request for a protective order that contemplates wholesale sealing of documents—as opposed to the application of carefully limited redactions—will likely be denied.” Therefore, he denied the request without prejudice.

Assignee of remediation company whose barge sank during recycling of the barge was entitled to claim damage from its P&I insurer for declining to remove the vessel (including lost profits, removal expenses, and attorney fees) pursuant to a bad faith claim under Puerto Rico law; damages expert would be allowed to testify on lost profits but not with respect to amounts within the ability of the jury to understand; marine underwriting expert would not be allowed to give opinions that are legal conclusions or impermissible statements of applicable law; Party Book Hill Park, LLC v. Travelers Property Casualty Co., No. 18-cv-1179, 2024 U.S. Dist. LEXIS 220422, 220423 (D.P.R. Dec. 4, 2024) (Méndez-Miró).

Opinion Damages

Opinion Experts

This litigation involves the sinking of the LONE STAR, a pipe barge owned by Marine Environmental Remediation Group, during ship recycling operations in Puerto Rico. The vessel was insured by Travelers Property Casualty Co. pursuant to a P&I Policy, and Travelers denied coverage for wreck removal under the policy. After Marine Environmental sought bankruptcy, Party Book Hill Park purchased Marine Environmental’s claims against Travelers and brought this suit against Travelers in federal court in Puerto Rico, including a claim under Puerto Rico law for “dolo” (bad faith). Travelers moved to exclude evidence related to lost profits of $16,628,853 for the dolo claim, arguing that the lost profits were speculative and unrelated to any alleged bad faith. Judge Méndez-Miró responded that Travelers will be liable for consequential damages, including lost profits, under Puerto Rico law, if it is found to have breached its obligations under the policy. As the bar for exclusion of evidence is low and as she did not believe there was a sufficient risk of unfair prejudice to Travelers from the large amount sought, Judge Méndez-Miró declined Travelers’ request to exclude the evidence of lost profits. Travelers also sought to exclude evidence of the amount that was paid to contractor Resolve to remove the sunken vessel ($2,505,983). Travelers noted that Resolve was paid by Marine Environmental’s pollution insurer, Starr Indemnity, so Marine Environmental had no loss to claim against Travelers. Judge Méndez-Miró answered that Starr had brought a claim against Marine Environmental for reimbursement in the bankruptcy proceeding and had recovered $793,500. Therefore, Judge Méndez-Miró held that Party Book Hill could pursue a claim against Travelers for the removal cost, limited to $793,500. Travelers objected to the damages incurred by Marine Environmental pursuant to a contract between Marine Environmental and Starr to assist with the removal contracted to Resolve (Starr paid Marine Environmental $177,359.80 of the $293,502 that Marine Environmental billed to Starr). Although Travelers argued that it was not a party to the contract, Judge Méndez-Miró held that the jury should be permitted to consider whether the amount was recoverable as part of the dolo claim, but Travelers would be allowed to produce evidence of the amount paid by Starr. Judge Méndez-Miró also agreed that Party Book Hill would be allowed to present evidence of damages related to the cost of security at the site of the sinking that was a cost of doing business at the location, for pollution expenses incurred voluntarily or at the direction of Starr, and for the cost of a surveyor retained in response to the reservation letter issued by Starr. Finally, Travelers argued that Party Book Hill could not recover attorney fees under the general maritime law, but Judge Méndez-Miró answered that attorney fees could be recovered under Puerto Rico law for the dolo claim.

Travelers also moved to exclude opinions of Party Book Hill’s damage expert, Robert Carter, and marine insurance underwriting expert, Damon Hostetter. With respect to Carter, Judge Méndez-Miró considered that Carter engaged in analysis that used acceptable methods in the industry and would assist the jury. Therefore, she held that his opinions on lost profits would be allowed (even though they were based in part on inadmissible statements). However, his testimony on other expenses was no more than “an exercise in addition” and would not be helpful to the jury. Therefore, she excluded the remainder of his opinions. Turning to the opinions of Hostetter, Judge Méndez-Miró agreed with Travelers that Hostetter would not be allowed to advise the jury that the policy was not marine because there was no vessel in navigation at the time the policy was bound as she had already held that the policy was governed by maritime law. Judge Méndez-Miró drew a distinction from Hostetter’s opinion that it “is doubtful that marine insurance principals [sic] are appropriate when considering the matter of the sinking” of the LONE STAR, agreeing that Hostetter could testify how Travelers should have considered seaworthiness in adjusting the claim. Judge Méndez-Miró agreed that Hostetter’s opinion that “the above is the type of carrier behavior covered by the Puerto Rico ‘dolo’ statute with respect to Traveler’s [sic] handling of the LONESTAR [sic]” claim was an impermissible legal conclusion and would be excluded. However, Hostetter would be permitted to testify on Travelers’ actions compared to industry standards. Judge Méndez-Miró agreed that Hostetter’s statement that the “doctrine of uberrimae fidei after commencement of the policy does not require that an insured notify an insurer every time there is an incident that might affect the seaworthiness of the vessel, if the vessel owner subjectively believed the vessel was seaworthy,” was an impermissible statement of the applicable law and would be excluded. Judge Méndez-Miró similarly held that Hostetter’s opinion that Travelers’ attempt to deflect blame did not absolve it of its dolo violations was a legal conclusion that should be excluded. Judge Méndez-Miró did allow Hostetter’s opinions that it would be inappropriate to deny the claim under the doctrine of uberrimae fidei, that coverage should have been paid for voluntary and compulsory wreck removal, and that there was not a lack of due diligence on the part of Marine Environmental.

Allegation that cruise line failed to enforce policy against drinks on the dance floor did not establish notice of a dangerous condition when the passenger did not plead that the substance on which she slipped was a spilled drink; Parker v. NCL (Bahamas) Ltd., No. 24-cv-22811, 2024 U.S. Dist. LEXIS 220653 (S.D. Fla. Dec. 4, 2024) (Martinez).

Opinion

Katrinia Parker, a passenger on the NORWEGIAN JADE, slipped and fell on a foreign slippery substance on the dance floor in the Spinnaker Lounge in the vessel where passengers were encouraged to dance and enjoy beverages. Parker brought this suit against the cruise line in federal court in Florida, asserting that the cruise line had notice of the dangerous condition on the deck because it had implemented a rule of prohibiting drinks on the dance floor but failed to enforce the rule. She added that a member of the crew wiped up the spill shortly after the fall, so the cruise line should have known what foreign substance caused her to fall. The cruise line moved to dismiss the complaint for failure to properly plead notice, and Judge Martinez reasoned that Parker failed to allege any details about when the condition came into existence or how long it was present. He added that Parker’s allegations about the failure to enforce the policy on drinks was not at issue as she failed to allege that it was a spilled drink that caused her fall. Parker alleged that it was highly unlikely that the wet substance was from another source such as saliva, sweat, bodily fluids, or wet hair; however, Judge Martinez answered that her argument relied on unwarranted inferences or deductions, which the court was not obligated to accept. As Parker failed to allege how long the condition existed, whether it had been reported, or whether any inspections or monitoring by the cruise line were inadequate, Judge Martinez dismissed the complaint without prejudice.

Question whether substitution of a guidewall for a dolphin exceeded the permit from the Corps of Engineers (and constituted an obstruction to  navigation in violation of the Rivers and Harbors Act) prevented summary judgment that the presumption from THE PENNSYLVANIA Rule should apply against the owner of the guidewall that was struck by a tug and barge; In re Gulf Inland Contractors, Inc., No. 22-cv-2453, 2024 U.S. Dist. LEXIS 221945 (E.D. La. Dec. 9, 2024) (Barbier).

Opinion

This litigation arises from an allision between a tug and barge (the tug M/V BIG HORN and barge CHELSEA A, owned by Gulf Inland Contractors) and the Bayou Terrebonne Miter Gate Lock System while the tug and barge were transiting Bayou Terrebonne in Louisiana. The Lock System is owned by (and was built by) the Terrebonne Parish Consolidated Government. Terrebonne Levee and Conservation District is responsible for operating and maintaining the lock system. Gulf Inland filed this petition for exoneration/limitation in federal court in Louisiana, and Terrebonne Parish/Terrebonne Levee and their insurer Great American filed claims seeking to recover for negligence and unseaworthiness. Gulf Inland moved for summary judgment on the unseaworthiness claim, arguing that the claimants are not owed the warranty of seaworthiness because owners of a marine structure with which a vessel allided do not fall within the narrow class of persons owed the warranty of seaworthiness. The claimants did not disagree, and Judge Barbier granted summary judgment on the unseaworthiness claim, holding that the liability of Gulf Inland would be measured under the standard of reasonable care.

In response to the claims filed in the limitation action, Gulf Inland asserted that there was comparative fault on the part of the claimants as well as GIS Engineering and Sealevel Construction (for a defect in the design and function of the lock structure that was designed and built by GIS and Sealevel). However, Gulf Inland did not file a third-party complaint against GIS and Sealevel, and Great American argued that fault could not be attributed to the non-parties, reasoning that liability under the maritime law is joint and several and that the claimants could obtain a judgment for the full amount from all joint tortfeasors. Judge Barbier agreed that joint tortfeasors are held jointly and severally liable; however, he added that a joint tortfeasor’s liability is determined through comparative fault under Reliable Transfer. He rejected the argument that the doctrine of comparative fault enunciated in Reliable Transfer only applied to collision cases, and he held that Gulf Inland was not required to make GIS or Sealevel third-party defendants in order for their fault to exonerate or reduce the liability of Gulf Inland.

After the allision, the claimants had discussions with Gulf Inland’s insurer, Clear Spring Property & Casualty Co., until Gulf Inland filed the limitation action. The claimants brought Clear Spring into the litigation as a third-party defendant, seeking attorney fees, penalties, and special damages for failure to timely pay for the property damage under the Louisiana Insurance Code. Clear Spring and Gulf Inland moved for summary judgment, arguing that attorney fees are not recoverable under the general maritime law and that penalties are non-pecuniary and are not recoverable under the general maritime law. Judge Barbier agreed that this case is governed exclusively by the general maritime law and that attorney fees and penalties for bad faith claim handling are not available in the claimants’ action against the vessel’s insurer. Therefore, he granted summary judgment dismissing those claims.

Terrebonne Levee and Conservation District (TLCD) sought damages for engineering costs, cost of repairs, costs associated with retrieving and backing up security footage, payment of wages of TLCD employees, and administration costs. Gulf Inland moved for summary judgment on TLCD’s claims, citing the economic loss rule from Robins Dry Dock, arguing that TLCD had no proprietary interest in the lock system that would allow it to recover economic losses. TLCD argued that it had a sufficient proprietary interest in the lock system because it operated the system with actual physical possession and was responsible for repairing the damage. Judge Barbier agreed that something less than outright ownership was sufficient to bring a claim for economic loss, but the party would have to be “tantamount to an owner.” Finding that there was a genuine fact issue whether TLCD had a sufficient interest to be considered an owner, Judge Barbier denied Gulf Inland’s motion for summary judgment. See October 2024 Update.

The issue of reinsurance was then addressed by the parties and by Judge Barbier. Great American, the property insurer for Terrebonne Parish, filed a subrogation claim in Gulf Island’s limitation action and a third-party action (under the Louisiana Direct Action Statute) against the liability insurer for Gulf Island (Clear Spring) and its unnamed reinsurers. Great American was taking steps to avoid the result in a previous case in which the reinsurers were dilatory in paying settlements. Great American argued in the present action that Clear Spring was a “fronting” insurer that allowed reinsurers to write policies on Clear Spring’s paper, such that the reinsurance agreement would be a contract of liability and not indemnity, permitting Great American to bring suit directly against the reinsurer under the Louisiana statute. Clear Spring submitted four redacted reinsurance agreements that contained a provision stating that the reinsurance did not confer any rights on third parties and moved to stay discovery with respect to reinsurance and to dismiss the direct action. However, Great American sought the unredacted agreements to evaluate the risk allocation provisions and moved to compel production. Judge Barbier believed that Great American had sufficiently stated how the discovery would uncover its claim that the reinsurers may be liable under the Direct Action Statute. Therefore, he declined to stay discovery and referred the discovery request to Magistrate Judge Dossier to address the scope of discovery. Similarly, Judge Barbier denied the motion to dismiss, without prejudice, pending the additional discovery, reasoning that “if there is language in a reinsurance agreement indicating that the reinsurer agreed ‘to assume and carry out directly with the policyholder any of the policy obligations of the ceding insurer’ then the reinsurance agreement is one of liability.” See January 2025 Update.

Gulf Inland then filed a motion for summary judgment, seeking a ruling that the Southeast Guidewall, with which the barge allided, was an unpermitted obstruction to navigation in violation of the Rivers and Harbors Act. Gulf Inland argued that the permit issued for construction of the lock included a protective dolphin at the southeast corner of the lock and did not include the Southeast Guidewall. Thus, the damage from the allision with the unpermitted structure was presumed to have been caused by the statutory violation in accordance with THE PENNSYLVANIA Rule. Terrebonne Parish responded that the Southeast Guidewall was substituted in place of the dolphin during the construction, served the same purpose as the dolphin, and did not contradict the original intention of the permit. The Director of Environmental Services of GIS Engineering stated that he would not go to the Corps of Engineers to modify the permit unless the change exceeded the project footprint. Considering there to be a fact issue whether there was a violation of the permit and as to whether the Guidewall was an obstruction to navigable waters, Judge Barbier denied the motion for summary judgment.

Limitation pleading failed to allege facts required by Rule F, sufficient facts (not conclusions) to support limitation, and facts to establish that the vessel was not excluded from the Limitation Act as a “covered small passenger vessel;” In re Cornell, No. 8:24-cv-900, 2024 U.S. Dist. LEXIS 222223 (M.D. Fla. Dec. 9, 2023) (Adams).

Opinion

This litigation arises from a collision between a vessel owned and operated by Peter J. Mackey and a vessel owned by Freedom Marine Sales and Freedom Boat Club and operated by John Cornell, the M/V TIMELESS. Mackey filed a suit in federal court in Florida, seeking exoneration/limitation of liability, and Freedom filed an answer and claims (seeking damages, contribution, and indemnity). Mackey filed an answer to the claims. Mackey later amended his complaint, seeking only exoneration of liability, and Freedom again filed an answer with the same claims as previously asserted. Mackey responded with a motion to dismiss under Rule 12(b)(6), arguing that Freedom’s allegations were insufficient to state a claim, that the indemnity claim was barred by Mackey’s allegation that Freedom was at fault, and that the contribution claim was premature. Freedom responded that Mackey waived his right to bring the motion by previously answering and not moving to dismiss the same claims, that the claims were sufficiently pleaded, and that the indemnity and contribution claims are permitted under admiralty law. Magistrate Judge Adams reasoned that an amended complaint does supersede the initial complaint; however, its filing does not automatically revive all defenses or objections that the defendant may have waived in response to the initial complaint. Magistrate Judge Adams concluded that because Mackey answered (instead of moving to dismiss) the identical claims, he could not now move to dismiss them under Rule 12(b)(6). Therefore, she recommended denial of the motion to dismiss. See January 2025 Update.

Meanwhile, John and Brunna Cornell filed a suit in the same Florida federal court, seeking exoneration/limitation as owners pro hac vice of the M/V TIMELESS. Mackey moved to dismiss the action, arguing that the Limitation Act did not apply to a “covered small passenger vessel” and that the complaint did not state a claim for limitation of liability. As to the first claim, Magistrate Judge Adams noted that the complaint asserted that the vessel carried guests, but it did not address its tonnage, the number of passengers, or whether it was a wing-in-ground craft. Therefore, the pleading did not allege sufficient facts to determine whether the recent amendment removed the vessel from the protection of the statute. Magistrate Judge Adams then addressed the issue of whether the complaint sufficiently alleged dominion and control over the vessel that the Cornells could be considered to be owners pro hac vice over the vessel owned by Freedom Marine. She concluded that the allegation that the Cornells had “rental and dominion and control over the vessel” and that others had filed claims against them based on their claimed dominion and control was sufficient to establish the standing of the Cornells to bring the limitation action. Magistrate Judge Adams did conclude that the complaint did not sufficiently state facts required by Rule F with respect to the voyage, whether the vessel was damaged, whether the vessel was damaged, lost, or abandoned (and, if so, when and where), the value of the vessel at the end of the voyage, or specific facts (and not conclusory allegations) to demonstrate that they were not at fault. Therefore, Magistrate Judge Adams recommended that the complaint be dismissed with leave to amend to correct the deficiencies.

Passenger did not establish notice of dangerous condition of strip separating walking surfaces based on the dented condition of the strip, but she did establish notice from a similar incident on a sister ship; passenger sufficiently identified categories of crewmembers to state a claim for vicarious liability; Goroni v. Carnival Corp., No. 1:24-cv-22995, 2024 U.S. Dist. LEXIS 222237 (S.D. Fla. Dec. 9, 2024) (Goodman).

Opinion

Rosa Goroni, a passenger on the CARNIVAL GLORY, tripped and fell over a protruding strip that separated two different deck coverings (carpet and hard deck) as she walked to a lunch table on Deck 10 of the ship. Goroni brought this suit in federal court in Florida against the cruise line, based on negligence, failure to warn, vicarious liability for negligent maintenance, and vicarious liability for failure to warn. The cruise line moved to dismiss the complaint for failure to properly allege notice and vicarious liability and for comingling allegations. Magistrate Judge Goodman noted that the negligence count included multiple causes of action, including negligent failure to provide a reasonably safe deck, negligent crowd control, negligent failure to inspect, negligent failure to maintain, negligent failure to train, negligent failure to comply with safety codes and standards, and negligent failure to implement safety codes and standards. This is improper, and Magistrate Judge Goodman recommended that each alleged breach of duty be pleaded separately. Additionally, Magistrate Judge Goodman noted that each count incorporated by reference the paragraph that pleaded that the cruise line was vicariously liable for the negligence of crewmembers assigned to inspect, monitor, clean, and repair the area where Goroni fell. The comingling of direct and vicarious liability counts required repleading. With respect to notice, the complaint pleaded notice from the apparent nature of the dangerous condition, prior incidents on other ships, the cruise line’s policy, and general foreseeability. Goroni asserted that the condition of the strip was dented from other pedestrians having struck it and that the leading edge of the strip was dented down, evincing that the crew had attempted to push it back down into proper position. Magistrate Judge Goodman believed that the allegations were generic, conclusory, and speculative, and lacked facts sufficient to establish notice. He then considered the prior incidents cited by Goroni, and he did find one incident, 44 days before her fall, in which a passenger allegedly fell on a sister ship when she tripped over an uneven/protruding strip which separated a hallway from a restaurant. This was sufficient, for pleading purposes, to satisfy the notice requirement. Although Goroni did not respond to the cruise line’s arguments that the policy was too vague and conclusory to establish notice or based on general foreseeability, Magistrate Judge Goodman held that her failure to respond would not preclude her from raising these arguments for notice in response to a motion for summary judgment. With respect to vicarious liability, Goroni alleged that “hotel personnel, housekeeping personnel, dining room personnel, and/or maintenance/repair personnel assigned to operate and maintain the area” where Goroni fell negligently maintained/repaired the strip, allowed it to become a tripping hazard, failed to supervise and control passenger use of the area, failed to inspect the strip, and failed to warn. The cruise line argued that Goroni failed to sufficiently identify crewmembers and that this pleading would allow any claim to be one for vicarious liability. Magistrate Judge Goodman disagreed, answering that Goroni had “sufficiently identified the allegedly negligent employees through their roles or tasks.” Consequently, Magistrate Judge Goodman recommended that the cruise line’s motion to dismiss be granted with leave to amend, but that the motion be denied with respect to the pleading of notice and vicarious liability.

Waiver of cruise line’s liability for injury during foreign excursion was valid despite incorporation of damage limits from the Athens Convention in the cruise ticket; Campbell v. SP Cruises OPCO Ltd., No. 24-cv-20955, 2024 U.S. Dist. LEXIS 223038 (S.D. Fla. Dec. 10, 2024) (Lenard).

Opinion

Dawn L. Campbell, a passenger on the AZAMARA JOURNEY, was injured during a shore excursion to the Krka National Park in Croatia when she was struck by the bus that transported her to the park. Campbell brought this suit against the cruise line in federal court in Florida, and the cruise line moved to dismiss the complaint on the ground that the ticket contained a waiver of the cruise line’s liability for injuries that occurred during shore excursions. The cruise line argued that the waiver was not invalidated by federal law because the voyage did not include travel involving a United States port. Campbell responded that the waiver was invalidated by the Athens Convention and other European Union regulations and directives (or there was ambiguity that had to be resolved in her favor). Judge Lenard noted that the United States has not signed or ratified the Athens Convention and that the Convention did not have binding effect in this case. Although the ticket did mention the Convention with respect to limits of liability of the cruise line for injuries and deaths, that incorporation did “not cause the Ticket Contract in its entirety to fall under the scope of the Athens Convention or any of the laws of the European Union.” Therefore, Judge Lenard did not consider the waiver to be invalidated by the Convention or any other EU laws, describing the passenger’s argument as “meretricious.” As the language of the waiver was clear and was reasonably communicated to the passenger, Judge Lenard held that the waiver was valid and enforceable under the general maritime law.

Court confirmed arbitration award that Coblentz agreement was valid, so the insurer owed its policy limit of $1 million, and the amount of the settlement ($3 million) can be awarded if the insurer is found liable for bad faith, but no prejudgment interest was available because the arbitrators did not award it; Cook v. XL Specialty Insurance Co., No. 21-cv-82186, 2024 U.S. Dist. LEXIS 225993 (S.D. Fla. Dec. 12, 2024) (Cannon).

Opinion

Christina Cook was injured when she was struck by the propellers of a diving vessel owned by Deep Obsession. The vessel was insured by a Commercial Wet Marine Insurance Policy issued by XL Specialty with a liability limit of $1 million per occurrence. Cook and Deep Obsession entered into a Settlement Agreement, Assignment and Covenant Not to Execute (Coblentz agreement by which Deep Obsession consented to the entry of a final judgment against it in the amount of $3 million, and Cook agreed not to execute on the judgment in exchange for an assignment of Deep Obsession’s rights against XL Specialty under the Policy. Cook brought this declaratory judgment action against XL Specialty in federal court in Florida, and the court stayed the litigation pending arbitration. The arbitration panel concluded that XL Specialty breached its duty to defend Deep Obsession, that the Coblentz agreement was entered into in good faith, that the assignment of Deep Obsession’s claim was valid and enforceable, that XL Specialty was bound by the terms of the Coblentz agreement, and that XL Specialty was obligated to pay Cook at least the full extent of its policy limit. The panel made no finding on any amount in excess of the policy limit, reasoning that the issue was beyond the scope of the matters submitted for arbitration. XL Specialty paid its policy limit of $1 million, but Cook argued that the federal court should include the $3 million figure in a partial judgment because the panel found that the Coblentz agreement was valid and legally enforceable. Judge Cannon noted that the $3 million was not owed until there was a finding of bad faith on the part of XL Specialty; however, she agreed that the $3 million figure should be included as a proven and fixed element of damages for the forthcoming bad faith action. Cook also argued that the judgment should include $369,583.56 in prejudgment interest on the $1 million award, but Judge Cannon answered that the panel did not award prejudgment interest, even though Cook requested it. As the panel did not mention prejudgment interest, Judge Cannon concluded that the Federal Arbitration Act precluded the court from awarding prejudgment interest.

Ocean carrier’s indemnity claim against railroad was barred by 9-month claim requirement in railroad’s Intermodal Rules and Policies Guide; CMA CGM, S.A. v. BNSF Ry., No. 24-cv-3369, 2024 U.S. Dist. LEXIS 226099 (C.D. Cal. Dec. 12, 2024) (Anderson).

Opinion

Ocean carrier CMA CGM issued a sea waybill to ship a container of 435 cartons of Pen Display devices from Shanghai, China to Memphis, Tennessee via the Port of Los Angeles. CMA CGM subcontracted with BNSF Railway to transport the container by rail from Los Angeles to Memphis. When the container was delivered, the consignee discovered a replacement seal on the container and the theft of the contents. The owner of the cargo brought suit in federal court in New York against the consignee for the value of the stolen goods ($973,502), and the consignee filed a third-party action against CMA CGM, which the carrier tendered to the railroad. When the railroad “refused to take appropriate action,” CMA CGM brought this suit in federal court in California seeking indemnity from the railroad for negligence, breach of contract, and breach of bailment obligations. The railroad moved to dismiss the indemnity action for failure to state a claim, citing the provision in the BNSF Intermodal Rules and Policies Guide that any claim must be filed within 9 months after delivery. The railroad argued that the Rules were incorporated into the contract to transport the cargo and should be considered by the court in response to the motion to dismiss. CMA CGM specifically referenced the Rules as part of the parties’ agreement in its complaint against the railroad, and Judge Anderson believed that it was appropriate to consider the Rules in ruling on the motion to dismiss. CMA CGM did not dispute the application of the Rules. Instead, it argued that the indemnity did not accrue until entry of a judgment or payment by CMA CGM. Judge Anderson disagreed, noting that the 9 months began on the delivery date and that there was no exception for indemnity or payment and no distinction between direct claims and indemnity claims. Although CMA CGM argued that the interpretation advocated by the railroad would lead to the “absurd result” that the cargo interest had a year to bring a suit against the ocean carrier, but the railroad only had 9 months to bring its indemnity claim. However, Judge Anderson did not believe that he could “ignore the clear language of the parties’ agreement, the sophisticated nature of the parties and the legal landscape against which they operate.” Therefore, he dismissed the indemnity action with prejudice.

Towing of vessel that lost the use of its starboard engine was not salvage, and the towing company’s bad-faith litigation seeking to recover salvage merited an award of attorney fees and costs; Marine Towing & Salvage of S.W. FL., Inc. v. One 66’ 2019 Sabre Dirigo, No. 2:22-cv-346, 2024 U.S. Dist. LEXIS 225657 (M.D. Fla. Dec. 13, 2024) (Chappell).

Opinion

Eyrie Holdings is owner of a 66’ Sabre Dirigo known as the M/V TERRY LEAH (a/k/a M/V WHIRLAWAY).  On April 8, 2022, the vessel was sailing around Estero Island, Florida with the intent to return to Tarpon Point Marina in Cape Coral, Florida with Randall Pittman as captain, Monty Biggs as deckhand, and Mary Pittman as a passenger. All three have significant sailing experience. There were no problems until the boat ran over a sand bar at Big Carlos Pass. Biggs checked the engine room and confirmed that no water was entering the boat. Randall was still able to maneuver the boat with the port engine, and he dropped the anchor to determine what to do next after discovering that the starboard engine was inoperable (the starboard propeller was damaged from going through the sand). The boat was in ten feet of water with five feet of water under the bottom of the boat. The seas were choppy, but the waves were not large and the anchor was holding. The sailors discussed whether to return home with the port engine or to call for a tow. The sailors did not believe the boat was in peril (they did not wear life jackets), and they called TowBoat US for assistance. The details of the call are disputed, with the dispatcher testifying that Biggs was frantic and the boat was blowing toward the beach. TowBoat U.S. dispatched Captain Stephen Lilly to respond, and he did not mention salvage when he threw a line to Biggs. The TERRY LEAH lost its anchor during the process, and Lilly tried to retrieve it twice before it was abandoned. The TERRY LEAH was successfully towed to shore, and the Pittmans left. Lilly then brought an iPad to the TERRY LEAH and asked Biggs to sign a delivery receipt that the vessel was brought to the dock safely. Biggs signed it and asked for a copy, but Lilly did not provide a copy. The owner of the tug, Marine Towing & Salvage, later produced a “Marine Salvage Contract” with Biggs’ name misspelled and a second signature that Biggs denied was his (because of the tremors in his hands). Three days after the event, Rich Paul, owner of Marine Towing & Salvage, called Briggs and demanded $500,000 for the services provided by the tug. He later demanded $375,000 as security in lieu of arrest of the vessel, asserting that the TERRY LEAH was aground when Lilly arrived. Randall deposited that sum into a trust account to prevent arrest of the vessel, and Marine Towing & Salvage brought this in rem action against the TERRY LEAH in federal court in Florida seeking a salvage award. The case was tried to Judge Chappell, who found that there was no peril because the boat was not blowing toward the beach and the sailors could have maneuvered the boat if the need arose. She explained that Marine Towing & Salvage relied almost exclusively on “Lilly’s exaggerated version of events,” but his testimony “contradicts nearly all other evidence.” Judge Chappell then addressed the counterclaim from the owner of the TERRY LEAH for fraudulent inducement and fraud, bad faith, overreaching, and vexatious litigation. Judge Chappell noted that the owner had not presented evidence of damages and appeared to present the counterclaim as a fee-shifting mechanism to bypass admiralty’s rule that the prevailing party is not generally entitled to recover attorney fees. Judge Chappell agreed that: “Plaintiff’s bad faith overreaching drove this dispute from start to finish, reasoning: “This is a case where “a vessel owner refused to pay the exorbitant and unjustified demand of a salvor and was forced to go to trial.” Therefore, she held that the owner of the TERRY LEAH was entitled to recover attorney fees and costs.

Judge declined to enjoin shipyard from moving one vessel ahead of another in order to timely complete the work on the vessel being advanced; Great Lakes Dredge & Dock Co. v. Philly Shipyard, Inc., No. 24-cv-6198, 2024 U.S. Dist. LEXIS 226152 (E.D. Pa. Dec. 13, 2024) (Costello).

Opinion

Great Lakes Dredge & Dock Co. contracted with Philly Shipyard to build a subsea rock installation vessel. Philly Shipyard was building other vessels, and the rock installation vessel was in dry dock in front of another vessel that was further along in construction. Philly Shipyard proposed a tandem float to move the other vessel from behind the rock installation vessel so that the shipyard could timely complete the other vessel. Great Lakes opposed the tandem float and brought this suit in federal court in Pennsylvania, seeking a temporary restraining order and preliminary injunction to prevent the tandem float. Great Lakes claimed that the maneuver would breach its construction contract by materially changing the build strategy for the rock installation vessel, putting the vessel at risk of sustaining serious damage. Great Lakes also asserted that the proposal would divert resources away from the construction of the rock installation vessel in favor of other vessels that were under construction. The shipyard responded that the tandem float would actually cause more efficient management of the shipyard that would allow it to complete the rock installation vessel sooner while enabling the shipyard to fulfill its contracts for construction of national security vessels. Judge Costello held an evidentiary hearing and denied the request for a temporary restraining order or preliminary injunction, holding that the tandem float proposal was a matter of larger shipyard operations that had not been shown to cause irreparable harm or to breach the construction contract and that the shipyard would suffer “drastic harm” if was not able to manage the placement of the vessels. Judge Costello concluded that it was reasonable for Great Lakes to want delivery of its vessel at the soonest practicable time and to be concerned about the effects of the tandem float on the construction of its vessel. However, Judge Costello did not believe that it was reasonable for Great Lakes to block the tandem float in the situation presented.

Federal judge in Louisiana enforced the forum-selection clause in a seaman’s contract and transferred his injury suit to federal court in Kentucky; Harris v. Inland Marine Services, Inc., No. 24-cv-1129, 2024 U.S. Dist. LEXIS 226725 (E.D. La. Dec. 16, 2024) (Barbier).

Opinion

Jessie Harris, a resident of Alabama, was employed by Inland Marine as a seaman on the M/V CHIPPAWA. Harris was injured while moving heavy, wet lines between the vessel and barges while docked in St. Rose, Louisiana. Harris brought this suit against Inland Marine in federal court in Louisiana, and Inland Marine moved to transfer the case to the United States District Court for the Western District of Kentucky, Paducah Division, in accordance with the Venue Selection Agreement in Harris’ employment application. Harris presented several arguments in opposition to the motion, and Judge Barbier addressed them in turn. Harris argued that a forum-selection clause should not be enforced against a Jones Act seaman, citing FELA decisions and distinguishing Jones Act cases enforcing forum-selection clauses that are part of an employment contract because the application in this case was not an employment contract. Harris pointed to the provision that the agreement did not create a contract for a definite time and did not alter any party’s right to end the employment relationship. Judge Barbier answered that the application contained a conditional offer of employment, and the cited language only reflected that the employment was not for a set term. Judge Barbier then reviewed the cases involving forum-selection clauses and the Jones Act and held that forum-selection clauses are enforceable against Jones Act seaman. Judge Barbier found that there was no fraud or overreaching specific to the forum-selection clause, and that Harris’ claims were directed to the agreement as a whole. He also found no merit in the argument that the clause contravened a strong public policy in favor of seamen as wards of the admiralty court. Finally, Harris argued that the forum-selection clause violated Louisiana public policy, but Judge Barbier responded that Louisiana public policy could not outweigh the federal presumption favoring enforceability of the clause. As Harris could not show that the public interest factors “overwhelmingly disfavor a transfer,” Judge Barbier enforced the forum-selection clause and transferred the case.

Absolute seaworthiness warranty applied at commencement of renewal of policy, but insurer waived this defense by denying coverage based on policy exclusions; Guardian Insurance Co. v. Lopez-Marrero, Nos. 24-cv-1063, 24-cv-1064, 2024 U.S. Dist. LEXIS 229166 (D.P.R. Dec. 17, 2024) (McGiverin).

Opinion

Severiano Lopez-Marrero acquired a used 2020 Scout, the SEACREST, on June 7, 2022. He purchased a Private Yacht Policy with Guardian Insurance, effective on June 16, 2022, with a limit on the hull coverage of $650,000. The coverage was renewed with a new policy number on June 16, 2023. The SEACREST was stored in a dry rack at the Puerto del Rey Marina in Fajardo, Puerto Rico. A crack in the hull of the vessel appeared in March 2023 (during the first policy term), and Lopez-Marrero noticed the damage on June 23, 2023, a week after the inception of the second policy. Six weeks later, on August 8, 2023, Lopez-Marrero notified Guardian of the damage and presented a claim under the policy. Guardian investigated the claim, and its naval architect concluded that the hull had a manufacturing/construction defect arising out of an inadequate infusion process of the resin system (but he recommended further tests). Guardian attempted to settle the claim, but the negotiations were unsuccessful. It then arranged for further testing, concluding that the damage was caused by non-conformities and/or manufacturer defects that were exacerbated from the vessel’ mooring on the rack. Guardian denied the claim based on several exclusions in the policy (including losses from manufacturing or design defects, wear and tear, deterioration, and failing to store the vessel in accordance with manufacturer recommendations), and it brought this action in federal court in Puerto Rico in admiralty, pleading for a judgment that the claim be denied pursuant to the exclusions. Lopez-Marrero brought a counterclaim for breach of contract, seeking the policy limit of $650,000, plus extracontractual damages. Guardian later filed an amended complaint adding a cause of action that the policy is void due to the vessel’s unseaworthiness at the inception of the policy and a claim for “adjustment of the loss” in accordance with the provisions of the policy addressing a constructive total loss. Lopez-Marrero moved to dismiss Guardian’s claim to declare the policy void ab initio because of the unseaworthiness of the vessel at the inception of the policy on June 16, 2023, arguing that the coverage with Guardian began in June 2022, and the vessel was already covered when the policy was renewed in June 2023. Guardian argued that the absolute warranty of seaworthiness (from Judge Brown’s Spot Pack case) applied at the inception of the renewal because the renewal was a separate policy. Reasoning that a renewal of a policy is a new contract, where there is no provision in the initial policy for its renewal (the terms of the new contract are the same terms as the old one), Magistrate Judge McGiverin held that Guardian had sufficiently alleged a basis for declaring the renewal void ab initio because of the unseaworthy condition at the inception of the renewal. Magistrate Judge McGiverin then considered whether maritime or state law applied to the issue of whether Guardian waived its right to assert unseaworthiness as a defense in light of its denial that was based on policy exclusions and not the unseaworthiness of the vessel. Finding no entrenched maritime rule under Wilburn Boat, Magistrate Judge McGiverin applied Puerto Rico law that waiver entails an intentional abandonment or voluntary relinquishment of a right. The waiver may be manifested by conduct or words, and the insurer must know of the right and intend to abandon it; however, “an insurer is not permitted to retract the adjustment that it is under obligation to submit to the insured, except in cases of fraud on the part of the claimant or other extraordinary circumstances which the insurer had been unable to discover in spite of diligent investigation.” Magistrate Judge McGiverin reasoned that if Guardian had completed a diligent investigation, it would have known of its right to void the policy due to the crack in the hull, and by sending the denial letter based on the exclusions, it accepted that the insurable interest in the vessel and would not be allowed to retract its decision (there was no allegation of fraud or extraordinary circumstances). Lopez-Marrero also challenged Guardian’s pleading for an adjustment of loss, and Magistrate Judge McGiverin agreed to dismiss that claim because Guardian had failed to take any of the steps required in the policy (such as an appraisal) in order to assert the claim. The dismissal was, however, without prejudice.

Failure to investigate seaman’s claim is not a basis for spoliation; Johnson v. Cashman Dredging & Marine Contracting Co., No. 23-cv-11870, 2024 U.S. Dist. LEXIS 229600 (D. Mass. Dec. 19, 2024) (Boal).

Opinion

Joshua Johnson, a seaman employed by Cashman Dredging, was injured when he was knocked off a tug and fell onto a smaller transport boat. He brought this suit against Cashman Dredging in federal court in Massachusetts, with claims for Jones Act negligence, unseaworthiness, maintenance and cure, and failure to provide maintenance and cure. Johnson filed a motion for spoliation, seeking an order of spoliation because Cashman Dredging failed to investigate the incident, resulting in physical evidence and witness observations being ‘irreplaceably lost.” Magistrate Judge Boal reasoned that Johnson was not arguing that there was spoliation from destruction of evidence but based on a “failure-to-collect-evidence theory.” Magistrate Judge Boal found no authority from the First Circuit to support the theory (or analogous cases in other circuits), and, even if there were authority for a failure-to-collect-theory for spoliation, she did not believe that the facts in this case supported use of the “novel claim.” Johnson cited the cases awarding punitive damages for denial of maintenance and cure when the employer fails to conduct a reasonable investigation. However, the cases do “not support the proposition that shipowner-employers have a duty to investigate a maintenance and cure claim.” Nonetheless, Cashman Dredging did investigate the claim in accordance with Johnson’s statement at the time of the accident, and Magistrate Boal denied the motion for spoliation.

Death claim and two indemnity claims presented a multiple-claims situation in a limitation action, and the judge declined to lift the stay so that the death-claim beneficiary could bring a suit in state court; In re Anchorage Yacht Basin, No. 6:24-cv-1305, 2024 U.S. Dist. LEXIS 230277 (M.D. Fla. Dec. 20, 2024) (Sneed).

Opinion

Anchorage Yacht Basin is owner of a 20-foot Hurricane Fundeck motor vessel that was rented to Michael Millimaci and/or Stone Sparkes for recreational use. Daniel Eduardo Perez was a passenger on the vessel while it was operating in the Intracoastal Waterway near Palm Bay in Brevard County, Florida. Perez went for a swim and drowned while the vessel drifted away after the operators were unable to start the engine or maneuver the vessel to allow him to board. Anchorage Yacht Basin brought this limitation action in federal court in Florida (limitation fund of $11,500), and Marcos Eduardo Perez, Sr., personal representative of the Estate of Daniel Perez, brought a claim in the limitation action (under maritime law and Florida law). Millimaci and Sparkes also brought claims in the limitation action (Sparkes sued for indemnity, contribution, breach of contract, and negligence). Marcos moved to lift the stay so that he could file a wrongful death complaint in state court within Florida’s two-year limitation period, but he did not file any stipulations on behalf of the Estate or Millimaci or Sparkes. As the claims exceeded the value of the vessel, Judge Sneed considered the case to present a multiple-claims-inadequate-fund situation. Although Marcos was concerned that the limitation period would expire before the limitation proceeding concluded, and he stated that he would move the state court for a stay once the action was filed, Judge Sneed answered that the limitation court had the power to adjudicate all of the claims, including the wrongful death claim. Therefore, there was no problem with a time-bar, and Judge Sneed declined to lift the stay to allow a suit in state court.

Potential claimants had standing to challenge default in limitation action, but the judge declined to overturn the default, except for a minor child for whom the state statute of limitations had not run; In re Mackey, No. 3:23-cv-337, 2024 U.S. Dist. LEXIS 231069 (S.D. Cal. Dec. 20. 2024) (Houston).

Opinion

On May 21, 2022, Brian Mackey, owner of a 1990 Triumph Boats 150, 18, was operating the boat, headed northbound on the Colorado River north of the Interstate 10 overpass, when the vessel collided with a jet ski, operated by a minor (H.N.), resulting in the death of H.N. The minor’s mother, Veronica Daisy Carreno (through her attorney at the Omega Law Group), notified Mackey’s insurer of a potential claim for wrongful death, and Mackey filed this limitation action in federal court in California within six months of the notice. Mackey published notice in the Palo Verde Times and sent notice by certified mail to the Omega Law Group and to H.N.’s last known address (the mail was not accepted). After the time for claims passed and no claims were filed, Mackey moved for a permanent injunction, and the court granted the motion and then entered a default on July 19, 2023. A year later, on July 19, 2024, Veronica Carreno (mother of H.N.), Vanessa Carreno (mother of M.A., a minor who was riding on a jet ski nearby), Jaycob Nungaray (cousin of H.N. who was riding on a jet ski nearby), and Juan David Nungaray (father of H.N.) filed motions for relief from the default and from the order barring future prosecution against Mackey, asserting that they had not received proper notice of the limitation action. Mackey challenged the standing of the movants on the ground that they were not parties to the case as they had not filed claims. Although the language of Rule 60(b) does refer to parties, Judge Houston noted that district courts within the Ninth Circuit have allowed a “would-be claimant” to challenge a default in a limitation action. Judge Houston reasoned that potential claimants who did not receive proper notice would have no recourse to challenge an improper default if they did not have a remedy under the Rule. Therefore, he held that the movants had standing and addressed the merits of their motions. In considering whether there was good cause to vacate the injunction and default, Judge Houston noted that California has a two-year statute of limitations. As the deadline to file claims expired on May 21, 2024, Judge Houston held that the claims of Veronica, Juan David, and Jaycob, who are adults, were barred and would not be permitted in the limitation action. The situation was different with respect to the claim of M.A., as the statute of limitations had not begun to run with respect to the minor, who pleaded a negligence remedy under California law for being present at the scene of the injury to a close relative. As M.A. did not appear in this case and was not represented until after the entry of default, Judge Houston concluded that M.A.’s due process rights were violated, and he vacated the default and injunction with respect to M.A.

After reversal by the Ninth Circuit, District Judge transferred seaman’s case filed in violation of forum-selection clause rather than dismissing it when a new suit would no longer be timely; Patrick v. Trident Seafoods Corp., No. 23-cv-4, 2024 U.S. Dist. LEXIS 231631 (D. Hawaii Dec. 23, 2024) (Watson).

Opinion

Jenos Patrick entered into an employment contract with Trident Seafoods to work as a seaman on the M/V SEATTLE ENTERPRISE. He brought this suit in federal court in Hawaii, seeking to recover for multiple injuries and for wages that he claims he was not paid. He brought claims for negligence under the Jones Act, unseaworthiness of the SEATTLE ENTERPRISE, infliction of emotional distress, an accounting with respect to the voyage on the vessel, and failure to pay wages. Citing the forum-selection clause in the employment contract, requiring that a suit be brought in the federal or state courts of King County, Washington, Trident moved to dismiss the case or, alternatively, to transfer the case to the federal court in King County, Washington (Western District of Washington). The response was due on May 12, 2023, and two days after the deadline, on May 14, Patrick filed a proposed stipulation between the parties, purporting to give him until May 15 to file the response. Patrick missed that deadline and filed a response on May 16, which the court struck on May 19, 2023. Patrick filed a motion to reconsider the striking of his response, arguing that his counsel was in poor health and the response was filed only 69 minutes after the deadline to which the parties stipulated (because he was trying to include a table of authorities). Patrick also argued that the court should issue a “Writ of Rachmones” or “Writ of Mercy” and should refer the case to the Hawaii Supreme Court to determine if there is a strong public policy in Hawaii regarding the treatment of seamen who are recruited and hired in Hawaii. Chief Judge Watson declined to grant reconsideration as none of the explanations given by Patrick “remotely fit” within the grounds for relief under the Local Rule, stating: “Patrick does not even recognize that Local Rule 60.1 exists or, for that matter, that any relevant legal principle governs the motion for reconsideration.” Chief Judge Watson noted that Patrick had not attempted to satisfy any of the grounds for reconsideration, which Chief Judge Watson surmised was the reason that Patrick relied on the Writ of Rachmones or Writ of Mercy (available “where there is no clear legal right to relief”). He stated: “There is certainly no legal right to relief here, and the Court will not create one simply to avoid the consequences of counsel’s actions.” Turning to the motion to dismiss, Chief Judge Watson agreed that Trident could use a motion to dismiss under Rule 12(b)(6) (as opposed to a motion based on improper venue under 28 U.S.C. Section 1406(a) or Rule 12(b)(3)). Chief Judge Watson concluded that the forum-selection clause applied to all of the claims asserted by Patrick, and he found no reason not to enforce the clause on the record presented. Patrick argued that the dismissal of the case would be prejudicial because of the six-month time limitation in his employment contract to assert claims for unpaid wages or production shares. However, Chief Judge Watson cited the Supreme Court’s decision in Atlantic Marine that “such alleged prejudice is not a relevant consideration when ‘the plaintiff has violated a contractual obligation by filing suit in a forum other than the one specified in a valid forum-selection clause.’” Chief Judge Watson also rejected Patrick’s arguments about the inconvenience of the Washington forum as Patrick waived the right to challenge the preselected forum as inconvenient by his agreement to the forum-selection clause. Consequently, Chief Judge Watson granted the motion to dismiss and dismissed the case without prejudice. The next day, Patrick filed a notice of appeal to the Ninth Circuit. See July 2023 Update.

The Ninth Circuit assumed, without deciding, that a dismissal pursuant to Rule 12(b)(6) was a permissible mechanism to enforce a forum-selection clause. However, the appellate court believed it was an abuse of discretion in this case to dismiss the case without considering a transfer. The court noted that the employment contract required Patrick to bring an action for recovery of wages within 6 months, and an action in the selected forum would no longer be timely. In contrast, a transfer of the existing suit would simply move the timely claim to the proper venue. Therefore, the Ninth Circuit remanded the case to the district court to consider the alternative request to transfer the case. See December 2024 Update.

In response to the Ninth Circuit’s remand, Chief Judge Watson explained that “while Patrick’s briefing on this issue, and the case in toto, has been almost universally unpersuasive and, as will be explained, self-defeating, the Court chooses to transfer this action to the federal judicial District that is consistent with the parties’ contract.” Chief Judge Watson noted that “Patrick opposed transfer of this case to Washington . . . for specific reasons, including the alleged ‘personal and financial hardship’ he would suffer if forced to litigate in Washington.” Chief Judge Watson added that “Patrick’s briefing further reflects a blatant attempt to forum shop” (choosing the forum “that he hoped would have a ‘strong’ policy in favor of seamen”). Chief Judge Watson set forth three factors that supported the transfer. First, although Section 1406(a) contemplates dismissal and transfer as options for the court when the suit is filed in the wrong division or district, Section 1404(a) provides only for transfer to a district to which the parties have consented. Second, Chief Judge Watson found no sanction in the contract (such as dismissal of the suit) for the situation where a party violates the forum-selection clause. Third, despite the “conscious decision” of Patrick’s counsel to “ignore and oppose the forum selection clause in the hope of obtaining a more favorable outcome in what he perceived to be a more hospitable forum,” the preference for deciding a case on the merits, together with the other factors, resulted in Chief Judge Watson finding that the interests of justice weighed “barely in favor of sparing Patrick the consequence of at least this action.” Regardless of “Patrick’s questionable litigation practices,” Chief Judge Watson transferred the suit to the Seattle Division of the United States District Court for the Western District of Washington.

Judge agreed with recommendation of Magistrate Judge that cargo’s claim against freight forwarder for more than $250,000 for delay in delivery of cargo is limited by COGSA’s package limitation to $500; KLM Consulting LLC v. Panacea Shipping Co., No. 22-cv-5194, 2024 U.S. Dist. LEXIS 231655 (S.D.N.Y. Dec. 23, 2024) (Engelmayer).

Opinion

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 the Carriage of Goods by Sea Act, 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. See December 2024 Update.

After granting summary judgment to Maersk Agency, the court entered a default against Panacea and referred the amount of damages to be awarded to KLM to Magistrate Judge Cave. KLM submitted proposed findings of fact and conclusions of law to support an award in excess of $250,000. As Judge Hittner had held that KLM’s claims were subject to COGSA, Magistrate Judge Cave reviewed the terms of the bill of lading to determine the application of the package limitation. The bill of lading described the cargo as “1 Container Said to Contain 3 UNITS.” KLM did not declare a higher value. As there was no indication that KLM was charged separate amounts for the items, the parties appeared to have computed the freight based on the shipment of the container. Therefore, Magistrate Judge Cave recommended that KLM’s damages be limited to $500 (along with prejudgment interest). See September 2024 Update.

KLM did not object to Magistrate Judge Cave’s recommendation, and Judge Engelmayer agreed that the parties had contracted for a flat rate for the shipment. Thus, Magistrate Judge Cave was “on target in concluding that COGSA’s limitation of liability applies, barring KLM from recovering the full amount of compensatory damages it sought.” Consequently, Judge Engelmayer ordered entry of judgment in favor of KLM against defaulting defendant Panacea in the amount of $500.

Judge in federal limitation action declined to lift the stay on enforcement of the state court judgment ($15 million) up to the amount of the letter of undertaking ($2 million) as the value of the vessel had not yet been determined; In re Osage Marine Services, Inc., No. 4:21-cv-347, 2024 U.S. Dist. LEXIS 233327 (E.D. Mo. Dec. 27, 2024) (Sippel).

Opinion

Casey Redmond, who was 22 years old, was working as a deck crewmember on Osage Marine’s tug M/V RAIN MAN and was assigned to help put a barge into a fleet that was being towed by the tug. Redmond’s supervisor stepped onto the barge, noticing that there was cornmeal on the deck that made it slippery. He then heard Redmond’s tools hit the deck, and he heard the splash from Redmond falling into the Mississippi River. The supervisor saw Redmond floating in the river, but his body submerged and was never found. Recovery crews found his life jacket, and the back plate was cut in half. There was nothing in the river that could have caused the cut other than the tug or its propeller. Osage Marine filed a limitation action in federal court in Missouri (with a letter of undertaking in the amount of $2 million) after it was presented with a death certificate from Candace Love, the only surviving parent of its employee Casey Redmond. Love filed a claim in the limitation action as Redmond’s parent and sought to lift the stay as the single claimant. Osage Marine objected that Love did not have standing to bring the claim because the only person entitled to assert the claim is the personal representative of the seaman. Therefore, she lacked standing to lift the limitation stay. Judge Sippel disagreed, stating that Osage Marine’s argument was addressed to the merits. As there was only one claim, Judge Sippel dissolved the stay and held that the entitlement of the claimant and the nature of relief to which she may be entitled could be addressed in the forum of her choosing. See August 2021 Update.

Love then brought a suit against Osage Marine in state court in St. Louis, Missouri, seeking damages of more than $51 million for Redmond’s conscious pain and suffering prior to his death and loss of his economic support and pecuniary services. Redmond lived with his mother in her home, and she testified that he helped keep the house clean, cut the grass, shoveled snow, fixed things around the house, and occasionally contributed $100 or so to help her with the bills. She also testified that he helped her take care of her Type I diabetes. Shortly before trial, Osage Marine declined to contest liability or the right to an award of the elements of damages that are available and proven under applicable law.  Love asked the jury to award $31 million, and Osage Marine argued that the award should not exceed $1 million. The jury returned a verdict in the amount of $15 million, and Osage Marine challenged the verdict on appeal to the Missouri Court of Appeals. Writing for the court of appeals, Judge Stevens agreed that Love could recover for Redmond’s pre-death pain and suffering if she could establish that Redmond was conscious after he fell into the river. The evidence established that Redmond stepped onto the deck of the barge wearing a life vest. The supervisor heard his tools bounce on the barge and Redmond fall into the river. Another deckhand saw Redmond floating in the river, and Redmond then went underwater. Love argued that Osage Marine did not prove that Redmond was rendered unconscious or died instantaneously on falling, and Osage Marine’s vice-president of operations conceded that it was likely that Redmond hit the propeller while wearing his life jacket, which killed or maimed him. Osage Marine argued that Love failed to carry her burden of proof as there was a reasonable inference that Redmond simply collapsed and fell into the river unconscious. Judge Stevens agreed that Osage Marine may have a point (citing the rule that a jury may not infer pain and suffering from circumstantial evidence when the evidence gives rise to a number of inferences that are equally probable), except for its pre-trial admission that its negligence and failure to provide a safe workplace (as opposed to a sudden collapse) caused Redmond’s death. Therefore, Judge Stevens declined to set aside the award of pain and suffering. Osage Marine also challenged the award for loss of financial support, asserting that Love failed to adduce sufficient evidence for this element of damages. At trial, Osage Marine argued that Love was not financially dependent on Redmond, but Judge Stevens held that dependency was not required and that what was necessary was a reasonable expectation of pecuniary assistance. Love proved that with the evidence of the work that he performed around the house, the assistance he gave her with her diabetes, and the nominal monetary contributions. As to the amount of the award, Judge Stevens noted the broad discretion given to the jury and reasoned that the amount was not so excessive as to shock the conscience. Osage Marine’s other objections to the evidence, arguments, and submission to the jury were dismissed as multifarious or not preserved for appeal (including the argument that the judgment violated the federal limitation court’s prohibition of entry of judgment). The affirmance of the verdict of $15 million when there is a limitation fund of $2 million then brought the federal proceeding back into play. See June 2024 Update.

In the limitation proceeding, Love filed a motion for summary judgment that Osage Marine was not entitled to limitation because it could not disprove privity to the acts and conditions which caused Redmond’s death. Love argued that the admission of liability in state court eliminated any dispute regarding the issue of privity. Osage Marine responded that its admission in state court was not determinative in the limitation case and that the facts demonstrated that it lacked privity. Judge Sippel reminded Love that before he lifted the stay, Love stipulated that nothing from the state court proceeding “will serve as res judicata on matters relating to limitation of Petitioner’s liability.” Judge Sippel explained that “sometimes factual issues determined by the state court must be relitigated in federal court,” citing the Eleventh Circuit’s decision in Beiswenger, in which the court stated that “it is possible that several factual issues that were determined by the state court in resolving the negligence question would have to be relitigated in the admiralty court in resolving the privity or knowledge question.” Thus, the admissions in state court were not binding as to the issue of privity, but Judge Sippel held that they were admissible as evidence in the limitation action. See July 2024 Update.

Love next moved to lift the stay on enforcement of the state-court judgment up to the $2,000,000 letter of undertaking that was filed in the limitation action. Love argued that allowing enforcement up to $2,000,000 would not adversely impact Osage Marine because the amount did not exceed the limitation fund. Judge Sippel disagreed, as the limitation fund had not yet been determined. He added that the amount of the fund could be increased or decreased to reflect the actual value of the vessel. There was also an unresolved issue as to whether the flotilla doctrine should apply to the limitation fund. Accordingly, Judge Sippel declined to lift the stay.

Judge agreed to allow testimony on the intent of the parties as to the meaning of the term “package” and to allow bills of lading from other cases in bench trial to resolve dispute on application of the package limitation, as the sea waybills listed 480 for the number of packages but added that the packages were “into” 24 pallets; HDI Global Insurance Co. v. Kuehne + Nagel, Inc., No. 23-cv-6351, 2024 U.S. Dist. LEXIS 233658 (S.D.N.Y. Dec. 30, 2024) (Liman).

Opinion

This case involves a cargo of electrical wire harnesses scheduled to be transported from Barcelona, Spain to Charleston, South Carolina for shipper Mahle Behr Charleston. Mahle Behr engaged Kuehne + Nagle, a non-vessel operating common carrier for the carriage, and Kuehne + Nagle issued four sea waybills for the cargo. One of the containers fell into the water while it was being loaded in Barcelona, and cargo insurer HDI Global paid for the damage. HDI Global brought this suit in federal court in New York against Kuehne + Nagle, and the defendant moved for summary judgment based on the package limitation in the Carriage of Goods by Sea Act. The parties agreed that the package limitation applied; however, they disagreed as to the number of COGSA packages. HDI Global argued that there were 480 packages based on the listing in the waybills of 480 packages under the heading “Number of Packages” (there were 480 cartons). Kuehne + Nagel argued that there were 24 COGSA packages because the waybills described that the packages were “into” 24 pallets. Although HDI Global argued that the list of the number of packages was dispositive, Kuehne + Nagel argued that there was plain contrary intent with the statement that the packages were “into” 24 pallets. As neither party provided satisfactory evidence of the contemporaneous understanding of the document consistent with the wording or significant evidence of industry practice, and as the case was set for a non-jury trial, Judge Liman declined to decide the issue on a motion for summary judgment and awaited “further elucidation” at the bench trial. See October 2024 Update.

Judge Liman asked the parties to advise if they were prepared to stipulate to liability so that trial could proceed with respect to the package limitation, but Kuehne + Nagel declined to stipulate to liability and advised that it had no objection to a bench trial on application of the package limitation. Judge Liman gave HDI Global leave to file a motion for summary judgment on liability and concluded that a bench trial on the package limitation would further convenience and promote efficiency. Accordingly, the court agreed to conduct a bench trial on application of the package limitation. HDI Global also moved for reconsideration of Judge Liman’s order finding a fact question with respect to the number of packages, arguing that the Second Circuit’s Seguros decision was dispositive with its holding that the number appearing under the heading “NO. OF PKGS” determines the limit of liability under COGSA. Judge Liman reiterated that the reasoning in Seguros applies unless the number is plainly contradicted by contrary evidence of the parties’ intent. In this case, the language that the packages were “into” 24 pallets reflected a contrary intent, and Judge Liman denied the motion for reconsideration. See December 2024 Update.

In advance of the bench trial with respect to the package limitation, Judge Liman considered the motions of the parties with respect to the evidence to be presented at trial. HDI Global sought to exclude evidence related to the intent of the parties on the meaning of the term “package.” Judge Liman reasoned that the court could commit reversible error in a bench trial by excluding evidence, but it was almost impossible to do so by admitting evidence. Therefore, he agreed to the admission of testimony on the meaning of “package.” Kuehne + Nagel sought to exclude bills of lading issued by other carriers and by Kuehne + Nagel in an unrelated case, noting that the bills had not been produced in response to requests for production. HDI Global responded that the bills were being offered for impeachment, and they would not prejudice Kuehne + Nagel. Judge Liman agreed with HDI Global and held that they would be allowed for impeachment.

Letters and emails advising of the “serious” injury, the theories for liability, and threatening suit were sufficient to trigger the six-month requirement to file a limitation action; requirements of the Limitation Act and Rule F to “give” notice and for “receipt” of notice were satisfied by the delivery of letters and emails, even if they were not read; In re Wienold, No. 1:24-cv-10400, 2024 U.S. Dist. LEXIS 234026 (N.D. Ill. Dec. 30, 2024) (Chang).

Opinion

Michael Wienold and BCW Partners, alleged owners of a 2019 Kingfisher powerboat, arranged to have the boat transported from Peru to Mexico for a fishing tournament. Three persons crewed the boat, which capsized and sank near Plata Island, Ecuador after encountering a storm. Two of the crewmembers died, and one survived (Jhonathan Holder Galvez Vargas). On March 29, 2023, Vargas’ attorney sent correspondence by FedEx and email to Wienold, and on June 20, 2023, the attorney sent a letter by FedEx and email to Wienold and BCW Partners. On April 1, 2024, Vargas filed suit against Wienold and BCW Partners in state court in Cook County, Illinois, and nearly six months later, on October 15, 2024, Wienold and BCW Partners brought this limitation action in Illinois federal court. Vargas moved to dismiss the limitation action on the ground that it was not filed within six months of the letters and emails, arguing that the court lacked subject matter jurisdiction and, alternatively, that the complaint did not state a claim. Judge Chang rejected the argument that the failure to give notice was a requirement for jurisdiction and, instead, considered whether complaint stated a claim under the Limitation Act. The first letter advised Wienold of the representation of counsel with respect to his injuries from the incident and asserted that his injuries were caused by negligence and the unseaworthy condition of the vessel. The correspondence concluded that Vargas would look to Wienold, as owner of the vessel, to respond in damages. The second letter (to Wienold and BCM Partners) advised that it was the second attempt to reach the owners, repeating that Vargas’ injuries were caused by negligence and unseaworthiness and looking to the owners to respond in damages. The letter explained that the attorney had been in contact with the vessel’s insurer, which advised that notice of the claim had to come from the insured. The letter added that the insurer had tried to contact the owners but had not been successful. Finally, the letter advised that if the attorney did not hear from the owners, their attorney, or their insurer in 30 days, the attorney would file a lawsuit on behalf of Vargas. Wienold and BCW Partners argued that neither letter provided sufficient notice under the Limitation Act because the letters did not state the value of the vessel or the value of Vargas’ claim. Judge Chang disagreed. He noted that the letters informed the owners of the claim, enumerated the theories of liability, and even threatened to take legal action within 30 days. The letters did not expressly state the value of the claim and the value of the vessel, but they described the injury as serious and stated that the claim “may exceed the value of the vessel.” As the vessel was not recovered, the limitation affidavit stated that the value of the vessel was $0. Judge Chang concluded that the letters were sufficient to provide notice of a claim for the Limitation Act. Wienold argued that he did not receive the letters or emails, which were sent to the mailing address and email addresses listed on the boat’s bill of sale, registration with the state of Florida, and insurance policy. Wienold argued that he no longer regularly lives at or visits the address for the mailing, and that he does not check one email account regularly and does not have the password for the other. The letter to BCW Partners was sent to the address of one of its partners, Michael Chernick, who did not notify Wienold of the letter. Wienold argued that he had to have actually read the letters/emails for the six-month period to begin, but Judge Chang disagreed, answering that it did not matter whether there is a difference between giving notice and receipt of notice because the delivery of the letters and emails satisfied the requirement of the statute to “give” notice and the requirement of Rule F for “receipt” of notice, stating: “Vargas sent a letter not once but twice, to two mailing addresses and two email addresses. These contacts were listed on official records about Wienold’s ownership of the boat—its Bill of Sale, registration, and insurance policies—and adequately gave notice of Vargas’s claim.” As the limitation action was filed more than six months after the notices, it was not timely, and Judge Chang dismissed it with prejudice.

Judge declined to apply the snap removal doctrine to removal based on diversity by forum defendants in maritime case Saldin v. Holo Holo Charters, Inc., No. 24-cv-306, 2024 U.S. Dist. LEXIS 234902 (D. Hawaii Dec. 31, 2024) (Kobyashi).

Opinion

Terry W. Saldin, a passenger on a sunset dinner cruise on the HOLOHOLO to and from Port Allen on the Island of Kauai, was injured when the vessel encountered “a predictable sea state.” However, the vessel’s elevated speed resulted in a jolt that threw her in the air and slammed her onto a handrail, causing multiple fractures to her left leg. She asserts that the vessel had been delayed by missile launches from the U.S. Navy and was making up for lost time. Saldin brought suit in the Hawaii Circuit Court against the owner/operator of the vessel, Holo Holo Charters, and the captain of the vessel, and the defendants removed the case to federal court based on diversity. There was no dispute that the parties were diverse, as the captain and Holo Holo are citizens of Hawaii, and Saldin is a citizen of California. However, as the forum-defendant rule prohibits removal if any parties who are properly joined and served as defendants are citizens of the forum state, the defendants argued that the rule was not applicable because they removed the case before they were served (snap removal doctrine). Judge Kobyashi answered that the Ninth Circuit has not ruled on the propriety of snap removals in the context of removal by forum defendants, and she declined to allow removal based on diversity (compare Judge Vitter’s decision in American Commercial Barge Line v. Associated Terminals, discussed in the June and July 2024 Updates, upholding snap removal of a maritime case based on diversity by forum defendants). Although the case was removed solely based on diversity, Judge Kobyashi added that admiralty jurisdiction would apply to the incident except for Saldin’s invocation of the Saving-to-Suitors clause. Consequently, Judge Kobayashi remanded the case to the state court.

From the state courts

Appellate court affirmed findings of fault for seaman’s accident (60% employer; 40% seaman); that the employer did not arbitrarily terminate maintenance and cure; and the awards of $125,000 for general damages, $50,000 for past wage loss, and $20,000 for future medical expenses; however, the appellate court added $1,500 for past medical expenses; Bryant v. Helix Energy Solutions, Inc., No. 2023 CA 1290, 2024 La. App. LEXIS 2145 (La App. 1st Cir. Dec. 11, 2024) (Hester).

Opinion

Michael Bryant was employed by Helix Energy Solutions as an assistant crane operator on Helix’s oil field construction and intervention vessel, the Q4000, located in the Gulf of America. Bryant slipped while ascending a ladder to the crane platform, and he eventually underwent several surgeries on his lower back. Bryant brought this suit against Helix in state court in the Parish of East Baton Rouge, Louisiana, claiming that Helix was negligent under the Jones Act because scaffolding behind the crane ladder created a trip or slip hazard, and also seeking punitive damages for Helix’s failure to continue to pay maintenance and cure. The case was tried to a jury, which found Helix (60%) and Bryant (40%) at fault, and which awarded Bryant $85,000 for past pain and suffering, $50,000 for past lost wages, and $20,000 for future medical expenses. The jury awarded no damages for future pain and suffering or past medical expenses. In response to Bryant’s motion for judgment notwithstanding the verdict, Judge Fields awarded Bryant $40,000 for future pain and suffering. Bryant appealed the apportionment of fault, the damage awards, and the failure to award damages for Helix’s termination of maintenance and cure payments. Writing for the Court of Appeal, Judge Hester noted that the jury heard two different versions of the circumstances with respect to Bryant’s fall as well as evidence that he was not truthful in his interview after the accident. Therefore, the appellate court declined to disturb the jury’s apportionment of fault. Turning to damages, Judge Hester noted that after his first surgery, Bryant was found to have reached maximum cure and underwent a complete physical examination before going to work for more money with Noble and then with Seadrill. In surveillance video Bryant appeared to walk without difficulty and to engage in activities such as fishing, shopping, bending, and carrying large bags and a large chest. After considering all of the evidence, Judge Hester concluded that the awards of $125,000 for general damages, $50,000 for past wage loss, and $20,000 for future medical expenses were sufficient. However, Judge Hester disagreed that the award of no damages for past medical expenses was proper. He noted that Helix stopped paying for medical care after Bryant recovered from his first surgery, and the jury apparently believed that medical treatment thereafter was unrelated to his accident on the Q4000. However, Judge Hester’s review of the evidence found charges for three medical appointments that should have been paid by Helix, and he amended the judgment to add $1,500 for past medical expenses. Finally, Bryant argued that Helix’s termination of maintenance and cure was arbitrary and capricious, citing the declaratory judgment action that Helix filed in federal court with respect to maintenance and cure. The suit was dismissed with an order stating that the evidence showed that Bryant’s doctor had rescinded his prior finding of maximum cure and that Bryant had filed suit in state court. Judge Hester did not believe that the failure to reinstate maintenance and cure (based on the rescission of the finding of maximum cure) was arbitrary and capricious because Helix also considered the videos, an FCE performed on Bryant, and Bryant’s passing of the physical to work for Noble.

Justice of the Peace held that the limitation of liability in the marina’s storage agreement did not clearly exculpate the marina from damage to the vessel’s rudder caused by negligence during the hauling of the vessel from the water; Vinezia v. 701 Marina LLC, No. 24-110003, 2024 N.Y. Misc. LEXIS 24765, 2024 NY Slip Op 51697 (U) (J.P. Ct., Piermont Vill., Rockland Cty, N.Y. Dec. 16, 2024) (Ruby).

Opinion

Vincent F. Vinezia brought his 26’ sailboat, INFINITY, to the 701 Marina (formerly the Tappan Zee Marina) in Piermont, New York to be hauled out of the water and laid up for the winter. Vinezia liked to be present when the vessel was hauled because the rudder had been caught on the straps during prior haul-outs. When he arrived, it was too late for the hauling, and Vinezia was told to leave the vessel tied up to be hauled later. Ten days later, Vinezia returned and found that the rudder’s post was bent and that the rudder would rub against the hull when the tiller moved. The marina did not respond to Vinezia’s request to correct the situation, and Vinezia purchased a rudder for $2,952 and installed it himself. At that time, he noticed heat blistering on the INFINITY’s starboard rub-rail and recently charred debris near the boat. The marina admitted that there had been a fire at the marina and expressed a willingness to compensate Vinezia for the blistered rub-rail. Vinezia brought this suit in the Justice Court of Piermont, Rockland County, New York, seeking the jurisdictional limit of $3,000 in damages, and the case was tried to Judge Ruby. The marina argued in defense that the claim was barred by the limitation of liability in its storage agreement (that the marina is not liable for loss or damage from any cause, including negligence, but not gross negligence or willful misconduct). Judge Ruby first addressed the applicable law and stated that state courts may entertain maritime suits under the saving-to-suitors clause, but that admiralty jurisdiction would not automatically preempt state law. He concluded that the court had jurisdiction to adjudicate the claim by applying New York common law, finding no conflict with maritime law in the event negligence is proven as alleged in the claim. As to the marina’s argument that gross negligence was required, Judge Ruby noted that the agreement provided that the owner accepted the slip, docks, piers, their appurtenances and all common areas and that their usage was at the risk of the owner. There was no mention of hauling. Explaining that an exculpatory clause must clearly exculpate the marina, Judge Ruby concluded that “the Agreement does nothing of the sort.” And, even if it did, the marina had assured Vinezia that it was advisable for him to leave the vessel at the dock. As the marina agreed to compensate for the damage from the fire, Judge Ruby did not have to address whether the limitation applied to that claim. Therefore, Judge Ruby entered judgment in the amount of $3,000, the jurisdictional limit of the vessel, ending the opinion: “May she be met with fair winds, and following seas.”

Kenneth G. Engerrand

President, Brown Sims, P.C.

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Quote

“Great nations, like great men, should keep their word.” Fed. Power Comm’n v. Tuscarora Indian Nation, 362 U.S. 99, 142, 80 S. Ct. 543, 4 L. Ed. 2d 584 (1960) (Black, J., dissenting). Ours is a written Constitution. The promises it makes to the People and the States alike are not hidden. The Court must enforce them. “The powers of the legislature are defined, and limited: and . . . those limits may not be mistaken, or forgotten, the [C]onstitution is written.” Marbury v. Madison, 5 U.S. 137, 176, 2 L. Ed. 60 (1803). While the Court defers to Congress on matters of policy, interpretation of the Constitution is an area where Congress enjoys no authority. Florida Dept. of Revenue v. Piccadilly Cafeterias, Inc., 554 U.S. 33, 128 S. Ct. 2326, 171 L. Ed. 2d 203 (2008) (“[I]t is not for [the Court] to substitute [its] view of . . . policy for the legislation which has been passed by Congress.”); Marbury, 5 U.S. at 177. Legislative ingenuity, dispatched to meet today’s problems, is not measured by any other standard than our written Constitution. Modern problems may well warrant modern solutions, but modernity does not grant Congress a roving license to legislate outside the boundaries of our timeless, written Constitution. See, e.g., Louisiana v. Biden, 55 F.4th 1017, 1032 (5th Cir. 2022) (“The Constitution is not abrogated[, even] in a pandemic.”). The Constitution  must stand firm.

Texas Top Cop Shop, Inc. v. Garland, No. 4:24-cv-478, 2024 U.S. Dist. LEXIS 218294, at *2-*3 (E.D. Tex. Dec. 3, 2024) (Mazzant).

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© Kenneth G. Engerrand, January 31, 2025; redistribution permitted with proper attribution.

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