March 2021 Longshore/Maritime Update (No. 262)
On the LHWCA Front . . .
From the federal appellate courts:
Although this opinion does not arise from a longshore or maritime case, it does present an important lesson for our LHWCA practitioners. Fern Kottler was injured while working for Dollar Tree Stores and received medical treatment. Although Kottler’s claim was pending under the Florida Workers’ Compensation Law, the collection agency for Radiology Physicians, which had performed a test on Kottler, sent a dunning letter to Kottler seeking to recover the amount of $345.92. Kottler then brought this action against the collection agency, Gulf Coast Collection Bureau, pursuant to the Fair Debt Collection Practices Act, asserting that Kottler was not liable for the debt under the Florida Workers’ Compensation Law. Judge Bloom agreed, rejecting the collection agency’s arguments that Kottler did not have standing to bring the claim, that the agency did not violate the statute by trying to collect a debt that was not valid as to Kottler, and that the agency had committed a bona fide error. Judge Bloom entered judgment in favor of Kottler in the amount of $250 and reserved judgment on attorneys’ fees. The Eleventh Circuit likewise rejected all of the collection agency’s defenses and affirmed the judgment in favor of Kottler.
From the federal district courts:
Barbara Kennedy was injured in 2015 while performing longshore work on a vessel that was docked at the Port of Newark, New Jersey. She brought this action against the vessel owner and related entities pursuant to Section 905(b) of the LHWCA in New Jersey state court, and the defendants removed the suit to federal court. After years of extensions and 5 missed deadlines by Kennedy, the court addressed the vessel owner’s motion to dismiss the case for lack of personal jurisdiction. Magistrate Judge Waldor declined to reopen discovery for Kennedy, concluding that she had not acted diligently and had not established good cause. As to jurisdiction, the vessel owner argued that it did not operate the vessel or employ any of the crew and did not contract for performance of the the stevedoring services or arrange for the vessel’s call in New Jersey. The crew was directed by a different Hoegh company that had previously been dismissed from the case. The owner is a Singapore corporation that has no offices, assets, or accounts in New Jersey. As those assertions were unrebutted by Kennedy, Magistrate Judge Waldor ordered that the case be dismissed without prejudice (she did note that the owner might have been able to obtain a dismissal with prejudice in the circumstances of this case, but there was no indication that Kennedy herself was responsible for the failure to prosecute the case). Note: the day after this opinion was issued, Magistrate Judge Waldor filed a revised opinion, changing her decision to a recommendation of dismissal that could be appealed to the district judge, 2021 U.S. Dist. LEXIS 30687.
Ahmad Barton was injured on the M/V VIENNA EXPRESS while unfastening lashing rods that secured a container on the vessel. He brought this action against the vessel’s owner and manager for negligence under Section 905(b) of the LHWCA. Barton engaged the services of Rich Galuk as an expert witness. Galuk attended a joint inspection of the lashing rods and discovered a bend that he opined would make it difficult for the longshore worker to disconnect the container. The defendants filed a Daubert motion to exclude the testimony of Galuk, and Barton countered that Galuk had nearly forty years of experience in inspecting, repairing, and maintaining marine vessels and equipment. Galuk is a member of the Society of Naval Architects and Marine Engineers, worked for the Coast Guard, and attended the Coast Guard’s engineering school where he received training in inspecting engine crankshafts for bends. However, despite his long history of working with marine vessels, his primary work has been on yachts, and he has almost no experience related to container vessels. Consequently, Judge Moore concluded that, because Galuk’s experience with vessels was unrelated to the mechanics of cargo-securing equipment, he was not qualified to opine on the functionality of the equipment in this case. Additionally, Judge Moore ruled that the methods and principles employed by Galuk to reach his opinion did not satisfy the reliability standards of Daubert. Galuk’s opinion was based on visual inspection and information from the manufacturer, and he did not conduct a test to ascertain what degree of bend would affect the functionality of the equipment. Finally, Judge Moore considered Galuk’s belief that the bend in the lashing equipment would have the same effect as a bend in shaft propellers was entirely speculative. Consequently, Judge Moore ordered that Galuk’s testimony be excluded.
From the state appellate courts:
Joseph Pastorino was employed by Commodore Maintenance Corp. as a dock builder foreman for the construction on the Broadway Bridge spanning the Harlem River. Commodore Maintenance, which was hired by New York City, chartered a tugboat from Ocean Marine Development Corp. to assist in the work. The tug performed various operations, including moving barges from one side of the bridge to the other. Pastorino was allegedly injured when he was ascending from the tugboat onto a barge by stepping on a tire that was hanging from the barge. Pastorino brought this action against the City under the New York Labor Law (based on an alleged violation of the New York Industrial Code) and against his employer, Commodore Maintenance. The parties filed motions for summary judgment and appealed the decisions to the Appellate Division. With respect to Commodore Maintenance, the court reviewed the charter for the tug and held that it did not provide for the complete and exclusive relinquishment of possession, command, and navigation of the vessel to Commodore Maintenance in order to be a bareboat charter. In the absence of a bareboat charter, the court held that LHWCA compensation was Pastorino’s exclusive remedy against Commodore Maintenance. Additionally, Ocean Marine Development, owner of the tug, was precluded from bringing indemnity and contribution claims against Commodore Maintenance in accordance with Section 905(b) of the LHWCA. Turning to the claims against the City, the court held that federal law did not preempt application of the New York Labor Law as the work was “essentially local in character,” and, although the City did not own the tug or barge, it could be held liable under the Labor Law as the “project owner.” Finally, the appellate court ruled that the City’s indemnity and contribution actions against Commodore Maintenance were barred by the anti-subrogation rule as the City was a named additional insured under Commodore’s commercial general liability policy.
Like the preceding case, this opinion addresses the intersection of the LHWCA and the New York Labor Law. Carl T. Mauriello claimed that a wooden plank on a pier in New York City failed, causing him to fall while he was attempting to board a barge. The pier was leased by Battery Park City Authority (BCPA) from the City of New York, and BCPA leased the building on the pier to Pier A battery Park Associates to operate as a restaurant. There were multiple construction projects ongoing at the time of the accident, and D’Onofrio General Contractors was installing timber pilings on the pier. Mauriello was working for Diego Construction, a union-shop subsidiary of D’Onofrio, as a maintenance engineer and operator. Mauriello brought this action against BPCA and others, and Diego’s LHWCA carrier intervened to prosecute Mauriello’s claims after Mauriello relieved his attorney as counsel, proceeded pro se, and the complaint was dismissed. The carrier asserted claims pursuant to the LHWCA and the New York Labor Law, and Judge Kotler initially held that the carrier had standing to intervene. However, under the LHWCA, the carrier’s claim was based on subrogation, and Mauriello’s claims had been dismissed. Judge Kotler found it clear that the carrier lacked standing to maintain an action on behalf of Mauriello in this situation. However, even if the carrier had standing, Judge Kotler held that the accident did not fall within the ambit of the New York statute so as to give rise to liability. Additionally, Judge Kotler held that there was no breach of any common-law duty by the defendants as they did not exercise supervision and control over Mauriello. The judge did address the contractual indemnity between BPCA and the tenant and D’Onofrio and held that the tenant and D’Onofrio were required to defend and indemnify BPCA.
And on the maritime front . . .
From the federal appellate courts:
Judge Barbier’s efforts to resolve the remaining claims in the DEEPWATER HORIZON litigation has met with the dismissal of many claims for lack of compliance with his pre-trial orders. This case involves the dismissal of the exposure claims of clean-up workers and land owners for failure to file the required documents with the court in response to PTO 66. Three of the claims involved late compliance after the deadline and after being ordered to show cause why the claims should not be dismissed. As the claimants did attempt, belatedly, to comply, the Fifth Circuit did not consider their conduct to be sufficiently contumacious to justify dismissal with prejudice. However, with respect to one claimant who moved for rehearing but did not comply with the order by submitting the proper documentation, the Fifth Circuit affirmed the dismissal with prejudice. The appeal also involved the claims of a worker who failed to opt out of the Medical Settlement Class, causing Judge Barbier to dismiss his suit with prejudice. The claimant asserted as his excuse that his wife received at least three notices of the settlement at their home, but she mistakenly threw them away. As the notice of the settlement and its opt-out provisions were widely disseminated by emails, in magazines, in newspapers, and on websites, the Fifth Circuit agreed that the failure to opt out was inexcusable. Judge Haynes dissented from the reversal of the dismissals, supporting Judge Barbier’s effort to manage the docket with the “mammoth number of cases.”
William Adams filed this collective action on behalf of himself and other employees who performed maritime jobs on All Coast’s lift boats. Adams contended that the workers “spent most of their time doing something completely terrestrial: operating cranes attached to the boats to move their customers’ equipment on and off the boats, the docks, and the offshore rigs” (the crane operators were joined in the action by cooks on the liftboats). All Coast contended that the crane operators (and cooks) fell within the seaman exclusion to the overtime rules in the Fair Labor Standards Act, and Judge Milazzo agreed, reasoning that the work served the liftboats’ operation as a means of transportation (the second criterion promulgated by the Department of Labor to determine if an employee is a seaman). Judge Milazzo ruled that it did not matter whether the workers spent 10% or 100% of their time operating the crane, because crane operation was seaman’s work that aided the vessel as a means of transportation. However, Judge Clement, writing for the Fifth Circuit, noted that an example provided in the regulation stated that assisting in loading or unloading of freight at the beginning or end of a voyage was not connected with operation of the vessel as a means of transportation. The work performed by the crew was performed while the liftboats were stationary, never under weigh, so that the work was not seaman’s work by the language of the regulation. All Coast countered with dictionary definitions of the term seaman from the time of the enactment of the FLSA, because the term seaman is not defined in the FLSA, asserting that the Department of Labor regulations are only persuasive and do not have the force of law. However, after reviewing the various definitions, Judge Clement concluded that they reinforced the thrust of the regulations that a seaman’s duty must serve the ship’s operation “as a ship.” As the work was performed when the liftboats were jacked up, Judge Clement answered that the workers were not engaged in seaman’s work when operating the cranes. The case was therefore remanded to Judge Milazzo to re-evaluate the work performed by the employees. The ruling on the crane operators implicated the summary judgment on the claims of the cooks as well. The Fifth Circuit has held that cooks are usually seamen under the FLSA because they cook for seamen. As the ruling that the crane operators were seamen was reversed, Judge Milazzo would have to reconsider the status of the workers for whom the cooks were cooking. That would include an analysis of whether the cooks were cooking for other workers or passengers on the liftboats and the amount of time spent cooking for seaman and non-seaman (but the court should not conflate the FLSA determination with the duration test enunciated by the Supreme Court in Chandris v. Latsis in deciding whether a worker is a Jones Act seaman). In a separate case from the Southern District of Texas brought by Vantrerius McKnight, three stewards who work on a vessel that transports workers to oil platforms in the Gulf of Mexico sought overtime, and their employer argued that they fell within the seaman exception to the FLSA. The workers cook, serve, and clean for 12-hour watches, working 28 days on, 28 days off. They served two sets of workers on the vessel, the marine crew that operates the ship and the non-marine crew that works on the oil rigs. Judge Hughes found no distinction between the persons served by the stewards, reasoning that their duties were intrinsic to the operation of the vessel. He therefore held that they were exempt from overtime under the FLSA.
Marilyn Adams brought this action against the owner of the cruise ship GRAND CELEBRATION on which she was a passenger after she slipped and fell on the bathroom floor after taking a shower. There was a 1.25-inch threshold dividing the shower from the rest of the bathroom, and there was a sign at the entrance to the bathroom stating: “‘WATCH YOUR STEP.’ BATHROOM FLOOR SLIPPERY WHEN WET.” Adams put a towel on the floor before taking her shower, but she slipped in her first step coming out of the shower in what she described as a pool of water, about an inch or two deep. Adams’ husband noticed a corroded area near the doorway entering into the shower, but he did not observe water flowing through the corroded area. Judge Bloom granted summary judgment in favor of the cruise line, and the Eleventh Circuit affirmed her decision. The Eleventh Circuit agreed that Adams had not shown a genuine fact issue with respect to whether the corroded area on the doorframe caused Adams’ fall as her husband did not see any water leaking through the corroded area. With respect to the pooling of water on the floor constituting a hazardous condition, the Eleventh Circuit affirmed the determination that Adams failed to establish notice to the cruise line. First, the sign did not indicate that the cruise line had notice of the pooling of water that caused Adams to slip. Second, Adams’ citation to an online posting about a shower constantly leaking onto the bathroom floor was insufficient as the evidence was not developed to determine whether the condition was substantially similar to the incident in which Adams was injured. Affirming on these grounds, the Eleventh Circuit did not have to address the argument that the “lake” was open and obvious.
Herod’s Stone Design contracted for the shipment of marble tiles from China to New York with Mediterranean Shipping Company (MSC). MSC handled the ocean carriage to Long Beach and contracted with BNSF Railway for the carriage from Long Beach to New York. The tiles were undamaged when they were discharged in Long Beach, but they were damaged upon arrival in New York on June 29, 2016, and July 6, 2016. The carriage was undertaken pursuant to a sea waybill that incorporated the terms of the Carriage of Goods by Sea Act and that also contained a provision that all suits for damage to the cargo must be brought against MSC and not any subcontractor. Herod’s contacted MSC to present a claim and there was extensive discussion about the claim, including alleged assurances that the claim was being approved and processed. After more than a year of waiting, Herod’s brought this suit against MSC in New Jersey state court, and MSC removed the action to federal court based on federal question and admiralty jurisdiction. The case was transferred to the Southern District of New York, and Herod’s brought an amended complaint, naming both MSC and BNSF, including claims for violation of New Jersey law. BNSF moved to dismiss the case for lack of personal jurisdiction, but Judge Torres denied the motion on the ground that BNSF was subject to personal jurisdiction for undertaking to deliver the tiles to New York. Judge Torres then addressed the motions for summary judgment of both BNSF and MSC and held that, pursuant to the Supreme Court’s decision in Norfolk Southern Railway v. James N. Kirby Pty Ltd., 543 U.S. 14 (2004), the contract of carriage was maritime and maritime law applied to the land-based damage. This was fatal to the argument that state law applied to the damage despite the incorporation of COGSA (rejecting the pre-Kirby decision in Colgate Palmolive Co. v. S/S DART CANADA, 724 F.2d 313 (2d Cir.1983)). Applying the terms of the sea waybill, Judge Torres held that Herod’s could not bring a claim against BNSF and that the claim against MSC was barred by COGSA’s one-year statute of limitation. Finally, Judge Torres addressed the argument that MSC was equitably estopped from asserting the statute of limitation because it had engaged in trickery by running Herod’s in circles until the statute of limitations had expired and then denying its claim. Concluding that Herod’s had failed to show that its failure to file suit within a year of delivery was the result of inequitable conduct, Judge Torres rejected the argument (see February 2020 Update). The Second Circuit affirmed Judge Torres’ decisions. As to the railroad, the Second Circuit noted that it had previously held that unambiguous subcontractor exoneration clauses are enforceable and prohibit suits against anyone other than the ocean carrier. As to the ocean carrier, Herod’s argued that the incorporation of COGSA was contractual, so that COGSA did not have statutory effect and did not preempt New Jersey law. The Second Circuit responded that the sea waybill was a maritime contract under Kirby, and maritime law, not state law, applied (noting that Kirby appeared to have effectively overruled the Colgate Palmolive case). Concluding that COGSA was the applicable law, the Second Circuit upheld the application of its statute of limitations and agreed that there was no genuine issue of fact as to whether the carrier lulled Herod’s into a false sense of security.
Edward Moore brought this action against the M/V SUNNY USA, a 73-foot motor yacht, to foreclose on a maritime lien for dockage and for negligence for damage to the dock caused by the vessel during a hurricane. The vessel was arrested, and after the time to file a claim of owner for the vessel, John Dong, pro se, filed a pleading identifying himself as the owner of the vessel and moving to dismiss the complaint as a fraud and extortion scheme by Moore. Judge Bloom denied the motion to dismiss as Dong had not filed a verified claim of owner, ordered an interlocutory sale of the vessel, and entered a default judgment. Dong moved for reconsideration on the ground that he was in prison, and it was unfair to enter the orders for the sale and default merely because he did not comply with the rules of civil procedure. Judge Bloom did reconsider the default and gave Dong the opportunity to provide a bond of $60,000 by March 22, 2019. When Dong did not post the bond by that date, the vessel was sold at auction for $1,000, with the process receipt reflecting that the buyer was Moore’s attorney. A month later, Dong attempted to post the security, invoking the prison mailbox rule that a pro se prisoner’s filing is deemed filed on the date he delivers it to prison authorities for mailing. The magistrate judge noted, however, that the notice of payment of bond was not signed until 11 days after the deadline to post the bond. Moore then moved for summary judgment on the merits of his lien and established that he was owed $61,174.40 in dockage. Dong responded that when Moore doubled the rent for the dock, Dong had found a new location for the ship but could not move the vessel to the new location because Moore sabotaged the engines and falsely reported to the Coast Guard that the ship was abandoned and was discharging diesel into the water. Dong also asserted that Moore had prevented workers from repairing the vessel or relocating it. Judge Bloom rejected Dong’s assertions and entered judgment in favor of Moore for the net sale proceeds of $600. The Eleventh Circuit initially rejected Dong’s argument that the district court lacked jurisdiction, noting that providing necessaries (dockage) gives rise to a maritime lien. The court of appeals then addressed the argument that the district court violated Dong’s due process rights by denying him standing and failing to give him adequate notice of the arrest. The court noted that the district court had rescinded the initial holding on Dong’s lack of standing and had provided him sufficient opportunity to post a bond, to contest the sale, and to bid at the auction. The appellate court also found no genuine issue of material fact as to the validity of the lien as all of the allegations presented by Dong did not refute the critical facts that Moore provided docking services to the vessel for at least $600, the amount for which the vessel was sold. Finally, the court rejected Dong’s arguments that the judgment should be set aside as a fraud on the court because fraud on the court is limited to more egregious forms of subversion of the legal process.
From the federal district courts:
Freedom Marine Holdings owns and operates the M/V FMS COURAGE on which Marine Fab & Repair was replacing and welding hardware to secure the lids to the vessel’s tanks. Mavall Jones was working as a seaman on the vessel when the welding failed, causing the deck lid and other material to break away and strike Jones. Jones brought suit against Freedom Marine Holdings in Louisiana state court, and Freedom Marine Holdings instituted this limitation action. Jones and Marine Fab & Repair filed claims in the limitation action. Marine Fab’s claim sought contribution and indemnity. Arguing that the contribution and indemnity claim was derivative solely from Jones’s personal injury claim, Jones asked the limitation court to lift the stay based on the single-claimant exception from Langnes v. Green and filed the stipulations for a single claimant. Judge Vitter declined to lift the stay, noting that the Fifth Circuit requires that all claimants agree to the required stipulations, including claimants seeking contribution and indemnity (Judge Vitter added that this requirement was recently reaffirmed by the Fifth Circuit in the Devall Towing case, see October 2020 Update).
John Marincola tripped over a fishing line and was injured while boarding Arthur A. DeGeorge’s 2014 Steiger pleasure boat at the Belmar Manutti Marina in New Jersey. Marincola brought suit against DeGeorge and others in New Jersey state court, and DeGeorge brought this limitation action. Marincola filed a motion to dismiss the case on two grounds, both of which were rejected by Judge Shipp. In response to the argument that the Limitation Act did not apply to small recreational boats, Judge Shipp held that the Steiger pleasure craft qualified as a vessel subject to the statute. Second, Judge Shipp held that it was inappropriate to adjudicate (on a motion to dismiss) Marincola’s assertion that DeGeorge, who was in control of the boat, had privity or knowledge of the condition of the fishing line on which Marincola tripped. He advised that the parties would have to develop that issue factually before he ruled on the existence of privity or knowledge. Marincola also argued that the limitation stay should be lifted based on the single-claimant exception from Langnes v. Green; however, Judge Shipp noted that the exception was inapplicable because the Marina had asserted a cross claim.
Chevy Thornton began working for Seadrill on the SEVAN LOUISIANA in 2015. He provided Seadrill with his home address on Hailey Road in Jena, Louisiana, at that time, but he later moved to Warwick Road in Jena. Although Seadrill had two procedures to update a worker’s home address, Thornton did not update his address in Seadrill’s records. Thornton was injured in March 2017, and he completed an accident report for Seadrill’s human resources advisor (listing his new address) that was sent to the third-party administrator for claims by Seadrill’s seamen. The administrator sent maintenance payments to the new address. In September 2017, Seadrill sought Chapter 11 relief, and Seadrill was required to mail notice of the Bar Date for claims to the last known mailing address of all creditors. That notice was sent to the Hailey Road address, and Thornton did not receive it until after the Bar Date had passed. Thornton sent the notice to his lawyers, but he took no action on the notice for approximately nine months, during which the court confirmed Seadrill’s reorganization plan, which took effect on July 2, 2018. On November 7, 2018, Thornton brought a Jones Act lawsuit against Seadrill in federal court in Louisiana. Seadrill moved the bankruptcy court to enforce its confirmation order, and Thornton sought leave to file a proof of claim on February 7, 2019, arguing that the notice provided to him did not satisfy due process and that his failure to change his address constituted excusable neglect. The bankruptcy court ordered Thornton to dismiss his Jones Act suit with prejudice, and the district court agreed. Judge Tipton declined to impute notice to the claims administrator to Seadrill, holding that it was not unreasonable for Seadrill to look at its personnel database to determine the address for notice of the bar date. Judge Tipton also concluded that Thornton’s receipt of notice after the bar date did not violate due process as it was Thornton who failed to apprise Seadrill of his change in mailing address.
Chevron entered into service contracts with Expro Americas, Oceaneering International, and Supreme Service to assist in Chevron’s operations in the Gulf of Mexico. Chevron time chartered the vessel M/V CADE CANDIES to serve as a tooling station and to transport and house equipment and personnel for its operation. Chevron contracted with Expro and Supreme to provide maintenance on its offshore wells. Expro employed Rusty Pelsia as a high-pressure choke technician. He was injured on the CADE CANDIES when he was lifting and passing a Chiksan iron. Pelsia brought this suit against Oceaneering and Supreme, and they demanded indemnity from Expro pursuant to the pass-through indemnity provision of the contract between Expro and Chevron (which required Expro to indemnify Chevron and its contractors, other than Expro). The contract also contained an arbitration clause. In response to the indemnity demand, Expro demanded arbitration. Oceaneering and Supreme opposed arbitration as they were non-signatories to the contract, but Judge Lemelle noted that Oceaneering and Supreme were asserting claims based on the contract and the theory of direct-benefits estoppel bound them to the arbitration clause. Therefore, the question whether they were entitled to indemnity would have to be decided in arbitration. Oceaneering also filed a motion for summary judgment that it did not owe a duty to Pelsia that was breached, arguing that Pelsia was not performing any work for Oceaneering and that the accident did not involve any Oceaneering equipment or personnel (Pelsia also testified that he was “not really blaming” Oceaneering). The time charterer of the vessel, Chevron, was directing work on the vessel. As there was no genuine issue of material fact supporting breach of duty by Oceaneering, Judge Lemelle granted summary judgment to Oceaneering on Pelsia’s claim.
Serendipity at Sea owns the yacht M/Y SERENDIPITY that was damaged by Hurricane Dorian while docked in the Bahamas. The vessel’s insurer denied Serendipity’s claim for several reasons, including breach of the captain warranty in the policy, and Serendipity brought this suit against the insurer. The parties filed cross motions for summary judgment, and Magistrate Judge Strauss first addressed the choice of law. As the policy contained a Florida choice-of-law clause that was enforceable in admiralty, Magistrate Judge Strauss held that Florida law was applicable. Magistrate Judge Strauss concluded that Serendipity breached the captain warranty in the policy because it did not employ a full-time licensed captain. Although an earlier policy provided that Sean Michael Oakley (manager of Serendipity) could operate the vessel without the captain aboard, that provision was not in the policy that was effective at the time of the loss, and, even if it were, it would not have created any ambiguity as it only applied while the vessel was under weigh with someone other than Oakley operating the vessel. However, Florida law only allows denial of the claim if the breach of warranty “increased the hazard by any means within the control of the insured.” As the insurer’s motion failed to establish that the risk was increased by the failure to employ a full-time captain for the vessel, Magistrate Judge Strauss recommended that the increased-hazard issue be addressed at trial.
Lincoln Harbor Enterprises developed a portion of Lincoln Harbor in the Hudson River in Weehawken, New Jersey, including the Lincoln Harbor Marina that contained condominiums and pleasure-boat slips. Hartz Mountain developed most of the remainder of Lincoln Harbor, including business space, restaurants, retail locations, luxury residences, and two slips from which NY Waterway ran ferries. When the ferry traffic increased, the marina suffered from noise and frequent wakes that damaged the Marina’s structures and rendered its boat slips unusable (even sinking some vessels). The Marina owner then brought this action against Hartz Mountain and NY Waterway, asserting maritime and state tort claims, nuisance, and violations of federal and state statutes and regulations. Judge McNulty did not find any basis for Lincoln’s claims under the Rivers and Harbors Act, the Coastal Zone Management Act, the New Jersey Coastal Zone Management Rules, New Jersey boating regulation, or the Magnuson-Stevenson Act. Judge McNulty then turned to the tort claims. To the extent the tort claims were based on statutory violations, they were dismissed. Judge McNulty then determined what law was applicable to the tort claims and reasoned that the tort was unreasonable ferry activity that occurred on the navigable Hudson River. As it had a potentially disruptive impact on maritime commerce from the frequent and substantial wakes, he concluded that the claims stated maritime torts under the admiralty jurisdiction.
Maersk Line brought this action against Marie S. Carew, trading as Holiday Shipping, seeking to recover on demurrage/detention charges on shipments carried under 79 bills of lading. After Carew filed a complaint with the Federal Maritime Commission with respect to four of the bills of lading, Maersk Line sought leave to amend its complaint to remove the charges for those four bills of lading in order to avoid duplicative litigation costs. Carew declined to agree to the agreement and insisted on litigation all of the claims in this action despite her separate complaint with the FMC. Finding Carew’s reason for opposition to be “somewhat perplexing” in view of her contention that the FMC was the appropriate agency to resolve the dispute, Judge Cronan granted Maersk Line leave to file the amended complaint without the charges related to the four bills of lading.
Travis Perry brought this action against the insurer of his 49-foot commercial fishing vessel, F/V ISLA AND GRAYSON, after the vessel was destroyed by fire while sitting on jack stands at Perry’s place of business in Harrington, Maine. Perry moved to dismiss (without prejudice) the count for unfair claim settlement practices under Maine law, and the insurer moved to dismiss that count and two other counts with prejudice. Finding that it would not prejudice the insurer to dismiss the one count without prejudice, Judge Walker dismissed that count without prejudice and then addressed the question whether the count alleging breach of the covenant of good faith and fair dealing could stand alone as an independent cause of action. Concluding that there was no established federal rule on the subject and that Maine law should be applied under Wilburn Boat, Judge Walker held that the violation of the obligation of good faith and fair dealing could not sustain an independent cause of action and dismissed that count. Judge Walker then addressed the count alleging that the insurer violated the duty of uberrimae fidei (utmost good faith and fair dealing). The insurer argued that uberrimae fidei is only owed by the insured, but Judge Walker held that the obligation also applied to the insurer. However, as the doctrine is applicable to inform a party’s claim of breach of contract, he dismissed the count as a stand-alone cause of action.
The M/Y CHAIRMAN began taking on water in its engine room after recent repairs to its air conditioning system by CMAC Systems. The owner of the vessel and its insurer sued CMAC and recovered a settlement of $850,000. This litigation sought to divide the settlement between the insurer, which paid $1,360,673 for repairs, and the owner, which paid $281,240 for “owner’s work” and also made payments for its deductible and repair that was not reimbursed. The court appointed a special master to allocate the recovery, and the parties disputed his conclusions. The special master first ruled that admiralty jurisdiction governed the dispute and that the policy did not cover loss of use. Additionally, he ruled that admiralty law does not provide for recovery of loss of use of a private pleasure craft. The special master found that the owner’s work was out-of-pocket expenses and owner expenses paid to complete the job and was not for the betterment of the vessel. Judge Martinez agreed that admiralty law applied to the tort and that the vessel owner was not entitled to recover for loss of use either against the contractor or against the insurer. Agreeing with the division made by the special master, Judge Martinez awarded $345,273.10 to the owner and the remainder to the insurer.
Shiann Kelldorf was injured on Lake Conroe, Texas, on a pontoon boat rented by Kelldorf and her friends from Dock Partners. Kelldorf filed an action in state court against Dock Partners, and Dock Partners brought this limitation action in federal court. Kelldorf moved to dismiss the limitation action for lack of admiralty jurisdiction, asserting that Lake Conroe is not a navigable waterway. Kelldorf presented an affidavit from the General Manager of the San Jacinto River Authority establishing that Lake Conroe was a manmade lake (formed by a dam on the west fork of the San Jacinto River) that existed wholly within Montgomery, County, Texas, and did not connect with any other streams or rivers that would allow a vessel to access it from interstate or international waters. Dock Partners initially asked for the court to allow discovery and to hold a hearing on the navigability of the lake, but Judge Hanen denied the request as all information on the issue was external to the parties and Dock Partners should have been prepared to establish jurisdiction when it filed the action. On the merits, Judge Hanen noted that Lake Houston, which is similarly situated to Lake Conroe was held to be non-navigable even though it was created by the damming of the navigable San Jacinto River. As the affidavit established that Lake Conroe was similar to Lake Houston, Judge Hanen held that Lake Conroe was likewise not navigable and dismissed the limitation action for lack of subject matter jurisdiction.
During the sea trials after maintenance work on the azipods of the M/Y SAFIRA in Florida, the vessel lost control and was involved in several allisions. The owner of one of the vessels damaged by the SAFIRA brought this action in federal court against the SAFIRA, and SAFIRA’s owner appeared and brought a third-party action against the manufacturer/maintainer of the azipods (Schottel). After the dismissal of the complaint against the SAFIRA, the third-party action was transferred to the federal court in Louisiana based on a forum-selection clause in the contract between Schottel and the owner, and the owner sought to file an amendment to its third-party claim to assert claims of extreme and unconscionable conduct, recklessness, and gross and intentional fault (in order to avoid the indemnity and exculpatory clauses in the contract). As the amendment was within the time for amendment of pleadings, Magistrate Judge van Meerveld allowed the amendment except for the claim of intentional misrepresentation. As that claim appeared to allege fraud as a basis for voiding the contractual obligation to indemnify Schottel, it had to comply with the particularity requirements of Rule 9. Noting that the pleading did not allege the “who, what, when, where, and how of the alleged misrepresentations” or explain how the statements were fraudulent, Magistrate Judge van Meerveld held that the amendment could not include a claim for intentional misrepresentation based on the facts currently alleged.
Moran Towing’s vessel ATB LOUISIANA arrived at International Matex’s terminal and loaded a cargo of crude degummed soybean oil that it carried to Callao, Peru. When the vessel returned to Louisiana, Moran discovered residue in the tanks which necessitated additional cleaning time and expense. Moran brought suit against International Matex for negligence and breach of the warranty of workmanlike performance, and International Matex filed a motion for summary judgment, contending that the WWLP was not a viable theory of recovery in this case. International Matex noted that this case involved property damage (not personal injury where the WWLP was created) and that there was no contract between the parties. Moran Towing responded that an implied contract was created between the parties when Moran Towing’s vessel called at the International Matex terminal with reciprocal performance from International Matex in loading the cargo onto the vessel. Concluding that there were fact questions whether an implied contract existed and whether an implied contract would contain a WWLP, Judge Feldman held that the intertwined questions of fact and law required a trial for resolution.
This case involves a dispute over bonuses claimed by commercial divers and diving supervisors for a jetty repair project in Kamsar, Guinea. The workers brought this suit under Louisiana wage statutes, the Seaman’s Wage Act, and the general maritime law. The employer filed a motion to dismiss, which required Judge Lemmon to decide this case based on the pleading filed by the workers. Thus, she denied the motion to dismiss the Seaman’s Wage Act claims for the employer’s contention that there was no qualifying voyage or agreement as required by the statute as those arguments challenged the accuracy of the plaintiffs’ allegations and not their sufficiency. However, the Louisiana statute applies to the amount due upon discharge or resignation. Reasoning that the workers asserted that they were not paid bonuses upon the completion of their work (rather than upon discharge or resignation), Judge Lemmon held that the workers did not state a claim under the Louisiana statute. The employer also argued that the Seaman’s Wage Act superseded the general maritime law, but Judge Lemmon held that the statute only superseded the general maritime law for penalty wages and not for breach of contract. Therefore, the general maritime law claim for breach of contract could proceed.
Cape Cod Aggregates contracted to sell crushed stone/gravel to Tisbury Transportation and to load the gravel onto Tisbury’s vessels at Cape Cod’s marine distribution facility in New Bedford, Massachusetts. Victor Joseph Marolda, III, a seaman employed by Tisbury as a member of the crew of the tugboat SIRIUS, was seriously injured when Tisbury’s barge ALCAID capsized after it had been loaded with gravel. Marolda brought this action in federal court against Tisbury asserting federal question jurisdiction for his Jones Act claim and supplemental jurisdiction for his unseaworthiness and maintenance and cure claims under the general maritime law. He did not designate Rule 9(h) and demanded a jury on all of the claims. Marolda sought leave to amend his complaint to add additional defendants, including Cape Cod, under the court’s supplemental jurisdiction, but Judge Hillman denied the request on the ground that the claims were properly within the court’s admiralty jurisdiction. Tisbury then sought leave to file third-party claims against Cape Cod, asserting that the barge capsized because Cape Cod’s equipment failed to accurately measure the weight of the gravel, causing the barge to be overloaded. As the Jones Act claim was brought under the court’s federal question jurisdiction, Tisbury brought the third-party claim against Cape Cod based only on Rule 14(a). However, Tisbury brought its third-party claim on the unseaworthiness and maintenance and cure claims based on Rule 14(c), demanding judgment in Marolda’s favor directly against Cape Cod. Marolda objected to the use of Rule 14(c) as Marolda had not designated the unseaworthiness and maintenance and cure claims as maritime. However, Judge Hillman held that the designation was not necessary because there was no diversity or federal question applicable to those claims and they were only cognizable within the court’s admiralty jurisdiction. Therefore, Tisbury could bring in Cape Cod to be directly liable to Marolda under the court’s admiralty jurisdiction; however, Judge Hillman did require that Tisbury serve Cape Cod with a copy of the third-party complaint in accordance with the court’s local rule before being given leave to implead Cape Cod.
On March 7, 2020, Leonard Lindsay and Carl Zehner boarded the MS ZAANDAM, a cruise ship owned by Carnival through its wholly owned subsidiary, Holland America Line. Four days later, the World Health Organization declared COVID-19 a global pandemic, and Holland America suspended cruise operations. Nonetheless, passengers continued to gather and attend cruise events and ate together until March 22, when the passengers were asked to isolate in their staterooms. Zehner began exhibiting symptoms of COVID-19 on March 27 and was transported by helicopter to a hospital in Orlando, Florida, on April 5, 2020. He tested positive for the virus and was eventually released from the hospital. Lindsay believed that he caught the virus on the vessel, but he has not received a positive test. Zehner and Lindsay brought this action against Holland and Carnival, and their complaint included allegations of negligent infliction of emotional distress, class allegations of negligent infliction of emotional distress, and a request for injunctive relief for the defendants to take certain safety measures. The motion to dismiss the class allegations was based on the waiver of class actions in the passage ticket. The passengers argued that the waiver was unenforceable, but Judge Zilly did not reach the merits of the arguments as the passage ticket was outside the allegations of the complaint and could not be considered in the context of a motion to dismiss. Judge Zilly did dismiss Lindsay’s claim of negligent infliction of emotional distress because he did not allege that he manifested any symptoms of COVID-19. Judge Zilly noted, in the context of diseases, that fright alone without manifestations of symptoms, is insufficient to satisfy the zone-of-danger test required for a claim of negligent infliction of emotional distress. Judge Zilly also dismissed the claims of both Lindsay and Zehner of intentional infliction of emotional distress on the ground that the pleadings failed to rise to the level of extreme and outrageous conduct required to state this claim. Finally, the plaintiffs sought injunctive relief that the defendants must implement safety measures in the future. Although the cruise lines argued that there was not an actual and imminent threat to the plaintiffs, Judge Zilly concluded that the passengers had standing to bring the claim because they had actually booked a cruise in September 2021 on a Holland America ship, and the past wrongs committed by the defendants were evidence of a threat of immediate repeated injury. Therefore, he declined to dismiss the claim for injunctive relief.
Deborah Reed attended a passenger dance party hosted by Royal Caribbean aboard a cruise ship. At this dance party, Reed was approached by a “fellow intoxicated passenger” to dance. Reed claimed that this passenger spun her and forcefully released her, causing her to fall to the ground and suffer severe injuries as a result. After the incident, the Guest Security Supervisor for the cruise line interviewed the other passenger, and it was his normal procedure to switch on his body camera. However, there was no video of the interview when Reed requested that it be produced, and the Supervisor could not remember whether or not he turned on the camera. Reed filed a motion for sanctions with respect to the absence of body camera footage, which followed her unsuccessful motion for sanctions with respect to the cruise line only preserving six minutes of footage that showed the incident. Reed asserted that the electronically stored information could have revealed the level of intoxication of the other passenger, and she sought exclusion of the video evidence of the incident, or, in the alternative, a jury instruction allowing the jury to find that the other passenger was “unruly, erratic, intoxicated, and dangerous,” at the time of the interview if the jury believed the defendant negligently failed to preserve the body camera footage. Chief Magistrate Judge O’Sullivan ruled that Reed had the burden of proof and failed to establish that the body camera footage of the interview existed. Additionally, he noted if there had been sufficient evidence of the existence of the footage, the requested relief of exclusion of the footage of the incident would not have been reasonably related to the prejudice caused by missing body cam footage. Chief Magistrate Judge O’Sullivan did note that during trial the judge would decide if the passenger could examine witnesses on the issue whether any body camera footage existed.
Paragon Asset brought this limitation action after its drillship, DPDS1, came unmoored during Hurricane Harvey and allided with other vessels and structures near Corpus Christi, Texas. With the reduction in the market for drillships in 2015, Paragon moved the DPDS1 to Port Arthur, Texas, removing two of its thrusters before the voyage. The drillship was cold stacked with no maintenance and no running equipment, and it deteriorated accordingly. When the dock in Port Arthur was no longer available, the DPDS1 was towed to the Gulf Copper dock near Corpus Christi in May 2017. Paragon Asset was unable to find a buyer, and it appeared likely that the drillship would have to be scrapped. Nonetheless, the drillship was fully outfitted with cranes, winches, electrical generators, and navigational lights, and a two-person maintenance crew remained aboard to secure the craft and monitor its equipment. As Hurricane Harvey approached Corpus Christi later in 2017, Paragon Asset sought to tow the drillship offshore and obtained certification of its seaworthiness from a surveyor. However, the DPDS1 was at the dock when the Hurricane struck, and it became unmoored and allided with vessels and other structures. The DPDS1 remained afloat after the storm and was towed back to the Gulf Copper dock and then to Brownsville, Texas, where it was scrapped. Paragon Asset brought this limitation action in Brownsville and filed a motion for partial summary judgment that the DPDS1 was a vessel for purposes of the Shipowners’ Limitation of Liability Act. Judge Rodriguez agreed with Paragon Asset, reasoning that the craft was capable of carrying things or people over water and that a reasonable observer would conclude that it was a vessel based on its physical characteristics and activities. Although the claimants in the limitation action cited Paragon Asset’s intent to scrap the vessel, Judge Rodriguez noted the recent Fifth Circuit decision in Southern Recycling (see January 2021 Update), in which the owner transported a barge to a shipyard to be scrapped. The barge lost status as a vessel when the contractor cut gaping holes in the bow that prevented the barge from transporting people or property. As the DPDS1 still appeared to a reasonable observer to be capable of serving as a vessel, Judge Rodriguez held that it was a vessel subject to limitation of liability.
This opinion addresses actions brought in state court by the City and County of Honolulu, Hawaii, against a “roll call of ‘energy’ companies” asserting claims related to global warming. The suits were removed to federal court based on the Outer Continental Shelf Lands Act, exclusive jurisdiction over federal enclaves, and the Federal Officer Removal Statute. Although Judge Watson noted that, “at first blush,” the suits appeared to assert removable issues, the claims actually targeted concealment of the dangers of fossil fuels. As the specific allegations did not involve acts of extracting, processing, and delivering fuels from the outer Continental Shelf, Judge Watson held that there was no basis for federal jurisdiction and remanded the cases.
Chris Havener, a resident of Maine, was injured while serving as a crewmember of the F/V GABBY G while the vessel was working in the Atlantic Ocean near New Bedford, Massachusetts. The fishing vessel is owned by Gabby G Fisheries, whose principal owner and CEO is Danny Farnham. Farnham transacts business from his home office in Montauk, New York, but he spends most of his time in New Bedford Massachusetts, where the vessel conducts 100% of its fishing and where the hiring and firing are done. Havener filed this Jones Act suit in federal court in New York, and his employer moved to transfer the case to Massachusetts on the basis that the events and omissions giving rise to the claims occurred there and his initial treatment and surgery were there. Judge Seybert weighed the factors for a transfer and agreed to transfer the case. Havener’s choice of forum in New York was not given significant weight as it was not his home forum or the location of the accident. The crew members were located in multiple states, but most of the documents related to the case were located in Massachusetts where the operation and initial treatment were located.
Maria Briem was injured when a wave knocked her off her Wave Runner during a dolphin tour booked through Holiday Water Sports with Jack Graddy serving as tour guide. Holiday Water Sports filed this limitation action based on the value of the Wave Runner at $7,601. Claimants included Maria Briem and her husband Torstem Briem. The Briems moved to lift the stay and filed stipulations that were originally held to be insufficient. The Briems amended their stipulations to attempt to fit within the single claimant exception to the concursus of claims, and Holiday Water Sports objected because there were also potential claims for contribution/indemnity from Jack Graddy and potential subrogation claims from medical providers. Judge Mizell noted that the Eleventh Circuit has approved stipulations for multiple claims presented by co-defendants that were mirrored by the stipulations filed by the Briems in this case [the Fifth Circuit requires that all claimants sign the stipulations]. The stipulations provided that the Briems would not seek to enforce any judgment against any person or entity that would entitle it to seek indemnity or contribution from Holiday Water Sports in excess of the limitation fund unless and until the federal court has denied limitation of liability. Judge Mizell held that the stipulation was sufficient to protect against any claim from Jack Graddy and from any subrogation claim [not explaining how a subrogation claim fit within the indemnity or contribution language of the stipulation]. Consequently, Judge Mizell lifted the stay to allow the Briems to proceed with their separate suit against Holiday Water Sports.
Thomas Turley’s yacht GRECIAN GIRL struck an underwater object returning to Fort Lauderdale from the Bahamas and eventually sank. Turley’s company, Scotland Cay, which owned the vessel, sought damages for the loss of the hull, wreck removal, and sue and labor/protection against loss. The insurer denied the claim on the ground that the owner breached the terms of the policy by misrepresenting or failing to disclose the fact that the owner intended to use the vessel for occasional chartering. The insurer based that argument on the information it developed that the vessel was advertised as available for charter for $20,520 per week and was listed on the owner’s tax returns as a “charter boat” with income declared from commercial use. Turley explained that he had never chartered the vessel, that he had discussed chartering the vessel but had not authorized the advertising, and that the income was from business partners and associates to cover the cost of using the vessel for entertainment. The insured and insurer filed cross-motions for summary judgment, but Magistrate Judge Strauss recommended that both motions be denied as there were disputed issues of material fact that precluded summary judgment for either party.
Jeffrey Helser was employed as a leverman by J.F. Brennan and was injured while preparing an excavator that was to be placed on J.F. Brennan’s dredge for operations on the Fox River in Green Bay, Wisconsin. Helser notified J.F. Brennan that he would pursue claims under the Jones Act, and J.F. Brennan brought this limitation action. J.F. Brennan filed third-party complaints in the limitation action against the companies that manufactured and sold the excavator to J.F. Brennan, and it also filed a counterclaim against Helser (when Helser filed a claim in the limitation action) seeking declaratory relief that the excavator was not a vessel or an appurtenance of a vessel and that Helser was not a seaman. Helser moved to dismiss J.F. Brennan’s claim for declaratory relief, and Judge Griesbach ruled that the claim should be dismissed because it served no useful purpose and was brought only to determine issues that are already pending. It did not matter whether the question of liability was tried in state or federal court, the issues of seaman status and the status of the excavator would have to be determined as part of that process. The declaratory judgment action only served “to complicate the case” [compare the Mike Hooks case discussed below, in which Judge Cain dismissed the employer’s declaratory judgment claim in its limitation action]. This case also presents issues similar to those addressed in the Holiday Water Sports case discussed above with respect to stipulations involving potential claims for contribution/indemnity. Helser brought an action against various entities in state court that he dismissed without prejudice; however, there were still potential claims for contribution that created a multiple claimant situation. As in Holiday Water Sports, Helser stipulated that he would not enforce any judgment in such a way as to expose J.F. Brennan to liability in excess of the limitation fund determined by the court. As the other potential claims were derivative of Helser’s, Judge Griesbach considered the stipulation to sufficiently protect Brennan’s right to limit liability and lifted the stay.
Robert Lehmann and others filed this action against the S/V THALIA and its owner, Anthony J. Langley, as an admiralty action in the federal court in Rhode Island seeking wages and contractual benefits as crewmembers of the THALIA. The dispute arose after the vessel arrived in Antigua on March 13, 2020, and faced lockdowns and travel restrictions from COVID-19. Langley paid the crew only part of the wages required in their contracts and directed the crew to sail the vessel back to Rhode Island. After paying some of the wages and agreeing to reimburse repatriation expenses, the defendants filed a partial motion to dismiss, arguing that the court no longer had admiralty jurisdiction. Judge McElroy disagreed, reasoning that as long as the plaintiffs had any interest in the outcome of the litigation, no matter how small, the case was not moot and the court continued to have admiralty jurisdiction to reach the merits of the remaining claims.
Jade Spurr was injured during a jet boat tour of San Diego Bay on Star & Crescent’s PATRIOT. She brought suit in San Diego Superior Court against Starr & Crescent, which brought this limitation action. Star & Crescent submitted an Ad Interim Stipulation for Value in the amount of $775,000 together with a letter of undertaking and requested issuance of the stay required by Supplemental Rule F. Judge Benitez noted that courts have held that a stipulation supported by a letter of undertaking qualifies as sufficient security; however, he pointed out that the amount of the letter of undertaking has to be in the same amount as the stipulated value. Although the insurers listed three policies with sufficient coverage for the value of the vessel, the letter of undertaking was in the amount of $750,000 ($25,000 less than the value of the vessel). Accordingly, Judge Benitez found the security to be inadequate and denied the request to stay proceedings without prejudice to resubmission of the security.
Sunfari Experiences brought two suits against its insurer in connection with damages to its vessel allegedly caused by Hurricane Irma. One suit was for breach of contract that was filed in the federal district court for the Southern District of Florida and is still pending. The second suit was brought in Florida state court for an unspecified amount damages for statutory bad faith under Florida law. The damages sought in the state suit included chartering a replacement boat, lost charter income, and attorney’s fees. The insurer removed the case based on diversity jurisdiction, and the insured moved to remand the case for failure to satisfy the requirement that the amount in controversy exceed $75,000. The insurer argued that the amount in controversy for the breach of contract and bad faith actions exceeded $75,000, but Judge Singhal held that the damages sought in the two actions could not be aggregated. Finding that the amount in controversy in the bad faith action was too speculative to determine, Judge Singhal ordered the case remanded (noting that the insurer was not foreclosed from filing another notice of removal once the amount in controversy became ascertainable).
David Tyrone Lavan was injured in an explosion or fire that occurred on the dredge vessel MIKE HOOKS in the Calcasieu River in Louisiana. Mike Hooks filed this limitation action; Lavan filed a claim in the limitation action as a Jones Act seaman; and Mike Hooks filed a claim for declaratory judgment on Lavan’s right to maintenance and cure. Lavan moved to lift the stay so that he could file a suit in Louisiana state court as the sole victim of the accident, and he also moved to dismiss the claim for declaratory relief so that the right to maintenance and cure could be resolved in the suit he planned to file in state court once the stay was lifted. Mike Hooks argued that the stipulations were inadequate because Lavan was not foreclosed from seeking to enforce a judgment up to the amount of the limitation fund while the limitation action was pending, but Judge Cain rejected the argument as the Fifth Circuit has only required that the claimant must stipulate to exclusive federal jurisdiction over the limitation issues and waive any claim of res judicata with regard to the state court’s resolution of those issues. Similarly, Judge Cain rejected the contention that the stipulations were inadequate for only specifying that the claimant will not seek any excess judgment until after the adjudication of the right to limitation in the federal court. Finally, Judge Cain rejected a claim of prematurity as the time to file claims had not passed before the motion to lift the stay was filed, leaving the prospect that a second claim could be filed. The time to file claims passed before Judge Cain’s order, rendering this argument moot. With respect to the declaratory judgment action, Judge Cain considered the Trejo abstention factors governing the discretion of a federal court to stay or dismiss a declaratory judgment action when there is a pending state action, and he held that the balance of factors favored dismissing the federal action (noting that this was not a situation where the discovery in the federal action has outpaced the state suit and the federal action was allowed to proceed). He therefore dismissed Mike Hooks’ federal declaratory judgment action without prejudice.
Turnkey Offshore entered into a Master Work Contract (and work order) with Morrison Energy by which Turnkey Offshore was to remove three platforms located in the Gulf of Mexico (using derrick barges for the deconstruction). During the removal, Turnkey encountered delays from several sources, including two tropical storms. Turnkey brought this action against Morrison Energy pursuant to the federal court’s admiralty jurisdiction for breach of a maritime contract for the removal of the platforms, but the suit sought attorney’s fees pursuant to the Louisiana Open Account Statute. Morrison filed a motion to dismiss the open account claim, asserting that the relationship between Turnkey and Morrison did not qualify as an open account, and Judge Lemelle agreed and dismissed the open account claim. Neither the parties nor Judge Lemelle addressed how Louisiana law could provide attorneys’ fees for breach of a maritime contract, contrary to the Fifth Circuit’s rule that state attorneys’ fees statutes do not apply to maritime contracts. See Tex. A&M Research Foundation v. Magna Transportation., Inc., 338 F.3d 394 (5th Cir. 2003).
Before taking a cruise with his family on the SYMPHONY OF THE SEAS, William Christie purchased a travel insurance policy with Jefferson Insurance Co. through its agent, Allianz Global Assistance. Christie experienced back pain after boarding the ship and was referred by the ship’s medical staff to a shore-side hospital in Puerto Rico. Christie contacted the travel insurer and agent to coordinate his medical care, and ultimately arranged for his own air ambulance to return him to Florida for care after an unreasonable delay. He brought this action against the cruise line, and he also named the insurer and agent for breach of contract and negligence. The travel insurer and agent asserted affirmative defenses seeking to reduce their liability based on comparative fault principles of Florida law, and Christie moved to strike the defenses on the ground that maritime law applied to the claims against the defendants. The defendants argued that Christie’s claims were based on failure to comply with obligations to a Florida citizen that arose from an insurance contract that was consummated in Florida, and Florida law should consequently apply. Magistrate Judge Torres held that admiralty jurisdiction applied to Christie’s claims against the cruise line, and that admiralty jurisdiction consequently applied to the entire case. He then determined that maritime law applied because Christie asserted a maritime tort against the defendants in the undertaking of the coordination of his medical care so that he could leave the cruise ship and receive appropriate treatment. The tort began while Christie was a passenger on the vessel and continued onto land. As such, Magistrate Judge Torres held that maritime law, not Florida law, applied to the comparative fault defenses and recommended that Christie’s motion to strike be granted. Agreeing that maritime law does not recognize the Florida comparative fault rule, Judge Scola affirmed the decision of Judge Torres.
Thamalassen Sungaralingum, a citizen of Mauritius, signed an employment agreement with Heinemann American Cruise Retail and a Seafarer’s Agreement with Carnival Corp. so that he could work as a watch specialist on the cruise ship FANTASY. Both agreements contained arbitration clauses, but the provisions were different. The Heinemann contract provided for arbitration in London, and the Carnival contract provided for arbitration in Monaco. Sungaralingum was injured while serving on the FANTASY and brought this action in state court in Miami, Florida, under the Jones Act and general maritime law against Heinemann as his employer and Carnival as his borrowing employer. The defendants removed the action to federal court under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) and moved to compel arbitration. Sungaralingum argued that the case could not be removed because the arbitration provisions conflicted and were impossible to enforce. Carnival agreed that it would accept the arbitration provisions of the Heinemann contract, and Chief Magistrate Judge O’Sullivan held that the provisions were enforceable under the New York Convention and the suit was removable under the Convention. He therefore recommended that the motion to compel arbitration be granted and that the case be dismissed.
Lohengrin Ltd.’s vessel, M/Y LOGENGRIN, was docked at the Universal Marine Center in Fort Lauderdale, Florida, undergoing an extensive refit. The vessel caught fire, and the fire spread to an adjacent vessel and to the dock and other property. Lohengrin filed an action for limitation of liability, and this opinion involves the claims of Universal Marine and Tommy Lee and TQY LLC, which had extensive property and equipment in the water that were damaged in the fire. Lohengrin moved to dismiss the claims, and Judge Smith granted the motions in part and denied them in part. The pleading of Lee and TQY was unclear what legal claim was being asserted, but the claimants clarified in response to the motion to dismiss that the claim was based on negligence. Lohengrin also contended that the claim did not state any facts supporting proximate cause, but Judge Smith concluded that it was sufficient to allege that the proximate result of the neglect and inactions of Lohengrin was that the fire commenced on the M/Y LOHENGRIN and spread to the vessel that was moored close by, causing fire damage to the claimants’ equipment in the water. Universal Marine’s negligence allegations did not fare as well as they were brought as a shotgun pleading that commingled multiple theories of liability and had to be repleaded. Universal’s count for negligence per se was insufficient because it did not identify any specific statute that was violated and did not allege that the claimant was a member of a protected class. Although Universal brought a claim for gross negligence, the pleading did not allege any conduct that more egregious than gross negligence. Judge Smith did conclude that Universal’s pleading of breach of contract was sufficient as it enumerated specific items that Lohengrin was required by the contract to reimburse to Universal.
Great Lakes Insurance insured Raiders Retreat’s 70-foot Viking vessel from 2007 to 2019. When the policy was renewed for the 2016 to 2017 policy year, a survey on the vessel made recommendations on the vessel’s fire extinguishing equipment, and the owner certified that the recommendations had been completed. The policy also contained a warranty that the fire extinguishing equipment was properly installed and maintained in good working order. After an accident in 2019 in which the vessel ran aground near Fort Lauderdale, Florida (no fire or use of fire extinguishing equipment was involved), Great Lakes Insurance determined that Raiders Retreat had not complied with the recommendations and had misrepresented its compliance and violated the warranty (this was disputed by Raiders Retreat). Great Lakes therefore denied the grounding claim and brought this action in federal court in Pennsylvania seeking a declaratory judgment that there was no coverage under the hull policy. Raiders Retreat filed a counterclaim for breach of contract as well as claims for extra-contractual liability under Pennsylvania law. The hull policy contained a choice-of-law provision designating federal admiralty law, and where there is no entrenched admiralty law, the substantive laws of the state of New York. Great Lakes moved for judgment on the pleadings on Raiders Retreat’s extra-contractual claims under Pennsylvania law, and Raiders Retreat argued that the choice-of-law clause was unenforceable and that Pennsylvania law should apply to its claims. Applying the maritime rule that the choice of law will be enforced unless the designated state has no substantial relationship to the parties or transaction, Judge Robreno found sufficient contacts between Great Lakes and New York to enforce the clause. He then addressed Raiders Retreat’s argument that application of New York law would frustrate Pennsylvania’s strong policy of punishing insurers who deny coverage in bad faith and held that it would frustrate the uniformity that is a central purpose of maritime law to allow state public policy to override otherwise valid contractual provisions. As the extra-contractual counts brought by Raiders Retreat were not cognizable under New York Law, Judge Robreno held that Great Lakes was entitled to judgment on the pleadings on those counts.
Tanisha Prince was killed in a collision between two jet skis at Agua Hedionda Lagoon in Carlsbad, California. Her jet ski, operated by her boyfriend Devin Whittaker, was struck by a jet ski being operated by Noe Aguilar, who was attending a party hosted by his employer, Roof Masters. Cantor Enterprises, owner of the jet skis, brought this limitation action, and Prince’s mother and daughter brought claims in the proceeding. Roof Masters also filed a claim seeking indemnification from Cantor Enterprises. Prince’s mother and daughter sought to lift the limitation stay based on stipulations that they would not seek to enforce any judgment that would expose Cantor Enterprises to liability above the limitation fund amount until the conclusion of the proceedings in the limitation court, that Roof Masters would have first priority over both claimants in the limitation fund, and that the daughter’s claim would have priority over the mother’s claim. Cantor Enterprises objected that Roof Masters had not joined the stipulations (as required in the Fifth Circuit), but Judge Benitez held that the stipulation of priority for Roof Masters sufficiently protected Cantor Enterprises. Cantor Enterprises also noted that it was possible that the other operators, Whitaker or Aguilar, could file claims, but Judge Benitez cited the stipulation that the mother and daughter would not seek to enforce a judgment that would expose Cantor Enterprises to liability above the limitation amount until the conclusion of limitation proceedings and held that it sufficiently protected Cantor Enterprises from the potential claims. Consequently, Judge Benitez lifted the stay pending the conclusion of the action brought by the daughter and mother in state court.
Seattle Lakes bareboat chartered the M.V. HARBOR LADY from Bikini Yacht Club, took possession of the vessel in Florida, and shipped it to Washington. Three years later, the owner sold the vessel to West Star Yacht, which assumed Bikini Yacht Club’s rights and interests under the charter party. The charter party contained a forum-selection clause that legal proceedings may be held in the state or federal courts in Collier County, Florida, and the parties expressly consented to the personal jurisdiction of those courts. When the vessel was redelivered to West Star at the end of the charter, West Star spent approximately $480,000 in repairs and brought this complaint seeking damages for failing to return the vessel in good order and condition in breach of the charter party. West Star, a Florida corporation, brought this suit in the federal court in Fort Myers, Florida (Collier County) in accordance with the forum-selection clause of the charter party, and Seattle Lakes moved to transfer the case to the Western District of Washington. Seattle Lakes agreed that it had consented to the suit and personal jurisdiction in Florida, but it contended that the forum-selection clause was permissive, not mandatory, and was only one factor to consider in determining whether the case should be transferred. As the locus of operative facts, convenience of the witnesses, and interests of justice weighed in favor of transfer to Washington, Judge Magnuson ordered the case transferred to the Western District of Washington.
Colleen Conden, a passenger on the ADVENTURE OF THE SEAS, brought her mobility scooter on the vessel, but the cruise line failed to charge the scooter one evening. The cruise line provider her with a scooter that was leased from Scootaround, Inc., but it was bigger, faster, and different from Conden’s scooter, and she was thrown off the scooter while ashore in Nova Scotia. She brought this action against the cruise line and Scootaround, and the defendants moved to dismiss several of the counts in her complaint. Scootaround argued that it had no relationship with the passenger that would give rise to a duty, but Judge Altonaga disagreed. Although the scooter was provided to the passenger by the cruise line, the passenger’s allegations that Scootaround inspected and maintained the scooter, was aware of prior incidents and complaints about the scooter but did not warn the passengers, and that it was aware that the cruise line provided the scooters without adequate warnings were sufficient to allow her negligence claim to proceed. Judge Altonaga dismissed the claims of breach of implied warranty against both defendants as maritime law does not allow a claim of breach of an implied warranty of fitness and merchantability, state law is not applicable, and there was no privity with Scootaround. Judge Altonaga did allow the strict liability claim to proceed against Scootaround from its role as a commercial lessor of mobility scooters, but she dismissed the claim against Scootaround under Florida’s dangerous instrumentality doctrine. Finally, Judge Altonaga held that Conden’s allegations were too conclusory to state a claim that the cruise line had undertaken a duty to provide medical care to Conden after the accident by offering to check up on her to see if she was “OK.”
Earth Island Institute brought this action against food, beverage, and consumer goods companies for injuries sustained as a result of plastic pollution from the defendants’ products in California coasts and waterways. Earth Island sought relief under California law for public nuisance, failure to warn, design defect, negligence, breach of warranty, and unlawful practices under the California Consumer Legal Remedies Act. The defendants removed the case to federal court on several grounds, and Judge Gilliam rejected all of the bases for federal jurisdiction and remanded the case. He rejected the argument that federal common law governs interstate pollution or public nuisance, holding that, to the extent federal common law has not been displaced by federal statutes, it does not completely preempt state law in the field of marine environmental pollution or public nuisance. Judge Gilliam also rejected the argument that there was federal enclave jurisdiction on the ground that the bodies of water described in the complaint were adjacent to or near federal enclaves as jurisdiction would exist only if the claim arose on the federal enclave. Finally, Judge Gilliam rejected the claim that there was maritime tort jurisdiction because the injuries occurred on navigable waters, distinguishing state waters from federal waters for purposes of admiralty jurisdiction: “Plaintiff has only pled torts occurring in California waterways and coasts, rather than oceanic waters, navigable waters of the United States, federal enclaves, or the waters of multiple states.”
Marine Watchmen, which operates a marina in Brooklyn, New York, brought this action to extinguish two mortgages against a United States flagged vessel that was docked at the marina. The marina entered into a contract with the vessel’s owner, Venture Cruise, through Venture’s beneficial owners, Christopher Sperry and Paul Demo, to dock the vessel and for maintenance and repair on the vessel. Nine years later, Venture abandoned the vessel at the marina and failed to pay the dockage and maintenance fees. The marina then filed a suit in the Supreme Court of Kings County against Venture and recovered a default judgment of more than $400,000. The marina purchased the vessel for $350 at a foreclosure sale, and a New York state title was issued to the marina. The marina attempted to register the vessel with the Coast Guard, but the registration was hindered by two preferred ship mortgages that were recorded against the vessel over 20 years ago by P.M. Royal, a company also owned by Sperry and Demo. The marina then brought this action in federal court against Venture, Royal, Sperry, and Demo in personam, and the complaint also named the vessel in rem. The marina did not arrest the vessel because the marina had the New York title to the vessel and the vessel was present at the marina in the territorial jurisdiction of the federal court. The marina asserted that the defendants had been served, and the marina sought a default judgment, in personam, that the liens had been extinguished by laches (failure to take any action on them for 20 years). However, Magistrate Judge Bloom declined to grant the default and instead provided a lesson in admiralty procedure. She noted that if the marina had brought the action in federal court in rem in the first place, she could have ordered the sale of the vessel and granted a judgment that gave title free and clear of any liens or mortgages. That was the first “misstep.” Addressing the in personam action, she found no authority to permit the court to exercise jurisdiction to extinguish the liens, particularly when Royal, a Missouri limited liability company, had been administratively cancelled by the Missouri Secretary of State. Although Magistrate Judge Bloom ruled that the motion for default judgment should be denied for failure to arrest the vessel, she did discuss the claim of laches and advised that if the marina had arrested the vessel and complied with the notice requirements of the federal rules and local rules, the allegations in the complaint would weigh in favor of extinguishing the two outstanding mortgage liens.
Savage’s towing vessel M/V SAVAGE VOYAGER was towing a barge on the Tennessee-Tombigbee Waterway and entered the Jamie Whitten Lock, operated by the Army Corps of Engineers. Savage argued that the Corps’ lock master began dewatering the lock chamber without confirming that the tug and tow were within the miter walls, which caused the barge to be caught on the north miter wall. The barge was punctured, and crude oil was released into the lock. Savage cleaned up the spill and brought this action against the United States under the Suits in Admiralty Act and Federal Tort Claims Act, to recover for the negligence of the United States. Although the Suits in Admiralty Act contains a waiver of sovereign immunity that would apply in this case, the question was whether Savage had a cause of action against the United States. The Oil Pollution Act of 1990 provides for an action for contribution against any other “person” who is liable or potentially liable under OPA or another law. However, OPA does not include the United States in the definition of “person.” Savage also invoked the savings clause in OPA that, except as otherwise provided in the statute, it does not affect admiralty and maritime law. Savage argued that it therefore should be allowed to pursue a tort under the general maritime law against the United States. Judge Steele rejected that argument, however, as it overlooked the fact that the statute provided otherwise by its definition of “person” that did not include the United States. Finally, Judge Steele denied Savage the right to pursue the United States under the Federal Tort Claims Act as it is mutually exclusive with the Suits in Admiralty Act and Savage’s claim is a maritime claim within the SIAA.
From the state courts:
Joseph Checkan, a riverboat captain, filed a complaint against his former employer, Southern Towing Co., and Canadian Pacific Railway, alleging wrongful termination by his employer and libel/defamation against the railroad. The complaint arose out of an incident that occurred on the Mississippi River in August 2017. Checkan was engaged in a two-week shift with his boat, M/V MARY ELIZABETH, when he was asked to stop and wait for two trains to cross a drawbridge owned by Canadian Pacific Railway. Checkan performed a controlled landing by which he caused his barge system to come to rest next to a piling of the bridge with no damage to the bridge or barge. Checkan confirmed that no damage had been done to the barge or the bridge before completing his run and returning home. Months later, when Checkan attempted to begin his next run with Southern Towing, he learned that Canadian Pacific sent his employer a letter, accusing Checkan of causing damage to the bridge owned by Canadian Pacific. Checkan was subsequently informed that his employment had been terminated for failure to report an accident, and he brought this suit for relief. Southern Towing was eventually dismissed from the suit and Canadian Pacific Railway filed a motion dismiss raising a host of issues, including lack of personal jurisdiction and failure to state a claim upon relief can be granted. Checkan moved to amend his complaint, but the district court denied his request and granted Canadian Pacific’s motion to dismiss without ruling on the personal jurisdiction defense. In discussing the issues presented on appeal, Judge Goldin sidestepped the substantive controversies and focused primarily on the jurisdictional question. Judge Goldin reasoned that a court without jurisdiction over the person of the defendant lacks the authority to dismiss a complaint for failure to state a claim. Judge Goldin pointed out that Canadian Pacific had not waived its personal jurisdiction defense, which would allow the substantive argument to be considered. As such, the trial court committed an error when it ruled on the merits of the case before addressing the jurisdictional question. Consequently, Judge Goldin vacated the trial court’s order of dismissal and remanded the case for consideration of Canadian Pacific’s personal jurisdiction defense.
Kendrick Williams was injured while working for Associated Terminals as an equipment operator on a vessel in the Mississippi River. Associated Terminals paid him maintenance and cure, and Williams brought suit in the state court in Plaquemines Parish, Louisiana, against Associated Terminals and Buck Kreihs Marine Repair. Williams, who asserted that he was a seaman, settled his claims with his employer, Associated Terminals, for $50,000 plus an assignment of Associated Terminals’ right to reimbursement of $189,221.25 in maintenance and cure against Buck Kreihs Marine. Williams filed a superseding petition against Buck Kreihs Marine that included the assigned claim, and the defendant excepted that the employer could not assign the right to reimbursement to its employee. The district judge agreed that Williams could not be subrogated to the rights of his employer because he had already recovered the maintenance and cure and could not collect it a second time. The court of appeals disagreed. Judge Love held that Louisiana law allows assignments, and the defendant did not provide any authority prohibiting the assignment. She added that whether recovery of reimbursement was akin to a double recovery was not an issue for the question whether the assignment was valid.
Thanks to Katherine E. Kaplan and Fitzgerald Eze for their help in preparing this Update.
Kenneth G. Engerrand
President, Brown Sims, P.C.
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Quote:
“We meant what we said, and we said what we meant.” See Dr. Seuss, Horton Hatches the Egg (1940). We once again AFFIRM the judgment of the district court.
Automation Support, Inc. v. Humble Design, L.L.C., No. 20-10386 (5th Cir. Dec. 8, 2020) (Costa).
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