January 2023 Longshore/Maritime Update (No. 284)
Notes from your Updater:
On December 2, 2022, Judge Lake ordered arbitration of the suit by a pipeline inspector against his employer, rejecting the inspector’s claim that his claim fell within the exception in the Federal Arbitration Act for contracts of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce. See Whitaker v. Enbridge (U.S.) Inc., No. H-22-2354, 2022 U.S. Dist. LEXIS 217623 (S.D. Tex. Dec. 2, 2022).
On December 2, 2022, Magistrate Judge Westmore held that the Biological Opinion regarding the Coast Guard’s codification of Traffic Separation Schemes near the port of Los Angeles/Long Beach, the Santa Barbara Channel, and the port of San Francisco violated the Endangered Species Act and that the Coast Guard’s reliance on the Opinion was arbitrary and capricious. See Center for Biological Diversity v. NOAA Fisheries, No. 4:21-cv-345, 2022 U.S. Dist. LEXIS 220920 (N.D. Cal. Dec. 7, 2022).
The claims of Mark Kane, a seaman and member of the Sailors’ Union of the Pacific, against his employer for breach of contract, breach of the implied covenant of good faith and fair dealing, and intentional interference with economic relations were held to be pre-empted by Section 301 of the Labor Management Relations Act in Kane v. Matson Navigation Co., No. 22-cv-4583, 2022 U.S. Dist. LEXIS 223605 (N.D. Cal. Dec. 12, 2022) (Orrick).
As many marine employers are contractors of the United States, we note the decision of the Fifth Circuit on December 19, 2022, affirming the preliminary injunction issued against the mandate of President Biden that requires the United States to include in its contracts a clause requiring federal contractors to ensure that all members of their workforce (one fifth of all employees in the United States) are fully vaccinated against COVID-19. See Louisiana v. Biden, No. 22-30019, 2022 U.S. App. LEXIS 35009 (5th Cir. Dec. 19, 2022) (Engelhardt).
In our November 2022 Update we reported that a panel of the Eleventh Circuit issued its lengthy decision vacating a preliminary injunction against Florida’s enforcement (against the cruise industry) of its statute prohibiting businesses from requiring patrons to show proof of vaccination against COVID-19 to receive services (the cruise line had required its customers to provide proof of vaccination). Writing for the majority, Chief Judge William Pryor held: “Florida’s statute is a regulation of economic conduct that only incidentally burdens speech, which does not implicate the First Amendment. And its burdens on interstate commerce do not exceed the benefits of furthering Florida’s substantial interests in protecting its residents from discrimination and invasions of privacy.” Thereafter, the cruise line filed a suggestion of mootness with the Eleventh Circuit, stating that it no longer requires proof of vaccinations on its cruises. However, the filings of the cruise line made it clear to the appellate court that it had not suspended its vaccination requirements permanently or categorically, and it asked the court to leave the preliminary injunction against enforcement of the Florida statute intact. Writing for a majority of the court, Chief Judge William Pryor held that the appeal was not moot, and the court declined to dismiss the appeal. Judge Rosenbaum, who dissented from the original opinion, called the decision an “ultra vires power grab” that “tramples Article III’s case-or-controversy limitation on our jurisdiction, and she urged the court to revisit the matter en banc. See Norwegian Cruise Line Holdings Ltd. v. State Surgeon General, No. 21-12729, 2022 U.S. App. LEXIS 35517 (11th Cir. Dec. 22, 2022).
In our July 2022 Update, we reported the “rare” midyear increase in the mileage rate announced by the Internal Revenue Service, increasing the rate for business mileage from 58.5 cents per mile to 62.5 cents per mile, and the rate for medical or moving expenses from 18 cents per mile to 22 cents per mile, effective on July 1, 2022. On December 29, 2022, the IRS announced an increase in the rate for business mileage, beginning on January 1, 2023, to 65.5 cents per mile, up 3 cents from the midyear increase that has been effective for the second half of 2022. The rate for medical or moving expenses (22 cents per mile) did not increase and remains at 22 cents per mile.
On the LHWCA Front . . .
From the federal appellate courts
Expert testimony was necessary for DBA/LHWCA claimant to establish malpractice against his attorney for settling the compensation claim for less than permanent and total disability; Rollo v. Escobedo, No. 22-50026, 2022 U.S. App. LEXIS 33580 (5th Cir. Dec. 6, 2022) (per curiam)
Robert Rollo was injured in Iraq while working for a United States defense base contractor. He brought a claim pursuant to the Defense Base Act extension of the LHWCA, and he was represented by attorney George Escobedo and the law firm of Carabin & Shaw. The claim was settled, and the Department of Labor issued an order approving a Section 8(i) settlement. After the settlement was completed, Rollo brought a malpractice suit against Escobedo and Carabin & Shaw in federal court in New York, but that action was dismissed for lack of personal jurisdiction. He then brought this suit in federal court in Texas against the attorney and firm. Rollo also filed a petition with the Department of Labor to set aside the compensation order for the settlement as being inadequate. After the petition to set aside the compensation order was denied, Judge Pulliam considered the motions for summary judgment of Escobedo and Carabin & Shaw. Rollo argued that Escobedo committed malpractice by persuading him to settle his claim instead of taking it to trial, alleging Escobedo’s ignorance of the law and failure to read pertinent documents caused Rollo to receive a smaller amount than he would have received had he been awarded permanent and total disability benefits. Escobedo responded that Rollo had not designated an expert to establish the standard of care, breach, and causation, and these points were not within the common knowledge of jurors. Although Rollo argued that breach and causation were self-evident in this case because he was indisputably entitled to receive compensation for permanent and total disability, Judge Pulliam disagreed. Citing the trial-within-a-trial methodology when a legal malpractice action arises from prior litigation, Judge Pulliam held that winning at trial was not certain, only possible, and that the case settled before discovery was complete. As the court would not be recreating a trial but convening a trial, Judge Pulliam did not believe that the trial-within-a-trial methodology was appropriate. Judge Pulliam reasoned that determining what a reasonably prudent attorney would recommend for settlement or trial requires knowledge that is beyond the experience of an ordinary juror. The claim in this case was more complex than the failure to respond to requests for admissions or allowing the statute of limitations to run and required expert testimony to establish the elements of legal malpractice. Without that expert evidence, Judge Pulliam granted summary judgment to Escobedo and Carabin & Shaw.
Rollo appealed the dismissal of his malpractice claim to the Fifth Circuit. The appellate court agreed that expert testimony is only unnecessary in cases of egregious negligence that are obvious to a lay person or established as a matter of law and that Judge Pulliam was correct that Rollo’s claim was not such a case. In the absence of expert testimony, the Fifth Circuit affirmed the dismissal of the malpractice action.
From the federal district courts
Shipyard could remove employee’s asbestos suit based on the Federal Officer Removal Statute; Goffner v. Anco Insulations, Inc., No. 22-3047, 2022 U.S. Dist. LEXIS 216449 (E.D. La. Dec. 1, 2022) (Morgan).
Wilson Goffner claims that he suffers from lung cancer caused by his exposure to asbestos and asbestos-containing products while he was employed as a shipfitter by Avondale. He filed a petition in Louisiana state court against Avondale and parties who designed, manufactured, sold, maintained, or used asbestos and asbestos-containing products to which he was exposed. Avondale removed the case to federal court in Louisiana based on the Federal Officer Removal Statute, and Goffner moved to remand the case to state court. As Avondale established that it was contracted by the Navy to build vessels and that the contracts with the Navy required Avondale to use asbestos, Judge Morgan held that Avondale satisfied the element that it acted under the direction of a federal officer. With respect to the colorable federal defense, Judge Morgan followed the Fifth Circuit’s en banc decision in Latiolais (see March 2020 Update), noting that the defendant only has to raise a federal defense that is plausible and not frivolous and material. Concluding that Avondale sufficiently asserted the elements of the government contractor defense from the Boyle case, Judge Morgan denied the motion to remand.
And on the maritime front . . .
From the federal appellate courts
Sharing attorney fees with attorney involved in the claim administration process for BP’s economic damages settlement for the Macondo/DEEPWATER HORIZON blowout violated disciplinary rules and a suspension was appropriate; In re Andry, No. 22-30231, 2022 U.S. App. LEXIS 32882 (5th Cir. Nov. 29, 2022) (Willett).
Jonathan Andry, a Louisiana attorney, represented oil spill claimants in connection with the court-supervised settlement program established after the Macondo/DEEPWATER HORIZON blowout. Lionel Sutton, a Louisiana attorney who had been representing claimants in the program accepted a job as a staff attorney for the settlement program and referred one of his clients to Andry and requested a portion of the fee earned by Andry. Andry directed an attorney at his firm to send an attorney referral agreement to Sutton’s firm to set forth the division of fees, but Sutton did not sign it. Andry’s firm did make three payments totaling more than $40,000 to Sutton. After an anonymous tip resulted in the appointment of a special master to investigate improprieties in the settlement program, Judge Barbier held an evidentiary hearing and disqualified Andry from participating in the program or collecting fees from it, and the Fifth Circuit denied Andry’s appeal. The special master filed a disciplinary complaint with the en banc court of the Eastern District of Louisiana, which held that a hearing was unnecessary because of the prior investigation. The en banc court concluded that Andry violated the Louisiana Rules of Professional Conduct and suspended him from practicing law before the Eastern District of Louisiana for a year. The Fifth Circuit reversed that decision, holding that Andry was entitled to a disciplinary hearing, and, after holding a hearing, the en banc court for the Eastern District of Louisiana held that Andry violated rules governing the division of fees, prohibiting assistance of another attorney in violating the Rules of Professional Conduct, prohibiting engaging in conduct involving dishonesty, deceit, and misrepresentation, and prohibiting conduct that is prejudicial to the administration of justice. The court handed down three concurrent one-year suspensions and a public reprimand for the violations. On appeal, the Fifth Circuit held that the en banc court had erred in its application of the rules for three of the four violations, but it agreed that the evidence supported the violation of the rule prohibiting attorneys from engaging in conduct that is prejudicial to the administration of justice (it was not the way the fees were split but the fact that money was sent to an attorney involved in the claim administration process by an attorney representing claimants). The Fifth Circuit remanded the case to the en banc court for further proceedings, noting that the court was free to impose on Andry whatever sanction it saw fit for the one violation, including, but not limited to the previous one-year suspension.
Ninth Circuit agreed that the insured’s failure to cooperate relieved its insurers from their obligations under the policy, including the amount the insurer argued was otherwise owed; United States Fire Insurance Co. v. Icicle Seafoods, Inc., No. 22-35024, 2022 U.S. App. LEXIS 33541 (9th Cir. Dec. 6, 2022) (per curiam).
United States Fire and others provided hull insurance covering Icicle Seafoods’ R.M. THORSTENSON. The vessel suffered engine damage during the policy, and the parties settled the claim for hull damage. However, the parties could not reach agreement on the insured’s claim for loss of hire, with the insurers’ adjustment in the amount of $966,638.48, and the insured seeking $4,043,445. The major disagreement arose over the amount of pink salmon that the insured would have processed had the vessel been able to travel to Area M in Alaska. The insurers retained an expert who opined that the insured would have been able to process up to 4.5 million pounds of pink salmon. Counsel for the insurers agreed that the report provided some independent support for the insured’s claim, but did not disclose the report to the insured and designated the expert as a consulting expert. The insurers brought this declaratory judgment action (paying $966,638.48 into the registry of the court as the amount they contended was owed), and the insured filed a counterclaim in which it alleged breach of contract and extracontractual claims under Washington law. During the litigation, the insured discovered an email from the insurers’ counsel describing the expert report and its non-disclosure. The insured demanded that counsel withdraw from the matter and then filed a motion to disqualify the attorney and his firm when he declined to withdraw. Chief Judge Martinez first addressed whether, under Washington’s Rules of Professional Conduct, the lawyer could not act at trial because it was likely that he would be a “necessary witness.” The insured argued that the lawyer was a necessary witness to establish bad faith of the insurer by burying the report. Chief Judge Martinez was not convinced, however, that the relevant evidence was solely with the lawyer and was not obtainable elsewhere. In fact, the email itself was quite powerful. Whether the lawyer was acting on behalf of the insurers could be elicited from employees of the insurer. Finally, Chief Judge Martinez was convinced that the insurers would suffer substantial hardship as marine insurance in general, and loss of hire in particular, require specialized expertise that few lawyers possess, and it would be difficult to find qualified replacement counsel at this stage of the proceeding for seven different groups of insurers (including international clients). Chief Judge Martinez also addressed the insured’s argument that the lawyer should be disqualified because of a conflict of interest with his clients. In the first place, Chief Judge Martinez was not persuaded that the insured had standing to move to disqualify the lawyer for his alleged conflict with the insurer. Additionally, Chief Judge Martinez did not find a significant risk that the lawyer’s representation of the insurers would be materially limited by his self-interest so that his ability to represent the insurers would be compromised. See April 2021 Update.
Icicle and its insurers then filed cross-motions for partial summary judgment on the applicable law and the recoverable amount for economic loss under the policies. Chief Judge Martinez first addressed the applicable law, noting that the USA Marine policy and the Lloyds Slip policy provisions on loss of hire both provided: “This insurance is subject to English law and practice U.S. LAW AND PRACTICE.” Another section in the Lloyds Slip policy provided that any case arising out of the insurance “shall be governed by and construed in accordance with Washington law and practice.” The insurers argued that the policies provided for the application of federal admiralty law and federal common law, but Chief Judge Martinez held that the reference to “U.S. LAW” merely indicated a choice of American law over English law and that there was no conflict with the provision identifying Washington law as the governing law. He added that this interpretation was consistent with Wilburn Boat’s application of state law in the absence of an established maritime rule. Therefore, he applied Washington law to the dispute. Chief Judge Martinez then addressed the question whether Icicle was entitled to a jury trial on its counterclaims in the insurers’ declaratory judgment action that was brought under the court’s admiralty jurisdiction. As Icicle did not allege any independent jurisdictional grounds for its counterclaims, Chief Judge Martinez held that Icicle was not entitled to a jury trial. Turning to the language of the policies, the insurers argued that the policies required a waiting period of 14 days from the date of loss of hire, and Icicle argued that the 14-day period was triggered by physical damage to property. As the loss of hire provision provided that the insurers would pay if “in consequence of . . . loss, damage or occurrence” the vessel could not earn hire for a period “in excess of” the 14-day period, Chief Judge Martinez found the language unambiguously required a loss or damage of property that prevented the vessel from earning hire in excess of the 14-day period before there could be a recovery for loss of hire. Chief Judge Martinez then addressed Icicle’s counterclaims for breach of contract and bad faith and held, as a matter of law, that Icicle’s failure to provide material records or respond to the insurers’ questions hampered the insurer’s investigation and were a breach of Icicle’s duty to cooperate that prejudiced the insurers. Under Washington law, that breach relieved the insurers from their obligations under the policy. Thus, Chief Judge Martinez dismissed Icicle’s counterclaim, including its claims for bad faith and violation of Washington statutes. See December 2021 Update.
After the decision on the motions for summary judgment, the parties stipulated for the entry of a final judgment that included returning to the insurers the $966,638.48 that they had paid into the registry of the court (as the amount they contended was owed to the insured). Icicle Seafoods appealed to the Ninth Circuit, and the majority of the panel affirmed the decision of Chief Judge Martinez. The appellate court held that Chief Judge Martinez misconstrued a specific loss mitigation clause in the policy as imposing a general duty to cooperate, but that error was harmless because Washington law contains an implied duty of good faith that obligates the parties to cooperate with each other so that each may obtain the full benefit of performance. That implied duty exists in relation to the insurers’ specific contractual obligation to cover “actual loss sustained,” and the insurers may be relieved of their coverage obligation if the insured fails to substantially comply with a material request and the insurers are prejudiced as a result. Reasoning that the insurers’ requests for financial information were relevant and germane to the investigation into the loss, that the insured’s partial disclosures did not amount to substantial compliance, and that the insurers were prejudiced as a matter of law by the refusal to provide material financial records for 15 months, the majority concluded that Chief Judge Martinez properly granted summary judgment to the insurers. Judge Nelson dissented, stating that the conclusion that the insured did not substantially comply with its duty to cooperate and that insurers were prejudiced thereby was “troubling.” He reasoned that the issue was not whether the claim was covered but how much the claim was worth. Judge Nelson recognized that “Icicle concededly played hardball with Insurers,” and he agreed that “a penalty for that litigation tactic is appropriate.” However, he did not believe that the penalty should be a complete denial of the claim.
Appellate court agreed that counsel did not act diligently to extend the expert deadline for BELO claims of clean-up workers from the DEEPWATER HORIZON/Macondo blowout and affirmed dismissal for lack of expert testimony; district judges granted summary judgment on BELO and opt-out claims from the spill for lack of evidence on causation; Howard v. BP Exploration & Production Inc., No. 22-11074, 2022 U.S. App. LEXIS 34990 (11th Cir. Dec. 19, 2022) (per curiam); Bland v. B.P. Exploration & Production, Inc., No. 17-3049, 2022 U.S. Dist. LEXIS 211183 (E.D. La. Nov. 22, 2022) (Vance); Brumfield v. B.P. Exploration & Production, Inc., No. 17-3107, 2022 U.S. Dist. LEXIS 213278 (E.D. La. Nov. 28, 2022) (Vance); Campbell v. B.P. Exploration & Production, Inc., No. 17-3119, 2022 U.S. Dist. LEXIS 213284 (E.D. La. Nov. 28, 2022) (Vance); Ellzey v. B.P. Exploration & Production, Inc., No. 17-3163, 2022 U.S. Dist. LEXIS 225700 (E.D. La. Dec. 15, 2022) (Vance); In re: DEEPWATER HORIZON BELO cases, No. 3:19-cv-963, 5:19-cv-260, 5:18-cv-245, 5:19-cv-12, 2022 U.S. Dist. LEXIS 225619 (N.D. Fla. Dec. 15, 2022) (Cannon); Card v. BP Exploration & Production, Inc., No. 17-3121, 2022 U.S. Dist. LEXIS 228351 (E.D. La. Dec. 20, 2022) (Vance); McKay v. BP Exploration & Production, Inc., No. 17-4072, 2022 U.S. Dist. LEXIS 230227 (E.D. La. Dec. 22, 2022) (Ashe); Bice v. BP Exploration & Production, Inc., No. 14-1155, 2022 U.S. Dist. LEXIS 230234 (E.D. La. Dec. 22, 2022) (Vitter).
Opinion DEEPWATER HORIZON BELO cases
Class members of the DEEPWATER HORIZON Medical Benefits Class Action Settlement Agreement were permitted to sue BP for later-manifested medical conditions (Back-End Litigation Option suits), and a number of those suits were transferred to the Northern District of Florida. Judge Rodgers established a procedure to identify bellwether cases for the Florida BELO suits, and that procedure included a revised case management order grouping some of the cases into three groups with modified deadlines. The revised order only applied to plaintiffs represented by the Downs Law Group and the Falcon Law Firm. The Falcon plaintiffs moved to amend the revised order, and the court issued a revised case management order and then a corrected case management order, staying cases with sinus or ocular injuries except for eight bellwether cases, but not staying other cases that remained subject to the revised order. Daniel Howard, who alleged that he contracted cancer from working on the cleanup efforts, was represented by the Falcon Law Firm. His suit was filed on December 11, 2020, and was transferred to Florida on May 6, 2021 where the original case management order was entered with an expert deadline of December 2, 2021. His suit was not subject to the revised case management order (or the corrected order), and he did not move to have his case made subject to the revised order. On the day of the expert deadline, December 2, 2021, Howard moved to have his case grouped under the revised case management order and to have his case stayed, but Magistrate Judge Jones denied the requests on the ground that his counsel had not acted diligently in the eight months between the transfer of the case to Florida and the expert deadline (applying the good-cause standard from Rule 16 for amending scheduling orders). A second motion to amend the scheduling order was denied, and Judge Rodgers rejected Howard’s objections to the decisions of Magistrate Judge Jones. Judge Rodgers then granted BP’s motion for summary judgment on the ground that Howard failed to provide expert evidence on causation. On appeal, Howard argued that his counsel mistakenly believed the case was subject to the revised case management order, but the Eleventh Circuit agreed with Magistrate Judge Jones that the contention was not credible. It was Howard’s burden to show that his counsel acted diligently, and, even on appeal, he did not explain what steps he had taken to obtain an expert witness. Thus, independent of the alleged mistake, there was no good cause provided to amend the order. Accordingly, the Eleventh Circuit affirmed the refusal to extend the time to designate experts and the summary judgment that was granted in the absence of expert evidence.
Lora Ann Card brought suit seeking to recover for exposure to oil and harmful chemicals from the spill in Biloxi, Gulfport, and the Gulf waters of Mississippi. Melinda C. McKay sought to recover for exposures in Ft. McRae, Destin, and Gulf Breeze, Florida. As Card and McKay did not present expert testimony to support their claims, Judges Vance and Ashe granted summary judgment to BP and dismissed the suits. Art Bice, Dae Bice, and Minor Bice sought to recover for conditions they attributed to exposure to oil and hazardous chemicals as residents of Seagrove, Florida and from swimming in the Gulf of Mexico. As these plaintiffs failed to support their claims with expert testimony as to causation, Judge Vitter (after declining to recuse herself) granted summary judgment for lack of evidence of causation and dismissed the suit (declining to consider the report of non-testifying expert Dr. William Sawyer that was untimely disclosed, unsworn, hearsay, and that failed to meet the requirements to establish causation).
Eric Dewayne Ellzey brought suit seeking to recover for problems he related to his clean-up work on the DEEPWATER HORIZON/Macondo spill in Cocodrie, Louisiana and in the Gulf waters of Louisiana. Two weeks after the deadline to disclose expert testimony, Ellzey produced his expert report on causation from Dr. Jerald Cook. Although BP did not establish that it suffered any prejudice from the late submission, Judge Vance declined to consider the report because Ellzey did not proffer a good reason for the late disclosure (also noting that the report was “not actually important in light of the numerous rulings finding Cook’s opinions to be inadmissible). As Judge Vance excluded the report and there was no expert evidence to establish causation, she granted summary judgment and dismissed the suit with prejudice.
Daray Rashon Bland brought suit seeking to recover for conditions he alleged were caused by exposure to crude oil and dispersants in clean-up work after the Macondo/DEEPWATER HORIZON oil spill in areas at the beaches from Moss Point to Bay St. Louis, Mississippi, and at Horn Island, Cat Island, East and West Ship Island, and Petit Bois Island, Mississippi. Herbert Lee Brumfield asserted claims from the clean-up work at Pascagoula Mississippi, Cat, Horn, and Ship Islands, Mississippi, and Hancock, Harrison, and the beaches at Hancock, Harrison, and Jackson County, Mississippi. Sharon Arleta Campbell claimed exposure for clean-up work at Gulfport, Long Beach, and Biloxi, Mississippi. These plaintiffs presented the opinions of Dr. Jerald Cook, an occupational and environmental physician to carry their burden on causation, but Judge Vance held that Dr. Cook’s opinions were insufficient on general causation and were excluded. Consequently, without expert support, these cases were dismissed with prejudice.
The Downs Law Group represents a group of workers who brought BELO suits claiming to have chronic sinusitis and ocular disease as a result of exposure to oil and harmful chemicals from the DEEPWATER HORIZON/Macondo blowout. The workers presented opinions on general causation from Dr. Ranajit Sahu, Dr. Gina Solomon, Dr. David Carpenter, and Dr. Michael Freeman. BP moved to exclude the expert reports and for summary judgment. Finding that the reports did not identify a statistically significant association in relevant epidemiological studies between any chemical or mixture of chemicals in the weathered oil or dispersants, did not meaningfully critique the strengths and weaknesses of the epidemiological studies on which they relied, did not engage in a more than superficial analysis of the Bradford Hill factors, and did not identify a harmful level at which any chemical or mixture of chemicals can cause the medical conditions, Magistrate Judge Cannon recommended that the opinions be excluded and that BP be granted summary judgment for lack of expert evidence on causation.
From the federal district courts
Medical records for treatment of passenger on cruise ship did not satisfy pre-suit notice required by the ticket contract; Owen v. Carnival Corp., No. 18-25372, 2022 U.S. Dist. LEXIS 211974 (S.D. Fla. Nov. 21, 2022) (Altonaga).
Susan Owen and her family were passengers on a seven-day cruise on the CARNIVAL BREEZE. During the voyage, Owen developed an eye condition and visited the medical facility on the ship. The ship’s doctor prescribed medication, but the medication did not help. Owen’s condition worsened, but she did not return to the ship’s medical facility. Three days after disembarking from the ship, Owen visited her own doctor and then a specialist who prescribed a corneal transplant. Her doctors expressed concern about the treatment on the vessel, and Owen brought this suit in federal court in Florida against the cruise line more than 185 days later. The ticket contract contained a pre-suit notice clause requiring passengers to submit full particulars in writing within 185 days after the injury, event, illness or death giving rise to the claim. The cruise line pleaded 26 affirmative defenses to the suit, including one that the suit was subject to the terms, limitations, and conditions in the ticket contract. The cruise line moved for summary judgment, arguing that notice was not provided in accordance with the ticket contract, and Owen responded that lack of notice was not pleaded as an affirmative defense and was waived. Judge Altonaga responded that the defendant may rely on an affirmative defense that is first raised in a motion for summary judgment unless the plaintiff demonstrates that the belated defense prejudiced her. Although Owen cited the discovery that had been completed, she could not establish how she would have done anything differently had the notice defense been pleaded. Consequently, Judge Altonaga allowed the cruise line to rely on the notice defense from the ticket. Turning to the merits of the defense, Owen argued that 46 U.S.C. Section 30508(c) excuses noncompliance with the notice requirement if the defendant had notice of the injury and was not prejudiced by the failure to submit the notice. Owen claimed that the medical records from her treatment on the vessel constituted full particulars in writing of her condition so that the notice requirement was satisfied. However, Judge Altonaga rejected that argument, reasoning that the only knowledge provided from the records was that Owen visited the medical facility and was treated. They did not reflect any knowledge of the adequacy of the treatment or of the claims for negligent treatment that Owen later brought. As Owen did not carry her burden to establish that the cruise line had knowledge of the claim, the notice requirement was a defense and Judge Altonaga granted summary judgment.
Cruise line was not entitled to expert fees after passenger voluntarily dismissed her claim on the eve of trial; Birren v. Royal Caribbean Cruises, Ltd., No., 20-cv-22783, 2022 U.S. Dist. LEXIS 211854 (S.D. Fla. Nov. 22, 2022) (Bloom).
The suit brought by Kathryn Birren and her daughter Mandy Birren returns, again, to the Update. The Birrens brought suit against Royal Caribbean for injuries they allegedly sustained when elevator doors on the HARMONY OF THE SEAS closed abruptly, striking Kathryn’s arm and causing her to collide with Mandy. Mandy voluntarily dismissed her claim before trial, and Judge Bloom awarded $600 to Kathryn. Magistrate Judge Louis then addressed the issue whether the cruise line was entitled to recover fees and costs under Rule 41 as a result of the voluntary dismissal. Magistrate Judge Louis agreed that an award of fees and costs “will ordinarily accompany an order voluntarily dismissing an action without prejudice, but noted that awards of fees have almost never been awarded with a dismissal with prejudice. Finding no basis for an award of fees and costs under Rule 41, Magistrate Judge Louis recommended that fees not be awarded. However, Magistrate Judge Louis agreed that the disposition of Mandy Birren’s claims rendered the cruise line the prevailing party under 28 U.S.C. Section 1920 and recommended that the cruise line renew the request in a properly filed motion to tax costs (limited to recoverable costs under Section 1920). See November 2022 Update. The cruise line filed an objection to the recommendations, arguing that Magistrate Judge Louis did not address the cruise line’s request for medical expert costs. The cruise line argued that the cost of its medical experts should be awarded under the rule that costs can be awarded after a voluntary dismissal for exceptional circumstances—the failure to conduct a meaningful pre-suit investigation that would have resulted in the dismissal of Mandy’s suit before the eve of trial and before the cruise line had to expend money for its medical expert. As Mandy raised questions of law and fact that survived summary judgment and as the cruise line did not show that the litigation was brought in bad faith, Judge Bloom declined to award expert costs to the cruise line.
Owner who was on his pleasure boat at the time of a collision was allowed to proceed with a limitation action; In re Schneider, No. 2:21-cv-549, 2022 U.S. Dist. LEXIS 211894 (M.D. Fla. Nov. 22, 2022) (Steele).
This case involves the collision of two pleasure boats in heavy fog in the Gulf of Mexico off the coast of Naples, Florida. Julie Leonard was operating her vessel, PARADOX, insured by Allstate. James Schneider, owner of the WHISKEY TANGO FOXTROT, was aboard his vessel that was being operated by Robert Slade. Both vessels were damaged, and Leonard claimed to have suffered injuries. Schneider filed a limitation action in federal court in Florida, and Leonard and Allstate filed claims in the limitation action. Allstate filed a motion for partial summary judgment that the limitation act did not apply and that Allstate and Leonard should be able to litigate their claims in state court. After noting the substantially different versions of the accident from the parties, Judge Steele concluded that there was a genuine dispute whether Schneider was negligent and whether that negligence was a proximate cause of the collision. Allstate argued that the facts demonstrated that Schneider had privity or knowledge of the negligence acts so that limitation of liability was not available. However, Judge Steele cited the case law in the Eleventh Circuit that there can be no privity or knowledge without negligence being established. As there was a fact dispute whether Schneider was negligent, the court could not determine whether Schneider personally participated in or had knowledge of negligence. Judge Steele cited the Eleventh Circuit’s caution to district courts not to apply the reasoning of the Fifth Circuit’s Fecht case too strictly with respect to privity of the owner on his vessel, quoting that the “‘owner at the helm’ doctrine is a useful tool directed toward proper decision and not a talisman.” Consequently, Judge Steele denied Allstate’s motion for partial summary judgment.
Captain was sanctioned, again, for trying to bring wage claim after it was denied; judge confirmed arbitration award rejecting the Captain’s claim for unpaid wages in connection with an arbitration over a charter party dispute as the Captain vo9luntarily and actively participated in the arbitration for several months; Absolute Nevada, LLC v. Grand Majestic Riverboat Co., No. 19-cv-11479, 2022 U.S. Dist. LEXIS 211907, 225482 (S.D.N.Y. Nov. 22, 2022, Dec. 14, 2022) (Castel).
This litigation arises from a cancelled charter of Absolute Nevada’s vessel M/V AMERICANA. Absolute Nevada brought a suit in federal court in New York against the charterer, Grand Majestic Riverboat Co., and the parties (including the owners and officers of Grand Majestic) agreed to submit all of their disputes related to the charter and the vessel to arbitration and to refrain from placing a lien on the vessel. Despite the agreement, however, Captain Joseph Baer, the president and a stockholder of Grand Majestic, violated the order by asserting a lien on the vessel for unpaid wages. Even though Baer was not a party to the suit, District Judge Castel held Baer in contempt and issued monetary sanctions against him. Baer appealed the order of sanctions and challenged the jurisdiction of the federal court in New York. As the litigation arose out of a charter party dispute, the Second Circuit began by holding that the district court had admiralty jurisdiction over the suit, which was settled by the agreement for arbitration and by the agreement that Grand Majestic and its officers would not place a lien on the vessel. The appellate court rejected Baer’s argument that he was not subject to jurisdiction in New York (claiming that he lacked sufficient contacts with the state) and held that a non-party’s intentional violation of an injunction entered by a district court is an action “designed to have purpose and effect in the forum” so that an exercise of personal jurisdiction comports with due process. The Second Circuit did vacate the portion of the contempt order that imposed the fine. The monetary sanction, which began at $1,000 per day for Baer’s failure to comply with the court’s order, doubled every seven days until he came into compliance. By the time of oral argument, the fine had reached trillions of dollars. The Second Circuit ordered the district judge to reconsider what was a reasonable sanction. See March 2022 Update.
Captain Baer also brought suit in federal court in Florida against the AMERICANA and Absolute Nevada seeking to recover lost wages and to enforce a maritime lien against the vessel. Magistrate Judge Klindt issued a show-cause order directing Baer to explain why his claims were not barred by the action in New York that found Baer in contempt for violating the terms of the order requiring that all claims arising from the failed charter must be arbitrated. Baer argued that he performed the repair work on the vessel personally as a contractor, separate from the charter agreement between Absolute Nevada and Grand Majestic; however, Magistrate Judge Klindt recommended that the complaint be dismissed because Baer was attempting to re-litigate the same maters that had been addressed in federal court in New York. Judge Davis adopted the recommendation, concluding that Baer’s claims were barred by res judicata. Baer appealed to the Eleventh Circuit, claiming bias based on the statement of the Magistrate Judge that Baer was proceeding pro se and in forma pauperis. The Eleventh Circuit noted, however, that this truthful statement was actually evidence of the lower court’s indication that Baer’s pleadings would be construed more liberally than those drafted by lawyers. The Eleventh Circuit also rejected the argument that counsel for the vessel and Absolute Nevada should be disqualified because the Firm previously represented Baer in the purchase of a passenger vessel, as Baer failed to show any relationship between that purchase and the instant case involving a claim for unpaid seaman wages. Turning to the merits, the Eleventh Circuit agreed that Baer was not a named party in the New York litigation, but the New York court determined that Baer, as president and sole member of Grand Majestic, was expressly bound by the stipulation in that case and the order entered by the district court involved the same cause of action involved in the Florida suit—Baer’s claim for unpaid seaman wages. Consequently, the Eleventh Circuit agreed that the claim was barred by res judicata and affirmed the dismissal of the Florida suit. See December 2022 Update.
After the New York suit was remanded by the Second Circuit, Judge Castel noted that Baer had not complied with his contempt order issued more than two years earlier. Judge Castel found that Baer’s contumacious conduct had caused considerable harm to Absolute Nevada, rejecting Baer’s arguments that Absolute Nevada’s sale of the vessel resulted in no further harm to Absolute Nevada because Absolute Nevada was responsible for removing the lien and had to indemnify the buyer in connection with the lien. Therefore, Absolute Nevada continued to have standing to request relief from the court. Judge Castel ordered Baer to withdraw the lien against the vessel by January 10, 2023 and imposed a monetary sanction of $500 per day thereafter, with the amount doubling every 14 days until he has withdrawn the lien. However, this time Judge Castel capped the monetary sanction at $500,000, excluding attorney fees, costs, and actual damages to be determined separately.
Absolute Nevada had moved in the New York litigation to confirm the arbitration awards declaring that Grand Majestic and/or Captain Baer waived all liens against the vessel regarding claims related to the charter and that Baer’s notice of claim of lien was waived, that the lien was invalid, and that Baer should immediately remove the claim of lien. The court confirmed the award against Grand Majestic and stayed the motion to confirm as against Baer pending his appeal to the Second Circuit. After the conclusion of that appeal, Judge Castel considered the motion to confirm as to Baer and held that Baer’s conduct demonstrated a clear intent to arbitrate his personal services claim. As Baer voluntarily and actively participated in the arbitration proceeding for several months before arguing that his claim was not subject to the arbitration (including his counsel representing at a conference that Baer’s claim was subject to the arbitration clause), Judge Castel held that Baer waived his right to object to arbitrability. Although Baer was not initially a party to the New York litigation, Judge Castel had to determine whether he could entertain the motion to confirm against Baer. As the charter party’s arbitration clause provided for New York arbitration and for judgment on an award by any court of competent jurisdiction, and as Baer consented to the arbitration of his claim, Judge Castel held that Baer had consented to personal jurisdiction before the New York court. Judge Castel then turned to the merits of the motion to confirm the awards and Baer’s motion to vacate the awards. Rejecting all of Baer’s attacks on the arbitration, Judge Castel confirmed the awards.
Judge found fact question on maximum cure when the seaman’s symptoms of PTSD fell below standards indicative of PTSD but his therapist opined that continued therapy would be helpful; Bingham v. Shaver Transportation Co., No. 3:22-cv-5253, 2022 U.S. Dist. LEXIS 212690 (W.D. Wash. Nov. 23, 2022) (Estudillo).
Adam Bingham brought this suit in federal court in Washington seeking to recover for an injury sustained on the M/V VANCOUVER while it was assisting a United States Navy vessel. His employer filed a motion for partial summary judgment on Bingham’s claim for maintenance and cure, and Judge Estudillo concluded that Bingham had offered sufficient evidence that Bingham suffered post-traumatic stress disorder that stemmed from the accident. His employer argued that Bingham had reached maximum cure because his testing indicated that his symptoms fell below standards indicative of PTSD. Citing the testimony of the therapist that continued therapy “would be helpful,” Judge Estudillo found a fact question whether treatment would be curative or palliative and denied the motion for partial summary judgment.
Surreptitious, unauthorized inspection of the vessel by the investigator for the seaman’s attorney and subsequent change in the seaman’s allegations did not merit dismissal of seaman’s suit; In re G&J Fisheries, Inc., No. 20-11703, 2022 U.S. Dist. LEXIS 213365 (D. Mass. Nov. 28, 2022) (Sorokin).
Peter Amaral alleged that he injured his back in November 2017 while lifting a box of scallops on the F/V GEORGES BANKS. He continued to repeat that version of the incident through a year of treatment before he was cleared to work and began working on another vessel. He retained the law firm of Flynn Wirkus Young, which employed a full-time staff investigator, James A Comfort, Jr. Comfort conducted a “surreptitious, unauthorized Vessel inspection” that included boarding the vessel, removing the hatch cover, and photographing the fish hold. Thereafter, there was a “noticeable change” in Amaral’s version of the incident in which he injured his back, describing the injury as involving a slip and fall in the ship’s fish hold in addition to the injury while lifting a basket of scallops. Amaral’s employer, G&J Fisheries, defendant in this suit brought by Amaral in federal court in Massachusetts, moved to compel production of the photographs, and Judge Sorokin rejected Amaral’s work product objection and ordered them produced. G&J then moved for sanctions, asking for dismissal of the case with prejudice or precluding further vessel inspection, disqualifying Amaral’s counsel, or jury instructions addressing the misconduct. Judge Sorokin believed that case dismissal was not warranted in light of the fact that Amaral would have been entitled to an inspection and was not involved in the unauthorized inspection. G&J also argued that the combination of the unauthorized inspection and the change in allegations demonstrated that the slip and fall theory had been fabricated, as the obtaining of the photos of the hold was the linchpin of the change. Judge Sorokin did not believe that the evidence supported dismissal as Comfort had worked in the hold and did not need the photos to change his story. However, Judge Sorokin did believe that the circumstances raised serious concerns and could merit sanctions. Accordingly, he ordered Comfort to provide an affidavit whether he had inspected or boarded other vessels without permission during the period from November 2016 to present; he ordered attorney Flynn to provide an affidavit with information on when he first examined the photos in this case and whether he was aware of Comfort boarding other vessels without permission; and he ordered Amaral and Flynn to show cause why sanctions should not be imposed.
Agreement with cruise line to conduct a jazz cruise may have been a charter for which the cruise line owed a warranty of seaworthiness; Royal Caribbean Cruises Ltd. v. Capital Jazz Inc., No. 22-cv-20187, 2022 U.S. Dist. LEXIS 213769 (S.D. Fla. Nov. 28, 2022) (Gayles).
On May 30, 2019, Capital Jazz, a music promoter, entered into an agreement with Royal Caribbean Cruises to conduct a jazz cruise on the M/V INDPENDENCE OF THE SEAS. With the intervention of COVID-19, the parties entered into to amendments to the agreement, postponing and amending the cruise. At the last minute, as customers attempted to check in for the cruise, the cruise line cancelled the cruise for the safety and well-being of its guests and crew. The cruise line brought this action in federal court in Florida for anticipatory breach of contract and breach of contract, and Capital Jazz filed a counterclaim with counts alleging unjust enrichment, restitution, breach of contract, breach of the implied warranty of seaworthiness, and breach of warranty. The cruise line moved to dismiss the counts in the counterclaim, and Judge Gayles agreed that the claims for unjust enrichment and restitution could not be maintained in light of the express contract between the parties. He dismissed the claim for breach of contract because it was pleaded as a defense, alleging how Capital Jazz complied with the contract and not stating what contractual provisions were breached by the cruise line. The cruise line argued that the warranty claims failed because the agreement was not a charter party so the cruise line did not owe a warranty of seaworthiness. Although the agreement contained a non-charter provision, Judge Gayles noted that it contained references that could imply the existence of a charter party. Judge Gayles declined to dismiss the warranty claims at the stage of a motion to dismiss, ruling that the argument was better addressed at a later stage.
American court lacked jurisdiction to vacate decision in Panamanian arbitration of seaman’s claim based on the provisions of the Panama Convention; Wilson v. Carnival Corp., No. 22-22492, 2022 U.S. Dist. LEXIS 213770 (S.D. Fla. Nov. 28, 2022) (Scola).
Andre Denhario Wilson, a United States citizen, suffered an injury while working as a crew member of the CARNIVAL MAGIC. His claim against Carnival (a Panamanian corporation) was arbitrated under Panamanian law in accordance with his employment agreement, but the arbitrator found the claim to be time-barred under the one-year statute of limitations of Panamanian law. Arguing that the contract contained a three-year period, Wilson brought actions in federal court in Florida seeking to vacate the decision of the arbitrator and to recover under the Jones Act and general maritime law. Wilson argued that the New York Convention (Convention on the Recognition and Enforcement of Foreign Arbitral Awards) was applicable pursuant to the Federal Arbitration Act, and that the New York Convention permitted this vacatur action. The cruise line argued that the Federal Arbitration Act adopted the Panama Convention (Inter-American Convention on International Commercial Arbitration) in this case as the parties’ home countries (United States and Panama) had both ratified the Panama Convention, and the Panama Convention did not authorize a vacatur proceeding in a secondary jurisdiction (where the decision was not made). Judge Scola held that the federal court in the United States was sitting in a secondary jurisdiction under the Panama Convention and lacked subject matter jurisdiction over the claim seeking to vacate the foreign arbitral award. As the court was not authorized to vacate the award, he dismissed the case with prejudice.
Bareboat charterer was liable for attorney fees and prejudgment interest after succeeding in recovering costs of repair plus charter hire until chartered vessels were restored to good condition at redelivery; full attorney fees were awarded despite lack of success on one set of damages; Tug Construction LLC v. Harley Marine Financing LLC, No. 2:19-cv-632, 2022 U.S. Dist. LEXIS 217111 (W.D. Wash. Nov. 28, 2022) (Tsuchida).
Tug Construction was formed to construct tugboats to bareboat charter to Harley Marine Services. Five newly constructed tugs were delivered to and accepted by Harley Marine, and the vessels were tendered for redelivery in 2019 (except one that was arrested after redelivery was not tendered). The parties disputed whether the vessels were redelivered in good condition, and Tug Construction brought this suit against Harley Marine seeking damages for its costs of restoring the vessels together with charter hire and insurance premiums for the period until the repairs were completed. The case was tried in a bench trial to Magistrate Judge Tsuchida, who found that Harley Marine had breached the charter party by failing to redeliver the vessels in the same good condition as at delivery, ordinary wear and tear excepted. Magistrate Judge Tsuchida also held that the term “redeliver” is a term of art by which a vessel is not deemed redelivered until it is tendered at the agreed redelivery location in the same good condition as a delivery and that the charterer is required to pay charter hire and insurance until the vessel is restored to the required condition. Accordingly, Magistrate Judge Tsuchida awarded repair costs, charter hire, and insurance costs to Tug Construction for each of the vessels (a total of $1,408,502.16), plus prejudgment interest and attorney fees. See December 2022 Update.
After adding to the judgment $49,529.69 in costs incurred in the inspection and overseeing of repairs performed on each tug, Magistrate Judge Tsuchida addressed Tug Construction’s request for attorney fees, costs, and prejudgment interest. He awarded prejudgment interest and costs and then considered the request for the fees of Tug Construction’s expert. Concluding that the expert fees were not recoverable under federal law (or Washington state law), Magistrate Judge Tsuchida awarded only the daily witness fee ($120 total for three days). As the charter provided that, in the absence of applicable maritime law, Washington law would govern the charter, Magistrate Judge Tsuchida awarded attorney fees to Tug Construction as the prevailing party. Tug Construction sought $612,239 in fees, and Harley Marine argued that the court should reduce the request by $180,000 for the time spent on unsuccessfully pursuing one set of damages. However, Magistrate Judge Tsuchida rejected the argument that fees should be rejected because the plaintiff did not achieve the level of success that was initially sought. Magistrate Judge Tsuchida reasoned that the plaintiff who obtained substantial relief should not have the fee reduced simply because not every contention was found. Accordingly, he awarded the full amount of fees that were sought.
Distributor and manufacturer of lithium battery (for seaman’s e-cigarette) that exploded on vessel in Louisiana were not subject to personal jurisdiction in Louisiana; In re American River Transportation Co., No., 18-2186, 2022 U.S. Dist. LEXIS 215025 (E.D. La. Nov. 29, 2022) (Lemmon).
Philip Graves was killed and Ronald D. Neal was injured in a fire in the crew cabin of American River’s vessel M/V LOUISIANA LADY that resulted when a lithium ion battery that had been stored on a shelf in the cabin exploded. The vessel was performing tow work at the Sarah Fleet on the Mississippi River in Louisiana. The battery was owned by crew member John Kevin Wolfe for use with his e-cigarette or vape. Wolfe purchased the battery from Epic E-Cigs and More!!! in Prairieville, Louisiana. The outlet obtained the battery from a Texas-based distributor, IMR Electronics. American River brought this limitation action in federal court in Louisiana, and Neal and representatives of Graves brought actions in the limitation proceeding against LG Chem America (distributor of the lithium batteries) and LG Chem, Ltd., the Korean manufacturer). The distributor and manufacturer moved to dismiss the claims for lack of personal jurisdiction, and the claimants argued that they should be subject to jurisdiction on a stream-of-commerce theory; however, the distributor never sold any batteries to anyone in Louisiana, and the batteries it sold were not sold for use by individual consumers as replaceable batteries. Its only contact with Louisiana had no relationship to the lithium ion battery in this case. Thus, Judge Lemmon held that the distributor was not subject to personal jurisdiction in Louisiana. The manufacturer, however, was aware that Amazon was marketing, advertising, and selling the batteries as standalone, rechargeable batteries over the internet. The claimants contended that the manufacturers shipped the batteries to China to be sold to sophisticated users for integration into devices, but they were purchased from China by wholesalers and big box stores, which sold them as standalone batteries, which ultimately resulted in their sale by Epic E-Cigs. However, Judge Lemmon noted that the Fifth Circuit requires that contacts with a state be more than random, fortuitous, or attenuated, or the unilateral activity of another party or third person. As the battery’s presence in Louisiana was the result of unilateral acts of third parties, Judge Lemmon dismissed the claims against the manufacturer for lack of personal jurisdiction.
Uberrimae fidei was available as defense to P&I insurer and was not waived, but there were fact questions as to materiality that precluded summary judgment; Brown v. Yaring’s of Texas, Inc., No. 1:21-cv-355, 2022 U.S. Dist. LEXIS 217375 (S.D. Ala. Dec. 1, 2022) (DuBose).
During the Memorial Day weekend in 2020, Kylie Brown and others took a boat ride on the jet boat M/V EAGLE II, owned and operated by Yaring’s of Texas from Hudson Marina at Orange Beach, Alabama. There were 16 passengers and 2 crew members on the vessel when it topped an unusually high wave and fell hard into the trough of the wave on May 23, 2020. The vessel returned to the dock, and nine passengers disembarked with the other seven continuing the ride. Although at least two of the passengers were complaining of back pain, they walked to their cars without medical assistance. Atlantic Specialty provided insurance for Yaring’s since 2018, and for the 2020 renewal, Yaring’s emailed its broker with a vessel schedule that showed the EAGLE II with 12 passengers. There were efforts to bind the policy but coverage lapsed on April 11, and the insurer requested a no loss letter to bind coverage back to May 22. The insured did not provide the letter, but the insurer mistakenly provided coverage on May 26 with an inception of May 22. The last application left blank the inquiry about losses and did not list the vessels or number of passengers. The policy, however, listed the EAGLE II and the number of passengers as 12. Kylie Brown and other passengers brought this suit in federal court in Alabama against Yaring’s, and Yaring’s brought a third-party complaint against Atlantic Specialty, which had denied coverage based on breach of the passenger warranty in the policy. Atlantic Specialty moved for summary judgment, arguing that coverage was properly denied because Yaring’s breached the passenger warranty by carrying more than 12 passengers and because Yaring’s concealed the accident on May 23 when procuring the coverage (violating uberrimae fidei). Yaring’s argued that uberrimae fidei was not available to the P&I coverage because it was inconsistent with other provisions of the policy. Judge DuBose rejected that argument, however, because the policy language did not run counter to uberrimae fidei as there was no requirement that any misrepresentation or omission be intentional. Yaring’s claimed that Atlantic Specialty had waived the right to assert uberrimae fidei with respect to the failure to disclose the loss because its denial of coverage only cited the passenger warranty, and Alabama law provides that when an insurer denies liability on one ground, it waives other grounds that it may later seek to assert. Concluding that waiver and estoppel do not apply in the context of uberrimae fidei in marine insurance contracts, Judge DuBose held that Atlantic Specialty had not waived the defense of material misrepresentation by failing to assert it in the initial denial. However, she found a fact dispute whether the misrepresentation was material and denied summary judgment. As to the passenger warranty, Yaring’s claimed that it intended to list a 23-passenger limit but mistakenly wrote 12 on the schedule, which was an unintentional mistake. Judge DuBose rejected that argument, but she noted that the premium increase would only have been an increase of $70 out of a premium of $43,325, and she found a fact question on materiality. Therefore, she declined to grant summary judgment on the defense of breach of the passenger warranty.
Lienor might not be able to order the vessel be scrapped, but it was entitled to summary judgment on its lien; John W. Stone Oil Distributor, LLC v. M/V DANA K, No. 1:22-cv-151, 2022 U.S. Dist. LEXIS 217394 (S.D. Miss. Dec. 4, 2022) (Guirola).
John W. Stone brought this suit against the M/V DANA K in federal court in Mississippi, alleging that it had provided diesel fuel and other necessaries to the vessel and asserting a lien on the vessel. The vessel was arrested, and, when no claim of owner was filed, Judge Guirola ordered an interlocutory sale at a judicial auction by the United States Marshal with a minimum bid of $300,000. William Ladnier, doing business as Gulfstream Marine, then filed a claim of owner but did not post security. The Marshal conducted the auction, but no one submitted a bid that satisfied the minimum amount. As the vessel is in poor condition and pumps are required to remove water to protect the engines, John W. Stone asked the court for an order to scrap the vessel. Ladnier opposed the motion, arguing that the vessel should not be scrapped until the validity of John W. Stone’s claim was determined. Judge Guirola reviewed the Supplemental Rules and found no authority for the court to order that a vessel be scrapped. Accordingly, he denied the motion. See December 2022 Update.
John W. Stone then moved for summary judgment with respect to its lien, and provided proof that it had provided diesel oil, trash disposal, and Shell Rotella to the vessel in the amount of $106,264.28. Judge Guirola found that these were necessaries and granted a lien in the amount requested. Judge Guirola also held that John W. Stone was entitled to recover for the custodia legis expenses of the substitute custodian of the vessel, which were $112,790.75 as of November 16, 2022.
Judge awarded half of the attorney fees requested for breach of a vessel storage agreement, but none of the defendants were held in contempt for failing to remove the vessel in accordance with the court’s removal order; Seward Property, LLC v. Arctic Wolf Marine, Inc., No. 3:18-cv-78, 2022 U.S. Dist. LEXIS 218084 (D. Alaska Dec. 5, 2022) (Gleason).
Seward Property owns property in Seward, Alaska, that it uses to drydock vessels. Seward brought this action under the court’s admiralty jurisdiction against Arctic Wolf Marine, Henry Tomingas, and Del Schultz seeking to recover storage charges for the BERING EXPLORER. Arctic Wolf underwent more than one round of involuntary dissolution proceedings, and there was a dispute over ownership of the vessel and responsibility for the storage charges. The litigation was further complicated by the failure of Arctic Wolf or Schultz to answer the suit. Seward sought to hold Schultz and Tomingas personally liable for breach of the storage agreement, and Judge Holland applied Alaska law on piercing the corporate veil to find Schultz liable based on his failure to answer admissions. This allowed Judge Holland to hold Schultz personally liable for Arctic Wolf’s breach of the covenant of good faith and fair dealing. Tomingas did participate in the litigation and counterclaimed for intentional interference with his contract with Schultz for the sale of the BERING EXPLORER by which Tomingas agreed to transfer title to the vessel to Schultz, and Schultz agreed to convey real estate in Arizona to Tomingas. However, the parties did not complete a written contract to that effect. Noting that both Arizona and Alaska have statutes of fraud, Judge Holland granted summary judgment to Seward on Tomingas’ claim of intentional interference with contract. See January 2021 Update. Eventually, the court held that Arctic Wolf and Schultz owed $52,000 in storage charges to Seward and ordered them to cause the BERING EXPLORER to be removed from Seward’s ship storage yard by July 21, 2021. The vessel was not removed by that date, and the court held a two-day bench trial that resulted in the court piercing the corporate veil and holding Tomingas liable for Arctic Wolf’s debt to Seward. Seward then sought attorney fees, costs, prejudgment interest, additional storage charges, and sanctions for failure to remove the vessel. As the storage contract provided for recovery of attorney fees, Judge Gleason addressed the request for $115,463 (more than twice the amount recovered) and noted that the firm had not complied with the local rule and had not provided sufficient evidence of the market rate for maritime lawyers (although she found the rates charged, between $100 per hour to $350 per hour, to be within the range sought and awarded in other cases). After a detailed review of the work and charges, she held that a 50% across-the-board percentage cut was appropriate. Judge Gleason also awarded additional storage charges but, citing the storage agreement, ruled that Seward should expeditiously exercise its right to demolish the vessel and seek recovery of the reasonable costs of doing so. With respect to contempt for failing to remove the vessel, Judge Gleason held that Arctic Wolf was involuntarily dissolved in 2019 and could not have complied with the removal order. Additionally, Tomingas could not be held in contempt as the order requiring the vessel’s removal did not apply to him. Finally, Seward did not establish that Schultz was aware of the removal order. Consequently, Judge Gleason did not find any defendant was in contempt for which sanctions should be ordered.
Claims against parent company were authorized by the Master Service Agreement entered into by its subsidiary, and the mediation requirement in the MSA did not preclude filing suit without mediation to avoid the running of the statute of limitations; Couvillion Group, LLC v. S2 Energy Operating, LLC, No. 2:22-cv-2014, 2022 U.S. Dist. LEXIS 219980 (E.D. La. Dec. 5, 2022) (Fallon).
This suit arises from an alleged breach of a Master Service Agreement by which S2 Energy contracted for dredging and similar marine services with Couvillion Group for the Burrwood oil field in south Louisiana where S2 Energy and its parent company, Krewe Energy, owned oil and gas leases. Couvillion claimed that it performed services for both S2 and Krewe that were not paid, and Krewe moved to dismiss the suit, asserting that it was not a party to the Master Service Agreement. Judge Fallon rejected the argument because the MSA provided that it applied to services provided by Couvillion to S2 or any of its parent, subsidiary, and affiliated companies. Thus, the court had subject matter jurisdiction over the contract dispute and the claim for breach of contract was sufficiently stated as there was privity of contract between the parties. Krewe also argued that the suit should be dismissed because the MSA contained a clause providing that a dispute between the parties had to be submitted to mediation before resorting to litigation. Couvillion answered that the clause contained an exception “for statute of limitation or venue reasons,” and it filed the suit to comply with the Louisiana statute of limitations on its claims under Louisiana law. Judge Fallon concluded that the argument was sufficient to allow the filing of the suit, but he did dismiss the Louisiana claims on the merits because he found that maritime law was applicable to the contract.
Judge assessed fault and amounts recoverable for injuries (including amount paid for past medical expenses) and property damage in vessel allision with platform; In re Lasala, No. 18-11057 c/w Nos. 18-11138, 19-9706, 19-9798, 19-9819, 2022 U.S. Dist. LEXIS 220237 (FOF/COL) (E.D. La. Dec. 7, 2022) (Vitter).
Gabriel Lasala took several friends on his 29-foot boat into the Gulf of Mexico to go tuna fishing with Lasala operating the boat. During the trip the bilge light came on and Lasala noticed that the boat was taking on water. When the engines would not crank, it indicated that the batteries were low, and Lasala reconnected the batteries to allow him to crank the engines and charge the batteries. Lasala determined that the batteries were still going down because the bilge pump continued to remove water from the vessel, so Lasala abandoned the trip. He turned off the radar and used GPS to navigate. The vessel then struck a platform owned by Cantium, LLC that Lasala contended was not properly lighted. Lasala filed this limitation action seeking to limit liability to $1300, and all of the passengers and Cantium filed claims in the limitation action. Cantium moved for summary judgment on the basis that Lasala was not able to limit his liability because Lasala was negligent in several respects and he necessarily had privity with those acts as he owned and piloted his own vessel. In response, Lasala argued that Cantium was solely at fault and he was consequently entitled to limit his liability. Judge Vitter reasoned that Lasala’s argument on the fault of Cantium missed the mark. What mattered for this limitation action is whether Lasala had privity or knowledge with the acts of negligence asserted against him and the unseaworthiness of the vessel. She stated that the only way that Lasala could be entitled to limitation was if Cantium’s negligence were the sole cause, and “there is no chance that the Court will not find Lasala at least some degree contributorily negligent.” She added that as the owner at the helm of his own pleasure craft, Lasala had privity or knowledge as a matter of law. Therefore, Lasala’s claims for exoneration and limitation of liability were dismissed with prejudice. After Cantium settled with the claimants, Lasala moved for summary judgment on the claims of Cantium for contribution and indemnity against Lasala. Cantium’s settlement with the Pressler plaintiffs (passengers) provided that the Presslers reserved all their rights against Lasala and his insurers. However, depending on the percentage of fault ultimately attributable to Cantium, Cantium’s insurers would be reimbursed some or all of its settlement from the Presslers’ recovery. Cantium argued that, as the amount of the settlement was dependent on the allocation of fault to Cantium and Lasala, the principle from AmClyde, barring contribution to a settling defendant, was not applicable. Judge Vitter first held that none of the situations where indemnity is authorized by the maritime law were applicable in this case. She then held that the buyback clause in the settlement agreement did not alter the rule from AmClyde as the settlement did not release all of the Presslers’ claims against Lasala. As the agreement did not allow Cantium to “essentially step into the shoes” of the Presslers to pursue their claims against Lasala for his proportionate share, there was no basis for Cantium’s claim, and Cantium’s claims for contribution and indemnity were dismissed. See July 2021 Update.
Judge Vitter then held a bench trial and held that Lasala was at fault for leaving safe harbor after being made aware of mechanical issues with the vessel, turning off the radar while increasing speed and navigating at night in open water with numerous platforms, not requesting lookout help from the passengers, choosing to continue to a distant harbor rather than returning to safety at a nearby island or harbor, and failing to see the platform or nav aid light. Judge Vitter found Cantium negligent for failing to have two nav aid lights on the platform as required by federal regulations. She apportioned the fault 85% to Lasala and 15% to Cantium. Before quantifying damages, Judge Vitter addressed the question whether to award the amount billed or the amount paid for medical expenses. Judge Vitter noted that the Fifth Circuit had held that the amount paid was the amount recoverable in cases involving maintenance and cure and the LHWCA. Although neither situation was involved in this vessel allision, Judge Vitter held that the claimants would be “made whole” with respect to past medical expenses by recovering the amount paid to the medical providers.
Lasala sought $1.5 million in general damages, $220,000 in past medical bills ($30,528.51 was paid), future medical expenses of $50,000, past lost wages of $629,544, future lost wages of $4,329,531, and $1,200 per month for household services/chores. Judge Vitter awarded $750,000 in general damages, $30,528.51 in past medical expenses, and nothing for future medical expenses, wage loss, or household chores. Passenger Dale Presser sought $305,389.56 in medical expenses ($44,062.23 was paid), $1 million in general damages, $348,033 in past wage losses (plus $120,000 per year for a nurse practitioner to assist in his medical practice), and future wage loss. Judge Vitter awarded $44,062.23 for the past medical expenses, $126,850 in past wage loss plus the cost of the nurse practitioner up to trial, $1 million in general damages, and no future wage loss. Judge Vitter awarded Presser’s son, who has recovered from his physical injuries, $50,000 in past pain and suffering, $10,000 in future pain and suffering, plus $4,525.25 in paid medical expenses. She awarded $18,282.63 for the damages established by Cantium. The amounts were divided in accordance with the 85%/15% allocation of fault. See December 2022 Update.
Lasala moved to alter or amend the judgment, contending that the court had previously granted summary judgment to Lasala denying Cantium’s contribution claim but that Cantium was expecting contractual contribution/reimbursement from Presser’s damage award. Lasala argued that the settlement agreement with Cantium should have required the Pressers to release Lasala (the non-settling defendant) in order for Cantium to be paid anything. Cantium responded that the “buyback provision” of the settlement agreement was not an impermissible assignment of a personal injury claim and did not create a right of contribution. Instead, it was a simple contractual agreement to provide for a reimbursement. Although Judge Vitter did not find any extraordinary or exceptional circumstances to warrant relief under Rule 60(b), she did consider the merits of the Lasala’s motion and answered that the buyback provision was not a maritime contribution action and, instead, was a contractual right. She also rejected Lasala’s argument that he should be given a full credit for the amount previously paid by Cantium (her judgment awarded damages against Lasala for Lasala’s 85% proportionate fault in accordance with the Supreme Court’s AmClyde ruling).
Judge held that letter requesting information on insurance coverage and preservation of evidence was sufficient notice to trigger the running of the six-month period to file a federal action seeking limitation of liability; In re Intrepid Marine Towing & Salvage, Inc., No. 8:21-cv-420, 2022 U.S. Dist. LEXIS 221690 (M.D. Fla. Dec. 8, 2022) (Honeywell).
On June 14, 2020, Captain Curtis Snyder was operating Intrepid Marine’s vessel when it collided with another vessel occupied by claimants, Nicholas Cachussie, Adrienne Cachussie, and Cheryl Watkins. Three days later, on June 17, 2020, claimants’ counsel sent a letter to Intrepid Marine explaining that counsel represented the claimants for losses sustained in the collision with the collision causing significant injuries. The letter requested information on insurance coverage, including the amount of coverage, so that counsel could properly advise his clients of certain legal rights. The letter advised the owner not to discard or alter evidence, requested documents, and advised that the claimants would pursue legal remedies if evidence was spoliated. A second letter was sent to Intrepid’s insurer a few days later advising of the representation. It was more than six months later, however, on February 22, 2021, that Intrepid Marine filed this limitation action in federal court in Florida, and the claimants responded that the action was not filed within six months of written notice of a claim. Magistrate Judge Flynn recommended that summary judgment be granted to the claimants, concluding that the initial letter provided Intrepid Marine with notice of a reasonable possibility of a claim that exceeded the vessel’s value. Magistrate Judge Flynn found notice from seeking information related to a potential claim, placing blame on Intrepid Marine, requesting information about insurance, requesting production of documents, and requesting preservation of evidence “in very serious terms.” Intrepid appealed the recommendation to Judge Honeywell and argued that the letter did not make a claim, noting that there was no demand for any amount and no assertion that the claims could exceed the vessel’s value. However, Judge Honeywell agreed with Magistrate Judge Flynn that seeking information about a potential claim was sufficient, and she entered judgment in favor of the claimants that the limitation action was untimely. [Compare the analysis of the Ninth Circuit in Martz v. Horazdovsky, Nos. 20-35985, 21-15187, 2022 U.S. App. LEXIS 12536 (9th Cir. May 10, 2022) (discussed in our June 2022 Update), in which the appellate court held “the writing must convey to the vessel owner the claimant’s actual intent to initiate a claim”].
Claims filed in state court after lifting the stay in a limitation action defeated the single-claimant exception, and the federal court issued a new stay of the state litigation; In re Williams Sports Rentals, Inc., No. 2:17-cv-653, 2022 U.S. Dist. LEXIS 222208 (E.D. Cal. Dec. 8, 2022) (Mueller).
The death of Raeshon Willis in a jet-ski accident in South Lake Tahoe returns to the Update (June 2019, November 2019, December 2019, August 2020, and January 2022 Updates). Willis, an employee of Zip, Inc. and Berkeley Executives, was on a work trip with fellow employees Thomas Smith and Kai Petrich. As part of a team-building activity, Smith and Willis were riding together in Lake Tahoe on a wave runner that was rented from Williams Sports Rentals. Smith was operating the wave runner when it hit a wave and Willis was thrown overboard and drowned. Williams Sports Rentals filed a limitation action as the owner of the wave runner, and Willis’ mother sought to lift the limitation stay so she could litigate her claim against Williams Sports Rentals in state court. Judge Mendez declined to lift the federal stay, and the Ninth Circuit ordered Judge Mendez to reconsider his analysis. Instead of lifting the stay, however, Judge Mendez ruled that the owner of the jet ski should be exonerated and dismissed the case. The Ninth Circuit then ordered Judge Mendez to lift the stay in the limitation action, and Judge Mendez considered that order to be “unequivocal.” Although agreeing to lift the stay, Judge Mendez did address whether trial of the limitation question should proceed in federal court or await trial of the liability issue in the state court (based on efficient use of judicial resources). As the Sacramento federal courthouse was closed to the public until further notice, Judge Mendez held that the limitation action should be stayed until the completion of the suit in state court.
Willis’ mother had filed a suit in state court in Alameda County against Zip, Inc., Berkeley Executives, Smith, and Petrich. After the limitation stay was dissolved, his mother added Williams Sports Rentals as a defendant. Williams Sports Rentals twice moved to transfer the case from the Alameda County Superior Court to the South Lake Tahoe Branch of the El Dorado Superior Court, and the judge transferred the case, concluding that trial in El Dorado County would be vastly more convenient than trial in Alameda County (the principal place of business of Zip and Berkeley and the residence of Smith and Petrich). The Court of Appeal, however, held that the trial court abused its discretion in granting the transfer because Williams Sports Rentals had not carried its burden to show that both the convenience of witnesses and the ends of justice would be promoted by a transfer. The lower court had found that it “cannot determine what delay might result from changing venue,” and that was insufficient to satisfy the requirement that the ends of justice would be promoted by the transfer. Consequently, the appellate court issued a peremptory writ of mandate directing the superior court to vacate its order transferring the case.
The basis for the lifting of the stay of the federal limitation action was that only the Willis estate had filed a claim in the limitation action and the Willis estate filed the necessary stipulations for a single-claimant exception. The court lifted the federal stay of state-court litigation and substituted a stay of the limitation proceeding pending a resolution of liability in the suit in state court. Several parties in the Willis state-court suit filed cross-claims for indemnity and attorney fees against Williams Sports Rentals. The cross-claimants declined to stipulate to Williams Sports Rentals’ limit of liability. One of the insurers of a cross-claimant also sought to intervene in the limitation action. Williams Sports Rentals then sought to lift the stay of the limitation action as the limitation action no longer presented a single-claimant situation. Chief Judge Mueller agreed that the federal action no longer presented a single-claimant exception, and she lifted the stay of the federal action and enjoined the state-court litigation. On December 12, the Willis estate filed a notice of appeal.
Beneficiaries of Navy machinist who died from mesothelioma from alleged exposure to asbestos at naval shipyards failed to establish that products of two of the defendants were a substantial cause of the decedent’s death without expert evidence; Carpenter v. 3M Co., No. 2-cv-11797, 2022 U.S. Dist. LEXIS 226395 (C.D. Cal. Dec. 13, 2022) (Fitzgerald).
John Carpenter died from mesothelioma that his beneficiaries claimed resulted from exposure to asbestos during his service in the Navy on vessels at the Long Beach Naval Shipyard, the San Diego Naval Shipyard, and the Mare Island Naval Shipyard. His beneficiaries brought this suit in California state court against a number of product suppliers, and the case was removed to federal court based on the Federal Officer Removal Statute. Two of the suppliers, Nibco and Asco Valve, moved for summary judgment on causation, and Judge Fitzgerald began by addressing the applicable law. Although the case was removed based on the Federal Officer Removal Statute, Judge Fitzgerald stated that the basis for removal did not affect the substantive law to be applied. As Carpenter’s exposure occurred on Navy vessels on navigable waters, Judge Fitzgerald held that the locality test for admiralty jurisdiction was satisfied. He also reasoned that the type of incident had the potential to disrupt maritime commerce and that Carpenter’s work in repair and maintenance had a significant relationship to traditional maritime activity. Consequently, he held that the claims were subject to maritime law. On the merits, Judge Fitzgerald considered the issue whether the plaintiff in an asbestos tort action in federal court is required to proffer expert causation testimony that is specific to the dose of asbestos attributable to a particular defendant in order to survive a motion for summary judgment. Absent an extraordinary showing of actual exposure by a particular defendant’s product, Judge Fitzgerald answered yes to the question. Although the beneficiaries offered exposure evidence by testimony from Carpenter’s co-workers, Judge Fitzgerald held that the evidence was not specific as to the frequency, amount, and duration of the exposure. As the beneficiaries failed to produce the opinion of an expert to connect the nature of the asbestos exposure in a Daubert-approved methodology so as to establish that the exposure was a substantial cause of the decedent’s mesothelioma, Judge Fitzgerald dismissed the claims against Nibco and Asco with prejudice.
Magistrate Judge vacated arrest of cargo for lack of lien under English law but declined to find that equitable vacatur of the attachment of cargo was warranted; Victory Shipping Pte. Ltd. v. 50,109 Metric Tons of Cement, No. 4:22-cv-3689, No. 2022 U.S. Dist. LEXIS 226593 (S.D. Tex. Dec. 16, 2022) (Edison).
Victory Shipping and Texcem agreed to a charter party for the shipment of 50,109 metric tons of cement from Karachi, Pakistan, to Houston, Texas. The voyage to Houston was uneventful, but the discharge in Houston took 63 days instead of the six days allowed in the charter party, resulting in Victory Shipping’s claim for demurrage of more than $2 million plus additional costs for which it asserted a lien of $2.3 million. Citing an arbitration clause in the charter party, Victory Shipping filed this suit in the federal court for the Southern District of Texas against the cargo pursuant to the Federal Arbitration Act and sought to attach and arrest the cargo under Supplemental Rules B and C. The court authorized the attachment and arrest, and Texcem appeared and moved to vacate the attachment and the arrest. Although Magistrate Judge Edison referred to attachment throughout his discussion of the arguments and decision, his discussion of the lien reflects that he was actually discussing the arrest when he referred to attachment of the cargo. Texcem argued that the governing documents produced by Victory Shipping did not contain a signature by Texcem and that Victory Shipping could not support the demurrage claim with a written agreement. At the hearing, Victory Shipping admitted that the agreement it sought to apply provided for the application of English law, which would not afford a lien on the cargo. Texcem argued that United States maritime law applied because Rules B and C are procedural remedies, and it admitted that liens arise by operation of law (as it denied the written charter party). However, if American maritime law applied, it would allow a lien on the cargo. Magistrate Judge Edison summarized: “What a curious predicament—the party seeking vacatur has adopted a position that seemingly supports probable cause for the attachment by contending that the charter party is invalid, while the party seeking attachment has candidly admitted, by implication, that probable cause does not exist if the charter party is valid.” Magistrate Judge Edison resolved the issue by noting that “Texcem’s self-defeating position regarding the validity of the charter party—and by implication, the validity of Victory Shipping’s alleged maritime lien—is irrelevant.” As English law would not recognize the claim, Magistrate Judge Edison held that Victory Shipping could not carry its burden to establish the lien. And, even if it could carry its burden, Magistrate Judge Edison would still vacate the arrest on equitable grounds (even though the arrest was to obtain security for arbitration pursuant to the FAA). Texcem was subject to suit in the Northern District of Texas (equitable vacatur), and it consented to the jurisdiction of the Southern District of Texas. Although Victory Shipping argued that Texcem had only been in business for a year, that was not enough, given the value of the cargo being for in excess of the amount in issue, for equity to tip in favor of Victory Shipping. Concluding that “Victory Shipping does not have a valid maritime lien that can sustain a Rule B attachment,” Magistrate Judge Edison vacated the order authorizing attachment. However, he stayed the vacatur to allow Victory Shipping to object to the order. See December 2022 Update.
Victory Shipping sought reconsideration of Magistrate Judge Edison’s ruling. In its initial motion, Texcem moved to vacate the Rule B attachment, and Magistrate Judge Edison noted that vacatur under Rule B would have left the Rule C arrest in place. However, Texcem orally moved to vacate the arrest during the hearing and submitted a letter stating why the arrest should be vacated. As the parties agreed that English law applied and as Victory Shipping did not have a lien for demurrage to arrest a vessel under English law, Magistrate Judge Edison vacated the arrest. Turning to the attachment, Texcem conceded that Victory Shipping met the requirements for an attachment under Rule B but asked the court to apply the equitable vacatur doctrine to vacate the attachment (when the defendant would be subject to personal jurisdiction in an adjacent district, when the defendant is located and subject to personal jurisdiction in the same district as the plaintiff, or when the plaintiff has already obtained sufficient security). Texcem argued that the equities weighed in favor of vacatur because it is located in the adjacent Northern District of Texas, has demonstrated financial stability by paying Victory Shipping millions of dollars, including payments above the full freight charges, and that cement is in high demand and the attachment hinders its ability to generate revenue and will force it to pay disputed amounts. Magistrate Judge Edison respected Texcem’s argument that in no other context can a plaintiff indefinitely disrupt the defendant’s business as it can under Rule B, noting that the courts have continued to affirm that a purpose of Rule B is to assure satisfaction of a potential judgment. Reasoning that the evidence reflected a carelessness on Texcem’s part in the discharge, a lack of a good faith payment after the cargo was discharged, and an absence of proof of Texcem’s stability or solvency, and adding that equitable vacatur “is not some bright-line workaround to longstanding admiralty procedures,” Magistrate Judge Edison held that Texcem had not satisfied its burden to establish that equitable vacatur was warranted.
Passenger sufficiently alleged notice to the cruise line with evidence of prior incidents and the presence of a caution cone in the area where the passenger slipped and fell; judge declined to rule on a motion to dismiss with respect to limitations and laches for medical negligence claims added in an amended complaint; Arouza-Pai v. Carnival Corp., No. 21-cv-23511, 2022 U.S. Dist. LEXIS 226795 (S.D. Fla. Dec. 16, 2022) (McAliley).
Mark Arouza-Pai claimed that he was injured when he slipped on a wet or slippery transient foreign substance on the Lido Deck of the CARNIVAL PRIDE. He brought this suit against the cruise line in federal court in Florida, asserting claims for negligent maintenance of the Lido Deck and negligent failure to warn, and in his second amended complaint, he added claims of negligent treatment from the physician and medical staff of the vessel. The cruise line moved to dismiss the claims for negligent maintenance and failure to warn for lack of sufficient notice and the claim for negligent medical treatment as barred by limitations or laches (claiming that it did not relate back to the filing of the original complaint). Magistrate Judge McAliley rejected the notice argument because the second amended complaint alleged numerous prior substantially similar incidents on the Lido Deck of the vessel and because it alleged that the cruise line had placed a single yellow caution cone near the area where the passenger fell (leading to a reasonable inference that the cruise line knew the Lido Deck would become slippery when wet). As the timeliness of the allegation of medical negligence was raised in a motion to dismiss, Magistrate McAliley held that the argument had to be limited to the four corners of the complaint. Reasoning that the ticket containing the time limitation was not attached to the second amended complaint, Magistrate Judge McAliley could not considered its terms and declined to dismiss the medical negligence claim. Similarly, Magistrate Judge McAliley did not find evidence in the second amended complaint that would establish the elements of laches and held that the defense was beyond the scope of the motion to dismiss.
After six year stay, a bunker supplier was allowed to change its theory and replead its actions to recover from the vessel interests; Aegean Maritime Petroleum S.A. v. KAVO PLATANOS M/V, No. 2:15-cv-172, 2022 U.S. Dist. LEXIS 226991 (W.D. Wash. Dec. 16, 2022) (Chun).
Canpotex, charterer of the M/V KAVO PLATANOS, contracted with OW Bunker to supply bunkers to the vessel in Vancouver, Canada. OW Bunker contracted with Aegean Maritime to deliver the fuel, and Aegean billed OW Bunker $463,050 for the delivery. After OW Bunker declared bankruptcy, Aegean requested that Canpotex pay for the fuel. When payment was not forthcoming, Aegean filed this suit in federal court in Washington seeking to arrest and attach the vessel and bunkers pursuant to Supplemental Rules B, C, and D. The court authorized the arrest and attachment; Canpotex posted security for the release of the vessel and bunkers, and the court granted a stay of the action pending resolution of cases in federal court in New York where similar issues were being litigated arising from OW Bunker’s bankruptcy. After the New York decisions generally held that subcontractors like Aegean did not have valid maritime liens for nonpayment unless they could show that the contractor (OW Bunker) was acting as the agent of the vessel to engage the subcontractor, the Washington court lifted the stay, and Canpotex moved to dismiss the case. Aegean then amended the complaint to claim that its lien was valid under Canadian law and that it was entitled to recover under quantum meruit in the absence of a contract between Canpotex and Aegean. Canpotex argued that Aegean was estopped to bring the Canadian claim because that assertion contradicted the allegation in the initial complaint that American law governed the lien claim and because of the delay in raising that argument. As it was Canpotex who sought the stay, as the case was still in its procedural infancy, and as parties are allowed to plead in the alternative, Judge Chun held that Aegean could assert its lien claim under Canadian law. However, there did not appear to be a contract between Canpotex and Aegean, and Aegean’s terms provided for Greek law and a Greek forum. Accordingly, Judge Chun dismissed the contract claim and gave Aegean leave to replead it. As to the maritime lien, Judge Chun noted that the parties had not addressed the Lauritzen factors to determine if Canadian law applied, and he dismissed that claim to be repleaded with allegations that would allow a determination of the applicable law. Judge Chun reasoned that the unjust enrichment claim fell within the broader category of unjust enrichment, and Canpotex argued that the court did not have personal jurisdiction over Canpotex for the claim. As the vessel and bunkers had been attached under Rule B, Judge Chun held that Aegean could bring an in personam claim for unjust enrichment. But the mere fact that OW Bunker went bankrupt and did not pay did not create an unjust enrichment cause of action against Canpotex, which was not party to the contract between OW Bunker and Aegean. Thus, Judge Chun dismissed the unjust enrichment claim so that Aegean could plausibly allege that Canpotex acquiesced in or encouraged the contact between OW and Aegean. The Rule D petitory action against the bunkers depended on Aegean’s retention of ownership of the bunkers in accordance with the provisions of Aegean’s terms and conditions. As the basis for that contention had not been plausibly pleaded, the claim was dismissed to be repleaded.
Drowning of diver while working at a hydroelectric power plant of a dam on the Chattahoochee River did not satisfy the nexus test for admiralty jurisdiction, but the suit on behalf of the diver’s beneficiaries was removable based on the Federal Officer Removal Statute and federal question jurisdiction; Paxton v. Georgia Power Co., No. 4:22-cv-81, 2022 U.S. Dist. LEXIS 229939 (M.D. Ga. Dec. 21, 2022) (Self).
Georgia Power Co. owns and operates Oliver Dam, a commercial hydroelectric generating facility on the Chattahoochee River on the Georgia/Alabama border in Columbus, Georgia. Alex Reed Paxton, a commercial diver, descended into the water, was trapped by a pipe within the infrastructure of the dam, and drowned. His beneficiaries brought this suit in Georgia state court under a state negligence theory, and Georgia Power Co. removed the suit to federal court in Georgia, basing jurisdiction on federal question, federal officer removal, and admiralty (noting also the diverse citizenship of the parties). The plaintiffs argued that Georgia Power could not remove the case based on diversity because of the forum-defendant rule, and Georgia Power clarified that it would not rely on diversity. Judge Self did not initially reach the issue whether there was removal jurisdiction based on federal question or admiralty as he concluded that the court had jurisdiction under the Federal Officer Removal Statute. He reasoned that the Congressional “subjugations” imposed on Georgia Power by its license issued by the Federal Energy Regulatory Commission reflected governmental control, not governmental guidance–establishing that Georgia Power was acting under a federal officer and that Georgia Power had raised a colorable federal defense of federal preemption of the state-law action alleged by the plaintiffs. See November 2022 Update.
The plaintiffs sought a certification for interlocutory appeal, and Judge Self decided to address the issues of federal question jurisdiction and admiralty jurisdiction before considering whether to certify the decision on remand. Judge Self began with a reiteration of his analysis that Georgia Power satisfied all of the requirements for removal under the Federal Officer Removal Statute. He then turned to the argument that there was federal question jurisdiction based on the allegations in the complaint, despite the plaintiffs’ reliance on state tort law for the causes of action. Concluding that the existence of Georgia Power’s Federal Energy Regulatory Commission license and federal governmental regulations necessarily raised federal issues, Judge Self held that there was federal question jurisdiction. He then addressed whether there was admiralty jurisdiction, and he began with the proposition that Oliver Dam in Columbus, Georgia may have caused the Chattahoochee River to no longer qualify as a continuously navigable waterway. After complaining about the “near-empty record” before the court, Judge Self reasoned that the question was whether the water passing through the dam was capable of transporting commercial vessels, noting that there is no federal interest in the exercise of admiralty jurisdiction if the damming of the waterway had the practical effect of eliminating commercial maritime activity. [Compare the Sixth Circuit decision in Finesseth v. Carter involving Dale Hollow Lake on the Tennessee/Kentucky state line]. In this case, Paxton’s death occurred when he was underwater and encountered a hole in the face of the dam. However, assuming that his death occurred on navigable waters, Judge Self did not believe that the nexus requirement for admiralty jurisdiction was satisfied. He noted that Georgia Power had to establish both that the incident had a potentially disruptive impact on maritime commerce and that the activity had a substantial relationship to traditional maritime activity. Judge Self believed that there was a substantial relationship to traditional maritime activity from the maintenance work on the dam so that it could function properly. Turning to the potential to disrupt maritime commerce, the parties agreed that the activity giving rise to the incident was a commercial diver drowning while making repairs inside a hydroelectric dam licensed by the federal government, but they disagreed about whether the drowning had the potential to disrupt maritime commerce. Judge Self concluded that the diver’s death posed no more than a fanciful risk to maritime activity and that the nexus test for admiralty jurisdiction was not satisfied. Having addressed all of the jurisdictional issues, Judge Self, advised that he would prefer to certify the case for an interlocutory appeal. However, he did not believe that the plaintiff could carry the heavy burden to permit interlocutory review, and he declined to certify the denial of the motion for remand for an interlocutory appeal.
From the state appellate courts
Texas appellate court upheld personal jurisdiction over Delaware companies with their principal places of business in Kentucky and Louisiana for a Louisiana seaman’s suit involving a stroke suffered on a vessel in Louisiana based on specific jurisdiction related to failure to enforce safety policies and failure to pay maintenance and cure from an office in Texas; Marquette Transportation Co. v. Simon, No. 14-21-00729-CV, 2022 Tex. App. LEXIS 9040 (Tex. App.—Houston [14th Dist.] Dec. 13, 2022) (Wise).
Gerald Simon, a Louisiana resident, began working for Marquette Transportation in 2020. He signed employment documents that included a forum-selection agreement that provided for claims against his employer to be filed in Kentucky. The Marquette companies are Delaware companies whose principal places of business are in Kentucky and Louisiana. While serving as Captain of the M/V LADY OF PROMPT SUCCOR, a tug with its hailing port in New Orleans, Simon suffered a stroke while the vessel was located near Houma, Louisiana. Simon brought this suit in state court in Houston, Texas against the Marquette companies, and the defendants filed a special appearance contesting the personal jurisdiction of the Texas court. Judge Garrison denied the special appearance, and Marquette appealed to the Fourteenth Court of Appeals of Texas. Marquette argued that Simon’s claims did not arise from or related to Marquette’s contacts with Texas, but, writing for the appellate court, Justice Wise disagreed. Marquette chose to negate Simon’s allegations on a legal basis, and it did not present facts to dispute them other than a declaration of its claims manager that senior management and the ultimate decision making authority are located outside of Texas and that none of the facts or circumstances alleged in the lawsuit arose out of or had any relationship to Texas. However, Justice Wise did not believe that the conclusory statements were sufficient to negate Simon’s claims. In connection with the claims for negligence under the Jones Act and unseaworthiness under the general maritime law, Justice Wise cited Simon’s allegation that Marquette failed to enforce safety policies and procedures that comprise health and safety responsibilities from its office in LaPorte, Texas. With respect to the claims for maintenance and cure and for failure to pay maintenance and cure, Justice Wise cited Simon’s allegation that the failure to pay occurred from the LaPorte office. As Simon’s amended petition detailed his factual allegations on specific jurisdiction, and as Marquette did not present evidence to contradict the allegations, the appellate court affirmed the denial of the special appearance (Judge Garrison also denied Marquette’s motion to dismiss based on the forum-selection clause, and the court of appeals previously denied mandamus relief with respect to that order in In re Marquette Transportation Co. Gulf-Inland, LLC, No. 14-22-00047-CV (Tex. App.—Houston [14th Dist.] Sept. 1, 2022)).
Kenneth G. Engerrand
President, Brown Sims, P.C.
1177 West Loop South
Houston, TX 77027
365 Canal Street
New Orleans, LA 70130
1110 Cowan Road
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Gulfport, MS 39507
4000 Ponce De Leon Blvd
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But a complaint is not meant to initiate a game of Clue; it is intended to “give the defendants adequate notice of the claims against them and the grounds upon which each claim rests.” (Giving as an example: it was either Colonel Mustard in the Billiard Room with the knife, or Mr. Green in the Conservatory with the lead pipe).
Rivera v. MSC Cruises, S.A., No. 1:22-cv-21386, 2022 U.S. Dist. LEXIS 210612, *8 (S.D. Fla. Nov. 20, 2022) (Moore) (quoting Weiland v. Palm Beach County Sheriff’s Office, 792 F.3d 1313, (11th Cir. 2015) (referencing Clue [Board game] (1949), Parker Brothers).
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