July 2023 Longshore/Maritime Update (No. 290)
Notes from your Updater:
On May 18, 2023, Judge Block of the United States District Court for the District of Maine addressed the request by Simon Kinsella, a resident of the Wainscott hamlet of the Town of East Hampton, New York, for a preliminary injunction to halt construction of the South Fork Wind Farm, located 35 miles east of Montauk Point, Long Island, and the cables that export the energy produced by the windmills to the onshore electric grid in East Hampton (the offshore cables would involve seafloor construction in an area known for Atlantic cod spawning, and the onshore cables would run through trenches where the groundwater was contaminated with perfluoroalkyl and polyfluoroalkyl substances). Kinsella objected to the approval of the project by the Bureau of Ocean Energy Management, arguing that the project would result in irreparable harm to the drinking water near the onshore portion of the project and would harm the Atlantic cod population near the offshore portion of the project. Finding that Kinsella had not established irreparable harm, Judge Block denied the request for a preliminary injunction. See Kinsella v. Bureau of Ocean Energy Management, No. 23-cv-2915, 2023 U.S. Dist. LEXIS 87437 (E.D.N.Y. May 18, 2023).
In our June 2023 Update, we noted the decision of Judge Talwani of the United States District Court for the District of Massachusetts, rejecting claims of Nantucket Residents Against Turbines who objected to the approval of an offshore wind project off the coast of Martha’s Vineyard and Nantucket by the Bureau of Ocean Energy Management and the National Marine Fisheries Service. See Nantucket Residents Against Turbines v. United States Bureau of Ocean Energy Management, No. 1:21-cv-11390, 2023 U.S. Dist. LEXIS 86176 (D. Mass. May 17, 2023). On May 25, 2023, Judge Talwani of the United States District Court for the District of Massachusetts declined to grant a stay or preliminary injunction with respect to the objection of several fishing interests to the approval of the construction and operation of an offshore wind energy development project by Vineyard Wind 1 LLC on the outer Continental Shelf southeast of Martha’s Vineyard and Nantucket, Massachusetts. See Seafreeze Shoreside, Inc. v. United States Department of Interior, No. 1:22-cv-11091, 2023 U.S. Dist. LEXIS 91590 (D. Mass. May 25, 2023). The fishing interests filed a notice of appeal to the First Circuit the next day (No. 23-1473).
In our October 2023 Update, we reported that the Fifth Circuit upheld the validity of port fees charged by the Sabine-Neches Waterway for improvements to the Waterway. See BG Gulf Coast LNG, L.L.C. v. Sabine-Neches Navigation District of Jefferson County, Texas, No. 22-40158, 2022 U.S. App. LEXIS 25767 (5th Cir. Sept. 14, 2022) (Elrod). Congress paid for most of the improvements, but Congress left it to the local navigation district to cover the rest through port fees. Two energy companies challenged the fees and filed a writ of certiorari to the Supreme Court, presenting this question:
The Tonnage Clause states that “[n]o State shall, without the Consent of Congress, lay any Duty of Tonnage.” U.S. Const. art. I, § 10, cl. 3. The Water Resources Development Act of 1986 provides limited congressional consent for local authorities to impose “tonnage duties or fees” on vessels using the Nation’s ports and harbors to finance harbor navigation projects, but “only” if those fees are “levied * * * in conjunction with a harbor navigation project whose construction is complete (including a usable increment of the project).” 33 U.S.C. § 2236(a)(1).
The question presented is whether the Act permits localities to charge fees for incomplete and unusable increments of a harbor navigation project.
On May 30, 2023, the Supreme Court declined to grant the writ of certiorari to hear the case. See BG Gulf Coast LNG, L.L.C. v. Sabine-Neches Navigation District of Jefferson County, Texas, No. 22-805, 2023 U.S. LEXIS 2220 (U.S. May 30, 2023).
In our February and June Updates, we reported the decisions of Judge Durkin of the United States District Court for the Northern District of Illinois in connection with the crash of a Boeing 737 MAX (Lion Air Flight JT 610) in the Java Sea. Judge Durkin held that DOHSA applied and dismissed claims for pre-death pain and suffering and emotional distress. See In re Lion Air Flight JT 610 Crash, Nos. 18 C 07686, 19 C 01552, 19 C 07091, 2022 U.S. Dist. LEXIS 229095, 2023 U.S. Dist. Lexis 92140 (N.D. Ill. Dec. 20, 2022, May 25, 2023). Judge Alonso of the United States District Court for the Northern District of Illinois reached a different result for the crash of a Boeing 737 MAX (Ethiopian Airlines Flight 302) in Ethiopia. Applying Illinois statutes, Judge Alonso declined to dismiss claims for emotional distress that the decedents suffered during the flight prior to the crash. See In re: Ethiopian Airlines Flight ET 302 Crash, No. 19 C 2170 (Consolidated) (N.D. Ill. May 30, 2023). [But DOHSA may apply when the death occurs on waters within a foreign country, as the Fifth Circuit applied DOHSA to the death of a seaman on a vessel in operation on Lake Maracaibo, Venezuela. See Sanchez v. Loffland Bros. Co., 626 F.2d 1228 (5th Cir. 1980) (per curiam)].
On June 8, 2023, the Council on Environmental Quality and Office of Science and Technology Policy requested input from all interested parties to inform the development of an Ocean Justice Strategy to coordinate and guide ocean justice activities across the Federal Government. Its goal is to propose equitable and just practices to advance safety, health, and prosperity for communities residing near the ocean, the coasts, and the Great Lakes. Responses are due on July 24, 2023. Instructions for submission are included in the following Notice that was published in the Federal Register.
On June 15, 2023, the Fifth Circuit affirmed the decision of Judge Milazzo of the United States District Court for the Eastern District of Louisiana that the State of Louisiana failed to establish standing to challenge a National Marine Fisheries Service rule that required certain shrimping vessels in Louisiana waters to use turtle excluder devices (the rule was estimated to affect 1,047 vessels in the Gulf of Mexico with an aggregate loss in gross revenue of about $2.29 million in addition to the cost of purchasing the TEDs, which was approximately $1.36 million). See Louisiana State v. National Oceanic & Atmospheric Administration, No. 22-30799, 2023 U.S. App. LEXIS 14917 (5th Cir. June 15, 2023) (Wilson).
On June 21, 2023, the Fifth Circuit held that an installation engineer with FMC Technologies, who first planned and prepared for the installation of complex subsea drilling equipment and then assisted in the on-site installation, was within the learned professional exemption from the overtime requirements of the Fair Labor Standards Act. See Hebert v. FMC Technologies, Inc., No. 22-20562, 2023 U.S. App. LEXIS 15578 (5th Cir. June 21, 2023) (Jolly).
On June 23, 2023, the Texas Supreme Court declined to hear a petition for review of the decision of the Texas Court of Appeals in Houston, ordering arbitration of the legal malpractice suit brought by Sheri Allen Dorgan, who claimed injury from exposure to harmful chemicals from the DEEPWATER HORIZON/Macondo blowout, against her attorneys, Charles F. Herd and the Herd Law Firm, and Mark Lanier and the Lanier Law Firm. Her malpractice suit in state court in Texas sought recovery from the attorneys/firms based on negligence and gross negligence, alleging that her federal action against BP was dismissed for failing to comply with the requirements of Judge Barbier’s orders in that litigation. District Judge Reeder in the malpractice action declined to grant the firms’/attorneys’ motion to compel arbitration based on the arbitration provisions in the agreements with the law firms, but the court of appeals reversed the decision and ordered the malpractice claims to be arbitrated. See Herd v. Dorgan, No. 14-19-00926-CV, 2022 Tex. App. LEXIS 4643 (Tex. App.—Houston [14th Dist.] July 7, 2022) (Wise), pet. denied, No. 22-1060, 2023 Tex. LEXIS 585 (Tex. June 23, 2022).
On the LHWCA Front . . .
From the federal appellate courts
Clarence Jones worked at Huntington Ingalls as a sheet-metal mechanic from 2003 to 2009. Several years later, Jones selected an audiologist who administered a hearing test and generated an audiogram that indicated that Jones had a 17.2% binaural hearing impairment. Jones presented a claim for hearing loss to Huntington Ingalls, which scheduled Jones for an evaluation by its choice of audiologist. That audiologist determined that Jones’ hearing impairment was 0% (with a mild high-frequency sensorineural hearing loss), and Huntington Ingalls agreed to accept liability for medical treatment as the result of that audiogram. Huntington Ingalls agreed to provide hearing aids from its choice of audiologist, but Jones requested that his choice of audiologist conduct the fitting. Administrative Law Judge Romero denied Jones’ claim for compensation and medical benefits (for lack of causation), and Jones appealed to the Benefits Review Board. The BRB affirmed the denial of compensation benefits but reversed and remanded the decision on medical benefits based on the employer’s stipulation that it would pay for hearing aids. The BRB held, however, that Jones did not have a right to choose his own audiologist. Jones moved for reconsideration, and the Board reversed its decision on the issue of whether Jones could choose his own audiologist. Writing for the majority (Judge Rolfe concurring), Judge Buzzard held that an audiologist is a physician such that Jones was permitted his choice of audiologist pursuant to Section 7(b) of the LHWCA. Chief Judge Boggs dissented, giving her opinion that audiologists are not physicians under the LHWCA. Huntington Ingalls appealed to the Fifth Circuit and presented the single legal question whether an audiologist is a physician, as that word is used in Section 7(b) (that section provides that the claimant has the right to choose an attending physician). Writing for the Fifth Circuit, Judge Elrod noted that the term physician (added to the Act in 1972) is not defined in the LHWCA. She consulted dictionaries from that period and turned to the primary definition from Webster, “a person skilled in the art of healing: one duly authorized to treat disease: a doctor of medicine—often distinguished from surgeon.” Judge Elrod reasoned that an audiologist would fall within the first portion of the definition but not the more restrictive portion. Similarly, the American Heritage Dictionary had both a broad and narrow definition. As dictionaries left the court with genuine ambiguity, Judge Elrod turned to the structure of the LHWCA, but the conflicting use of the terms audiologist and physician in the statute “would seem to exacerbate, rather than alleviate, the ambiguity presented by the plain text of the statute.” Judge Elrod then looked to the purposes of the LHWCA to determine if there was an interpretation that was consistent with congressional intent, but “this tool seems yet again to pull equally in both directions.” As the statute was ambiguous, Judge Elrod considered the regulation under Chevron deference. The regulation stated that the term physician “includes doctors of medicine (MD), surgeons, podiatrists, dentists, clinical psychologists, optometrists, chiropractors, and osteopathic practitioners within the scope of their practice as defined by State law.” It ended by stating: Naturopaths, faith healers, and other practitioners of the healing arts which are not listed herein are not included within the term ‘physician.’” Huntington Ingalls argued that audiologists were not enumerated and were excluded as practitioners of the healing arts that were not listed. Judge Elrod disagreed, answering that the beginning of the regulations uses the term “includes, which she described as a “term of enlargement, and not of limitation,” and the ending language was subject to the canon of ejusdem generis, which requires that the exclusion be limited to practitioners of the healing arts who “are similar to naturopaths and faith healers.” Giving the regulation Chevron deference, Judge Elrod held that audiologists are included in the use of the word physician in Section 7(b) of the LHWCA. Alternatively, assuming the regulation was ambiguous, Judge Elrod considered whether Auer deference gave the Department of Labor “leeway to say what its own rules mean.” As the Director’s interpretation was merely a parroting of the definition of a physician from the regulation, she held that the Director’s position was not authoritative. However, as the interpretation implicated the DOL’s substantive expertise (“work-related injuries and the compensation and medical care that accompany them”), and she considered the interpretation to be “likely ‘fair and considered,’” the interpretation might satisfy two of the three conditions for Auer deference and would not have the highest level of deference. Thus, if any deference were granted to the Director’s position, it would be Skidmore deference. Based on the court’s interpretation of the regulation, supported by Skidmore deference, Judge Elrod held that an audiologist is a physician as used in Section 7(b) of the LHWCA.
LHWCA did not preempt state tort claims for worker’s asbestos exposure in the zone of concurrent jurisdiction when the worker elected to bring a tort suit under state law; Barrosse v. Huntington Ingalls, Inc., No. 21-30761, 2023 U.S. App. LEXIS 14604 (5th Cir. June 12, 2023) (Engelhardt).
Ronald J. Barrosse claimed that he suffered from mesothelioma from exposure to asbestos while working as an electrician at Avondale’s shipyard on destroyer escorts for the Navy. He brought this action under Louisiana state law in the Civil District Court for the Parish of Orleans, Louisiana, against Avondale and several product suppliers, and Avondale removed the case to federal court under the Federal Officer Removal Statute. After Barrosse died, his surviving spouse and children maintained the action. Avondale moved for summary judgment on the basis that the exclusive-remedy provision of the LHWCA preempted the claims under state law. A pivotal issue was whether the pre- or post-1972 LHWCA applied, and Judge Vitter followed the decisions from other judges in the Eastern District of Louisiana, holding that the version of the LHWCA in effect at the time of the manifestation, not exposure, governed (the manifestation was after the 1972 Amendments). Consequently, Barrosse’s exposure on ships and adjoining areas was covered under the LHWCA (as it was expanded in 1972), and that coverage extended to exposure in his car and at home to dust on his clothes as it arose out of his employment. Judge Vitter then addressed whether the LHWCA was the exclusive remedy in light of the concurrent jurisdiction that is permitted between the LHWCA and state workers’ compensation statutes by the Supreme Court in the Sun Ship case for the twilight zone where both acts can apply. This case was not brought seeking state workers’ compensation benefits, however, and Judge Vitter held that the exclusive remedy provision in the LHWCA preempted the state negligence claims against Avondale. Finally, Judge Vitter rejected the plaintiffs’ argument that the application of the 1972 Amendments to exposure before 1972 was unconstitutional, holding that Congress’ action was not irrational or arbitrary. See October 2021 Update. Avondale then requested that Judge Vitter enter a final judgment pursuant to Rule 54(b) so that the issue of LHWCA preemption could be appealed. Avondale argued that the issue of LHWCA preemption has arisen in at least 16 other cases pending in federal courts in Louisiana and that it was likely that the issue will continue to arise. Therefore, Avondale sought to avoid repeatedly litigating the question in the district courts before the Fifth Circuit could address the issue. Concluding that delay in entry of a final judgment would prejudice Avondale, Judge Vitter entered a final judgment in favor of Avondale. See December 2022 Update.
Writing for the Fifth Circuit, Judge Engelhardt cited the Hahn decision of the Supreme Court in 1959 that allowed workers who were injured in the twilight zone of concurrent jurisdiction to bring a tort claim under state law. After the 1972 Amendments to the LHWCA extended the Act’s coverage shoreside, the Supreme Court permitted concurrent jurisdiction of state and federal workers’ compensation in areas of concurrent jurisdiction, despite the provision in Section 5(a) of the LHWCA that liability for injuries covered by the LHWCA is exclusive and in place of all other liability of the employer to the employee. In the case of Barrosse’s claim, the Louisiana workers’ compensation statute did not afford a remedy for mesothelioma until 1975. Thus, Barrosse had a remedy under state tort law or he could seek relief under the LHWCA. The question presented was whether state tort law was preempted by the LHWCA in the twilight zone. Judge Engelhardt concluded that there was no express preemption, despite the exclusivity language in the LHWCA, based on the decisions of the Supreme Court. As to conflict preemption, Judge Engelhardt agreed that an injured worker “cannot eat his cake and have it too.” Thus, once the worker receives LHWCA benefits, he may not also sue his employer under state law for additional compensatory damages. As Barrosse “eschewed the LHWCA entirely” and was only seeking compensation in tort, Judge Engelhardt ruled that his state tort claim was not preempted. Judge Engelhardt did emphasize that the category of claims affected by this ruling was small, applying only to (1) maritime workers, (2) injured in the twilight zone, (3) in Louisiana, (4) who did not seek or obtain LHWCA compensation, (5) and whose injuries were not covered by the relevant version of the state workers’ compensation act. Judge Engelhardt cautioned that the preemption issue should be determined on a state-by-state basis, and he did not address whether a plaintiff who brings a tort claim could subsequently obtain relief under the LHWCA (“a question we leave for another day”). Thanks to Professor Michael Sturley of the University of Texas School of Law for bringing this case to our attention.
From the federal district courts
LHWCA claim interrupted the running of the prescriptive period for a shipyard worker to file his tort claims under Louisiana law for asbestos exposure, but settlement of the LHWCA claim stopped the interruption and the shipyard worker’s tort claims were untimely; Fiffie v. Eagle, Inc., No. 22-189, 2023 U.S. Dist. LEXIS 84351 (E.D. La. May 12, 2023) (Ashe).
Roland Fiffie, Sr. brought suit in Louisiana state court against Avondale Shipyards (claiming he was employed on a cleanup gang and later as a shipfitter, pipefitter, and welder), other employers, and a number of suppliers of products containing asbestos, seeking to recover for asbestosis. Avondale removed the case to federal court based on the Federal Officer Removal Statute. In his deposition, Fiffie admitted that he settled an asbestosis claim he made against Avondale under the LHWCA in 2009 and that he believed he was first diagnosed with asbestosis prior to 1999. One of the suppliers (and its insurer) moved for summary judgment on the ground that Fiffie’s tort claims were prescribed because they were filed more than one year after Fiffie’s LHWCA claim was discharged and was no longer pending. Applying Louisiana law, Judge Ashe noted that Fiffie’s claim would have been time-barred a year after his diagnosis. However, Judge Ashe added that a claim under the LHWCA interrupts prescription of the tort claim. The LHWCA claim was resolved in 2009, and Fiffie waited more than a year to file this tort action in 2021. Therefore, his tort claims were untimely, and Judge Ashe granted summary judgment.
Splitting the bill for dinner is not the same as allocating defense costs between insurers that owe a duty to defend; waiver of subrogation by the LHWCA carrier did not violate the Louisiana Oilfield Indemnity Act and was enforceable; In re Aries Marine Corp., Nos. 19-10850, 19-13138, 2023 U.S. Dist. LEXIS 87701, 90523 (E.D. La. May 18, 24, 2023) (Africk).
Aries Marine owned the liftboat RAM XVIII, which was sent to house workers who were working on a platform in the West Delta region of the outer Continental Shelf off the coast of Louisiana (the workers were employed by Fluid Crane and United Fire). The vessel jacked up, and a construction crew worked until the next day when the vessel began to list and sank. Aries filed a limitation action in federal court in Louisiana, and seven workers on the rig filed claims against Aries under Section 5(b) of the LHWCA. Aries moved for summary judgment that it was entitled to exoneration of liability or, alternatively, limitation of liability. Judge Africk found a fact dispute whether the captain of the liftboat performed a preload before jacking up to ensure that the leg pads for the vessel were on stable ground and would not punch through the seabed. If the preload was not performed, Judge Africk concluded that the failure would constitute negligence under the vessel’s active control, in violation of the duty enunciated by the Supreme Court in the Scindia case. Turning to the limitation issue, Judge Africk noted that with respect to seagoing vessels, the privity or knowledge of the master at or before the beginning of the voyage is imputed to the owner. Aries did not dispute that the liftboat was a seagoing vessel (the accident did occur on the outer Continental Shelf more than 12 nautical miles from the coast). Thus, to the extent there was negligence of the captain before the voyage, it would be imputed to the owner. Judge Africk also cited evidence that the owner allegedly provided an unqualified captain whom it had failed to adequately train, and he declined to grant summary judgment as to limitation of liability. The vessel owner also moved to dismiss the punitive damage claims brought against it under Section 5(b) of the LHWCA on the ground that punitive damages are only recoverable against a third-party tortfeasor by a longshore worker who is injured in state territorial waters (and for lack of evidence of willful and wanton conduct). Judge Africk noted that the Fifth Circuit has not decided the question of whether punitive damages may be recoverable under Section 5(b), and he declined to grant summary judgment on the punitive damage claim. See February 2023 Update.
Fugro USA was hired to assist in positioning the liftboat by providing GPS positioning and performing a sonar scan for debris or obstructions on the sea floor. It provided plats that showed where prior vessels had been placed in the area, but the images Fugro provided only showed the impressions left by vessels that Fugro had helped to position. Therefore, it was possible that there were holes and impressions in the area that were not reflected in the data provided by Fugro to Aries. Fugro moved for summary judgment on the negligence claims asserted against it, noting that the claimants had placed the blame for the listing of the liftboat on Aries’ captain’s failure to conduct a preload (or on the conducting of an improper preload). In response to Fugro’s motion for summary judgment, the claimants argued that Fugro owed them a duty to advise the captain that there could be additional can holes in the area, that there were dark spots on the sonar images that might be additional can holes, and to exercise stop work authority when one leg of the liftboat penetrated deeper than had been expected. Judge Africk assumed for the motion that Fugro had a duty, but he could not find causation for any of the alleged failures because, ultimately, the accident occurred because, as the claimants alleged, the captain failed to properly preload the vessel. The claimants’ expert confirmed that when the failure of the vessel occurs after the preloading, the preload was not adequate. As the preloading was not the responsibility of Fugro, Judge Africk dismissed the claims against Fugro.
Fieldwood, the owner of the platform, chartered the liftboat to provide worker housing in support of operations taking place on its platform. Fieldwood moved for summary judgment on the ground that, as the time charterer, it had no control over the vessel and assumed no liability for the negligence of the crew. Judge Africk noted that time charterers owe a “hybrid duty” arising from contract and tort to avoid negligent actions within the sphere of activity over which they exercise at least partial control. He added that a time charterer may be liable for directing the vessel to encounter natural hazards, such as dangerous weather or sea conditions. The claimants argued that Fieldwood was negligent by directing the liftboat to be positioned on the east side of the platform when it knew the conditions were hazardous and by limiting the scope of the marine surveyor (Fugro) to not include geo-technical data. As the claimants’ expert opined that it was likely that either soil samples existed for the location or that penetrations were known by Fieldwood, which, if credited, would permit a finding that Fieldwood had notice of the hazardous conditions and contributed to the failure, Judge Africk denied summary judgment to Fieldwood.
Judge Africk then considered the contracts between the parties for their indemnity obligations. Fieldwood entered into Master Service Contracts with both Fluid Crane and United Fire (employers of the claimants) by which Fluid Crane and United Fire agreed to indemnify Fieldwood for injuries to employees of Fluid Crane and United Fire. The indemnity extended to Fieldwood’s contractors (such as Fugro and Aries) if they entered into contracts with Fieldwood to extend indemnity (for injuries to their employees) to subcontractors of Fieldwood (such as Fluid Crane and United Fire). Fieldwood and Fugro entered into a Master Service Contract by which Fugro agreed to provide similar indemnity to Fieldwood and its contractors. Likewise, Fieldwood and Aries entered into a Master Service Contract by which Aries agreed to provide similar indemnity to Fieldwood and its contractors. Therefore, the contracts between Fieldwood, on the one hand, and Aries, Fugro, Fluid Crane, and United Fire contained provisions by which each party agreed to indemnify the others for injuries to its own employees. Consequently, Fluid Crane and United Fire were obligated to indemnify Fieldwood, Aries, and Fugro for the claims brought by the employees of Fluid Crane and United Fire if the indemnity provisions were valid under applicable law. The validity question required a determination of whether Louisiana law or maritime law applied. If maritime law applied, the agreements were valid. If Louisiana law applied, the indemnity was invalidated by the Louisiana Oilfield Indemnity Act. Judge Africk applied the requirement from the Fifth Circuit’s Doiron case (whether the contract provided or the parties expected that a vessel would play a substantial role in the performance of the contract) to determine whether the contracts were maritime or not. The contracts at issue were the contracts between Fieldwood and Fluid Crane and United Fire to perform work on Fieldwood’s platform. Although Aries and Fugro were involved with the role of the liftboat, that expectation was not relevant to the contracts between Fieldwood and Fluid Crane and United Fire. Judge Africk distinguished cases in which the contract documents provided for the use of a vessel. In this case, “Aries and Fugro may have expected the vessel to play a substantial role in the completion of the work, but the same cannot be said of Fluid Crane and United Fire.” Therefore, Judge Africk concluded that Louisiana law applied, and he denied indemnity from Fluid Crane and United Fire to Aries and Fugro. He did not, however, hold that the LOIA invalidated the requirement for payment of defense costs when the indemnitee was found to be free from fault. Thus, if Aries were ultimately found free from fault, it would be entitled to reimbursement of its defense costs. Judge Africk had granted summary judgment on liability in favor of Fugro, so Fugro was entitled to recover its defense costs. Fluid Crane requested that Judge Africk order the defense costs be split evenly between Fluid Crane and United Fire, despite the fact that only one of the seven claimants was an employee of United Fire. Judge Africk agreed that, under Louisiana law, the defense obligation was incapable of division. Therefore, he ordered that the defense obligation be divided in equal portions between Fluid Crane and United Fire. See March 2023 Update).
One of the workers employed by Fluid Crane, Gilberto Gomez Rozas, was an undocumented immigrant who was not authorized to work in the United States. During his deposition and in discovery, Rozas repeatedly invoked the protection against self-incrimination in the Fifth Amendment, refusing to answer questions related to his citizenship and personal history. Aries argued that his claim should be dismissed with prejudice because Rozas had perpetrated a fraud on the court (and to deter future parties from similar conduct). In the alternative, Aries sought a sanction that Rozas be precluded from recovering past and future lost earnings at United States’ wage rates. Judge Africk noted that the party invoking the Fifth Amendment cannot hope to gain an unequal advantage against the party he has chosen to sue and that the defendant should not be required to defend against a party who refuses to reveal the very information which might absolve the defendant of liability. Thus, the Fifth Circuit has enunciated a balancing test that dismissal is appropriate only when less burdensome remedies would be an ineffective means of preventing unfairness to the defendant. In this case, Rozas did not commit perjury or provide false documents, but his invocation of the Fifth Amendment during depositions and discovery impeded Aries’ ability to investigate the claim for damages. Consequently, Judge Africk decided that the lesser sanction of precluding Rozas from seeking future wage loss awards at United States’ rates was the appropriate sanction. With respect to past wage loss, Rozas testified that he had not been working and it had been four years since he prepared tax returns. The parties did not brief the issue of extending the sanction to past wage losses, so Judge Africk did not address the issue of past wage losses at this time. See April 2023 Update.
Aries moved for reconsideration of the decision on the contractual allocations involving Aries, Fugro Marine, United Fire, and Fluid Crane that was discussed in the March 2023 Update. Aries, Fugro, United Fire, and Fluid Crane were parties to contracts with Fieldwood that contained indemnity provisions that were enforceable under the general maritime law but that were unenforceable under Louisiana law. Applying the Fifth Circuit’s Doiron test, Judge Africk held that the contracts with United Fire and Fluid Crane were not maritime because there was no evidence that United Fire and Fluid Crane expected the vessel RAM XVIII would play a substantial role in the completion of the contract. Aries asked Judge Africk to reconsider that decision, arguing that Judge Africk erred by not considering Fieldwood’s expectations as to the use of the RAM XVIII. Judge Africk agreed that the expectations of Fieldwood were relevant (as it was a party to each of the contracts), but he answered that Aries did not cite any authority that the expectations of one party could establish that the parties expected that a vessel would play a substantial role. Thus, further discussion of Fieldwood’s expectations would not have changed the court’s analysis. Aries also argued that Judge Africk had added a third prong to the Doiron test—”did the vessel in fact play a substantial role in the completion of the contract?” Judge Africk disagreed, stating that the decision was based on the expectations of the parties and not on the use of the vessel (he noted that the actual use was only relevant, according to Doiron, when the parties’ expectations were unclear). Consequently, Judge Africk denied Aries’ motion for reconsideration. See June 2023 Update.
United Fire also sought reconsideration of Judge Africk’s decision to divide the defense costs equally between United Fire and Fluid Crane despite the fact that six of the seven claimants were employees of Fluid Crane and only one was an employee of United Fire. United Fire cited an opinion from Judge Vance of the United States District Court for the Eastern District of Louisiana that, absent a clear agreement to the contrary, insurers who owe a co-equal duty to defend must share the cost equally. However, United Fire did not identify any portion of the contracts that constituted a “clear agreement” to share defense costs in an unequal proportion, so Judge Africk held that relief was not available for arguments that had been previously considered and rejected (Judge Africk was not impressed with the analogy to seven individuals who had dinner together and split the bill for the appetizer so that each paid 6/7 of the cost, reasoning that defense costs “cannot be divided amount the claimants in the same manner that an appetizer would be shared among diners”).
As Fluid Crane and United Fire were the employers of the workers who were injured when the RAM XVIII capsized in the Gulf of Mexico, their LHWCA carriers (American Longshore Mutual Association and the Louisiana Workers’ Compensation Corp.) paid benefits under the LHWCA for their injuries. ALMA and LWCC then brought subrogation claims to recover the benefits paid from the defendants. Fieldwood, Aries, and the plaintiffs moved for summary judgment, arguing that ALMA and LWCC had agreed to waive their rights of subrogation pursuant to the terms of the Master Services Contracts between Fieldwood and Fluid Crane and United Fire. Judge Africk noted that the policies provided for waiver of subrogation when required by written contract, so he considered the requirements of the underlying contracts. The waiver in the MSCs extended to the “Company Group,” which was defined to include Fieldwood and its “invitees.” ALMA and LWCC argued, however, that Aries and the plaintiffs also fell under the definition of “third Party Contractor Group,” which would render the language of the indemnity and insurance sections of the contracts superfluous because all parties and contractors/subcontractors would be members of the Company Group. Fieldwood answered that there was no prohibition against an invitee satisfying another definition in the contract and that this interpretation would not lead to circular indemnity or absurd results. Therefore, Judge Africk addressed whether Aries and the claimants were, in fact, invitees, citing Louisiana law that defines an invitee as a person who goes onto premises with the expressed or implied invitation of the occupant on business of the occupant or for their mutual advantage. Fieldwood argued that it was the occupant of the platform (one who has possessory rights in, or control over, certain property or premises) and the RAM XVII (a time charterer is an occupant of the vessel because the vessel is under the ultimate direction, control, and command of the time charterer). It also argued that Fluid Crane and United Fire were invited by Fieldwood to the platform to work by their contracts and that they, and their employees, who performed the work that benefited Fieldwood, were, therefore, invitees. Judge Africk agreed that the employees of Fluid Crane and United Fire were invitees of Fieldwood and that LWCC and ALMA were required to waive subrogation in favor of the claimants. With respect to Aries, Fieldwood argued that the RAM XVIII, owned by Aries, was invited to erect itself within the boundaries of Fieldwood’s mineral lease to assist in the platform work, so Aries qualified as an invitee. Although Aries argued that no employee of Aries ever stepped foot on the platform, it did not dispute that the vessel was attached to the platform via a walkway and that its presence benefitted Fieldwood. Having concluded that Aries and the workers were invitees so that subrogation was waived, Judge Africk considered the validity of the waiver under Louisiana state law, which he had previously held was applicable to the contracts so as to invalidate the indemnity provisions. Citing the Fontenot decision from the Louisiana Supreme Court, Judge Africk noted that a waiver of subrogation provision does not violate the Louisiana Oilfield Indemnity Act if the contract does not also require indemnity. As there was unenforceable indemnity in this case, Judge Africk held that the statute did not void the waiver of subrogation (there was no evidence of payment of a “Marcel” payment that would create an exception to the LOIA. Consequently, the subrogation claims of ALMA and LWCC were dismissed.
Longshore worker’s tort claims against the stevedore and West Gulf Maritime were barred by the exclusive remedy provision in the LHWCA, and her HIPAA claim failed because HIPAA does not create a private cause of action; Preston v. International Longshoremen’s Association Local 24, No. 4:19-cv-2606, 2023 U.S. Dist. LEXIS 88707 (S.D. Tex. May 22, 2023) (Hanks).
Cheryl Preston, a member of International Longshoremen’s Association Local 24 in Houston, brought this workplace harassment suit against Local 24, West Gulf Maritime Association, and APS Stevedoring LLC, alleging violation of federal laws for discrimination and retaliation after she suffered an injury. In our December 2022 Update, we reported that Judge Hanks dismissed Preston’s claims for discrimination, retaliation, and a hostile work environment in violation of federal and state law. West Gulf Maritime and APS Stevedoring then moved to dismiss her remaining claims: tort claims (for negligence, failure to train, indifferent policies, assault, battery, bystander liability, and intentional infliction of emotional distress) and a claim for violation of the Health Insurance Portability and Accountability Act. As Preston identified West Gulf Maritime and APS Stevedoring as her employers, as Judge Hanks found that her tort claims fell within the scope of the LHWCA, and as APS Stevedoring was self-insured and had secured the payment of LHWCA compensation, Judge Hanks held that Preston’s tort claims were barred by the exclusive-remedy provision of the LHWCA. Turning to Preston’s claim that West Gulf Maritime and APS Stevedoring violated HIPAA because they did not protect her health information privacy, Judge Hanks held that HIPAA does not provide a private cause of action, and he dismissed that claim. In a separate order on May 22, 2023, Judge Hanks dismissed the remaining claims against Local 24, resulting in the entry of a final judgment on all claims against all of the defendants.
Suit by Defense Base Act claimant against her employer and carrier in federal court (after dismissal of her DBA claim) did not state a claim and was dismissed; Rashidiasl v. MEP (ESIS/Arch/Chubb), No. 23-cv-325, 2023 U.S. Dist. LEXIS 94107 (S.D. Cal. May 30, 2307) (Curiel).
Fariba Rashidiasl claims that she was injured when she fell off her bed during a nightmare while deployed in Afghanistan by Mission Essential Personnel as a linguist. She brought this suit in federal court in California, alleging that she was denied medical benefits and compensation under the Defense Base Act by defendants, MEP (ESIS/Arch/Chubb) and Iqarus (International SOS). She attached a description of what happened as well as medical reports, emails and a response to requests for admissions filed with the Office of Administrative Law Judges. Rashidiasl requested that she be allowed to proceed in forma pauperis, and she moved for appointment of counsel. Finding the information provided about her assets to be insufficient, Judge Curiel denied Rashidiasl’s motion to proceed in forma pauperis (advising that Rashidiasl could refile with an affidavit identifying all of her assets). Judge Curiel then reviewed the complaint, sua sponte, and held that the documents that Rashidiasl submitted for her complaint did not state a claim. Accordingly, Judge Curiel dismissed the complaint (with leave to amend). Judge Curiel also noted that the complaint may be barred by res judicata in light of litigation previously brought in the same federal court by Rashidiasl’s employer and carrier to enforce a discovery order by Administrative law Judge Alford (resulting in dismissal of the DBA claim as a sanction). As the case was dismissed for failure to state a claim, Judge Curiel declined to appoint counsel for Rashidiasl.
From the Office of Administrative Law Judges
ALJ struck evidence from medical provider whose “recycled” report was submitted in 94 cases, found the law firm that submitted the reports was negligent and violated a fundamental ethical guidepost, and referred the matter to the Chief Administrative Law Judge to conduct any further inquiry into the law firm and medical provider; Bugaba v. SOC-SMG, Inc., No. 2021-LDA-03931 (OALJ Boston June 13, 2023) (Calianos).
The longsuffering readers of the Update know that we do not ordinarily summarize decisions from Office of Administrative Law Judges or the Benefits Review Board. We have made an exception for this decision in view of the importance of this matter to the readers of the Update who are Defense Base Act practitioners. This decision involves three claimants who brought claims under the LHWCA as extended by the DBA. Their cases are pending in the Boston District Office of the Office of Administrative Law Judges. When it was discovered that the law firm that represented the claimants filed a nearly identical medical report prepared by the claimants’ treating provider, Musuto Bwonya Alex, in each of the cases, District Chief Administrative Law Judge Calianos issued an Order to Show Cause, requiring the law firm to address why it had filed the reports. The subsequent submissions reflected that the law firm had filed “the recycled Alex report” in “what appears to be 94 instances—12 in Boston and 82 across other OALJ districts.” Judge Calianos found that the law firm “was at least negligent in filing the recycled Alex report” and that the law firm had “violated a fundamental ethical guidepost contained in the American Bar Association’s Model Rules of Professional Conduct, the Florida Rules of Professional Conduct, and the Rules of Practice and Procedure for Administrative Hearings before OALJ—the duty to represent a client with diligence, ‘dedicated to the interest of the client and with zeal in advocacy upon the client’s behalf.’” Judge Calianos also found that the law firm violated 29 C.F.R. Section 18.35(b)(3) “as the factual contentions and conclusions in the recycled Alex report are not supported by the evidentiary record.” Finding the content of the reports to be “unreliable,” Judge Calianos held that the evidence proffered by Alex would be given no weight. Finally, Judge Calianos referred the matter to the Chief Administrative Law Judge to conduct any further inquiry he deems necessary regarding the law firm and provider Alex.
And on the maritime front . . .
From the federal appellate courts
Federal criminal charges under the Seaman’s Manslaughter Statute and for grossly negligent operation of a vessel arising from the sinking of STRETCH DUCK 07 on Table Rock Lake near Branson, Missouri were dismissed because the statutes require admiralty jurisdiction and Table Rock Lake does not qualify as navigable waters; United States v. McKee, No. 20-3671, 2023 U.S. App. 13217 (8th Cir. May 30, 2023) (Kelly).
In our January 2020 Update we discussed the civil litigation arising from the tragic sinking of the duck boat, STRETCH DUCK 07 on Table Rock Lake near Branson, Missouri that resulted in 17 deaths. The owner, owner pro hac vice, and former owner of the duck boat sought limitation of liability. Judge Harpool began by dismissing the action brought by the former owner of the duck boat because its investment in the duck boat prior to selling it before the accident was insufficient to give it standing to bring a limitation action. Judge Harpool then dismissed the action on behalf of the current owner/operator of the duck boat for lack of admiralty jurisdiction. This case presented the well-known circuit split between the two great maritime circuits of the interior waters, the Eight Circuit and the Sixth Circuit. Table Rock Lake is a recreational lake used for fishing and water sports that crosses the state lines of Missouri and Arkansas. Applying the test for admiralty jurisdiction from the Sixth Circuit, the lake would be considered navigable waters because it is capable or susceptible of use as an interstate highway of commerce. However, the Eight Circuit (whose law is applicable in this case) has held that admiralty jurisdiction turns on contemporary navigability in fact. As Table Rock Lake is not currently used as a highway for interstate trade or transportation of people or goods (no tugs, barges, or ferries operate on the lake), Judge Harpool followed the rule in the Eighth Circuit and held that the lake did not satisfy the definition for navigable waters. Therefore, as there was no admiralty jurisdiction, Judge Harpool dismissed the limitation action for lack of jurisdiction. Note: unlike the Ninth Circuit’s decision a week later in Blue Water Boating, Judge Harpool did not address in this opinion the issue whether admiralty jurisdiction is necessary for there to be federal jurisdiction over a limitation of liability action. The owner/operator appealed the decision to the Eighth Circuit, but the parties settled and the appeal was dismissed.
The United States also brought criminal charges in the United States District Court for the Western District of Missouri against Kenneth Scott McKee, captain of STRETCH DUCK 07, and Charles V. Baltzell and Curtis P. Lanham, managers of the duck boat company. The charges were based on the Seaman’s Manslaughter Statute, 18 U.S.C. Section 1115, and for grossly negligent operation of a vessel under 46 U.S.C. Section 2302(b). The defendants moved to dismiss the charges, arguing that the statutes only applied within the court’s admiralty jurisdiction and did not extend to crimes occurring on Table Rock Lake because it is not “navigable.” Chief Magistrate Judge Rush recommended dismissal on the ground that Table Rock Lake did not fall within the court’s admiralty jurisdiction, and Judge Harpool adopted the recommendation. The United States appealed to the Eighth Circuit, which affirmed the dismissal of the indictment. The United States first argued that the district court erred in finding that the statutes were enacted pursuant to Congress’s admiralty authority and were limited to conduct occurring within the court’s admiralty jurisdiction. In contrast, the United States argued that the statutes were enacted pursuant to Congress’ power to regulate interstate commerce. Writing for the Eighth Circuit, Judge Kelly easily disposed of that contention with respect to the statute for grossly negligent operation of a vessel because the statute includes an express reference to its reach, which is defined by the admiralty jurisdiction. The Seaman’s Manslaughter Statute, however, does not contain that limitation. Therefore, Judge Kelly provided a comprehensive review of the history of the statute, from its inception to its current language, and concluded that the scope of the statute was limited to the reach of federal admiralty jurisdiction. Judge Kelly then addressed the United States’ argument that Table Rock Lake is currently navigable under the navigability-in-fact test. The district court noted the previous decision of the Eighth Circuit in Edwards v. Hurtel that Table Rock Lake is a recreational lake that has not been susceptible of use for commercial shipping. The United States argued, however, that evidence of commercial activity established that the lake was navigable in fact, but the district court found that the nature and frequency of commercial shipping on the lake has not substantially changed since the decision in Edwards. Reasoning that the concept of navigability in admiralty is limited to a present capability of the waters to sustain commercial shipping (from the court’s Livingston decision), Judge Kelly rejected the United States’ evidence of recreational activity on the lake and held that the incident on Table Rock Lake was not within the admiralty jurisdiction. Therefore, she affirmed the dismissal of the criminal charges. Judge Grasz concurred with the decisions on the scope of the statutes and the navigability of Table Rock Lake, and Judge Erickson concurred that Table Rock Lake was not navigable in fact but dissented from the dismissal of the charges under the Seaman’s Manslaughter Statute, believing that the statute was enacted under the Commerce Clause power and that it did not require admiralty jurisdiction.
Eleventh Circuit affirmed judge’s findings that neither the vessel owner nor the marina was liable for an explosion on a vessel during fueling and for the resulting fire that spread to another vessel; In re Kuhl, No. 22-13862, 2023 U.S. App. LEXIS 13333 (11th Cir. May 31, 2023) (per curiam).
Reichen Kuhl purchased a 28-foot motorboat and navigated it to the Bahia Mar Marina (owned by Suntex) for fueling. An explosion occurred and the burning vessel drifted into the 189-foot Feadship yacht W, owned by Seven LXXVII, which sustained damages requiring weeks in a shipyard to repair. Kuhl filed this limitation action in federal court in Florida, and Seven filed a claim in the limitation action along with a third-party claim against Suntex. As Seven was compensated by its hull insurer for the physical damage, it sought recovery for lost charter income in the claims against Kuhl and Suntex. Kuhl and Suntex then filed a motion for summary judgment, asserting that Seven was unable to establish any lost charter income as it had never had a charter of the W before the incident. David MacNeil, owner of Seven, purchased the W in 2019 as a recreational vessel, and the vessel underwent a retrofit that was completed in September 2020. On July 1, 2020, Seven entered into an agreement with Northrop & Johnson to manage charters for the W. Northrop and Johnson began marketing charters at a rate of $400,000 per week, and two offers came for charters during the Christmas and New Year’s holidays, but MacNeil turned them down because his family was using the W. Northrop & Johnson suggested reducing the charter rate to $355,000 per week, but at the time of the fire on January 17, 2021, the W had not been chartered and had no bookings. After repair on the W was completed on March 19, 2021 (the yacht was unavailable for charter for 9 weeks), it was chartered five times during the summer season, and two charters were booked for the holidays at the end of the year. The first charter began on May 22, 2021. Seven claimed a loss of between three and five weeks of charter hire at $400,000 per week, based on the testimony of its manager that there was a spike in demand for charters and inquiries about the W due to restrictions from COVID-19. Citing the active advertising of the W for charters, the subsequent charters, and the beneficial owner’s history of chartering yachts before the W, Judge Bloom held that there was sufficient evidence of loss of income to present a triable question. See May 2022 Update.
Judge Bloom then held a bench trial and issued findings and conclusions on the liability of Kuhl and Suntex. She first determined whether Kuhl was negligent or the vessel was unseaworthy, and there was disputed evidence whether Kuhl was negligent for failing to run the blowers on the vessel for four minutes or to check the engine compartment bilge for gasoline vapors. As there was no evidence presented, however, with respect to the cause of the explosion and fire or that the alleged failures of Kuhl contributed to the explosion and fire, Judge Bloom did not find Kuhl liable for negligence. A year before Kuhl purchased the boat, there was an explosion and fire on the vessel. The previous owner did not tell Kuhl about the explosion and fire, but he did not believe there were any mechanical issues with the vessel when he delivered it to Kuhl, and Kuhl, who had been around boats his entire life, inspected the vessel and engine compartment on delivery and found everything to be in order. As there was no evidence as to the cause of either of the explosions, Judge Bloom held that the evidence was insufficient to support a finding that the vessel was unseaworthy. Finally, Seven argued that res ipsa loquitur applied because a seaworthy vessel does not explode and catch fire on its own. However, Judge Bloom held that Seven failed to establish that the explosion/fire was of a type that ordinarily does not occur in the absence of negligence, especially considering the cause of the fire was not determined. With respect to privity or knowledge, Judge Bloom could not conclude that Kuhl had actual or constructive knowledge of any defect that may have caused the explosion and fire. Seven also asserted a claim against the marina for gross negligence, arguing that the marina owed a non-delegable duty to ensure that fueling operations were conducted in a safe manner. Judge Bloom agreed generally that fueling operations carry risk, but she did not believe that any fueling operation constitutes a clear and present danger, particularly considering the hundreds of fueling operations that took place for years at the marina without incident. And, without evidence of a similar occurrence, Judge Bloom could not conclude that the marina had evinced a conscious disregard of the consequences of its actions. Accordingly, Judge Bloom entered judgment in favor of Kuhl and the marina. See September 2022 Update.
Seven appealed to the Eleventh Circuit. To support its claim that Kuhl was negligent, Seven argued that Kuhl ran the blowers in the engine compartment for an unreasonably short amount of time. Seven cited a Coast Guard regulation requiring that placards be installed on every vessel with a gasoline engine and exhaust blowers warning of the danger of explosion and advising to operate the blower for four minutes before starting the engine. Seven also cited the Suntex manual recommending that blowers be run between three and five minutes. Judge Bloom was persuaded, however, by the testimony of Kuhl’s fire safety expert that the new and powerful blowers on the vessel would have completely cleared the air in the engine compartment within one minute. Additionally, Judge Bloom found insufficient evidence about the cause of the explosion to satisfy causation. Although Seven argued about the weight of the facts, the Eleventh Circuit easily disposed of those arguments as within the discretion of Judge Bloom as the fact finder. The appellate court did consider Seven’s argument that Kuhl should be subject to a heightened standard of care and rejected the argument, holding that the proper standard is reasonable care under the circumstances. Seven also argued that Kuhl violated the Coast Guard regulation by failing to operate the blowers for four minutes. The Eleventh Circuit disagreed, reasoning that the regulation required installation of the placard and did not mandate that operators actually follow the contents of the placard in every instance when they start the engine. The court concluded that it could review the meaning of the regulation, but it could not review the weight given by the district court placed on the regulation, absent clear error. The Eleventh Circuit also agreed that Judge Bloom correctly declined to apply the doctrine of res ipsa loquitur, stating that res ipsa loquitur did not relieve Seven from its burden of proving that any acts of negligence were a proximate cause of the accident. Finally, the appellate court rejected Seven’s argument that THE PENNSYLVANIA Rule should apply as Seven did not raise it until its motion for reconsideration. Turning to the gross negligence claim against Suntex, the Eleventh Circuit held that Seven’s arguments failed for the same lack of evidence of causation that prevented recovery against Kuhl. The appellate court answered that there was no evidence that Suntex’s practices deviating from its manual proximately caused the explosion (the court added that a party’s failure to apply certain safety standards does not, alone, constitute gross negligence). Therefore, the Eleventh Circuit affirmed the judgment of the district court.
Time charterer’s claim against voyage charterer for breach of safe port warranty supported attachment even though the time charterer had paid nothing to the vessel owner and its obligation for indemnity to the vessel owner had not been adjudicated; however, time charterer’s claim for loss of hire from the voyage charterer, which was strategically contingent on whether the time charterer recovered the same damages from the vessel owner, was not a valid prima facie admiralty claim and did not support attachment; Bunge, S.A. v. ADM International Sarl, No. 22-1276, 2023 U.S. App. LEXIS 13661 (3d Cir. June 2, 2023) (Bibas).
Tongli Shipping time-chartered the cargo ship M/V ORIENT RISE to Bunge, which voyage-chartered it to ADM International to carry fertilizer from Saudi Arabia to the Mississippi River. When the vessel arrived, “things went awry,” and the berth owner arrested the vessel after the cargo was offloaded. Tongli Shipping settled the dispute with the berth owner for $3.25 million and filed a London arbitration against Bunge, claiming that Bunge was required to indemnify Tongli for the settlement. Bunge counterclaimed that Tongli owed Bunge for loss of hire under a safe-port warranty in the time charter. Bunge also filed a London arbitration against ADM (if it lost to Tongli, then Bunge would try to recover the loss from ADM based on a safe-port warranty in the voyage charter). The indemnity claim from Tongli was more than $7 million (with interest), and the claim for loss of hire was roughly $480,000. When little happened in the arbitrations, Bunge filed this suit in federal court in Delaware against ADM, alleging breach of contract and seeking to attach ADM’s funds under Rule B. The district court ordered the attachment but vacated it after a hearing, reasoning that the claims were contingent on the outcome of its arbitration with Tongli. Bunge appealed to the Third Circuit, which had to address whether Bunge stated valid prima facie claims under English law (applicable in both charters). Before reviewing the merits of Bunge’s claims, Judge Bibas addressed the standard required to support an attachment. He noted that there is a “heightened” pleading standard when factual adequacy is challenged, and with a challenge to legal sufficiency, he stated that “(1) the claim must be ready to be adjudicated under the relevant law and (2) the claimholder must have asserted the claim.” Judge Bibas then addressed the claim that ADM is liable for “Bunge’s possible payment to Tongli.” Bunge’s complaint in the arbitration labeled the claim, alternatively, as for breach of the voyage charter party and as an implied indemnity (separate claims under English law). Judge Bibas considered the claim for implied indemnity to be incomplete until there was a payment to a third party. As Bungi had not paid Tongli (and there was no judgment), it was not a prima facie admiralty claim, and the attachment was unavailable. However, Judge Bibas came to the opposite conclusion on the claim for breach of the safe port warranty, reasoning that the cause of action dated from the breach. Thus, it did not matter that the measure of damages was indemnity or that Bunge had not paid anything on the claim. The claim was a complete cause of action under English law and supported an attachment. Judge Bibas described the claim for loss of hire as: “Bunge wants this money from Tongli; and if it does not get it from Tongli, it wants the money from ADM.” Judge Bibas agreed that this was an ordinary claim for breach of contract, and that it was complete on the date of the breach. However, it was “deliberately” (strategically) contingent as Bunge only sought to recover from ADM if Bunge’s claim against Tongli was not upheld. Consequently, Judge Bibas ruled that Bunge could not attach ADM’s property “while it waits for its own condition to be triggered.” Summarizing that “Rule B attachment is a powerful tool” and, to prevent abuse, a valid prima facie admiralty claim is required (“one that is ready to be adjudicated and has been asserted”), Judge Bibas held that the $7 million claim for breach of contract supported the attachment, but the $480,000 contingent claim did not.
Arbitration provision was incorporated into contracts of Filipino citizen who was hired to work on a vessel in the United States, and his claim for fraud had to be decided by the arbitrator; Calicdan v. M D Nigeria, LLC, No. 22-30412, 2023 U.S. App. LEXIS 14618 (5th Cir. June 12, 2023) (per curiam).
Servando Paraon Calicdan, a Filipino national, contracted with a manning agency to work for Megadrill Services for five months as a welder on a ship on the outer Continental Shelf in the Gulf of Mexico. He claims that the work was instead on a ship in Louisiana waters in deplorable conditions. After the first five months, Calicdan entered into an extension of his contract for one month, and he then entered into another five-month contract with Megadrill. When the work was finished, Calicdan brought this suit in federal court in Louisiana against Megadrill and individual defendants based on the working conditions and for wages under federal and Louisiana law. The defendants moved to compel arbitration based on the Standard Terms set by the Philippine Overseas Employment Agency, that were incorporated into his employment agreement. Magistrate Judge Whitehurst recommended that the court compel arbitration and deny Calicdan’s motion to conduct discovery on the issue of arbitrability, and Judge Doughty adopted her recommendation and dismissed the case. Calicdan appealed to the Fifth Circuit, challenging whether there was a written agreement to arbitrate. The agreements did not, by themselves, contain an arbitration provision. However, they stated that they would follow Memorandum Circular No. 10, which provides that all employment contracts must follow the POEA Standard Terms. The Standard Terms contain an arbitration clause for all employment-related disputes. Calicdan argued that the Standard Terms were not incorporated because the defendants failed to produce signed copies of the Standard Terms with each employment contract. The Fifth Circuit answered that “an incorporated document does not have to be attached, much less signed, to be enforceable.” And it was not as though Calicdan was unaware of the Standard Terms as they were attached to the second five-month employment agreement and he previously signed dozens of POEA-approved contracts. Calicdan also argued that his work as a welder on a moored vessel in Megadrill’s shipyard was not seafaring work under the 2016 Revised POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers. The Fifth Circuit responded that Calicdan admitted that he was hired as a seafarer, the definition of a seafarer required only that a worker be employed in any capacity on a ship, and that the employment contracts expressly incorporated the Standard Terms to govern the contracts. The issue at this stage of the litigation was whether there was an applicable arbitration agreement, and the appellate court agreed that there was. Calicdan also argued that the employment contracts were predicated on fraud—the misrepresentation that Calicdan would be employed as a seafarer. As that issue attacked the entire agreement and not the arbitration clause specifically, it had to be decided by the arbitrator, not the court. Calicdan then argued that he did not have to arbitrate any dispute covered by the extension contract because his signature on that contract was forged. However, the Fifth Circuit noted that under the terms of the first contract, his employment ceased when he signed off the ship and arrived at the point of hire (The Philippines). Consequently, even if his signature was forged on the extension agreement, Calicdan was still working under the terms of the initial agreement that he signed. As there was no support for Calicdan’s contention that he could not raise his federal wage claims in the arbitration, the Fifth Circuit held that Calicdan had not met his heavy burden of proof to avoid arbitration on the ground that it violated public policy (noting the many cases in which the courts have upheld arbitration before the National Labor Relations Commission). Finally, Calicdan asked the court to reverse the decision of the district court to deny limited discovery on arbitrability. As the issue of arbitrability could be decided on the law and undisputed facts, the Fifth Circuit held that the district court did not abuse its discretion in denying the discovery.
District courts did not abuse their discretion in declining to extend discovery deadlines so that clean-up workers who claimed exposure to harmful chemicals from the DEEPWATER HORIZON/Macondo spill could depose a BP executive with regard to dermal testing and biomonitoring; Byrd v. BP Exploration & Production, Inc., No. 22-30654 c/w Nos. 22-30657, 22-30661, 22-30665, 22-30666, 22-30667, 22-30668, 22-30669, 22-30671, 22-30694, 22-30724, 22-30725, 22-30726, 22-30728, 22-30731, 2023 U.S. Dist. LEXIS 15107 (5th Cir. June 16, 2023) (per curiam).
George Arron Byrd, Rebecca Yarbrough, Jennifer Danielle Byrd, Joy Lashawn Beverly, Lucy Ann Dailey, Sharitye Seay, George Leonard Coon, Dennis Edward Bosarge, Lorinda Ruth Bosarge, Reynard Lenderis Brown, John D. Naples, Gary Joseph Terrebonne, Jr., John Earl Fountain, Royce Lamar Fairley, Alexis White, and Terry Hye were hired by BP (through subcontractors) to assist in the clean-up of the oil spill after the DEEPWATER HORIZON/Macondo blowout. These workers relied on Dr. Jerald Cook as their general causation expert (who concluded that several categories of injury can result from exposure to crude oil and dispersants). Judge Barbier of the United States District Court for the Eastern District of Louisiana gave the workers more than a year to submit expert reports on causation, and the workers sought to depose Dr. David Dutton, BP’s main fact witness, regarding the health and safety of the clean-up workers. There was one short deposition of Dr. Dutton that the workers found unsatisfactory, and the workers argued that the failure to present Dr. Dutton for a satisfactory deposition prevented them from obtaining evidence on BP’s decision-making with respect to dermal testing and biomonitoring of clean-up crews. Judge Barbier declined to extend the time for discovery, excluded Dr. Cook’s report, and granted summary judgment to BP based on the lack of evidence of general causation. He explained that, even if the workers were correct that BP willfully declined to collect dermal testing and biomonitoring data, that failure was irrelevant to general causation. The workers appealed to the Fifth Circuit, arguing that Judge Barbier erred in granting summary judgment before the workers had a chance to depose the BP executive. The Fifth Circuit agreed with Judge Barbier, noting that he had “rightly explained” that the evidence sought by the workers did not bear on general causation (whether exposure to a chemical can cause a specific injury in the general population as demonstrated by scientific literature). Moreover, the workers were not seeking data from the incident and instead were seeking to gather information on the safety decisions made by BP. As the workers did not explain how the evidence they sought would help them to prove general causation (and they did not otherwise challenge Judge Barbier’s exclusion of Dr. Cook’s report), the Fifth Circuit found no abuse of discretion and affirmed the dismissal of all of these cases.
An appeal may not be taken from an interlocutory order that compels arbitration of a seaman’s claims and stays, rather than dismisses, the suit; Cosgun v. Seabourn Cruise Line Ltd., No. 23-11396, 2023 U.S. App. LEXIS 15631 (11th Cir. June 22, 2023) (per curiam).
Seabourn Cruise Line hired Bulent Cosgun, a citizen of Turkey, to work as a waiter on its cruise ship M/V SEABOURN ODYSSEY. He signed a Seafarer’s Employment Contract that incorporated the terms and conditions of the Collective Bargaining Agreement between the cruise line and the Norwegian Seaman’s Union. The Collective Bargaining Agreement contained an arbitration provision for any disputes, including injury claims, to be arbitrated pursuant to the United Nations Conventions [sic] on the Recognition and Enforcement of Foreign Arbitral Awards “in such place as is agreed upon by the Unions, Owners/Company and Seafarer.” Cosgun slipped and fell on a flooded deck (in water leaking from a broken water line) and brought suit against the cruise line in state court in Broward County, Florida under the Jones Act and general maritime law. The cruise line removed the case to federal court based on the New York Convention and moved to compel arbitration. The court initially denied the request, asking that the parties address the issue of whether the agreement needed to specify that arbitration would take place in a signatory nation under the Convention. After further briefing, Judge Altman noted that dicta in several published Eleventh Circuit decisions included a jurisdictional prerequisite that the arbitration clause specify that the arbitration will be conducted in the territory of a signatory nation. This presented a conundrum to Judge Altman—whether to apply the dicta or disregard it in favor of the unambiguous language of the New York Convention and the Federal Arbitration Act that only required three prerequisites—an agreement in writing, that governed a commercial dispute, and that included at least one party who is not a citizen of the United States. After a comprehensive review of the provisions of the New York Convention, the FAA, and the cases interpreting them, Judge Altman concluded that neither the New York Convention nor the FAA requires that the arbitration agreement specify the arbitral forum as a prerequisite to the jurisdiction of the court to compel arbitration. Concluding that the seamen’s exception in the FAA did not apply to the implementing legislation for the New York Convention, Judge Altman addressed Cosgun’s argument that the arbitration agreement was null and void and unenforceable under the Jones Act with respect to seamen, who are the wards of the admiralty court. Holding that a party to an arbitration agreement can only raise a public-policy defense at the award-confirmation stage, Judge Altman ordered the parties to submit to arbitration in the Southern District of Florida, and he stayed the suit pending the completion of the arbitration. See May 2023 Update.
Cosgun appealed to the Eleventh Circuit, which sua sponte dismissed the case for lack of appellate jurisdiction. Noting that an appeal may not be taken from an interlocutory order that compels arbitration and stays the case, rather than dismissing it, the Eleventh Circuit held that the order was not appealable and dismissed the appeal.
Eleventh Circuit affirmed summary judgment for the vessel owner against its hull insurer for hurricane damage to the insured vessel because the insurer failed to carry its burden of proof under state law with respect to the insured’s breach of warranties; Travelers Property Casualty Co. of America v. Ocean Reef Charters LLC, No. 21-14509, 2023 U.S. App. LEXIS 15845 (11th Cir. June 23, 2023) (Tjoflat).
Travelers insured the M/Y MY LADY, a 92-foot Hatteras yacht. The policy contained two express warranties, a captain warranty that required the owner to employ a full-time professional captain approved by Travelers and a crew warranty that required the owner to have one full-time or part-time professional crew member aboard the vessel. The owner of the vessel, Ocean Reef Charters, had neither a captain nor crew member when Hurricane Irma headed toward Florida in September 2017. The operator could not engage the former captain and did his best to secure the yacht. The extra mooring lines he added were ineffective when a dock piling to which the port bow line was attached gave way when Irma struck. The yacht was holed and sank. Travelers brought this suit seeking a declaratory judgment that the breaches of the captain and crew warranties voided coverage under the policy, and the owner responded by arguing that the breaches were unrelated to the loss and that the policy was not voided because of the application of the Florida anti-technical statute (providing that breaches of warranty do not void the policy unless they increased the hazard by any means within the control of the insured). The owner asserted that it was the unforeseeable failure of the dock piling that caused the loss. The arguments presented the question, under Wilburn Boat, whether there was an entrenched rule of admiralty that express warranties in marine insurance policies must be strictly construed in the absence of a limiting provision in the policy. The district court held that there was such an entrenched rule and ruled that there was no coverage. The Eleventh Circuit then re-examined Wilburn Boat, noting how it has sown confusion and troubled maritime lawyers for more than 60 years. This was, in part, because the analysis in Wilburn Boat “rests on a flawed premise” that there was no established maritime rule requiring strict fulfillment of warranties in marine insurance policies when the Supreme Court and all major admiralty appellate courts in the United States had long accepted the literal performance rule. This resulted in inconsistent decisions in the lower courts, and Travelers cited cases from the Eleventh Circuit that breaches of a navigation limit warranty and the seaworthiness warranty bar coverage even when the breach is unrelated to the loss. Judge Jordan did not consider those decisions to establish that strict compliance with all warranties in marine policies is required, as that would be contrary to Wilburn Boat. Reviewing the cases addressing the captain and crew warranties, Judge Jordan declined to find an entrenched maritime rule and remanded the case to the district court to apply Florida law. Judge Jordan concluded with this comment: “Maybe, just maybe, this case will prove tempting enough for the Supreme Court to wade in and let us know what it thinks of Wilburn Boat today.” See June 2021 Update. Travelers did not seek a writ of certiorari to find out what the Supreme Court thinks of Wilburn Boat today, and on remand, Judge Ruiz applied the rule from Florida law that the breach of warranty does not void the coverage unless it increased the hazard that the vessel would suffer the loss. Travelers cited the testimony of its expert, Captain Joseph Ahlstrom, to show that breaches of the captain and crew warranties caused or contributed to the loss of the vessel during Hurricane Irma. However, Captain Ahlstrom was designated as a rebuttal expert, and Judge Ruiz held that a party cannot rely on a rebuttal expert to avoid summary judgment. Rejecting evidence from witnesses who were not licensed captains (its underwriter, its adjuster, and the owner of the vessel), Judge Ruiz held that Travelers had failed to carry its burden to establish the defense, and the owner was entitled to summary judgment. See December 2021 Update.
On appeal, Travelers argued that it only had to show that the lack of a full-time captain generally makes vessels more susceptible to damage from hurricanes and that Florida law does not require that the insurer prove that the insured’s noncompliance with the captain warranty actually caused this incident. Travelers also argued that it did not have to introduce expert testimony about what would have been different if the insured had complied with the warranty and that it could satisfy its burden with hybrid fact-witness expert testimony. Finally, Travelers argued that Judge Ruiz erred in refusing to allow Travelers to use the testimony of its rebuttal expert to avoid the insured’s motion for summary judgment. Writing for the Eleventh Circuit, Judge Tjoflat held that Travelers was wrong on all of its arguments. He reviewed Florida cases and held that, in order to meet its burden under Florida’s anti-technical statute, the insured must show that the breach of the warranty had a material effect on the loss in the circumstances of the specific incident. Judge Tjoflat also held that a lay witness may not competently offer an opinion on what a captain would have done with the MY LADY if a captain had been in charge, answering: “There is no such thing as ‘hybrid fact-expert witness testimony’ in the sense that Travelers claims.” Travelers’ witness, who was not disclosed as an expert, could discuss the weather and observations that he made. However, that would still leave the jury speculating about what a captain would have done differently in the specific circumstances of the case. As to the rebuttal expert, Travelers had the burden of proof, so, if the case went to trial, Travelers would have to establish that the lack of a captain had a material effect on the loss of the vessel. It could not use the rebuttal expert to carry that burden. After Travelers rested, the insured would move for judgment as a matter of law, which the court would have to grant. Therefore, Travelers had no legally sufficient case. Finally, Judge Tjoflat noted that Travelers had not filed a motion to redesignate its rebuttal expert as an expert for its case in chief, which sank its argument that Judge Ruiz erred in refusing to allow Travelers to use the opinion of its rebuttal expert to oppose the insured’s motion for summary judgment. Seeing “no need to give Travelers another bite at the apple,” the Eleventh Circuit affirmed the grant of summary judgment to the insured.
From the federal district courts
Judges granted summary judgment on opt-out claims from the DEEPWATER HORIZON/Macondo spill for lack of evidence on causation, declined to admit insufficient expert opinions on causation as a sanction for BP’s failure to collect dermal or biometric data on those who were exposed to the oil and chemicals after the spill, and declined to reconsider decisions rejecting opt-out claims; Vickers v. BP Exploration & Production Inc., No. 1:21-cv-106, 2023 U.S. Dist. LEXIS 84950 (S.D. Miss. May 8, 2023) (Guirola); Rounds v. BP Exploration & Production, Inc., No. 17-4576, 2023 U.S. Dist. LEXIS 87783 (E.D. La. May 19, 2023) (Milazzo); Kalinowski v. BP Exploration & Production, Inc., No. 17-4387, 2023 U.S. Dist. LEXIS 88675 (E.D. La. May 22, 2023) (Milazzo); Bodiford v. BP Exploration & Production, Inc., No. 17-3341, 2023 U.S. Dist. LEXIS 88684 (E.D. La. May 22, 2023) (Vance); Mackles v. BP Exploration & Production, Inc., Nos. 17-4002, 17-3022, 17-4322, 17-4578, 17-4588, 17-4654, 17-4136, 17-4142, 17-3629, 17-3913, 17-3985, 17-4141, 17-4229, 17-4453, 17-4471, 17-4507, 17-4563, 17-4357, 17-3099, 17-3193, 17-3413, 17-3989, 17-3549, 17-3312, 17-3480, 17-3506, 2023 U.S. Dist. LEXIS 88686 (E.D. La. May 22, 2023) (Milazzo); Walker v. BP Exploration & Production, Inc., No. 17-4219, 2023 U.S. Dist. LEXIS 89569 (E.D. La. May 23, 2023) (Vance); Keyes v. BP Exploration & Production, Inc., No. 14-2211, 2023 U.S. Dist. LEXIS 91499 (E.D. La. May 25, 2023) (Morgan); Bruton v. BP Exploration & Production, Inc., No. 17-3110, 17-3107, 2023 U.S. Dist. LEXIS 91502 (E.D. La. May 25, 2023) (Morgan); Howard v. BP Exploration & Production, Inc., No. 17-3543, 2023 U.S. Dist. LEXIS 94256 (E.D. La. May 30, 2023) (Vitter); Spencer v. BP Exploration & Production, Inc., No. 17-4253, 2023 U.S. Dist. LEXIS 94260 (E.D. La. May 31, 2023) (Vance); Treme v. BP Exploration & Production, Inc., No. 17-4269, 2023 U.S. Dist. LEXIS 94261 (E.D. La. May 31, 2023) (Vance); Haynes v. B.P. Exploration & Production, Inc., No. 17-4350, 2023 U.S. Dist. LEXIS 94262 (E.D. La. May 31, 2023) (Vance); Yarbrough v. BP Exploration & Production, Inc., No. 17-4293, 2023 U.S. Dist. LEXIS 94263 (E.D. La. May 31, 2023) (Vance); Hudson v. BP Exploration & Production, Inc., No. 17-4361, 2023 U.S. Dist. LEXIS 96112 (E.D. La. June 2, 2023) (Vance); Gaines v. BP Exploration & Production, Inc., No. 17-4329, 2023 U.S. Dist. LEXIS 96113 (E.D. La. June 2, 2023) (Vance); Blackwell v. BP Exploration & Production, Inc., Nos. 17-3490, 17-3550, 17-3690, 17-4003, 2023 U.S. Dist. LEXIS 96115 (E.D. La. June 2, 2023) (Vance); Harris v. BP Exploration & Production, Inc., No. 17-4344, 2023 U.S. Dist. LEXIS 96116 (E.D. La. June 2, 2023) (Vance); Holifield v. BP Exploration & Production, Inc., Nos. 17-3284, 17-3295, 17-3339, 17-3398, 2023 U.S. Dist. LEXIS 96132 (E.D. La. June 2, 2023) (Vance); Hayes v. BP Exploration & Production, Inc., No. 17-4349, 2023 U.S. Dist. LEXIS 96138 (E.D. La. June 2, 2023) (Vance); Hakenjos v. BP Exploration & Production, Inc., No. 17-4338, 2023 U.S. Dist. LEXIS 96140 (E.D. La. June 2, 2023) (Vance); Dufour v. BP Exploration & Production Inc., No. 1:19-cv-591, 2023 U.S. Dist. LEXIS 98716 (S.D. Miss. June 2, 2023) (Ozerden); Brown v. BP Exploration & Production, Inc., Nos. 17-3516, 17-3590, 2023 U.S. Dist. LEXIS 97961 (E.D. La. June 6, 2023) (Milazzo).
Opinion rehearing Mackles, Anderson, Dumas, Scott, Stapleton, Lawrence, Bradley, R. Brown, Barnes, Easterling, Elzey, D. Brown, White, Moore, Pace, Poole, Michael, Hinton, R.S. Brown, Fielder, Upchurch, Fast, Magee, Jones, Belton, Bowden
Kevin Kalinowski alleged that he was exposed to harmful chemicals from the DEEPWATER HORIZON/Macondo spill while residing in Mobile, Alabama. Ellis Keyes alleged that his deceased mother, Christine C. Keyes, who lived in Chalmette, Louisiana, suffered health conditions due to the spill. Almetis Haynes claimed exposure to toxic chemicals by virtue of his presence in the environment in Moss Point, Mississippi. Kalinowski, Keyes, and Haynes did not produce an expert report to establish causation, and Judges Vance and Milazzo dismissed the Kalinowski and Haynes suits with prejudice for lack of evidence of causation. Keyes argued, however, that expert testimony was not required to establish specific causation because the injuries alleged fell within the common knowledge of a juror. However, Judge Morgan noted that Keyes had still failed to produce expert testimony establishing general causation, which is required in toxic tort cases. Therefore, she dismissed the claims for his mother’s injuries.
Michael Brandon Vickers claimed exposure to oil and dispersants while employed by Knight’s Marine as a foreman assisting in the clean-up operations after the spill. Thomas Bodiford, Rodney John Walker, II, and Gregory Alphonse Rounds alleged exposure to crude oil and dispersants from their work as offshore clean-up workers. Joseph Bruton alleged that he was exposed in Mobile, Alabama when he cleaned and decontaminated vessels and equipment used in the spill response. Larry Howard asserted exposure from cleanup of oil and oil-covered debris from coastal areas near Biloxi and Pascagoula, Mississippi and Mobile, Alabama. Rita Spencer claimed exposure to crude oil and dispersants as an onshore and offshore cleanup worker. Josh Treme alleged that he was exposed to crude oil and dispersants from his work as an offshore cleanup worker. Daniel Yarbrough claimed exposure to crude oil and dispersants from his work as an onshore cleanup worker. Mark Hudson alleged exposure from work as an onshore and offshore cleanup worker. Shawndaius Gaines and Ezzard Harris claimed exposure from work as onshore cleanup workers. Rodney Hayes and Jamerson Hakenjos asserted exposure while performing cleanup work onshore and offshore. Cher Griffin Brown and Chester Lee Norswearthy based their claims on exposure from cleanup or recovery work. These plaintiffs presented the expert report of Dr. Cook to support the general causation requirement for their claims. BP moved to exclude Dr. Cook’s opinions, and the plaintiffs asked the court to allow Dr. Cook’s expert testimony as a sanction for BP’s alleged spoliation of evidence of the plaintiffs’ exposure. Some of the plaintiffs recognized the long line of decisions striking the opinions of Dr. Cook, so Vickers, Bodiford, Walker, Bruton, Spencer, Treme, Yarbrough, Hudson, Gaines, Harris, Hayes, and Hakenjos relied on an affidavit from Linda S. Birnbaum, Ph.D., who was the director of the National Institute of Environmental Health Services and the National Toxicology Program, stating that it was not plausible to establish an oil-spill responder’s quantitative exposure to a particular chemical at a given level because of issues with the data collection. Judges Guirola, Vance, Milazzo, Morgan, and Vitter agreed that Dr. Cook’s opinions should be excluded and that the affidavit did nothing to change that result. Similarly, they held that the spoliation contention did not change that result. They noted that spoliation is a sanction for the destruction of evidence, but the plaintiffs argued in these cases that BP should have gathered data. Without a duty to collect the data (and as no such evidence existed), there could be no spoliation. Additionally, the admission of a deficient expert report would not be the cure even if there were spoliation. Finally, plaintiffs Vickers, Bodiford, Walker, Spencer, Treme, Yarbrough, Gaines, Hudson, Harris, Hayes, and Hakenjos noted that some judges had denied summary judgment to BP for symptoms that were transient or temporary. Judges Guirola and Vance responded that the summary judgment motions in those cases were premised on specific causation, and that Dr. Cook’s opinions on general causation were not challenged in those cases. In these cases, however, BP argued that Dr. Cook’s opinions were insufficient on general causation and specific causation. As evidence of general causation was required, regardless of whether the condition was transient or temporary, and as there was no expert evidence of general causation, Judges Guirola, Vance, Milazzo, Morgan, and Vitter granted summary judgment to BP and dismissed all of these suits with prejudice.
Duke Allen Mackles, Latonya Sherell Anderson, Hakim Dumas, Codie James Scott, Charles D. Stapleton, James Dewayne Lawrence, Eric Bradley, Regina Brown, Krystal Barnes, Tonnie Lee Easterling, Johnny Elzey, Donna Brown, Ricardo White, Anthony L. Moore, Linda Pace, Don Poole, Frank Michael III, Alrene Hinton, Ray Sylvester Brown, Cheryl Lakisha Fielder, Amanda Victoria Upchurch, William Shephard Fast, Richard Terrell Magee, Charlene Jones, Roderick Clifton Belton, William Arthur Bowden, Jr. Cherrae Addi Blackwell, Shawna Elisie Matthis, Ivan Perez Curbelo, Shane L. Mackles, Alvin Holifield, Brenda Joyce Jackson, Wesley Michael Loftus, and Timothy Bennett Miller moved for reconsideration of the decisions to exclude the testimony of Dr. Cook and to grant summary judgment to BP based on the lack of expert evidence on causation. As with a number of the plaintiffs in the prior group, these plaintiffs submitted the affidavit of Dr. Birnbaum, and, as with the prior group, Judges Vance and Milazzo held that Dr. Birnbaum’s affidavit did not remedy the deficiency in Dr. Cook’s expert report. Therefore, there was no justification for reconsideration of the decisions on admissibility or on summary judgment.
Richard Allen Dufour, Jr., alleged exposure while performing cleanup work within the Southern District of Mississippi. Dufour relied for causation on the reports of his experts, Dr. Michael Freeman (his consultant on forensic medicine and forensic epidemiology) and Dr. Shawn K. French (his treating pulmonologist). Considering Dr. Freeman’s reports, his deposition testimony, and the evidence in the record, Judge Ozerden held that Dufour had not carried his burden to show that the opinions were sufficient to satisfy any plausible causation standard, general, specific, or otherwise, and his opinions were excluded. BP moved to exclude opinions related to causation from Dufour’s treating physicians, including Dr. French because they had not submitted written reports under Rule 26(a)(2). Judge Ozerden agreed, but he also addressed the causation methodology for Dr. French’s opinions and held that they were “nothing more than ipse dixit testimony and should be excluded. Without expert testimony on causation, Judge Ozerden granted summary judgment to BP.
Injury to guest while walking down a stairway on a docked vessel was within the court’s admiralty jurisdiction; In re Klassen, No. 3:22-cv-1056, 2023 U.S. Dist. LEXIS 80967 (M.D. Tenn. May 9, 2023) (Campbell).
Amy Alexander was a guest on the 1989 Sumersey motor vessel owned by Christopher Klassen (Jane Klassen was jointly responsible for the maintenance and care of the vessel). While the vessel was tied to its slip at Blue Turtle Bay Marina on the Cumberland River in the vicinity of Old Hickory, Tennessee, Alexander was injured when she was walking down a stairway from the upper deck to the lower deck and fell into an open hatch. The Klassens brought this action in federal court in Tennessee for exoneration/limitation of liability, but before approving the Ad Interim Stipulation, directing the issuance of the Monition, and restraining the prosecution of claims, Judge Campbell addressed the admiralty jurisdiction of the court. The first element of the test to determine if there was admiralty jurisdiction of the incident was satisfied because the Cumberland River has been held to be navigable. Judge Campbell then considered whether the incident had the potential to disrupt maritime commerce, and he believed that the description of the incident as an injury to a passenger aboard a docked vessel demonstrated the potential to involve rescue personnel in and around navigable waters and to impact maritime commerce. Finally, he agreed that storage of vessels at a marina on navigable waters bears a substantial connection to a traditional maritime matter. Therefore, he was satisfied that the court had admiralty jurisdiction and issued the orders for the action to proceed.
Owner of towed vessel was the “substantially prevailing party” under Tow Agreement and entitled to attorney fees, even though it was found 60% at fault, because it prevailed on the tower’s claims and it recovered 40% of its damages; Western Towboat Co. v. Vigor Marine, LLC, No. C20-0416, 2023 U.S. Dist. LEXIS 84199 (W.D. Wash. May 12, 2023) (Martinez).
Vigor Marine sold its three-section drydock, constructed in 1956, to a shipyard in Mexico to be scrapped. Vigor then contracted with Western Towboat to tow the drydock from Seattle, Washington to Ensenada, Mexico, using the tug OCEAN RANGER. A surveyor noted significant corrosion but opined that the drydock was appropriately prepared and rigged for the tow in an extended configuration with the bow and stern sections attached. The surveyor did require that the tow avoid heavy head or beam seas to avoid pitching or rolling. The Navy operating manual for the drydock provided that the bow and stern sections should be detached and docked on the center section, and Vigor’s sales contract required that the three sections be detached and carried on a heavy-lift ship. During the tow the drydock began taking on water and listing, and the tug headed toward San Francisco Bay to seek assistance. After communicating with the Coast Guard, the tug concluded it was unsafe to enter San Francisco Bay in the event the drydock sank. The Coast Guard approved the tow entering Monterey Bay where the drydock sank .92 miles inside the Monterey Bay Marine Sanctuary. The National Oceanic and Atmospheric Administration informed Vigor, Western Towing, and the Mexican shipyard of their liability under the National Marine Sanctuaries Act for damages from the sinking in the sanctuary, and Western filed this action against Vigor, seeking recovery for its services under its towing agreement and a declaratory judgment against the United States exculpating it of liability in any forthcoming enforcement action under the NMSA. Chief Judge Martinez first held that the court lacked subject matter jurisdiction, based on lack of ripeness and standing, of the action against the United States as NOAA has not taken any final action against the parties. Chief Judge Martinez then turned to the claims between Western and Vigor. He denied Vigor summary judgment that Western had breached the towing agreement by failing to adequately perform its duties when it proceeded into Monterey Bay and stood by while the drydock sank in a marine sanctuary as the contract did not contain a requirement that the tug keep the tow in a safe place to sink. Chief Judge Martinez then addressed the knock-for-knock indemnity provisions in the towing agreement and held that claims arising out of or relating to damage to a party’s own property could not be recouped (such as Vigor’s loss of the drydock); however, that did not bar Vigor from recouping costs incurred as a result of Western’s negligent injury to third parties. With respect to Vigor’s claim that Western was negligent, Chief Judge Martinez declined to find that the last clear chance doctrine or THE PENNSYLVANIA Rule applied; however, he concluded that Western breached its duty of prudent seamanship as a matter of law when it allowed the drydock to sink in the marine sanctuary. Although Western objected that its crew was unaware that the drydock was inside the sanctuary and was unaware of the legal, environmental, or economic consequences of the sinking in the sanctuary, Chief Judge Martinez held Western was negligent as a matter of law with respect to its lack of cognizance of the vessel’s position in relation to the sanctuary. Western moved for reconsideration of the decision on the awareness of the tug’s crew of the sanctuary. Chief Judge Martinez recognized that there were factual disputes about whether the crew knew that the tug had entered a sanctuary, but it was their failure to be aware of the hazards presented by the sanctuary to a tug, together with their lack of positional awareness, that led to the finding of negligence. Additionally, Western argued that it was not negligent for the tug to release the line on the drydock while it was in the sanctuary as it was necessary to save the life of its crew in the emergency presented by the sinking drydock. Chief Judge Martinez responded that it was not the response to that emergency that was the source of the fault but the failure to exercise prudent seamanship in entering the sanctuary with a sinking drydock. See July 2021 Update.
Chief Judge Martinez conducted a bench trial of the case, and on the final day of trial, Western argued that Vigor was not entitled to recover damages on its counterclaim against Western because Vigor’s insurers paid for a portion of the damages Vigor incurred from its exposure to liability under the NMSA. After holding that Vigor was a real party in interest and could maintain the counterclaim, Chief Judge Martinez addressed the question of whether the collateral source rule applied when Vigor had been partially reimbursed for its losses and there was a waiver of subrogation in the towing agreement. Concluding that the payments were not “benefits from a wholly independent source which Vigor had the foresight to arrange,” Chief Judge Martinez held that the collateral source rule did not apply and that Vigor could not recover to the extent it had been paid by its insurers. See November 2021 Update. On December 16, 2021, Judge Martinez issued his findings of fact and conclusions of law from the bench trial on the cross-motions of Western and Vigor for breach of contract and Vigor’s counterclaim for maritime negligence from the sinking of the drydock in the sanctuary. Judge Martinez concluded that neither party could prevail on the claims for breach of contract, allocated fault for the sinking of the drydock as 60% to Vigor and 40% to Western, and awarded Vigor 40% of the $100,000 expended by Vigor to cooperate with NOAA. Western’s argument that it was entitled to recover the hire under the Tow Agreement was subject to an exception for loss arising from the negligence of Western. As Western’s negligence contributed to the sinking of the drydock, Judge Martinez held that Western was not entitled to recover the contractual hire. Judge Martinez denied Vigor’s counterclaim for breach of contract based on Western’s failure to render reasonable assistance when the drydock became disabled, rejecting the argument that the entry into the sanctuary with the sinking dock breached the contract, noting that the contract only required that Western either proceed to the nearest safe port or stand by the tow, and the standing by could occur in the sanctuary. Comparing the fault of the parties, Judge Martinez found Western to be negligent in voyage planning and navigating into the sanctuary with the sinking drydock. However, he considered that Vigor’s fault saddled Western with a nearly impossible task of managing the unwieldy drydock that should not have been certified as suitable for tow under the circumstances. Consequently, he reduced Vigor’s recovery by 60%. See January 2022 Update.
After the six-day bench trial that resulted in Judge Martinez dismissing Western’s claim for breach of contract and awarding Vigor $40,000 on its counterclaim for maritime negligence, Western and Vigor filed motions for attorney fees, each arguing that it was the prevailing party under the Tow Agreement (the “substantially prevailing party” was entitled to recover its reasonable legal fees and costs). Western argued that it was the “substantially” prevailing party because the court found Vigor was 60% comparatively negligent on its maritime negligence claim. Vigor argued that it was the “substantially” prevailing party because Western took nothing on its claims and Vigor received judgment in its favor of $40,000. Judge Martinez agreed with Vigor because it defeated all of Western’s claims and received a significant judgment in its favor and because Western did not prevail except to the extent that damages were not as high as prayed for. Thus, Vigor was entitled to recover reasonable attorney fees under the Tow Agreement.
Passenger adequately pleaded proximate causation for his injury in a fall on a platform while disembarking a water taxi to return to the cruise ship; allegations of vicarious liability and direct liability were improperly comingled, but the general reference to actions of the crew was sufficient to assert a claim of vicarious liability without naming the crew members specifically; allegations of the presence of a wet-floor sign and slip-resistant strips were sufficient to plead a claim of actual notice; Peavy v. Carnival Corp., No. 23-cv-20042, 2023 U.S. Dist. LEXIS 84305 (S.D. Fla. May 12, 2023) (Bloom).
Trent Peavy fell while exiting a water taxi on a platform in the disembarking area where passengers step while leaving the water taxi to board the CARNIVAL MIRACLE in the waters off Cabo San Lucas, Mexico. Peavy brought this suit in federal court in Florida against the cruise line, which moved to dismiss the complaint because it did not plead facts for proximate causation, intermingled the allegations of vicarious and direct liability, and failed to adequately allege notice. The cruise line asserted that the complaint alleged that the platform was not connected to the water taxi at the time of his disembarkation and that it failed to allege any proximate causation between the lack of connection and his injury. However, Judge Bloom noted that the complaint alleged that the cruise line failed to warn of the slippery nature of the platform and was negligent for failing to secure the water taxi to the platform or place the water taxi in a position next to the ship where rough seas would not affect the safe disembarkation from the water taxi. She considered this sufficient to state a claim for vicarious liability. Judge Bloom did agree that the complaint impermissibly comingled allegations of vicarious and direct liability when it stated that the cruise line and its crew members owed a nondelegable duty to Peavy to exercise reasonable care (alleging the duty of the cruise line in a count for vicarious liability). The count was not deficient in its description of crew members who were responsible for the platform where Peavy disembarked, despite the fact that it did not specifically name the crew members (“it would seem fundamentally unfair to require the Plaintiff to remember the names of each of the crewmembers involved in the incident”). As to notice, the complaint alleged actual notice by the presence of a “caution wet floor” sign and the existence of slip-resistant strips on the platform, and Judge Bloom agreed that the allegation was sufficient to plead actual notice. Judge Bloom also addressed the sufficiency of the pleading of constructive notice and held that the pleading was sufficient when it stated that the dangerous condition was constructively known to the cruise line “as they made the decision to disembark their passengers from the water taxi back to the ship in these rough conditions which created a dangerous and slippery platform where their passengers were to disembark.” Judge Bloom agreed that Peavy had not sufficiently pleaded constructive notice based on length of time and based on prior incidents (as the allegations of prior incidents were conclusory and lacked specificity).
Cruise line may not have a non-delegable duty with respect to the actions of the company that transported a passenger suffering a stroke to the shoreside hospital, but the cruise line was responsible for the actions of its own medical staff; Burgess v. Royal Caribbean Cruises, Ltd., No. 20-cv-20687, 2023 U.S. Dist. LEXIS 85464 (S.D. Fla. May 16, 2023) (Otazo-Reyes).
This case was brought by and on behalf of a passenger on the HARMONY OF THE SEAS, who sustained a slip-and-fall accident on the vessel and a cerebrovascular incident in Puerto Rico. The suit in federal court in Florida contained allegations related to the medical care and failure to arrange for emergency transportation to the closest medical facility. The cruise line filed a Daubert motion to exclude the expert testimony of Captain Hendrik J. Keijer regarding emergency transportation and the opinions of Dr. David Nidorf and Dr. Camilo Gomez with respect to the medical evacuation and with respect to tissue plasminogen activator. In opposition to Captain Keijer’s opinion that the cruise line deprived Burgess of the opportunity to receive shore-based medical care as soon as possible by use of an ambulance with a slow drive to a shore-based hospital, the cruise line attacked Captain Keijer’s methodology based on use of Google Maps to determine the shortest route so that he could determine the average speed for the transportation time reflected in the ambulance report. Magistrate Judge Otazo-Reyes held that the methodology was sufficiently reliable and declined to strike his opinions. Although the cruise line agreed that Dr. Gomez and Dr. Nidorf had experience facilitating medical transfers, the cruise line objected that they had no experience or personal knowledge with respect to coordinating medical transfers in Puerto Rico. That experience in transferring patients, including those who had suffered strokes, was sufficient that Magistrate Judge Otazo-Reyes declined to exclude their testimony for lack of qualification. She then considered whether the opinions on availability of alternative transfer options were speculative, lacked proper methodology or were unhelpful. Magistrate Judge Otazo-Reyes noted that the evidence that the opinions with respect to obtaining options for the stroke treatment were the same as would be done by emergency doctors and that the opinions about the treatment with tissue plasminogen activator were based on extensive medical sources. Therefore, Magistrate Judge Otazo-Reyes declined to strike the opinions. See June 2023 Update.
The cruise line moved for summary judgment on all of the claims, and Burgess opposed the motion with respect to the medical treatment after Burgess began exhibiting symptoms of a stroke. Burgess was transported from a booth in a restaurant on the ship to the ship’s medical center, and the ship’s physician diagnosed acute cerebrovascular insufficiency at 9:56 a.m. The cruise line’s medical secretary emailed the port agent, Continental Shipping, to request an ambulance, and two hours later, at 12:08 p.m., the ambulance departed the port, arriving at the hospital at 12:50 p.m. A CT scan revealed that Burgess had infarcted brain tissue, which is a contraindication for t-PA, and t-PA was not given to Burgess. Twelve to fourteen hours later, Burgess developed new symptoms, and a CT scan revealed a total occlusion of the basilar artery. Emergency surgery was unsuccessful. The cruise line objected to Count VI of the complaint (alleging that the cruise line was negligent for failing to arrange for emergency transport to the closest medical facility) because the cruise line delegated the transfer to an independent contractor, Continental Shipping, via a Port Agent Agreement. Burgess responded that the cruise line’s disembarkation policy specified that the cruise line’s treating physician was ultimately responsible for the decision to disembark a guest for emergency medical treatment and “shall ensure that the ground transportation arranged is appropriate for the medical condition” and that the ship’s treating physician “is medico-legally responsible for the care and treatment of the patient until the patient care is taken over by the receiving physician at [the] receiving medical facility. Magistrate Judge Otazo-Reyes decided that the cruise line did owe a duty with respect to arranging emergency transport. The cruise line argued that this was an improper imposition of a non-delegable duty, but Magistrate Judge Otazo-Reyes disagreed as Burgess explained that he was not arguing that the cruise line cannot delegate its duty but that it did not delegate it. Magistrate Judge Otazo-Reyes also found support for the contentions that the medical staff should have called 9-1-1 instead of coordinating transfer through the private service, should have had an emergency care protocol for stroke victims, should have directed the ambulance to deliver the passenger to a closer hospital, and should have been more aggressive in facilitating the transfer. The cruise line also moved for summary judgment on the claims for negligent medical care, asserting that Burgess could not establish causation. The cruise line argued that if t-PA had been given, there was only a 30% chance of a different outcome and it was speculative that the delay in transportation was the cause of Burgess not qualifying to receive t-PA. However, Magistrate Judge Otazo-Reyes found sufficient evidence to support causation to deny the motion.
Judge issued post-judgment anti-suit injunction to enforce the court’s decision that a bunker trader did not have a lien on the vessel for bunkers supplied on order of the broker for the subcharterer; Sing Fuels Pte Ltd. v. M/V LILA SHANGHAI, No. 4:20-cv-58, 2023 U.S. Dist. LEXIS 86945 (E.D. Va. May 17, 2023) (Jackson).
Autumn Harvest, owner of the M/V LILA SHANGHAI, time chartered the vessel to Bostomar Bulk Shipping. The charter party provided that the charterer would provide and pay for fuel and foreclosed the charterer from unilaterally placing a lien on the vessel. Bostomar subchartered the vessel to Medmar for a voyage from Argentina to India. Costas Mylonakis, an employee of Windrose Marine, contacted Sing Fuels to provide bunkers, and Sing Fuels arranged for South African Marine Fuels to provide bunkers to the vessel on two occasions. Sing Fuels transmitted its Sales Order Confirmation and Terms and Conditions of Sale to Mylonakis, requesting Mylonakis obtain Medmar’s signature and company stamp (which were not forthcoming). Sing Fuels only communicated with Mylonakis. When payment was not received, Sing Fuels sent a notice of nonpayment to Autumn Harvest, but Autumn Harvest declined to pay, and Sing Fuels paid the supplier. Sing Fuels started tracking the vessel, and it waited until the vessel docked in the United States before it arrested the vessel in the Eastern District of Virginia. Judge Jackson held a bench trial and, applying United States law, held that the charter precluded Medmar from placing the lien on the vessel, that Mylonakis did not possess authority to bind the vessel, and that equitable laches barred the suit based on lack of a satisfactory excuse for the delay in arresting the vessel. Sing Fuels appealed, and Judge Floyd, writing for the Fourth Circuit, first addressed the applicable law. The terms of the bunker contract contained a choice-of-law provision permitting Sing Fuels to choose any jurisdiction it wished in order to obtain a lien and a provision that the contract would be governed by Singapore law (which would not afford a lien). Judge Floyd noted that the Fourth Circuit had not addressed that type of choice-of-law provision, but he did not have to decide which law applied because he held that a lien was unavailable under United States maritime law. Under the Commercial Instruments and Maritime Liens Act, the supplier of necessaries has a maritime lien on the vessel on the order of the owner or a person authorized by the owner. The issue presented was whether the bunkers were supplied on order of a party with apparent authority. Agreeing with Judge Jackson, Judge Floyd noted that Sing Fuels only communicated with Mylonakis and never received any confirmation of the authority of Mylonakis (stating that it is “hornbook law that Mylonakis cannot deem himself Medmar’s apparent agent”). Consequently, the requirements of the CIMLA were not satisfied. Judge Wilkinson concurred to note his agreement that Sing Fuels did not show that Mylonakis was acting as an agent of anyone with authority to bind the vessel. However, with the problems in our supply chains, and increased difficulties in ocean transport of goods, he emphasized the importance that those who provide bunkers or other necessaries be paid promptly. Pointing out the pitfalls that “threaten to destabilize the basic principle of admiralty law that suppliers of necessaries such as bunker fuel must be able to rely on maritime liens to ensure payment,” Judge Wilkinson cautioned that he “would not want this ruling to require too much of suppliers” and that he hoped “that courts in the future will review with skepticism attempts to obscure or confuse agency relationships on the part of those who accept necessaries and then resist strenuously any payment for them.” See August 2022 Update.
On December 5, 2022, Sing Fuels sent a notice to Autumn Harvest, again presenting the claim that it lost in the trial and appeal and insisting that the claim would be pursued until the vessel was arrested in a favorable jurisdiction and payment was received in full. Sing Fuels stated that the vessel was en route to Mozambique, which would allow Sing Fuels to enforce a lien on the vessel. Autumn Harvest moved the federal court in Virginia to impose an anti-suit injunction against Sing Fuels, and Judge Jackson addressed the factors to determine whether the court should use its power to prohibit Sing Fuels from proceeding with a suit in a foreign country (a power that should be used “sparingly”). Noting that the court would only issue an anti-suit injunction when the strongest equitable factors favored its use, Judge Jackson reasoned: “Plaintiff chose to avail itself of jurisdiction in the United States; appeared in an action it brought before this Court; engaged in extensive discovery pursuant to the directives of this Court; went to trial; lost the trial; lost an appeal and only then, threatened to bring identical claims in a more favorable jurisdiction.” Concluding that this type of “absurd duplication of effort” would result in “unwarranted inconvenience, expense, and vexation,” Judge Jackson found the relevant factors and equity favored granting the injunction and that the injunction would present no issues of international comity. Therefore, he enjoined Sing Fuels from commencing an in rem or in personam suit against the vessel or owner.
Two-dismissal rule barred a third declaratory judgment action by the insurer on a marine insurance policy, even though one of the dismissals was by agreement of the parties; Great Lakes Insurance SE v. Crabtree, No. 20-cv-81544, 2023 U.S. Dist. LEXIS 87511 (S.D. Fla. May 18, 2023) (Altman).
Great Lakes provided hull insurance for the S/V BRANDISON, owned by Bryan and Bethea Crabtree. The vessel was damaged in a fire at the Cracker Boy Boat Works in Riviera Beach, Florida, and Great Lakes denied coverage, claiming that the policy was a temporary binder, that the policy expired because the Crabtrees did not provide required materials, and that the Crabtrees made material misrepresentations in their application. Great Lakes brought a declaratory judgment action in federal court in Montana and voluntarily dismissed the suit when the attorney for the Crabtrees agreed to accept service in Florida. Great Lakes then brought suit against the Crabtrees in federal court in Florida and dismissed that action as well. Great Lakes then sued the Crabtrees in federal court in Montana, again, and the judge transferred the case to the federal court in Florida. While the federal actions were proceeding, the Crabtrees filed suit against Great Lakes in the circuit court in Miami-Dade County, Florida. The Crabtrees filed counterclaims in the federal action for breach of contract and extracontractual remedies under Montana and Florida law. Great Lakes based its federal action on admiralty jurisdiction and moved for a bench trial on its claims and those of the Crabtrees. Judge Altman agreed that the insurer’s suit on the policy on the vessel was based on a maritime contract and was within the admiralty jurisdiction. The Crabtrees argued that they were entitled to a jury trial on their counterclaims because Great Lakes was only pursuing a declaratory judgment in its complaint and the Crabtrees were pursuing damages against Great Lakes. Judge Altman did not believe that distinction made any difference as the counterclaim arose out of the same operative facts and marine policy that are at issue in the declaratory judgment action, and the Rule 9(h) designation by the plaintiff trumps the demand for a jury trial from the defendant in a counterclaim arising out of the same facts. Judge Altman also disagreed with the insured’s argument that Great Lakes had raced to the courthouse to deprive the Crabtrees of their right to a jury trial and was engaged in gamesmanship, citing the statement of the Montana judge that it was the Crabtrees who appeared to be engaged in gamesmanship with their agreement to accept service in Florida. Finally, Judge Altman noted that the Crabtrees implied, but “to their credit, they never explicitly argue,” that the court could not exercise admiralty jurisdiction because the fire occurred on land. Judge Altman noted that admiralty jurisdiction over contracts is implicated by the nature of the contract (marine insurance) and not by the location where the boat was damaged by the fire (contract jurisdiction is “conceptual” and not “spatial” as with respect to torts). Accordingly, Judge Altman granted Great Lakes’ motion for a bench trial of the case. See February 2022 Update.
Great Lakes and the Crabtrees then filed cross-motions for summary judgment in the federal action. The Crabtrees previously raised the two-dismissal rule pursuant to Rule 41(a)(1) (the second dismissal must be dismissed with prejudice), but Judge Christensen denied their motion to dismiss, concluding that the prior dismissals were attributable to gamesmanship on the part of the Crabtrees. The Crabtrees raised the argument again, and Great Lakes argued that, despite the clarity of Rule 41, the two-dismissal rule should not apply when one of the dismissals was not unilateral (citing cases from the Second Circuit and the Ninth Circuit that the two-dismissal rule does not apply when the defendant agreed to one of the dismissals). As Judge Altman sits on a district court within the Eleventh Circuit, he responded: “But in the world of the law, two plus nine doesn’t always equal eleven.” Judge Altman recognized that the two-dismissal rule is “potentially harsh,” but he believed that “we must apply it as written.” Finally, Great Lakes argued that Judge Christiansen’s prior ruling should be conclusive, but Judge Altman disagreed. She issued her order in the third suit (the case currently pending), and it was not a final judgment on the issue. Thus, Judge Altman held that the court had the authority to reconsider the order on a motion for summary judgment, and he granted summary judgment to the Crabtrees.
Judge struck unsworn declaration of vessel owner’s deceased attorney and upheld the insurance policy release signed by the insured despite claims of fraudulent inducement and misrepresentation; Great Lakes Reinsurance (UK) SE v. Herzig, No. 16-cv-9848, 2023 U.S. Dist. LEXIS 87752 (S.D.N.Y. May 18, 2023) (Gardephe).
Peter Herzig, a resident of Manhattan, bought the 62-foot yacht CRESCENDO in 1998 for approximately $1.4 million. In 2015, the yacht was insured with AIG for $600,000 when it was struck by another vessel. There was a dispute about the damage/repair, and Herzig retained attorney Adam Heffner to represent him. Eventually, Herzig settled with AIG for the face value of the policy even though the repairs turned out to be less than $270,000. Herzig then retained a retail insurance broker, Crystal & Co. to obtain new coverage for the yacht, and he sought coverage in the amount of $600,000 while stating that the vessel had been purchased for that amount and was undergoing repair in the amount of $270,000. There were discussions why AIG paid $600,000, but Great Lakes’ underwriter/claims agent, Concept Special Risks, issued a policy with coverage for the CRESCENDO effective from May 26, 2016 subject to a valuation survey (that did value the vessel at $625,000). A few months later, on October 7, 2016, the yacht was damaged while in port in Jacksonville by Hurricane Matthew. Concept became concerned about the value of the vessel, with its underwriting manager stating that it was common sense that a vessel purchased in 1998 for $600,000 would not be worth $600,000 20 years later. Concept issued an endorsement reducing the coverage to $300,000. Meanwhile, Herzig obtained repair quotes ranging from $155,000 to $490,000, and he proposed a settlement for $300,000 with the policy remaining in effect for its full term (until May 2017). Attorney Heffner represented Herzig in negotiations that eventually resulted in a policyholder release for $175,000. A week before the execution of the release, Great Lakes filed this suit against Herzig in federal court in New York, seeking a declaration that it owed no more than $175,000 as the reasonable cost of repair of the damage. A few months later, Great Lakes amended the complaint to seek a declaration that the release was valid and binding. Herzig counterclaimed for fraud, rescission, breach of contract, and breach of the covenant of good faith and fair dealing, and Great Lakes filed another amended complaint, seeking declarations that the policy was void ab initio. Great Lakes moved for summary judgment on its claims, and after attorney Heffner died, moved to strike Heffner’s unsworn declaration that was filed in opposition to the motion for summary judgment. The declaration provided the only evidentiary support for Herzig’s claims that he had to accept the “exploding” settlement offer or Great Lakes would cancel the policy and pursue its claims against him and that the endorsement reducing coverage was applicable. Herzig argued that Heffner’s declaration was admissible under the residual exception to the hearsay rule, but Judge Gardephe did not find that the declaration was particularly trustworthy under Fed. R. Evid. 807, it was not subject to challenge through cross-examination, and it was uncorroborated on material points. Thus, Judge Gardephe struck the declaration. Turning to the validity of the release, Judge Gardephe applied New York law in accordance with the policy’s choice of law clause (New York law in the absence of well-established, entrenched principles of admiralty law). Judge Gardephe agreed with Herzig that there was a material issue of fact about whether Herzig relied on representations about the endorsement; however, he did not believe it was reasonable for Herzig to rely on the Concept’s statements about the endorsement being in effect because Herzig could have easily discovered the facts and legal doctrines about the endorsement actually being in effect and retroactive to the loss. Judge Gardephe also rejected Herzig’s duress argument because Herzig accepted the offer before the allegedly unlawful threat to cancel his insurance. Therefore, Judge Gardephe held that the release was valid and enforceable, which disposed of Great Lakes’ argument that it was entitled to restitution of the $175,000 that Great Lakes paid as consideration for the release: “Having granted Great Lakes summary judgment on its claim that the Release is a valid and binding contract, this Court cannot now dismantle that same contract and direct Herzig to return the consideration that is a key element in the formation of any binding contract.” Finally, Judge Gardephe noted that Great Lakes had not moved for summary judgment on Herzig’s counterclaims, so he asked Herzig to advise the court whether he intended to proceed on the claims (in light of the analysis in the opinion).
Fisherman was entitled to claim punitive damages in his products liability injury claim against the manufacturer of the trolling motor’s handle on his fishing boat, and he presented sufficient evidence to defeat summary judgment; fisherman’s failure to read installation instructions did not defeat claim for failure to warn when the instructions did not include usage of the product; Thibodeaux v. T-H Marine Supplies, LLC, No. 21-443, 2023 U.S. Dist. LEXIS 88330 (M.D. La. May 18, 2023) (Jackson).
Keith Thibodeaux, an avid crappie fisherman, was fishing aboard his flat-bottom boat in the Atchafalaya Basin in Louisiana, using a trolling motor to control and maneuver the boat. In order to move to a better location, he strapped down his tackle and attempted to stow his trolling motor. When he pulled back on the handle (an aftermarket G-Force handle and cable system manufactured by T-H Marine Supplies), the cable broke, and Thibodeaux was thrown to the floor of his boat. Thibodeaux brought this suit in Louisiana state court against T-H Marine Supplies, which removed the case to federal court. T-H Marine Supplies moved for partial summary judgment, contending that the claims for punitive damages, failure to warn, res ipsa loquitur, and lost wages failed as a matter of law (Thibodeaux did not contest the motion for summary judgment on the count of res ipsa loquitur or the claim for future loss of wage-earning capacity). T-H Marine Supplies argued that punitive damages are not available in a products liability action brought under the general maritime law, citing the Supreme Court’s Batterton decision which held that there was no historical basis for allowing punitive damages in unseaworthiness actions. Thibodeaux noted that T-H Marine did not cite authority, however, that the courts had applied the same analysis from Batterton to a maritime products liability action, and he added that the Supreme Court in Townsend had stated that punitive damages “have long been an accepted remedy under general maritime law.” Citing decisions from district courts that punitive damages are recoverable in maritime products liability cases, Judge Jackson held that Thibodeaux could pursue punitive damages in this case. Although T-H Marine Supplies also argued that there was insufficient evidence that it exhibited a callous disregard for Thibodeaux’s rights, Judge Jackson cited the 22 acts/omissions in designing and manufacturing the G-Force that Thibodeaux argued for a pattern of negligence that would support the conclusion that T-H Marine Supplies was reckless or exhibited a callous disregard for the rights of others. T-H Marine also argued that Thibodeaux’s claim of failure to warn failed because Thibodeaux conceded that he did not read the installation instructions for the G-Force. Judge Jackson recognized that a product can be unreasonably dangerous under Section 402A of the Second Restatement of Torts due to lack of adequate instructions or warnings. In this case, there were installation instructions, but there were no instructions or warnings about the use of the G-Force. Judge Jackson could not conclude that Thibodeaux would not have read a warning on usage of the product if there had been one. Consequently, he declined to grant summary judgment on the claim of failure to warn.
Purchase and Sale Agreement for yacht and Limited Warranty (involving affiliated companies) contained different obligations, so that the warrantor, not the seller, had the obligations with respect to the problems that arose after delivery of the yacht; Horowitz v. Allied Marine, Inc., No. 21-cv-60358, 2023 U.S. Dist. LEXIS 88229 (S.D. Fla. May 19, 2023) (Altman).
This case reminds your Updater of the sage words of Judge Reynaldo Garza of the Fifth Circuit: “They say that the two happiest days of a yacht owner’s life are the day he buys it and the day he sells it.” Jones v. One Fifty Foot Gulfstar Motor Sailing Yacht, 625 F.2d 44, 45 (5th Cir. 1980).
Kenneth Horowitz executed a Purchase and Sale Agreement with Ferretti Group of America to buy an “expensive” ($1,254,000) 2020 Riva 38-51 Italian yacht. A Limited Warranty from Allied Marine was attached. Otherwise, the Agreement disclaimed all liability and damages. Horowitz had a number of issues with the yacht, and Allied Marine worked to correct them; however, Horowitz eventually sent a letter demanding rescission and revocation of acceptance and brought this lawsuit in federal court in Florida against Ferretti Group and Allied Marine. Judge Altman previously agreed to dismiss the claims against Ferretti Group, leaving Allied Marine as the sole defendant. He dismissed the claims for consequential and liquidated damages against Allied Marine, leaving claims for compensatory damages for breach of warranty. Horowitz moved for reconsideration of the dismissal of Allied Marine and, alternatively, that the dismissal be certified for an interlocutory appeal. Judge Altman found nothing to change his prior ruling that Ferretti Group’s disclaimer of liability and damages was unambiguous and was not unconscionable under Florida law. Further, as warranties were validly disclaimed, there was no basis for Horowitz to revoke acceptance of delivery of the vessel under Florida law. Finally, Judge Altman rejected the argument that, because the defendants were affiliated entities, Ferretti Group was liable as a joint venturer of Allied Marine. Judge Altman reasoned: “The bottom line is this: Horowitz agreed that his only recourse—for any problems that might arise with his yacht—would be against Allied Marine. As the case is headed for trial, Judge Altman declined to certify his decision on reconsideration for an interlocutory appeal that would result in piecemeal litigation. Turning to the dismissal of Horowitz’ claim for incidental and consequential damages against Allied Marine, Judge Altman stated that the decision was premature because, under Florida law, if Horowitz demonstrated that the Limited Warranty failed of its essential purpose, then he could seek incidental and consequential damages. Allied Marine and Horowitz then filed cross-motions for summary judgment. Although Horowitz argued that it was undisputed that the yacht was unseaworthy and failed to conform to the standards and specifications, Judge Altman found factual disputes that the parties would need to “clarify” at trial. Allied Marine moved for summary judgment on four issues. Judge Altman agreed with Allied Marine that the Agreement did not require that the yacht be built to any standards other than the 2013 Directive and ISO standards that were harmonized as of the commencement of construction of the yacht. Judge Altman agreed, in part, that Horowitz could not proceed with any warranty claims that were expressly excluded under the Limited Warranty. However, Judge Altman noted that Horowitz still had an implied warranty claim under the Magnuson-Moss Warranty Act that Allied Marine could not disclaim or modify. Allied Marine argued that Horowitz could not proceed with any warranty claims that were not disclosed in the pre-suit revocation letter. Judge Altman agreed that Horowitz had an obligation to give Allied Marine written notice of claims, and he agreed to dismiss claims for defects that were raised for the first time in the complaint. However, Judge Altman declined to limit Horowitz to claims asserted in the revocation letter as there were claims in written communications that were separate from the revocation letter. Allied’s last ground for summary judgment was that Horowitz was precluded from claiming nonconformity with conditions that were in existence at the time of delivery and acceptance, as Horowitz signed an agreement that he accepted the vessel as compliant with the conditions in the purchase agreement. Judge Altman disagreed, noting that the Limited Warranty and Purchase and Sale Agreement are separate documents with different obligations. There was a fact question whether acceptance under the Purchase and Sale Agreement waived Horowitz’ rights under the Limited Warranty.
Vessel owners’ claims against charterers of hopper barges for damage to the barges sounded in contract and not in tort for fraudulent inducement or negligence/gross negligence; Marine Steel Transport Line, LLC v. Eastern Metal Recycling, LLC, No. 19-cv-2275, 2023 U.S. Dist. LEXIS 90005 (E.D.N.Y. May 23, 2023) (Block).
Eastern Metal Recycling and Camden Iron & Metal chartered three hopper barges from Marine Steel and Thornton Transportation for the carriage of scrap metal. Claiming that the barges were damaged during the transportation of the scrap metal and were not repaired by the charterers based on the damages reflected in the off-hire surveys, Marine Steel and Thornton Transportation brought this suit in federal court in New York, asserting causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing, fraud in the inducement to contract, and negligence/gross negligence. The defendants moved for summary judgment on the counts alleging fraud in the inducement and negligence/gross negligence, and Judge Block agreed that the owners did not state valid claims for these counts. Judge Block agreed that a party may be liable in tort for fraudulently inducing another to enter into a contract but that involves the current ability to perform and not the failure to perform future acts required by the contract. As the fraudulent inducement claim was based on statements concerning the promise to repair the barges, the remedy was limited to damages for breach of contract. The owners sought to recover for lost profit as a result of being unable to use the damaged barges for other jobs. Judge Block noted that consequential damages are generally available in tort cases but not for breach of contract in the absence of the plaintiff showing that such damages were foreseeable and within the contemplation of the parties at the time the contract was made. As the duties in this case arose out of the contractual relationship, the owners were not entitled to recover on a theory of negligence/gross negligence. Finally, the charterers argued that the owners were aware of the damages during loading operations and that the failure to act barred recovery. Although the cases cited by the charterers involved tort claims, Judge Block noted that there was a similar doctrine in contract cases based on failure to mitigate damages. He held that the suit would proceed in a bench trial based on breach of contract, with the defendants entitled to assert that the owners had responsibility for the damage and whether lost profits were reasonably foreseeable and contemplated by the parties at the time of the agreement (as well as whether the cost of repairs exceeded the fair market value of the barges).
Passenger’s conclusory allegations of cruise line’s notice were insufficient and required repleading; A.B. v. Carnival Corp., No. 1:22-cv-23701, 2023 U.S. Dist. LEXIS 90131 (S.D. Fla. May 23, 2023) (Gayles).
This suit was brought on behalf of A.B., a minor, against Carnival Corp. in federal court in Florida, alleging that A.B. was injured when exiting the bathroom in her cabin on the CARNIVAL SUNSHINE. She claims that the ship was unable to dock because of choppy seas from Hurricane Ian, and the bathroom door slammed into her right hand and crushed her thumb. The cruise line moved to dismiss the complaint, and Judge Gayles agreed and dismissed the complaint without prejudice. With respect to the claim for direct negligence, the passenger alleged a number of defects in the weather detection system, stabilizer fins, and bathroom door, and then claimed that the cruise line knew or should have known of the risk-creating conditions and safety standards for these defects. However, the allegations of notice were conclusory, the standards were not specified, and the list of prior cases involving storms or doors gave no detail how those cases were similar. For vicarious liability, the passenger alleged that the captain and crew made the decision to sail during the hurricane, but the complaint failed to provide any detail about crew and the decisions they made. Judge Gayles did agree that the passenger could move for leave to amend the complaint.
Magistrate judge suggested that alternative measures are a better solution than a stay (pending resolution of a criminal matter against the seaman) after the seaman declined to answer questions on the ground that his answers might tend to incriminate him; Cook v. Lynn & William, Inc., No. 22-cv-10408, 2023 U.S. Dist. LEXIS 91699 (D. Mass. May 25, 2023) (Cabell).
Timothy Cook, Jr., claims that, while serving as captain of the defendant’s vessel F/V LYNN & WILLIAM, he fell and a fish pick pierced his right eye. He brought this suit against his employer, Lynn & William, Inc., in federal court in Massachusetts, and Lynn & William alleged that Cook’s use of illegal drugs directly caused the injury (claiming that Cook was high on heroin and stabbed his eye with a hypodermic needle rather than a fish pick). Noting that Cook is a defendant in an unrelated criminal action pending in Massachusetts state court (drug charges from an event over a year prior to the eye injury), Lynn & William moved to stay the civil litigation until the criminal proceeding was resolved. Lynn & William noted that Cook declined to answer questions about his drug use and drug purchasing habits on the ground that the answers might tend to incriminate him in the pending criminal case and argued that the refusal hindered it from presenting its defense in the civil case. Magistrate Judge Cabell answered that other means were better suited than a stay for developing its defense, including moving to compel Cook to answer its questions or to request an adverse inference from the refusal to answer the questions. Therefore, Magistrate Judge Cabell declined to issue a stay based on the invocation of the Fifth Amendment. Magistrate Judge Cabell also declined to stay the case because a witness was also likely to invoke the Fifth Amendment as there was no indication that the witness’s drug charge was related to illegal drug use on the vessel or how his testimony about drug use on the vessel could be used against him in his criminal proceeding. Finally, Lynn & William argued that Cook’s continued delays reflected a want of prosecution of the case that would warrant a stay. Although Magistrate Judge Cabell found some merit to the argument, he noted that the deadlines for discovery and dispositive motions were in place, and a stay would only cause further delay. Therefore, Magistrate Judge Cabell declined to stay the civil action.
Judge declined to reconsider his decision that state law applied to a waiver of liability signed by a water skier in order to participate in a water ski show; Stewart v. Wang, No. 20-cv-179, 2023 U.S. Dist. LEXIS 92198 (W.D. Wis. May 25, 2023) (Peterson).
Alisha Stewart is a professional water skier who spent her summers from 2017 to 2019 working in the Wisconsin Dells for the Tommy Bartlett water ski show held on Lake Delton. In order to participate, Stewart had to join USA Water Ski and sign a Participant Waiver and Release of Liability Assumption of Risk and Indemnity Agreement. During a practice session, Anthony Wang was operating a boat and towing Stewart as she practiced barefoot water ski maneuvers on Lake Delton. She struck a buoy, fracturing her foot, and brought this suit in Wisconsin state court against Wang. Wang removed the suit to federal court based on diversity and moved for summary judgment that Stewart’s claims were barred by the waiver of liability in the agreement she signed. The threshold question was whether admiralty law or Wisconsin law applied (to determine the validity of the waiver). Stewart submitted evidence that Lake Delton was formed in 1927 by the damming of Dell Creek at its confluence with the Wisconsin River. This formed a lake that is wholly within the state of Wisconsin. On the upstream end, it was fed by Dell Creek and its tributaries. The downstream end was the dam. These facts did not resolve the issue of whether Dell Creek flowed through any other state and whether the dam allowed maritime traffic to reach the Wisconsin River, which flowed into other states. Judge Petersen took judicial notice of Google Maps and satellite images of Lake Delton. The maps demonstrated that the Dell Creek stream system was located wholly within Wisconsin and that the dam did not allow passage by a boat or other commercial traffic. Therefore, Judge Peterson held that the lake was not navigable and that Wisconsin law applied to the waiver. In his reply brief, Wang argued that the liability waiver was a maritime contract and that admiralty provided another basis for jurisdiction, but Judge Peterson held that Wang forfeited that argument and that Wisconsin law applied [confusing jurisdiction with applicable law because admiralty law still applies to maritime contracts in diversity cases]. Applying Wisconsin law, Judge Peterson held that the waiver was unenforceable as a matter of public policy because it was overbroad and ambiguous and because Stewart was afforded no opportunity to bargain its terms. Therefore, Wang’s motion for summary judgment was denied. See April 2023 Update.
Wang moved for reconsideration of Judge Peterson’s conclusion that Wisconsin law applied and that the waiver was unenforceable under Wisconsin law. Judge Peterson noted that Wang devoted a substantial portion of his original argument to the enforceability of the waiver under maritime law, but he only spent six sentences arguing that the claim was subject to admiralty jurisdiction, stating that the operation of recreational boats bears a significant relationship to traditional maritime activity and citing maritime tort cases. Wang did not cite maritime contract cases, like the decision of the Supreme Court in Kirby, or use the term “maritime contract.” Therefore, Judge Peterson declined to reconsider his decision that the application of admiralty to the waiver was forfeited. Wang argued that the court had an independent duty to ensure that subject matter jurisdiction was proper, but Judge Peterson responded that he had done that with respect to the only basis for jurisdiction alleged in the notice of removal—diversity. Judge Peterson added that, even if Wang had not forfeited the admiralty-contract jurisdiction argument, the argument would still fail because Stewart was bringing a tort claim, not a contract claim. Thus, the cases allowing the court to exercise supplemental admiralty jurisdiction over tort claims arising from the same set of facts as maritime contract claims were not relevant, and Judge Peterson concluded that Wang had not cited any authority that “a contractual liability waiver can serve as a hook for admiralty jurisdiction over a tort case” [consequently, if the agreement was a maritime contract, the court would apply state law to it in a case brought under the diversity jurisdiction]. Finally, Judge Peterson considered whether the agreement met the test from Kirby to determine if the waiver was a maritime contract. He noted that Wang had not cited any cases to support the idea that a national water ski organization’s liability waiver deals with maritime service or transactions or serves to protect maritime commerce. Additionally, Wang did not address Wisconsin’s interests in regulating recreational safety within its borders or how that interest was in tension with the need for uniform contract interpretation to protect maritime commerce. Therefore, Judge Peterson held that Wang had not demonstrated that the contract was maritime in nature.
Damages sought by passengers were not barred by the pecuniary-loss limitation in DOHSA, and most of their claims against the cruise line for the drowning during an excursion survived the cruise line’s motion to dismiss, including the claim of a duty to provide a safe excursion (in light of representations of safety allegedly made by the cruise line); Blow v. Carnival Corp., No. 22-22587, 2023 U.S. Dist. LEXIS 92334 (S.D. Fla. May 26, 2023) (Scola).
Tamiko Blow and other passengers on the CARNIVAL PANORAMA purchased tickets for an excursion in Mexico that included snorkeling and swimming in the ocean. Donna Faye Nelson drowned, and Blow and others brought claims on behalf of Nelson and themselves in federal court in Florida against the cruise line and Vallarta Adventures, a Mexican company that operated the excursion. The court entered a scheduling order, and Vallarta Adventures responded to the complaint with a motion to dismiss for lack of personal jurisdiction. After the deadline to file amended pleadings had passed, the plaintiffs moved to amend their complaint to assert an attachment claim against Vallarta Adventures pursuant to Supplemental Rule B (in order to obtain personal jurisdiction against Vallarta Adventures). The plaintiffs alleged that the affidavit in support of the motion to dismiss demonstrated that Vallarta Adventures may not be present within the district, which would trigger the right to seek an attachment. As the time for amendments under the scheduling order had passed, the request was governed by Rule 16, which required the plaintiffs to demonstrate good cause. Judge Scola did not find good cause, however, reasoning that the plaintiffs knew from their original filings that Vallarta Adventures was not present within the district and they did not need the affidavit to learn that fact. Judge Scola pointed out that the plaintiffs had to serve Vallarta Adventures in Mexico, outside the district. As the plaintiffs did not act diligently in asserting their claim under Rule B, Judge Scola denied the plaintiffs’ request and ordered them to respond to the motion to dismiss the complaint. See May 2023 Update.
The cruise line then moved to dismiss the nine claims against the cruise line in the complaint. Before considering the specific claims, Judge Scola addressed the argument that the damages sought were barred by the pecuniary-loss limitation in the Death on the High Seas Act (household support, love, and guidance). Judge Scola concluded that claims for lost household support and loss of guidance and love are sufficiently pecuniary. With respect to severe mental distress, the claims were for the plaintiffs’ own distress, not that of Ms. Nelson. Accordingly, Judge Scola held that those damages were not barred by DOHSA. Judge Scola held that the plaintiffs had sufficiently pleaded claims for misleading advertising and negligent misrepresentation on the part of the cruise line (such as, the excursion is “safe” and “easy,” and “we will have people there to look out for you”). He also held that the plaintiffs had sufficiently pleaded claims for negligent selection/retention, negligent failure to warn, and negligence based on apparent agency or agency by estoppel. However, Judge Scola held that the plaintiffs could not state a claim for negligence based on a joint venture between the cruise line and the excursion (or a third-party beneficiary claim for breach of contract) in light of the explicit terms of the agreement between them. Finally, Judge Scola considered the cruise line’s argument that it does not have a non-delegable duty to provide a safe excursion. Noting that the court had previously found a duty was sufficiently alleged when the passenger established a representation or assurance of safety that is above and beyond the standard ticket language and considering the plaintiffs’ claim of multiple oral representations about the safety/ease of the excursion, Judge Scola declined to dismiss the count.
Vessel owner/employer could not bring claim for indemnity/contribution against seaman in connection with injury sustained by another seaman; Ward v. M/Y UTOPIA IV, No. 22-23847, 2023 U.S. LEXIS 93277 (S.D. Fla. May 29, 2023) (Scola).
This litigation arises from the collision between the tanker TROPICAL BREEZE and the yacht UTOPIA IV in Bahamian waters. Eric Ward, a seaman on the UTOPIA IV was injured and brought this suit in federal court in Florida against the UTOPIA IV and its owner, Utopia Yachting, asserting claims for negligence under the Jones Act and for unseaworthiness and maintenance and cure under the general maritime law. Ryan Fitzgerald, a bosun on the UTOPIA IV, intervened in the suit to assert similar claims. Utopia then brought a counterclaim against Fitzgerald for tort indemnity and equitable contribution under the general maritime law, claiming that Fitzgerald was responsible for all third-party liabilities triggered by Fitzgerald’s negligence because he abandoned his non-delegable duty to ensure the safety of the vessel’s operation. Fitzgerald moved to dismiss the claim for contribution/indemnity, and Judge Scola noted that indemnity and contribution claims are only available in four narrow situations. The exception that was at issue in this case is if a party seeking indemnity/contribution is a vicariously liable or non-negligent tortfeasor. Judge Scola noted that the warranty of seaworthiness is an absolute, non-delegable duty to provide a seaworthy ship. As the warranty is non-delegable, unseaworthiness claims run directly against the shipowner and do not run against non-shipowners. Thus, Judge Scola held that Utopia could not base its claims on a theory of vicarious liability for unseaworthiness. For the Jones Act claim, Judge Scola reasoned that a seaman’s duty is to carry out the vessel’s orders and not to assess whether an order creates danger. Although Fitzgerald could be found to be comparatively at fault with respect to his own damages, he could not be liable for contribution/indemnity to Utopia under the Jones Act. Consequently, Judge Scola dismissed the counterclaim for indemnity/contribution.
Funds used for limited entry permits were for necessaries and gave rise to a maritime lien on the vessel; a Rule D possessory action is not the remedy to enforce a lien on a vessel created by a loan agreement; Kanaway Seafoods, Inc. v. PACIFIC PREDATOR, No. 3:22-cv-27, 2023 U.S. Dist. LEXIS 94001 (D. Alaska May 30, 2023) (Kindred).
Kanaway Seafoods, d/b/a Alaska General Seafood (AGS), and Liberty Packaging brought this action against the PACIFIC PREDATOR, claiming a maritime lien for necessaries and seeking petitory relief under Supplemental Rule D. Bryan Howey, beneficial owner of the vessel, and Dana Howey entered into a Loan and Security Agreement with Liberty by which Liberty loaned $800,000 to the Howeys to pay off an outstanding loan to a credit union. In exchange for the loan, the Howeys agreed to enter into a Fishing Agreement with an affiliate of Liberty (AGS) to deliver and sell seafood products to the affiliate. The Loan Agreement granted to Liberty a security interest in the vessel and certain fishing rights. The affiliate (AGS) also loaned amounts to Howey on an open account for necessaries for the vessel. When Howey defaulted on the loan payments, Liberty and AGS arrested the vessel. AGS argued that its lien on the vessel extended to necessaries for the vessel, which included the salmon seine limited entry permit issued by the Alaska Commercial Fisheries Entry Commission, that permitted fishing in Alaska waters. The vessel owner objected to the lien claim by AGS, arguing that the limited entry permits are within Alaska’s exclusive jurisdiction, were not transferrable under Alaska law, and did not give rise to a maritime lien. Judge Kindred disagreed, reasoning that the lien claim hinged on whether funds that were loaned by AGS were used for necessaries so that a maritime lien arose. Judge Kindred did not believe that the case involved a conflict between Alaska law and the general maritime law. The lien was asserted against the vessel, not the permits themselves, and the lien was created by maritime law because the permits were necessaries of the vessel. Therefore, Alaska law with respect to restrictions on transfer of permits did not affect the court’s determination of whether there was a lien on the vessel. Accordingly, Judge Kindred held that there was a lien on the vessel for the amounts loaned to purchase the permits. Judge Kindred then turned to the complaint for relief under Rule D. Liberty Packaging argued that it was bringing a possessory action, not a petitory action. Liberty argued that it had obtained a security interest in the vessel under the Loan Agreement, that the owners had breached the Loan Agreement, that Liberty was entitled to foreclose on its lien rights on the vessel and to take possession of the vessel, and, therefore, Liberty was entitled to take possession of the vessel under Rule D. Judge Kindred disagreed, reasoning that a possessory action is brought to reinstate an owner of a vessel who alleges wrongful deprivation of property. In this case, Liberty claimed the right to possess the vessel, but it was never in physical possession of the vessel, nor did it acquire legal title to the vessel such that it had constructive possession. As its claim was to obtain, and not to recover, possession of the vessel, the claim was not a possessory action under Rule D. Consequently, Judge Kindred granted the motion to dismiss the Rule D claim.
Seamen on fishing boat whose employment contract provided them with a percentage of the revenue from the catch were not entitled to share in the Department of Agriculture’s Seafood Trade Relief Program payments to commercial fishermen who held a commercial fishing permit to harvest seafood and an ownership interest in the production of eligible seafood; Angelette, LLC v. Bradley, No. 1:22-cv-55 c/w No. 1:22-cv-59, 2023 U.S. Dist. Lexis 94002 (D. Alaska May 30, 2023) (Kindred).
Ryan Bradley and Lyuda Gorbachuk contracted with Angelette, LLC, owner of the commercial fishing vessel F/V ANGELETTE, to work as deckhands on the vessel during the 2019 Prince William Sound salmon fishing season. Angelette agreed to pay the deckhands a share (12% each) of the revenue of the vessel’s catch during the season. Angelette paid the deckhands their share of the initial revenue plus their share of a price adjustment issued in relationship to the revenue from the sale of the catch. In September 2020, the U.S. Department of Agriculture announced the Seafood Trade Relief Program (STRP), intended to assist commercial fishermen in the expansion of domestic markets for seafood that was commercially caught and sold in the United States. Payments were made to U.S. commercial fishermen who held a commercial fishing permit to harvest seafood and had an ownership interest in the production of eligible seafood, and the Department of Agriculture paid eligible commercial fishermen 16 cents per pound of salmon produced in 2019. There was no requirement that any portion of the payment must be distributed to crew members, and Angelette received a payment and did not share any portion with its crew. Bradley and Gorbachuk filed notices of claim of maritime lien against the vessel in the amount of $40,000 each (as their share of the STRP payment), and Angelette brought this action in federal court in Alaska, seeking a declaration that it did not owe the crew a portion of the payment and that the crew did not have a lien on the vessel. The crew members filed a counterclaim against Angelette for their shares of the payment plus penalties under Alaska law and punitive damages under the general maritime law. Applying maritime law to the contract, Judge Kindred first noted that the parties could not have intended the contract to cover the STRP payment as the program did not exist when the contract was made. He then turned to the language, which limited compensation to the crew members’ 12% share of the “gross stock,” based on cash actually received by the vessel for fish sold, after deducting fuel, lube oil, and food. The contract added that the compensation would be paid 30 days after the close of the fishing effort for the season, that this would be the sole compensation, and the share would be in “full payment for all services.” Judge Kindred reasoned that the contract contemplated compensation during a set time period and that it would be the sole compensation. Judge Kindred did not find any ambiguity from the silence regarding trade bonuses, and he found the final sentence (that the crew members were not entitled to any adjustment paid to the owner as part of a loyalty or performance incentive paid by a fish buyer) to indicate that the owner did not intend to share any additional payments with the crew. Although the crew sought to introduce extrinsic evidence that the owner orally promised that the STRP payment would be shared with crew members who returned to work for the owner, Judge Kindred declined to consider extrinsic evidence for a contract that was unambiguous. Finally, the crew argued that the contract should be construed in favor of the crew, as wards of the admiralty, and Judge Kindred was mindful that courts should protect seamen in their contractual dealings. However, this situation did not present a situation where a vessel owner was trying to take advantage of its crew in an unscrupulous manner, and Judge Kindred decided to hold the parties to their bargain. Therefore, he granted relief to the owner that the crew members were not entitled to a 12% share of the STRP payment and that the lien claims were void.
Cruise line’s duty of reasonable care extended to investigating whether there was a basis for forcing a passenger to disembark and to providing the passenger with an accommodation to keep her medications refrigerated after disembarking her from the vessel; Al-Hindi v. Royal Caribbean Cruises, Ltd., No. 22-24032, 2023 U.S. Dist. LEXIS 95596 (S.D. Fla. June 1, 2023) (Lenard).
Salwa Al-Hindi is a 68-year old citizen of Kuwait, whose daughter purchased a ticket for Al-Hindi for a four-night cruise from Port Canaveral, Florida to The Bahamas on the INDEPENDENCE OF THE SEAS. Al-Hindi subsequently upgraded her stateroom and then flew from Kuwait to Florida. When Al-Hindi attempted to board the vessel, the cruise line questioned her because there were similarities between her name and the name of another passenger. The cruise line later advised her that she had to disembark the ship (which was docked in The Bahamas) due to “certain financial issues.” She explained that her passage was fully paid and tried to prove that through receipts. She also claimed that she had medical conditions that required her medication to remain refrigerated at all times. The cruise line did not allow her to remain on the vessel and did not provide her reasonable accommodations to refrigerate her medication and booked a ticket (at her expense) from The Bahamas to Orlando. Al-Hindi was forced to disembark the cruise ship as Hurricane Ian threatened Florida. When she went to the airport, she discovered that the flight booked by the cruise line was for a month later and that she had nowhere to stay. She booked a flight that day and traveled to Orlando, but her luggage remained in Nassau. Hurricane Ian struck, and the Orlando airport was closed. When her luggage finally arrived, her medication and personal items, such as her glucose monitoring device, had been removed. Al-Hindi was hospitalized in Orlando and again in New Brunswick, Canada, allegedly because of the cruise line’s failure to provide reasonable accommodations to refrigerate her medication and because of the stress in disembarking/return. Al-Hindi filed this suit in federal court in Florida against the cruise line with a shotgun pleading that she had to replead. Her amended complaint contained three causes of action: (1) negligence for failure to use reasonable care to investigate the basis for disembarkation; (2) negligence for failure to use reasonable care after being placed on notice of the passenger’s medical condition; and (3) negligence for failure to use reasonable care in arranging for Al-Hindi’s disembarkation and return travel. The cruise line moved to dismiss the three counts for failure to state a claim. For the first cause of action, the cruise line argued that its duty of reasonable care does not include the duty to timely investigate good-faith bases for disembarkation and that the ticket allows the cruise line to remove any passenger from the vessel at any time for failing to comply with the cruise line’s policies. Thus, after the cruise line determined that there were financial issues violating the cruise line’s procedures, the cruise line had a right to disembark Al-Hindi. Judge Lenard disagreed with the cruise line and held that the cruise line’s duty of reasonable care required it to investigate whether there existed a basis for forcing the passenger to disembark. As to the cruise line’s reliance on the provision of the ticket, the passenger had not attached the ticket to the complaint, and it was not central to the passenger’s cause of action. Therefore, Judge Lenard declined to consider it at the stage of a motion to dismiss. Judge Lenard also found sufficient evidence of breach of duty when an investigation would have revealed that there was no financial issue that justified the immediate expulsion of a 68-year old woman at a time when a major hurricane posed an imminent threat. Turning to the second cause of action, Judge Lenard held that the cruise line’s duty of reasonable care extended to providing the passenger with an accommodation to keep her medications refrigerated to avoid placing her life at risk (stating that this is not a heightened duty but just includes what is reasonable under the circumstances). As to the third cause of action, Judge Lenard held that Al-Hindi had not plausibly alleged that the cruise line’s breach of an assumed duty to act with reasonable care when booking the travel increased the risk of harm based on the facts that she alleged.
Filipino seamen on American vessels were required to arbitrate their wage claims in the Philippines; Dziennik v. Sealift, Inc., Nos. 05-cv-4659, 04-cv-1244, 06-cv-5305, 2023 U.S. Dist. LEXIS 95762 (E.D.N.Y. June 1, 2023) (Irizarry)
Sylvester Dziennik, Mieczyslaw Kiersztyn, and Ferdynand Kobierowski brought this suit, individually and on behalf of a class of Polish and Filipino seamen who worked on vessels of Sealift, Inc., Fortune Maritime Inc., Sagamore Shipping, Inc., and Victory Maritime, seeking to recover for unpaid wages, overtime wages, and statutory penalties. The court previously ordered arbitration of the claims of the seamen for whom the defendants produced executed copies of Philippines Overseas Employment Administration contracts accompanied by standard terms and conditions containing arbitration clauses. The defendants later filed a motion to compel arbitration for the remaining Filipino class members. Finding that the remaining class members signed contracts requiring arbitration in the Philippines, Judge Irizarry held that arbitration was required (rejecting the argument that the clauses were null and void because compelling arbitration in the Philippines would result in a prospective waiver and denial of statutory rights available to them on U.S. flagged vessels).
Vessel owner waited too long to request refund of premium after the insurance policy on his vessel was declared void ab initio based on uberrimae fidei; QBE Seguros v. Morales-Vazquez, No. 15-cv-2091, 2023 U.S. Dist. LEXIS 96721 (D.P.R. June 1, 2023) (McGiverin).
Morales-Vazquez purchased an insurance policy in 2011 on his forty-foot Riviera yacht from an insurance company that was acquired by QBE. In the application he left blank the spaces for the answers to questions about his boating history and accidents related to any vessel. Three years later, in 2014, Morales-Vazquez applied for a separate policy on his 48-foot Cavileer yacht. In this application he disclosed two of the seven boats that he had previously owned/operated and disclosed an accident involving a propeller strike but failed to disclose an incident in January 2010 in which the Riviera yacht was grounded. The Cavileer yacht was insured for $550,000. Later in 2014 the Cavileer yacht was damaged in a fire. During the extended negotiations with Morales-Vazquez over payment for the loss, the insurer discovered the 2010 grounding and the other vessels that Morales-Vazquez had previously owned/operated, and the insurer filed this suit seeking a declaration that the policy was void. After a six-day bench trial, the court concluded that QBE was entitled to void the policy for breach of the doctrine of uberrimae fidei and for violating the policy’s warranty of truthfulness. The First Circuit affirmed the application of the doctrine of uberrimae fidei to void the policy. Judge Selya issued a lengthy analysis of the development and application of the doctrine (applied throughout the United States except in the outlier Fifth Circuit) and concluded that it remained an entrenched principle of maritime law that was not subject to the application of state law under Wilburn Boat. Morales-Vazquez argued that, after the doctrine of uberrimae fidei was abolished in the United Kingdom in 2015, it should be scuttled in the United States in order to harmonize our insurance law with English law. Although recognizing that maritime law is intended to be dynamic and evolve, Judge Selya noted that Congress has been silent on the issue and that the needs of the marine industry still necessitated the doctrine. In fact, the present case was a “poster child” for the continuing relevance of the doctrine. Judge Selya then addressed the application of the doctrine and whether there was a requirement that the insurer demonstrate actual reliance on the insured’s omissions in issuing the policy. Following the majority of decisions, Judge Selya ruled that the materiality of a false statement or an omission, without more, provides a sufficient ground for voiding a policy under the uberrimae fidei doctrine. As the district court found that the omitted facts crossed the threshold for materiality, the First Circuit affirmed the declaration that the policy was void. See February 2021 Update.
After the affirmance by the First Circuit, the insurer moved for an order for costs, and the court assessed the costs at $12,138.12. The insurer moved for execution on the judgment, and the insured’s bank deposited that amount. Morales-Vazquez then asked that the court order the return of $8,432 of the funds to cover the premium on the policy that had been declared void ab initio. The insurer argued that Morales-Vazquez had previously refused the insurer’s offer to reimburse the paid premium and had waived the right to seek the refund by waiting for so long to assert the argument. Morales-Vazquez responded that he did not wait too long to raise the argument because he was not entitled to the refund until the court declared the policy void ab initio. He also argued that the acceptance of the offer would have precluded his claim for breach of contract based on the doctrine of accord and satisfaction. Magistrate Judge McGivern disagreed with Morales-Vazquez and held that his waiting 20 months after the seizure of his property was too long and that he had waived his right to seek the refund (and that the refund request was also untimely under the Puerto Rico statute of limitations). Therefore, he declined relief to grant relief to Morales-Vazquez.
Judge dismissed seaman’s wage and injury suit based on forum-selection clause, rejecting his request for a Writ of Rachmones or a Writ of Mercy, declining to reconsider the striking of his late response, and denying his request to refer the case to the Hawaii Supreme Court to ascertain Hawaii public policy regarding the treatment of seamen hired/recruited in Hawaii; Patrick v. Trident Seafoods Corp., No. 23-cv-4, 2023 U.S. Dist. LEXIS 97071 (D. Hawaii June 5, 2023) (Watson).
Jenos Patrick entered into an employment contract with Trident Seafoods to work as a seaman on the M/V SEATTLE ENTERPRISE. He brought this suit in federal court in Hawaii, seeking to recover for multiple injuries and for wages that he claims he was not paid. He brought claims for negligence under the Jones Act, unseaworthiness of the SEATTLE ENTERPRISE, infliction of emotional distress, an accounting with respect to the voyage on the vessel, and failure to pay wages. Citing the forum-selection clause in the employment contract that suit must be brought in the federal or state courts of King County, Washington, Trident moved to dismiss the case or, alternatively, to transfer the case to the federal court in King County, Washington (Western District of Washington). The response was due on May 12, 2023, and two days after the deadline, on May 14, Patrick filed a proposed stipulation between the parties, purporting to give him until May 15 to file the response. Patrick missed that deadline and filed a response on May 16, which the court struck on May 19, 2023. Patrick filed a motion to reconsider the striking of his response, arguing that his counsel was in poor health and the response was filed only 69 minutes after the deadline to which the parties stipulated (because he was trying to include a table of authorities). Patrick also argued that the court should issue a “Writ of Rachmones” or “Writ of Mercy” and should refer the case to the Hawaii Supreme Court to determine if there is a strong public policy in Hawaii regarding the treatment of seamen who are recruited and hired in Hawaii. Chief Judge Watson declined to grant reconsideration as none of the explanations given by Patrick “remotely fit” within the grounds for relief under the Local Rule, stating: “Patrick does not even recognize that Local Rule 60.1 exists or, for that matter, that any relevant legal principle governs the motion for reconsideration.” Chief Judge Watson noted that Patrick had not attempted to satisfy any of the grounds for reconsideration, which Chief Judge Watson surmised was the reason that Patrick relied on the Writ of Rachmones or Writ of Mercy (available “where there is no clear legal right to relief”). He stated: “There is certainly no legal right to relief here, and the Court will not create one simply to avoid the consequences of counsel’s actions.” Turning to the motion to dismiss, Chief Judge Watson agreed that Trident could use a motion to dismiss under Rule 12(b)(6) (as opposed to a motion based on improper venue under 28 U.S.C. Section 1406(a) or Rule 12(b)(3). Chief Judge Watson concluded that the forum-selection clause applied to all of the claims asserted by Patrick, and he found no reason not to enforce the clause on the record presented. Patrick argued that the dismissal of the case would be prejudicial because of the six-month time limitation in his employment contract to assert claims for unpaid wages or production shares. However, Chief Judge Watson cited the Supreme Court’s decision in Atlantic Marine that “such alleged prejudice is not a relevant consideration when ‘the plaintiff has violated a contractual obligation by filing suit in a forum other than the one specified in a valid forum-selection clause.’” Chief Judge Watson also rejected Patrick’s arguments about the inconvenience of the Washington forum as Patrick waived the right to challenge the preselected forum as inconvenient by his agreement to the forum-selection clause. Consequently, Chief Judge Watson granted the motion to dismiss and dismissed the case without prejudice. The next day, Patrick filed a notice of appeal to the Ninth Circuit (No. 23-15849).
Cargo containers on barge did not qualify as appurtenances of the barge for purposes of a maritime lien for necessaries on the barge; In re Work Cat Florida, LLC, 8:21-bk-2588, 2023 Bankr. LEXIS 1468 (Bankr. M.D. Fla. June 5, 2023) (McEwen).
Work Cat Florida operated a short-term shipping operation providing container and roll-on/roll-off freight transportation services between the ports of Tampa, Florida and Brownsville, Texas. Louisiana International Marine entered into a contract with Work Cat Florida to provide towing services for two flat-deck cargo barges (ATLANTA BRIDGE and MEMPHIS BRIDGE) that were chartered by Work Cat Florida. During the towing of the ATLANTA BRIDGE by Louisiana International’s tug, LA COMMANDER, the tug collided with the barge. Work Cat Florida then commenced this bankruptcy case in Florida, and Louisiana International Marine filed a claim in the bankruptcy proceeding for unpaid invoices, claiming that it had a maritime lien against the LA COMMANDER and its appurtenances that included cargo containers on the barge that were owned by Work Cat Florida. Work Cat Florida did not dispute that Louisiana International Marine provided necessaries for the barge for the towage service; however, it did dispute in the bankruptcy action that the lien extended to cargo containers on the barge. Bankruptcy Judge McEwen began her analysis of the lien claim by reasoning that the most prevalent phrasing to describe an appurtenance of a vessel is that the purported appurtenance is “essential to the vessel’s navigation, operation, or mission.” Bankruptcy Judge McEwen was troubled by the case law in which “the compass points in multiple, different directions,” but she concluded that “defining a vessel’s mission based on the single primary purpose for which she was designed or specially redesigned” is the “most pragmatic, at least when considering a lien for services and supplies.” Bankruptcy Judge McEwen noted that some courts have added a requirement that the equipment be a “specifically identifiable item that is destined for use aboard a specifically identifiable vessel,” and she considered that requirement to be a useful tool in the determination. Applying these defining points to the facts in this case, Bankruptcy Judge McEwen stated that the “big-picture mission of a flat deck cargo barge is to transport ‘stuff’ across the water, plain and simple, regardless of what it transports on any particular voyage.” Thus, cargo containers temporarily on the barge do not play a role in the navigation or operation of the barge, and they are not essential to the mission of the barge, “which is simply to bring stuff (including containers) from dock A to dock B.” She added that the containers “for all intents and purposes, are cargo themselves, together with whatever is inside the containers and, if whatever is inside includes smaller containers, then together with whatever is inside those smaller containers, and so on – much like nesting dolls – all of which are the objects of the mission, meaning what the barge was hired to transport.” Therefore, the containers are “no more appurtenances than are cars on board a car ferry or shrink-wrapped pallets in a ship’s hold.” Bankruptcy Judge McEwen also reasoned that the containers are interchangeable and fungible, with no concern as to which containers end up on which barge, so they were not “destined for use aboard a specifically identifiable vessel.” Accordingly, Bankruptcy Judge McEwen held that any lien that Louisiana International Marine may have on the ATLANTA BRIDGE did not extend to the containers on board the barge while it was being towed.
Attach the correct bill of lading in the first place: Judge declined to reconsider decision that package limitation defense by the carrier foundered on the different versions of the bill of lading submitted by the carrier, chiding the carrier for its premature motion filed before it had “done its diligence;” Gulf Island Shipyards, LLC v. Mediterranean Shipping Co. (USA), Inc., No. 1:22-cv-1018, 2023 U.S. Dist. LEXIS 97887 (S.D.N.Y. June 6, 2023) (Vyskocil).
Gulf Island Shipyards contracted with Wärtsilä Defense to purchase a propeller shaft to be used for a construction project for the U.S. Navy. Wärtsilä Defense contracted with Martin Bencher to arrange for the shipping of the cargo from Trieste, Italy to New Orleans, Louisiana, and Martin Bencher issued a Combined Transport Bill of Lading for the shipment (naming Wärtsilä Defense as the shipper and Gulf Island as the consignee). Martin Bencher then contracted with Mediterranean Shipping Co. (a vessel operating common carrier) to transport the propeller shaft. MSC issued a Sea Waybill for the shipment, identifying Martin Bencher (Scandinavia) as the shipper and Martin Bencher USA as the consignee. The shaft was damaged when it was dropped during its discharge from the vessel in New Orleans, and Gulf Island initiated this suit against MSC in federal court in Louisiana based on the Carriage of Goods by Sea Act, alternatively the Harter Act, and, alternatively, negligence/bailment. MSC moved to transfer the case to New York based on the forum-selection clause in the Sea Waybill, and Judge Lemmon transferred the case. Gulf Island added Martin Bencher as a defendant for the same causes of action and added a claim for breach of contract that Martin Bencher failed to obtain insurance on the cargo. Martin Bencher moved for summary judgment on the COGSA/Harter/negligence claims based on the one-year statute of limitations in COGSA, and Gulf Island responded that it was too early to determine what law applied to the claims. As the complaint alleged that the damage occurred while the shaft was being discharged from the vessel, however, Judge Vyskocil held that COGSA, not the Harter Act, applied, and that COGSA preempted the state negligence/bailment claim to the extent it would have a longer statute of limitations than COGSA. As the amended complaint naming Martin Bencher was filed more than a year after the discharge, Judge Vyskocil held that the COGSA claim was time-barred unless the amended complaint related back to the filing of the original complaint (Gulf Island did not claim there was a mistake in the parties’ identity that would allow a relation back). Similarly, the amended complaint did not allege grounds for applying equitable estoppel for the negligence claim. As to the claim against Martin Bencher for breach of contract for failing to procure required insurance, Judge Vyskocil found the allegations failed to identify any provision containing the requirement and that the pleading was entirely conclusory. Therefore, she dismissed that claim without prejudice. MSC moved for partial summary judgment that its liability was limited by COGSA’s package limitation to $1,500, as the Sea Waybill identified three packages. Gulf Island invoked the “fair opportunity” doctrine (that it did not have the opportunity to declare a higher value, citing the Waybill that was attached to MSC’s motion for summary judgment. In its reply, MSC attached a version of the Waybill which presented the opportunity to declare a higher value, and Judge Vyskocil noted that it appeared to be fatal to Gulf Island’s argument. In light of the different versions of the Waybill that were submitted, however, Judge Vyskocil found a fact dispute that would have to be resolved and that precluded summary judgment. See May 2023 Update.
MSC moved for reconsideration, arguing that there was no genuine dispute that the MSC Waybill that was filed with its reply brief was the operative version of the Waybill and that version clearly limited recovery to $500 per package (alternatively, MSC moved to refile its motion for partial summary judgment to include the Waybill that was attached to the reply with declarations attesting that it is the operative version of the Waybill). MSC argued that the complete version of the Waybill (the critical third page was missing from the initial filing) was not available until the filing of its reply brief, but Judge Vyskocil responded that MSC’s story did not “add up.” She noted that the versions of the Waybill differed in various ways, not just the missing page, and MSC did not attempt to explain the differences. Thus, she was left unable to determine what shipping documents “were provided to what parties and when.” Judge Vyskocil noted that it might turn out that MSC was correct about which Waybill governed, but she could not decide that based on what had been presented. She then chided MSC, stating: “While MSC complains that the issue could be resolved more efficiently at the summary judgment stage, MSC squandered that opportunity by electing to file a premature motion, which was based entirely on a document that MSC now claims (without any support) to be defunct.” She continued: MSC should not have filed its motion, and wasted the resources of its adversary and this Court until it had done its diligence and obtained the as-issued MSC Waybill. The Court will not give MSC another (unjustified) bite at the apple.”
Government contractor defense sank mesothelioma suit on behalf of Navy electrician mate against manufacturer of pumps with asbestos packing; Gorton v. Warren Pumps, LLC, No. 1:17-cv-1110, 2023 U.S. Dist. LEXIS 98599 (M.D. Pa. June 6, 2023) (Conti).
This suit was brought by Thomas D. Gorton, II, and after his death by his widow, Rhonda, claiming that Gorton contracted mesothelioma from exposure to asbestos-containing products during his service on the USS BLUE while the vessel performed maneuvers and conducted battle exercises in the Pacific Ocean off the coast of California and during its conversion into an anti-submarine ship at the Hunter’s Point Naval Shipyard (removing all of the electrical equipment from the vessel). The suit alleged that Gorton maintained all electrical devices on the ship, including lighting, motors, and generators. Rhonda settled with all of the supplier-defendants except Warren Pumps, which manufactured fire and bilge pumps, emergency feed pumps, and main condenser circulating pumps that were aboard the vessel during Gorton’s service (the pumps manufactured by Warren Pumps utilized braided asbestos packing). Warren Pumps filed a motion for summary judgment, causing Judge Conti to address whether admiralty law applied to the claims against Warren Pumps. She held that the locality test was satisfied because Gorton was exposed to the asbestos-containing pumps while on the vessel on navigable waters and in drydock during the overhaul (“some portion of the asbestos exposure occurred on a vessel on navigable waters”). As to the element of the connection test involving the potentially disruptive impact on maritime commerce, Judge Conti reasoned that exposure to defective products creates unsafe working conditions, can slow or frustrate the work on the vessels and cause injuries, and can cause fires or other hazards. Thus, there was the potential to disrupt maritime commerce. As the pumps were manufactured for use of the Navy on its vessel, Judge Conti held that there was a substantial relationship to traditional maritime activity. Accordingly, she applied maritime law to the case and addressed the government contractor defense “as a federal common law . . . defense to liabilities incurred in the performance of government contracts.” With respect to the product defect claim against Warren Pumps, Judge Conti concluded that the Navy approved reasonably precise specifications for the manufacture of the pumps, that the pumps conformed to the reasonably precise specifications, and that Warren Pumps’ knowledge about the danger of asbestos was not superior to the knowledge of the Navy so that Warren Pumps was not required to warn the Navy about the danger. Therefore, she granted summary judgment on the claims for product liability, breach of implied warranty, and negligent design. Judge Conti then addressed the failure-to-warn claims as the pumps did not contain any warnings with respect to the hazards of asbestos exposure. However, Judge Conti found that the evidence established that the Navy approved reasonably precise specifications for the manufacturing of the pumps, and that process included “a careful review, control, and approval of all written material accompanying the pumps.” As the written material accompanying the pumps conformed to the specifications approved by the Navy, Judge Conti granted summary judgment on the failure-to-warn claims. Finally, Judge Conti granted summary judgment on the fraudulent concealment claim, having previously concluded that Warren Pumps did not possess knowledge about the dangers of asbestos that was superior to the knowledge of the Navy. Consequently, Judge Conti granted judgment in favor of Warren Pumps.
Judge resolved (in favor of the shipyard) the dispute as to the terms of a contract for ship repair that began with a work order and bids but ended on a time-and-materials basis; Superior Shipyard & Fabrication, Inc. v. M/V CECILE A. FITCH, No. 22-1169, 2023 U.S. Dist. LEXIS 98865 (E.D. La. June 7, 2023) (Barbier).
Chester J. Marine, LLC owns the towing vessel M/V CECILE A. FITCH. Its owner, Larry Fitch, contacted Superior Shipyard in Golden Meadow, Louisiana to perform structural and mechanical repairs on the vessel, and the parties executed a one-page Work Order for “complete repairs as directed” containing a provision that the owner would be responsible for all debts incurred for the work. There was a handshake agreement on the price, believed to be $69,860 by Fitch, but the parties later signed a Bid Letter for the work at a price of $310,503 and an additional Bid Letter for $52,000. Superior Shipyard claimed that at some point after acceptance of the bid letters, Fitch agreed to proceed on a time-and-materials basis. Superior then invoiced Chester Marine $585,432.13 for the work and later sent another invoice in the amount of $36,564 for dry docking and utilities. The shipyard filed this suit against the vessel and owner in federal court in Louisiana, seeking to recover more than $600,000, and then moved for summary judgment to enforce a maritime lien on the vessel or for judgment enforcing the open account under Louisiana law. Chester Marine responded that the signed agreements indicated the cost of repairs was $310,504, that the shipyard did not do the work it charged, that the shipyard unilaterally changed the terms of the agreement, that the shipyard allowed the vessel to be damaged in Hurricane Ida, and that the shipyard essentially abandoned work on the vessel. In analyzing the maritime contract between the parties, Judge Barbier stated that it is a practice and custom in the ship repair industry for the contractor to first do the work and then send a purchase order or invoice with the terms and conditions after the work has been done or completed. In this case, Superior Shipyard asserted that Fitch decided to proceed on a T&M basis and that the shipyard provided him daily reports on the work that, together with the Work Order and Bid Letters, formed the contract under the general maritime law. The evidence presented included emails from the shipyard with the daily reports, most of which stated that the report was presented “due to BID cancellation.” However, Judge Barbier did not believe that this was sufficient to support judgment as a matter of law as Fitch presented an affidavit that there was no oral contract and because the reports were not sent daily (where the owner could object) and, instead, 13 of 14 were sent on a single day. Judge Barbier also noted that there was no evidence of a prior course of dealings that would allow him to infer whether there was a meeting of the minds as to the nature of the contractual arrangement. Accordingly, Judge Barbier held that there were disputes about the terms of the repair contract and the cost of the repair work. See June 2023 Update.
Judge Barbier conducted a bench trial on June 5 and 6, 2023, and heard conflicting testimony about the modification of the repair agreement to a time-and-materials basis (although he had no doubt that the change occurred). He determined that a written agreement (work order) met the formalities for a maritime contract and that, as is customary in the shipyard repair industry, the terms of the agreement were later modified by the parties to reflect specific work that was performed and that the agreement would proceed on a T&M basis. As the work was then performed as presented in the daily reports without objection from the vessel owner, Judge Barbier found that the shipyard had established that it provided necessaries that gave rise to a maritime lien on the vessel. Additionally, as the Work Order was binding, Judge Barbier held that the shipyard was entitled to attorney fees and costs. Judge Barbier did, however, reject the shipyard’s claim that it should be paid for certain drydocking and utilities as he found no evidence of a discussion between the parties that the shipyard would provide those services. Crediting a partial payment of $13,318.90, Judge Barbier awarded judgment in the amount of $572,113.23 (plus attorney fees, costs, and prejudgment interest).
On November 7, 2020, seawater entered the 88-foot Leopard vessel named PETRUS via the stern. This suit arose out of the hull policy issued by Great Lakes Insurance to Chartered Yachts Miami for the vessel in the amount of $725,000. The parties disputed the cause of the incident. Great Lakes alleged that the vessel was unseaworthy because it did not have a properly functioning transom door and that only one of the two bilge pumps was operational. Chartered Yachts argued that an underwater rope got caught on the vessel’s port propeller as the vessel entered the Miami River. Great Lakes declined to pay for the loss and brought this action in federal court in Florida, seeking a declaration that there was no coverage for the loss. Great Lakes moved for summary judgment on several grounds: that Chartered Yachts breached the warranty of seaworthiness, that it misrepresented material facts, that it breached the survey compliance warranty, and that it breached the legal and regulatory compliance warranty. Judge Williams first considered the misrepresentation claim and noted that in the marine insurance application and renewal questionnaire, Chartered Yachts stated that the first-listed operator of the vessel, Greg Pack, had a 100-ton boating license from the Coast Guard, but he actually held no license at the time of the incident. Under the doctrine of uberrimae fidei, the issue was whether the misrepresentation of his license was material to the calculation of the insurance risk. The underwriter who issued the policy stated that he would have issued different policy terms if he knew that the operator did not have a captain’s license. He added that the underwriters would never provide coverage for illegal chartering of a vessel without a licensed captain, in violation of Coast Guard regulations. Although Chartered Yachts argued that the operator was qualified to captain a yacht because he had a current Florida boating license and had attended sea school in Florida, the owner did not provide the court with evidence about how that information would influence an insurer in assessing the risk for the policy. Consequently, Judge Williams found that Chartered Yachts breached the doctrine of uberrimae fidei and that the policy was void ab initio. Great Lakes also argued that the owner’s failure to have the vessel’s life raft inspected and tagged was a breach of the policy’s survey compliance warranty. Applying New York law (requiring strict compliance with express warranties), a breach would void coverage regardless of whether there was causation between the breach and the damage. Chartered Yachts submitted two Letters of Survey Recommendations Compliance to Great Lakes that identified deficiencies needing immediate attention. Although the Chartered Yachts tried to establish that the deficiencies had been corrected, the evidence demonstrated that the life raft that remained on the vessel had an expired certification tag (as noted on the Survey). Therefore, Judge Williams held that the policy was void ab initio for violation of the survey compliance warranty. Additionally, as the Coast Guard requires that life rafts be periodically serviced, inspected, and tested by an approved servicing facility, and as the expired certificate violated the Coast Guard rule, the owner was also in violation of the warranty that the owner comply with all laws and regulations governing the use and operation of the vessel. Therefore, the policy was void ab initio for violation of the legal and regulatory compliance warranty. With three strikes already, Judge Williams did not have to address the insurer’s argument about the seaworthiness of the vessel.
Limitation claimant/cross-claimant demonstrated good cause for late amendment to its cross-claims; In re Magnolia Fleet, LLC, No. 22-504, 2023 U.S. Dist. LEXIS 100047 (E.D. La. June 7, 2023) (Currault).
Magnolia Fleet filed this limitation action in connection with property damage allegedly caused by its vessels during Hurricane Ida. Magnolia Fleet moved to dismiss claims filed in the limitation action by Valero Refining, Entergy Louisiana, and Maintenance Dredging or for a more definite statement. The claims asserted that Magnolia Fleet was in control of barges that broke free from their moorings and caused damage to property of the claimants. Judge Fallon considered the pleadings to contain all the elements of a maritime negligence claim (or sufficient facts supporting the elements were easily inferable from the facts that were alleged). Although the claimants could not allege at this stage which barges allided with which property, Judge Fallon considered that to be immaterial as there were enough facts to raise a reasonable expectation that discovery would fill in the remaining details. Therefore, Judge Fallon denied the motion to dismiss or for a more definite statement. See September 2022 Update.
On October 31, 2022, the limitation plaintiffs filed a Rule 14(c) tender and third-party demand against Vopak Industrial, which was alleged to own the barge that allided with Entergy’s facility. Vopak answered that it owned the barge, but the breakaways involved vessels owned, operated, or in the custody of Magnolia Fleet and others. On April 17, 2023, Entergy sought leave to file an amended cross-claim (after the deadline had passed in the court’s scheduling order, and leave was denied because the motion did not argue that there was good cause to amend as required by Rule 16. Entergy then refiled the motion, alleging that it had good cause because it did not receive confirmation that the barge was under the care, custody, or control of Vopak until after the expiration of the pleading deadline. Several parties opposed the amendment, asserting that Entergy had been informed before the deadline and that other parties had previously pleaded the theory that Entergy was asserting, and that allowing a claimant to amend over eight months after the deadline would open the floodgates to additional amendments. Magistrate Judge Currault sided with Entergy that it had established good cause, noting that it could not be faulted for ensuring that it had a good faith basis in law and fact before making assertions, rather than simply relying on claims pleaded by others in the limitation action. Additionally, Magistrate Judge Currault did not find prejudice as the theories had already been raised by other parties. Therefore, she gave leave for the amended cross-claim.
Passenger who slipped and fell on a cruise ship sufficiently pleaded a claim for negligent training but not for negligent supervision; Casey v. Carnival Corp., No. 23-20027, 2023 U.S. Dist. LEXIS 99969 (S.D. Fla. June 8, 2023) (Altonaga).
Karen Casey claims that she slipped, fell, and landed in a large puddle (at least five feet in size) while using an outdoor staircase near the jacuzzi area of Deck 9 on the CARNIVAL FREEDOM. She brought suit in federal court in Florida on several theories, and the cruise line moved to dismiss the counts for negligent training of personnel and negligent supervision of personnel for failure to state claims for relief. The cruise line argued that Casey made many allegations as to how the cruise line trained its crew but failed to allege how the cruise line was negligent in the implementation or operation of its training program. Additionally, the cruise line claimed that the detailed descriptions of the training program contradicted the allegations of failure to train. Chief Judge Altonaga disagreed that the allegations were contradictory and then addressed the sufficiency of the allegations with respect to negligent training. Although she did not find the complaint to be “a model of clarity,” she also did not find the allegations were a mere “threadbare pleading.” Chief Judge Altonaga found that the allegations that the cruise line did not train its crew or implement its procedures on how to inspect for wet areas regularly, cordon off wet areas, and warn passengers were sufficient to satisfy the “how and why” the specific crew members were negligent and to push her “claims across the line from conceivable to plausible.” The count for negligent supervision did “not fare as well.” Casey pleaded a lot of information about a repetitive problem with open decks being wet, but she did not connect the cruise line’s awareness of that problem with any crew members who were on duty at the time of the incident. There was no evidence of incompetence of the employees who were actually responsible. Chief Judge Altonaga stated: “Apparently, Plaintiff believes Defendant is on notice that its entire deck crew on the FREEDOM—and presumably every other vessel in its fleet—is unfit, without regard to when the employee was hired (i.e., whether the crewmember was hired after the prior incidents) or whether the employee had any involvement in prior slip and fall accidents.” Although Casey argued that the cruise line must be on notice of the unfitness of the specific employees, Chief Judge Altonaga answered that the failure to allege facts to establish the notice to the cruise line failed to nudge her “claims across the line from conceivable to plausible.” That count was dismissed without prejudice but without leave to amend as the deadline to amend pleadings had passed.
Seaman’s injury suit filed in state court was removable to federal court based on the jurisdiction of the Outer Continental Shelf Lands Act, but the Jones Act negligence count was severed and remanded to state court; McDonald v. Enermech Mechanical Services, Inc., No. 4:23-cv-0126, 2023 U.S. Dist. LEXIS 106956 (S.D. Tex. June 20, 2023) (Eskridge), adopting (S.D. Tex. May 30, 2023) (Bryan).
Buddy McDonald was a hydraulic technician assigned to perform MHS and Umbilical services for his employer, Enermech Mechanical Services, on the vessel VALARIS DPS-5, owned by Valaris PLC. Asserting that he injured his back while moving tools and a hose out of a basket, McDonald brought this suit in Texas state court against Enermech and Valaris under the Jones Act and general maritime law (unseaworthiness and maintenance and cure). Enermech removed the case to federal court in Texas based on jurisdiction of the Outer Continental Shelf Lands Act and also arguing that the Jones Act claim was improperly pleaded to frustrate federal jurisdiction. McDonald moved to remand the case, arguing that the saving-to-suitors clause prevented removal and that the Jones Act claim was not improperly pleaded. Although McDonald did not mention the OCSLA in his petition, Magistrate Judge Bryan held that Enermech had sufficiently established that there was jurisdiction under the OCSLA in that the VALARIS DPS-5 was located on the OCS, that the vessel was involved in offshore drilling operations at the time of the injury, and that McDonald’s work furthered the mineral development. Therefore, there was removal jurisdiction under the OCSLA. Magistrate Judge Bryan then addressed the argument that she should conduct the summary inquiry as to whether the Jones Act claim was improperly pleaded (approved by the Fifth Circuit in Lackey and repeatedly used thereafter). Magistrate Judge Bryan declined to apply the summary procedure, answering that the procedure was only applicable to avoid the frustration of federal jurisdiction when a Jones Act claim is pleaded to avoid removal. In this case, the suit was removable under the OCSLA, so she reasoned that federal jurisdiction was not frustrated and that she could simply sever and remand the Jones Act count. McDonald urged the court to remand the entire case, arguing that the Jones Act count is closely related to the unseaworthiness and maintenance and cure claims and all of the claims should be submitted to one jury (citing Fitzgerald). Magistrate Judge Bryan rejected that argument, stating that McDonald could certainly present all of his claims to a jury in federal court, but he lost that right when he sought a remand to state court. Therefore, she recommended that the Jones Act claim be severed and remanded to state court. As neither McDonald nor the defendants objected to the recommendation, Judge Eskridge ordered that the motion to remand be denied and that the Jones Act claim be severed and remanded. Thanks to Matthew Ammerman of Houston, Texas for bringing this case to our attention.
From the state appellate courts
There was no irreconcilable conflict in jury findings that the vessel owner breached a warranty to the shipbreaker but that the shipbreaker was not entitled to damages in connection with an explosion due to failure to clean petroleum products from the barge before delivery to the shipbreaker, and the evidence was sufficient to support the finding that the breach of warranty was not a proximate cause of the shipbreaker’s damages; In re Kirby Offshore Marine Operating, LLC, No. 13-22-00377-CV, 2023 Tex. App. LEXIS 3433 (Tex. App.—Corpus Christi – Edinburg May 19, 2023) (Orig. Proceeding) (Benavides).
Southern Recycling purchased a tug/barge unit (the tank barge DBL 134 and its towing vessel VIKING) from Kirby Offshore Marine for shipbreaking and recycling, and the barge was allegedly cleaned of petroleum products and other chemicals and was transported to a shipyard in Brownsville for the shipbreaking. An affiliate of Southern Recycling, International Shipbreaking, was cutting and removing pipes, but the pipes still contained some gasoline, and there was an explosion that killed one worker and injured another. After suits were filed in Texas state court by the injured worker and beneficiaries of the worker who was killed, Southern Recycling filed a limitation action, claiming that the barge still retained the essential features of a vessel and was still floating. The claimants filed a motion to dismiss, arguing that the barge was not a vessel and that the court lacked admiralty jurisdiction for the limitation action. The barge had a gaping hole open to the sea that was the basis for Judge Olvera finding that it was not a vessel and that the limitation action should be dismissed. On appeal Southern Recycling argued that the cuts in the vessel were preparatory only and that the barge had been moved on navigable waters after the accident. As there were factual disputes that had to be resolved with respect to whether the barge was a vessel, the first issue that was presented was whether the district court was allowed to resolve disputed jurisdictional facts on a motion to dismiss. The general rule is that the courts may resolve disputed facts on a motion to dismiss unless the issue of jurisdiction is intertwined with the merits of the case. Judge Clement reasoned that the limitation action is about consolidating multiple actions into a single forum to determine whether the owner is liable and whether it can limit its liability. It is not about whether a structure is a vessel. The status of the structure is a jurisdictional question that is antecedent to the merits. As such, the district court was permitted to resolve factual disputes about the status of the barge in deciding the motion to dismiss. Turning to the finding that the barge was not a vessel, Judge Clement noted that the subjective intent of Southern Recycling to dismantle the barge for scrap was insufficient to render it a dead ship. The issue was whether it had been withdrawn from navigation and maritime commerce. In this case, the fact that the barge still floated and could be moved in the shipyard did not establish its capability for transportation as the gaping hole in the bow put the barge at a substantially increased risk of taking on water. Judge Clement quoted the Supreme Court in Lozman that a structure is not a vessel merely because it is “capable of floating, moving under tow, and incidentally carrying even a fair-sized item or two.” Its structure must give a reasonable observer evidence that it is designed to a practical degree for transportation on water. In view of the cuts in the pipes, the barge was not capable of carrying cargo, and with the pipes containing chemicals that could ignite with a spark, the barge had no capability of transporting people. Therefore, the Fifth Circuit could “readily conclude” that the barge was no longer a vessel and that there was no admiralty jurisdiction for the limitation action. See January 2021 Update.
After the injury and death claims were resolved, Kirby and Southern litigated claims against each other in state court to determine whether Kirby met its obligation to clean the barge of hazardous materials in accordance with the terms of a purchase and sale letter agreement between Kirby and Southern. The agreement provided that the barge would be delivered to Southern cleaned of all chemicals and petroleum products; that Southern would inspect the barge and tug upon delivery and, upon acceptance, Kirby would have no further obligation with respect to the vessels “except as provided” in the agreement; Southern acknowledged that the vessels were sold “as is” without a warranty of seaworthiness or other warranty; and that if any hazardous substances were discovered, Southern would immediately notify Kirby in writing and Kirby would remove the substances. Kirby had the barge cleaned before delivery to Southern, and a marine chemist inspected the barge and certified that the barge was safe for shipbreaking. After the barge arrived at the facility belonging to Southern’s affiliate, International Shipbreaking, another chemist inspected the barge and certified that the barge was safe for shipbreaking. Southern made an initial payment toward the total price for the vessels after the delivery, but it declined to pay the remainder after the explosion/fire. Southern brought suit against Kirby for failing to clean the vessel properly, seeking the amount it paid to the workers ($8 million), the attorney fees and costs to defend the workers’ suit ($1,271,156), and the amount of the initial payment for the vessels ($635,896.80). Kirby counterclaimed, seeking to recover the remaining payment due for the sale of the vessels. The case between Kirby and Southern was submitted to a jury in the district court of Cameron County, Texas. The jury found that Kirby’s failure to comply with a warranty was a proximate cause of damages to Southern, but it did not award damages for the settlement of the worker claims, the cost to defend the claims, or for the return of the initial payment for the vessels. The jury found that Kirby failed to comply with the purchase agreement for the barge, but it did not award damages after considering the damage elements for the settlements or the return of the initial payment. The jury found that Southern failed to comply with the purchase agreement and awarded Kirby the remainder of the purchase price ($272,527.20). The jury found that Kirby failed to comply with the purchase agreement first and that Kirby committed fraud against Southern; however, the jury did not award any damages to Southern with respect to the cost to settle the worker claims or for return of the initial purchase payment. Finally, the jury allocated fault—35% to Kirby, 29% to International Shipbreaking, 25% to Southern, and 15% to others. Southern objected to the verdict and requested continuing deliberations, but Judge Sanchez overruled the request. Southern filed a motion for judgment notwithstanding the verdict or, alternatively, for a new trial, but Judge Sanchez declined the motion and entered a take-nothing judgment against both Southern and Kirby. Judge Sanchez then sua sponte signed an order vacating his judgment and granting a new trial, with no explanation for the decision. Southern requested the judge modify the order to explain his reasoning, and he signed an amended order concluding that the jury’s finding that Kirby breached a warranty conflicted with the finding that Southern should not recover any damages and the finding that Southern should recover no damages was not supported by legally and factually sufficient evidence. Kirby then brought this original mandamus proceeding in the Texas Court of Appeals, asserting that Judge Sanchez abused his discretion by ordering a new trial. Kirby first argued that there was not an irreconcilable conflict in the jury’s verdict. Writing for the court of appeals, Justice Benavides stated that, in order for there to be a fatal conflict in jury findings, the findings must be about the same material fact, and the court must uphold the findings if there is any reasonably possible way to reconcile them. In this case, the allegedly conflicting findings were on liability and damages. As liability and damage findings do not concern the same material fact, the findings do not necessarily require entry of a different judgment. For example, the jury could conclude that Southern carried its burden of proof on liability but failed to carry its burden of proof on damages. Therefore, the appellate court sustained Kirby’s issue with respect to the existence of an irreconcilable conflict in the jury findings. In its second point, Kirby argued that there was legally and factually sufficient evidence to support the jury’s verdict, claiming that its actions did not proximately cause Southern’s damages because Southern could have avoided its losses by exercising reasonable care. Southern responded that it was uncontested that it suffered damages in specific amounts because of the breach of warranty by Kirby and that any negligence on the part of Southern was immaterial when Kirby was guilty of breach of the express warranty. After reviewing the extensive evidence presented in the case, Justice Benavides noted that there was conflicting testimony and that the jury was the sole judge of the credibility and weight to be given to the testimony. He reasoned that Kirby was at fault for not delivering the vessel cleaned of all chemicals and petroleum products, but the contract did not require that the vessel be cleaned for shipbreaking purposes rather than lay-up, which would be significantly more expensive. The jury could have inferred that Southern chose not to require the vessel be cleaned for shipbreaking for economic reasons. Moreover, the barge was twice cleared for shipbreaking, it was sold “as is,” the contract provided that Kirby would have no further obligation to Southern, and Southern did not inspect the barge as required in the agreement. After International Shipbreaking discovered liquid in the coils on the barge, it did not notify Southern (which could not notify Kirby as required by the contract). Considering these factors, Justice Benavides concluded that the jury could reasonably conclude that Kirby’s breach of warranty did not proximately cause Southern’s damages. Accordingly, the appellate court conditionally granted the writ of mandamus to direct Judge Sanchez to vacate the order granting a new trial.
Use of “and/or” in the indemnity provisions in an agreement to manage a warehouse and to supply products to vessels required the supplier of a captain’s chair to indemnify the seaman’s employer/vessel owner for the Jones Act negligence and unseaworthiness claims brought by the seaman resulting from an injury on the vessel caused by a defect in the captain’s chair; however, the claim for maintenance and cure was not within the scope of the indemnity as that claim was not for “personal injuries, death, or property damage;” Enterprise Marine Services LLC v. Motion Industries Inc., No. 01-22-00072-CV, 2023 Tex. App. LEXIS 3832 (Tex. App.—Houston [1st Dist.] June 6, 2023) (Landau).
Dallas Theriot, the relief captain on the M/V CATHY, brought suit in Texas state court against his employer, Enterprise Products, under the Jones Act and general maritime law for injuries he sustained when the captain’s chair on which he was sitting gave way and caused him to fall backward and strike his head and neck. The chair had been supplied to Enterprise by Voorhies Supply (a division of Motion Industries). Enterprise concluded that the chair was defective because the hardware delivered with the chair was the wrong size. The relationship between Enterprise and Voorhies was governed by a contract that Enterprise inherited from its predecessor, CTCO Shipyard of Louisiana. CTCO decided to consolidate the storerooms at its shipyard in Houma, Louisiana and to outsource the procurement of supplies for its vessels by having a vendor at its shipyard. Accordingly, CTCO entered into a Supply Agreement with Voorhies Supply by which Voorhies agreed to lease the warehouse space at CTCO’s warehouse and to use the warehouse to supply products to CTCO for CTCO vessels. CTCO provided the premises to Voorhies at the shipyard, and Voorhies was responsible for maintenance and upkeep of the building. Voorhies purchased the existing inventory and agreed to provide CTCO with products for its vessels. Voorhies agreed to provide commercial general liability insurance covering the premises and to insure both CTCO and Voorhies against loss of the contents of the premises, including inventory. The Agreement provided that it was to be governed by Louisiana law, and it contained a provision that CTCO would not be liable for any injuries or damages to the property. The Agreement also contained a provision that required Voorhies to indemnify CTCO from any injury claims “which are in any way related to or connected with or arise out of this Agreement and/or Voorhies’ use or occupancy of the Premises,” whether or not caused in whole or in part by the negligence, strict liability, or other fault or condition attributable to Enterprise. CTCO eventually sold its shipyard to Enterprise. The Supply Agreement was assigned by CTCO to Enterprise with Voorhies’ consent, and Voorhies performed under the Agreement. After the suit by Theriot against Enterprise, Enterprise tendered its defense and indemnity to Voorhies under the Agreement and sought insurance coverage under Voorhies’ insurance policies as an additional insured. Enterprise then brought a third-party claim against Voorhies, and Voorhies and Enterprise moved for partial summary judgment. Voorhies argued that the defense and indemnity obligation only extended to use of the premises, and not to supplying a captain’s chair. It argued that the indemnity should not apply to its simply serving as a middleman for Enterprise to supply its vessels. Judge Miller agreed with Voorhies and granted it summary judgment. Enterprise then appealed to the Texas Court of Appeals in Houston. Applying Louisiana law in accordance with the choice-of-law provision in the Agreement, Justice Landau focused on the scope of the indemnity provision, covering claims arising out of “this Agreement and/or Voorhies’ use or occupancy of the Premises.” She gave the phrase “and/or” an interpretation that includes A, B, or both A and B. Therefore, the provision imposed an indemnity obligation on Voorhies arising out of the Supply Agreement, Voorhies’ use or occupancy of the premises, or both the Supply Agreement and Voorhies’ use or occupancy of the premises. The more limited insurance requirements for insurance for the building and contents did not undercut the broader interpretation for the indemnity provision, as the obligations with respect to the building and the supplying of products were different. The appellate court concluded that the plain language of the Supply Agreement required Voorhies to defend and indemnify Enterprise for claims arising out of the Supply Agreement as well as arising out of Voorhies’ use or occupancy of the Premises. The final question was whether the injury claim arose out of the Supply Agreement. Justice Landau noted that Theriot brought claims for negligence and unseaworthiness related to the supplying of unsafe equipment on the vessel. Therefore, she held that the indemnity provision encompassed the Jones Act and unseaworthiness claims. However, Justice Landau reached a different conclusion for the maintenance and cure claim because it “does not compensate for injuries but provides the equivalent of the food, lodging, and medical services to a seaman who is injured or falls ill in the service of the ship. Accordingly, she held that the claim for maintenance and cure is not one for “personal injuries, death, or property damage” as set forth in the indemnity provision and fell outside the scope of the indemnity obligation.
From the Armed Services Board of Contract Appeals
Dredging contractor could not use the duty of good faith and fair dealing to impose a duty on the Corps of Engineers that was inconsistent with the allocation of duties in the dredging contract; In re RLB Contracting, Inc., ASBCA No. 62779 (Armed Servs. Bd. of Contract Apps. June 15, 2023) (Sweet).
RLB Contracting contracted with the Corps of Engineers to perform dredging work in the Gulf Intracoastal Waterway in San Antonio Bay, Texas. While performing that work, RLB struck the Tomcat West Pipeline, causing an explosion that damaged the dredger and allegedly delayed completion of the contract. The Corps imposed liquidated damages, and RLB sought remission of the damages and a time extension. RLB appealed to the Armed Services Board of Contract Appeals from the contracting officer’s denial, and the Board granted summary judgment to the Corps. RLB argued that the Corps breached its duty of good faith and fair dealing by failing to disclose its knowledge that the pipeline was inadequately buried, but the Board rejected the contention, ruling that RLB could not use the implied duty of good faith and fair dealing to expand the duties of the Corps beyond those in the contract or to create duties that are inconsistent with the provisions of the contract (finding that the contract imposed on RLB a duty to determine the pipeline’s depth).
Kenneth G. Engerrand
President, Brown Sims, P.C.
1177 West Loop South
Houston, TX 77027
365 Canal Street
New Orleans, LA 70130
1110 Cowan Road
Suite B #214
Gulfport, MS 39507
4000 Ponce De Leon Blvd
Coral Gables, FL 33146
The Maumee River (sometimes known as the “Muddy Maumee”) creates some difficult maneuvering during spring when the tide is high. Boaters beware. In the words of the captain from Cool Hand Luke — “What we’ve got here is a failure to communicate.” Both sides could have done a better job to avoid this allision.
Norfolk Southern Railway Co. v. M/V SAGINAW IMO 517876, No. 3:21-cv-874, 2023 U.S. Dist. LEXIS 57549, *13 (N.D. Ohio Mar. 31, 2023) (Zouhary).
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© Kenneth G. Engerrand, June 30, 2023; redistribution permitted with proper attribution.