March 2023 Longshore/Maritime Update (No. 286)
Notes from your Updater:
On January 27, 2023, the Connecticut Supreme Court held that the ocean marine insurance policy issued by Hartford Fire Insurance Co. that covered the insured’s shoes while they are in transit and storage (insuring against “all risks of direct physical loss or direct physical damage to [i]nsured [p]roperty from any external cause” did not cover the business losses suffered during the COVID-19 pandemic when the insured’s warehouses overflowed with spring inventory in 2020. Although the inventory was effectively unsellable because of the seasonal nature of the retail business, there was no damage in the physical substance of the insured property. See Hartford Fire Insurance Co. v. Moda, LLC, No. SC 20678, 2023 Conn. LEXIS 23 (Conn. Jan. 27, 2023) (Ecker).
In our January 2023 Update we discussed the decision of the Fifth Circuit in In re Andry, No. 22-30231, 2022 U.S. App. LEXIS 32882 (5th Cir. Nov. 29, 2022) (Willett), holding that an attorney for claimants in connection with the Macondo/DEEPWATER HORIZON blowout violated disciplinary rules by sharing attorney fees with an attorney involved in the claim administrative process for BP’s economic loss settlement. On February 3, 2023, the Fifth Circuit withdrew its prior opinion in response to a request for panel rehearing and substituted an opinion without changing the result. See No. 22-30231, 2023 U.S. App. LEXIS 2800 (5th Cir. Feb. 3, 2023) (Willett).
On February 8, 2023, the Court of Appeals for the Federal Circuit upheld the dismissal of the claim under the Fifth Amendment based on the Coast Guard’s denial of fishery endorsements (so that the fishing vessel AMERICA’S FINEST could operate in the United States’ Exclusive Economic Zone) because foreign steel was used in the construction of the vessel, reasoning that fishing endorsements, licenses, and permits are revocable privileges and are not compensable property interests. See Fishermen’s Finest, Inc. v. United States, No. 2021-2326, 2023 U.S. App. LEXIS 3040 (Fed. Cir. Feb. 8, 2023) (Chen).
On February 15, 2023, the United States District Court for the District of Columbia confirmed the arbitration award (London Court of International Arbitration) in favor of Doraleh Container Terminal SA against the Republic of Djibouti in connection with the building and development of a new international container terminal on the Red Sea in Doraleh, Djibouti. See Doraleh Container Terminal SA v. Republic of Djibouti, No. 20-2571, 2023 U.S. Dist. LEXIS 25861 (D.D.C. Feb. 15, 2023) (Hogan).
On February 21, 2023, the Ninth Circuit reversed a district court’s order that vacated a regulation promulgated by the Environmental Protection Agency under the Clean Water Act during the Trump Administration (remanding it to the EPA), holding that the district court lacked authority to vacate the regulation without first holding that the regulation was unlawful. See In re: Clean Water Act Rulemaking, No. 21-16958, 2023 U.S. App. LEXIS 3939 (9th Cir. Feb. 21, 2023) (Friedland).
In our October 2021 Update we noted that a majority of the en banc Fifth Circuit held that a tool pusher on an offshore rig, who supervised 12 to 13 employees and earned $200,000 a year (twice the salary cap for overtime) while working about half the days of the year was entitled to overtime pursuant to the Fair Labor Standards Act. See Hewitt v. Helix Energy Solutions Group, No. 19-20023, 2021 U.S. App. LEXIS 27215 (5th Cir. Sept. 9, 2021) (en banc) (Ho). Six of the eighteen judges dissented. The Supreme Court agreed to hear the case, and, on February 22, 2023, a majority of the Supreme Court affirmed the decision of the Fifth Circuit. Writing for the Court, Justice Kagan held that the tool pusher was exempt from overtime if he was a bona fide executive, which required that he be paid by the week (or longer). As the tool pusher was paid by the day, he was not exempt from being paid overtime. Justice Kavanaugh, joined by Justice Alito, dissented. Justice Gorsuch would have dismissed the petition for certiorari as improvidently granted. See Helix Energy Solutions Group, Inc. v. Hewitt, No. 21-984, 2023 U.S. LEXIS 944 (U.S. Feb. 22, 2023) (Kagan).
On February 23, 2022, the Fifth Circuit struck down as unauthorized and arbitrary and capricious the rule promulgated by the Department of Commerce (pursuant to the Magnuson-Stevens Fishery Conservation and Management Act of 1976) that requires charter-boat owners (at their own expense) to install on their boats a vessel monitoring system that continuously transmits the boat’s GPS location to the Government, regardless of whether the boat is being used for commercial or personal purposes. See Mexican Gulf Fishing Co. v. United States Department of Commerce, No. 22-30105, 2023 U.S. App. LEXIS 4596 (5th Cir. Feb. 23, 2023) (Elrod).
On February 27, 2023, the United States Supreme Court declined to hear the appeal of energy companies from the remand to state court of cases filed in Louisiana state court by coastal Parishes against energy companies seeking to recover restoration costs for loss of land along the Louisiana Gulf Coast allegedly resulting from production practices carried out by the energy companies going back to World War II. The issues presented were:
During World War II (“WWII”), the U.S. government recognized that it would need unprecedented quantities of oil to conduct and win the war and, accordingly, launched a massive government effort to secure sufficient supplies of this most critical war material. Invoking his war powers, the President created a new temporary agency—the Petroleum Administration for War (“PAW”)—to take all action necessary to meet the government’s oil needs. According to the government’s own account, the oil industry worked as “extensions of the government,” and, under PAW’s direction, produced the billions of barrels of oil the United States required to prevail over the Axis powers.
More than 70 years later, Louisiana coastal parishes, joined by the state of Louisiana, filed this and 41 other cases in state court under a 1978 state law, alleging that oil companies should have employed more environmentally protective oil production practices going back for decades. The companies removed this and related cases to federal court because many of the challenged practices were undertaken by the companies during WWII while “acting under” PAW. The Fifth Circuit nonetheless ruled that the case should be remanded to state court. The Fifth Circuit reviewed the District Court’s decision without giving petitioners the benefit of inferences in their favor.
The questions presented are: 1. Whether a private entity is “acting under” a federal officer for purposes of removal under 28 U.S.C. § 1442 when federal officials, through orders and regulations, direct the entity’s production of a product the government requires to respond to a national emergency. 2. Whether, in assessing federal-officer removal under 28 U.S.C. § 1442, both the district court and the court of appeals must accept as true all facts alleged by the removing party and draw all reasonable inferences in its favor.
See Chevron USA, Inc. v. Plaquemines Parish (No. 22-715).
On the LHWCA Front . . .
From the federal district courts
Judge entered final judgment for shipyard after holding that the LHWCA preempted the worker’s claims for asbestos exposure; Rushton v. Taylor-Seidenbach, Inc., No. 21-1461, 2023 U.S. Dist. LEXIS 23588 (E.D. La. Feb. 13, 2023) (Barbier).
Glen Otis Rushton, Jr. brought this suit in Louisiana state court, asserting that he developed mesothelioma from exposure to asbestos while working on vessels at Avondale Shipyard. Avondale removed the case to federal court in Louisiana, and Rushton’s spouse and children substituted as plaintiffs after Rushton died. Avondale moved for summary judgment that there was no evidence that Rushton was exposed to asbestos while working at Avondale and that the claims were preempted by the LHWCA. The motions were unopposed, and Judge Barbier granted them, dismissing the claims against Avondale. Avondale then moved for a partial final judgment under Rule 54(b), and Judge Barbier agreed to grant the relief. Judge Barbier noted that the LHWCA preemption issue had been raised in numerous cases and there was a likelihood that it would arise in future cases. Thus, allowing a Fifth Circuit decision to finally resolve the preemption issue would benefit the numerous district courts facing this issue. Consequently, Judge Barbier entered a final judgment in favor of Avondale.
Action brought in state court under LHWCA Section 5(b), the general maritime law, and state law for an injury on a floating production unit connected to wells on the OCS was removable under the OCSLA; Mannifield v. Talos Energy LLC, No. 4:22-cv-1831, 2023 U.S. Dist. LEXIS 23627 (S.D. Tex. Feb. 13, 2023) (Hanks).
This case presents the issue whether cases arising on floating structures connected to wells on the outer Continental Shelf can be removed to federal court based on the jurisdiction of the Outer Continental Shelf Lands Act. Marvin Mannifield was injured when he tripped and fell while power washing part of the floating production unit, M/V HELIX PRODUCER I, which was secured through a Disconnectable Transfer System to pipelines that were carrying oil and gas from multiple wells located on the outer Continental Shelf. Mannifield brought suit in Texas state court against the owner and operator of the HELIX PRODUCER under the Saving-to-Suitors clause, asserting that his claims were governed by the general maritime law and/or Section 5(b) of the LHWCA. Alternatively, he pleaded that his claims were governed by Texas law. The defendants removed the case based on the federal jurisdiction granted in the OCSLA, citing the jurisdictional provision in 43 U.S.C. Section 1349(b) that the federal courts have jurisdiction over cases arising out of any operation conducted on the OCS involving exploration, development or production of minerals from the OCS. Mannifield argued, however, that pursuant the Barker case decided by the Fifth Circuit, there was a situs requirement for jurisdiction (based on the choice-of-law provision in 46 U.S.C. Section 1333 that the structure be permanently or temporarily attached to the seabed of the OCS). He argued that the HELIX PRODUCER was floating and was not moored to the area and, therefore, failed the situs requirement set forth in Barker. The defendants did not contest that the case did not satisfy the Barker situs requirement because the HELIX PRODUCER “was an unmoored vessel floating on navigable water when Mannifield was allegedly injured.” However, the defendants cited the subsequent decision of the Fifth Circuit in the DEEPWATER HORIZON case and argued that it clarified that Section 1349 only requires for federal jurisdiction that there be a “but for” connection between the cause of action and an operation on the OCS involving exploration, development, or production of minerals. Noting the decision from Judge Lake that the Fifth Circuit opinions did not conflict (as well as the line of decisions from the Fifth Circuit such as the Recar case that divorced OCSLA jurisdiction from a situs requirement), Judge Hanks declined to find a situs requirement for jurisdiction under the OCSLA and applied the but-for test to conclude that Mannifield’s suit was properly removed to federal court (as it arose out of an operation on the OCS that involved exploration and production of minerals from the OCS). Thanks to Matthew H. Ammerman of Houston, Texas for bringing this opinion (and several other opinions in this Update) to our attention.
Vessel did not breach turnover duty by turning over the vessel to the stevedore in Alaska in an icy condition, but it may have violated the active control duty by trying to de-ice the hold where the longshore workers were unloading frozen fish; Nystrom v. Khana Marine Ltd., No. 3:20-cv-98, 2023 U.S. Dist. LEXIS 25974 (D. Alaska Feb. 15, 2023) (Kindred).
Elias Nystrom was employed as a longshore worker by Pacific Stevedoring in Dutch Harbor, Alaska to assist in unloading packages of frozen fish from the reefer vessel M/V SUAH. His shift was scheduled to last about 18 hours. After working in two holds of the vessel, he entered Hold 3 after the gang boss warned him that conditions would be “really icy” and that the hold “was going to be a mess.” The warning was prescient. The workers encountered two to three millimeters of ice on the walking surface, and several complained to the vessel’s crew about the slippery condition. Two crewmembers worked alongside the longshore workers to de-ice the walking surface, but Nystrom slipped on the ice while carrying a package of frozen fish. Nystrom brought this suit in federal court in Alaska against the owner and manager of the vessel under Section 5(b) of the LHWCA, and Nystrom argued that the defendants breached the turnover duty and the active control duty from Scindia. The defendants presented the declaration from the president of Pacific Stevedoring (as an expert on stevedoring) that an experienced longshore worker in Dutch Harbor can typically work safely around the conditions faced by Nystrom and that it was the duty of the stevedore and longshore workers to ensure that ice is safely cleared before continuing the work. Nystrom noted that the vessel crew had undertaken to de-ice the hold, eliminating any possible reasonable basis for relying on the stevedore to correct the hazardous condition. However, Judge Kindred held that the turnover duty relates to the condition of the vessel at the commencement of operations. As the actions of the crew occurred after the turnover of the vessel, and as an experienced longshore worker could reasonably work on icy surfaces on a reefer vessel in Dutch Harbor, Judge Kindred held that the claim based on violation of the turnover duty failed. However, once the crew began to de-ice the hold, there was a genuine issue whether the vessel had active control over the area and had negligently failed to remove the ice that caused Nystrom’s fall. Therefore, he denied summary judgment on the claim for violation of the active control duty.
Exclusive remedy against his employer of employee of contractor who worked more than 40% of the time on a drillship on the OCS was under the LHWCA, not the Jones Act, resulting in summary judgment for his employer; summary judgment was granted to the owner of the drilling vessel based on Section 5(b) of the LHWCA and to the oil and gas operator under either the maritime law or state law; Santee v. Oceaneering International, Inc., No. 4:21-cv-03489 (S.D. Tex. Feb. 16, 2023) (Hittner).
Shanon Roy Santee was employed by Oceaneering International as a remote operated vehicle technician. He was injured on the drillship, M/V DEEPWATER CONQUEROR, which was performing drilling operations on the outer Continental Shelf off the Louisiana coast. Santee brought this suit in state court in Houston, Texas against his employer Oceaneering, drilling contractor Transocean, and well operator Chevron, asserting claims under the Jones Act and general maritime law. Chevron removed the case to federal court based on federal question jurisdiction under the Outer Continental Shelf Lands Act (arguing that the Jones Act claim was improperly pleaded and did not prevent removal), and Santee moved to remand the case to state court, presenting Judge Hittner with two questions. The first question was whether Santee sufficiently pleaded a Jones Act claim against Oceaneering so as to invoke the bar to removal of Jones Act/FELA cases in Section 1445(a). Judge Hittner held that that Santee’s work as an ROV technician contributed to the function of the vessel and that the 763 days he spent aboard the DEEPWATER CONQUEROR pursuant to Oceaneering’s contract with Chevron (40% of his time over the last five years) satisfied the duration element of the connection test for seaman status. Judge Hittner then analyzed the factors set forth by the Fifth Circuit in the Sanchez case with respect to the nature element of the connection test, and he held that Santee’s allegiance was to Oceaneering, a shoreside employer, and not to the DEEPWATER CONQUEROR; that Santee was a transitory worker who performed discreet services on the vessel pursuant to a contract and was not permanently assigned to the vessel; but that Santee’s work was sea-based. Reasoning that the sea-based nature of Santee’s work was insufficient by itself to satisfy the nature element of the connection test, Judge Hittner held that Santee was not a seaman and the bar to removal was not applicable. Judge Hittner then considered whether there was jurisdiction under the OCSLA, and, as the drillship was attached to the OCS and was involved in exploration and development of oil and gas resources on the OCS, there was federal question jurisdiction under the OCSLA and the case was removable. See March 2022 Update.
Oceaneering moved for summary judgment (claiming it was immune from tort liability under the LHWCA), and Santee moved for reconsideration of its motion to remand. Judge Hittner stated that, as Santee was injured as a result of oil and gas operations on the OCS, his exclusive remedy was in the LHWCA and that his employer only needed to establish that it had LHWCA insurance at the time of the accident in order to invoke the exclusive remedy provision in the Act. Santee responded with a declaration detailing his job duties to show he was a seaman as well as the maintenance checks he received from his employer. However, Judge Hittner held that his seaman status was no longer an issue and that, regardless, his evidence did not create a genuine issue of material fact as to whether the exclusive remedy of the LHWCA was applicable. Holding that Oceaneering was immune from tort actions under the LHWCA, including actions under the Jones Act, Judge Hittner granted summary judgment to Oceaneering. See August 2022 Update.
Chevron and Transocean then moved for summary judgment. Chevron argued that Santee was an independent contractor and that Chevron did not exercise sufficient operational control over his work to impose vicarious liability for negligence under the general maritime law. Santee argued that Louisiana law applied and that Chevron retained sufficient operational control to impose vicarious liability on Chevron. Judge Hittner did not have to decide whether maritime law or Louisiana law applied as he concluded that the result was the same under either body of law. Judge Hittner cited the terms of the contract between Chevron and Santee’s employer, Oceaneering, that Oceaneering had complete control over the work performed and that its work was performed as an independent contractor. Despite Santee’s contention to the contrary, Judge Hittner noted that the facts presented did not show that Chevron directed Santee to perform the activity that caused his injury or that Chevron dictated how Santee was to perform that activity. Chevron argued that Santee’s unseaworthiness claim failed because Chevron did not own the vessel, but Santee argued that Chevron had operational control over the vessel that was sufficient to create a fact question for the unseaworthiness claim. Judge Hittner held, however, that Chevron only had a superintendent on the vessel to oversee the drilling operations and did not have a full crew to operate the vessel. Therefore, he denied Santee’s unseaworthiness claim. Judge Hittner analyzed Santee’s claims against Transocean under the Scindia duties for a negligence claim under Section 5(b) of the LHWCA. The turnover duty failed because the equipment Santee was using (an on which he was performing maintenance) was owned by Oceaneering. Santee argued that the area on the vessel where he performed the work was inadequate, making his work more dangerous (not large enough to accommodate his equipment), but Judge Hittner concluded that Santee failed to show that Transocean should have known that the area was not large enough for the work. As to the active control duty, Santee similarly argued that Transocean had control over the deck area and failed to warn Santee or remedy the hazard created by the lack of sufficient space to perform the maintenance on the Oceaneering equipment. However, Judge Hittner found that this argument failed because it was Santee and the other Oceaneering employees who were using the deck to perform their work and Transocean did not have active control of the equipment or the area where the work was being performed. With respect to the duty to intervene when the vessel owner has actual knowledge of the dangerous condition, Judge Hittner held that Santee was unable to show that Transocean had actual knowledge of the allegedly dangerous condition. Finally, Judge Hittner held that, as the LHWCA applied to Santee’s claims, his unseaworthiness claim was replaced by the negligence remedy under Section 5(b) and failed as a matter of law.
From the state appellate courts
Floating barge serving as work platform at ship repair and cleaning facility was not a vessel, and welding foreman failed the nature and duration elements of the test for seaman status so that his remedy against his employer was pursuant to the LHWCA; Jackson v. Chem Carriers, L.L.C., No. 2022-C-01770 (La. Feb. 14, 2023), denying cert. to No. CA 0043, 2022 La. App. LEXIS 1912 (La. App. 1st Cir. Nov. 4, 2022) (Theriot).
Clarence Jackson was employed by Plaquemine Point Shipyard as a welding foreman. Plaquemine Point owns and operates a ship repair and cleaning facility attached to the east bank of the Mississippi River a few miles south of Baton Rouge, Louisiana. The repair facility begins with the TT barge, which runs from the bank in a perpendicular direction (with a welded ramp and utility lines). The PPS-10 barge is then secured perpendicularly to the TT barge by cables with utility connections from the TT barge. The facility also has the Tucker barge (with a cherry picker and small crane) that moves weekly, a dry dock, a shop barge, and other floating equipment. Jackson lived at home and drove to the facility daily. He would go out onto customer barges that were brought to the facility to test tanks and sometimes assist with tying off the barges. He operated heavy equipment, including the crane on the Tucker barge. He traveled by boat two or three times to perform welding work. On the day he was injured, Jackson was welding on the TT barge when he was asked to look at a weld on a barge that was secured between the Tucker barge and the PPS-10. When he was returning to the TT barge, he was called to the PPS-10 for a problem with the welding machine on the PPS-10. After fixing the problem on the PPS-10, Jackson tripped over a welding lead on the PPS-10 and fell on his right shoulder. Jackson brought suit in the District Court of Iberville Parish, Louisiana against Plaquemine Point Shipyard, seeking to recover under the Jones Act and general maritime law. Judge Kimball held a bench trial, and, after the trial was held but before he issued his decision, the en banc Fifth Circuit published its opinion in Sanchez, setting forth factors to consider in determining whether a worker satisfies the nature element of the connection test for seaman status. Judge Kimball did not address or follow Sanchez and found that the PPS-10, Tucker barge, three pontoon boats, sand barges, and a rescue skiff, owned by the shipyard, were all vessels and constituted an identifiable fleet. Judge Kimball found that Jackson spent more than 30% of his time on the fleet, that he was subject to the perils of the sea, that the shipyard was negligent under the Jones Act, that Jackson had a claim for unseaworthiness, that Jackson was entitled to maintenance and cure, and that the shipyard was liable for failure to pay maintenance and cure. Judge Kimball awarded judgment for $1 million for the tort claims and $406,668.19 in maintenance and cure (with maintenance payable at $75 per day until Jackson is determined to have reached maximum cure). The shipyard and its insurer appealed to the Louisiana Court of Appeal in Baton Rouge, and Judge Theriot wrote a thorough opinion on application of the elements of the test for seaman status to the facts of Jackson’s claim. Jackson argued that the PPS-10 was not permanently moored and had moved several times since arriving at the shipyard. However, the shipyard argued that its function was as a work platform, it had large openings in its deck and bulkheads, and it was not practically capable of transporting people or cargo over water. Although the PPS-10 was designed to haul rail cars, it was brought to the shipyard and used in different capacities until it was tried off in its current position to the TT barge for the repair facility. After it was tied off, it had not moved except when its lashings broke or when it was shifted three or four feet for incoming barges. The penetrations made in the barge to open it for storage and access were not sealed or watertight, and it was insured as a work platform. Evaluating the facts under the principles enunciated by the Supreme Court in Lozman, Judge Theriot concluded that a reasonable observer, looking to the activities of the PPS-10, would not consider it designed to a practical degree for carrying people or things over water, and the finding that it was a vessel was manifestly erroneous. Judge Theriot then turned to the substantial connection test for seaman status with its nature and duration elements. Although the appellate court concluded that the PPS-10 was not a vessel and could not be considered for the seaman status analysis, Judge Kimball found that the Tucker barge, the three pontoons, the sand barges, and the rescue skiff were all vessels and part of an identifiable fleet. Therefore, Judge Theriot addressed the connection test in relation to the other structures. Judge Theriot meticulously applied each of the factors set forth by the en banc Fifth Circuit in Sanchez to determine whether Jackson’s connection was substantial in nature. Although Jackson testified that he spent 90% to 100% of his time over water, Judge Theriot concluded that Jackson’s work was not of a seagoing nature as his work was performed on vessels that came to the shipyard for repair and none of his work was done while any vessel performed transportation activities (his assistance in tying off incoming vessels was not performed as a deckhand). With respect to the factor whether his assignment to a vessel was limited to performing a discrete task or ended with him sailing with the vessel, Judge Theriot did not find that Jackson’s work on the structures was just performing discrete tasks; however, Jackson did not travel with the boats for his welding except to ride to vessels two or three times. Finally, Judge Theriot noted that there were risks of falling in the water and from wakes of passing vessels, but he held that, as the work was not sea-based and did not involve seagoing activity, Jackson could not satisfy the nature element of the connection test. With respect to the duration test (and the 30% rule of thumb), Judge Theriot eliminated the time Jackson spent on the PPS-10, the time he spent on customer vessels (not part of the fleet), and the time spent traveling on vessels to location (he was a passenger and not in service of the vessel). That did not leave 30% of his time on the structures considered to be the fleet of vessels. Consequently, Judge Theriot reversed the award in favor of Jackson against the shipyard and remanded the case for further proceedings under the LHWCA.
Jackson applied to the Louisiana Supreme Court for a writ of certiorari, and, on February 14, 2023, the Court denied the writ application on a 5-2 vote. Thanks to Trevor M. Cutaiar, Georges M. Legrand, and Julie A. Gravois with Mouledoux, Bland, Legrand & Brackett LLC in New Orleans for bringing this case to our attention.
Inconsistent testimony of longshore worker was insufficient to support his case against his employer/stevedore for his wife’s death from lung cancer allegedly caused by exposure to asbestos that he took home on his work clothes; Allen v. Eagle, Inc., No. 2022-CA-0622, 2023 La. App. LEXIS 266 (La. App. 4th Cir. Feb. 24, 2023) (Belsome).
Odell Allen was a longshore worker and freight handler for various employers in New Orleans from the 1960s to the 1980s. His wife, Joyce Allen, died from lung cancer that Mr. Allen attributed to exposure to asbestos on his work clothes, and he brought suit in Louisiana state court against a number of parties, including Ports America (successor to one of his employers). Ports America filed a motion for summary judgment, contending that its predecessor companies did not handle asbestos cargo at the Port of New Orleans. Ports America submitted testimony from Mr. Allen in an unrelated matter (2004) and in this case (September 2021) in which he stated that he had no personal knowledge of handling asbestos cargo and that he could not remember anyone talking about asbestos cargo while working for Ports America. Ports America also submitted the deposition testimony of Mr. Allen in this case (July 2021), contradicting the statements he made in his prior and subsequent depositions and stating that he did move dusty sacks of asbestos while employed by a predecessor of Ports America. The district court granted summary judgment to Ports America, and Allen appealed. Ports America argued that Allen’s inconsistent testimony was insufficient to create a fact issue, and Mr. Allen argued that the testimony was not inconsistent. He claimed that in the 2004 deposition he did not remember what cargos he handled, but that his recollection was refreshed when he testified about handling asbestos sacks in July 2021. Writing for the Court of Appeal, Judge Belsome answered that Mr. Allen failed to address the fact that in the last deposition (September 2021), Mr. Allen reiterated that he could not say what type of cargo he handled for Ports America. Therefore, Judge Belsome considered Allen’s testimony to be internally inconsistent. He also noted that Mr. Allen failed to introduce evidence from other workers in unrelated asbestos cases and that, in response to an inquiry from the district judge, counsel for Mr. Allen stated that he deemed it unnecessary and did not want “to burden the court with all of that evidence.” Concluding that the inconsistent evidence, standing alone, was insufficient to establish the material fact of exposure to asbestos while employed by Ports America, Judge Belsome affirmed the summary judgment.
And on the maritime front . . .
From the federal appellate courts
Fifth Circuit agreed that rent-a-captain was a borrowed servant of the owner of the tug on which he was serving as captain; Garner v. Pontchartrain Partners, LLC, No. 20-1179, 2023 U.S. App. LEXIS 3239 (5th Cir. Feb. 9, 2023) (per curiam).
Jerode Garner was injured on the M/V MARY JANE, which transported rocks in connection with the construction of breakwater jetties to protect Grand Isle, Louisiana. The captain of the vessel, Kevin Morgan, was a W-2 employee of Z.E. Services, and his salary and benefits were provided by that company. However, he was assigned to work on the vessel, owned by Pontchartrain Partners, pursuant to an agreement that the captain called a rent-a-captain arrangement. Garner brought this suit in federal court in Louisiana against both Z.E. Services and Pontchartrain Partners, and Z.E. Services moved for summary judgment on the basis that Captain Morgan was a borrowed servant of Pontchartrain Partners so that Pontchartrain Partners, and not Z.E. Services, was liable for the acts/omissions of the captain. Judge Lemmon considered the borrowed servant factors from the Fifth Circuit’s Ruiz case and held that Pontchartrain Partners exercised control over the captain’s work, that the work being performed was for Pontchartrain Partners, that there was an agreement under which the services were to be administered and approved by Pontchartrain Partners, that the captain agreed to the work arrangement requiring him to report to Pontchartrain Partners, that the captain’s employment was not terminated with Z.E. Services but he had little communication with Z.E. Services during the work, that the vessel and lodging were provided by Pontchartrain Partners, that the captain had worked for Pontchartrain Partners for three months, that Pontchartrain Partners had the right to terminate the captain’s work at the jobsite, and that Pontchartrain Partners ultimately paid for the captain’s services. As the factors supported borrowed servant status with Pontchartrain Partners, Judge Lemmon granted summary judgment to Z.E. Services. See July 2020 Update.
Pontchartrain Partners filed a notice for an interlocutory admiralty appeal under Section 1292(a)(3) and sought a stay of the matter pending resolution of the interlocutory appeal. Pontchartrain Partners argued that it was only required to show a substantial case on the merits in order to obtain the stay because it presented a serious legal question, but Judge Lemmon disagreed and held that it had to make a strong showing of a likelihood of success on the merits. She rejected the contention that the appeal presented a serious legal question, reasoning that her opinion involved a straightforward application of the Ruiz factors, resulting in the borrowed employee finding. Therefore, she declined to grant the stay. See September 2022 Update. The interlocutory appeal continued, and the Fifth
Circuit agreed that the Ruiz factors “overwhelmingly support the district court’s ruling.” Pontchartrain Partners argued that summary judgment was inappropriate, citing factual disputes; however, the Fifth Circuit answered that the issue whether a worker is a borrowed employee is a question of law to be decided by the court and not by the jury. As to the “central question” in deciding whether a worker is a borrowed employee—control over the employee—Pontchartrain Partners argued that Captain Morgan was working as the captain, but the Fifth Circuit held that Pontchartrain Partners’ contention “conflates control with the degree to which it was necessary to exercise control.” Consequently, the Fifth Circuit affirmed the summary judgment in favor of Z.E. Services.
Fourth Circuit affirmed judgment in favor of shipyard, awarding it recovery based on a lien for necessaries after delivery of a vessel and fire on the vessel the next day, denying recovery on the counterclaim against the shipyard, and rejecting the vessel owner’s attempt to revoke acceptance of the vessel after the fire; Hatteras/Cabo Yachts, LLC v. M/Y EPIC, No. 21-2241, 2023 U.S. App. LEXIS 3598 (4th Cir. Feb. 15, 2023) (per curiam).
Hatteras entered into a sales contract with Spisso as agent for Acquaviva to construct a yacht. After Spisso filed suit for breach of contract and warranties, the parties entered into a settlement agreement for a purchase/sale of another yacht. The day after Spisso arrived to take possession, the yacht (EPIC) caught fire with Spisso and his guests onboard, and the vessel was returned to shore where it remained in custody of Hatteras. Hatteras offered to repair the damage, but Spisso refused to take possession, and Hatteras incurred costs for which it brought suit against the yacht and Acquaviva. Acquaviva (and Spisso as an intervenor) brought a fifteen-count counterclaim against Hatteras and two other entities, and the claims were tried to Judge Britt. Spisso argued that he had justifiably revoked his acceptance of the EPIC and could not be liable for necessaries after title had transferred back to Hatteras. Finding that the attempt to revoke acceptance was objectively unreasonable, Judge Britt held that Spisso and Acquaviva were liable for the necessaries for which Hatteras provided sufficient evidence in support. Concluding that the Hatteras express limited warranty for the EPIC met the legal requirements necessary to disclaim implied warranties of merchantability and fitness under North Carolina law, Judge Britt rejected Spisso’s implied warranty claims. Noting that the claim for the fire on the vessel did not constitute a claim for breach of an express warranty other than for repair or replacement of defective parts or materials, and there was no evidence of the cost of repairing the EPIC’s alleged defective fire system, Judge Britt denied the express warranty claim. He also declined to find that Hatteras was negligent, that it had wrongfully possessed or converted the EPIC, that it had violated an implied covenant of good faith and fair dealing under North Carolina law, or that it had committed a deceptive trade practice under North Carolina law. Therefore, Judge Britt entered judgment in favor of Hatteras for the value of the necessaries it had provided. See November 2021 Update.
Having prevailed on the deceptive trade practice claim under North Carolina law, Hatteras, as the successful counterclaim defendant, sought to recover attorney fees under the North Carolina statute, which gives the presiding judge discretion to award fees if the party bringing the action should have known that the action was frivolous and malicious. Reasoning that the claims survived a motion to dismiss and a motion for summary judgment and that the counterclaim plaintiffs did present evidence in support of their claim at trial, Judge Britt could not conclude that the counterclaim plaintiffs knew or should have known that the claims were frivolous and malicious and declined to award attorney fees. See January 2022 Update.
The defendants appealed to the Fourth Circuit, and, in a short per curiam opinion without oral argument, the appellate court affirmed the judgment in favor of Hatteras on all of the issues presented in the suit by Hatteras and in the counterclaim.
From the federal district courts
Peter Rocco D’Ancona was the owner of the TALKIN TRASH. According to the pleadings, Town & Country Marina and Vic’s Marina East own and operate Town & Country Marina in Center Moriches, New York. Before June 30, 2018, the marina took possession of the vessel to conduct repairs but they cracked or broke a hose that served to expel carbon monoxide from an onboard generator in the engine compartment. From June 30, 2018 to July 1, 2018, D’Ancona and Clemendina Sgambati were passengers on the vessel while it was docked at Slip 4 at Cherry’s Bar in Fire Island, New York. They allegedly died from carbon monoxide poisoning from gas that escaped from the broken hose. The D’Ancona Estate brought an action in New York state court against Town & Country, and the Sgambati Estate brought an action in New York state court against Town & Country and the D’Ancona Estate. The D’Ancona Estate then brought this action in federal court in New York seeking to limit its liability for the TALKIN TRASH. After the limitation court declined to stay claims against the non-vessel defendants, the D’Ancona Estate settled with the Sgambati Estate and the D’Ancona Etate moved for summary judgment in the limitation action on Town & Country’s claims for contribution and indemnity. That caused the limitation court to ask for briefing on the admiralty jurisdiction for the limitation action. After determining that the locality test for admiralty jurisdiction was satisfied where the incident took place on a vessel docked on navigable waters, Magistrate Judge Scanlon considered the connection test and whether the possibility of an emergency response when a person is injured on a docked vessel may have the potential to disrupt maritime commerce. She noted that at least three circuits have relied on the potentially disruptive effect of a maritime emergency to sustain admiralty jurisdiction even when the activities or vessels were recreational. However, she added that the potential danger to shipping from a maritime emergency response may be more significant when the rescue is at sea than when the rescue is at the dock. In this case Magistrate Judge Scanlon focused on the fact that the vessel was docked overnight, the passengers were presumably sleeping (they were not navigating the vessel), and there was no potential for damage or obstruction of other vessels (as there would be if the incident had been a fire, for example). Consequently, she recommended that the action be dismissed for lack of admiralty jurisdiction. However, if admiralty jurisdiction were found to exist in the case, she recommended that the contribution/indemnity claims against the D’Ancona Estate be dismissed under AmClyde in light of the settlement between the D’Ancona Estate and the Sgambati Estate.
Fact disputes on fault prevented summary judgment for the claimants in limitation action arising when co-owner/navigator of vessel ran the vessel aground; vessel insurer was entitled to any limitation granted to the vessel owner; Castillo v. Guardian Insurance Co., No. 20-1262, 2023 U.S. Dist. LEXIS 16687 (D.P.R. Jan. 30, 2023) (Dominguez).
This is a limitation action brought by James Ugobono-Diaz and Francisco Rivera-Morales, owners of the vessel MARINA & PAQUITO. Rivera invited friends and acquaintances on the vessel with the consent of Ugobono, and Rivera was navigating the vessel in waters adjacent to Marina Puerto del Rey in Puerto Rico when the vessel ran aground. Two suits were filed to recover damages from the incident before this limitation action was filed in federal court in Puerto Rico. The claimants in the limitation action sought dismissal of the limitation proceeding on the ground that the vessel was operated by an incompetent and inadequately trained captain who was operating the boat over the speed limit, at night and under the influence of alcohol, and with inoperative or faulty navigational equipment. As the owners had privity with the unseaworthy condition of the vessel, the claimants argued that limitation should be denied. The claimants also argued that the owners’ insurer should not be entitled to limit its liability as it did not have a proprietary interest in the vessel. Addressing the argument on the privity of the owner, Judge Dominguez noted that the claimants had the burden to establish unseaworthiness or negligence on the owners and that the burden would then shift to the owners to demonstrate their lack of privity or knowledge. Reviewing the allegations of fault, Judge Dominguez found many disputed facts that ended the inquiry with the failure to carry the burden of establishing unseaworthiness or negligence of the owners. He then turned to the extent of liability of the insurer under the Puerto Rico direct action statute. Although the defense of limitation of liability is a personal defense that is not available to the insurer, the insurance policy provided that the limitation defense from the federal statute would inure to the benefit of the insurer as well as to the owner of the vessel. Consequently (as in Judge Brown’s en banc Fifth Circuit decision in the Crown Zellerbach case with respect to the Louisiana direct action statute), Judge Dominguez held that the insurer would not be required to pay more than the amount that the owners were ordered to pay.
Vessel owner sufficiently pleaded estoppel claims against his broker and the insurer with respect to the issuance of a policy four days after an allision; Magi v. Rich, No. 20-8881, 2023 U.S. Dist. LEXIS 15962 (D.N.J. Jan. 31, 2023) (Quraishi).
This litigation involves the insurance coverage for a small vessel that allided with another vessel. Mark and Marie Magi are recreational boaters who own a 21-foot Aquasport. William Rich owns a 36-foot Contender. On November 3, 2019, Mark Magi was fishing from his vessel about three miles east of Barnegat Inlet on the New Jersey coast when Rich’s vessel struck the port side of the stationary Magi vessel, injuring Magi. On August 19, 2019, broker Sea Insure sent a yacht insurance application to Rich, and Rich claimed that he provided all the requested information needed for Sea Insure to bind coverage with insurer Markel. However, Sea Insure did not obtain coverage with Markel until after the accident. Magi brought this action in federal court against Rich and Magi’s insurer, GEICO (seeking uninsured/underinsured boater coverage), and Rich filed a third-party action against Sea Insure and Markel. Sea Insure and Markel moved to dismiss the third-party complaint, and Judge Quraishi held that the claim for breach of contract against Markel had to be dismissed because the policy did not take effect until four days after the accident. Rich also alleged a claim of equitable estoppel against Markel based on alleged misrepresentations by Sea Insure on behalf of Markel (as an agent of Markel). Markel cited the provision in the insurance application that the applicant must submit a fully completed application and premium in order for coverage to be considered. Although that provision militated against the estoppel claim, it did not dispel it entirely as it was plausible that Rich may have been misled into believing that he would have coverage when he supplied the information based on alleged misrepresentations by Sea Insure. Whether Markel could be held liable for Sea Insurer’s misrepresentations required an examination of the contractual relationship between Markel and Sea Insure to determine the actual authority of Sea Insure as well as consideration of evidence whether Sea Insure was vested with apparent authority. Thus, Judge Quraishi did not dismiss the equitable estoppel claim against Markel (or the similar claim against Sea Insure). With respect to the claim against Sea Insure for breach of contract, Judge Quraishi noted that, under New Jersey law, the claim against an insurance broker for failing to obtain proper insurance sounds in negligence and not in contract. Accordingly, he dismissed the claim against Sea Insure for breach of contract. Besides the negligence claim, Rich pleaded a claim against Sea Insure for professional malpractice based on breach of a fiduciary duty to provide services within the standards accepted by insurance brokers. As that claim contained several statements followed by a legal conclusion that the conduct amounted to professional liability that caused him harm, Judge Quraishi reasoned that it failed the pleading requirements set forth in Iqbal. Thus, he dismissed that count without prejudice. Similarly, Judge Quraishi held that the fraud claim failed the heightened pleading standard set forth in Rule 9 and would have to be repleaded.
When an arbitration clause contained conflicting requirements for the appointment of arbitrators in comparison to the Rules incorporated into the clause, the contract provision governed over the Rules; however, the vessel owner was estopped from enforcing the contract provision when it invoked the Rules in the selection of its arbitrator; Defiance Charters, L.L.C. v. Florida Yacht Management, L.L.C., No. 22-cv-62020, 2023 U.S. Dist. LEXIS 16261 (S.D. Fla. Jan. 31, 2023) (Bloom).
Defiance Charters is the owner of a yacht, and it contracted with Florida Yacht Management to provide maintenance, repair, and management services for the yacht. The yacht caught fire when in the custody of Florida Yacht Management, and the parties agreed that the contract between the parties provided for arbitration under the Miami Maritime Arbitration Council Rules. The dispute between the parties involved the number and selection of arbitrators. The agreement provided that each party would appoint an arbitrator and the two would appoint a third arbitrator; however, it also provided that if one party appointed an arbitrator and the other failed to appoint an arbitrator within 20 days after notice of the first appointment, then the first arbitrator would act as the sole arbitrator. The Rules of the Miami Maritime Arbitration Council were slightly different, providing that if the second party did not appoint an arbitrator within 30 days, the first party may request the Council to appoint the second arbitrator. Defiance Charters appointed its arbitrator, and Florida Yacht Management appointed its arbitrator 30 days later. Defiance Charters objected to the appointment and brought this suit to compel arbitration with the single arbitrator in accordance with the provision in the agreement. Judge Bloom first noted that Defiance Charters was correct that the parties are free to include provisions in their contract that conflict with rules that are incorporated by reference. Thus, even though the contract incorporated the Rules of the Miami Maritime Arbitration Council, the specific provisions in the arbitration agreement took precedence (the Rules were incorporated only to the extent that they did not conflict with the express provisions in the contract). Judge Bloom then considered the question whether the specific language in the arbitration provision did not apply because of waiver or estoppel. When Defiance Charters selected its arbitrator, it stated: “Going forward, pursuant to Article 7 of the MMAC the first item of business is to nominate our arbitrators. By this Notice of Arbitration, Claimant nominates Robert S. Glenn, Jr. as arbitrator.” However, Judge Bloom noted that Defiance Charters also referred to the clause in the agreement in the same notice and that it objected immediately to the appointment of the arbitrator by Florida Yacht Management. Therefore, she could not conclude that there was an implied waiver by Defiance Charters of its rights under the contract. Judge Bloom reached a different conclusion on the issue of equitable estoppel. Defiance Charters represented that it was appointing an arbitrator pursuant to Article 7 of the MMAC and it was aware that Article 7 contained a longer period for Florida Yacht Management to select its arbitrator. She concluded that Florida Yacht Management had a good-faith belief that, based on Defiance Charters’ notice, the parties were proceeding under the MMAC Rules and not the terms of the contract clause. Consequently, based on equitable estoppel, Judge Bloom held that the arbitration would proceed with the two arbitrators who were appointed and a third arbitrator appointed pursuant to the agreement.
Ownership or operational control of vessel did not support vicarious liability for the actions of every worker on the vessel; Banks v. Alliance Offshore, L.L.C., No. 22-3733, 2023 U.S. Dist. LEXIS 16602 (E.D. La. Feb. 1, 2023) (Africk).
Aaron Banks, an employee of Diverse Safety & Scaffolding, was injured while working on the lift boat NASHVILLE, owned and operated by Alliance Offshore. He claimed that he was injured when another worker (referred to as the instigator) physically bumped him into a piece of furniture. Banks filed suit in federal court in Louisiana against Alliance Offshore and Apache Corp., stating that he did not know the identity of the instigator but that he was an employee of Apache. Banks alleged that Apache and Alliance Offshore were negligent in their failure to supervise their agent, representative, and employee. Alliance Offshore moved for summary judgment on the ground that the complaint alleged that the instigator was an employee of Apache, so Alliance Offshore was not liable for the action of the instigator. Banks responded that there was uncertainty as to whether the instigator was an independent contractor or acting outside the course of employment and that the ownership or operational control of the vessel was sufficient to create an agency relationship with respect to the instigator. Additionally, Banks argued that the instigator may have been a borrowed servant of Alliance Offshore. Judge Africk rejected the argument that ownership or operational control of the vessel alone was sufficient to establish vicarious liability and dismissed the claims based on direct or vicarious liability. Turning to whether the instigator was a borrowed employee, Banks did not allege that the instigator was under the control of Alliance Offshore or attempt to establish any of the other Ruiz factors to establish borrowed-employee status. As there was no plausible claim for relief against Alliance Offshore, Judge Africk dismissed the claims against Alliance Offshore without prejudice.
Passenger’s allegations related to escape of jet of hot steam did not indicate how the cruise line should have known of the dangerous condition for direct liability or identify any negligence of a crew member for vicarious liability; Rosenberg v. NCL (Bahamas) Ltd., No. 22-23642, 2023 U.S. Dist. LEXIS 17375 (S.D. Fla. Feb. 1, 2023) (Scola).
Joseph Rosenberg was a passenger on the GETAWAY. He claims he was injured when a jet of hot steam came directly out of the bed of stone/coals and struck him on the arm, wrist, and hand. He brought this suit in federal court in Florida against the cruise line and spa contractor, and the defendants moved to dismiss the complaint. To support the claim of direct negligence, Rosenberg alleged that there was a malfunction in the spa and the defendants should have known of the dangerous condition because the condition occurred with regularity and there were prior similar incidents. However, Judge Scola noted that Rosenberg failed to provide any support for those assertions. Rosenberg tried to establish notice by claiming that the jet was not the usual steam, that it could only have occurred by a malfunction, and that the sauna was closed the next day. As these claims only involved the incident in which Rosenberg was injured and did not indicate how the defendants should have known of a dangerous condition beforehand, Judge Scola dismissed the direct liability claims. Although Rosenberg tried to avoid the lack of notice by pleading a claim of vicarious liability based on failure of the crew to maintain the sauna, he failed to identify any specific crew member whose negligence caused his injury. As Rosenberg did not request leave to amend, Judge Scola dismissed the complaint with prejudice.
Workers who were injured when a liftboat listed and sank could not establish causation for any faults of the contractor hired to assist in positioning the liftboat because the claimants blamed the improper preload of the vessel for the incident; time charterer of the liftboat was potentially liable for directing the positioning of the vessel; Louisiana law applied to indemnity obligations that arose from contracts to work on fixed platform even though indemnity was sought by parties who provided a vessel and services in connection with the positioning of the vessel; although indemnity was invalidated under Louisiana law, the defense obligation was not invalidated for parties who were exonerated of fault, and the defense obligation was shared equally between indemnitors, even though one indemnitor employed six claimants and the other only employed one claimant; In re Aries Marine Corp., Nos. 19-10850, 19-13138, 2023 U.S. Dist. LEXIS 17450, 18204, 20071, 21885 (E.D. La. Feb. 1, 3, 7, 9, 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 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 conducted 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 work 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 they knew the conditions were hazardous and by sending the liftboat to a dangerous area and 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 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.
One prior similar incident on a sister ship was sufficient to establish constructive notice for a passenger’s injury suit against the cruise line; whether passenger misused sink by grabbing it to pull herself up was a quintessential fact question; fracture in passenger’s neck after fall did not require medical testimony on causation to defeat a motion for summary judgment; Worley v. Carnival Corp., No. 21-cv-23501, 2023 U.S. Dist. LEXIS 18534 (S.D. Fla. Feb. 1, 2023) (Goodman).
Doretha Worley was a passenger on the SENSATION. While in her stateroom, she grabbed the bathroom sink to pull herself up from the toilet but the sink detached from the wall causing her to fall. She brought this suit against the cruise line in federal court in Florida, and the cruise line moved for summary judgment on the ground that it had no notice that the cabin sink was in an allegedly dangerous condition. It also argued that Worley had misused the sink as a support device, and that was not a foreseeable misuse. The evidence demonstrated that the sink attaches to the wall with a locking mechanism and that the sink had been left in an unlocked position. A passenger on a sister class ship had fallen using an almost-identical sink that was not properly locked approximately six months before Worley’s accident. As there was no evidence other than speculation about how or how long the sink had been unlocked, Worley could not establish constructive notice by the method of demonstrating that the dangerous condition existed long enough for the cruise line to have learned of it and done something about it. Therefore, Worley alleged that the cruise line had constructive notice of the dangerous condition because of the incident involving a passenger on a similar ship. The cruise line argued that the incidents were not similar because the passenger in the other case held the sink to avoid a fall as the ship was rocking, but Worley grabbed the sink to pull herself up from the toilet. Magistrate Judge Goodman noted that the Eleventh Circuit had held in the Cogburn case that a single prior incident that was substantially similar could defeat the cruise line’s motion for summary judgment and that Chief Judge Altonaga had recently relied on that decision to deny a cruise line’s motion for summary judgment based on one prior incident. Considering the prior incidents in those cases and in Worley’s suit to analogous, Magistrate Goodman denied summary judgment to the cruise line on the notice argument. He also declined to grant summary judgment on the argument that Worley misused the sink, noting that the argument was akin to a comparative negligence approach, and that these arguments are “quintessential jury issues, inappropriate for summary judgment.” Finally, the cruise line argued that Worley had not obtained a medical opinion that her fall was the cause of her injuries. Magistrate Judge Worley disagreed. The causation in this case was within the ordinary experience of laymen. Worley had X-Rays and imaging a few days after her accident that confirmed a fracture in her neck. Magistrate Judge Goodman believed that was sufficient to avoid summary judgment and that the cruise line could renew its argument at trial when the judge would “have a more-nuanced understanding of the medical testimony.”
Judges granted summary judgment on opt-out claims from the DEEPWATER HORIZON/Macondo spill for lack of evidence on causation and declined to admit insufficient expert opinions on causation or reconsider the exclusion of the insufficient expert opinions as a sanction for BP’s failure to collect dermal or biometric data on those exposed to the oil and chemicals after the spill; Sproat v. BP Exploration & Production, Inc., No. 17-4255, 2023 U.S. Dist. LEXIS 17431 (E.D. La. Feb. 2, 2023) (Milazzo); Bradley v. BP Exploration & Production, Inc., No. 17-4136, 17-4142, 2023 U.S. Dist. LEXIS 17446 (E.D. La. Feb. 2, 2023) (Milazzo); Barnes v. BP Exploration & Production, Inc, Nos. 17-3629, 17-3985, 17-3147, 17-4453, 17-4471, 17-4507, 17-4563, 17-4002, 17-3022, 17-4322, 17-4578, 17-4588, 17-4564, 2023 U.S. Dist. LEXIS 17447 (E.D. La. Feb. 2, 2023) (Milazzo); Williams v. BP Exploration & Production, Inc. No. 17-4277, 2023 U.S. Dist. LEXIS 17453 (E.D. La. Feb. 2, 2023) (Milazzo); Charles v. BP Exploration & Production, Inc., Nos. 17-3125, 17-3499, 17-3555, 17-3564, 17-3574, 17-3598, 17-3628, 17-4367, 17-3053, 17-4608, 2023 U.S. Dist. LEXIS 17455 (E.D. La. Feb. 2, 2023) (Milazzo); White v. BP Exploration & Production, Inc., No. 17-4229, 2023 U.S. Dist. LEXIS 17456 (E.D. La. Feb. 2, 2023) (Milazzo); Brown v. BP Exploration & Production, Inc., No. 17-4141, 2023 U.S. Dist. LEXIS 17457 (E.D. La. Feb. 2, 2023) (Milazzo); Howell v. BP Exploration & Production, Inc., No. 17-3287, 2023 U.S. Dist. LEXIS 19126 (E.D. La. Feb. 6, 2023) (Vance); Blanks v. BP Exploration & Production, Inc., No. 17-3050, 2023 U.S. Dist. LEXIS 23589 (E.D. La. Feb. 13, 2023) (Vitter); Martin v. B.P. Exploration & Production, Inc., No. 17-4424, 2023 U.S. Dist. LEXIS 30757 (E.D. La. Feb. 24, 2023) (Vance).
Nancy Sproat claimed injuries from clean up work at the Pascagoula, Theodore, and Lake Charles decontamination sites related to the Macondo/DEEPWATER HORIZON spill. Charles Williams sought recovery for conditions related to exposure to toxic substances at Gulfport, Mississippi. Patricia Howell’s claim related to cleanup work in the Gulf of Mexico. Lizzie Martin claimed exposure to toxic chemicals by virtue of her presence in the environment in Gulfport, Mississippi. As these plaintiffs failed to support their claims with expert testimony as to causation, Judges Vance and Milazzo granted summary judgment for lack of evidence of causation and dismissed the suits.
Eric Bradley and Regina Brown brought claims for exposure to harmful substances along the Mississippi Gulf Coast. Ricardo White alleged claims from exposure at Pascagoula, Mississippi from his work with the Vessels of Opportunity Program. Donna Brown claimed exposure at Gulfport and Biloxi, Mississippi. Romond Blanks alleged exposure as a cleanup worker in the coastal areas near Venice, Louisiana. These plaintiffs presented the opinions of Dr. Jerald Cook, an occupational and environmental physician to carry their burden on causation (Blanks submitted the opinion of Dr. Cook after the deadline for submission of expert reports, but BP challenged the opinion as insufficient and not because it was late). BP moved for the exclusion of the expert opinions and for summary judgment. Judges Milazzo and Vitter held that Dr. Cook’s opinions were insufficient on general causation and were excluded. Consequently, without expert support, these cases were dismissed with prejudice.
Krystal Barnes, Tonnie Lee Easterling, Johnny Elzey, Dale Hunter, Anthony L. Moore, Linda Pace, Don Poole, Frank Michael III, Duke Allen Mackles, Latonya Sherell Anderson, Hakim Dumas, Codie James Scott, Charles D. Stapleton, and James Dewayne Lawrence sought to recover for exposure during cleanup work after the oil spill, and they presented the expert report of Dr. Cook to support the causation requirement for their claims. BP moved to exclude Dr. Cook’s opinions, and these 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. Judge Milazzo agreed that Dr. Cook’s opinions should be excluded and then added that, even assuming the plaintiffs could prove that BP was guilty of spoliation, it would not solve the problem that the opinions were unhelpful, unreliable, and inadmissible. Consequently, Judge Milazzo granted summary judgment to BP and dismissed these actions with prejudice.
Corey Anthony Charles, Sterling Wayne Boler, Jacques Pierre McInnis, Jr., Jesse Cantu Medel, III, Dennis Ray Moore, Mark L. Peschlow, Teandra S. Aubert, Terria Jenkins, Chianti Lashon Booth, and Carlos Alexander Thomas brought claims against BP for conditions they claim arose from exposure to oil and chemicals from the spill. Their claims were dismissed after Judge Milazzo determined that Dr. Cook’s opinions were inadmissible. These plaintiffs moved to reconsider the dismissal of their claims, noting that BP was sanctioned in another case for failing to produce a proper corporate witness to testify about biological monitoring. Judge Milazzo declined to grant reconsideration, however, noting that the discovery sanctions were not relevant because the exclusion of Dr. Cook’s opinions did not depend on the dermal and biometric data that BP allegedly failed to collect.
Question whether the Coast Guard made a mistake in matching boats after receiving a call about a capsized boat was sufficient to allow a suit to proceed against the United States based on a “worsened the situation” theory (that the Coast Guard’s decision that no boat was in distress terminated rescue efforts of other potential rescuers); Powers v. United States, No. 21-517, 2023 U.S. Dist. LEXIS 17881 (W.D. Wash. Feb. 2, 2023) (Zilly).
Michael Powers was injured when his 20-foot Duckworth Navigator sank in navigable waters approximately 1.2 miles west of the Deception Pass Bridge in Washington. He claimed that his boat was hit by a rogue wave and sank. Powers was pulled from the water about eight hours later, but his cousin died about twenty or thirty minutes after being thrown from the vessel. Powers brought this suit in federal court in Washington against the United States under the Suits in Admiralty Act, alleging that his rescue was delayed by negligence on the part of the Coast Guard. Powers recognized that the Coast Guard does not have an affirmative duty to rescue a vessel or person in distress, so he invoked the “worsened the situation” theory for rescuer liability, claiming that the Coast Guard negligently determined that no vessel was in distress and then informed other agencies with assets in the water of that determination, thereby terminating third-party efforts to find and rescue Powers. The United States invoked the discretionary function exception under which the question of “how” the government was negligent is the critical inquiry. The United States moved to dismiss the suit, and Powers moved for summary judgment that the discretionary function exception defense lacked merit. Judge Zilly denied both motions. Powers pleaded that a 911 caller named David Shell reported seeing an outbound boat disappear and perhaps capsize in rough seas. A Coast Guard watchstander spoke with Shell, and an urgent broadcast was issued, asking vessels in the area to provide further information. The P/C KRAKEN responded and reported seeing a 22- or 24-foot boat inbound and not in distress, and the Coast Guard concluded that the outbound vessel seen by Shell and the inbound boat observed by the KRAKEN were the same. The Coast Guard then issued another urgent broadcast that no vessel was in distress and transmitted messages that no vessel was in distress to the Swinomish Tribal Police Department and to North Whidbey Fire and Rescue. Powers added that Shell told the Coast Guard that his companion thought he saw the distressed vessel’s light under water and that the KRAKEN indicated that at least five other boats headed out to sea that morning. Powers asserted that the fault was in the Coast Guard’s failing to account for the other boats before declaring that no vessel was in distress. Judge Zilly concluded that there was a sufficient fact dispute whether the decision was not the result of a policy decision on the allocation of rescue resources but was rather the negligent execution of an implemented course of action based on a mistake in matching boats. Therefore, it was inappropriate to grant either of the motions.
Jury awarded more than $20 million against owner of platform on the OCS (reduced by 12% for the employer’s fault) for death of rigger; Warner v. Talos ERT, LLC, No. 2:18-cv-1435 (W.D. La. Feb. 2, 2023) (Cain).
Walter Jackson was employed as a rigger by DLS on an oil and gas production platform owned and operated by Talos on the outer Continental Shelf of the Gulf of Mexico off the Louisiana coast. Jackson and other DLS workers were attempting to lower sections of pipe when one of the sections came loose and struck Jackson, resulting in his death. Jackson’s wife and the guardian of his minor child brought suits against Talos and Diverse Safety and Scaffolding (which provided the scaffolding from which the pipe was being lowered), and the suits were consolidated. Diverse Safety and Scaffolding moved for summary judgment that its scaffolding had no causal connection to the accident, despite not having toe boards in violation of OSHA regulations. Jackson’s beneficiaries argued that the toe board is designed to prevent something from falling or rolling off the scaffold, but Diverse Safety and Scaffolding responded that the toe boards were purposefully left off the scaffolding so that the pipe could be more easily lowered to the deck of the platform (the sections of pipe were pushed over the side of the scaffold deck). It was after the pipe was pushed over the side of the scaffold deck (where the toe board would have been) that the pipe disconnected from its rope. That disconnection was unrelated to the condition of the scaffolding, and the duty of Diverse Safety and Scaffolding did not extend to the risk of the pipe disconnecting from its rope while being lowered. Accordingly, Judge Cain dismissed the suit against Diverse Safety and Scaffolding with prejudice. See March 2022 Update.
Talos moved for summary judgment on the survival claim, asserting that Jackson did not experience conscious physical or mental pain and suffering before his death. Judge Cain applied Louisiana law to the accident on the platform, which permits recovery for damages suffered by the deceased from the time of injury to the moment of death. Talos argued that Jackson was rendered unconscious instantly when struck by the falling pipe and that he could not have experienced fear before his death because he was hit on the back of the head. The plaintiffs cited the report of Jackson’s rapid breathing when crew members first approached him and began to administer CPR, and Judge Cain agreed that the report provided evidence that Jackson may not have died instantaneously. However, it did not demonstrate he experienced any pain, suffering, or other emotion between injury and death. Accordingly, Judge Cain dismissed the survival claim with prejudice. See December 2022 Update.
After Judge Cain twice denied summary judgment to Talos on the merits, the case was tried to a jury which returned a verdict on February 2, 2023 that Talos was 88% at fault and that employer DLS was 12% at fault. The jury awarded a total of $20,120,000 to Anika Warner on behalf of her minor son, for loss of past and future financial support, loss of love, affection, and companionship, and past and future mental anguish. The jury awarded a total of $7,587,930 for past and future wage loss, loss of household services, loss of love, affection, and companionship, and past and future mental anguish to Vantrece Jackson as the surviving spouse of Walter Jackson. Judge Cain entered a judgment against Talos for 88% of these damages.
Choice of New York law in a policy insuring a vessel in Florida did not extend New York’s deceptive practice provision to conduct outside the state of New York; Great Lakes Insurance SE v. 305 Event Production LLC, No. 21-cv-20251, 2023 U.S. Dist. LEXIS 18535 (S.D. Fla. Feb. 3, 2023) (Damian), recommendation adopted, 2023 U.S. Dist. LEXIS 22426 (S.D. Fla. Feb. 8, 2023) (Altonaga).
This litigation involves a marine insurance dispute arising from personal injuries sustained by Jennifer Kuhn on the M/Y SAPPHIRE, owned by 305 Event Production. Great Lakes brought this action in federal court in Florida in admiralty, seeking a declaratory judgment that the policy it issued to 305 Event was void ab initio because of misrepresentations and omissions in the application for insurance. The underlying injury occurred while the vessel was chartered by Sven Glaeser from 305 Event. Glaeser selected a captain and mate from 305 Event’s list of approved captains, and, after Kuhn tripped and fell during the charter, Great Lakes discovered a series of misrepresentations and omissions made by 305 Event during the process of obtaining insurance, including failing to disclose criminal convictions of two of the vessel’s captains, failing to disclose a driver’s license suspension and traffic citation for one of the captains, failing to disclose that the vessel would be chartered with undisclosed captains, and filing to disclose that the vessel was not in compliance with relevant Coast Guard regulations for legal chartering. 305 Event filed a counterclaim, asserting that Great Lakes had violated the Florida Deceptive and Unfair Trade Practices Act and the New York Business Law section addressing unconscionable, deceptive, and unfair acts and business practices. Great Lakes moved to dismiss the counterclaim, and 305 Event conceded that the Florida claim could not be maintained against Great Lakes. Great Lakes challenged the application of the New York statute as the insurance application and policy were exchanged and delivered to 305 Event in Florida, the vessel was kept and operated in Florida, and the injury to Kuhn occurred in Florida. The New York statute declared deceptive acts or practices in the conduct of business or the furnishing of a service in New York to be unlawful, and the policy provided for the application of New York law. Therefore, 305 Event claimed that the policy extended the New York statute to conduct that occurred outside the state of New York. Magistrate Judge Goodman agreed that the New York law applied, based on the terms of the policy, but the conduct did not fall within the terms of the statute. As this was a shortcoming that could not be overcome by amending the counterclaim, Magistrate Judge Goodman recommended that the claim under the New York statute be dismissed with prejudice. Magistrate Judge Goodman also noted that the statute requires an act or practice that is consumer-oriented and has the potential to affect the public at large (not just a private contractual dispute). As the allegations in the counterclaim focused on the private contract dispute between Great Lakes and 305 Event, the counterclaim did not state a claim under the New York statute (Magistrate Judge Goodman also concluded that the counterclaim failed to plausibly allege any materially misleading conduct). Chief Judge Altonaga set a short period for objection and adopted the recommendation when no objection was submitted within the prescribed time.
Joint operator of VTS did not establish as a matter of law that it was entitled to assert immunity to suit (based on the claim that it was an agent of the Coast Guard) in connection with allision of vessels with a pipeline; Gutierrez v. Amplify Energy Corp., No. 21-cv-1628, 2023 U.S. Dist. LEXIS 19830 (C.D. Cal. Feb. 6, 2023) (Carter).
This suit arises out of damage to Amplify Energy’s pipeline off the coast of California (resulting in an oil spill into San Pedro Bay) when the pipeline was struck by the vessels MSC DANIT and M/V BEIJING. This suit was brought in federal court in California against Amplify Energy, and numerous interventions and third-party claims ensued. An amended complaint and a third-party complaint brought claims against Marine Exchange of Lost Angeles-Long Beach, which jointly operates the Vessel Traffic System in conjunction with the Coast Guard, claiming that Marine Exchange was negligent in its operation of the Vessel Traffic System. Marine Exchange moved to dismiss the claims against it, arguing that it acted under the supervision of, and as an agent for, the Coast Guard. Therefore, as an agent of the United States, it could not be sued in admiralty based on the exclusivity of the Suits in Admiralty Act. Amplify argued that Marine Exchange had its own board of directors and that, under California law, it acted as an agent of each vessel (and that the vessels were required to indemnify Marine Exchange). The fact that the vessels were to indemnify Marine Exchange was an indication that Marine Exchange was an agent of the vessels and not the Coast Guard. At this stage of the proceedings, Judge Carter found that Amplify had plausibly alleged that the Coast Guard did not exercise significant control over Marine Exchange’s activities (so that Marine Exchange would be an agent as a matter of law). Denying the motions to dismiss, Judge Carter also found that it was not necessary that the Coast Guard be joined as a required party.
Attachment action was the basis for personal jurisdiction, but the attachment could be vacated if there was no property in the district; Ultra Deep Picasso Pte. Ltd. v. Dynamic Industries Saudi Arabia Ltd., No. 4:21-cv-3891, 2023 U.S. Dist. LEXIS 20103 (S.D. Tex. Feb. 6, 2023) (Ho).
Ultra Deep brought this action in federal court in Texas alleging that Dynamic Industries Saudi Arabia failed to pay for subsea diving support vessels for offshore operations of Saudi Aramco. Ultra Deep requested attachment of assets of Dynamic that were held by or at Riyad Bank, and the court ordered the attachment. Dynamic filed a restricted appearance and moved to dismiss the suit for lack of personal jurisdiction, improper venue, and for forum non conveniens. As the jurisdiction over Ultra Deep was supplied by the Rule B attachment, Magistrate Judge Ho recommended that the motion be denied (noting that the attachment allowed Ultra Deep to ensure the availability of security pending determination of the merits in arbitration). Dynamic did, however, raise series questions whether Dynamic had property within the district to support the attachment, submitting evidence that it had no bank accounts within the district and evidence from the garnishee that Dynamic had no account with the bank in the United States. Magistrate Judge Ho suggested that the proper procedural vehicle to address this issue was to request a vacatur of the attachment order. Consequently, Judge Ho denied the motion to dismiss without prejudice to filing a motion to vacate the attachment order.
Seaman who jumped from drilling barge to frac barge presented fact questions of negligence and unseaworthiness; insurers of bankrupt defendant were not liable to the seaman under the Louisiana Direct Action Statute until the remaining deductible under the P&I policy was exhausted; punitive damage exclusion in P&I policy prevented seaman from recovery of punitive damages from the insurers for the claim of willful failure to pay maintenance and cure; Stewart v. Moncla Marine Operations, LLC, No. 6:17-cv-1260, 2023 U.S. Dist. LEXIS 20819, 25292 (W.D. La. Feb. 6, 14, 2023) (Summerhays).
Wilbert Stewart was employed by Moncla Marine as a derrickman assigned to the drilling barge RIG 103. The drilling barge was spudded down at a wellsite on the inland waters of St. Bernard Parish, Louisiana with a frac barge moored alongside. Stewart was instructed to retrieve fluid from the frac barge. The horizontal distance between the two barges was six to eight inches, and the vertical distance between the two decks was between eleven inches and more than nineteen inches. There was no gangway between the vessels, so Stewart jumped from the deck of the drilling barge to the frac barge and fell, resulting in the injuries for which he sought recovery in this suit against Moncla in federal court in Louisiana. Stewart joined Moncla’s insurers in the suit under the Louisiana Direct Action Statute, and Moncla sought bankruptcy relief under Chapter 11. Consequently, this suit is proceeding solely against the insurers. Stewart brought claims under the Jones Act and under the general maritime law for unseaworthiness, maintenance and cure, and for failure to pay maintenance and cure (for which he sought punitive damages). The insurers moved for summary judgment on the Jones Act and unseaworthiness claims. The insurers argued that Stewart’s injuries were caused solely by his negligence in jumping between the barges (citing to testimony that the horizontal gap was no more than eleven inches, which would not require a gangway for the crossing). And, if the distance was greater, the insurers argued that it was up to the seaman to use his judgment to determine if he needed a gangway and that he had the authority and ability to deploy a gangway if he wanted one. The insurer noted that Stewart had 27 years of experience in the marine industry and should have been able to decide safely whether to use a gangway. Stewart responded with the expert opinion of Robert Borison that a gangway would have been necessary for a gap of more than nineteen inches. He answered that he had little experience moving from one vessel to another in his work, and he stated that he had not been instructed in how to deploy a gangway. Finding a sufficient factual dispute whether Moncla was negligent, Judge Summerhays denied summary judgment on the Jones Act negligence claim. The insurers’ argument on unseaworthiness was that the drilling rig was equipped with gangways and that it was negligence in failing to deploy the gangway, not unseaworthiness of the vessel, that caused the injury. However, Judge Summerhays noted that failure to provide a safe means of ingress and egress can be unseaworthiness and that there were sufficient facts that the vessel was unsafe and in violation of OSHA regulations with the gangway not deployed. Therefore, he denied the motion for summary judgment on the unseaworthiness claim.
The insurers also moved for summary judgment on the question of how to apply the deductible provisions of the primary protection and indemnity policy ($1.000,000 policy limit). The policy contained a general deductible of $100,000 that was exhausted and an annual aggregate deductible that still had a balance of $420,336.88 (there was an excess policy with coverage up to a limit of $5 million). The insurers argued that the remaining aggregate deductible had to be credited against a damage award under the Louisiana Direct Action Statute, but Stewart argued that the P&I policy provides “first dollar” coverage and that the full amount of his claim had to be paid by the insurers without any deduction or credit and that the recourse for the insurers was to then seek to recover the deductible from the bankrupt Moncla. Based on the “little case law addressing deductibles under the Louisiana Direct Statute,” Judge Summerhays agreed with the insurers that any recovery for Stewart would have to be reduced by the remainder of the aggregate deductible before Stewart could recover against the primary insurers under the Louisiana Direct Action Statute. The insurers also argued that Stewart could not recover against the insurers on the claim for punitive damages for failure to pay maintenance and cure because the policy contained an exclusion for punitive damages. Judge Summerhays noted that, to the extent Stewart was seeking punitive damages based on allegations that Moncla willfully failed to pay maintenance and cure, the punitive damage exclusion would preclude recovery of punitive damages against the insurers. Although Stewart appeared to suggest that the insurers’ failure to pay maintenance and cure supported an independent claim for punitive damages against the insurers, Judge Summerhays noted that Stewart had not pleaded an independent bad faith claim against the insurers and that the obligation to pay maintenance and cure lies with the employer. Accordingly, he granted summary judgment to the insurers on the claim for punitive damages.
Cook on vessel who claimed she was sexually harassed sufficiently alleged a claim under the Jones Act but not for maintenance and cure; MacMartin v. Marine Management Services, No. 3:22-cv-610, 2023 U.S. Dist. LEXIS 21314 (M.D. Fla. Feb. 7, 2023) (Lambert).
Teresa MacMartin agreed to work as a cook on Fugro’s vessel FUGRO ENTERPRISE. She signed an employment agreement with a marine staffing company, Marine Management Services, and the agreement also had the name of payroll company, Crowley Personnel, at the top of the agreement. She boarded the vessel off the coast of New Jersey and New York, and she cooked, baked, washed dishes, cleaned, sanitized food preparation and dining areas, and tidied the galley and mess area. She was assigned to a cabin that connected through a shared bathroom to the cabin of Neil Bennett. MacMartin alleged that on two occasions Bennett engaged in sexually harassing conduct, and that Bennett was warned and a barrel bolt was installed inside her cabin. Thereafter, Bennett allegedly made obscene and disturbing noises outside the restroom door, and Fugro switched shifts so Bennett and MacMartin would work at different times. Nonetheless, she claimed that Bennett continued to harass her, and the crew and Fugro stopped responding to her complaints. Eventually, Fugro told her that it no longer needed her position. She contacted Crowley about her position on the vessel and said that she would be interested in the job only if Bennett were not on the vessel. When Crowley would not assure her that Bennett would not be on the vessel, MacMartin brought suit against Marine Management, Crowley, and Fugro in federal court in Florida, pleading claims for sexual harassment and retaliation in violation of the Civil Rights Act of 1964, the Florida Civil Rights Act, negligence under the Jones Act, maintenance and cure, and breach of contract. The defendants moved to dismiss the claims, and, pertinent to the Update, Magistrate Judge Lambert addressed the claims for maintenance and cure, Jones Act negligence, and breach of contract. MacMartin alleged that she suffered emotional and psychological distress with physical manifestations that included anxiety, nausea, breathing difficulties, and insomnia as a result of the harassment. She based her maintenance and cure claim on the fact that the defendants failed to provide any medical care on board the vessel or to give her access to medical treatment or offer her the opportunity to seek medical help or visit a qualified doctor. She did not allege, however, that she requested medical treatment or even that she told the defendants of her medical conditions. Consequently, Magistrate Judge Lambert concluded that MacMartin had not properly pleaded a claim for maintenance and cure and recommended that the claim be dismissed. For the Jones Act claim, MacMartin alleged that she suffers and continues to suffer emotional and psychological distress (with physical manifestations). Fugro argued that MacMartin did not plead that it was her employer for the Jones Act claim, but Magistrate Judge Lambert recommended that MacMartin be permitted to engage in discovery to identify which entity was her Jones Act employer. The defendants argued that the Jones Act pleading failed because MacMartin did not state a common-law tort, reasoning that sexual harassment is a statutory cause of action. After reviewing the allegations in the complaint, however, Magistrate Judge Lambert reasoned that it was not the sexual harassment that served as the basis for the Jones Act claim but the negligent failure to provide a safe working environment. Therefore, she recommended that the motion to dismiss the Jones Act claim be denied. The claim for breach of contract asserted that Marine Management failed to pay her or provide medical care as required by the employment agreement. Marine Management cited the provision in the agreement that suit must be filed within six months of termination, but Magistrate Judge Lambert rejected that argument, reasoning that the agreement is a maritime contract subject to the one-year minimum time limit in 46 U.S.C. Section 30508 for personal injury or death claims. Magistrate Judge Lambert declined to address the merits of the contract claim on a motion to dismiss as it would require resolution of factual questions.
Judge granted summary judgment to platform owner in suit brought by worker who had traversed a doorway and grated step at least six times a day without issue but then tripped on the grating and fractured his ankle; Hole v. W&T Offshore, Inc., No. 4:21-cv-3212, 2023 U.S. Dist. LEXIS 21016 (S.D. Tex. Feb. 8, 2023) (Ellison).
David Hole was employed by a contractor to paint risers and equipment on a platform owned and operated by W&T Offshore on the outer Continental Shelf off the Louisiana coast. He had been on the platform twelve days before his accident, and each day he traversed without incident a galley doorway and grated step at least six times (twice after each meal to throw leftovers into the ocean). Hole was injured when he stepped out of the galley to throw his dinner leftovers into the ocean and hit his heel on the outside of the step’s grating with the front of his foot going over the edge. The incident occurred in good weather during daylight hours. Hole brought this suit in Texas state court against W&T Offshore, alleging that the step was too narrow and was not painted a conspicuous enough red to distinguish it from its surroundings (the step was painted red, and black mats were placed on the galley and platform grating). He also alleged that another painter fell on the same step several days earlier. W&T removed the case to federal court in Texas based on the jurisdiction of the Outer Continental Shelf Lands Act and moved for summary judgment at the close of discovery. Judge Ellison applied Louisiana law to the argument that the condition was open and obvious and did not present an unreasonable risk of harm. Hole argued that it was inappropriate to grant summary judgment on this defense because it required weighing evidence and finding of facts; however, Judge Ellison believed that the argument misstated the summary judgment standard under Louisiana law, noting cases in which summary judgment had been granted with respect to open and obvious conditions. Second, Hole argued that there was a genuine issue of fact whether the width of the step was unreasonably dangerous. Although Hole cited “a single other incident,” he did not give details of the incident other than to allege that another painter had tripped over the step. Judge Ellison reviewed pictures of the step and concluded that it was marked and distinguished from the surroundings. The fact that Hole had walked on the step repeatedly without incident and that others had walked on the step for years without any reported incident demonstrated that there was not a genuine dispute over whether the condition of the step was open and obvious or unreasonably dangerous. Accordingly, Judge Ellison granted summary judgment to W&T and dismissed the suit.
Magistrate Judge schooled counsel appointed by the P&I Club on the tri-partite relationship among insurer, defense counsel, and insured, and ordered the law firm to be disqualified for conflicting representation; Maersk Tankers MR K/S v. M/T SWIFT WINCHESTER, No. 3:22-cv-390, 2023 U.S. Dist. LEXIS 21019 (S.D. Tex. Feb. 8, 2023) (Edison).
On September 8, 2022, the M/T SWIFT WINCHESTER, owned by Winchester Shipping, was detained by the Coast Guard in Port Arthur, Texas. Winchester committed the vessel to a commercial tanker trading pool in accordance with the Maersk Tankers Pool Agreement, and Maersk chartered the vessel to PMI Trading for the transport of petroleum products from Port Arthur to Mexico. Winchester’s P&I Club, the Swedish Club, appointed a law firm to serve as local correspondents for non-MARPOL issues related to the detention of the SWIFT WINCHESTER. A lawyer for the firm attended on the vessel while it was detained, helped the master to ensure that deficiencies were corrected and inspected by the class surveyor, sent a detailed report to the Club about matters occurring on the vessel, provided legal advice to Winchester, and made recommendations. Winchester then retained “new counsel,” and the first firm (appointed by the Club) coordinated with the new firm to assist as instructed. On November 8, 2022, the attorney for the first firm instituted this action in federal court against the SWIFT WINCHESTER on behalf of Maersk Tankers, alleging that the vessel was significantly delayed and/or failed to depart the United States due to pollution violations and the related investigation by the Coast Guard and the Department of Justice and that PMI Trading had placed Maersk on notice of claims arising from delay to the cargo caused by the alleged violations of the vessel. Ten days later Winchester moved to disqualify the first firm (and attorney) from its representation of Maersk against Winchester. The firm argued that P&I Clubs do not function as traditional insurance companies and that the long-standing principles of Texas law (from the Tilley case) on the “tripartite relationship among an insurer, defense counsel, and insured” do not apply to them. Magistrate Judge Edison distinguished the authority cited by the firm, noting that the case stood for the proposition that “the lawyers provided to the vessel owner by its P&I Club were just that—lawyers for the vessel owner.” Accordingly, Magistrate Judge Edison stated that “the fact remains that [the firm] was Winchester’s counsel for the short duration that it assisted Winchester during the Vessel’s detention, and it owes Winchester unqualified loyalty.” Although Judge Edison believed that “the turkey seems cooked,” he addressed the remaining arguments presented by the firm. The firm argued that the attorney-client privilege only attaches to communications for legal advice or services and not business or technical advice or management decisions. The firm’s billing records refuted that argument, however, with entries that included coordinating defense of member, assisting in the company response to the Coast Guard inspection and investigation, planning for the continued defense of the allegations and responding to them, assisting with recommendations to the Club and member and responding to the Coast Guard, and coordinating with criminal defense counsel and conferring about recommendations to the criminal defense counsel. “To appreciate just how far [the firm] is reaching with its contention that it had no attorney-client relationship with Winchester,” Magistrate Judge Edison noted that the Swedish Club identifies two local correspondents for the Houston area in its list of correspondents. The website for the other firm contains a disclaimer that the providing of legal services constitutes an attorney-client relationship. However, the website for the firm hired in this case contains no such disclaimer. Thus, “the best support [the firm] can muster for why it did not establish an attorney-client relationship with Winchester is to point to a disclaimer from the website of” the other local correspondent. Magistrate Judge Edison considered that difference to work against the argument made by the firm. Accordingly, Magistrate Judge Edison concluded that Winchester established an attorney-client relationship with the firm during the vessel’s detention in September 2022 in Port Arthur. Finally, Magistrate Judge Edison concluded that the subject matter of the present litigation and the prior representation by the firm were substantially related, resulting in “an irrebuttable presumption ‘that relevant confidential information was disclosed during the former period of representation’” (stating that this case was “a textbook example of ‘substantial relation’”). Therefore, Magistrate Judge Edison disqualified the firm and attorney from representing Maersk in this litigation, but he did not strike the pleadings submitted by the firm as counsel for Maersk.
Vessel owner did not plead with particularity the facts supporting fraud claim against shipyard; Carlsen Mooring & Marine Services, LLC v. Seacraft Shipyard, LLC, No. 22-4102, 2023 U.S. Dist. LEXIS 21886 (E.D. La. Feb. 9, 2023) (Milazzo).
Carlsen Mooring entered into a contract with Seacraft Shipyard to repair two vessels, the M/V SAN JACINTO and the M/V SAN MARCOS. Carlsen Mooring claims that it had conversations with third-party contractors that Seacraft Shipyard was not timely paying its contractors. Worried about maritime liens being asserted against its vessels, Carlsen Mooring asked for documents for the payment of subcontractors, and Seacraft allegedly refused to provide the documents. The relationship deteriorated to the point that Carlsen Mooring brought suit against Seacraft Shipyard for breach of contract, civil fraud, and maritime conversion. Seacraft Shipyard moved to dismiss the fraud claim as insufficient under the heightened pleading standard of Rule 9, and Judge Milazzo agreed. She noted that a fraud pleading must specify the statements alleged to be fraudulent and identify the speaker, the when and where for the statements, and explain why the statements were fraudulent. Carlsen Mooring alleged that Seacraft Shipyard made representations about payment that it should have known were false based on information that Carlsen Mooring received about nonpayment from third-party contractors of Seacraft Shipyards. Carlsen Mooring argued that more specifics were within the shipyard’s knowledge, but Judge Milazzo rejected the argument on the ground that Carlsen Mooring had failed to provide the required details about the statements to which it referred in its pleading. Accordingly, she dismissed the fraud claim without prejudice.
Federal court lacked subject matter jurisdiction over a suit alleging claims under the Jones Act and general maritime law arising from an injury on a marsh buggy operating in swamp land; Griffin v. Specialized Environmental Resources, Inc., No. 6:21-cv-82, 2023 U.S. Dist. LEXIS 22672 (W.D. La. Feb. 9, 2023) (Joseph).
Specialized Environmental Resources (SER) hired Bryan Keith Griffin to work as a seismic driller’s helper. He was assigned to a field project in Port Neches, Texas to insert pipes in the soil and take samples. He performed this work from SER’s marsh buggy in swampland-like terrain. He was taken by a vessel from the Neches River to a smaller body of water where he transferred to an air boat to drive him to the marsh buggy. The marsh buggy is an amphibious tracked vehicle designed to operate on land, swampland, or marshland flooded with up to two feet of water. It navigates on two “tracks” without any means of water propulsion. Griffin was injured while working on the marsh buggy when the driller accidentally hit a lever that caused the pipe to move and injure Griffin’s hand. SER paid LHWCA benefits to and on behalf of Griffin, and Griffin filed this suit in federal court in Louisiana seeking to recover for negligence under the Jones Act and for unseaworthiness under the general maritime law. SER moved for summary judgment that Griffin did not qualify as a seaman because the marsh buggy was not a vessel and was not operated on navigable waters. Rather than deciding the case on the merits, however, Judge Joseph considered the facts and arguments presented by the parties and held that the federal court lacked subject matter jurisdiction. As the existence of a vessel is a “fundamental prerequisite” for the Jones Act claim, Judge Joseph compared the Super Scoop in Stewart and the floating home in Lozman in determining whether the marsh buggy’s capability of being used as a means of transportation was a practical possibility or merely a theoretical one. Judge Joseph reasoned that the marsh buggy was more analogous to the floating home because it was designed to operate in swampland (not water) and because it had to be towed to its working location as it could not effectively navigate across water under its own power. Consequently, Judge Joseph held that Griffin was not a Jones Act seaman and that the court lacked federal question jurisdiction over the Jones Act. Turning to the general maritime law as a basis for federal jurisdiction, Judge Joseph considered whether the area where the marsh buggy was working satisfied the locality test for admiralty jurisdiction. The marsh buggy operated on soft swamp land that consisted of a few feet of water and mud. At times, the marsh buggy had to use a mounted boom and bucket to dig itself free from the mud. Citing decisions from the Fifth Circuit that swampland or marsh land does not constitute navigable water, Judge Joseph held that the tort did not occur on navigable water so as to support admiralty jurisdiction. As Griffin did not attempt to plead diversity, and as diversity was not otherwise evident from the pleadings, Judge Joseph dismissed the complaint for lack of subject matter jurisdiction.
Marine policy issued by German insurer, where coverage was placed with the London Market, did not permit a claim by the insured against the Underwriters at Lloyds; arbitration clause in the policy was not enforceable pursuant to state law as the New York Convention was reverse preempted by the McCarran-Ferguson Act; Krohmer Marina, LLC v. Certain Underwriters at Lloyd’s London, No. 20-cv-402, 2023 U.S. Dist. LEXIS 22901 (E.D. Okla. Feb. 9, 2023) (Broomes).
Krohmer Marina owns Evergreen Marina on Lake Eufaula, Oklahoma, offering boat rentals and sales and operating a restaurant and store. Krohmer Marina secured a commercial marine liability policy with coverage for damage caused by flood and wind that was issued by International Insurance Company of Hannover, a German insurer, which subscribed to the policy for a 100% share of the risk. Hannover placed the policy with Certain Underwriters at Lloyd’s through the London Market. After flooding in Lake Eufaula and high winds a month later caused damage to the Evergreen Marina, Krohmer Marina presented an insurance claim that was not fully paid. The marina then brought this suit against Hannover and Certain Underwriters at Lloyd’s in federal court in Oklahoma for breach of contract and bad faith. The Underwriters at Lloyd’s moved to dismiss the claim on the ground that the only contractual relationship created by the policy was between Krohmer Marina and Hannover. Although Judge Broomes stated that it was “poor judgment” to use the term “Underwriters” in the policy and to include a Notice of Several Liability that is standard for Lloyd’s policies, he concluded that the policy unambiguously named Hannover as the only insurer who contracted with Krohmer to provide insurance. Therefore, he dismissed the Lloyd’s Underwriters from the suit. Hannover invoked the London arbitration provision in the policy, and Krohmer argued that the provision was unenforceable under the Oklahoma Uniform Arbitration Act, which prohibits arbitration agreements in insurance contracts. Hannover argued that the Federal Arbitration Act and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) were applicable as Hannover is a German entity, and Krohmer Marina argued that the McCarran-Ferguson Act reverse preempted application of the New York Convention and the FAA (the McCarran-Ferguson Act provides: “No Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance . . . unless such Act specifically relates to the business of insurance.”). Following the specific language of the statute and the implementing statute for the New York Convention, Judge Broomes concluded that the Convention Act had to yield to the Oklahoma statute as the Oklahoma statute was enacted for the purpose of regulating the business of insurance and the Convention Act did not relate specifically to the business of insurance. Accordingly, he held that the Oklahoma statute applied to prevent arbitration of the claims against Hannover [although he refers to the insurance as “commercial marine liability coverage,” Judge Broomes did not discuss the case law reaching a different result for marine insurance policies, e.g., Galilea, LLC v. AGCS Marine Insurance Co., 879 F.3d 1052 (9th Cir. 2018)].
Stating facts in one paragraph and incorporating them as necessary for specific claims is not a shotgun pleading; vicarious liability claim requires identification of the employee and the duty breached; stating facts in footnotes is sufficient to avoid dismissal but requires repleading in the numbered paragraphs; Moors v. Carnival Corp., No. 22-22262, 2023 U.S. Dist. LEXIS 23039 (S.D. Fla. Feb. 9, 2023) (Sanchez).
Michael Moors was a passenger on the CARNIVAL MAGIC. He claims that he was watching the ship dock from a crowded viewing area on Deck 12 of the ship and tripped over a push up bar affixed to the deck when he turned to walk away. He brought this suit against the cruise line in federal court in Florida seeking to recover for negligence related to his fall and for failing to provide adequate medical care. The cruise line moved to dismiss the complaint, and Magistrate Judge Sanchez noted that the complaint was not a shotgun pleading merely because it incorporated allegations from a prior paragraph. He explained that just because factual allegations were listed in one paragraph did not mean that those allegations lacked sufficient factual specificity to warrant dismissal. The allegations with respect to the dangerous conditions and notice to the cruise line were sufficiently specific and were only adopted into subsequent paragraphs as necessary. The allegations with respect to vicarious liability were insufficient, however, as they did not identify a crew member who was responsible for the dangerous condition and did not set forth the duty that the crew member breached (merely alleging vicarious liability for the unreasonable lack of crowd control). The cruise line objected to the sufficiency of the factual allegations for the claims related to the medical treatment, but Magistrate Judge Sanchez held that the allegations were sufficient, noting the assertion that Moors was released to travel home without adequate pain medicine, causing him to suffer additional pain. As some of the factual allegations were contained within footnotes, Magistrate Judge Sanchez recommended that Moors file an amended complaint in which the factual allegations are put in numbered paragraphs and not footnotes.
Evidence of the extent of involvement of vessels was necessary to determine whether a contract to provide dockage and other services for vessels was a maritime contract or was subject to state law; conflicting indemnity provisions in Brokerage Agreement and Master Time Charter resulted in release of indemnity agreement; QuarterNorth Energy LLC v. Supreme Offshore Services, Inc., No. 22-1852, 2023 U.S. Dist. LEXIS 22747 (E.D. La. Feb. 10, 2023) (Vance).
This decision involves Kilgore Marine Services’ brokerage of time charters (which provided the backdrop for the litigation in Willis v. Barry Graham that has been addressed in the Update many times, most recently in the February 2023 Update). Fieldwood Energy and Kilgore Marine entered into a Master Time Charter by which Kilgore Marine agreed to act as a broker to help Fieldwood Energy charter vessels for its oil and gas operations. Supreme Offshore entered into a Brokerage Agreement with Kilgore by which Supreme Offshore appointed Kilgore Marine to obtain charters for Supreme Offshore’s vessels. Pursuant to these agreements, Fieldwood Energy chartered Supreme’s vessel M/V PENNY F. Fieldwood Energy also entered into a Master Service Contract with Express Weld to perform services, including permitting Fieldwood Energy to use Express Weld’s dock in Port Fourchon, Louisiana. A Fieldwood Energy employee, Joseph Pigott, slipped on Express Weld’s dock while disembarking from the PENNY F, and Pigott brought suit against Supreme Offshore and Express Weld. Supreme Offshore and Express Weld made demands to Fieldwood Energy’s successor entities for defense and indemnity, and the Fieldwood entities brought this declaratory judgment action in Louisiana federal court, asserting that Supreme Offshore’s claims had been released and that Express Weld’s claims were void under the Louisiana Oilfield Indemnity Act. The parties moved for summary judgment, and Judge Vance began with the Master Service Contract between Fieldwood Energy and Express Weld. The parties did not dispute that the contract covered Pigott’s claims, so the issue was whether the contract was governed by the LOIA, which would invalidate the indemnity. To determine whether the contract was maritime or not, Judge Vance applied the test enunciated by the en banc Fifth Circuit in Doiron (and applied by the Fifth Circuit in Crescent Energy and Barrios). The first prong of the test was satisfied as the contract provided services to facilitate activity on navigable waters. The dispute was whether the parties expected that a vessel would play a substantial role in the completion of the contract. In this case, Express Weld provided its dock to Fieldwood Energy for the loading and unloading of materials, equipment, chemicals, and other cargoes. However, Express Weld also performed non-vessel related work on Fieldwood Energy’s parking lot; it performed electrical work on Fieldwood Energy’s shore base; it dumped rocks at the shore base; it performed maintenance on vehicles and equipment; it installed limestone; and it provided rental of cranes and forklifts. Judge Vance noted the Fifth Circuit’s 30% “rule of thumb” for what is “substantial” and concluded that the parties had not provided the court with sufficient information about the total value of the vessel-related services and the non-vessel-related services. Fieldwood Energy argued that the value of the vessel-related services should not be counted because a lease of a dock is not maritime. Judge Vance answered that the agreement was not a “pure dock lease contract” as it included both dockage and services related to loading and unloading cargo, which are maritime in nature. Accordingly, as vessels were involved in the performance of the contract, Judge Vance found a fact question whether state or federal law applied to the indemnity obligation in the contract between Fieldwood Energy and Express Weld. Judge Vance then considered whether Fieldwood Energy owed indemnity to Supreme Offshore. The Master Time Charter between Fieldwood Energy and Kilgore required that Fieldwood Energy indemnify Kilgore and the owners/operators of chartered vessels for injuries to employees of Fieldwood Energy. As Supreme Offshore owned the chartered vessel, it was entitled to indemnity from Fieldwood Energy for the Pigott suit under the terms of the Master Time Charter. Under the Brokerage Agreement between Supreme Offshore and Kilgore, Supreme Offshore agreed to indemnity charterers (Fieldwood Energy) from all claims arising out of the services provided in the Brokerage Agreement. Reading the provisions of the two contracts together, Judge Vance held that Supreme Offshore had agreed to indemnify Fieldwood Energy in the Brokerage Agreement for the indemnity claim that Supreme Offshore made against Fieldwood Energy in the Master Time Charter. Thus, Supreme Offshore’s claims against Fieldwood were released and waived as a matter of law.
Second time’s a charm: stipulations in limitation action were sufficient to lift the stay in a single-claimant case; In re Daytona Beach Aqua Safari, Inc., No. 6:22-cv-740, 2023 U.S. Dist. LEXIS 23117 (M.D. Fla. Feb. 10, 2023) (Irick).
Daytona Beach Aqua Safari (d/b/a Ponce Inlet Watersports) filed this limitation action, as owner of the MERMAID, in connection with an incident near Ponce Inlet, Florida when the vessel was crossing over wakes from an overtaking vessel and a passenger on the MERMAID, Sandra Castle, was injured. Castle moved to lift the stay in the limitation action as the single claimant, and the vessel owner did not oppose lifting the stay. Nonetheless, Magistrate Judge Irick declined to lift the stay, concluding that the stipulations were not adequate. Magistrate Judge Irick agreed that the stipulations generally comported with the requirements from the Eleventh Circuit’s Beiswenger case; however, Castle did not stipulate to the manner in which her case would proceed in the event the admiralty court granted the owner’s request for exoneration. Magistrate Judge Irick allowed Castle to amend the stipulations to address the issue and cited language by which the claimant stipulates that “in the event this Court grants the Petitioner’s Complaint for Exoneration, there shall be no recovery from the Petitioner.” See February 2023 Update.
Castle then amended her stipulations to add: “That, in the event this Court determines that Petitioner is entitled to exoneration, there shall be no recovery from the Petitioner.” As this complied with the requirements in the Eleventh Circuit, Judge Irick lifted the stay so that Castle could pursue her claim in state court.
Allegations in seaman’s complaint were insufficient to pierce the corporate veil of the shipowner or to establish liability of managers of limited liability company under state law; Hernandez v. MB yachts, LLC, No. 22-cv-22135, 2023 U.S. Dist. LEXIS 23951 (S.D. Fla. Feb. 10, 2023) (Damian).
Danielys Hernandez, who had never worked on a yacht, contracted with MB Yachts to serve as the yacht mate on the M/Y IRIS. Andy Garcia, a 20-year old, was hired to serve as captain. Although Hernandez had no training and was given no training, she was directed to secure the bow line to the dock’s cleat when the yacht returned from its charter in adverse weather conditions. While trying to secure the line, she sustained a severe injury to her hand that resulted in the amputation of several fingers. Hernandez brought this action in federal court in Florida under the Jones Act and general maritime law against MB Yachts as well as Ardalan Mehr Jouei and Sugra Baghirova, individually and as mangers of MB Yachts. Jouei and Baghirova moved to dismiss the actions that were brought against them as owners, operators, and managers of MB Yachts (but not in their individual capacity), and Magistrate Judge Damian analyzed their potential liability based on two theories. First, she addressed whether there were allegations sufficient to pierce the corporate veil of MB Yachts, and she noted that Hernandez pleaded nothing to establish that the corporation was organized or used to mislead creditors or to perpetrate a fraud on them. Accordingly, she concluded that Hernandez did not state a claim against Jouei and Baghirova based on Florida law for piercing the corporate veil. Magistrate Judge Damian then considered the liability of managers under Florida Statute Section 605.04093(1)(b)(5), which allow managers of limited liability companies to be held liable for reckless conduct. Although Hernandez asserted in her response to the motion to dismiss that the defendants acted recklessly in failing to provide training or supervision for Hernandez, that claim did not appear in her complaint. As allegations in a response do not cure defective complaints, Magistrate Judge Damian recommended that the claims against Jouei and Baghirova in their capacity as managers of MB Yachts be dismissed.
Agreement that “stinks to high heaven” created a single-claimant situation sufficient to lift the stay in a limitation action; In re M/T STOLT FLAMENCO, No. 3:21-cv-365, 2023 U.S. Dist. LEXIS 23618 (S.D. Tex. Feb. 13, 2023) (Edison).
This litigation arises from the death of Dewey Monroe and the injury of his fishing companion, Donald Currie, in an accident in Galveston Bay. The STOLT FLAMENCO was inbound in the Houston Ship Channel, and the VALENCIA was outbound. The fishing boat was struck by two large waves from the passing ships and capsized. Currie was able to swim to the capsized boat and climb on top of it; however, Monroe drowned. Currie and Monroe’s personal representative filed suits in Texas state court against the owners/operators/charterer of the vessels, and the owners of the vessels filed limitation actions in Texas federal court with the claimants filing claims in the limitation actions. The owners of the STOLT FLAMENCO settled with the claimants, and the claims against the STOLT FLAMENCO were dismissed. The claimants then sought to lift the stay in the limitation action involving the VALENCIA so that they could pursue their claims in state court against its owner, Hammonia Reederei. The owner/operator of the STOLT FLAMENCO voluntarily dismissed the contribution/indemnity claims presented in the VALENCIA limitation action. The claimants filed the required stipulations to create a single-claimant situation and to protect Hammonia’s right to seek limitation of liability, and counsel for Hammonia agreed that the stipulations were sufficient. After the stay was lifted, Hammonia filed a motion under Rule 60(b) to oppose the lifting of the stay. Hammonia contended that the settlement agreement for the STOLT FLAMENCO was akin to a Mary Carter Agreement and should be struck by the court (as void under public policy) because the agreement provided that the claimants and the owner of the STOLT FLAMENCO would share the first $400,000 of any settlement or judgment paid by Hammonia on a 50/50 basis. Hammonia argued that the STOLT FLAMENCO limitation action should be reactivated and that the entire proceeding should remain in federal court. Before addressing the legal arguments, Magistrate Judge Edison wanted to “state outright that I firmly believe the Agreement stinks to high heaven. The parties know the Agreement stinks because it provides the PI Claimants with scripted language to use when ‘asked about the resolution of the Claims against [Stolt].’” He then stated: “Alas, what one considers morally right and what is right under the law are not always the same thing. It is not my job to determine what is morally right. It is my job to determine whether the Agreement is legally permissible.” Magistrate Judge Edison then addressed whether the agreement was valid under maritime law and Texas law. The agreement was valid under Texas law because the STOLT FLAMENCO interests were dismissed and were no longer parties: “Frankly, there is nothing to say. Right, wrong, or otherwise, the Texas Supreme Court has made very clear that a defendant must remain a party to the case for an otherwise Mary Carter-like agreement to be void against public policy.” Magistrate Judge Edison also agreed that the agreement was not void under the maritime decisions of the Fifth Circuit, stating: “The Fifth Circuit is aware of the perverse financial incentive created by agreements like the one at issue here, but this perverse incentive ‘does not disturb’ the Fifth Circuit.” As structured, Hammonia will not pay anything to Stolt. Its liability will be calculated based on its proportionate fault without regard to the monetary amount of the settlement (as provided by the Supreme Court’s AmClyde decision). Magistrate Judge Edison declined to grant relief to Hammonia with one more critique of the settlement: “I want to be clear that I make this recommendation based on the law. Hammonia is entirely correct that Stolt’s continuing financial interest in this litigation undermines the credibility of any Stolt witness while creating a financial headwind that discourages settlement between Hammonia and PI Claimants, thus increasing the likelihood of litigation. But the Texas Supreme Court and the Fifth Circuit have decided time and again that these consequences do not outweigh plaintiffs’ freedom of choice. Until they decide otherwise, my hands are tied.” Consequently, Magistrate Judge Edison denied the motion.
Use of fewer (but larger) mooring lines than were required by the Hurricane Plan in the vessel owner’s application for insurance permitted the insurer to void coverage for the total loss of the vessel in a hurricane and tropical storm; Transpac Marine, LLC v. Yachtinsure Services, Inc., No. 20-10115, 2023 U.S. Dist. LEXIS 23655 (D. Mass. Feb. 13, 2023) (Woodlock).
Ralph Young, owner of Transpac Marine, owned and lived on the SUMMER STAR and insured the vessel with Yachtinsure from 2013 to 2019. On August 28, 2019, the vessel ran aground and was destroyed when Hurricane Dorian struck St. Thomas in the United States Virgin Islands, where the vessel was moored. Yachtinsure denied his claim based on material misrepresentations in his April 2019 policy renewal application, and Transpac brought this suit against Yachtinsure in federal court in Massachusetts based on diversity (and admiralty in the alternative) seeking recovery for breach of contract. When Young renewed his policy, he was obligated to submit a Hurricane Plan for review by Yachtinsure’s underwriters. The Plan inquired how many lines were going to be used to secure the vessel and asked the diameter and material of the lines. He responded that there would be 10 lines, ¾-inch nylon braid. He signed a declaration that misrepresentation or nondisclosure may entitle the insurer to void the insurance. Yachtinsure sent a follow-up email that “we need confirmation that the lines will be doubled in the event of a named/numbered windstorm, and Young replied with confirmation that the lines would be doubled. When the storm approached, Young secured the vessel at a single mooring in Crown Bay with four mooring lines plus two new one-inch lines that he purchased to prepare for the storm. Hurricane Dorian parted the mooring lines for the vessel causing it to drift out to sea. Young put out his heaviest anchor, but the anchor chain became entangled with a sailboat, and the operator of the sailboat disconnected the anchor line causing the SUMMER STAR to be swept up in the storm and grounded about four miles from Crown Bay. Young was unable to remove the vessel from the reef before Tropical Storm Karen struck the Virgin Islands a few days later, leaving the vessel a total loss in three pieces. The environmental cleanup cost him $245,000, and the removal of the vessel and debris was estimated to cost an additional $250,000. Yachtinsure argued that Young violated the doctrine of uberrimae fidei and the warranty of truthfulness in the application, but Judge Woodlock revised the approach for resolving the question by noting that when the insured stipulates that something will be done, it is a promissory warranty as opposed to a factual representation. Judge Woodlock considered the confirmation that he would use 20 lines to secure the vessel in the event of a named storm to be a promissory warranty, and he added that the insurer could deny coverage based on the breach even if the breach had no causal connection to the damages. Young argued that his six-line configuration had the strength equivalent to or higher than that of the twenty ¾ inch lines, but, even if he raised a factual dispute about the holding capacity of his arrangement, it would not be material because he was required to comply with the unambiguous terms of his promissory warranty for 20 lines. Yachtinsure did not have to explain why it required the specified configuration; it did not have to establish that the failure to comply was causally related to the damage; and it did not have to address whether the actions of the sailboat were an intervening cause in the loss. Thus, Yachtinsure was entitled to summary judgment.
Vessel owner seeking to limit liability must provide security and provide the court with information on potential claims; In re Glen, No. 22-cv-430, 2023 U.S. Dist. LEXIS 25015 (D. Neb. Feb. 14, 2023) (Nelson).
Derek Glenn and Garret Vanderheides petitioned the federal court in Nebraska for limitation of liability with respect to their 1989 Wellcraft pleasure boat after the vessel sank in the Missouri River near Blair, Nebraska. One passenger, Emma Olsen, was missing and was not rescued. The vessel owners took no further action after filing the suit, and Magistrate Judge Nelson noted that the petitioners did not provide any security nor did they provide the court with any relevant information about potential claims. As Magistrate Judge Nelson stated, it appeared that the petitioners might be waiting for the court to order an appraisal of the vessel before providing security. He answered that the rule was clear that the owner must provide security before the court can act on the claim. Additionally, information about claims was necessary so that the notice to claimants could be issued. Consequently, Magistrate Judge Nelson ordered that the owners comply with the requirements of Supplemental Rule F and noted that failure to comply may result in dismissal of the action.
Continuing violations doctrine tolled insurance policy’s limitation period; New York law did not permit a bad faith claim based on the same facts as the claim for breach of contract; Polar Vortex, LLC v. Certain Underwriters at Lloyd’s London, No. 22-cv-61067, 2023 U.S. Dist. LEXIS 25040 (S.D. Fla. Feb. 14, 2023) (Ruiz).
Polar Vortex, LLC owned the 57-foot catamaran POLAR VORTEX that was insured with a Marine Yacht Insurance Policy issued by Certain Underwriters at Lloyd’s for $1 million in hull coverage. The vessel was docked at the Compass Point Marina in the U.S. Virgin Islands in September 2017 when Hurricane Irma struck the area, resulting in the vessel being impaled and sinking (the vessel’s tender was also damaged). Polar Vortex notified its insurer of the loss and hired a salvage company to try to mitigate the loss. Several days later, Lloyd’s sent a surveyor to handle the claim. Although Polar Vortex contended that the vessel was a total loss, Lloyd’s advised Polar Vortex that the vessel could be repaired and that it was the insured’s obligation to do the repair. Polar Vortex arranged for the vessel to be transported to Fort Lauderdale for repairs, and repairs continued until the insured spent more than $1.2 million, including over a million dollars for repairs and an additional $150,000 for salvage and transportation. Polar Vortex tendered abandonment of the vessel to Lloyd’s, which rejected the tender, although it later purportedly conceded that the vessel was a total loss. Polar Vortex brought an action against Lloyd’s in federal court in Florida in 2020, but the case was dismissed without prejudice to refiling. When Polar Vortex refiled the action, Lloyd’s argued that it was untimely because the policy contained a provision for suit to be filed within one year from the date of the happening or occurrence out of which the claim arose. Polar Vortex argued that the policy provision was tolled by the continuing violations doctrine until a year from the most recent violation of the policy. In this case, the most recent wrongful acts were the rejection of the notice of abandonment in 2020. Therefore, Judge Ruiz held that the action was not time-barred (Judge Ruiz ordered the count with respect to the tender to be repleaded because it lacked details to support the claim). Lloyd’s argued that the claim for bad faith should be dismissed because the policy contained a choice-of-law clause for entrenched maritime law and, in the absence of entrenched maritime law, New York law would apply. Reasoning that New York law does not permit a bad faith claim based on the same facts as the claim for breach of contract (that Lloyd’s wrongly refused to declare the vessel to be a constructive total loss), Judge Ruiz dismissed the bad faith claim.
Subcontractor on dredging project did not establish that it was entitled to a portion of an equitable adjustment reached between the prime contractor and the Corps of Engineers; subcontractor was not entitled to withdraw its 9(h) designation and demand a jury trial on the counterclaim as it did not comply with Rule 16; Diamond Services Corp. v. RLB Contracting, Inc., No. 3:21-cv-253, 2023 U.S. Dist. LEXIS 29591, 29592 (S.D. Tex. Feb. 14, 2023) (Brown).
The Army Corps of Engineers contracted with RLB Contracting for pipeline dredging in the Houston Ship Channel, and RLB furnished a surety bond from Travelers in accordance with the Miller Act. RBL contracted with Harbor Dredging to assist in the project, and Harbor Dredging contracted with Diamond Services. As the work progressed, the parties encountered conditions that differed materially from those represented by the Corps in its project specifications, and RLB requested equitable adjustments from the Corps of the amounts set forth in the prime contact. Ultimately, the Corps and RLB reached a settlement for an equitable adjustment of $6,000,000, but RLB could not reach agreement with Diamond and Harbor Dredging, and Diamond brought this suit against RLB, Harbor Dredging, and Travelers in federal court in Texas (based on admiralty jurisdiction), seeking to recover for breach of contract, implied contract, and quasi contract. RLB filed a counterclaim. Harbor Dredging and RLB filed motions for summary judgment on the Diamond claims. Judge Brown dismissed Diamond’s contract claims against Harbor on the ground that there was no evidence demonstrating an oral contract modification. As to the claim for quantum meruit (Diamond declined to accept $950,000 from the equitable adjustment), Judge Brown noted that Diamond did not produce evidence of the reasonable value of the work it performed or the materials it furnished. Accordingly, he granted summary judgment to Harbor Dredging on Diamond’s quantum meruit claim. Judge Brown previously dismissed Diamond’s contract claims against RLB, and he dismissed the quantum meruit claims for the same reason as in the summary judgment for Harbor Dredging—failure to produce evidence of the reasonable value of the work that was performed or the materials that were supplied. As to the Miller Act claim, Judge Brown ruled that the Miller Act did not permit recover of profits on expenditures attributable to delay and that Diamond did not establish that the equitable adjustment segregated any costs of Diamond. The only live claims that remained in the case were RLB’s counterclaims. In answer to the counterclaims, Diamond demanded a jury trial and gave notice that it was withdrawing its Rule 9(h) designation. The defendants moved to strike the notice of withdrawal and jury demand, and Judge Brown noted that Diamond had not sought to excise from its complaint the statements that invoked admiralty jurisdiction, and that it had not satisfied the obligation under Rule 16 (as there is a scheduling order in this case) for amending to drop its 9(h) designation. The fact that the defendants had demanded a jury and then sought to withdraw it (improperly) did not affect the analysis as the jury demands were ineffective in light of the 9(h) designation. Consequently, Judge Brown granted the motion to strike.
Vessel owner in an attachment proceeding against the charterer established reasonable grounds that the charterer was the beneficial owner of a vessel to allow an attachment of that vessel, even though the vessel was registered in the name of a financing company; Genco Constellation Ltd. v. BG Shipping Co., No. 4:23-cv-365, 2023 U.S. Dist. LEXIS 25438 (S.D. Tex. Feb. 15, 2023) (Edison).
Genco Constellation brought this action as owner of the GENCO CONSTELLATION in connection with a charter of the vessel to BG Shipping. The GENCO CONSTELLATION was arrested in Ghana, and Genco separately sought security from BG Shipping in South Africa for damages resulting from the arrest of the vessel (receiving a letter of undertaking from BG Shipping’s P&I Club in the amount of $1,084,828). Genco claimed that it was seeking to commence an arbitration in London pursuant to the clause in the charter party with BG Shipping, and it filed this action in federal court in Texas to obtain additional security, seeking to attach the BBG HEZHOU, owned by SPDBFL No. 53 (Tianjin) Shipping Leasing Co. (Genco alleged that the BBG HEZHOU was beneficially owned by BG Shipping). After the vessel was attached, SPDBFL filed a limited appearance, and the defendant in the attachment action, BG Shipping, argued that it did not have a property interest in the vessel that could be attached. Magistrate Judge Edison noted that courts have refused to vacate attachments where the registered owner was nothing more than a financier, so the question was whether SPDBFL had a meaningful economic reversionary interest in the vessel or whether it held only a security interest. Reviewing the documents between SBDBFL and BG Shipping, Magistrate Judge Edison concluded that SPDBFL did not retain a meaningful upside or downside in the vessel. He noted that BG Shipping was bound to pay SPDBFL for 14.6 years and that the only way BG Shipping could be relieved of that obligation was through the conduct of SPDBFL. He stated: “That sounds an awful lot like a mortgage.” Consequently, he found that Genco had established reasonable grounds that BG Shipping was the beneficial owner of the BBG HEZHOU and that the attachment would not be vacated.
Evidence was sufficient to support jury verdict of direct liability and vicarious liability of cruise line when bunk bed deployed and struck a passenger on the head; Ewing v. Carnival Corp., No. 19-20264, 2023 U.S. Dist. LEXIS 25907 (S.D. Fla. Feb. 15, 2023) (Goodman).
Eric Ewing was sitting on the lower bed of his room on the CARNIVAL ECSTASY when the upper stowed bunk bed deployed, striking him on the top of the head. He brought this suit against the cruise line in federal court in Florida and asserted a claim of direct negligence of the cruise line for failing to lock the bunk or to check that the bunk was locked prior to the passenger’s injury. He also claimed that the cruise line was vicariously liable for the negligence of the cabin steward and that it was not necessary that he prove that the cruise line was on notice of the dangerous condition. He also brought a claim of res ipsa loquitur. Based on the decision of the Eleventh Circuit in Everett v. Carnival Cruise Lines, Magistrate Judge Goodman held that there was no exception to the notice requirement for “a created-by-defendant or active-negligence-by-employee or vicarious-liability theory.” Thus, regardless of how Ewing pleaded his negligence case, he still had to establish actual or constructive notice of the condition by the cruise line. As the cruise line had a procedure for the cabin steward to check bunk beds and make sure that the locking mechanism was activated, it was aware of the danger created by upper bunk beds. Combined with the fact that the ship’s carpenter had previously repaired the locks on two upper bunk beds, there was “adequate (although barely) evidence to withstand summary judgment” on the notice issue. Magistrate Judge Goodman did reject the claim of res ipsa loquitur as Ewing could not establish that the accident would not ordinarily occur in the absence of negligence (screws which loosen over time could have caused the bed to fall). See August 2020 Update. The case was tired to a jury before Magistrate Judge Goodman, and the jury returned a verdict on October 28, 2021, finding that the cruise line and cabin steward were not negligent. Magistrate Judge Goodman entered a final judgement on the verdict on November 19, 2021. See December 2022 Update.
Ewing filed a motion for new trial that asserted several errors during the trial, and, admitting he made a mistake during the trial, Magistrate Judge Goodman ordered a new trial. Ewing’s expert, forensic engineer Dr. Srinivas Kadiyala, testified that the bunk would not have fallen on Ewing’s head if it was locked and latched and that he believed the bunk was not locked. He did not believe that Ewing had opened the lock because it had a tamper-resistant key. Magistrate Judge Goodman allowed the cruise line to cross-examine Kadiyala with a cell phone video showing a burly security guard prying open a lock, but there was no evidence authenticating the video or explaining when, where, or how it was made. Reasoning that the video essentially accused Ewing of perpetrating a fraud (a defense that was not pleaded) with no evidence to support the accusation and no evidence of similarity of the video to Ewing’s bed, and considering that the video was unfairly prejudicial to Ewing and that an adequate curative instruction was not given, Magistrate Judge Goodman felt compelled to correct his error by ordering a new trial. See May 2022 Update.
A second jury trial was held before Magistrate Judge Goodman. The jury returned a verdict that the cruise line was directly negligent, that the cabin steward was negligent (for which the cruise line was vicariously liable), that Ewing was not negligent, and that Ewing was entitled to $275,000 for past non-pecuniary damages and $400,000 for future non-pecuniary damages. See December 2022 Update. The cruise line then filed a renewed motion for judgment as a matter of law. The cruise line challenged the vicarious liability theory of negligence (based on the employee failing to check the locked status of the bed). The employee testified that he properly locked the bed and performed a pull-down test on it, and the cruise line argued that, absent direct evidence to the contrary, the jury had to believe the crew member’s testimony. Magistrate Judge Goodman disagreed. He cited the expert testimony from Dr. Kadiyala that it was more likely than not that the bed was not locked, which was supported by cellphone video showing that both bunks in the room were unlocked. Thus, a jury was permitted to conclude, based on evidence-based inferences, that the bed was not locked (and that the crew member did not use a pull-down test to make sure the bed was locked). The cruise line also argued that there was insufficient evidence to establish constructive notice of the risk-creating condition on the claim of direct liability. There was a warning sign on the bed that only authorized personnel may operate the bed and to seek assistance. The cruise line argued that the notice did not establish that the sign was connected to the specific danger. The cruise line argued that the sign related to opening the bed, but Magistrate Judge Goodman noted that the warning was to seek assistance to “operate” the bed, which included opening and closing, and that closing may involve the greater risk as the bed may not be locked into position. Thus, Magistrate Judge Goodman concluded that there was sufficient notice based on the warning sign. Magistrate Judge Goodman also rejected the argument that three prior incidents were not sufficiently similar to establish constructive notice, concluding that it was up to the jury to determine whether the incidents were substantially similar. Finally, Magistrate Judge Goodman cited the cruise line’s policy that bunk beds must be inspected during regular stateroom cleaning, and the inspection required that “beds close properly and are secure when locked.” As Magistrate Judge Goodman reasoned that the jury could infer that the policy was a corrective measure, designed to protect against a purportedly locked bunk from unexpectedly deploying because the lock had not been properly engaged, he held that there was sufficient evidence of constructive notice to support a finding of direct liability. Therefore, he denied the motion for judgment as a matter of law.
After holding that the insured’s breach of the navigational warranty in its hull policy voided insurance coverage for loss of the insured vessel while performing humanitarian work near Haiti (and that there was no meeting of the minds on coverage), the magistrate judge rejected the vessel owner’s claim against its broker because it was barred by the economic loss rule; Atlantic Specialty Insurance Co. v. Bindea, No. 3:21-cv-2, 2023 U.S. Dist. LEXIS 26537 (W.D. Va. Feb. 16, 2023) (Hoppe).
Bogdan Andrei Bindea sought to insure the offshore supply vessel, M/V BOB ROUSE, with a seven-person crew to perform humanitarian work in Haiti. The application submitted to Atlantic Specialty by Bindea’s agent requested coverage for the vessel and a three-person crew to deliver construction supplies in and around Fort Lauderdale, Florida. The policy was issued with a navigational area within the east coast of Florida and with a crew coverage not to exceed three crew members at one time. While transporting cement from Port-au-Prince Haiti to Mole Saint-Nicholas, Haiti, in the Caribbean Sea, the vessel hit rough water and capsized, resulting in the death of five of the crew and the other two being missing and presumed dead. Atlantic Specialty brought this declaratory judgment action in federal court in Virginia, seeking a declaration that the policy was void or, alternatively, that there was no coverage under the policy. Based on Wilburn Boat, Magistrate Judge Hoppe held that Virginia law governed the policy’s validity and scope (as it was issued in Virginia, which was Bindea’s domicile). On the merits, Atlantic Specialty argued that there was no insurance contract as there was no meeting of the minds as to the essential terms of the agreement. Bindea’s response did not address this point, and Magistrate Judge Hoppe considered that Bindea had conceded the argument. Under Virginia law, the policy provides the terms for the contract between the parties, and Magistrate Judge Hoppe concluded that the policy clearly excluded coverage for the incident (“area around Florida” and “within the east coast of Florida” were not ambiguous). As there were no material disputed facts and as the policy did not afford coverage for the loss, Judge Hoppe granted judgment on the pleadings to Atlantic Specialty that it was not obligated to cover the loss. See November 2022 Update.
Bindea brought a third-party action against its broker, John Uhr and ASAP Insurance Agency, and the wholesale broker, USG Insurance Services. USG moved to dismiss the third-party complaint, and Magistrate Judge Hoppe found that there was supplemental jurisdiction over the claims as they were sufficiently related to the policy issued by Atlantic Specialty. In order to determine the applicable law for the third-party action, he looked to the choice-of-law rules for the forum state (Virginia), which required that he decide whether the claims sounded in contract or tort. He concluded that Virginia law characterizes the claims against USG as contract claims because the duties allegedly breached arose out the agreement to procure marine insurance on Bindea’s behalf. As Virginia law provides that a contract is made when the last act to complete it is performed, and as USG assisted in the procurement of the marine insurance policy that was delivered in Virginia, Magistrate Judge Hoppe applied Virginia law. USG argued that the claim was barred by Virginia’s economic loss rule, and Magistrate Judge Hoppe noted that Bindea’s request that USG compensate him for a loss that would have been covered by Atlantic Specialty’s policy if USG had procured the coverages that Bindea wanted for his vessel was purely a claim for “disappointed economic expectations.” He therefore held that Bindea’s claim against USG was barred by the economic loss rule and dismissed the third-party claim against USG.
Judge enjoined the vessel owner from declaring the charterer of its vessel in default for failing to pay a proposed increase in the charter hire for the vessel during the term of the charter; Olympic Tug & Barge, Inc. v. Lovel Briere LLC, No. 22-cv-1530, 2023 U.S. Dist. LEXIS 26834 (W.D. Wash. Feb. 16, 2023) (Robart).
Harley Franco was the Chief Executive Officer and Chairman of the Board of Harley Marine Services and a number of related and successor companies. Harley Marine obtained vessels for its marine transportation services by constructing new vessels and acquiring exiting vessels. Mr. Franco often took on the business risk for the acquisition by using his personal credit to construct or acquire a vessel and then chartering the vessel to Harley Marine at a favorable rate for Harley Marine but at a rate that would cover his expenses and provide a reasonable rate of return. Mr. Franco formed Lovel Briere to acquire the barge LOVEL BRIERE in 2013, and the agreement between Lovel Briere and Harley Marine subsidiary Olympic Tug provided for a charter for a term of 87 months for a minimum monthly payment of $75,000 per month. Mr. Franco claims that it was agreed that the rate would be increased from time to time to cover his costs and provide a reasonable return and that it was understood that Mr. Franco would remain the CEO and majority owner of Harley Marine. After the Chief Financial Officer of Harley Marine died, the Chief Operating Officer asked Mr. Franco to extend the term of the charter for ten years, and Mr. Franco agreed to the extension without an increase in the monthly charter rate with the understanding that he would remain the CEO and majority owner of Harley Marine for the extended term. Shortly after the extension was signed, the board of Harley Marine voted to terminate Mr. Franco as CEO of Harley Marine, and Mr. Franco notified Olympic Tug that the charter hire would increase to $150,000 per month based on an increase in financing costs and the market rate. Olympic Tug filed suit in federal court in Washington seeking a declaration that the agreement was valid and binding and that the rate could not be increased during the ten-year term. Finding the language of the agreement to be unambiguous, Judge Robart granted a preliminary injunction that the owner (Lovel Briere) could not declare the charterer in default for not paying the increase in hire and could not arrest the vessel based on such a breach. Judge Robart declined to consider the evidence about the mindset of Mr. Franco at the time of the execution of the agreement as the language of the agreement was unambiguous. He also found that the evidence from Mr. Franco was insufficient at this early stage in the proceedings to establish a defense under Washington law of frustration of purpose or fraudulent inducement.
Judge did not accept booking note with arbitration provision as the charter party and declined to stay cargo damage case; Hawthorne Industrial Products Inc. v. M/V TAC IMOLA, No. 22-cv-1376, 2023 U.S. Dist. LEXIS (D. Md. Feb. 16, 2023) (Bennett).
Hawthorne Industrial imports wood products into the United States, and was the consignee of a shipment of plywood from Qingdao, China to Baltimore, Maryland on the M/V TAC IMOLA. Nine bills of lading were issued for the voyage. The bills contained a space to list the charter party but the space was left blank. However, there was language in the bills that provided: “TO BE USED WITH CHARTER-PARTIES,” and below that language there was a reference number that was dated October 13, 2021. There was a Booking Note dated October 13, 2021 with a Fixture Note No. that matched the reference number on the bills of lading. The Booking Note contained 23 provisions, including a provision that stated: “Arbitration in Hongkong with English law to be applied.” The cargo was damaged during the shipment, and Hawthorne Industrial brought this action against the vessel and its owner and manager in federal court in Maryland. The defendants moved to stay the case for arbitration, and Hawthorne Industrial argued that the arbitration provision was not validly incorporated into the bills of lading as the Booking Note was not the intended charter party. It argued that the Booking Note was a preliminary agreement to reserve space on the vessel as opposed to a charter party as referenced on the bills of lading. The defendants described that argument as “form over substance,” citing the substance of the Booking Note as well as the specific reference number and date in the bills of lading and Booking Note. As there was confusion at this “early stage of the proceedings” concerning the terms of the charter party that was to be incorporated into the bills of lading, Judge Bennett held that it would be inequitable to bind Hawthorne Industrial to arbitration in Hong Kong based on a “clause buried within various documents, the significance of which are in doubt.”
Jennifer Gusman, her father, Dudley Vandenborre, and others were fishing in Vandenborre’s boat in the Rigolets area near New Orleans. Gusman claims that she was injured and the boat was damaged when the vessel hit a submerged I-beam that was left in the water following repairs to a bridge that is owned and operated by CSX. Gusman and Vandenborre filed suit in Louisiana state court against CSX, and CSX removed the case to federal court based on diversity (Gusman and Vandenborre are Louisiana citizens and CSX is a Virginia corporation with its principal place of business in Florida) and based on the federal court’s original admiralty jurisdiction. After Gusman filed an amended complaint in which she brought a cross-claim against co-plaintiff Vandenborre, she moved to remand the case to state court on the ground that she and Vandenborre are both Louisiana citizens and there was no longer diversity jurisdiction for the case. Judge Ashe disagreed, noting that there was complete diversity between the plaintiffs and CSX when the case was removed and that a cross-claim between non-diverse co-parties that is within the court’s ancillary jurisdiction does not destroy diversity so long as each plaintiff is diverse as to each defendant. As Gusman and Vandenborre were both diverse from CSX, the cross-claim did not destroy the diversity jurisdiction, and the motion to remand was denied.
From the state appellate courts
Harbor worker who prepared barges to receive paper for recycling was allowed to amend his complaint to assert a claim under the Jones Act; Mack v. City of New York, Index No. 156903/2018, 2023 N.Y. Misc. LEXIS 373 (N.Y. Sup. [N.Y. Cty.] Feb. 2, 2023) (Moyne).
Ernest Mack worked as a supervisor for the New York City Department of Sanitation. He was assigned to supervise the marine transfer station located at Pier 99, which included monitoring the sanitation workers and overseeing the building located at the transfer station. The station served as the paper recycling center for Manhattan and was used to transport paper waste from the city to a recycling plant. Mack’s work was primarily in the building, which was located on the water with an opening for the barges to fit under the building. His duties including preparing barges for the receipt of the recycled material. He was attempting to place a net over a barge and he got his foot caught on a metal wire on the dock when he was stepping from the barge to the dock. Mack brought this action in 2018 against the City of New York, and, years later, moved for permission to amend his complaint to assert a cause of action under the Jones Act. The City objected, arguing that Mack could not satisfy the Chandris test for seaman status because he was a land-based office worker who only had a transitory connection to a vessel in navigation. Judge Moyne declined to address the extent of the evidence, noting that the procedural posture was not a motion to dismiss a complaint or a motion for summary judgment. To be permitted to amend his complaint Mack only had to demonstrate that the proffered amendment was not “palpably insufficient or clearly devoid of merit.” Without addressing whether the work on the barge was sufficient to qualify Mack as a seaman, Judge Moyne held that the proposed amendment was not palpably insufficient, and he therefore granted leave to amend the complaint.
Appellate court granted mandamus relief that the seaman must submit to the employer’s request for a neuropsychological examination; In re Transocean Offshore Deepwater Drilling, No. 14-22-00568-CV, 2023 Tex. App. LEXIS 994 (Tex. App.—Houston [14th Dist.] Feb. 16, 2023) (per curiam).
Daman Roy was working as a crew member (roustabout) on Transocean’s drillship, THE INSPIRATION, when he was struck in the face by a crane hook. He brought suit against Transocean in Texas state court and advised Transocean that he had recently undergone neuropsychological testing and planned to undergo a brain MRI. Transocean requested that Roy undergo an examination with a neuropsychologist selected by Transocean. Roy refused to submit to the examination, and Transocean moved to compel an examination. Judge Sepolio denied Transocean’s motion, and Transocean sought a writ of mandamus with the Texas Court of Appeals. The appellate court found that all of the requirements had been satisfied for the district court to order the examination. The request was before the discovery deadline, Roy’s neuropsychological condition was put in controversy by Roy, Transocean established good cause for the examination, and the information could not be obtained by less intrusive means. Concluding that Judge Sepolio abused his discretion by denying the motion and that Transocean did not have an adequate remedy by appeal, the court of appeals conditionally granted the writ of mandamus, directing the judge to issue an order compelling Roy to submit to the examination.
Texas Supreme Court declined to intervene after the state appellate courts reached different results with respect to jurisdiction over injuries to Texas residents in dredging operations outside of Texas; Weeks Marine, Inc. v. Carlos, No. 01-21-00015, 2021 Tex. App. LEXIS 8514 (Tex. App.—Houston [1st Dist.] Oct. 21, 2021) (Kelly), petition denied without opinion, No. 22-0149 (Tex. Feb. 24, 2023).
In our July 2021 Update we discussed the opinion of the San Antonio Court of Appeals in Weeks Marine Co. v. Landa, No. 04-20-00499-CV, 629 S.W.3d 742 (Tex. App.—San Antonio June 30, 2021). In that case, Weeks Marine, whose headquarters is in New Jersey, was engaged to perform a dredging operation in New York, one mile out in the Atlantic Ocean off the coast of West Hampton Dunes. Its employee, David Landa, a resident of Starr County, Texas, was injured and brought this suit in Starr County under the Jones Act and general maritime law. Weeks filed a special appearance, which was denied by the district court. The San Antonio Court of Appeals, however, reversed the district court and rendered judgment that the case should be dismissed for lack of personal jurisdiction. Weeks asserted that it has a regional office in Houston, but Landa and his co-employee, Luis Mijares, whom Landa blamed for the accident, also a resident of Texas, worked for the Dredging Division of Weeks located in Covington, Louisiana. Although both workers were recruited from Texas, and Landa took a physical and drug test in Texas, was paid by direct deposit to his bank account in Texas, once worked on a project in Texas, and received medical care in Texas after his accident, Justice Valenzuela held that the contacts did not establish specific jurisdiction over Landa’s negligence claims. Landa also asserted a claim that Weeks failed to pay maintenance and cure to him in Texas and tried to base jurisdiction on breach of a contractual obligation to pay him in Texas. Judge Valenzuela held that Landa’s residence in Texas could not be the basis for Texas jurisdiction and that Weeks’s contacts with Texas were not substantially connected to the operative facts of the maintenance and cure claim. Finally, Justice Valenzuela rejected Landa’s argument that there was general jurisdiction over Weeks in Texas, noting that merely doing business in Texas is not sufficient for Weeks to be “at home” in Texas.
The decision of the Houston Court of Appeals involved injuries of Mario Carlos, a resident of Starr County, Texas, while working for Weeks in the Mississippi River near the Port of New Orleans and in the New Zydeco Ridge near Slidell, Louisiana. When Carlos was hired, he was given a pre-employment physical and drug test in Hidalgo County, Texas, and Carlos accepted employment in Texas. He was paid a per diem when he travelled between his home in Texas and his work that was outside the state, and he did receive some training in Texas. Carlos brought this suit against Weeks in state court in Houston under the Jones Act and general maritime law, and the district judge denied Weeks’ special appearance. In contrast to the decision of the San Antonio Court of Appeals, the Houston Court of Appeals held that Weeks had purposefully availed itself of the Texas forum and that the contacts with Texas related to Carlos’s claims in this suit because his supervisor, who allegedly ordered Carlos to take unsafe actions, lives in Texas, was recruited in Texas, and received training from Weeks in Texas. Justice Kelly, writing for the Houston court, did not cite the contrary Landa decision of the San Antonio court. See November 2021 Update.
Landa did not seek review from the Texas Supreme Court, but Weeks filed a petition for review in the Carlos case with the Texas Supreme Court, asking the Court to “clarify the inconsistency in specific jurisdiction jurisprudence” created by the decisions of the intermediate appellate courts in Landa and Carlos. However, on February 24, 2023, the Texas Supreme Court denied Weeks’ petition without a written opinion.
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
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It is in the interests of all shippers and all carriers that when a steamship company grants an extension of the time for suit, in writing, before the running of the statute, specifically limited to a fixed and reasonable time, that the parties be able to rely on the terms of their agreement. If a shipper may dishonor an unambiguous extension agreement, and if a carrier is to be penalized for being liberal toward a shipper in not requiring rigid adherence to the statute — there will be no more extensions. And there is not much doubt that extensions of a statute of limitations are usually in the interest of claimants.
United Fruit Co. v. J.A. Folger & Co., 270 F.2dd 666, 670 (5th Cir. 1959) (Wisdom).
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