January 2024 Longshore/Maritime Update

January 4
2024

January 2024 Longshore/Maritime Update (No. 296)

Notes from your Updater:

On November 22, 2023, the California Court of Appeals, First Appellate District, affirmed the decision of the judge of the Superior Court of Marin County, California, declining to issue a writ of administrative mandamus to overturn the decision of the City of Belvedere, approving the construction of a private residential pier and boat dock on the shoreline of the property of the plaintiff’s neighbor. See INJ, LLC v. City of Belvedere, No. A164314, 2023 Cal. App. Unpub. LEXIS 6958 (Cal. App. 1st Dist. Nov. 22, 2023) (Stewart).

In our September and October 2023 Updates, we reported that after the State of Texas installed buoys on the Rio Grande River near Eagle Pass, Texas, the United States brought suit in the United States District Court for the Western District of Texas under the Rivers and Harbors Appropriation Act of 1899 against Texas and its Governor, Greg Abbott, seeking the removal of the floating barrier. On September 6, 2023, Judge Ezra granted a preliminary injunction, ordering Texas to reposition the buoys and other material comprising the floating barrier to the bank of the Rio Grande on the Texas side of the river. See United States v. Abbott, No. 1:23-cv-853 (W.D. Tex. Sept. 6, 2023). Texas filed a notice of appeal to the Fifth Circuit, and on September 7, 2023, a panel of the Fifth Circuit issued a stay of the order. See United States v. Abbott, No. 23-50632 (5th Cir. Sept. 7, 2023) (per curiam). On December 1, 2023, a divided panel of the Fifth Circuit dissolved the stay and held that the granting of the preliminary injunction was not an abuse of discretion. Writing for the majority of the panel, Judge Douglas held that the Rio Grande River satisfied the broadened definition of navigability for the Government’s regulatory power, rejecting Texas’ argument that the River is not currently capable of interstate commerce for the segment of the River involved in the controversy. Judge Douglas found sufficient evidence of the historical navigability of the River at the location where the floating barrier was installed. Judge Douglas also found sufficient evidence to support the argument of the United States that the barrier was an obstruction to the navigable capacity of the Rio Grande. Finally, Judge Douglas held that the district court had sufficiently considered and rejected Texas’ self-defense argument that it had the constitutional right to declare itself invaded and to protect itself. Judge Willett dissented from Judge Douglas’ rulings on each point. He disagreed that the “sketchy” historical accounts and “historical anecdotes” of activity on the River had any bearing on the analysis of the navigability of this segment. Thus, he addressed the alternative finding of the district judge that the segment of the Rio Grande River was currently navigable, reasoning that “reasonable improvements” could not make it susceptible of commercial use. United States v. Abbott, No. 23-50632, 2023 U.S. App. LEXIS 31841 (5th Cir. Dec. 1, 2023).

On December 1, 2023, Judge Orrick of the United States District Court for the Northern District of California dismissed the constitutional (and other) claims of vessel owners challenging the Anchor Permit Scheme of the Richardson’s Bay Regional Agency (the constitutional claims were based on violation of their right to anchor in Richardson’s Bay, California). See Roark v. Richardson Bay Regional Agency, No. 22-cv-7610, 2023 U.S. Dist. LEXIS 214691 (N.D. Cal. Dec. 1, 2023).

On December 5, 2023, Chief Administrative Law Judge Stephen R. Henley issued the following Administrative Order addressing the timing of initiating discovery in cases arising under the LHWCA and its extension acts, including the Defense Base Act:

Administrative Order

On December 6, 2023, Judge Cobb of the United States District Court for the District of Columbia dismissed the suit brought by MLS-Multinational Logistic Services, a maritime husbanding services provider to the Navy, against its main competitor, Global Defense Logistics, alleging that Global Defense Logistics tortiously interfered with its business relationship with the Navy when the defendant intervened in MLS’s suit against the United States in the Court of Federal Claims, opposing MLS’s bid protest in that suit and supporting the Navy’s position. MLS asked the court in its suit against Global Defense Logistics to force the defendant to retract its support of the Navy and to admit that the position it took was wrong. Reasoning that “MLS’s issue is with the Navy,” Judge Cobb held that MLS did not have standing to bring the action against Global Defense Logistics. See MLS-Multinational Logistic Services Ltd. v. Myhre, No. 20-cv-2116, 2023 U.S. Dist. LEXIS 216713 (D.D.C. Dec. 6, 2023).

On December 13, 2023, Judge Lemelle of the United States District Court for the Eastern District of Louisiana remanded suits brought by Louisiana coastal parishes in Louisiana state court seeking to recover against oil and gas producers and refiners for wetland losses along the Louisiana coastline from the energy companies’ exploration, dredging, drilling, transportation, and waste disposal activities. The energy and refining companies removed the cases to federal court on numerous grounds, including diversity, the Outer Continental Shelf Lands Act, and the Federal Officer Removal Statute. Judge Lemelle also declined to grant a stay pending the appeal. See Jefferson Parish v. Chevron U.S. Holdings, Inc., Nos. 18-5224, 18-5213, 18-5218, 18-5220, 18-5230, 18-5252, 18-5260, 2023 U.S. Dist. LEXIS 221557 (E.D. La. Dec. 13, 2023).

On December 14, 2023, the Michigan Court of Appeals issued another opinion in the “long, somewhat convoluted, and at times confusing history” of this legal malpractice action brought against an attorney and law firm, alleging that they breached the standard of care by failing to plead tort claims against municipal defendants under admiralty law because “under federal admiralty law the municipal entities, regardless if performing governmental functions, would not enjoy the protection of governmental immunity.” Long v. Fieger, Nos. 363259, 363406, 2023 Mich App. LEXIS 9171 (Mich App. Dec. 14, 2023) (per curiam).

On December 18, 2023, a jury in federal court in New York returned a verdict of more than $49 million in favor of CITGO Petroleum Corp. against Ascot Underwriting, on behalf of several Lloyd’s syndicates, in CITGO Petroleum Corp. v. Ascot Underwriting Limited, No. 1:21-cv-389 (S.D.N.Y. Dec. 18, 2023). CITGO sought coverage on its marine cargo reinsurance in connection with the loss of a cargo of crude oil that was seized from its chartered tanker, the M/T GERD KNUTSEN, by loyalists of Nicolás Maduro in Venezuela, arguing that the loss was covered under the Institute War Clauses.

Verdict

On December 19, 2023, the United States Court of Appeals for the District of Columbia affirmed the remand of a suit filed by the District of Columbia against several energy companies in the Superior Court of the District of Columbia, alleging that the energy companies made material misstatements about their products’ effects on climate change. The removal was based on several grounds for jurisdiction, including the Outer Continental Shelf Lands Act. Writing for the appellate court, Judge Rao agreed with the district court that the claims of misrepresentations tied to the consumption of fossil fuels did not arise out of and were not in connection with operations conducted on the outer Continental Shelf. See District of Columbia v. Exxon Mobil Corp., No. 22-7163, 2023 U.S. App. LEXIS 33611 (D.C. Cir. Dec. 19, 2023).

On the LHWCA Front . . .

From the federal district courts

Judge declined to reconsider his order allowing a third-party indemnity action against the shipyard employer after allowing the claims to proceed against the employer by the widow of its employee who died from mesothelioma (citing the holding of the Fifth Circuit in Barrosse that the state claims could proceed against the shipyard because the LHWCA did not bar the state-law claims of the worker’s widow); Hotard v. Avondale Industries, Inc., No. 20-1877, 2023 U.S. Dist. LEXIS 210897 (E.D. La. Nov. 28, 2023) (Fallon).

Opinion

Paul Hotard was allegedly exposed to asbestos while working at Avondale’s shipyard from 1969 to 1970 as a tack welder. Before he died from mesothelioma, he brought this suit against Avondale and several asbestos suppliers in state court in Orleans Parish, Louisiana. Avondale removed the case to federal court based on diversity, and Hotard’s widow substituted for Hotard after he died. In 2022, Chief Judge Brown granted the motion for summary judgment filed by/joined by Avondale and its insurers, arguing that the state-law claims against Avondale were barred by the post-1972 LHWCA, which provided the exclusive remedy against Avondale (and its insurers). After Chief Judge Brown recused herself and the Fifth Circuit issued its decision in Barrosse (see July 2023 Update), holding that the shipyard workers’ claims under Louisiana state law were not preempted by the LHWCA because his injury occurred prior to Louisiana’s 1975 workers compensation statute, some of the defendants (SeaRiver Maritime and Exxon Mobil) moved for leave to bring cross-claims and third-party claims against Avondale, Hopeman Brothers, and Liberty Mutual (insurer of Hopeman Brothers) that were denied before Barrosse. Citing the change in law, Judge Fallon granted reconsideration and permitted the filing of the claims. See November 2023 Update.

Hopeman Brothers and its insurer, Liberty Mutual, then moved for reconsideration of the order granting leave to file a third-party demand against Hopeman/Liberty Mutual or, alternatively, to dismiss the claims. Hopeman Brothers argued that the claim was untimely and that the claim was barred because Hopeman Brothers had settled with the plaintiffs. Judge Fallon previously considered the timeliness of the motion when he granted leave, so he declined to reconsider that decision. Turning to the merits, SeaRiver cited the indemnity provision in a purchase order between Avondale and Hopeman Brothers and argued that Hopeman Brothers was bound to indemnify SeaRiver. Judge Fallon reasoned that, at the stage of a motion to dismiss, SeaRiver had stated a plausible case for contractual indemnity and that the settlement of the tort claims would have no bearing on the contractual claims. Therefore, Judge Fallon declined to dismiss the third-party claim against Hopeman Brothers and Liberty Mutual.

Waiver of subrogation precluded intervention by LHWCA carrier to assert its rights in third-party litigation; Hewitt v. W&T Offshore, Inc., No. 22-461, 2023 U.S. Dist. LEXIS 213830 (E.D. La. Dec. 1, 2023) (Brown).

Opinion

Micah Rene Hewitt was employed by Pelstar Mechanical Services, which performed work for W&T Offshore, owner of a platform on the outer Continental Shelf off the coast of Louisiana. Pelstar provided Hewitt to W&T as a “fill-in” mechanic to replace W&T’s regular mechanic on the platform, who took temporary leave. Four days later, Hewitt was injured while helping to load a crate into a grocery box when the crate fell on his foot. Hewitt brought this suit in federal court in Louisiana against W&T under the Outer Continental Shelf Lands Act, the LWHCA, general maritime law, and Louisiana law. W&T filed a motion for summary judgment, arguing that Hewitt was its borrowed servant and that the LHWCA provided the exclusive remedy for Hewitt against W&T. The parties debated the application of the Ruiz factors, and Chief Judge Brown noted that no single factor is determinative, but the Fifth Circuit has considered control to be the central factor. Chief Judge Brown cited Ruiz for the proposition that “a careful distinction must be made between authoritative direction and control, and mere suggestion as to details or the necessary co-operation, where the work furnished is part of a larger undertaking.” W&T argued that its person-in-charge on the platform directed Hewitt’s schedule and assignment, that Pelstar was not involved in Hewitt’s work, and that Pelstar had no contact with Hewitt after he went to work on the platform as a substitute for the W&T mechanic. Hewitt responded that the provisions of the master service agreement between W&T and Pelstar provided that Pelstar was working as an independent contractor and that its employees were not to be considered to be servants or employees of W&T. Hewitt argued that W&T had failed to overcome that clear pronouncement, citing evidence that Hewitt determined his work each day, did not attend formal meetings, and did not receive instruction on his job as a mechanic. W&T objected that Hewitt relied in part on his own deposition testimony that was self-serving, but Chief Judge Brown answered that he was not using ultimate or conclusory statements but provided testimony as to his own experience on the platform. Based on the contract provision and the testimony and conduct highlighted by the parties, Chief Judge Brown found factual disputes that should be resolved by the jury. Based on the fact findings, she would then determine Hewitt’s borrowed-servant status as a matter of law, applying the Ruiz factors. See April 2023 Update.

As Hewitt was employed by Pelstar to work on a platform on the OCS, he was covered by the LHWCA. Pelstar’s LHWCA carrier (Starstone National Insurance Co.) paid benefits to and on behalf of Pelstar and filed an intervention in Hewitt’s suit, seeking to recover the payments it had made (more than $80,000 at the time of the intervention) and seeking a credit for Hewitt’s net recovery against W&T. Hewitt and W&T moved for summary judgment on Starstone’s intervention, arguing that there was a waiver of subrogation in the Master Service Contract between Pelstar and W&T to which Starstone agreed in its policy with Pelstar. The parties agreed that Louisiana law applied to determine the validity of the waiver of subrogation (because of the choice-of-law provision in the OCSLA), which required application of the Louisiana Oilfield Indemnity Act (LOIA). Chief Judge Brown cited the Fontenot case from the Louisiana Supreme Court, which held that waivers of subrogation are only voided by the LOIA when the beneficiary of the waiver seeks to enforce the waiver in conjunction with enforcement of an indemnity clause. If the beneficiary of the waiver only seeks to enforce the waiver and does not pursue indemnity, “there is no shifting of liability” that would frustrate the policy of the LOIA. Although W&T was not seeking indemnity (which was not valid under the LOIA), Starstone argued that the waiver was invalid because the MSC tied the waiver of subrogation to the assumption of defense, indemnity, and additional insurance (requiring that the policy be endorsed with a waiver of subrogation in favor of W&T, but only to the extent of the liabilities specifically assumed by Pelstar under the MSC). Chief Judge Brown rejected the argument, holding that the waiver of subrogation was valid, despite the qualifying language in the MSC, reasoning that, as W&T had chosen to utilize the waiver of subrogation rather than pursuing indemnity, the waiver was enforceable by its own terms and did not run afoul of the LOIA as interpreted in Fontenot. Starstone also argued that it had the right to intervene, regardless of subrogation, to protect its rights to a set-off/credit and to approve a third-party settlement. Concluding that Starstone could protect those rights in the administrative proceedings before the Department of Labor on Hewitt’s LHWCA claim, Chief Judge Brown dismissed the intervention.

Employee of marine construction company who was injured on a spudded barge during demolition of an existing dock and construction of a new dock was not a seaman (failing the nature prong of the connection test for seaman status), and his exclusive remedy was under the LHWCA; Bouton v. Manson Constr. Co., No. 6:22-cv-5535, 2023 U.S. Dist. LEXIS 218454 (W.D. La. Dec. 7, 2023) (Joseph).

Opinion

Christopher Bouton was employed by Manson Construction, a marine construction company that builds wharves, piers, and bridges. Bouton was hired as a carpenter to perform discrete tasks in connection with the demolition of an existing dock and construction of a new dock at the Blount Island Marine Terminal in Jacksonville, Florida. Bouton was injured when a shackle fell on his foot while he was working on a material barge that held materials pulled from the water in connection with the demolition of the existing dock. Bouton brought this suit against Manson Construction in federal court in Louisiana, seeking to recover as a seaman under the Jones Act, general maritime law, and state law. Manson Construction moved for summary judgment, arguing that Bouton was not a seaman and that his exclusive remedy was pursuant to the LHWCA. Bouton was employed to work on two phases of the demolition of the dock. The first phase involved driving piles and demolition of the wharf while working on the land side of the dock, and the second phase involved demolition and removal of the piles and other materials that comprised the dock on its water side. Bouton performed the first phase while working on land, and he claimed that he performed the work on the second phase aboard a group of vessels in the St. John’s River. He asserted that he pulled piles out of the river and put them on a transport barge. He would travel with the barge down river and help the crew off-load the piles. He then traveled back up the river to repeat the process. He also asserted that he piloted a skiff to locations and helped maintain the skiff. Bouton claimed that he assisted in preparing the crane on a crane barge to remove the pilings from the water. Bouton did not live or sleep on the material barge and returned home by car each day after work. Bouton would not have continued work on the project after the completion of the second phase. In its motion for summary judgment, Manson Construction did not address the duration prong of the connection test for seaman status and argued that Bouton was not a seaman because his connection with a vessel or vessels was not substantial in nature, based on the en banc decision of the Fifth Circuit in the Sanchez case (see May 11, 2021 Update). Judge Joseph analyzed each of the factors set forth in Sanchez and concluded that Bouton owed his allegiance to Manson and not to any vessel or fleet of vessels. Bouton arrived at the job each morning by vehicle and left the site each day in the same manner. Although he rode on vessels at the work site, he did not “sail” with any vessel. He was assigned to the demolition project, not to any vessel. Turning to the second factor enunciated in Sanchez, Judge Joseph stated that Bouton’s work was “decidedly not sea-based.” When he performed work on the vessels, they were spudded down, tied off, or were close to shore. None of his duties would “take him to sea.” Finally, as Bouton was not going to continue work on any of the vessels after the completion of the demolition, Judge Joseph held that his work was limited to performing a discrete task after which his connection to the vessel ended. Therefore, application of the Sanchez factors precluded a finding that Bouton had a connection to a vessel or vessels that was substantial in nature, and he was not a seaman. Reasoning that the LHWCA was Bouton’s exclusive remedy against Manson Construction, Judge Joseph dismissed Bouton’s claims under the general maritime law and state law.

Rigger/pile driver injured on crane barge was not a seaman (failing the nature prong of the connection test for seaman status), and his exclusive remedy was under the LHWCA; Burton v. Weeks Marine Inc., No. 2:22-cv-1111, 2023 U.S. Dist. LEXIS 221378 (W.D. La. Dec. 12, 2023) (Cain).

Opinion

Anthony Burton began his employment with Weeks Marine as a rigger/pile driver on February 11, 2019. He worked until July 20, 2019 in Portland, Texas, reclaiming land in a marshy area and living and working onshore. He was transferred to a Weeks Marine facility in Bourg, Louisiana, where he worked preparing barges to ship to other job sites, living at a local hotel. On September 16, 2019, Burton was sent to work at the Weeks Venture Global job site in Cameron Parish, Louisiana, which was accessible by vehicle. The job was to build a storm surge wall around an LNG facility. His initial role was taking equipment off trucks and driving piles in the marsh. After the WEEKS 571 crane barge arrived on November 21, 2019, Burton was assigned to a crew that worked on the barge while it was moored to the shore (although sometimes he would accompany the barge when it was repositioned along the edge of the land, moving at most 200 to 300 feet). The crew loaded and unloaded materials from other barges and transferred the material onto trucks on land. Burton was injured while trying to extend the boom of the crane to add an additional section when his fingers were caught between a spool and a pry bar. Burton brought this suit in federal court in Louisiana against Weeks Marine, seeking to recover under the Jones Act and general maritime law, and he sought punitive damages for the defendant’s willful and wanton failure to pay sufficient maintenance and cure, the defendant’s gross negligence or recklessness, and the unseaworthy condition of the vessel. Weeks Marine moved to dismiss the punitive damage claims, and Judge Cain agreed that the claims for punitive damages arising from negligence and unseaworthiness (not maintenance and cure) were barred by the decisions of the Supreme Court and Fifth Circuit, and he dismissed those claims with prejudice. See July 2022 Update

Weeks then moved for summary judgment, arguing that Burton did not qualify as a seaman and that his exclusive remedy against Weeks Marine was pursuant to the LHWCA. Although Weeks Marine argued that the crane barge was not a vessel, Judge Cain disagreed, reasoning that it was designed to carry a crane over water, was not permanently moored, and was frequently repositioned along the shore. He also disagreed with Weeks Marine’s argument that Burton’s duties did not contribute to the function or mission of the vessel, answering that Burton was doing the work of the vessel and that the vessel could not perform its function of unloading materials for the job site without the aid of the rigging crew. Judge Cain then considered the duration and nature prongs of the connection test and found sufficient evidence to create a fact question of whether Burton spent more than 30% of his time working in service of the crane barge. For the nature prong of the connection test, Burton argued that he was exposed to the perils of the sea; however, Judge Cain analyzed the three factors enunciated by the en banc Fifth Circuit in the Sanchez case (see May 11, 2021 Update). Judge Cain concluded that Burton owed his allegiance to a shore-side employer and moved from job site to job site upon the direction of his employer and not with a vessel; that Burton was not engaged in seagoing activity because the crane barge was primarily stationary and spudded in place, with only minor movements for repositioning along the bulkhead; and that, although Burton did not perform just a discrete task, he was not going to sail with the crane barge to another location when the job was completed. As Burton did not satisfy the nature prong of the connection test for seaman status, Judge Cain held that Burton’s exclusive remedy against Weeks Marine was as a land-based maritime worker under the LHWCA.

Judge agreed to dismissal with prejudice of two subcontractors in connection with death of worker during ship repair and to dismissal of claim under state law; Hornsby v. United States, No. 2:22-cv-427, 2023 U.S. Dist. LEXIS 224002 (E.D. Va. Dec. 15, 2023) (Smith).

Opinion

The USS MCFAUL was docked for repairs at a shipyard in Norfolk, Virginia that is owned by General Dynamics NASSCO-Norfolk. Cynthia Gary, who was assigned by Blue Staffing Agency to work for Harbor Industrial Services on the vessel, was positioned as fire watch on the exterior side of a blow-in door for one of the ship’s gas turbine engines. The door was tagged out in the open position while work was being performed, but it suddenly and unexpectedly closed, crushing Gary (who died from her injuries). An investigation by the Navy and OSHA was unable to explain why the accident occurred. The administrator of Gary’s estate brought this action in federal court in Virginia against the United States and contractors and subcontractors. KD Shipyard Repairs and Coastal Mechanical Systems moved to dismiss the claims against them with prejudice, arguing that the complaint did not state a negligence claim against them. Magistrate Judge Leonard agreed and dismissed the claims with prejudice. The plaintiff appealed, requesting the court to dismiss the claims without prejudice. Judge Smith reviewed the allegations and noted that the plaintiff pleaded nothing more than alleging that the contractors were working near the blow-in door. She agreed that the plaintiff could only surmise how that work supported any liability. Therefore, she agreed to the dismissal with prejudice. The defendants also moved to dismiss the allegations made by the plaintiff under Virginia law (allowing recovery for mental anguish). As this is an admiralty case, Judge Smith held that the Virginia claim was preempted by admiralty law, and she agreed to the dismissal with prejudice of the Virginia claim.

From the state courts

California Supreme Court agreed to hear case of maintenance worker for yacht club who was injured while stepping from a dock to a boat, where the court of appeals held that his suit under the general maritime law was excluded from coverage under the LHWCA, and his exclusive remedy against the yacht club was under the California workers’ compensation statute and not under the general maritime law; Ranger v. Alamitos Bay Yacht Club, No. S282264, granting the petition for review to 2023 Cal. App. LEXIS 686 (Cal. App. 2d Dist. Sept. 6, 2023).

Brian Ranger was employed by Alamitos Bay Yacht Club in Long Beach as a maintenance worker. He assisted in the painting, cleaning, maintaining, repairing, unloading, and mooring of vessels at the club. He was injured after loading a club boat into the water when he fell after stepping from the dock to the bow of the boat. He applied for workers’ compensation under the California statute and brought this suit in the Superior Court of Los Angeles County, seeking to recover for negligence and unseaworthiness under the general maritime law. Judge Kim sustained the club’s demurrer, ruling that there was no admiralty jurisdiction and that the state compensation statute provided the exclusive remedy for Ranger. Ranger appealed to the California Court of Appeals, and, writing for the court, Judge Wiley provided an extensive explanation of the 1984 Amendments to the LHWCA, which exclude “individuals employed by a club, camp, recreational operation, restaurant, museum, or retail outlet” if the individuals are subject to coverage under a state workers’ compensation law. As the exclusion ultimately applied to all clubs, whether for profit or nonprofit, Judge Wiley held that Ranger was not covered under the LHWCA, noting that Congress had determined that club employees “are more aptly covered under appropriate state compensation laws” because they lack “a sufficient nexus to maritime navigation and commerce.” Judge Wiley reasoned that employees may not sue their employer in tort under the California statute, and that result made sense in this case because federal law and state law were in accord—both the state and federal legislature have replaced the fault-based tort system with the no-fault alternative of workers’ compensation. Ranger cited the Fifth Circuit’s decision in Green v. Vermillion Corp., permitting a worker at a duck hunting camp, who was excluded from the LHWCA by the 1984 Amendments, to bring maritime claims for negligence and unseaworthiness, but Judge Wiley “profoundly” disagreed with the Fifth Circuit and joined with the contrary result from the Eleventh Circuit in Brockington v. Certified Electric, reasoning that the uniformity cited by Ranger and the Fifth Circuit as justification for preemption of state law was “a one-way street, not a useful method of analysis: it always insists on national uniformity, regardless of context, and it always disfavors state power, which can be sound and richly diverse.” Judge Wiley preferred the uniformity praised in modern Supreme Court decisions like Batterton, where the “uniformity sought is with policies enacted by democratically elected representatives.” He added that “Green’s and Ranger’s conception of ‘uniformity’ has antique support, but age has rotted some of those old timbers.” Judge Wiley concluded that the California workers’ compensation law was the exclusive remedy, stating: “A core part of the state workers’ compensation bargain is that injured workers get speedy and predictable relief irrespective of fault. In return, workers are barred from suing their employers in tort.” See October 2023 Update.

On December 20, 2023, the California Supreme Court granted Ranger’s petition for review. Thanks to Michael F. Sturley, Fannie Coplin Regents Chair at the University of Texas School of Law, for bringing this decision to our attention.

And on the maritime front . . .

From the federal appellate courts

Opinion

This litigation arises from the collision between Marquette’s vessel, the KIEFFER BAILEY, which was proceeding down the Mississippi River near Chalmette, Louisiana, and the STRANDJA (owned by Balkan Navigation and managed by Navigation Maritime Bulgare), which was un-anchoring in the river. The starboard anchor of the STRANDJA was still on the river bottom, causing the vessel to swing in front of the KIEFFER BAILEY. Marquette brought this action against Balkan Navigation and Navigation Maritime in federal court in New Orleans (based on diversity jurisdiction), and Balkan Navigation filed a counterclaim against Marquette, in personam, and the KIEFFER BAILEY, in rem. Marquette answered the counterclaim and filed a third-party action against Crescent Towing, owner of the tug that was assisting the STRANDJA, the M/V PROVIDENCE. Marquette also filed a third-party complaint against Captain Robert Johnson, the compulsory pilot on the STRANDJA. Marquette filed a motion for summary judgment that the STRANDJA was not restricted in her ability to maneuver under Inland Rule 18, which requires that power-driven vessels keep out of the way of vessels that are restricted in their ability to maneuver. Rule 3(g) provides that a vessel restricted in its ability to maneuver is “a vessel which, from the nature of her work, is restricted in her ability to maneuver as required by these Rules and is therefore unable to keep out of the way of another vessel.” The STRANDJA was not engaged in any of the enumerated examples of restrictions on maneuverability, such as laying pipeline and dredging, but its owner argued that a vessel with an anchor down is “very restrained” in its maneuverability. Citing an Eleventh Circuit case explaining that “restricted in her ability to maneuver” is a “term of art” based on work activities that restrict a vessel’s ability to maneuver, Chief Judge Brown found that heaving anchors is not “work” as defined by Rule 3(g). Consequently, she granted partial summary judgment that the STRANDJA was not restricted in her ability to maneuver under Rule 18. Crescent Tug also moved for summary judgment as its tug followed all orders of the STRANDJA, and Captain Johnson, pilot of the STRANDJA, confirmed that the tug did not contribute to the collision. Therefore, Chief Judge Brown granted summary judgment to Crescent Towing. Captain Johnson then filed a motion for summary judgment in which he admitted that there were contested facts; however, he claimed that, accepting Marquette’s assertions as true, Marquette had not satisfied the clear and convincing standard for a finding of gross negligence against a pilot under Louisiana law. Marquette argued that the state requirement for clear and convincing evidence was preempted under the Supremacy Clause, but Chief Judge Brown did not address the question or whether specific acts were sufficient to constitute gross negligence. Instead, she held that whether the evidence was clear and convincing of gross negligence was the province of the finder of fact. Accordingly, she denied the motion for summary judgment. See February 2022 Update.

The case was tried to a jury, which found that Marquette was not liable as owner of the KIEFFER E. BAILEY, that the owner and manager of the STRANDJA were negligent (50%), and that the river pilot for the STRANDJA, Captain Johnson, was grossly negligent (50%). Captain Johnson and Balkan appealed, and, writing for the Fifth Circuit, Judge Jones initially addressed the subject matter jurisdiction of the district court. Marquette sued Balkan based on diversity, and Marquette asserted that it is a Delaware limited liability company with its principal place of business in Paducah, Kentucky. However, Marquette did not allege the citizenship of the defendant. Therefore, the allegation for diversity jurisdiction was insufficient. All parties agreed that the court had admiralty jurisdiction over the collision, so Judge Jones held that the Fifth Circuit had jurisdiction to hear the appeal. However, she instructed Marquette to amend its pleading on remand to state admiralty jurisdiction as the basis for its claims against Balkan. Judge Jones then addressed the appeal by Captain Johnson, who challenged Chief Judge Brown’s ruling that general maritime law preempted state law on the burden of proof and the applicable negligence standard that are set forth by Louisiana statute (requiring the plaintiff to establish by clear and convincing evidence that the damages arose from the pilot’s gross negligence or willful misconduct). Judge Jones recognized that the general maritime law preempts state laws that prejudice the characteristic features of the maritime law or disrupt the harmony it strives to bring to international and interstate relations. However, she cited an exception to the rule, “carved out” by Congress, that pilots are regulated in conformity with the laws of the states, and she had “no difficulty” in concluding that the Louisiana statute fell within the state’s “broad power to regulate pilotage.” Consequently, Judge Jones held that Chief Judge Brown abused her discretion in instructing the jury that Marquette had the burden to prove gross negligence by only a preponderance of the evidence. Judge Jones then considered Balkan’s argument that Chief Judge Brown erred in trying the case to a jury where the only basis for jurisdiction was admiralty. Judge Jones answered that Marquette had only challenged the amount in controversy when it moved to strike the jury. Accordingly, it forfeited that argument. She added that Balkan did not have a constitutional right to a non-jury trial and had not shown how the jury trial had adversely affected its substantive rights. Therefore, the error in holding a jury trial was harmless. As to Balkan’s challenge to the jury’s finding that Marquette was not negligent, Marquette argued that Balkan had forfeited its challenge by failing to move for judgment as a matter of law under Rule 50(b) after the verdict. Judge Jones did not have to decide that issue, finding sufficient evidence to support the finding that Marquette was not negligent. As the district court’s instruction on the standard of proof against Captain Johnson likely influenced the jury’s assessment of liability on the claim against Balkan (at a minimum it affected the apportionment of fault), Judge Jones remanded the case for a new trial on Marquette’s claims against Balkan and Captain Johnson (but affirmed the judgment in favor of Marquette on Balkan’s claim against Marquette).

Tort claim against the Deepwater Horizon Medical Benefits Settlement Claims Administrator arising from a personal data breach did not fall within the court’s admiralty or federal question jurisdiction; Galan v. Deepwater Horizon Medical Benefits Settlement Claims Administrator, No. 23-30459, 2023 U.S. App. LEXIS 32124 (5th Cir. Dec. 5, 2023) (per curiam).

Opinion

Raoul A. Galan, Jr. alleged that he received a letter from the Administrator for the Deepwater Horizon Medical Benefits Settlement notifying him of a personal data breach. He sought clarification with no success. As his depression was “peeking due to this reckless tort damage,” Galan brought suit against the Administrator for the Settlement and Graphic Village in federal court in Louisiana. The Administrator did not answer, and Graphic Village moved to dismiss the suit for lack of jurisdiction and failure to state a claim. After giving Galan the opportunity to amend, Judge Barbier dismissed the case against Graphic Village for lack of subject matter jurisdiction, and he sua sponte dismissed the action against the Administrator as frivolous. Galan appealed the refusal to grant a default judgment against the Administrator, and the Fifth Circuit began by determining whether there was subject matter jurisdiction. The court acknowledged that the Administrator was created by the settlement of a case that arose under the court’s admiralty and federal question (OCSLA) jurisdiction and for which the district court retained jurisdiction. However, the Fifth Circuit focused on the category of claim being presented, and Galan’s claim was for negligence in handling personal data and failing to respond to requests for clarification. This conduct did not implicate the Settlement Agreement and did not provide subject matter jurisdiction to the court. There was no diversity because Galan’s complaint was silent on the citizenship of the parties. As the district court lacked jurisdiction, the Fifth Circuit remanded the case to the district court to dismiss the case without prejudice for lack of subject matter jurisdiction.

Third Circuit held that the district court lacked admiralty jurisdiction over limitation action involving guest who fell onto a docked vessel during boarding; In re DeGeorge, No. 22-3018, 2023 U.S. App. LEXIS 32271 (3d Cir. Dec. 5, 2023) (Chung).

Opinion

Arthur A. DeGeorge and a group of friends went to the Belmar Manutti Marina in Belmar, New Jersey to board DeGeorge’s vessel MISS ZENA for a fishing trip. DeGeorge noticed fishing lines tied around the docks (to deter birds from landing on boats or the docks), but his guest, John Marincola did not notice the lines and tripped and fell into the boat while trying to board it. Marincola did not remember his feet catching on anything when he fell, and he proceeded with the fishing trip. It was when the parties returned that Marincola pieced together what happened—that the fishing line must have caused his fall. Marincola brought suit in New Jersey state court against Belmar and DeGeorge, and DeGeorge brought this limitation action in New Jersey federal court. DeGeorge also removed the action brought in state court based on pendent or ancillary jurisdiction to the limitation action. Belmar and DeGeorge each filed a motion for summary judgment. Judge Shipp granted Belmar’s motion on Marincola’s claims (alleging a dangerous condition and negligent hiring and training) as Marincola did not know (other than assumption) what caused his fall. As to DeGeorge, Marincola asserted that DeGeorge was negligent for failing to inspect the dock, failing to warn of the fishing line, and failing to assist in boarding the boat. Applying New Jersey law, Judge Shipp reasoned that the precise duty owed to Marincola depended on what type of visitor Marincola was. Considering Marincola to be a licensee (a social guest and not a visitor for business purposes), Judge Shipp held that DeGeorge did not owe a duty because the condition was not on DeGeorge’s property. Judge Shipp stated: DeGeorge may wish his social guests fair winds as they venture out to sea, but he has no legal duty to ensure they safely make it to his vessel.” Judge Shipp similarly dismissed the unseaworthiness claim as there was no dangerous condition on the vessel. Therefore, he granted exoneration to DeGeorge. See November 2022 Update.

Marincola appealed to the Third Circuit, arguing that the district court lacked jurisdiction over the limitation action (and therefore lacked pendent or ancillary jurisdiction over the suit that was removed from state court). Writing for the Third Circuit, Judge Chung noted that there was an issue whether the locality test for tort jurisdiction was satisfied because Marincola fell onto the boat, but the cause of the fall was a fishing line attached to the dock. Judge Chung did not have to decide whether the locality test was satisfied because she held that the accident failed to meet the first prong of the connection test, whether the general features of the type of incident have a potentially disruptive impact on maritime commerce. DeGeorge argued that the line could interfere with the crew’s ability to secure the vessel when docking and could create a distraction if a passenger tripped while the captain was departing from the dock. Judge Chung answered that an individual falling onto a docked boat while boarding from a stationary dock “presents no realistic threat to maritime commerce” and does not provide a basis for admiralty jurisdiction. The marina added that this type of incident would cause a delay for the departure of the vessel, but Judge Chung found no support for the argument that a “trivial delay of a commercial vessel in arriving or departing from a dock” disrupts maritime commerce. Judge Chung distinguished cases in which the incident occurred during the process of docking and held that the potential for disruption was not present when there is a temporary distraction to the crew of a stationary vessel secured to a permanent dock. Consequently, she ordered dismissal of the limitation action and remand of the suit brought in state court.

Vessel owner’s claim against law firm for negligent advice about maritime lien did not state a maritime claim, but the owner recovered against the law firm under state law; ST Engineering Marine, Ltd. v. Thompson, MacColl & Bass, LLC, No. 22-1844, 2023 U.S. App. LEXIS 32224 (1st Cir. Dec. 6, 2023) (Selya).

Opinion

ST Engineering, owner of the M/V NOVA STAR, bareboat chartered the vessel to Nova Star Cruises. The charter obligated Nova Star to provide bunkers for the vessel. Nova Star hired Fleetpro to operate the vessel as its agent, and Fleetpro arranged for delivery of bunkers for the vessel with Bunkers International, which engaged Sprague Operating as the vendor to deliver the bunkers. The purchase orders for bunkers listed Fleetpro as agent for Nova Star and Bunkers International as the supplier. The bunkers were delivered to the vessel by Sprague, and the master and chief engineer signed or stamped the receipts. Fleetpro paid the invoices to Bunkers International, but Bunkers International filed for bankruptcy without paying Sprague. The NOVA STAR was arrested by a company asserting a maritime lien, and several other entities asserted maritime liens, including Sprague. ST Engineering engaged Thompson, MacColl for legal advice, including assessing the validity of the lien claims so that it could decide which claims should be settled and which claims should be bonded and resisted. The attorney advised that Sprague’s lien should be honored and its claim paid, and ST Engineering settled the claim for $267,366. ST Engineering filed a claim in the bankruptcy proceeding filed by Bunkers International, but it only recovered $5,526.96. ST Engineering later brought this action against the law firm in federal court in Maine (based on diversity jurisdiction), arguing that it was entitled to recover the payment it made because the firm’s advice that the lien was valid was negligent. Judge Levy held a bench trial and concluded that the firm had not conducted adequate legal research and had furnished advice based on an “erroneous interpretation of the controlling law at the time.” Thus, he found that the firm had failed to exercise due diligence in investigating the lien claim, had breached its professional duty to ST Engineering, and had caused damage to ST Engineering in the amount of $261,839.04. The firm appealed, and, writing for the First Circuit, Judge Selya first considered the subject matter jurisdiction. He noted that “questions of maritime law linger at the margins;” however, he reasoned that they were subordinate to the malpractice and “do not comprise the stuff needed to trigger admiralty jurisdiction.” Judge Selya added that the locality test for admiralty jurisdiction was not satisfied because ST Engineering suffered its injury on land, and it was the attorney’s advice—not a vessel on navigable waters—that allegedly caused ST Engineering’s loss. The district court did have diversity jurisdiction, which then resulted in the application of state (Maine) substantive law for the malpractice action. Judge Selya then addressed the negligence finding and found sufficient support for Judge Levy’s identification of several reasons why a “cloud of uncertainty” hung over the dicta on which the firm relied. Judge Selya reasoned that “[a] reasonably skillful, prudent, and diligent attorney conducting adequate legal research” would have realized that the appellate courts had moved to the position that, to provide a necessary on the order of the owner or a person authorized by the owner, a supplier must do more than simply deliver a necessary. Accordingly, the firm should have counseled ST Engineering about the “cloud of uncertainty that hovered over Sprague’s lien claim,” and its failure to do so was a breach of its professional duty. Judge Selya then turned to whether the negligence proximately caused the loss. He found sufficient evidence to support the finding that ST Engineering had proven that it would have prevailed in the arrest proceeding on Sprague’s lien claim and then addressed the argument that the advice was conditional and was not the cause of the loss. Judge Selya answered that the fact that the advice was conditional did not shield it from liability because the advice was faulty in the first instance. Therefore, the First Circuit affirmed the judgment against the firm.

Fifth Circuit agreed with dismissal of suit by Texas insureds on marine insurance policy based on forum-selection clause for the British Virgin Islands; Eads v. Spheric Assurance Co., No. 23-20066, 2023 U.S. App. LEXIS 32973 (5th Cir. Dec. 13, 2023) (per curiam).

Opinion

Ralph Eads owned the 62-foot Jamaican-flagged yacht PRINCESS ALIA through his company Princess Alia, L.L.C. Eads and his company are Texans. They insured the yacht through Spheric Assurance Co., which is incorporated in the British Virgin Islands. The vessel was destroyed by fire while harbored in Cabo San Lucas, Mexico, and, when Eads and Alia submitted a claim under the policy, Spheric denied coverage based on various warranty violations. Eads and Alia brought this suit in Texas state court, and Spheric removed the case to federal court. Spheric moved to dismiss the suit based on forum non conveniens, citing the forum-selection clause in the policy for the exclusive jurisdiction of the courts of the British Virgin Islands. Eads and Alia opposed the motion, arguing that it would violate Texas public policy to require litigation in the British Virgin Islands because it would allow Spheric to avoid coverage based on immaterial warranty violations while Texas law would not. Although the insureds argued at length about choice of law, the Fifth Circuit answered that federal law determined the enforceability of the forum-selection clause, even in a diversity case. The issue presented in the appeal was whether Texas public policy allowed enforcement of a forum-selection clause mandating a jurisdiction with purportedly less favorable insurance law. As the Fifth Circuit decided that issue in the affirmative in its Noble House decision, and as the Texas Supreme Court had not set aside a forum-selection clause on public policy grounds, the Fifth Circuit declined to set aside the clause and affirmed the dismissal of the case with leave to refile it in the British Virgin Islands. The court did note that the Supreme Court has granted certiorari in the Great Lakes Insurance case, but the court did not hold its decision in abeyance pending the decision of the Supreme Court in light of the Fifth Circuit precedent on the issue.

Fifth Circuit affirmed confirmation of arbitration decision from the Philippines denying claim for seaman’s wages under American law; Llagas v. Sealift Holdings, Inc., No. 23-30047, 2023 U.S. App. LEXIS 32974 (5th Cir. Dec. 13, 2023) (per curiam).

Opinion

Daniel Gonzales Llagas, a citizen of The Philippines, worked as a fitter, performing steelwork and repairing machinery on several United States-flagged ships. He brought this suit, individually and as a class action, in the District Court of Calcasieu Parish, Louisiana, claiming unpaid wages against Sealift Fleet under United States statutes and maritime law. The case was removed to federal court in Louisiana, and, after extensive procedural wrangling, Llagas was ordered to arbitration with the National Conciliation and Mediation Board of the Department of Labor and Employment in The Philippines. The arbitrator ruled against Llagas on his claims under the law of The Philippines and the law of the United States, finding that Llagas “miserably failed to prove by any slight of evidence that he, a Filipino seafarer is in fact considered a ‘gang member’ under US Law.” Sealift moved to enforce the decision of the arbitrator under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), and Llagas argued that enforcement of the decision, denying the claim under American law, would be contrary to public policy. Judge Cain explained that, under the effective vindication doctrine, foreign tribunals have the authority to arbitrate claims under American law, but the court in the United States must ensure that the legitimate interests of American law have been addressed. The scope of the inquiry is limited, however. The American court need only inquire if the foreign tribunal took cognizance of the American claims and decided them. The American court cannot decline to enforce the award based on a mistake of law or fact. In this case, Llagas was given the opportunity to present his American claims, and they were denied on the merits. That decision did not violate public policy, and Judge Cain recognized and enforced the decision of the arbitrator. See December 2022 Update.

Llagas appealed Judge Cain’s decision to recognize and enforce the arbitration decision. He first argued that Judge Cain erroneously compelled arbitration because Sealift Fleet was not a signatory to the contracts Llagas entered into with the Philippine Overseas Employment Administration that contained the arbitration provisions. Judge Cain found that equitable estoppel was applicable so that Sealift Fleet could enforce the arbitration provisions. Although Llagas argued that he was entitled to wages by American statute, the Fifth Circuit reasoned that Llagas would not have had his job were it not for the contract containing the arbitration clause. The court of appeals also rejected his argument that his wage theory did not rely on the express terms of the contract because the court had to compare the terms of the contract and statute (Llagas admitted that he was paid the amount owed under the contract). Finally, the conduct about which Llagas complained was substantially interdependent and concerted misconduct by both the signatory and non-signatory. Therefore, the Fifth Circuit agreed that the district court did not abuse its discretion in compelling arbitration. As to the confirmation of the arbitration decision, Llagas argued that the decision violated public policy and could not be confirmed pursuant to the New York Convention. Llagas cited the comment in Lauritzen by Justice Jackson that the tendency of the law is to apply the law that the parties selected in the contract, but that a different result would follow if the contract sought to apply foreign law to an American ship. The Fifth Circuit responded with its discussion in Asignacion that it was far from certain that the Court in Lauritzen condemned a choice-of-law clause mandated by a foreign sovereign (as in the contracts in this case). In any event, the Fifth Circuit noted that the arbitrator rejected Llagas’ claims on the ground that United States law did not apply and on procedural and evidentiary grounds. Consequently, the Fifth Circuit affirmed the decision to enforce the arbitration award.

Absence of paper charts on the vessel for every port in the covered territory of a hull policy did not render the vessel unseaworthy under the maritime law implied warranty of seaworthiness at the inception of coverage or the policy’s express warranty of seaworthiness; Great Lakes Insurance SE v. Andersson, No. 23-1359, 2023 U.S. App. LEXIS 34052 (1st Cir. Dec. 22, 2023) (Gelpi).

Opinion

In our April 2023 Update, we reported that the United States Supreme Court granted the petition for a writ of certiorari filed by Great Lakes Insurance in Great Lakes Insurance v. Raiders Retreat Realty Co., No. 22-500. The Supreme Court agreed to hear this question: Under federal admiralty law, can a choice of law clause in a maritime contract be rendered unenforceable if enforcement is contrary to the “strong public policy” of the state whose law is displaced? The Supreme Court is considering the decision in which the Third Circuit reasoned that the principle of generally enforcing choice-of-law provisions in marine insurance contracts “is not altogether separate” from the regime for forum-selection clauses. Holding that the framework enunciated in Bremen and Shute extends to the choice-of-law provision in the policy issued by Great Lakes in that case, the Third Circuit remanded the case to the district court to consider whether Pennsylvania has a strong public policy that would be thwarted by application of New York law.

Contractual choice-of-law was also an issue in the litigation between Martin Andersson and the insurer for his vessel, Great Lakes Insurance. Andersson, who lived in Massachusetts, purchased a marine insurance policy from Great Lakes for his catamaran, MELODY. The vessel sustained catastrophic damage when it struck a breakwater near the Port of Boca Chica in the Dominican Republic, and Great Lakes declined to pay for the cost of salvage or repair because Andersson had failed to keep the vessel in a seaworthy condition and had sailed outside the bounds of the policy’s navigational limits. Great Lakes brought its first action in federal court in Massachusetts seeking a declaratory judgment that it owed no coverage under the policy, and Andersson counterclaimed for breach of contract and for bad faith under Massachusetts law. Great Lakes moved to dismiss the bad faith count of the counterclaim, arguing that New York law, which does not afford a bad faith action, was applicable by a choice-of-law clause in the policy. The clause provided that “any dispute arising hereunder” would be adjudicated under entrenched principles of federal admiralty law, “but where no such well established, entrenched precedent exists, this insuring agreement is subject to the substantive laws of the State of New York.” Andersson argued that New York law applied to the contract claim, but Massachusetts law applied to extra-contractual claims (the bad faith claim). Judge Hillman rejected that argument, however, citing the cases holding that New York law applies to all claims arising from the performance under the contract and subsequent coverage disputes, which includes bad faith claims. He then addressed Andersson’s argument that Massachusetts public policy rendered the choice-of-law clause unenforceable and held that application of New York law, rather than Massachusetts law, would not conflict with any entrenched principle of maritime law and that New York did not lack a substantial relationship to the parties or transaction. Consequently, he applied New York law and dismissed the bad faith count of the counterclaim. See July 2021 Update.

After discovery was closed and the deadline to amend pleadings had passed, Great Lakes sought leave to amend its complaint to add a claim that Andersson violated the policy’s Named Operator Warranty. Judge Hillman denied the motion as untimely and unfairly prejudicial to Andersson, and Great Lakes filed an interlocutory appeal that the First Circuit dismissed for lack of jurisdiction. After the denial of its motion to amend, Great Lakes brought a second action against Andersson, presenting the claim it sought to add by the late motion for leave to amend in the first suit. Andersson moved to dismiss the second suit based on res judicata, and Great Lakes responded that res judicata was not applicable because the denial of the motion to amend was not a final judgment on the merits of the claim sought to be presented in the amendment. Judge Hillman disagreed with Great Lakes, citing case law that denial of leave to amend constitutes res judicata on the merits of claims that were the subject of the proposed amended pleading. Reasoning that allowing the second suit would result in the same prejudice and inefficiency that were cited by the court in denying the amendment in the first suit, Judge Hillman dismissed the second suit (adding that the remedy for Great Lakes was an appeal of the denial of leave to amend in the first suit at the conclusion of that suit). Andersson also sought sanctions for filing the late motion to amend and the second suit, but Judge Hillman denied the motion without substantive discussion. See October 2022 Update.

Back in the original suit, Great Lakes moved for summary judgment on its claims for declaratory judgment, and Andersson moved for partial summary judgment on its claim for breach of contract. The issue presented by both motions was whether Great Lakes established that the MELODY was unseaworthy as required by maritime law and the policy. Judge Hillman cited Judge Brown’s Spot Pack case for the two warranties, the warranty of seaworthiness at the inception of the policy and the negative warranty that the owner will not knowingly send the vessel to sea after the policy inception in an unseaworthy condition. Great Lakes argued that the vessel was unseaworthy when the policy attached because it lacked updated maps. However, finding no cases holding that lack of current maps voided an insurance policy from its inception, Judge Hillman concluded that the first warranty was not breached. Great Lakes did cite cases in which a vessel was held unseaworthy because of deficient charts, but Judge Hillman noted that the cases required knowledge of the captain that the maps were not sufficient for the intended journey. The intended voyage in this case was from Aruba to Sint Maarten. However, weather and the seasickness of a crewmember took the boat near the Dominican Republic where it was decided that repairs should be made. Although the Dominican Republic was a potential point of refuge for the voyage, Judge Hillman did not believe it was reasonably foreseeable that the vessel would end up there. Consequently, he did not find that the vessel was unseaworthy for failing to have a current chart for the waters where the vessel grounded. Turning to the policy’s express warranty of seaworthiness “at all times,” Great Lakes argued that the failure to have current charts for Florida, a destination listed in the policy, rendered the vessel unseaworthy. However, Judge Hillman considered the seaworthiness warranty to require the vessel to be adequate for the voyage she undertakes, not for every area covered by the policy. Accordingly, he did not believe the policy warranty was breached, and he granted summary judgment to Andersson on his claim for breach of contract. See April 2023 Update.

Andersson filed an interlocutory admiralty appeal under Section 1292(a)(3) of Judge Hillman’s decision dismissing the bad faith count of Hillman’s counterclaim. Andersson argued that Great Lakes engaged in unfair claim settlement practices in violation of Massachusetts law, and Great Lakes argued that Massachusetts law did not apply because of the provision in the policy that “any dispute arising hereunder” would be adjudicated under entrenched principles of federal admiralty law, “but where no such well established, entrenched precedent exists, this insuring agreement is subject to the substantive laws of the State of New York.” Writing for the First Circuit, Judge Montecalvo noted the grant of certiorari with respect to the application of the public policy of the state whose law was displaced by the choice-of-law provision, but she did not delve into that issue as the question on appeal was whether to apply Massachusetts or New York law to the bad faith claim pursuant to the provision in the policy. Andersson did not contest that the provision was valid and enforceable, that his contractual claim was subject to the provision, or that entrenched principles of admiralty law would control the extra-contractual claim if such precedent existed. Instead, Andersson argued that the extra-contractual claim did not “fall within the ambit of the choice-of-law provision.” Thus, Judge Montecalvo addressed whether the bad faith claim under the Massachusetts statute was, in fact, extra-contractual. She noted that the statute applies to failure to adopt and implement reasonable standards for prompt investigation of claims and refusing to pay claims without conducting a reasonable investigation. Consequently, the insurer may be liable under the statute even though it pays the claim and honors the contract, and the allegations are not duplicative of the claim for breach of contract. Having established the nature of the bad faith claim as extra-contractual, Judge Montecalvo compared the claim to the policy provision. She reasoned that the provision on choice of law contains separate triggers. For “any dispute arising hereunder,” the dispute is adjudicated under entrenched principles of admiralty law. As there were no such entrenched principles, she turned to the language that, in the absence of entrenched maritime principles, “this insuring agreement is subject to the substantive laws of the State of New York.” Judge Montecalvo considered the language, “this insuring agreement,” to be ambiguous. Any “dispute” could mean contractual and extra-contractual claims, but, as the second clause is limited to “this insuring agreement,” it could be limited to contract-related claims that are subject to New York law and not the extra-contractual claims. As the provision is a “boilerplate” clause, Judge Montecalvo did not believe that extrinsic evidence was relevant and applied the rule that doubts as the intended meaning of the words would have to be resolved against the insurer. Therefore, she reached “the inescapable conclusion that only contract-related claims” were subject to the substantive laws of New York and that the extra-contractual claims were not within the scope of the provision. See June 2023 Update.

Great Lakes filed an interlocutory admiralty appeal of the summary judgment granted to Andersson on the contract claim (and the denial of Great Lakes’ motion for summary judgment). Great Lakes brought one argument for the appeal—that Judge Hillman erred by refusing to enforce the policy’s express definition of seaworthiness (requiring the vessel to have adequate “parts, equipment and gear” to be seaworthy. Writing for the First Circuit, Judge Gelpi reasoned that the argument required the court to decide whether the policy warranty or the implied warranty from Spot Pack required that the vessel carry up-to-date charts for all geographic areas covered by the policy in order to be considered seaworthy. Judge Gelpi began by considering the absolute implied warranty of seaworthiness, and he defined the warranty as concerning “whether the physical condition of the vessel and its equipment are sufficient for the vessel’s intended use.” Thus, he held that the warranty pertained to the physical condition of the vessel and that it did not require Andersson to keep up-to-date paper charts on board the vessel for every covered location from the inception of the policy. He reasoned that it would be difficult to predict, at the inception of the policy, exactly where his vessel would dock in every port covered by the insurance (he did note that the existence of up-to-date paper charts might be relevant to the breach of the ongoing warranty of seaworthiness, but that was not the issue in this case). Judge Gelpi then turned to the express provisions of the policy. He noted that charts were not specifically enumerated in the language of the warranty, and similar to the analysis for the implied warranty, he did not find precedent that charts constituted “parts, equipment and gear.” Judge Gelpi agreed that charts are arguably equipment normally required for the operation and maintenance of the vessel, but he answered that they are not normally sold with the vessel and, consequently, do not qualify as part of the scheduled vessel. Although the policy provided that the vessel must be seaworthy at all times during the duration of the insuring agreement, Judge Gelpi did not consider that language to support Great Lakes’ argument that paper charts were required at the inception of coverage for every area covered by the policy. Additionally, Judge Gelpi noted that the seaworthiness warranty required that the vessel be reasonably suited for its intended use, and that the intended use of the vessel could change daily depending on the journey or activities pursued. Giving a narrow construction of the language of the policy, Judge Gelpi affirmed Judge Hillman’s decision that the incident was covered by the policy.

From the federal district courts

Judge declined to issue warrant for arrest of vessel without supportive documentation; Guardianship of Blain v. M/V MO CASH, No. 23-61180, 2023 U.S. Dist. LEXIS 206282 (S.D. Fla. Nov. 17, 2023) (Smith).

Opinion

The Guardianship of Henri R. Blain brought this action in federal court in Florida, seeking to arrest the M/V MO CASH, a 32.6-foot Hatteras vessel, to enforce a maritime lien for dockage. The Complaint, verified by the guardian of Henri R. Blain, alleged that Moe Rashed, the vessel owner, breached a Boat Dockage Lease Agreement (attached to the complaint) that required payment of $250 per month in rent for dockage of the vessel. Judge Smith, however, declined to issue the warrant for arrest of the vessel or to appoint a substitute custodian, stating that the guardian did not provide the court with an instrument appointing the guardian, the contract attached to the complaint was not signed by Blain or Rashed, and no outstanding invoices were attached to demonstrate what was owed. Accordingly, Judge Smith held that the complaint was insufficient to support arrest of the vessel, and he dismissed the complaint.

Judge transferred seaman’s suit pursuant to venue-selection provision in Supplemental Benefits Agreement signed by the seaman after the accident; Kennedy v. Marquette Transportation Co., No. 23-2883, 2023 U.S. Dist. LEXIS 210044 (E.D. La. Nov. 27, 2023) (Fallon).

Opinion

Jeffery Kennedy claims that he was injured while working for his employer, Marquette Transportation, as a deckhand on the pushboat M/V ST. CHRISTOPHER, when a rope wrapped around his leg while the crew was trying to cut loose from a barge. Kennedy brought this complaint in federal court in Louisiana against Marquette Transportation under the Jones Act and general maritime law, and Marquette Transportation moved to transfer the case to the United States District Court for the Western District of Kentucky based on venue-selection clauses in two agreements. Kennedy signed a Venue Selection Agreement before the accident that provided for any legal action involving personal injury claims under the Jones Act or federal or state law to be brought in the United States District Court for the Western District of Kentucky or the state court in Paducah, Kentucky. After the accident, Kennedy signed a Supplemental Benefits Agreement by which he agreed to exclusive venue in those courts for any personal injury/Jones Act claims arising from the incident. Kennedy argued that the venue provision in the Supplemental Benefits Agreement was the product of overreaching because he was severely injured and faced financial hardship when he signed the agreement. Judge Fallon rejected the argument, citing decisions from other judges in the Louisiana federal court and noting that Kennedy had availed himself of the benefits of the agreement (an additional $45 per day in maintenance plus a one-time payment of $500). Considering the clause to be the benefit of a valid bargain, Judge Fallon held that it was not the product of fraud or overreaching. As he held the clause in the Supplemental Benefits Agreement was enforceable, Judge Fallon did not have to determine whether the same provision in the Venue Selection Form was also enforceable. As Kennedy could not identify any extraordinary circumstances to defeat the transfer, Judge Fallon agreed to transfer the case to the United States District Court for the Western District of Kentucky.

Seaman’s crossclaim against his employer in the vessel owner’s limitation action plausibly stated claims for Jones Act negligence, unseaworthiness, and willful failure to pay maintenance and cure; In re BMW81, No. 3:23-cv-172, 2023 U.S. Dist. LEXIS 210918 (S.D. Tex. Nov. 28, 2023) (Edison).

Opinion

Antonio Alaniz asserts that he was working for Callan Marine as a crane operator on a dredging project near Port Aransas, Texas. He was assigned to the dredge GENERAL MACARTHUR, owned and operated by Callan Marine. The project included use of several vessels, including the BMW81 barge, owned by Brown Water Marine. Alaniz was injured when he was struck by a batch of pipes, and he filed suit against Callan Marine in Texas state court. Alaniz subsequently added Brown Water Marine and other defendants in the state suit, and Brown Water Marine filed this action in federal court in Texas, seeking to limit its liability for the BMW81. Alaniz filed a claim against Brown Water Marine in the limitation action and a crossclaim against Callan Marine. Callan Marine responded with a motion to dismiss Alaniz’s claims for negligence, unseaworthiness, and maintenance and cure, arguing that he had not pleaded facts sufficient to create a factual plausibility for the claims. Alaniz objected that the motion should not be heard because Callan Marine had failed to comply with the local rules (advising Alaniz of the motion and advising that he had 14 days instead of 21 days to amend his crossclaim). Magistrate Judge responded: “I refuse to play a game of ‘Gotcha’ and penalize Callan Marine for an innocent mistake.” With that “nickel-and-dime argument out of the way,” Magistrate Judge Edison considered the merits of Callan Marine’s motion. Although Callan Marine argued that the Jones Act count did not allege a factual plausibility that Callan Marine was negligent, Magistrate Judge Edison disagreed, citing the allegation that the crane operator reportedly began prematurely lowering the batch of pipes without command or warning. Magistrate Judge Edison agreed that the laundry list for negligent conduct unquestionably included legal conclusions without factual support. However, the pleading was sufficient to satisfy the “low hurdle” to allow the court to draw the reasonable inference that Callan Marine was liable for negligent conduct. Callan Marine objected to the unseaworthiness count as Brown Water Marine owned the BMW81 on which Alaniz was injured. Calling this argument “a non-starter” because the appropriate defendant in an unseaworthiness case is “the person who had operational control of the ship at the time the condition was created or the accident occurred,” Magistrate Judge Edison held that the allegation that Callan Marine operated, controlled, and/or manned the BWM81 was sufficient to state a claim for unseaworthiness against Callan Marine. Finally, Callan Marine asserted that Alaniz had failed to sufficiently plead that Callan Marine had arbitrarily, willfully, and capriciously refused to promptly pay maintenance and cure. However, Magistrate Judge Edison held that the pleading that Callan Marine failed to pay adequate maintenance and cure after being advised of Alaniz’s needs was sufficient, at the pleading stage, to state a plausible claim.

Judge allowed cargo to file a permissive counterclaim for cargo damage in the ocean carrier’s suit seeking freight for different shipments, but the Judge struck the non-COGSA counts and declined to permit a setoff; King Ocean Services v. CI Mistic SAS Fruits and Vegetables, LLC, No. 23-22227, 2023 U.S. Dist. LEXIS 211051 (S.D. Fla. Nov. 28, 2023) (Altonaga).

Opinion

King Ocean Services is a vessel operating common carrier that transports cargo between ports in Florida and Central and South America as well as the Caribbean Basin. CI Mistic is a Florida importer and distributor of produce. King Ocean transported produce on vessels from Columbia to Port Everglades, Florida for CI Mistic, and it brought this suit in federal court in Florida against CI Mistic, seeking to recover for unpaid freight in the amount of $118,322. CI Mistic filed a counterclaim, seeking to recover damages for two shipments of plantains that were transported from Columbia to Florida. CI Mistic brought four counts, under COGSA, under the Harter Act, for breach of warranties and nondelegable cargo worthiness duties, and negligence. CI Mistic also asserted that it was entitled to a setoff of the amount due for damage against the amount sought by King Ocean for freight. King Ocean moved to dismiss the counterclaim, and Chief Judge Altonaga agreed that the three counts alleging non-COGSA claims were preempted by COGSA and would be dismissed as the bills of lading extended COGSA to apply throughout the entire time the goods were in the custody of King Ocean. Chief Judge Altonaga also agreed that the setoff defense should be stricken because of the “ancient rule” that once the goods have been carried to their destination and are ready for delivery, the freight must be paid even though the goods are damaged or deteriorating. Finally, King Ocean argued that the counterclaim should be dismissed because it did not involve any of the bills of lading on which the complaint was based, and it would not advance judicial economy to add those to the suit, particularly when a setoff was not available. Chief Judge Altonaga disagreed, reasoning that the counterclaim was permissive and that keeping all of the claims together would promote judicial efficiency and encourage global resolution of the claims. Therefore, she declined to dismiss the counterclaim.

Judge denied the motions for summary judgment of the vessel operator and ship repairer in a dispute over repairs to vessel; Platypus Marine, Inc. v. Glacier Guides, Inc., No. 1:22-cv-6, 2023 U.S. Dist. LEXIS 211618 (D. Alaska Nov. 29, 2023) (Holland).

Opinion

Platypus Marine performed maintenance and repair on the yacht ALASKAN GRANDEUR, owned by Alaska Legacy and operated by Glacier Guides, for more than 15 years before the dispute that resulted in this litigation. After Glacier Guides declined to pay what Platypus Marine charged for repairs conducted on the vessel during the winter of 2022, Platypus Marine brought this suit against the yacht, in rem, and its owner and operator, in personam. Alaska Legacy posted security of $178,091.85 for the release of the vessel and filed a counterclaim, alleging that Platypus Marine performed work that was unauthorized and that was defective. Alaska Legacy then sought countersecurity pursuant to Supplemental Rule E(7), and Platypus Marine objected, arguing that the counterclaim did not plead an amount in damages and was frivolous. Judge Holland rejected the arguments, stating that the court was “unpersuaded that it should read Rule E(7) out of existence if a counterclaim does not state a damages amount.” Alaska Legacy submitted a value for its counterclaim through its expert witness ($224,810), and Judge Holland ordered countersecurity in that amount. See August 2023 Update.

Platypus Marine and Glacier Guides each moved for summary judgment. Platypus Marine argued that the parties had entered into a contract on a time-and-materials basis, and that it was owed a balance of $272,253.74. Glacier Guides issued checks for that amount in order to obtain the release of the vessel and then immediately stopped payment on the checks. It defended the claim with evidence that the work performed was defective and incomplete and that a substantial amount had been performed without approved work orders or change orders. Platypus Marine argued that Glacier Guides was now prevented from disputing the amount owed under the doctrine of satisfaction and accord because Glacier Guides had issued checks in the full amount allegedly owed without protesting the amount. Glacier Guides responded that there was a bona fide dispute over the amount owed and that Glacier Guides had to make the payments so that it would not default on its contracts for the vessel. Reasoning that there was a factual dispute whether there was an agreement to settle the amount owed and that there were disputes as to whether Platypus Marine overcharged for its work, Judge Holland declined to grant summary judgment to Platypus Marine. Glacier Guides moved for summary judgment on its counterclaim, contending that the limited warranty in Platypus Marine’s terms and conditions (limiting contract and tort liability to $100,000, regardless of negligence) was invalid and unconscionable under the general maritime law. Platypus Marine argued that if it was successful on its claim of accord and satisfaction, the counterclaim would fail. As Judge Holland declined to grant summary judgment to Platypus Marine, he addressed Glacier Guides’ motion. Citing the decisions of the Ninth Circuit, Judge Holland noted that the parties to a repair contract could validly stipulate that the shipowner assumed all liability for damage to the vessel, even when occasioned by the negligence of the shipyard, as long as there was no evidence of overreaching. Although Glacier Guides argued that there was overreaching because the contract terms were presented on a “take it or leave it” basis, Judge Holland answered that the Ninth Circuit had refused to invalidate an exculpatory provision in a ship repair contract where the ship owner assented to the agreement without complaint. As Glacier Guides did not object, there was no fact question on overreaching. Glacier Guides also argued that the limitation on the warranty failed of its essential purpose under UCC principles (indicative of general maritime law). Judge Holland did not consider that there was a failure of the essential purpose of the limited warranty because Glacier Guides could still recover $100,000 in damages if there was defective work and Platypus Marine did not repair the defective work. Consequently, Judge Holland declined to grant summary judgment to Glacier Guides.

Judges granted summary judgment in a DEEPWATER HORIZON BELO case for lack of expert testimony and in an opt-out case after striking the plaintiff’s causation experts, and declined to grant rehearing after striking expert opinions on causation and granting summary judgment on opt-out claims for lack of expert evidence on causation and declining to admit the opinions based on a spoliation theory; King v. BP Exploration & Production, Inc., No. 1:22-cv-463, 2023 U.S. Dist. LEXIS 212061 (S.D. Ala. Nov. 29, 2023) (DuBose); Dykes v. BP Exploration & Production, Inc., No. 17-4323, 2023 U.S. Dist. LEXIS 212905 (E.D. La. Nov. 30, 2023) (Milazzo); Cintra v. BP Exploration & Production, Inc., Nos. 17-3889, 17-4183, 17-4069, 2023 U.S. Dist. LEXIS 213817 (E.D. La. Nov. 30, 2023) (Milazzo).

Opinion King

Opinion Dykes

Opinion Cintra, Stallworth, McDaniel

Michelle Diane King alleged that she developed lung cancer from her exposure to toxic chemicals from the Macondo/DEEPWATER HORIZON blowout while performing clean-up work on Orange Beach, Gulf Shore, and Dauphin Island. She brought this Back-End Litigation Option action in federal court in Louisiana, and it was transferred to the federal court in Alabama. King did not, however, disclose any expert witnesses, and Judge DuBose granted summary judgment to BP in the absence of expert evidence on causation.

Wendell Dykes claimed exposure to toxic chemicals from the Macondo/DEEPWATER HORIZON blowout while working as the driver of a truck used to remove oil covered soil. Dykes presented the expert report of Dr. Jerald Cook to support the general causation requirement for his claim. BP moved to exclude Dr. Cook’s opinions, and Dykes argued that the court should not require Dr. Cook to identify a harmful level of exposure to particular chemicals that cause the conditions he experienced, that BP had spoliated evidence by failing to record quantitative data on the exposure of clean-up workers to specific chemicals (with the sanction for the spoliation being the admission of Dr. Cook’s opinions). Judge Milazzo rejected the arguments and granted summary judgment to BP after excluding the opinions on causation of Dr. Cook.

Elvis Cintra, Marlon Stallworth, and Ronald McDaniel claimed exposure to crude oil and dispersants from the DEEPWATER HORIZON/Macondo spill. These plaintiffs presented expert reports of Dr. Jerald Cook to support the general causation requirement for their claims. BP moved to exclude Dr. Cook’s opinions and, in the absence of expert evidence of causation, that it should be granted summary judgment. Judge Milazzo agreed and dismissed these suits. The plaintiffs moved for reconsideration, arguing that the court should not require Dr. Cook to identify a harmful level of exposure to particular chemicals that cause the conditions experienced by these plaintiffs and that BP had a duty to protect the cleanup workers and violated the duty by failing to conduct biomonitoring (based on the affidavit of Dr. Linda Birnbaum and explaining why there is inadequate data on causation). Judge Milazzo answered that these arguments had already been rejected and concluded that the plaintiffs’ reliance on the affidavit of Dr. Birnbaum did not cure the deficiencies in Dr. Cook’s opinions. Accordingly, Judge Milazzo denied the motions for reconsideration.

Judge instructed passenger who fell on cruise ship on what was necessary to replead claims for direct and vicarious liability of cruise line; Feagin v. Carnival Corp., No. 23-cv-23460, 2023 U.S. Dist. LEXIS 212078 (S.D. Fla. Nov. 29, 2023) (Ruiz).

Opinion

Belinda Feagin, a passenger on the CARNIVAL MARDI GRAS, was in the theater on the vessel when her husband won an award, and their family was directed to come to the stage. She was given a robe and directed to walk on a path with what Feagin termed a hidden stair that was unreasonably high and poorly lit. She missed the step and fell, citing the combination of the unreasonable size of the robe and the dangerous step. Feagin brought this suit against the cruise line in federal court in Florida with counts for negligent failure to inspect, negligent failure to maintain, negligent failure to remedy, negligent failure to warn, negligent design/installation, and vicarious liability for the acts of the crew. The cruise line moved to dismiss the complaint, and Judge Ruiz held a hearing. He directed the parties to consolidate the first three counts into two separate direct negligence counts. Count 1 will address the hazard of the robe and will allege constructive notice with respect to the direct negligence count for that hazard. Count 2 will address the hazard for the step and allege constructive and actual notice for the direct negligence count for that hazard. The count alleging failure to warn of dangerous conditions applied to both the robe and the stair, and the allegations asserted generally that the conditions were not open and obvious. It was unclear, however, whether the allegation pertained to the robe, the step, or both. Therefore, Judge Ruiz required the count for failure to warn to be repleaded to include open-and-obvious allegations about both alleged hazards. Judge Ruiz found the count for negligent design/installation to be sufficient based on the pleading that the cruise line participated in the design, approved the specifications, and maintained the right to review/modify/reject the design plans. Finally, Judge Ruiz held that the count alleging vicarious liability was insufficient and would have to be repleaded. The count identified a female crewmember who provided the robe and the male crewmember who directed her where to walk; however, the count merely alleged that the crewmembers were negligent without identifying the actions taken by the employees on which Feagin intended to rely for vicarious liability.

Broken links in the chain of apparent authority for the supply of bunkers to the vessel prevented summary judgment on the supplier’s claim against the vessel; Three Fifty Markets Ltd. v. M/V Argos M, Nos. 2:23-cv-595, 2:23-cv-623, 2023 U.S. Dist. LEXIS 213583 (E.D. La. Nov. 29, 2023) (Fallon).

Opinion

Three Fifty Markets sold and delivered bunkers to the vessel M/V ARGOS M at the request of AUM Scrap and Metals Trading, alleged to be the charterer of the vessel. AUM Scrap failed to pay for the bunkers, and Three Fifty brought suit against the vessel in federal court in New Orleans, resulting in the arrest of the vessel. Shortly thereafter, PMG Holding, another bunker supplier, filed suit against the vessel in federal court in New Orleans, resulting in another warrant for arrest of the vessel. Three Fifty and PMG Holding moved for interlocutory sale of the vessel after no claim was made, the crew had not been paid, and the costs to supply the arrested vessel were growing. The next claim was filed by ArcelorMittal, whose cargo of steel was aboard the vessel pursuant to a charter of the vessel to transport the steel to Costa Rica. Argos Bulkers finally filed a statement of interest in the vessel, challenging the maritime lien claims of Three Fifty and PMG Holding, and Three Fifty and PMG Holding filed motions for summary judgment seeking enforcement of their lien claims. Judge Fallon found fact questions on the issue of whether the fuel supplied by Three Fifty was purchased by an authorized agent of the vessel, and he denied summary judgment to Three Fifty. In this opinion, Judge Fallon addressed PMG Holding’s motion. PMG Holding argued that it sold the bunkers to AUM Scrap. When Argos Bunkers alleged that the charterer of the vessel was Shimsupa, PMG Holdings claimed that AUM Scrap was the agent of Shimsupa and that PMG Holdings sold the bunkers with the understanding that AUM Scrap had the authority to bind the vessel. Argos argued that although the master accepted delivery of the bunkers and the fuel was consumed by the vessel, no one with actual or apparent authority to bind the vessel purchased the bunkers. The parties did not dispute whether an individual with actual authority purchased the bunkers, and the dispute focused on whether an entity had apparent authority to bind the vessel. PMG Holdings argued that both the charterer (Shimsupa) and its agent (AUM Scrap) had apparent authority because they are majority owned and controlled by the same person and because it is recognized in the industry that AUM Scrap acts as an agent for Shimsupa. Unlike Three Fifty, PMG Holdings produced documents reflecting that the vessel was aware of the bunker sale. Argos responded that Shimsupa was responsible for purchasing the bunkers, but that the bunkers were purchased by AUM Scrap, as reflected in the documents for the sale that listed AUM Scrap as the charterer. Although Judge Fallon found that necessaries were procured for the vessel, there were broken links in the chain of apparent authority. He also found that there were fact issues on the damages. Accordingly, he declined to grant summary judgment to PMG Holdings.

Passengers’ claims were time-barred by the terms of the parties’ ticket contract; Cruz v. Carnival Corp., No. 23-22871, 2023 U.S. Dist. LEXIS 213087 (S.D. Fla. Nov. 30, 2023) (Scola).

Opinion

Franco Cruz and ten of his family members purchased vacation packages on a Carnival cruise ship departing Galveston, Texas in March 2022. The family members included a 3-year-old and a 6-month-old. When they arrived at the Port, Cruz was told that the children under the age of five would be prohibited from attending the ship’s daycare (Camp Ocean) because the vaccine for COVID-19 was not available for young children. Cruz was also informed that they would need to pay additional fees for a “bubble tour” in order to disembark the ship because of the unvaccinated children. As a result, the family stayed on the ship for the week, sleeping, eating, and walking around the ship on port days, as that was all that was available to them. They felt as though they were “captives.” The family brought this suit against the cruise line in state court in Bexar County, Texas, and the cruise line removed the action to federal court based on diversity and original admiralty jurisdiction. The cruise line then moved to transfer the case to federal court in Florida based on the forum-selection clause in the Cruise Ticket Contract. Comparing the case to the Supreme Court’s decision in Carnival Cruise Lines v. Shute, Judge Rodriguez concluded that the forum-selection clause was valid and enforceable and that the case should be transferred to the federal court in Florida. See September 2023 Update.

The cruise line moved to dismiss the claims on the ground that they were time-barred under the terms of the parties’ ticket contract. The claims arose from the cruise in March 2022, and the ticket required that legal proceedings be commenced within six months after landing from the voyage. The cruise line argued that a motion to dismiss was appropriate because the complaint incorporated the terms of the ticket contract. Concluding that the claims were time barred, Judge Scola dismissed the complaint without leave to amend.

OPA safety and marine firefighting salvage contractor was not liable for alleged negligence in rescue efforts after lift boat capsized because there was no evidence that the contractor violated the Good Samaritan Rule by worsening the position of the decedent; In re Falcon Global Offshore II, No. 21-1062, 2023 U.S. Dist. LEXIS 213816 (E.D. La. Dec. 1, 2023) (Milazzo).

Opinion

The liftboat SEACOR POWER capsized in the Gulf of Mexico during severe weather, resulting in thirteen deaths and damage to a pipeline owned by Energy XXI Pipeline. EPL Oil & Gas leases wells and platforms that are connected to the pipeline, and EPL owns hydrocarbons that are transported through the pipeline. Both entities are affiliates of Cox Operating, and other Cox Operating entities were involved in the maintenance and operation of the pipeline and the sale of the hydrocarbons. The owner and operator of the liftboat (Falcon Global and Seacor Marine) filed this limitation action in federal court in Louisiana, and Energy XXI Pipeline and other Cox affiliates brought claims for damage to the pipeline and losses resulting from deferred production of the oil. The owner and operator of the liftboat moved for summary judgment that none of the claimants could bring a claim for economic loss because they did not have a proprietary interest in the damaged pipeline or had not sustained an economic loss. The owner of the pipeline, which sustained physical damage, did not own the oil. The entities that owned the oil did not own the damaged pipeline, but they argued that they had a sufficient proprietary interest in the pipeline to avoid the economic loss rule from Robins Dry Dock. Judge Milazzo disagreed and held that the court would not ignore the corporate separateness of the different entities, reasoning that doing business as separate entities confers the benefit of limited liability for the entities but does not allow them to be treated as a single entity in order to be able to recover economic losses for one entity when the physical damage was sustained by another entity. See December 2023 Update.

The wife and minor child of Lawrence James Warren, II (who died in the casualty), brought claims in the limitation proceeding together with a third-party claim against Donjon-SMIT, based on negligence in the search-and-rescue operations after the SEACOR POWER capsized. Donjon is Seacor Marine’s OPA safety and marine firefighting salvage contractor, contracting with Seacor Marine to provide salvage, firefighting, and lightering services under the vessel response plan. After the liftboat capsized, Donjon was immediately contacted to perform salvage operations, but it could not begin search and rescue operations for two days because of dangerous weather conditions and a delay in securing the proper vessel. The Warren claimants argued that the decedent survived for at least three days and could have been rescued if Donjon had timely begun rescue operations. The claimants argued that Donjon had a legal and contractual duty to perform underwater dive rescues. Donjon responded that the claimants could not succeed under the Good Samaritan Rule unless Donjon’s actions worsened the position of the decedent. Judge Milazzo noted at the outset that the claimants had not produced evidence that Donjon was under a legal or contractual obligation to perform search and rescue operations; rather, it agreed to perform salvage, firefighting, and lightering services in fulfillment of the vessel’s obligations under OPA and its implementing regulations. Judge Milazzo added that the regulations do not require the contractor to provide search and rescue services. Nonetheless, Judge Milazzo found no distinction in the law between rescuers who act gratuitously and those who work for compensation. Applying the Good Samaritan Rule and finding no evidence that Donjon’s actions worsened the situation, Judge Milazzo granted summary judgment to Donjon.

Judge declined to reconsider denial of summary judgment on dispute over whether the cargo shipper received the complete bill of lading with the package limitation provision; Beaumont v. Vanguard Logistics Services (USA), Inc., No. 22-cv-6235, 2023 U.S. Dist. LEXIS 214226 (S.D.N.Y. Dec. 1, 2023) (Vyskocil).

Opinion

Gary Beaumont entered into an agreement with Vanguard Logistics to ship a crate containing his personal property (a hand-built Italian motorcycle, a bicycle, and other goods) from Sydney, Australia to New York. Vanguard issued a bill of lading for the shipment through its non-vessel operating common carrier in Hong King, and the reverse side of the bill of lading contained a LIMITATION OF LIABILITY that the value of the cargo would be deemed to be $500 per package unless otherwise provided. The back also mentioned the Carriage of Goods by Sea Act. The shipment arrived in New Jersey where the cargo was damaged when a much larger item was dropped on top of the crate. Beaumont brought suit in state court in New Jersey against Vanguard, and Vanguard removed the case to federal court in New Jersey based on diversity and admiralty. Vanguard moved to transfer the case to New York pursuant to a forum-selection clause on the back of the bill of lading. Beaumont opposed the motion on the grounds that there was no admiralty jurisdiction for the shoreside damage, that COGSA did not apply for the same reason, and that the clause was an unenforceable contract of adhesion (and that a reasonably prudent person would not have been aware of it from its location in “very tiny” print on the back of the bill of lading). The New Jersey court held there was admiralty jurisdiction (contract for ocean carriage) and that COGSA was applicable to the damage based on the language of the bill of lading. The judge transferred the case to New York, and Beaumont filed an amended complaint that included claims under COGSA and the New Jersey Consumer Fraud Act. Vanguard moved for summary judgment after the case was transferred, arguing that its liability was limited to $500 under the COGSA package limitation, which preempted Beaumont’s other claims. In response, Beamont argued that he placed the shipping order via email and that only the top half of the bill of lading was sent to his shipping agent. Although Vanguard contended that this argument was rejected by the court in New Jersey, Judge Vyskocil answered that the arguments presented in New Jersey did not address the issue whether Beaumont had received sufficient notice so as to have a fair opportunity to declare a higher value for his cargo, so she considered the fair opportunity issue. Vanguard argued that the front of the bill of lading gave notice of the opportunity to declare a higher value, stating: “FOR EXCESS AD VALOREM VALUE SEE CLAUSE 19 ON REVERSE SIDE.” However, the front of the bill of lading also stated: “Page 1 of 1” (indicating that there was no second page). Concluding that there was a fact question whether the front of the bill of lading provided Beaumont with a fair opportunity to declare a higher value to avoid the package limitation, Judge Vyskocil declined to grant summary judgment to Vanguard. See November 2023 Update.

Vanguard sought reconsideration of Judge Vyskocil’s decision, arguing that the transfer order established that the bill of lading offered by Vanguard was the governing contract of carriage. However, Judge Vyskocil dismissed this argument as the issue of whether Beaumont received the reverse side of the bill of lading (containing the package limitation) was not addressed in that decision. Judge Vyskocil also rejected the argument that the terms and conditions of the bill of lading were effectively incorporated by reference to the website, as Vanguard did not raise that argument until its reply brief. She reiterated that, as it was unclear whether COGSA imposed any limitation on Vanguard’s liability, it was premature to decide whether COGSA preempted Beaumont’s state-law claims, cautioning that she would “not tolerate further frivolous delays, and both parties should be prepared to litigate this case expeditiously.”

Judge dismissed American vessel owner’s suit against Saudi shipyard based on forum non conveniens; AdvanFort Co. v. Zamil Offshore Services Co., No. 1:23-cv-906, 2023 U.S. Dist. LEXIS 214545 (E.D. Va. Dec. 1, 2023) (Brinkema).

Opinion

Virginia-based AdvanFort deploys armed security vessels to protect oil tankers and other vulnerable ships against piracy. AdvanFort chartered a former British Navy vessel, the SEAMAN GUARD VIRGINIA, and sent it to the Red Sea. The vessel needed routine maintenance and minor repairs, and AdvanFort sought those services at the shipyard at Jeddah Islamic Port, owned by the Saudi Ports Authority and operated by Zamil Offshore. After the work began, the shipyard proposed that electrical work be performed, which AdvanFort approved. A fire broke out on the vessel, and the Director of Saudi Arabia’s Maritime Administration released a report attributing the cause of the fire to AdvanFort and the vessel’s electrical system. AdvanFort denied responsibility for the fire and brought a suit against Zamil in Saudi Arabia. Zamil filed a countersuit, and the Saudi court eventually issued a judgment dismissing the claims of AdvanFort and awarding Azmil $40,000 in damages plus berthing fees. The shipyard demanded that the vessel be removed due to fears that it would sink and become a hazard to navigation, and the shipyard removed the vessel from the water. An inspection revealed that the vessel was stripped of all items of value. AdvanFort then brought this suit against Zamil and the Saudi Ports Authority in federal court in Virginia, alleging that it had been denied the use of the vessel since the fire because of the deterioration of the vessel’s condition, bringing counts for conversion, breach of a bailment/contract, negligence, and gross negligence. Zamil moved to dismiss the complaint based on forum non conveniens and lack of personal jurisdiction. AdvanFort argued that the court should not dismiss the suit based on forum non conveniens because AdvanFort would have to sue the defendants in different Saudi tribunals (citing cases where motions to dismiss were denied when it would require plaintiffs to sue in different countries). Judge Brinkema was not persuaded, however, as AdvanFort would not have to litigate in different countries. AdvanFort, which previously brought an action in Saudi Arabia, now argued that the Saudi judicial system is corrupt and incapable of adjudicating disputes fairly, but Judge Brinkema noted that American courts have routinely found Saudi courts to be adequate and have held that anecdotal evidence of corruption provides an insufficient basis to conclude that a foreign forum is inadequate. Weighing the private and public interest factors (including the fact that the Virginia court would have to apply Saudi law), Judge Brinkema dismissed the suit based on forum non conveniens.

Seaman’s suit for exposure to asbestos while mining for sulfur from a platform on the OCS was removable based on the OCSLA because the Jones Act claim was fraudulently pleaded; Ragas v. Anco Insulations, Inc., No. 23-5369, 2023 U.S. Dist. LEXIS 216752 (E.D. La. Dec. 6, 2023) (Fallon).

Opinion

Ellery Ragas has been diagnosed with malignant lung cancer that he attributes to asbestos exposure. His father worked as an automobile mechanic and allegedly brought home asbestos on his work clothes. Ragas claims that he was directly exposed to asbestos in his factory work and hobby mechanic work as well as in his employment with Freeport-McMoran as a helper and operator. During his employment with Freeport-McMoran, Ragas worked on the Caminada Mine from a platform on the outer Continental Shelf to develop sulfur. Ragas brought this suit against twenty manufacturers, insurers, and employers in Louisiana state court, asserting claims under state law and under the Jones Act. Two defendants removed the case to federal court based on jurisdiction under the Outer Continental Shelf Lands Act, arguing that the Jones Act claim was fraudulently pleaded (improperly joined) or that, alternatively, the Jones Act claim should be severed and remanded to state court. Ragas moved to remand the case to state court. As Ragas alleged that he was exposed to asbestos at the Caminada Mine from a fixed platform on the OCS, Judge Fallon held that the allegations sufficiently pleaded a case under the jurisdiction of the OCSLA, and there was federal jurisdiction for the removal. Turning to the non-removability of Jones Act claims, Judge Fallon noted that the defendants may pierce the pleadings to establish that the Jones Act claim has been fraudulently pleaded (improperly joined), using the “summary judgment-like” procedure developed by the Fifth Circuit. The defendants established that most of Ragas’ employment took place at facilities that were fixed platforms and not vessels in navigation. Although Ragas did work on drilling barges as a roughneck at two of the Five Freeport-McMoran facilities, that work did not exceed 30% of the duration of his employment with Freeport-McMoran (a year and a half out of his 23-year tenure). Concluding that the Jones Act claim was fraudulently pleaded, Judge Fallon denied Ragas’ motion to remand.

Passenger sufficiently pleaded claims against cruise line for injury during excursion for breach of a non-delegable duty (based on oral modification of the excursion contract) and negligence based on apparent agency or agency by estoppel; however, the claim for negligent failure to warn did not sufficiently allege notice to the cruise line; Romano v. NCL (Bahamas) Ltd., No. 23-cv-21678, 2023 U.S. Dist. LEXIS 218121 (S.D. Fla. Dec. 7, 2023) (Ruiz).

Opinion

Richard Romano, a passenger on the cruise ship BREAKAWAY, was injured during an excursion tour that was operated by Chukka Caribbean Adventures in the Dominican Republic. Romano brought this suit in federal court in Florida, alleging five counts against the cruise line. The cruise line moved to dismiss three of the counts, and Judge Ruiz agreed to dismiss one of the counts. Romano pleaded that the cruise line breached a non-delegable duty because it offered to provide the excursion and orally modified the excursion contract by promising to utilize the best local providers at each port of call, vouching for the safety record of the providers. The cruise line responded that it had not guaranteed safe passage on the excursion and that it could not be held liable for breach of a non-delegable duty unless it was contained in the contract of carriage. Judge Ruiz disagreed, noting that similar allegations of an oral modification to the shore excursion contract have been held to survive a motion to dismiss. With respect to the count of negligence (based on apparent agency or agency by estoppel), the cruise line argued that its website and passenger ticket contained disclaimers that the shore excursions are operated by independent contractors. However, Romano did not rely on those materials for his claim. He alleged that the cruise line held out the tour operator as its apparent agent with brochures and other media, at its excursion desk, and with payment through the passengers’ onboard account or cruise line website. Judge Ruiz considered these contentions to be sufficient to avoid a dismissal of the count. The cruise line also challenged the count for failure to warn, arguing that the count did not sufficiently plead notice. Romano pleaded that the cruise line either had no idea about the safety of the tour because it failed to make a reasonable investigation of the tour or, alternatively, that it made an investigation and learned that the tour was unsafe. Judge Ruiz held that these allegations were ambiguous and failed to adequately establish a claim of negligence for failure to warn. He did note that Romano had alleged in other parts of his complaint that there had been complaints regarding the tour operator, and he gave leave for Romano to amend the allegations to properly allege notice.

Claim arising out of contract for ocean carriage of truck was governed by COGSA under the carrier’s standard bill of lading even though no bill was issued, and cargo’s suit in state court was removable under COGSA; Jeanty v. Antillean Marine Shipping Corp., No. 22-cv-23721, 2023 U.S. Dist. LEXIS 218594 (S.D. Fla. Dec. 8, 2023) (Altman).

Opinion

John Jerome Jeanty hired Antillean Marine to ship a Mack Truck from Florida to Haiti for $7,250. Jeanty had the truck delivered to Antillean, but he did not give Antillean Marine the title. As there was no title, Antillean was unable to ship the truck, and the truck sat on its lot for over a year before Antillean disposed of it. Jeanty inquired about the truck during this period, but his inquiries went nowhere. After disposal of the truck, Jeanty finally supplied the paperwork for the shipment, and the traffic coordinator processed the shipment and learned that the truck had been disposed of. No bill of lading was issued. She notified Jeanty, who brought suit against Antillean in Florida state court, asserting claims for breach of contract, breach of the covenant of good faith and fair dealing, fraud in the inducement, deceptive trade practices under Florida law, and civil theft. Antillean removed the case to federal court and filed a counterclaim in the amount of $945,523.25 for storage fees. Antillean alleged that the case was governed by the Carriage of Goods by Sea Act pursuant to the terms of its standard bill of lading. Jeanty moved to remand the case, arguing that COGSA did not apply because the truck was sold before being loaded on the vessel, no bill of lading was issued, and Antillean employees testified that there was no contract. Reasoning that COGSA would apply and provide jurisdiction for removal if the form bill of lading, incorporating COGSA, bound the parties, Judge Altman stated the question: “Is Jeanty bound by the terms and conditions of Antillean’s form bill of lading even though he never received a specific bill of lading for his Mack truck?” Judge Altman accepted the allegations in Jeanty’s complaint that the parties had entered into a contract to ship the truck. When the truck was delivered to Antillean, a warehouse receipt was issued stating that the cargo had been received for shipment “subject to the terms and conditions contained in the Carrier’s regular form Bill of Lading and Tariff now in use.” Citing cases from the Southern District of Florida to the effect that “as long as a bill of lading would have been issued in the ordinary course of business, the bill of lading serves as a contract governing the relationship of a shipper and carrier even if it was not actually issued,” Judge Altman held that COGSA applied to the loss before the truck made it onto a ship. Therefore, he denied the motion to remand.

Amended ad interim stipulation and letter of undertaking were sufficient in limitation action, but the requested injunction was too broad; In re Oceansound Investments, No. 23-cv-1745, 2023 U.S. Dist. LEXIS 219154 (S.D. Cal. Dec. 8, 2023) (Robinson).

Opinion

This opinion arises from a limitation action filed in federal court in California in connection with a boating accident in which a crew member, Robert Swift, broke his leg on the yacht LEGACY, owned and managed by Oceansound Investments and Robert Nagata. The petitioners filed an ad interim stipulation and sought an order enjoining prosecution of claims. Judge Robinson noted deficiencies in the ad interim stipulation and ordered the petitioners to correct them before he would issue the order. First, the ad interim stipulation did not include the $500 security for costs that is required under Rule F and the court’s local rules. Second, Judge Robinson held that the stipulation did not provide adequate security for the petitioners’ $350,000 interest in the vessel because it failed to identify the petitioners as insureds on the insurance policy whose insurer signed the stipulation. Additionally, Judge Robinson held that the language of the stipulation appeared to permit the petitioners to take actions that would void the stipulation. He ordered the petitioners to supplement the stipulation with a letter of undertaking from the insurer. See November 2023 Update.

The petitioners then filed an amended ad interim stipulation for $350,000 plus $500 in costs and interest at the rate of 6% per annum. The petitioners’ insurer, ACE American Insurance Co., executed the stipulation and a letter of undertaking. The petitioners also submitted a Declaration of Value for the value of the vessel. Judge Robinson agreed that the security was now sufficient, and he then addressed the language proposed by the petitioners for the injunction (enjoining prosecution against the petitioners and their representatives and insurers. Citing the language of the Limitation Act that the injunction will apply to all claims and proceedings against the owner, Judge Robinson declined to extend the injunction to encompass the petitioners’ representatives and insurers.

Passenger did not adequately plead notice in suit against cruise line seeking to recover for the injury she suffered when she tripped over a change in slope or elevation of the deck; Kendall v. Carnival Corp., No. 1:23-cv-22921, 2023 U.S. Dist. LEXIS 222188 (S.D. Fla. Dec. 8, 2023) (Moore).

Opinion

Joanne Kendall brought this suit against the cruise line in federal court in Florida, alleging that she was a passenger on the CARNIVAL SUNRISE and that she was injured when she tripped over an unmarked, uneven, and unexpected change in the slope or elevation of the floor surface of the mid-ship hallway on Deck 1 of the vessel. She brought counts for negligent maintenance, negligent failure to correct the dangerous condition, negligent failure to warn, and negligent design/construction. The cruise line moved to dismiss the complaint because Kendall failed to sufficiently plead that the cruise line had notice of the dangerous condition. Kendall asserted that the cruise line had notice of the dangerous condition for three reasons. First, she cited six prior trip-and-fall incidents involving changes in elevation on different ships, one on the SUNRISE. Judge Moore answered that Kendall had only cited the incidents and did not provide descriptions from which the court could determine that the incidents were substantially similar to Kendall’s accident on the SUNRISE. Second, Kendall argued that the cruise line had notice because of the length of time the surface had existed in a high-traffic area of the ship. Judge Moore noted that this contention is generally applicable to transitory substances and that it did “not naturally comport to the facts of this case.” Nonetheless, Kendall did not plead facts pertaining to how long the condition existed or that the dangerous condition had existed for a sufficient time to give notice to the cruise line. Kendall’s third argument was that the cruise line had constructive notice because the condition allegedly violated industry standards. Kendall recognized that violation of industry standards does not, by itself, establish notice of a dangerous condition. However, it may supplement other evidence of notice. As the complaint contained almost no facts demonstrating notice of the allegedly dangerous condition, and as Kendall did not plead which industry standards were violated, Judge Moore did not find that the third argument gave Kendall any help in pleading notice. Accordingly, he dismissed the complaint with leave to adequately plead notice.

Judge found sufficient evidence that the boat operator’s employer was negligent under the Jones Act when the operator allided with a wellhead despite his testimony that fatigue did not have anything to do with the allision and despite his testimony that he did not remember whether the wellhead was lighted; Judge found sufficient evidence that the vessel was unseaworthy for an inadequate crew despite the operator’s testimony that he could have had someone go with him during the operation; allegations of negligence and unseaworthiness prevented summary judgment on limitation of liability; In re Hilcorp Energy Co., No. 22-2686, 2023 U.S. Dist. LEXIS 219689 (E.D. La. Dec. 11, 2023) (Lemelle).

Opinion

This case arises from the allision in Plaquemines Parish, Louisiana, between the M/V MS. VANESSA, owned by Hilcorp Energy and operated by Matthew Delahoussaye, and a wellhead allegedly owned or under control of Hilcorp Energy, resulting in an injury to Delahoussaye. Delahoussaye, an operator, was assigned to open two company wells. He was on his way to open the second well when he received a call from his supervisor, causing him to put the vessel in idle. After the conclusion of the call, Delahoussaye engaged the throttle and the vessel allided with the wellhead. Hilcorp Energy filed this limitation action in federal court in Louisiana, and Delahoussaye filed a claim, asserting that he was a seaman and that his injury resulted from the unseaworthiness of the vessel and the negligence of Hilcorp Energy. Hilcorp Energy moved for summary judgment on the negligence and unseaworthiness claims and with respect to limitation of liability. For the negligence claim, Delahoussaye alleged that Hilcorp Energy was negligent for sending out a fatigued worker on a nighttime operation and that the wellhead was possibly unlit. With respect to the allegation of fatigue, Hilcorp Energy cited Delahoussaye’s testimony about whether being tired was a cause of him hitting the wellhead: “That don’t have nothing to do with it.” Delahoussaye responded that Hilcorp Energy had breached its duty by assigning excessive work hours. He supported his argument with the opinion of his expert that Delahoussaye should not have been operating the boat after that amount of work and that Hilcorp Energy should have been tracking his hours. Judge Lemelle concluded that a reasonable jury could find comparative fault of both Hilcorp Energy and Delahoussaye. As to the lighting of the wellhead, Hilcorp Energy established that the wellhead had been illuminated in inspections before the allision and that a dive team retrieved the light after the allision. However, when asked whether the wellhead was illuminated, Delahoussaye testified: “I don’t remember. I didn’t see a light. If I’d have saw a light, I wouldn’t have hit it, believe me.” Judge Lemelle found this to be sufficient to create a fact question of whether the wellhead was properly lighted. As to the unseaworthiness of the vessel, Delahoussaye argued that his one-person operation of the vessel was unfit for the nighttime operation, citing Hilcorp Energy’s safety manual that required a buddy system during nighttime operations in hazardous areas. Hilcorp Energy responded that the conditions were clear and calm and that Delahoussaye had experience performing solo operations, and Delahoussaye admitted that if he believed the operation was dangerous, he could have had someone else go with him. As with the negligence claim, Judge Lemelle found a fact dispute about whether the vessel was unseaworthy. Finally, Hilcorp Energy argued that it was entitled to limitation of liability as the allision was a navigational error of Delahoussaye for which it did not have privity or knowledge. However, as the allegations of negligence and unseaworthiness asserted against Hilcorp Energy involved its corporate management, safety policies, and the lighting of its wellhead, Judge Lemelle concluded that there was sufficient evidence of corporate involvement to take the case out of the situation in which there is a simple navigational error.

Maritime law and not the Louisiana Guest Passenger Doctrine governed comparative fault of passenger in boating accident; Griffin v. United States, No. 22-cv-3694, 2023 U.S. Dist. LEXIS 219691 (E.D. La. Dec. 11, 2023) (Papillion).

Opinion

Joseph Newby and Eric Joshua Williams died in a boating accident on the Pearl River near Bogalusa, Louisiana when their pleasure boat, operated by Newby, traveled over a low sill dam constructed and maintained by the Army Corps of Engineers. Suits were filed against the United States in federal court in Louisiana on behalf of the beneficiaries of the decedents, and the suits were consolidated. The beneficiaries of the passenger, Williams, filed a motion seeking partial summary judgment on the Government’s assertion of comparative fault of Williams, arguing that passengers on a boat cannot be held at fault for accidents, except in very limited circumstances, under the Louisiana Guest Passenger Doctrine. Judge Papillion reasoned that application of the doctrine would materially prejudice a feature of general maritime law and interfere with the uniformity of admiralty law because it would change the allocation of fault in maritime cases by potentially absolving Williams of liability, frustrating the comparative fault doctrine. Accordingly, he held that the doctrine did not apply in this case. Judge Papillion then considered whether there was evidence of comparative fault to defeat summary judgment, and he found that there was, citing the fact that the conditions were not ideal for safe boating, that Williams may not have been wearing a life jacket, and the existence of signs warning of the danger of the dam.

Judge declined to lift the stay in a limitation action when there was an indemnity/contribution claim as well as an injury claim in the limitation action and when the proposed stipulation from the worker did not address the indemnity claim; In re Elizabeth & Niki Fishing Corp., No. 21-10020, 2023 U.S. Dist. LEXIS 219789 (D. Mass. Dec. 11, 2023) (Gorton).

Opinion

Eduino Costa claimed that he was injured on June 15, 2017 while serving as a deckhand on the F/V GEORGES BANKS, and the vessel’s owner/operator, G&J Fisheries, filed a limitation action in federal court in Massachusetts. That action was the subject of opinions that were addressed in the May 2022 and June 2023 Updates.  The district court ordered that all claims be filed by November 18, 2020, and Costa filed an answer on November 17, 2020 but did not file a claim. More than 7 months later, the owner filed a motion for entry of default as to all persons who failed to file claims, and Costa opposed the motion, arguing that his claim was preserved in the answer. Judge Gorton disagreed, stating that the assertion that Costa’s rights were protected by the answer was impossible to reconcile with the plain language of Rule F and the “clear precedent” that claimants must file claims. Alternatively, Costa sought permission to file a late claim, and Judge Gorton noted that the courts freely grant permission to file late claims upon a sufficient showing of reasons therefor. However, Judge Gorton did not find the assertions of Costa’s counsel, in contravention of Rule F and clear caselaw, to present a convincing excuse, stating that “the failure of his counsel to admit to this oversight in either his initial filing or his sur-reply undermines his good faith.” Consequently, Judge Gorton did not permit the filing of the late claim and entered the default. See December 2021 Update. Costa appealed the entry of default to the First Circuit and argued that the proceedings in the district court should be stayed pending resolution of the appeal. Judge Gorton reasoned that Costa had made no effort to meet the burden for a stay, and he was skeptical that Costa could meet the burden even if he tried. Therefore, he denied the request for a stay. Elizabeth & Niki Fishing Corp. also moved to set aside the entry of default to allow its claim against G&J for indemnity and contribution. Elizabeth & Niki attached a claim but did not ask for leave to submit a late claim. Judge Gorton rejected the claim, noting that Elizabeth & Niki had incorrectly characterized the standard for filing a late claim, which required not just “cause” but “good cause.” Judge Gorton reasoned that the explanation given failed to satisfy the good-cause standard and that Elizabeth & Niki had failed to explain why it had not sought permission earlier. Thus, Judge Gorton entered an order of judgment of exoneration by default.

Costa appealed to the First Circuit, arguing that his answer and other pleadings should have been construed to constitute a claim and that the district court should have given him permission to make a formal filing of that claim after the deadline. The First Circuit disagreed, pointing out that claims and answers serve different purposes (an answer contests the right to exoneration/limitation, but it is not a claim). Writing for the First Circuit, Judge Lynch noted that Costa’s answer raised defenses and referenced the suit he had filed in state court. However, Judge Lynch stated that the claimant cannot merely point to the state court complaint in order to satisfy the requirement in Supplemental Rule F to file a claim. Costa also argued that Judge Gorton applied the wrong legal standard in considering the request to file a late claim (excusable neglect). Judge Lynch answered that, although Rule F does not use the term “excusable neglect,” the standard under the Rule was effectively one of excusable neglect. Judge Lynch agreed with Judge Gorton that Costa had carelessly made no attempt to remedy the failure to file a claim for a year. Although Costa argued that the entry of a default against his claim as a Jones Act seaman was inconsistent with the liberal treatment required for seamen, Judge Lynch answered that the Jones Act “does not exempt Costa or any other seaman from complying with Supplemental Rule F’s requirements for timely filing a claim in a limitation action.” Judge Lynch added that Costa was represented by experienced maritime practitioners who have filed claims in limitation actions, stating that Costa’s approach “clearly harms the efficient administration of admiralty rules by the federal courts,” which have a “strong institutional interest in ensuring that litigants honor court orders.” Consequently, the First Circuit affirmed the exoneration of the vessel owner/operator and the decision to deny the request to file a late claim.

Judge Gorton then addressed the separate limitation action filed by Elizabeth & Niki Fishing Corp, seeking to limit its liability as owner of the F/V ELIZABETH & NIKI. When Costa brought his suit in state court against G&J Fisheries, as owner of the GEORGES BANKS, he also named Elizabeth & Niki Fishing, as owner of the ELIZABETH & NIKI. G&J Fisheries filed a claim in this limitation action, asserting the right to indemnity or contribution (and attorney fees) from Elizabeth & Niki Fishing, and Costa filed an answer with a notice of claim, attaching his state court complaint. Judge Gorton stayed this limitation action, pending the decision in the appeal of the limitation action filed by G&J Fisheries. After the decision of the First Circuit in that appeal, Costa moved to lift the stay in the Elizabeth & Niki Fishing limitation action so that he could pursue his claim against Elizabeth & Niki Fishing in state court, submitting a single-claimant stipulation. G&J Fisheries did not sign the stipulation and opposed lifting the stay. Judge Gorton noted that some courts have permitted an action to proceed in state court despite a third-party’s claim for indemnity, contribution, and attorney fees when the claimant stipulates that the third-party claim will take priority over his or her own claim. However, Costa made no reference to G&J Fisheries’ claim. Additionally, Judge Gorton was unable to ascertain if the aggregate amount of the claims exceeded the value of the limitation fund. Accordingly, he declined to lift the stay in the Elizabeth & Niki limitation action.

Dispute over which contract was in force with seaman was immaterial in connection with injury suit when both contained the same arbitration clause; argument on unconscionability was for the arbitrator to decide; O’Keefe v. Holland America Line Inc., No. 22-cv-1111, 2023 U.S. Dist. LEXIS 220353 (W.D. Wash. Dec. 11, 2023) (Evanson).

Opinion

Catherine O’Keefe, a citizen of the United Kingdom who was a permanent resident of the United States, worked for Holland America Line as an executive housekeeper from 2006 to 2014. She signed a new employment contract each time she started a new employment period. In December 2013, Holland America emailed her a Seagoing Employment Agreement to join the M/S ZUIDERDAM from January 13, 2014 to June 14, 2014, which she signed. That agreement incorporated language from a 2011 document with an arbitration provision. When she went ashore on April 3, 2014 for a medical examination and treatment for an asthma attack, she was asked to sign a paper that was for a voyage on the ZUIDERDAM from April 14, 2014 to June 14, 2014. The language incorporated a different version of the Seagoing Employment Agreement (2014 version), but it contained an identical arbitration provision. On April 23, 2014, O’Keefe tripped over a brass threshold plate, injuring her knee, and she subsequently had a knee replacement. O’Keefe claims that the cruise line did not provide her maintenance and cure while she was recovering and during her lengthy unemployment. In 2022, she filed this suit under the Jones Act and general maritime law against the cruise line in state court in King County, Washington. The cruise line removed the action, based on federal jurisdiction under the New York Convention (the Convention on the Recognition and Enforcement of Foreign Arbitral Awards) and then moved to compel arbitration. O’Keefe moved to remand the case and opposed the motion to compel, arguing that the April 2014 agreement was void for lack of consideration because the prior agreement was still in effect on the date she signed the new agreement. Judge Evanson easily rejected that argument because both agreements contained the same arbitration provision. O’Keefe also argued that the agreement was unconscionable because it required application of the law of the British Virgin Islands and forced her to arbitrate in the United Kingdom. Judge Evanson answered that these arguments should be presented to the arbitrator under the delegation clause of the agreement and, if O’Keefe was dissatisfied with the outcome of the arbitration, she could raise a public policy challenge in the post-award proceedings. Therefore, Judge Evanson denied the motion to remand and ordered the case to proceed to arbitration.

Judge clarified that damages awarded to vessel owner for wrongful detention of the vessel by shipyard were compensatory damages; Kenai Ironclad Corp. v. CP Marine Services, LLC, No. 19-2799, 2023 U.S. Dist. LEXIS 220629 (E.D. La. Dec. 11, 2023) (Brown).

Opinion

This litigation arises from the contract to convert the vessel M/V IRON DON from an offshore supply vessel to a salmon fishing vessel. The vessel owner, Kenai Ironclad, alleged that it secured a charter for the vessel to fish in Alaska, and that the shipyard knew that the owner needed the work to be completed by June 20, 2019. Disputes arose between the parties, and the vessel owner asserted that the timely performance of the contract was jeopardized. When the owner came to pick up the vessel, the defendants blocked the owner from retrieving its vessel. The owner brought this action in federal court in Louisiana against the shipyard defendants for breach of contract and wrongful detention. Chief Judge Brown conducted a bench trial and held that there was no breach of contract but that, when the defendants detained the vessel, the work was complete and all sums that were owed had been paid. Thus, the defendants had no valid lien, and Chief Judge Brown found that the defendants had acted with bad faith and callous disregard for the safety of persons on the vessels (detention was accomplished by ramming, blocking, and converting the vessel for five days). For punitive damages, Chief Judge Brown awarded the net day rate for the salmon fishing charter ($3,516.10) for the five days the vessel was detained, plus attorney fees, expert fees, expenses, court costs, and prejudgment interest at the Louisiana rate from the date the vessel was detained. See June 2022 Update.

The shipyard defendants appealed to the Fifth Circuit, challenging the finding that they had wrongfully seized/converted the vessel and the awards of punitive damages and prejudgment interest. Writing for the Fifth Circuit, Judge deGravelles of the United States District Court for the Middle District of Louisiana, sitting by designation, first discussed the finding that the defendants had wrongfully converted the vessel. Although the defendants argued that they seized the vessel because Kenai’s check had not cleared, Judge deGravelles found ample evidence to support Chief Judge Brown’s conclusion that the bill had been paid in full and that there was no longer a lien. The defendants also argued that the evidence did not support Chief Judge Brown’s findings that the vessel hired by Kenai to remove the IRON DON was rammed, endangering lives, with the defendants claiming that the bumping was controlled, safe, and appropriate.” Judge deGravelles disagreed and found sufficient evidence of bad faith from the wanton disregard of the legal rights of Kenai. Concluding that the evidence was sufficient to support an award of punitive damages, Judge deGravelles then addressed the amount of the award for punitive damages. In considering whether the 1:1 ratio between compensatory and punitive damages articulated by the Supreme Court in the EXXON VALDEZ case was a hard rule applicable to all cases or whether it was a limit in cases, like the EXXON VALDEZ, where the conduct was reckless, profitless to the tortfeasor, and less than malicious, Judge deGravelles reasoned that “where the conduct is intentional and malicious, and the compensatory damages are small, imposing the 1:1 ratio would do little to serve the twin purposes of punitive damages: to punish the wrongdoer and deter his and others’ similar future conduct.” Judge deGravelles then addressed the issue whether punitive damages require compensatory damages. However, it was unclear from the decision in the district court whether the award was intended to be compensatory (at least in part). Therefore, Judge deGravelles remanded the case to the district court to clarify that issue. Kenai argued that the attorney fees awarded by the district court were awarded as costs and would serve to satisfy any requirement that compensatory damages are necessary for there to be an award of punitive damages. Kenai argued that, by analogy, the tort for malicious prosecution includes attorney fees in the award of compensatory damages. Judge deGravelles answered that the attorney fees in this case were not in a collateral proceeding and were incurred in this suit. Accordingly, he held that the award of fees could not be considered as compensatory damages. Finally, the shipyard defendants argued that the award of prejudgment interest was inappropriate for the award of punitive damages and that the entire award was intended to be for punitive damages because Chief Judge Brown found that Kenai suffered no damage from the five-day delay. However, in her award of punitive damages, Chief Judge Brown awarded Kenai the value of its missed contract days for the time the vessel was wrongfully detained. As it was unclear whether the award was compensatory in part and the case was being remanded on that basis, Judge deGravelles deferred the decision on prejudgment interest until the decision of Chief Judge Brown on the nature of the damages she awarded. See November 2023 Update.

On remand, Chief Judge Brown stated that the damage award was primarily intended to compensate the owner for the five-day loss of its vessel, while also deterring the shipyard defendants from engaging in future wrongdoing. She advised that her reference to “punitive damages” was inaccurate because the primary intent of the award was compensation—to “make Plaintiff whole for the five-day wrongful detention of the vessel.” Chief Judge Brown added that it may have been appropriate to award an additional amount as punitive damages, but she would not do that in light of the limited remand from the Fifth Circuit. The owner sought supplemental attorney fees for work on the appeal and for filing its brief on remand, but Chief Judge Brown declined to rule on the issue because that was not part of the limited remand and because the owner could seek relief from the Fifth Circuit on the fees incurred for the appeal. After issuance of Chief Judge Brown’s order, the parties entered into a settlement of all issues, including attorney fees.

Stay in vessel owner’s limitation action extended to the operator of the vessel; In re DeMore’s Montana LLC, No. 21-cv-730, 2023 U.S. Dist. LEXIS 220688 (D. Ariz. Dec. 12, 2023) (Humetewa).

Opinion

This case involves the collision between the MTI and the ELIMINATOR on the Colorado River at Lake Havasu. DeMore’s Montana LLC (owned by Michael DeMore) owns the MTI, which was being operated by Brandon Bond at the time of the accident. DeMore was sleeping below deck. Jim Dolson was operating the ELIMINATOR. As the MTI attempted to pass the ELIMINATOR, the ELIMINATOR made an abrupt left turn toward the MTI and struck the starboard side of the MTI. The collision resulted in the deaths of Jim Dolson, Sean Crow, and Shawn Fasulkey. DeMore’s filed this limitation action in federal court in Arizona, and the beneficiaries of Dolson, Crow, and Fasulkey filed claims in the limitation action. DeMore’s filed a motion for summary judgment for exoneration (that Dolson’s impaired operation of the ELIMINATOR was the sole cause of the accident and that DeMore and Bond were not negligent) and, alternatively, a motion for partial summary judgment that DeMore’s should be granted limitation of liability for lack of privity or knowledge. Judge Humetewa first addressed whether the court had admiralty jurisdiction and noted that the Ninth Circuit had established that Lake Havasu is a navigable waterway. She then held that the collision of two boats had the potential to disrupt maritime commerce and that the navigation of the boats in navigable waters had a significant relationship to traditional maritime activity. Therefore, the court had admiralty jurisdiction. Judge Humetewa then determined the applicable law. DeMore’s argued that Arizona law applied and that the federal Inland Navigation Rules were inapplicable. The beneficiaries argued that the Inland Rules applied and that, if the Inland Rules did not preempt state law, it was California law that applied because the collision occurred on the California side of the Colorado River and the beneficiaries are California residents. Judge Humetewa found persuasive the reasoning of the court in Meador v. Aramark Sports (discussed in the March 2022 Update), in which Judge Tuchi of the United States District Court for the District of Arizona held that Arizona law that was not in conflict with the Inland Rules would apply to an accident in navigable waters in Arizona. Judge Humetewa accordingly held that Arizona law may supplement, but does not replace, the Inland Rules. Applying the Inland Rules, Judge Humetewa found fact questions whether Bond (operating the MTI) violated Rule 5 (look out) when he lost sight of the ELIMINATOR for half a second while overtaking it, violated Rule 6 (safe speed) by failing to reduce his speed while overtaking the ELIMINATOR, violated Rule 7 (risk of collision) by overtaking the ELIMINATOR at close range, violated Rule 8 (action to avoid collision) by failing to turn in time to avoid the collision, violated Rule 9 (narrow channel failure to signal) by providing no warning signal while attempting to overtake the ELIMINATOR, violated Rule 13 (overtaking) by failing to consider unexpected maneuvers of the ELIMINATOR during the overtaking, violated Rule 16 (action by give-way vessel) by failing to stay clear of the ELIMINATOR, and violated Rule 34 (maneuvering warning signal) by failing to blow a horn or whistle while attempting the overtaking. DeMore’s argued that Dolson violated Arizona statutes on the operation of the ELIMINATOR in a passing situation and for operating the vessel under the influence of alcohol. DeMore’s contended that these violations invoked the presumption that Dolson caused the accident under THE PENNSYLVANIA Rule. As there were fact questions about the negligence and violations by both parties, the presumption “would apply in both directions . . . canceling out any impact.” Therefore, Judge Humetewa declined to grant summary judgment to DeMore’s. With respect to the motion for partial summary judgment, DeMore’s argued that there was no privity or knowledge on behalf of DeMore, who was asleep below deck and had no knowledge of the operational errors alleged against Bond. Judge Humetewa reasoned, however, that the shipowner must establish lack of privity or knowledge “[o]nly if liability is established.” As there were fact questions with respect to Bond’s negligence in operating the vessel, liability could not be established, and she held that she need not reach the issue of privity or knowledge at this time. See October 2023 Update.

While the motions were pending, the claimants filed three complaints in California state court against Bond, seeking to hold him liable as operator of the MTI, presenting the issue of whether the complaints violated the terms of the Stay Order issued by Judge Humetewa. The claimants argued that Bond was not an owner of the MTI and that the Limitation Act did not protect or limit his liability. The petitioners responded that Bond was a frequent permissive user of the vessel who helped DeMore design and purchase the custom vessel and that he was in sole operation of the vessel at the time of the accident in place of DeMore and with his authority. Judge Humetewa agreed and stated that she would treat Bond as an owner under the Limitation Act because of his relationship with the vessel and his role in the collision. Reasoning that the California suits violated the Stay Order, Judge Humetewa concluded that the suits would be stayed until the proceedings in the exoneration action were completed. However, she declined to procedurally join the state actions with the exoneration action, stating that the scope of exclusive federal jurisdiction is proportional to the federal interest in protecting the vessel owner’s right to seek limitation of liability.”

Beneficiaries of seaman who died from mesothelioma allegedly caused by years of exposure to asbestos on cruise ships could disclaim the right to recover during years in which the seaman’s employment contract contained an arbitration clause; judge declined to hold that the integration clause in the last employment contract had the effect of extending the arbitration clause to prior agreements because the cruise line did not sufficiently establish what law applied to the contract to allow interpretation of the integration clause; Gallo v. Carnival Corp., No. 23-23266, 2023 U.S. Dist. LEXIS 220757 (S.D. Fla. Dec. 12, 2023) (Altonaga).

Opinion

Basilio Gallo, an Italian citizen, worked on Carnival’s cruise ships for nearly 40 years, entering into several employment contracts with the cruise line. In his final year of employment, 2009, Gallo signed an employment agreement with Golden Falcon International that contained an arbitration clause. The agreement contained an integration clause that superseded any prior contract between the parties, and his contracts in 2006 and 2007 contained identical arbitration clauses. Gallo died from mesothelioma in 2020, allegedly attributable to asbestos exposure on cruise ships, and his beneficiaries (residents of Italy) filed suit in state court in Houston, Texas against Carnival (under the Jones Act and general maritime law) and several companies that allegedly supplied products containing asbestos. The cruise line removed the action to federal court in Texas, where the plaintiffs filed a motion to remand and the cruise line filed a motion to compel arbitration. Judge Hanks severed the claims against the cruise line and transferred them to the federal court in Florida. He remanded the product liability claims against the suppliers to the Asbestos MDL Pretrial Court. Chief Judge Altonaga in the Florida federal court then considered the motion to remand in which the beneficiaries argued that the arbitration agreements at the end of Gallo’s employment were insufficiently related to the asbestos exposure that occurred during his prior employment. The beneficiaries expressly disclaimed the right to seek recovery for any exposures that occurred during the years in which Gallo’s employment agreement included an arbitration clause. Chief Judge Altonaga was persuaded that the beneficiaries could disclaim the right to recover for exposure during the years when there was an arbitration agreement, but the cruise line argued that there were arbitration agreements for all years of Gallo’s employment because the final contract’s integration clause imposed the arbitration clause on all of the previous contracts. The parties disagreed on the question of which state’s law should apply to the interpretation of the contract (and its integration clause). The contract contained an express choice of law for the law of the flag of the vessel on which Gallo was assigned at the time that the cause of action accrued. The cruise line argued that the applicable law was that of The Bahamas (because the final cruise ship on which he worked flew the flag of The Bahamas). Chief Judge Altonaga disagreed, considering the cruise line’s interpretation to be contrary to the language of the contract that focused on the vessel on which Gallo was assigned at the time the cause of action accrued. Chief Judge Altonaga bemoaned that following the facts of the case had “taken the Court around the world, and the parties do not explain why the laws of any particular state should govern.” She reasoned that it was not incumbent on the Court to do research for the parties, and she did not have sufficient information to determine the law to apply. Although she agreed that both parties had “contributed to this conundrum,” it was the cruise line that had the burden to establish federal jurisdiction. Concluding that the Court did not have sufficient information to interpret the arbitration agreement that the cruise line used as the basis for federal jurisdiction, Chief Judge Altonaga remanded the case to the state court in Houston.

Explosion on vessel rendered vessel unseaworthy as a matter of law, regardless of the cause, and an injured seaman was not comparatively at fault; Ayala v. Work Boat Electrical Services, LLC, No. 22-1235, 2023 U.S. Dist. LEXIS 221555 (E.D. La. Dec. 13, 2023) (Barbier).

Opinion

The OPR VESSEL, owned by 4Ocean, is a repurposed offshore supply vessel used to remove plastic and other debris from the ocean. 4Ocean contracted with Work Boat Electrical Services to install a 208-volt circuit to a davit arm while the vessel was docked at Superior Shipyard in Golden Meadow, Louisiana. Durby Stevens Stanley Ayala, a deckhand employed by 4Ocean, was assisting the captain in placing a new small boat in a cradle on the second deck of the OPR VESSEL using a newly installed electric hydraulic boat davit. The electrical box on the davit exploded, injuring Ayala. The investigation report concluded that the explosion was likely caused by the continuous overcharging of the battery by the power supply, producing oxygen and hydrogen. A spark ignited the hydrogen gas. Ayala brought this suit against 4Ocean and Work Boat Electrical in federal court in Louisiana, and Ayala filed a motion for partial summary judgment that the OPR VESSEL was unseaworthy as a matter of law and that he was not comparatively at fault. He argued that the ship was unseaworthy based on the evidence that the electrical box exploded and that the cause of the explosion was immaterial to the unseaworthiness. 4Ocean did not contend that the vessel was not unseaworthy and instead argued that it should receive indemnity from Work Boat Electrical because it manufactured and installed the unseaworthy control box. As it was undisputed that a component of the OPR VESSEL exploded and caused Ayala’s injury, Judge Barbier agreed that the cause of the explosion was immaterial to the determination of whether the vessel was unseaworthy, and he granted summary judgment that the vessel was unseaworthy. As to comparative negligence, the captain testified that Ayala was not doing anything wrong, and 4Ocean pointed to no evidence of comparative fault. Accordingly, Judge Barbier granted summary judgment that Ayala was not negligent.

Judge agreed to dismiss prospective claim for punitive damages for failure to pay maintenance and cure in the absence of a claim that the employer had failed to pay maintenance and cure; In re FMT Industries, LLC, Nos. 23-2388, 23-2426, 2023 U.S. Dist. LEXIS 221562 (E.D. La. Dec. 13, 2023) (Africk).

Opinion

Dustin Harris, a deckhand on the M/V BIG D, claims that he was injured in a collision between that vessel and the CAROL MCMANUS in the Lower Mississippi River. The owners of the vessels filed limitation actions in federal court in Louisiana, and Harris filed a claim in the BIG D limitation action in which he asserted counts for Jones Act negligence and unseaworthiness against his employer (seeking compensatory and punitive damages). He also brought a count seeking to recover punitive damages and attorney fees in the event maintenance and cure has not been timely and properly paid, now or in the future. However, Harris did not allege that his employer had failed to pay him any maintenance and cure. His employer moved to dismiss the claims for punitive damages, and Harris did not contest that he was not entitled to recover punitive damages on the Jones Act and unseaworthiness claims. Therefore, Judge Africk dismissed those claims with prejudice. However, Harris opposed dismissal of the claim for punitive damages for willful failure to pay maintenance and cure. Judge Africk gave Harris ten days to amend his complaint to allege that his employer had not paid maintenance and cure and held that if he did not amend the claim, he could not assert a claim for punitive damages. However, Judge Africk added that Harris could request leave of court to add a claim for failure to pay maintenance and cure, if necessary, in the future.

Bank was entitled to a judgment under Rule D for possession of the vessel (secured property for the note to the bank) and the right to sell the vessel, but the loan documents did not give it title to the vessel on the petitory claim under Rule D; IncredibleBank v. PROVOCATIVE, No. 22-cv-445, 2023 U.S. Dist. LEXIS 2225999 (D.R.I. Dec. 14, 2023) (Sullivan).

Opinion

Jonathan Cohen executed a Promissory Note to IncredibleBank, and he granted the bank a security interest in Secured Property (the vessel PROVOCATIVE, its trailer, engines, tackle, and appurtenances). The Note and Security Agreement are governed by federal law and by state law to the extent state law is not preempted by federal law. Cohen repeatedly failed to pay as agreed in the Note, and he violated the terms of the Security Agreement by making insurance claims on the vessel and moving the vessel from California to Rhode Island without the bank’s consent. The bank perfected its security interest in the vessel, its trailer, and its engines in separate proceedings in Nevada and California pursuant to the terms of the Security Agreement. The bank then brought this action against the vessel in federal court in Rhode Island and arrested the vessel. The bank pleaded for judgment under Supplemental Rule D, that the bank be awarded possession and title to the vessel, its trailer, and its appurtenances. Magistrate Judge Sullivan agreed that the bank had established its right to possession of the vessel under Rule D, but she noted that the manufacturer of the vessel, Outerlimits Offshore Performance, had possession of the boat and sought custodia legis expenses and a maritime lien for necessaries. Outerlimits argued that a claim under Rule D could only be brought by a claimant who originally was in physical possession of a vessel that was wrongfully taken. Magistrate Judge Sullivan disagreed, holding that the decisions interpreting Rule D do not require prior actual possession and only require a right of possession (constructive possession) that preceded bringing the Rule D action. As Cohen’s right to possession of the vessel lapsed when he defaulted on the loan, and as he deprived the bank of its right of possession when he moved the vessel to Outerlimits in Rhode Island without the bank’s consent, Magistrate Judge Sullivan recommended that judgment be entered for possession of the vessel to the bank. Magistrate Judge Sullivan did not agree with the bank that the court could award legal title to the vessel on the bank’s petitory claim under Rule D. She clarified that the bank had established that it was a secured party with a security interest that conferred on it the right to possess and sell the vessel and to confer title to any buyer (as the attorney-in-fact for Cohen). She also recommended that an interim judgment be entered against Cohen in personam.

Judge found negligence and denied limitation for vessel that broke free and struck the plaintiff’s house during Hurricane Sally; Buster v. B&D Maritime, Inc., No. 1:21-cv-137, 2023 U.S. Dist. LEXIS 223912 (S.D. Ala. Dec. 15, 2023) (Moorer).

Opinion

Russel Buster owned a home in Gulf Shores, Alabama when Hurricane Sally made landfall in September 2020. TCJ Holdings owned a 68-foot convertible Hatteras, ASHLEY MARIE GRACE, and B&D Maritime owned an 89-foot Gulf Craft, the WEATHER OR KNOT (a commercial fishing charter boat that was chartered by Randy Boggs, who owned a marina in Orange Beach, Alabama and also owned B&D Maritime). As Hurricane Sally approached, the owners/operator declined to move the vessels, and both became unmoored and drifted down Cotton Bayou and allided with Buster’s home. Buster brought suit in federal court in Alabama against B&D Maritime, Boggs, and TCJ Holdings, and B&D Maritime and Boggs filed a limitation action. TCJ Holdings settled with Buster, and Judge Moorer held a bench trial on Buster’s claims against B&D Maritime and Boggs. Judge Moorer concluded that the defendants could not rebut the presumption of negligence from THE LOUISIANA rule and that the defendants had sufficient notice so that they were not entitled to limitation of liability. He assigned 10% fault to the ASHLEY MARIE GRACE, and found that Buster’s damages were $595,543.65, including damages to the home, seawall, and gazebo plus the cost of demolition and the survey/damage reports. He reduced that amount by 10%, and with prejudgment interest, the total award was $666,058.47.

Testimony that seaman’s condition had plateaued was insufficient to establish maximum cure; employer owed cure even though it was paid by the seaman’s private medical insurer, but the employer was entitled to a set off for advances it paid to the seaman and for a payment it made to the seaman’s medical provider; seaman was not entitled to compensatory damages for anguish as the anguish was not caused by any actions of the employer, and seaman failed to establish that the employer acted callously so as to recover punitive damages or attorney fees; Aadland v. Boat Santa Rita II Inc., No. 17-cv-11248, 2023 U.S. Dist. LEXIS ­­­224472 (D. Mass. Dec. 18, 2023) (Casper).

Opinion

Magnus Aadland developed an infection while serving as the Captain of the F/V LINDA on a scalloping trip. The vessel returned to shore, and Aadland was hospitalized for streptococcus and eventually had to have two cardiac surgeries. His treatment was paid first by his wife’s health insurance, then by COBRA, and then by Medicare. The defendant paid maintenance at the rate of $84 per day retroactive to Aadland’s discharge from the hospital and also paid “advances” at the rate of $114 per day (including periods of subsequent hospitalization). Aadland used the advances to pay for living expenses, including medical insurance premiums. The total paid for maintenance was $175,644, and the amount paid for advances was $328,374. The defendant also reimbursed out-of-pocket medical expenses. Aadland brought this action seeking to recover for Jones Act negligence, unseaworthiness, maintenance and cure, and failure to pay maintenance and cure. A trial was held on his claims for maintenance and cure and for failure to pay maintenance and cure, and Judge Casper denied all of the claims. She concluded that Aadland had reached maximum cure as he had been discharged from occupational therapy and was only seeing his doctors every six months for checkups. She also held that Aadland was not entitled to maintenance during the period when he was initially hospitalized. There were no outstanding medical expenses that Aadland was obligated to pay, and the record did not reflect that there were any unreasonable delays in payment of maintenance. Finally, Judge Casper held that Aadland’s employer was not liable for any failure to pay maintenance and cure. See November 2020 Update.

Aadland appealed to the First Circuit, but he did not contest that his employer had satisfied its duty of maintenance. The payment of cure was complicated by the fact that Aadland used the health insurance provided by his wife’s employer to pay the cost of his treatment, and, after his wife lost her job, they were enrolled in the COBRA plan for that insurance. Aadland used a portion of the advance payments on maintenance to pay for the costs of the COBRA premiums, and his employer reimbursed him for out-of-pocket medical expenses, such as co-pays. On the eve of trial, Aadland’s employer paid the health insurer $400,000 in full satisfaction of any claim the insurer may have had for Aadland’s medical expenses. The first issue presented to the appellate court was whether the employer breached the duty to provide cure by failing to pay the cost of reasonably necessary medical care even though the cost of the care was paid for by private insurance. A secondary issue was presented whether he could recover the sticker price for the medical care and not the reduced amount that the health care providers accepted from the insurers. As the bills were paid by the insurers and his employer reimbursed the co-pays, the only amounts for which Aadland was out of pocket were the premiums he paid for the private insurance coverage. Citing the Gauthier opinion from the Fifth Circuit, Aadland argued that the payments from private health care providers were from a collateral source, that the reimbursements made to the insurers should not reduce the amounts owed for cure, and that he should recover the full amount of $1.2 million that was invoiced by the medical providers. Writing for the First Circuit, Chief Judge Barron noted that Judge Casper had distinguished Gauthier on the basis that Aadland had not requested cure, but the employer had conceded that the duty to provide maintenance and cure includes a duty to inform the seaman of the duty. As the employer had not notified Aadland of that duty, it could not complain that he did not request cure. Consequently, the First Circuit vacated Judge Casper’s failure to properly explain why Gauthier should not apply. Alternatively, the employer argued that the premiums for the medical insurance during the employment of Aadland’s wife were deducted from his wife’s paycheck and were not paid by Aadland (citing cases where the seaman receives financial assistance from a parent). Chief Judge Barron considered the sharing of expenses by spouses to be different than a parent gifting expenses to an adult seaman. He held that the claim for breach of the duty to provide cure had to be vacated, absent a finding that the financial relationship between Aadland and his spouse would support a finding that Aadland did not incur an expense for the cost of the premiums. Aadland’s employer also argued that it paid hundreds of thousands of dollars in advances to Aadland that he used to pay for the premiums once his wife’s employment ended. However, Chief Judge Barron answered that the evidence reflected that the payments were advances (a loan) pursuant to an agreement for repayment. Although there was no request for repayment, it was unclear whether the payments were made as a loan for which there would be no basis to allow a set-off. Chief Judge Barron remanded the case to make findings bearing on whether Aadland alone purchased his insurance and emphasized that if he did alone purchase the insurance, his employer would not be entitled to set off from its cure obligation the roughly $600,000 that the medical insurer paid for Aadland’s treatment. Chief Judge Barron then addressed the question of whether Aadland was entitled to recover the sticker price for his cure and followed the decision of the Fifth Circuit in Manderson, holding that the amount owed was the amount accepted by the medical providers. Chief Judge Barron left it to Judge Casper on remand to address whether and how to credit the advance payments made by the employer and the payment made by the employer to the medical insurer. This left Judge Casper’s denial of Aadland’s claims for compensatory damages for mental anguish based on the failure to pay cure and punitive damages and attorney fees for willful delay in failing to provide cure. As the appellate court reversed the decision that the employer did not breach its duty to provide cure, Chief Judge Barron remanded these claims to Judge Casper for reconsideration. Finally, Chief Judge Barron addressed the ruling by Judge Casper that Aadland had reached the point of maximum cure (reasoning that there was no evidence that Aadland had not reached maximum medical recovery). Concluding that this decision improperly shifted the burden to the seaman to disprove maximum cure, Chief Judge Barron reviewed the court’s determination de novo. Although Aadland was discharged from his occupational therapy, was seeing his doctors every six months for checkups, and Aadland admitted that the doctors were not doing anything for him to get better, Chief Judge Barron was not persuaded that the evidence sufficed to establish that Aadland’s care was palliative rather than rehabilitative. Consequently, the First Circuit reversed the finding on maximum cure. See December 2022 Update.

On remand, Judge Casper addressed three issues: whether Aadland had reached maximum cure; whether the cure obligation was offset by payments already made; and whether Aadland was entitled to compensatory damages for failure or delay of his employer in providing cure. With respect to maximum cure, Judge Casper cited the opinions that there were no further surgical options available, but that his condition was improving as a result of physical and occupational therapy (although his therapist stated that his progress had plateaued). Concluding that the statement about plateauing was insufficient to carry the employer’s burden of proof, Judge Casper held that Aadland had not reached maximum cure. Judge Casper then returned to the Fifth Circuit’s Gauthier decision to determine whether the employer was relieved of its obligation to pay the roughly $600,000 in medical expenses that were paid by the medical insurance. Based on Gauthier, Judge Casper held that Aadland should be entitled to recover his medical expenses as long as the medical insurance was not gifted to him by a third party and was paid for out of his shared finances with his wife. As the payments came from insurance paid by his wife’s employer with payroll deductions, from COBRA that was paid from their joint checking account, and from Medicare (payments deducted from Aadland’s social security check), Judge Casper held that the employer was responsible for the full amount of the $600,000 accepted by the medical providers. As the employer paid $400,000 to the medical insurer, Judge Casper held that the $600,000 cure obligation should be reduced by that amount. Judge Casper then addressed the effect of the advances made by the employer “toward any settlement, judgment or award resulting from [Aadland’s] claim for personal injuries or illness occurring on or about 7/20/2014, while aboard the F/V LINDA.” Although Aadland argued that his employer could only use the advances to satisfy future obligations and not past due maintenance and cure, Judge Casper held that the receipt for advances was not limited and applied to any judgment or award. Accordingly, she reduced the $600,000 obligation by the $400,000 payment to the medical insurer and by the advances paid to Aadland, leaving a net credit against future cure obligations. Finally, Judge Casper addressed Aadland’s claim for compensatory damages for mental distress, punitive damages, and attorney fees. Although his employer did not timely fulfill its cure obligation, Aadland’s distress arose from his stress about the medical insurer’s decision not to provide him care at facilities of his choice and to refuse to allow additional physical and occupational therapy. The evidence did not establish that had the employer timely fulfilled its cure obligation, it would have paid for any treatment that Aadland did not receive or that was not covered by the medical insurer. Therefore, Judge Casper concluded that Aadland was not entitled to compensatory damages from his employer for emotional distress. With respect to punitive damages and attorney fees, Judge Casper held that Aadland timely received all care deemed medically necessary. His employer paid advances to Aadland to cover his mortgage payments, insurance, and living expenses. There were no expenses presented to the employer that it declined to pay (and it ultimately paid the medical insurer). And it was not clear that the employer was liable for the medical treatment that was paid for by private insurance while the employer was paying advances to the seaman. Judge Casper concluded that Aadland had not shown that his employer was callous or willful in its failure to pay cure, and she denied the claim for punitive damages and attorney fees.

The same day that Judge Casper issued her opinion, Aadland filed his notice of appeal to the First Circuit.

Judge entered million-dollar judgment in favor of passenger on cruise ship for injury when lifeboat crashed into a floating dock during a return from shore leave, injuring a passenger; Ruggeri v. NCL (Bahamas) Ltd., No. 20-cv-21961, 2023 U.S. Dist. LEXIS 226889 (S.D. Fla. Dec. 18, 2023) (Gayles).

Judgment

Vivian Ruggeri claims that she was injured while on a lifeboat operated by Norwegian Cruise Line that crashed into a floating dock as she returned to the vessel EPIC after a shore excursion. She brought this action against the cruise line in federal court in Florida, and the cruise line moved to exclude the opinions in the rebuttal report of her expert, Captain Hendrik J. Keijer, regarding the vessel’s speed and angle of roll. The cruise line argued that Captain Keijer’s methodology was unreliable and that his opinions were unhelpful to the trier of fact (a bench trial in this case). The cruise line contended that Captain Keijer relied solely on his observations of a CCTV video and did not articulate a rate of error for his speed calculations, and that his use of trigonometry to determine the vessel’s angles of roll from the CCTV footage was not reliable methodology. Additionally, the cruise line argued that Captain Keijer erroneously used the tangent function on non-right triangles. Captain Keijer corrected some errors, and Magistrate Judge Otazo-Reyes began with the foundation that Captain Keijer testified as a former cruise ship captain with decades of sailing experience who often relied on CCTV footage and applied trigonometry to calculate the movement of other vessels. Based on that experience, she held that the methodology was sufficiently reliable to allow the opinions, subject to cross-examination and presentation of contrary evidence. As to the issue of the helpfulness of the testimony, Magistrate Judge Otazo-Reyes noted that there was no danger of a jury being unduly influenced by the expert opinions in a case tried to the bench, and she added that the judge would presumably be competent to disregard anything he should not have heard or to discount it for practical and sensible reasons., Therefore, she denied the Daubert challenge to the opinions of Captain Keijer. See May 2023 Update.

Judge Gayles held a bench trial and issued his judgment after announcing his findings at the end of the trial. He found the cruise line negligent for negligent failure to warn and awarded economic damages for past medical expenses in the amount of $35,441.99 and future medical expenses in the amount of $18,360. He awarded non-economic damages of $800,000 for the passenger’s pain, suffering, disability, physical impairment, scarring, disfigurement, mental anguish, inconvenience, and loss of capacity for the enjoyment of life. He awarded pre-judgment interest (at the prime rate) in the amount of $162,968.55 on past non-economic damages (from the date of injury) under the general maritime law. The total judgment was $1,016,770.54.

Federal court had removal jurisdiction, based on the New York Convention, over suit filed in state court over charter party dispute, and the court compelled arbitration in accordance with the charter’s arbitration clause; America Chung Nam, LLC v. Mitsui O.S.K. Lines, Ltd., No. 2:23-cv-7676, 2023 U.S. Dist. LEXIS 227709 (C.D. Cal. Dec. 19, 2023) (Blumenfeld).

Opinion

American Chung chartered several specialized, humidity-controlled ships from Mitsui O.S.K. Lines, MOL (Americas), and MOL Drybulk in order to export wood chips from the United States to China. During the COVID pandemic, China shut down the intended destination of Dongguan, and American Chung no longer needed the ships. American Chung brought this suit in California state court against the vessel owners, alleging violations of the California Business and Professions Code, fraud, misrepresentations, negligence, and unjust enrichment. The defendants removed the case to federal court, alleging jurisdiction under the New York Convention (the Convention on the Recognition and Enforcement of Foreign Arbitral Awards), diversity, and admiralty, and moved to compel arbitration based on arbitration provisions in the charter parties. American Chung challenged the removal jurisdiction and argued that Younger abstention applied. Judge Blumenfeld reasoned that the gateway question of arbitrability was relevant to both issues, and he addressed American Chung’s argument that the addition of a Consultation clause in the charters had the effect of eliminating the provision requiring London arbitration of any dispute arising out of or in connection with the charters. The Consultation clause provided that any matters not addressed in the charters or any doubt or uncertainty with respect to the charters shall be determined or resolved through good faith consultation between the parties. Harmonizing the provisions required “little effort.” Judge Blumenfeld read the provisions together to require informal consultation before the parties engaged in more costly arbitration. He rejected American Chung’s argument that the court should order the parties to consult because, even if the consultation requirement was a condition precedent to arbitration, American Chung violated the requirement by filing this suit. Turning to the application of the New York Convention, American Chung argued that the claims in its suit were separate from its claims arising out of the charter parties. Noting that the arbitration provisions applied to claims arising out of or in connection with the charters, Judge Blumenfeld held that the claims touched matters covered by the charters and therefore related to it and fell within the New York Convention. Consequently, the court had removal jurisdiction. American Chung then made the argument that Younger abstention applied because the federal action interfered with its state action. The problem with that argument, of course, was that the state action had been removed to federal court, and there was no pending state action. Judge Blumenfeld described as “meritless” the argument that the case would “interfere with itself.” Finally, American Chung argued that, under California law, arbitration agreements that prevent a plaintiff from seeking public injunction relief in any forum are unenforceable. Judge Blumenfeld rejected that argument for several reasons. First, American Chung did not address the defendants’ argument that federal common law applied to the threshold issue of whether claims are arbitrable under the New York Convention. And, even if federal common law did not apply, the charters contained a clause selecting English law as the governing law. Additionally, there was nothing to prevent American Chung from requesting a public injunction in the arbitration, and the relief sought appeared to be for private rights, not public rights under the California statute. Thus, public policy did not preclude enforcement of the arbitration agreement, and Judge Blumenfeld granted the motion to compel arbitration and dismissed the case.

Seaman who was assigned to shoreside work while his vessel was out of commission stated a Jones Act negligence claim against his employer, but his claims for unseaworthiness and maintenance and cure were dismissed; Williams v. Sea Support Ventures LLC, No. 22-90, 2023 U.S. Dist. LEXIS 227237 (E.D. La. Dec. 21, 2023) (Milazzo).

Opinion

Johnny Williams was employed by Sea Support Ventures for twenty years as a captain and was assigned to its fleet of vessels. When the vessel to which he was most recently assigned was temporarily out of commission, Williams was assigned to work ashore to dismantle a sheet metal building near his employer’s dock. He was injured when the blade of the angle grinder used to cut and remove sheet metal disintegrated. He brought this suit in federal court in Louisiana against his employer, asserting claims for Jones Act negligence and unseaworthiness and maintenance and cure under the general maritime law. He also brought product liability claims against other defendants. Sea Support Ventures moved for summary judgment on Williams’ claims. On the Jones Act claim, Sea Support argued that Williams knew better than to use a grinder without a guard and that he had been instructed on the relevant safety procedures. It cited Williams’ testimony that “it’s [his] fault.” Judge Milazzo answered that the issue of negligence under the Jones Act related to the fault of the employer. She found a fact question whether the providing of the grinder without a guard was negligent, and Williams’ conduct went to the issue of his own comparative fault. Therefore, she declined to grant summary judgment on the Jones Act count. The unseaworthiness count failed, however, because Williams did not identify any appurtenance of a vessel that was involved in the allegedly defective shoreside equipment that caused his injury. Finally, Sea Support Ventures asserted that it was entitled to summary judgment on the maintenance and cure claim because Williams’ treating physician stated that Williams had reached maximum medical recovery based on a functional capacity examination. As Williams did not controvert the conclusion of his treating physician (or deny the allegations raised by his employer), Judge Milazzo dismissed the claim for maintenance and cure.

Judge remitted jury award in seaman’s claims against his employer and the vessel owner, reducing the awards for medical expenses and lost wages and reducing the award for punitive damages for failure to pay maintenance and cure from $1.5 million to $90,000 (9 times the amount of the award of $10,000 for maintenance); Griffin v. REC Marine Logistics, LLC, No. 3:20-cv-92, 2023 U.S. Dist. LEXIS 228037 (M.D. La. Dec. 21, 2023) (Jackson).

Opinion

McArthur Griffin, a seaman employed by REC Marine on the DUSTIN DANOS, operated by REC Marine and owned by Offshore Transport, was injured during a personnel basket transfer on the vessel. He brought this suit in federal court in Louisiana against REC Marine and Offshore Transport, and the defendants asserted limitation of liability as a defense. The parties agreed that a jury would decide the issues of liability and damages and that if damages were awarded, the Judge would decide whether the defendants could limit liability. The jury found liability: REC Marine negligence (70%), Offshore Transport unseaworthiness (20%), and Griffin comparative negligence (10%).  The jury awarded compensatory damages of $1,696,700. The jury also found that Griffin had reached maximum cure for his back injury but not for his neck and shoulder injuries and awarded $10,000 in maintenance but nothing for cure. Finally, the jury found REC Marine guilty of unreasonable, willful, wanton, and arbitrary failure to pay maintenance and cure and awarded $1.5 million in punitive damages. In the post-trial motions, REC Marine argued that maintenance and cure was not required because Griffin had not disclosed a prior neck injury suffered during a car accident (McCorpen defense). As REC Marine did not require a pre-employment physical, it had to establish that Griffin considered his neck injury to be important and that there were no reasonable grounds to support a good-faith belief that he was fit for duty. Judge Jackson believed that the evidence that Griffin did not miss a day of work after the car accident supported the finding that REC Marine did not establish a McCorpen defense. And Judge Jackson also held that there was evidence to support the finding of willful/callous failure to pay maintenance and cure with evidence that REC Marine delayed investigating the incident, did not meaningfully investigate the incident, and continued to deny maintenance and cure unreasonably. Judge Jackson then considered the defendants’ arguments that the jury awarded excessive damages. The jury awarded $686,700 for future medical expenses, despite the fact that Griffin presented a chart at trial that only listed medical costs of $590,503. The defendants also challenged $121,286 for a second cervical fusion surgery that Griffin might need to undergo 20 years down the road. Judge Jackson agreed with both arguments and remitted the award for future medical expenses to $469,217. The defendants argued that the awards of $150,000 for past wage loss and $500,000 for future wage loss were excessive in light of the testimony of the plaintiff’s expert (and closing argument of counsel) that the past wage loss was $144,995 and the future loss was $321,589. Judge Jackson agreed and ordered the remittitur to those sums. Judge Jackson declined to conclude that the award of $10,000 in maintenance was duplicative of the award of lost wages, and he found sufficient evidence to support the awards of $100,000 for past general damages and $250,000 for future general damages. As to the award of $1.5 million for failure to pay $10,000 in maintenance, Judge Jackson noted that REC Marine’s conduct was “hardly reprehensible enough to support such a shocking sum” and that the issue of whether to submit the issue to the jury was a “much closer call” than for the other claims. REC Marine argued that the award should bear a 1:1 ratio to the maintenance award of $10,000, but Judge Jackson noted the recent decision from the Fifth Circuit in Kenai Ironclad (see November 2023 Update and the decision on remand in Kenai Ironclad discussed above) and held that an elevated level of punitive damages was appropriate but limited to the “constitutionally tenable” ratio of 9:1. Therefore, he remitted the award of punitive damages to $90,000. Finally, Griffin sought attorney fees of $348,150 at a rate of $500 per hour. REC Marine argued that Griffin did not plead for attorney fees, but Judge Jackson rejected that argument because REC Marine was on notice of the claim in Griffin’s Rule 26 Disclosures. REC Marine also argued that Griffin was not entitled to fees because the jury did not award fees, and fees were not listed on the verdict form. Stating that REC Marine had not cited cases to support that contention, Judge Jackson held that Williams was entitled to attorney fees [note the decision of the Fifth Circuit in Holmes v. J. Ray McDermott & Co., 734 F.2d 1110, 1121 (5th Cir. 1984), in which the court reversed the award of attorney fees made by the judge after the jury made its finding of willful and arbitrary failure to pay maintenance and cure, stating, “an award of damages in the form of attorneys’ fees for willful and arbitrary failure to pay maintenance and cure is a nonseverable part of the plaintiff’s cause of action, and an integral part of the merits of the case.”]. Judge Jackson rejected the argument that fees should be awarded to attorneys who have only practiced law since 2016 at a rate of $500 per hour, and he held that an hourly rate of $300 was appropriate. Judge Jackson also agreed with REC Marine that Griffin was only entitled to recover fees for the work on the maintenance and cure claim (reasoning that work on the maintenance and cure claim was not so intertwined with the Jones Act and unseaworthiness claims to make that work inseparable). Accordingly, he declined the request for attorney fees without prejudice to the plaintiff resubmitting the motion after differentiating the hours spent on the maintenance and cure claim (identifying any hours that were impossible to differentiate).

Vessel owner sufficiently pleaded counterclaim against ship repairer for wrongful arrest and breach of contract and was entitled to countersecurity on the claim for breach of contract; Nautor Swan Global Service, S.L. v. S/V RED SKY, No. 22-386, 2023 U.S. Dist. LEXIS 228344 (D.R.I Dec. 22, 2023) (Almond).

Opinion

This litigation arises from services provided to the S/V RED SKY by Nautor Swan Global at its shipyard in Badalona (Barcelona metropolitan area), Spain. Nautor Swan arrested the vessel in this proceeding in federal court in Rhode Island, and the vessel was released by the posting of security in the amount of $750,000. The ship (not its owner) then filed a counterclaim for wrongful arrest and breach of contract (unauthorized work, overcharges, and damaged materials), and, because the vessel does not have legal standing to claim breach of contract, Nautor filed an amended complaint under Rule B directly against the owner of the vessel. The property to be attached was the security that was posted to release the vessel. Although the parties argued whether Spanish law or American maritime law applied, Magistrate Judge Almond answered that the applicable law was not material to “the validity of the Rule C arrest that took place in this case after the Owner chose to bring the Vessel to this District.” The vessel objected to Nautor Swan’s request to utilize Rule B to attach the security already posted by the vessel as the basis for the in personam claim for breach of contract/quantum meruit against the vessel owner. However, Magistrate Judge Almond recommended that the $750,000 that was deposited in the registry of the court could be used as security for the related Rule B claim for breach of contract/quantum meruit against the owner. Finally, the counterclaim and briefing of the vessel included a request for countersecurity under Rule E(7). Magistrate Judge Almond noted that countersecurity was not available for the claim for wrongful arrest (citing Judge Brown’s decision in Incas v. M/V SANG JIN). As the request was not properly pleaded, Magistrate Judge Almond recommended that the owner be allowed to amend the counterclaim to present a proper claim. See September 2023 Update.

The owner filed an amended counterclaim for wrongful arrest and breach of contract (unauthorized work, overcharges, faulty workmanship, and damaged materials), and Nautor Swan moved to dismiss the claim for wrongful arrest based on law of the case. Magistrate Judge Almond noted that the court had twice rejected motions (under Rule 12) to vacate the arrest, but he concluded that the prior denials did not require dismissal of the counterclaim. There were factual disputes about whether Spanish law governed (and did not create a lien), whether Nautor Swan violated the arbitration/mediation/jurisdiction provisions of its own terms and conditions, and whether the contract terms were ever signed by the owner. Thus, Magistrate Judge Almond held that the owner alleged a plausible wrongful arrest claim. Nautor Swan also sought dismissal of the counterclaim for breach of contract, but Magistrate Judge Almond reasoned that the pleading was sufficient and that the argument that the owner needed more specificity was better addressed through discovery. Finally, Magistrate Judge Lincoln addressed the owner’s claim for countersecurity under Rule E(7) and held that the claim was appropriate for the count alleging breach of contract but not for the count for wrongful arrest. He rejected the request for $500,000 and recommended that Nautor Swan be required to post countersecurity of $100,000.

From the state courts

State court dismissed insured’s suit on marine insurance policy based on forum-selection clause choosing federal court even though it resulted in denial of the insured’s right to a jury trial; Wello and Mom, LLC v. Clear Spring Property & Casualty Co., No. 3D22-1333, 2023 Fla. App. LEXIS 8438 (Fla. App. 3d Dist. Dec. 13, 2023) (Gordo).

Opinion

After Wello and Mom’s vessel partially sank, it made a claim with its insurer, Clear Spring Property & Casualty Co. Clear Spring denied the claim based on Wello and Mom’s failure to disclose material facts in the insurance application, and Clear Spring filed a declaratory judgment action in Florida federal court in admiralty. A few months later, Wello and Mom brought this suit against Clear Spring in state court in Miami-Dade County, Florida, and Clear Spring filed a motion to dismiss in the state court based on the forum-selection clause in the policy that provided for exclusive jurisdiction in federal court, in particular the federal district court in which the insured (or its insurance agent) resides. Judge Diaz dismissed the suit, and Wello and Mom argued on appeal that the forum-selection clause was unenforceable because it was not negotiated and because it deprived Wello and Mom of the right to a jury trial. Citing the “well-entrenched rule of federal admiralty law” favoring the enforcement of forum-selection clauses in maritime contracts (including marine insurance policies), Judge Gordo held that the presumption of validity of the clause applied notwithstanding the insured’s argument that it was deprived of the right to a jury trial. As Wello and Mom did not establish that enforcement was unreasonable and “so gravely difficult and inconvenient” as to deprive the insured of its day in court, the appellate court affirmed the decision of the lower court to dismiss the state suit.

Hull policy was an indemnity policy that did not require payment by the insurer until the insured had paid or become legally obligated to pay for the repairs on the vessel, and the insurer was not guilty of bad faith for not paying until repair expenses had been incurred; Great Northern & Southern Navigation Co. v. Certain Underwriters at Lloyd’s, No. 22-CA-578, 2023 La. App. LEXIS (La. App. 5 Cir. Dec. 13, 2023) (Wicker).

Opinion

French America Line purchased the COLUMBIA QUEEN and transported it to Louisiana for an extensive refurbishment for themed river cruises on the Mississippi River, renaming the vessel M/V LOUISIANE. French America Line obtained a hull policy through Lloyd’s Underwriters that included an endorsement for loss of earnings/loss of hire at an agreed rate of $11,666.66 per day. During the first voyage of the vessel, there was a “blackwater spill” of raw sewage on the vessel. As the vessel had a schedule of cruises lined up, the owner brought the ship to Gretna for immediate remediation rather than transporting it to a shipyard for repair. There was an impasse between the insurer and insured about the repairs because the insurer advised that the policy was an indemnity policy for which the insured would have to make the repairs before the insurer had the obligation to pay. The cost of the repairs increased during the delay from an initial estimate of $238,000 with the work to be done in 21 days, and the insurer eventually made total payments of $595,000. French America Line brought this action in state court in Jefferson Parish, Louisiana against Lloyd’s, and Judge Mentz instructed the jury that the policy only required Lloyd’s to reimburse the insured for expenses incurred for completed repairs and granted a directed verdict on the insured’s bad faith claims. The jury found that the repairs could have been completed at a cost of $375,000 within 60 days of the incident, and Judge Mentz awarded judgment in favor of the insured in the amount of $29,999.80. French America Line appealed, and Judge Wicker noted that the policy incorporated the 1977 American Institute Hull form that provided that no claim for unrepaired damage would be allowed and that coverage was for expenses incurred. She held that Judge Mentz had correctly instructed the jury because the language demonstrated that the policy was an indemnity policy that did not require payment until the insured had paid or become legally obligated to pay the expenses because a repair had been performed or equipment/material had been purchased. As the insurer was not obligated to tender payment until after expenses had been incurred (paid or liability to pay), the insurer was not liable for bad faith. Lloyd’s also appealed the jury’s determination that the repairs could have been completed in 60 days, but the appellate court found sufficient evidence to support that decision.

Kenneth G. Engerrand
President, Brown Sims, P.C.

Houston
1990 Post Oak Blvd
Suite 1800
Houston, TX 77056
O 713.629.1580

New Orleans
365 Canal Street
Suite 2900
New Orleans, LA 70130
O 504.569.1007

Gulfport
1110 Cowan Road
Suite B #214
Gulfport, MS 39507
O 228.867.8711

Miami
2801 SW 149th Ave
Suite 120
Miramar, FL 33027
O 305.274.5507

Quote:

Judge Goldberg of the United States Court of Appeals for the Fifth Circuit began his opinion in a suit by the United States seeking a refund of overpayment of cotton subsidies that had been obtained through a scheme or device to defeat the purpose of the Upland Cotton Price Support Program with this verse:

Some farmers from Gaines had a plan.
It amounted to quite a big scam.
But the payments for cotton began to smell rotten.
Twas a mugging of poor Uncle Sam.

The ASCS and its crew

uncovered this fraudulent stew.

After quite a few hearings, the end is now nearing –

It awaits our judicial review.

Judge Goldberg affirmed the award to the United States for the subsidy overpayments, but he remanded the case for an award of prejudgment interest to the United States. Judge Goldberg concluded:

With thought and comment most candid,

affirmance shall now be commanded.

But the court below missed the prejudgment interest:

The cases are therefore remanded.

United States v. Batson, 782 F.2d 1307, 1309, 1316 (5th Cir. 1986) (Goldberg).

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© Kenneth G. Engerrand, December 29, 2023; redistribution permitted with proper attribution.

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