May 2022 Longshore/Maritime Update (No. 276)
Notes from your Updater:
On March 22, 2022, Judge McConnell, writing for the California Court of Appeal, Fourth Appellate District, held that federal maritime law preempted the California unfair competition claim of dredging company Curtin Maritime against its competitor, Pacific Dredge & Construction (claiming that Pacific Dredge’s dredging vessel was not domestically built and was thus ineligible for a coastwise endorsement). Curtin Maritime Corp. v. Pacific Dredge & Construction, LLC, No. D078217, 2022 Cal App. LEXIS 235 (Cal. App. 4th Dist. Mar. 22, 2022).
In a non-maritime case with maritime implications, the United States Supreme Court declined to use the “look-through” approach to the “underlying substantive controversy,” that is applicable when a federal court is considering a petition to compel arbitration, in determining whether a federal court has jurisdiction to vacate or confirm an arbitration award under the Federal Arbitration Act. Instead, a federal court only has jurisdiction to vacate or confirm an award if the action has an independent jurisdictional basis. Writing for the 8-justice majority (over the dissent of Justice Breyer), Justice Kagan noted that the result of the ruling was “to give state courts a significant role in implementing the FAA.” Badgerow v. Walters, No. 20-1143 (U.S. Mar. 31, 2022).
The full Senate enacted its version of the Ocean Shipping Reform Act on March 31, 2022. As the House passed a different version of the legislation last year, the differences will require resolution by conference between the chambers.
On March 31, 2022, Judge Norton dismissed the claims of Christine Nelson, an African American female longshore worker in the Port of Charleston, South Carolina, against the South Carolina Stevedores Association and International Longshoreman’s Association Local 1422 for harassment, hostile work environment, and retaliation (based on pervasive sexual harassment toward women in the workplace), adopting the recommendation of Magistrate Judge Baker. Nelson v. Local 1422, International Longshoreman’s Association, No. 2:19-cv-1545, 2022 U.S. Dist. LEXIS 59895 (Mar. 31, 2022).
In the June 2021 Update we reported that the Supreme Court issued its decision in the suit brought by the Mayor and City Council of Baltimore against 26 multinational oil and gas companies, asserting that they were partially responsible for climate change. The oil and gas companies removed the case on numerous grounds, including the federal jurisdiction of the Outer Continental Shelf Lands Act and admiralty jurisdiction, and the district judge rejected all the bases for removal and remanded the case. The only ground the defendants had to appeal the remand of the case was the Federal Officer Removal Statute, but the Fourth Circuit rejected that as a basis for removal, affirming the remand of the case to state court. The energy companies sought a petition for certiorari. The question presented was: Whether 28 U.S.C. 1447(d) permits a court of appeals to review any issue encompassed in a district court’s order remanding a removed case to state court where the removing defendant premised removal in part on the federal-officer removal statute, 28 U.S.C. 1442, or the civil rights removal statute, 28 U.S.C. 1443. The Supreme Court answered that appellate review was not confined to the defendant’s arguments under the Federal Officer Removal Statute and the appellate courts may consider all of the grounds for removal raised by the defendant. Writing for seven members of the Court, Justice Gorsuch remanded the case to the Fourth Circuit to consider all of the grounds for removal and not just the Federal Officer Removal Statute. On remand, the Fourth Circuit concluded that none of the bases for removal permitted the exercise of federal jurisdiction, and the court affirmed the remand of the case to state court. Writing for the court, Judge Floyd held that jurisdiction under the OCSLA requires a but-for connection between the cause of action and operations on the outer Continental Shelf; however, he concluded that the city’s claims of trickery and deceit leading to climate change were too remote and attenuated for a but-for connection to OCS activity. With respect to admiralty removal jurisdiction, Judge Floyd noted the division in the federal courts but declined to address the issue whether cases can be removed based on original admiralty jurisdiction in light of the “inadequate briefing” on the subject. Instead, he held that the oil and gas companies failed to satisfy the locality test for admiralty jurisdiction, noting that the complaint never mentioned any tort on navigable waters and that the defendants had not identified one. Although the oil and gas companies argued that their floating oil rigs were vessels within the locality test, Judge Floyd responded that the defendants did not argue that the rigs were either designed for navigation or used for navigation when the city suffered its injuries (arguing that the rigs were used for oil and gas production, not for navigational purposes). He compared the floating rigs to the floating construction platforms and floating hotels that had been held not to be vessels by the Fifth Circuit although he did cite a case considering a jack-up rig to be a vessel. But even if the structures were vessels, Judge Floyd reverted to the lack of allegations that the city’s land-based injuries were caused by a vessel. After writing 93 pages on the various bases for removal, Judge Floyd affirmed the remand of the case to state court. Mayor and City Council of Baltimore v. BP P.L.C., No. 19-1644, 2022 U.S. App. LEXIS 9409 (4th Cir. Apr. 7, 2022). Less than two weeks later, on April 19, 2022, the Ninth Circuit addressed the removal jurisdiction in a global-warming suit brought by California governmental entities in California state court (also on remand from the Supreme Court). The energy companies removed the case and asserted that because the plaintiffs argued that their injuries were caused by fossil-fuel extraction, some of which occurred on the OCS, the claims arose from the operations of the energy companies on the OCS. The Ninth Circuit disagreed and held that the connection to OCS activities was too attenuated. The court also addressed the issue whether the case was removable under the federal court’s admiralty jurisdiction and held that “when a plaintiff brings a maritime cause of action against a person in state court, a federal court lacks admiralty jurisdiction over that claim,” contradicting the Supreme Court in Romero: “All suits involving maritime claims, regardless of the remedy sought, are cases of admiralty and maritime jurisdiction within the meaning of Article III whether they are asserted in the federal courts or, under the saving clause, in the state courts.” See County of San Mateo v. Chevron Corp., Nos. 18-15499, 18-15502, 18-15503, 18-16376, 2022 U.S. App. LEXIS 10477 (9th Cir. Apr. 19, 2022) (Ikuta).
In our March 2022 Update, we noted that the Ninth Circuit denied two appeals from Chad Barry Barnes in his long-running litigation seeking to recover for the injuries he suffered when the vessel on which he was working exploded. The appellate court dismissed his appeal of three sanctions orders, noting that the appeal was not filed within thirty days of the first two orders and that the third order did not define Barnes’s rights or liabilities or go to the merits of the case, so there was no interlocutory jurisdiction under Section 1292(a)(3). See Barnes v. Henry, No. 21-16120, 2022 U.S. App. LEXIS 4459 (9th Cir. Feb. 18, 2022) (per curiam). With respect to Barnes’s appeal of the dismissal of his claim for an accounting, the Ninth Circuit held that the district court correctly dismissed the claim for lack of any confidential or trust relationship with the defendants and because Barnes has an adequate remedy at law through the normal discovery process. See Barnes v. Henry, No. 20-17141, 2022 U.S. App. LEXIS 4460 (9th Cir. Feb. 18, 2022) (per curiam). The Ninth Circuit dismissed another appeal in April. That appeal was from Judge Kay’s denial of Barnes’ motion to compel the transfer of the commercial-use permit and to enjoin defendant Henry or his new company from the using the permit. Judge Kay held that he lacked jurisdiction to decide the motion because it raised the same issues that were on appeal to the Ninth Circuit. Barnes appealed as an interlocutory admiralty appeal under Section 1292(a)(3), but the Ninth Circuit held that it lacked jurisdiction as the order did not define the rights and liabilities of the parties or address the merits of the case. See Barnes v. Henry, No. 21-17094, 2022 U.S. App. LEXIS 10004 (9th Cir. April 13, 2022) (per curiam).
The effort of seaman Vinod Kumar Dahiya, an Indian national, to avoid arbitration and bring his claim for an injury in 1999 in Louisiana state court, did not end with the decision of the Fifth Circuit on October 1, 2021 (discussed in our November 2021 Update) in which the Fifth Circuit affirmed the decision of Judge Feldman to confirm an arbitration decision. Dahiya’s effort to avoid arbitration was even discussed in an article written 10 years ago by your Updater and Monica Markovich, Forum Selection and Arbitration Clauses in Seamen’s Injury Claims, 11 Loy. Mar. L.J. 109 (Fall 2012). On February 8, 2022, the Supreme Court docketed Dahiya’s petition for certiorari, No. 21-1097, Dahiya v. Neptune ShipManagement Services, Pte, Ltd. The first question presented by Dahiya was: “Can a foreign arbitration award be enforced pursuant to the Convention (9 U.S.C. 207) where the arbitration agreement does not meet the Convention’s definitional requisite [Art. II (2)] of bilateral signatures? And, is that defect jurisdictional, or merely fatal to the merits of the enforcement action?” However, on April 18, 2022, the Supreme Court denied the writ of certiorari. After 23 years, the litigation may finally be over.
On April 25, 2022, Judge Bennett confirmed the London arbitration award in favor of Corporativo Grupo R SA de C.V. against Marfield Limited Inc. and Shanara Maritime International, S.A. for non-delivery of vessels. Corporativo Grupo R SA de C.V. v. Marfield Limited Inc., No. 4:19-cv-1963 (S.D. Tex. Apr. 25, 2022).
On the LHWCA Front . . .
From the federal appellate courts:
Fifth Circuit applied awkward language of crew/employee exclusion to deny coverage under P&I policy for non-employee of the additional insured who was injured during construction of an addition to a dock; Barrios v. River Ventures, L.L.C., No. 21-30431, 2022 U.S. App. LEXIS 9148 (5th Cir. Apr. 5, 2022) (per curiam).
The insurance and contractual issues in this case arise from the claims of Devin Barrios, an employee of Centaur, who was injured while offloading a generator from River Ventures’ vessel in connection with the construction of a concrete rail by Centaur on United Bulk Terminals’ Dock in the Mississippi River. Barrios brought suit against River Ventures and Centaur, resulting in a judgment in favor of Barrios against River Ventures under Section 5(b) of the LHWCA. River Ventures sought indemnity and additional insurance (as a contractor of UBT) from Centaur pursuant to the Master Service Agreement between Centaur and UBT that applied to the construction of the rail. The dispute raised the question whether the contract was maritime or subject to Louisiana law. In the wake of the decision of the Supreme Court in Kirby and the decision of the en banc Fifth Circuit in Doiron, Judge Milazzo applied a three-part test (first enunciated by Judge Rosenthal in Texas) to determine if a non-oilfield contract is maritime: did the work performed under the contract involve maritime commerce, did it involve work from a vessel, and did the contract provide or did the parties expect that a vessel would play a substantial role in completing the contract. Applying the first prong of that test, Judge Milazzo held that the contract was a land-based contract so that Louisiana law applied and the indemnity and additional insured provisions were invalid under the Louisiana Construction Anti-Indemnity Act. The Fifth Circuit disagreed with the three-prong test applied by Judge Milazzo and adopted the test proffered by River Ventures that, in order to determine if a mixed-services contract is maritime, the “contract (1) must be for services to facilitate activity on navigable waters and (2) must provide, or the parties must expect, that a vessel will play a substantial role in the completion of the contract.” Judge Smith rejected a separate initial test whether the contract involved maritime commerce as that is what the two prongs of Doiron, as extrapolated in Barrios, were designed to determine. Judge Smith then determined that the test was satisfied in this case as the dock was over the Mississippi River, and the vessels involved in the construction (and the accident) were on navigable waters. The contract also required substantial use of vessels as Centaur’s bid expressed that the price for the work was “significantly higher” because of the necessity of vessels in the project, and Centaur’s project manager admitted that the work could not have been done properly without a crane barge. The fact that Centaur’s workers, like Barrios, may have performed a majority of their work on the dock did not alter the conclusion that the parties expected a substantial role for vessels in the construction. (See December 2019 Update). On remand, River Ventures and its insurer, XL Specialty, and Centaur and its insurer, Travelers, disputed the insurance coverage for River Ventures under the Travelers P&I policy and whether Centaur breached the contract if the Travelers’ policy did not afford coverage to River Ventures. Travelers argued that the P&I policy excluded coverage for Barrios’ injury because it contained a crew/employee exclusion for “injury of any crew, seaman or other employee of the Assured regardless of whether they be employees of the Assured or any Additional Assured named in the Policy.” River Ventures argued that “the Assured” referred to the particular insured against whom a claim has been asserted and did not apply to Barrios’ claim against River Ventures. Travelers argued that “the Assured” referred to Centaur so that the exclusion excluded claims for injuries to Centaur employees against River Ventures. Judge Milazzo agreed with Travelers that the exclusion unambiguously excluded Barrios’ claim against River Ventures as he was an employee of Centaur. With that ruling, River Ventures argued that Centaur had breached the MSA because Centaur was required to obtain a P&I policy of “not less than the P&I SP-23 (revised 1/56) form of policy or its equivalent” and that form insures the crew and injuries to third parties without a crew/employee exclusion. Despite that language, Centaur argued that the MSA required Centaur to obtain a maritime employers liability endorsement to its workers’ compensation policy that would cover the crew. Considering the MSA provisions to be ambiguous, Judge Milazzo held that summary judgment was not proper on River Ventures’ claim for breach of contract against Centaur. See August 2021 Update.
River Ventures and XL appealed to the Fifth Circuit, arguing that the language of the exclusion in Travelers’ policy was ambiguous because it contained superfluous or redundant language, the interpretation suggested by Travelers conflicted with other provisions of the policy, and the interpretation conflicted with the requirements of the Master Service Agreement of which Travelers was aware because its additional insured provision incorporated the requirement from the Master Service Agreement. Substituting the names of the parties into the exclusion would provide that the policy excluded any crew, seaman, or other employee of Centaur, regardless of whether they be employees of Centaur or River Ventures. The Fifth Circuit recognized that the Exclusion “could have been written more efficiently” and that its use of “the Assured” was “certainly awkward.” However, the appellate court believed that the Exclusion unambiguously precluded coverage for all employee claims, regardless of whether the entity seeking coverage was the employer of the injured employee. As Barrios was an employee of Centaur, the court held that the Exclusion applied to preclude coverage for Barrios’ claim against River Ventures, even though Barrios was not an employee of River Ventures. To the extent that the Travelers policy did not afford the coverage required in the Master Service Agreement, the court held that the policy controlled and remanded the case to the district court to address River Ventures’ claim against Centaur for breach of contract.
From the federal district courts:
Employee’s mesothelioma claims against shipyard and its insurer for the employee’s exposure to asbestos were preempted by the LHWCA, but not his claims for exposure to asbestos on the clothes of his brother; Cortez v. Lamorak Insurance Co., No. 20-2389, 2022 U.S. Dist. LEXIS 62107, 64449 (E.D. La. Apr. 4, 6, 2022) (Vance).
Callen Cortez claimed that he contracted mesothelioma from exposure to asbestos during his employment as a welder and tacker helper at Avondale’s Westwego Yard as well as from his brother’s employment with Avondale. Callen Cortez lived in his family home in Kraemer, Louisiana until he married and moved out in May 1972. His brother, Daniel, went to work for Avondale in August 1967 and lived in the family home with Callen until Daniel married and moved out in July 1968. Daniel testified that he worked with asbestos during this period and that he and his brother beat the asbestos fibers off his clothes after Daniel came home each day, and Avondale’s expert opined that asbestos taken home on Daniel’s clothes significantly contributed to the development of Callen’s mesothelioma. Callen also complained of exposure to asbestos during his employment with Avondale between March 1969 and May 1974. Callen brought this suit in Louisiana state court against Avondale, its executive officers and insurer (Lloyd’s) as well as various parties supplying products containing asbestos, including claims for negligence and an intentional tort. The suit was removed to federal court, and Avondale and its insurer Lloyd’s moved for summary judgment on the ground that Callen’s claims are preempted by the exclusive remedy provision of the LHWCA. Callen and several of the defendants opposed the motion, arguing that the claims fell within the twilight zone of concurrent state and federal jurisdiction over workers’ compensation claims, that the LHWCA does not preempt Callen’s third-party claims arising out of Daniel’s take-home asbestos, and that the LHWCA has an intentional-tort exception. Judge Vance first addressed the version of the LHWCA that is applicable to the suit, as the exposure occurred before the 1972 Amendments that extended the LHWCA shoreside. Following the manifestation rule pursuant to which Callen’s claims were manifest after the 1972 Amendments, Judge Vance held that Callen’s claim satisfied the situs and status of the LHWCA. Consequently, she held that the state tort claims against Avondale arising from his employment were preempted and should be dismissed. She reiterated rulings from prior decisions that rejected arguments that preemption did not apply because Callen was not seeking benefits under the LHWCA and that dismissal would violate due process by divesting Callen of an accrued right. Without deciding whether the LHWCA recognizes an intentional-tort exception to its preemption, Judge Vance held that Callen had failed to present evidence sufficient to establish that Avondale either consciously desired that Callen contract mesothelioma or knew that the result was substantially certain to follow from Avondale’s conduct. Consequently, Judge Vance granted summary judgment on all of the claims of Avondale in its capacity as Callen’s employer. However, Callen also sued Avondale related to the exposure to asbestos from the clothes of his brother, Daniel, while Daniel was employed by Avondale. Although Callen argued that the LHWCA preempted this claim as well, Judge Vance held that the exclusive remedy language within Section 5(a) of the LHWCA was not so broad as to encompass exposure that did not occur in the course of Callen’s employment with Avondale but, instead, was related to the employment of Daniel. If Callen had been exposed to dust on his brother’s clothes during Callen’s ride to or from employment, the situation would be different. Avondale also cited the non-apportionment rule from the Benefits Review Board that declines to apportion LHWCA benefits across jurisdictions when a claimant’s employment-related injury/disease occurred both within and without the coverage of the LHWCA. She held that the BRB rule has no application to the issue whether non-employment claims are preempted by the LHWCA and only applies to employment exposure falling within different compensation schemes. Finally, Avondale argued that Callen’s mesothelioma is a single disease, and the individual exposures are not indivisible injuries but a single injury/disease that is preempted. Thus, when the employment injury aggravates or combines with a previous condition or disease, the employer is liable for the resulting total disability. Judge Vance rejected that argument, reasoning that the scope of an LHWCA award does not affect the claimant’s ability to sue manufacturers of products, or, in this case, Avondale as employer of Callen’s brother. As the LHWCA is only concerned with Avondale’s capacity as employer, she denied Avondale’s motion for summary judgment for Callen’s exposure from Avondale’s capacity as employer of Daniel. Judge Vance then applied the holding on Avondale’s motion for summary judgment to the motion filed by Avondale’s insurer, Lloyd’s. She only added that Lloyd’s was also not liable in its capacity as insurer for executive officers of Avondale (even though they were not part of the previous order) because the executive officers have the same immunity to suit as the employer. Similarly, Judge Vance denied Lloyd’s motion to the extent of Avondale’s liability in a non-employer capacity with respect to Callen.
LHWCA exclusive remedy provision barred suit alleging wrongful termination of benefits under the Act; Hebert v. Quality Production Management LLC, No. 2:220cv-113, 2022 U.S. Dist. LEXIS 67453 (W.D. La. Apr. 11, 2022) (Guidry).
Jory Hebert, an employee of ES&H Production Group, was injured while being lowered from the WD 73 D platform on the outer Continental Shelf, offshore Louisiana, to a supply boat, the M/V GOL SAPPHIRE. Hebert brought suit in federal court in Louisiana against the owner of the vessel and the employer of the platform crane operator, and his suit named American Equity Underwriters and American Longshore Mutual Association (as the parties paying benefits to Hebert under the LHWCA via the Outer Continental Shelf Lands Act, alleging that they had “maliciously and without sufficient factual basis, terminated Hebert’s Longshore benefits, thus causing damages to Heber that are actionable under civilian law Abuse Rights Doctrine.” AEU and ALMA filed a motion to dismiss on the ground that ALMA had not been properly served under the Hague Convention and that Hebert could not state a claim against them because his sole remedy was pursuant to the LHWCA. Citing the exclusive remedy provision of the LHWCA and holding that it was applicable to this claim via the OCSLA, Judge Guidry ruled that the state-law claims were preempted. Accordingly, as defective service could be cured, Judge Guidry proceeded to the merits and dismissed the claims against AEU and ALMA as barred by the exclusive remedy provision of the LHWCA.
Harbor worker who helped dock vessels in the Mississippi River from launch boats and at the dock from the land failed the duration element of the seaman status test; Blanda v. Cooper/T. Smith Corp., No. 20-cv-678, 2022 U.S. Dist. LEXIS 72458 (M.D. La. Apr. 20, 2022) (deGravelles).
Douglas Blanda was employed by Cooper/T. Smith from 2013 to 2020. Cooper asserted that Blanda was a lineman, and Blanda claimed that he was a blend of lineman and deckhand until October 2019, when he became an operator/deckhand for a majority of the time. Bland was injured on the deck of a Cooper mooring vessel while assisting in the mooring of an oceangoing vessel, the M/V SEA VICTORY, to a buoy in the Mississippi River. He brought this suit in state court in the Parish of East Baton Rouge against Cooper under the Jones Act, and, alternatively, under Section 5(b) of the LHWCA, and Cooper removed the suit to the federal court for the Middle District of Louisiana and also filed a petition for limitation of liability. Cooper filed a motion for partial summary judgment contending that Blanda was not a seaman because he failed the nature and duration elements of the connection test for seaman status. Cooper argued that, as a lineman, Blanda tied up vessels at the dock while working on the land and that when mooring vessels in the river, he did so from launch boats that did not have sleeping quarters, galley, or cabin. The workers would always return to shore from a job in the river and did not sleep or eat on the boat. Blanda argued that he also used the boats to travel to various river locations to perform his line work and that he did other work from the launch boats, including untying lines that got stuck in clusters and attaching mooring lines to the dock when dock winches were broken. Judge deGravelles first addressed the nature element and discussed the four factors enunciated by the Fifth Circuit in Sanchez to determine whether a worker’s duties “took him to sea” as set forth in Justice Kennedy’s opinion in Papai. Judge deGravelles noted that most of Blanda’s vessel work was performed while the vessels were away from the dock and in the Mississippi River, and his use of vessels was an integral part of how he performed his job. He noted that the district court in Meaux (see July 2021 Update) had denied Cooper’s motion for summary judgment for a flagger/utilityman on Cooper’s crane barges used to load and unload vessels in the Mississippi River. Thus, Judge deGravelles held that Blanda’s work on the Mississippi River took him to sea and involved seagoing activities as defined by the Fifth Circuit in Sanchez (although the Fifth Circuit held that Sanchez, who spent the majority of his time on a vessel at sea in the Gulf of Mexico, did not satisfy the test for seagoing activity and going to sea). As to the duration element of the connection test, CTS presented evidence that Blanda spent a maximum of 8% of his time doing work from CTS vessels (producing evidence for the year of his employment preceding the accident). Although Judge deGravelles questioned whether one year’s evidence was sufficient (as the Supreme Court and the Fifth Circuit have specified that the duration element is evaluated from the worker’s entire employment, absent a permanent change in duties), Blanda did not contest that the last year’s records were a fair representation of the preceding years. Instead, he argued that the records did not adequately reflect his actual time on vessels and that the 8% figure was woefully inadequate (for example, he argued that time waiting on shore for a job should be assigned to that job). However, Blanda made no attempt to quantify with specifics the amount of time he spent on vessels, he did not give the court a reason to depart from the 30% rule-of-thumb, and he did not give the court a reason for including time waiting on land as part of his work on vessels at sea. Finally, Blanda asked the court to consider the time after the accident when he was being trained as a boat operator. However, as this would reflect a change in duties after his accident, Judge deGravelles did not consider it in determining Blanda’s status as a seaman at the time of the accident. Concluding that Blanda had failed to establish a fact question on the duration element, Judge deGravelles granted the motion for partial summary judgment that Blanda was not a seaman.
And on the maritime front . . .
From the federal appellate courts:
Material barges were not necessaries for vessel involved in decommissioning of an offshore platform; Central Boat Rentals, Inc. v. M/V NOR GOLIATH, No. 21-60501, 2022 U.S. App. LEXIS 9814 (5th Cir. Apr. 12, 2022) (Higginbotham).
This litigation arises from services performed in connection with a vessel used in the decommissioning and salvaging of an offshore platform. Epic Companies sought to decommission an abandoned oil platform and chartered the M/V NOR GOLIATH, a ship equipped with a crane, to perform heavy lifts for the construction/deconstruction work. The vessel was arrested by a company that had not been paid for necessaries, and other parties filed interventions asserting liens for necessaries on the NOR GOLIATH. Entier provided catering services for the vessel and filed a motion for summary judgment, supported by the invoices specifying the catering services for the vessel, including its crew and visitors and guests on the vessel. That raised the question whether catering for those who were required for the decommissioning project (but were not members of the crew of the vessel) contributed to the mission of the vessel to perform heavy lifts. As that question could not be answered from mere submission of the invoices, Judge Guirola declined to grant summary judgment to Entier for the total amount of its invoices. MARMAC sought to enforce a lien for supplying material barges to the project, claiming that the barges were necessary to the NOR GOLIATH because it could not complete a lift and move on to the next lift without a barge for the lifted material. Judge Guirola agreed and held that MARMAC was entitled to partial summary judgment, but he drew the line with the contention that the services of the tugs that moved the barges were necessaries for the NOR GOLIATH. Although the claim was “seductive,” Judge Guirola held that the beneficiaries of the services of the tugs were the material barges, not the NOR GOLIATH. See June 2021 Update. The NOR GOLIATH sought reconsideration of the ruling that MARMAC had a lien for necessaries on the NOR GOLIATH, attaching an affidavit stating that the NOR GOLIATH could perform its function without the use of material barges. Concluding that the affidavit created a fact question whether the material barges provided necessary services for the NOR GOLIATH to perform its work, Judge Guirola denied MARMAC’s motion for summary judgment. See August 2021 Update.
The tug companies appealed to the Fifth Circuit, and Judge Higginbotham began by defining necessaries as the things that the prudent owner provides to enable the ship to perform the functions for which it is engaged. Thus, the court looks to the particular function and requirements of the ship to determine what is a necessary for that vessel. The role of the NOR GOLIATH was to lift platform components and place them on barges, so the tug companies argued that moving the barges for the NOR GOLIATH was necessary for the vessel to perform that function. Judge Higginbotham, however, held that the argument stretched the definition of necessaries too far, reasoning that the barges did not help the NOR GOLIATH’s crane raise and lower the components. As the NOR GOLIATH did not “use” the barges, the tug companies did not provide a service necessary for the NOR GOLIATH’s particular function. Alternatively, the tug companies argued that they performed an indirect service to the NOR GOLIATH because the decommissioning could not have proceeded without the towing of the barges. Judge Higginbotham rejected that argument, stating that it misapprehended the concept of liens for necessaries. There is going to be mutual benefit when the general contractor hires vessels from several subcontractors. However, mutually beneficial conduct does not give rise to a maritime lien as “maritime liens for necessaries run against the vessel that received the necessary and no further.” Finally, the tug companies argued that a lien arose because they protected the NOR GOLIATH from the hazards of the sea as the vessel would be in danger if it had to hold a component suspended from its crane in choppy waters. However, Judge Higginbotham held that the tug companies had not established that the NOR GOLIATH was in danger beyond conclusory allegations and unsubstantiated assertions. “Attentive to the economic realities” to which the “plain language” of the Commercial Instruments and Maritime Liens Act responds, Judge Higginbotham applied the language of the statute stricti juris and affirmed the denial of a lien for the tug companies.
John Doe, a United States citizen, began working for Carnival, a Panamanian corporation, in 2000. He executed his last contract with the cruise line on June 23, 2018, for work on the CARNIVAL MAGIC. Four days after executing the contract, Doe was medically disembarked from the vessel. He returned to work on September 2, 2018, but was again medically disembarked on November 25, 2018. Doe brought this suit against Carnival in federal court in Miami under the Jones and general maritime law and asserting discrimination claims under federal and state law. The cruise line moved to compel arbitration under the New York Convention (Convention on the Recognition and Enforcement of Foreign Arbitral Awards). Doe opposed the motion, asserting that there was no written agreement to arbitrate because the June agreement was terminated when he left the ship. Chief Judge Altonaga rejected that argument as the agreement provided that if the seaman returned to work after the agreement terminated, the return to duty would be deemed to commence a new and separate agreement under the same terms and conditions as the prior contract and would continue in place until a new contract was executed. Terming other arguments presented by Doe ‘fantastical” and “quite exasperatingly, contradicted by binding Eleventh Circuit precedent,” Chief Judge Altonaga compelled arbitration and stayed the case pending the arbitration. See November 2021 Update. Doe appealed to the Eleventh Circuit, and the appellate court dismissed the appeal for lack of jurisdiction. In the first place, the order compelling arbitration and staying the case is not appealable under Section 1291 because it did not finally resolve the case (the case was stayed and administratively closed). The case was also not appealable as an interlocutory admiralty appeal under Section 1292(a)(3) as it did not determine the rights and liabilities of the parties (the order determined how and where the rights and liabilities will be determined).
Vessel owner’s release of all actions and causes of action did not prevent the vessel owner from filing a limitation action; In re Martinez, No. 21-11084, 2022 U.S. App. LEXIS 10035 (11th Cir. Apr. 14, 2022) (Story).
This case involves a collision in Florida between a 22-foot boat owned and operated by Michael Martinez and a 32-foot boat operated by Eric Reynolds. Reynolds filed a limitation action in federal court in Florida, and Martinez asserted a claim in the limitation action. Reynolds asserted a counterclaim against Martinez. Martinez settled his claim against Reynolds, and the parties entered into a Settlement and Release by which Martinez released all actions, causes of actions, and claims against Reynolds. Martinez then filed a limitation action in federal court in Florida, seeking to limit his liability from the collision. Reynolds moved to dismiss the limitation action with prejudice, based on the language of the Settlement and Release, and Judge King dismissed Martinez’s limitation action, ruling that the Petition for Limitation of Liability was a civil action that was released by Martinez. Martinez appealed, and the Eleventh Circuit reversed the dismissal. Writing for the court, Judge Story (District Judge of the Northern District of Georgia, sitting by designation), applied Florida law to the Settlement and Release and held that Judge King had misinterpreted the agreement by taking language out of the context of the agreement as a whole. Although the agreement released all manner of actions and preserved defenses to Reynolds’ claims, the title was a release of claims “by Michael Martinez,” suggesting that it only applied to Martinez’s affirmative claims against Reynolds. The recitals similarly stated the desire to resolve the claims of Martinez. All of the types of claims released by Martinez were affirmative claims and did not have anything to do with Martinez’s liability to Reynolds. Finally, the agreement recognized Reynolds’ claims and noted that the agreement was not intended to waive any defenses that Martinez could raise against Reynolds. Judge Story then addressed Judge King’s holding that the limitation action was a civil action in admiralty that was released by the agreement. Judge Story acknowledged that the Limitation Act permits a vessel owner to “bring a civil action” and “file a complaint” and that federal courts refer to the limitation petitions as causes of action. However, Judge Story reasoned that limitation proceedings are not typical adversarial proceedings as they do not name a specific defendant and do not require the usual service of process on named defendants. They are inherently defensive and are construed as the assertion of a personal defense (Judge Story did not raise the tortured history of Olympic Towing v. Nebel Towing, Crown Zellerbach v. Ingram Industries, and the personal defense rule). Judge Story concluded that the limitation petition was not the type of cause of action contemplated by the agreement and that Judge King erred in ruling that it was.
Discovery in United States for foreign litigation must seek evidence “for use” in the foreign proceeding, and service must be properly made of subpoenas; In re Application of Newbrook Shipping Corp., No. 20-2268, 2022 U.S. App. LEXIS 10738 (4th Cir. Apr. 20, 2022) (Richardson).
Nadella Corp. bought the FALCON CARRIER for scrap from Falcon Carrier Shipping and warranted that the vessel was free from liabilities and debts. The litigation saga began when Samchira arrested the FALCON CARRIER in Bangladesh for a pre-sale debt of $368,000. Nadella then sought recovery from Falcon Carrier by arbitration in Singapore. As security for its arbitration claim, Nadella arrested the FALCON TRAVELLER, owned by Newbrook, in South Africa, arguing that they were associated vessels indirectly owned by the same beneficial owner. As the beneficial owners were found to be different (Nico Poons and his father Ronald Poons), the South African court did not consider the ships to be associated. Newbrook then brought suit against Nadella in South Africa for wrongful arrest, and Nadella arrested another vessel in South Africa, the FALCON CONFIDENCE, owned by Falcon Confidence Shipping. Believing that Nadella is owned by Global Marketing, a Maryland corporation owned and controlled by Dr. Anil Sharma, a Maryland resident, Newbrook filed this ex parte application in federal court in Maryland, seeking discovery in support of its South African wrongful arrest suit (pursuant to 28 U.S.C. § 1782). The court granted the application, and the subpoena was left with a trader at Global Marketing’s office (the trader insisted that he was not authorized to accept subpoenas). Nadella argued that the service was improper and that the discovery requests were too broad, but Chief Judge Bredar ordered Nadella to respond. Nadella appealed to the Fourth Circuit, and Judge Richardson, writing for the court, held that the discovery was too broad. The discovery requests were directed to the two arrests that were the subject of the South African litigation as well as for a contemplated action against Nadella in Nevis. While the American action was pending, the court in South Africa granted discovery for the claims related to the two arrests, but the court found the discovery for the Nevis action was a fishing expedition and declined to grant the requested discovery. Nonetheless, Chief Judge Bredar ordered Nadella to respond to all of the discovery requests, even though he found that the proposed action in Nevis did not qualify as a proceeding under Section 1782. Judge Richardson disagreed, holding that the requirement in the statute that the evidence sought must be “for use” in a foreign proceeding was not fully satisfied as some of the requests were not for the current South African litigation. He remanded the case to the district court to use its discretion to determine what discovery was sufficiently related to the South African proceeding. Judge Richardson also remanded the case on the propriety of service of the subpoena. He noted that the service could be perfected pursuant to state law or pursuant to Rule 4(h). In either event, the service had to be on an appropriate agent, and a finding on the authority of the trader (under agency law) was required.
Fifth Circuit affirmed lifting the stay in limitation action once proper stipulations were filed as a single claim; In re N&W Marine Towing, LLC, No. 21-30594, 2021 U.S. App. LEXIS 10758 (5th Cir. Apr. 20, 2022) (Higginson).
Trey Wooley, a deckhand on the M/V ASSAULT, injured his hand while helping to replace severed face wires for the tow of the M/V NICHOLAS in the Mississippi River (the incident occurred during the overtaking of the NICHOLAS by the cruise ship MAJESTY OF THE SEAS. The owner of the NICHOLAS filed a limitation action in federal court in New Orleans, and Wooley, his employer, and the cruise line all filed claims in the limitation action. Wooley also brought an action in state court in New Orleans that was removed to federal court. Wooley moved for bifurcated trials in the limitation action on the issues of liability and damages, with liability to be determined in a bench trial and damages to be decided later by a jury in the separate action (in order to preserve his right to a jury trial under the Saving to Suitors Clause). Citing Judge Barbier’s decision in Bertucci Contracting, Judge Guidry found bifurcation to be unwarranted, as the issues of limitation and damages turned on the same evidence and testimony such that the time and resources of the court and parties would be better served through a single trial on all issues. He therefore denied the motion to bifurcate. (See September 2021 Update). Wooley and the owner of the NICHOLAS settled their claims with the cruise line, and Wooley’s employer assigned its claims to Wooley. Wooley and his employer then filed a motion to lift the stay in the limitation action with stipulations as a single claimant. As the stipulations satisfied the requirements for lifting the stay, Judge Guidry lifted the stay in the limitation action to allow Wooley to pursue a separate action against the owner of the NICHOLAS. See October 2021 Update.
The owner of the NICHOLAS appealed to the Fifth Circuit (jurisdiction over an appeal from an interlocutory order lifting an injunction, under Section 1292(a)(1)), and the Fifth Circuit reviewed the lifting of the stay for an abuse of discretion, although Judge Higginson noted that the adequacy of the stipulations was a question of law that was reviewed de novo. After the settlements and assignment, Wooley was the sole claimant and filed a stipulation that he would not seek to recover in excess of the value of the limitation fund until there was an adjudication of limitation in the exclusive jurisdiction of the limitation action. Judge Higginson agreed that the stipulation recognized the exclusive jurisdiction of the district court and protected the right to limitation of the vessel owner. He then addressed the vessel owner’s argument that the district court abused its discretion in lifting the stay (so that Wooley could proceed in state court) because Wooley’s suit was pending in federal court after a snap removal. Judge Higginson did not consider that argument to be relevant to the lifting of the stay as the court had previously held that proper stipulations permitted lifting of the stay in state and other forums. Whether the other forum would be state or federal court had not been decided as Judge Guidry had not ruled on Wooley’s motion to remand. The propriety of the removal was not the issue on appeal as Judge Guidry properly lifted the stay based on the single-claim stipulation regardless of whether Wooley pursued his Saving-to-Suitors case in state or federal court.
Eleventh Circuit found sufficient evidence of the cruise line’s notice of a substance on the deck of the ship and reversed summary judgment for the cruise line; Cogburn v. Carnival Corp., No. 21-11579, 2022 U.S. App. LEXIS 11177 (11th Cir. Apr. 25, 2022) (per curiam).
Marjorie Cogburn, a passenger on the cruise ship ECSTASY, fell on a walkway of the Promenade Deck. She was wearing two-and-a-half-inch wedged sandals and asserted that she slipped in an unidentified brown liquid substance on the tile floor. Neither she nor her husband saw the substance before she fell, and her husband reported that her shoes may have caused the accident. Cogburn did not see any crew mopping in the area; she did not see anything leaking from the ceiling, and she did not see any bartenders walking with drinks in the area. A crew member who was eight to ten feet away testified that the deck was dry. The cruise line moved for summary judgment on the ground that it did not have actual or constructive notice of the risk-creating condition. Cogburn responded that minutes of meetings showed that the cruise line had general knowledge of accidents on the Promenade Deck due to spilled drinks, but Judge Ungaro answered that this fell short of establishing that the cruise line had notice of the brown liquid that allegedly caused Cogburn to slip and fall. There was no evidence how long the substance had been on the deck, and evidence of other falls on the walkway on the Promenade Deck were not sufficiently similar for Judge Ungaro to consider them as constructive notice of the danger of the brown liquid. Finally, the presence of a crew member eight to ten feet away did not provide constructive notice without some evidence of how long or large the puddle of brown liquid was. See May 2021 Update.
Ungaro appealed to the Eleventh Circuit. The appellate court summarized that there were two ways that constructive notice can be shown–with evidence that the defective condition existed for a sufficient period of time to invite corrective measures and with evidence of substantially similar incidents. The Eleventh Circuit disagreed with Judge Ungaro’s analysis with respect to similar incidents, concluding that a slip and fall cited to Judge Ungaro occurred in the same spot as Cogburn’s fall (and noting that Judge Ungaro did not mention that claim in her opinion). As that prior accident was sufficient to establish notice, the appellate court did not have to address whether the other incidents were substantially similar or whether there was evidence that the condition existed long enough to provide notice. Consequently, the Eleventh Circuit reversed the summary judgment in favor of the cruise line.
From the federal district courts:
Opinions of passenger’s cruise ship liability expert were stricken for unreliable methodology and lack of helpfulness; Kelly v. Carnival Corp., No. 20-cv-23856, 2022 U.S. Dist. LEXIS 52400 (S.D. Fla. Mar. 23, 2022) (Damian).
Carol Kelly brought this maritime negligence action in federal court in Florida against Carnival for an injury sustained on the CARNIVAL GLORY when she stepped on a “rogue screw” on her stateroom floor. The cruise line moved to strike the report and opinions of Kelly’s cruise ship safety expert, Randall Jaques, and Magistrate Judge Damian began by considering Jaques’ qualifications. As Jaques demonstrated substantial experience in the cruise industry and in conducting inspections and investigations of injuries occurring on cruise ships, Magistrate Judge Damian held that he was qualified to testify as a cruise ship safety expert. However, Magistrate Judge Damian agreed with other district courts that Jaques’ opinions suffered from serious and fatal methodological flaws. She reasoned that an expert who relies on his experience must explain how that experience leads to the conclusion reached, why that experience is a sufficient basis for the opinion, and how that experience reliably applied to the facts. Instead, his opinions were conclusory statements that were not tied to supportive materials, treatises, sources, or data. Further, many of his opinions were on ultimate legal conclusions at issue and impermissibly invaded the province of the jury. What was left after striking the impermissible legal conclusions was not beyond the understanding of a lay person and was excluded on that basis. Accordingly, Magistrate Judge Damian ordered that Jaques’ opinions be struck.
Disputes over the scope of the work on the estimate for retrofit work along with fact questions on causation and mitigation of damages, resulted in denial of the vessel owner’s motion for summary judgment against the boat builder; Maritech Marine Services, LLC v. Bay Welding Services, Inc., No. 3:20-cv-231, 2022 U.S. Dist. LEXIS 52630 (D. Alaska Mar. 23, 2022) (Gleason).
Maritech, a vessel chartering company based in Anchorage, Alaska, brought this action against Bay Weld, a custom boat manufacturer based in Homer, Alaska, asserting that Bay Weld negligently retrofitted the M/V LIGHTNING with a defective control system, resulting in the vessel’s allision with a fuel dock in Cordova, Alaska. Maritech filed a motion for summary judgment, and Bay Welding moved to strike the Declarations of Brian Edmondson and Enrico Ferroni that were submitted by Maritech in support of its motion. Maritech moved to strike the affidavits of Eric Engebretsen and Michael Stockburger, that were filed by Bay Weld in support of its response to the motion for summary judgment. Edmondson is the sole member of Maritech, and Ferroni is the managing member of Stillwater Marine, which performed repair work on the vessel. Neither was designated as a retained expert, and Bay Weld argued that their opinions were inadmissible lay witness testimony under Rule 701. Judge Gleason held that Edmondson’s opinions, based on his experience while onboard the vessel, would not be stricken, but she struck his opinions that were based on the conclusions of others and that were not based on any evaluation or perception of Edmondson. Judge Gleason allowed Ferroni’s opinions about causation, whether work was performed as promised, and on the performance of equipment, but she held that his opinions on some specifics of software were sufficiently technical and specialized and were not permissible under Rule 701. Bay Weld argued that Engebretsen, owner and operator of Bay Weld, and Stockburger, employed by Bay Weld to assist in the retrofit, were qualified to testify as experts under Rule 702 (asserting that both had decades of experience in vessel repair, retrofit, and renovation). Judge Gleason agreed that their experience was sufficient to qualify them as experts, and she then addressed the argument that the judge should exercise her inherent power to disqualify Engebretsen as an expert because of his financial conflict of interest as the owner and operator of Bay Weld. Concluding that the integrity of the legal system could be protected by cross examination, Judge Gleason declined to strike Engebretsen as an expert. See February 2022 Update.
Judge Gleason then addressed Maritech’s motion for summary judgment. Maritech argued that Bay Welding breached the contract between the parties by failing to fully perform several items on the agreed estimate, including “Upgrade UltraJet 340’s w/full internal inspection,” “Add Glendinning Joystick controls w/full electronic controls replacement and electronic steering system,” “complete controls and steering package for two stations and complete hydraulic system w/dual pumps,” and “Test and inspect all vessel systems.” The parties presented different views of what these terms included, and Judge Gleason held that the provisions were ambiguous to some extent as they were susceptible to multiple interpretations (the dispute over the meaning of the provisions precluded summary judgment on the claim for breach of the Alaska Unfair Trade Practices Act). And, even if the court accepted Maritech’s interpretation, there were questions whether the allision was caused by failure to comply with the requirements, particularly when over a year passed between completion of the work and the allision. Additionally, there were questions whether Maritech had taken reasonable steps to mitigate damages. The same disputes over causation were similarly fatal to Maritech’s negligence claims that Bay Welding failed to properly install the control system, resulting in a dangerous condition in which the controls were intermittently inoperable and unpredictable, failing to warn of the failure to install a proper functioning heading line on the vessel, and failing to disclose other defects in the work which caused increased dangers in the navigation system and steering. The causation and mitigation issues, together with a dispute over whether the work was substandard, precluded summary judgment on the claim of breach of the warranty of workmanlike performance.
Judge declined to set aside settlement between ocean carrier and port terminal after the terminal obtained a payment from the cargo shipper; Kawasaki Kisen Kaisha Ltd. v. Benicia Port Terminal Co., No. 2:19-cv-822, 2022 U.S. Dist. LEXIS 52787 (E.D. Cal. Mar. 23, 2022) (Nunley).
Kawasaki Kisen Kaisha is an ocean carrier that transported automobiles for Volkswagen. Kawasaki used the terminal at the Port of Benicia to discharge vehicles for Volkswagen, and there were disputes over the charges for the use of the terminal (Kawasaki argued that Volkswagen was responsible for the charges). Kawasaki brought this suit in federal court in California against the terminal to contest the charges, and the terminal brought a third-party action against Volkswagen seeking payment for the disputed charges. Kawasaki and the terminal began discussing a settlement agreement, and the parties agreed that Kawasaki would pay half of the disputed charges that had been paid into escrow, and proposed that the settlement would include a full resolution as between all parties, including Volkswagen. The terminal accepted the payment split but did not agree to the full resolution with Volkswagen. Kawasaki and the terminal entered into a release and the suit was dismissed. Shortly thereafter, Kawasaki learned that the terminal had obtained a payment from Volkswagen that was separate from the payment made by Kawasaki. Kawasaki moved to set aside the order of dismissal under Rule 59(e) on the grounds of violation of the implied covenant of good faith and fair dealing, fraud, breach of warranty, and unjust enrichment. Judge Nunley rejected the argument that the parties had an obligation to deal fairly or in good faith absent an existing contract, and he rejected the fraud argument for lack of a duty to disclose the confidential settlement agreement with another party (reasoning that Kawasaki was “effectively claiming that it wished it had negotiated a different agreement, namely one which protected it from Volkswagen’s indemnity claim”). Judge Nunley also rejected the argument that the terminal breached a warranty in the settlement agreement that the parties had not assigned or transferred any claim, debt, or liability to another party as there was no warranty that a third party might have a claim for contribution or indemnity. Judge Nunley rejected Kawasaki’s argument that the terminal was unjustly enriched by recovering from Volkswagen amounts that it agreed to forego in its settlement with Kawasaki for which Volkswagen would now seek indemnity from Kawasaki, reasoning that unjust enrichment is not a viable theory to set aside an order of dismissal. Accordingly, Judge Nunley declined to set aside the dismissal of the case. Kawasaki also moved to enforce the settlement agreement, but Judge Nunley noted that the parties did not include in the stipulation for voluntary dismissal that the court would retain jurisdiction of the court to enforce the settlement. Thus, he held that the parties have to file a separate action for breach of contract to enforce their settlement agreement.
Tall ships festival organizer did not owe a duty to a ticketed visitor who was injured on a featured vessel; Ellis v. Tall Ships Charleston, LLC, No. 2:18-cv-3588, 2022 U.S. Dist. LEXIS 53171 (D.S.C. Mar. 24, 2022) (Norton).
Tall Ships America and its local chapter, Tall Ships Charleston, organized a tall ships festival in North Charleston, South Carolina. They invited the naval vessel FRAGATA (ARA) LIBERTAD, owned by the Argentine Republic, to participate as one of the featured vessels. Tall Ships Charleston entered into a port organizer agreement with Tall Ships America under which Tall Ships Charleston agreed to afford safe interaction between the citizenry of the Port and the trainees and crew of the participating vessels. Tall Ships America agreed to provide professional review of the public safety, security, and incident management plan. Jerry Ellis and Keven Ellis purchased tickets for the festival and attended with their family. They visited the LIBERTAD for about thirty minutes and, when disembarking, they had to step up onto and walk across a painted metal bitt secured to the vessel’s desk to reach the gangway (because of the low tide, the gangway rested on a pier cap, causing the gangway to be several feet above the vessel’s deck). Jerry Ellis slipped and fell while stepping onto the bitt, and he filed this action in federal court in South Carolina against the Tall Ships entities and against Argentina. Ellis dismissed Argentina, and the Tall Ships defendants moved for summary judgment, arguing that they did not owe a duty to Ellis. Although the defendants argued that the court should analyze whether they were liable as the equivalent of shipowners, Judge Norton could not comprehend why the defendants owed a duty as shipowners. Judge Norton first considered whether the defendants sufficiently exercised control such that they owed a duty under maritime law or state law. Concluding that there was no evidence that the defendants exercised any degree of control over the deck of the LIBERTAD or the bitt and gangway, Judge Norton denied the claim for negligence under the maritime law. Ellis argued that the defendants owed a duty based on a contract theory, that the defendants owed a duty as the possessor of land, that the defendants owed a duty to entrants on land under the Restatement, and that the defendants assumed liability. Judge Norton agreed that maritime law and South Carolina law can recognize a duty arising out of a contract; however, the port organizer agreement only established obligations between Tall Ships America and Tall Ships Charleston and did not extend any duty to Ellis. The purchase of tickets during which the patrons were given a pamphlet and wristband did not afford Ellis any duty. Finally, Judge Norton held that no duty was owed to Ellis under the Restatement or South Carolina law. Consequently, he granted summary judgment to the Tall Ships defendants.
Cargo succeeded in establishing that the Carmack Amendment and not COGSA applied to land transportation when there was no through bill of lading, but cargo could not establish that the damage occurred during the inland portion of the carriage; Emco Corp. v. Miller Transfer & Rigging Co., No. 5:19-cv-2418, 2022 U.S. Dist. LEXIS 53592 (N.D. Ohio Mar. 24, 2022) (Lioi).
Emco brought this action in federal court in Ohio to recover damage to an industrial machine during a shipment from Ohio to Austria. Emco hired Miller Transfer to provide seaworthy packaging for the cargo and to transport the cargo to the Port of Baltimore where it would be shipped on Emco’s ocean carrier to the Port of Bremerhaven, Germany, and then taken by Emco’s inland carrier to its final destination in Austria. After the shipment arrived in Austria, the cargo was discovered to be damaged by corrosion. Miller Transfer moved for summary judgment, arguing that it believed the entire shipment was covered by a through bill of lading from Ohio to Austria and that the one-year statute of limitations in the Carriage of Goods by Sea Act barred the suit. Miller relied on the ocean bill of lading under whose terms the cargo was shipped from Baltimore to Germany. That bill of lading did not purport to be a through bill of lading covering the inland carriage, and separate bills of lading were issued for each segment of the transportation. Consequently, Judge Lioi held that COGSA’s limitation period was not applicable and that the Carmack Amendment applied to the claim against Miller Transfer. However, the argument that avoided COGSA required that Emco establish that the damage occurred during the inland segment involving Miller Transfer. As Emco could not establish that the corrosion occurred during the inland transportation involving Miller Transfer, Judge Lioi granted summary judgment to Miller Transfer for Emco’s failure to establish a prima facie case against Miller Transfer.
Vessel operator’s failure to provide notice of occurrence, failure to comply with warranty to maintain vessel, and violation of uberrimae fidei doctrine voided coverage under pollution policy for damages from sinking of vessel; Safe Harbor Pollution Insurance v. River Marine Enterprises, LLC, No. 18-cv-5942, 2022 U.S. Dist. LEXIS 54332 (S.D.N.Y. Mar. 25, 2022) (Buchwald).
Captain David Smith is the owner and manager of Western River Assets and River Marine Enterprises, owner and operator of the towboat GATE CITY. Western bought the vessel in 2007, and the survey on the vessel reflected deficient hull plating. The vessel was taken out of service, placed on port risk, and was not properly maintained. When its pollution insurer, WQIS, proposed a premium increase in 2015, the broker sought a quote from Safe Harbor Pollution Insurance, but did not advise the insurer that the vessel had been on port risk because of a lack of work. Safe Harbor issued the policy in 2015 and renewed it thereafter. In 2016, a River Marine deckhand discovered that the vessel was taking on water. Repairs were not made, and the water was removed weekly by an electric pump. On December 5, 2017, the Coast Guard issued an order to River Marine that the vessel was an imminent threat of discharge of oil into navigable waters and that all oil on the vessel had to be removed. River Marine did not notify Safe Harbor of the incident/order and did not remove the oil. The vessel sank on January 10, 2018, and Safe Harbor discovered that the hull was severely deteriorated (with multiple corrosion holes), that the engine room was in disarray with multiple systems disconnected, and that the Coast Guard had issued the order that had not been followed. Safe Harbor then brought this suit against River Marine and Western River in federal court in New York, seeking a declaration that it did not owe almost $6 million in expenses as a result of the sinking, some of which had been paid by other insurers. River Marine counterclaimed, and the other insurers intervened. Safe Harbor moved for summary judgment on three of the grounds asserted in its complaint, and Judge Buchwald granted the motion. Applying New York law in accordance with the Policy’s choice-of-law provision, Judge Buchwald held that the requirement that the insured give notice of an occurrence was a condition precedent in the policy, and the insured’s failure to give notice of the Coast Guard order voided the policy. Although New York insurance law requires a showing of prejudice for failure to provide timely notice, Judge Buchwald held that the requirement was not applicable to marine policies like the Safe Harbor pollution policy. However, even if prejudice were required, Judge Buchwald held that prejudice was established because the failure prevented Safe Harbor from being able to mitigate the loss before the vessel sank. Judge Buchwald also held that the policy was voided by the insured’s breach of the warranty to use due diligence to maintain the vessel in a seaworthy condition, noting that the violation of the express warranty would void the policy even if the violation was unrelated to the sinking of the vessel. Although River Marine argued that its employee checked the vessel to ensure it was floating and the void spaces were dry, Judge Buchwald termed the argument illogical and unavailing when the hull was severely compromised by corrosion holes and the engine room was in total disarray. Finally, Judge Buchwald held that the failure to disclose that River Marine did not follow its drydocking schedule, did not perform maintenance or safety inspections of the vessel, allowed it to fall into a state of complete disrepair, and was on port risk for lack of work violated the uberrimae fidei doctrine as those undisclosed facts were material and would have affected Safe Harbor’s decision to insure the vessel. Judge Buchwald held that the policy was void and also dismissed the counterclaim for bad faith, including the claim for punitive damages.
Charles Moran, captain on a commercial tug, tripped and fell in a parking lot the night before he was to board the vessel to begin a new hitch after his seven days off. Moran, a Louisiana resident, brought this action in state court in Texas against two Signet Maritime entities, which are citizens of Texas, seeking to recover for maintenance and cure. The Signet defendants removed the case to federal court before they were served, based on the diverse citizenship of the parties. Moran moved to remand the case, arguing that forum defendants could not remove a general maritime claim filed by a seaman. The first issue addressed by Chief Judge Rosenthal was the propriety of the snap removal by forum defendants who had not yet been served at the time of removal. Chief Judge Rosenthal noted the decision of the Fifth Circuit that a non-forum defendant could snap remove a case before service on a forum defendant, and that district courts had allowed snap removal by a forum defendant before it is served. She noted that the plain language of the removal statute allows removal as the non-removal is when any of the parties “properly joined and served as defendants is a citizen of the State” in which the action was brought. The fact that the claim was maritime did not change the result as there was an independent basis for jurisdiction (diversity), and the fact that Moran was a seaman did not change the result as he brought his claim under the general maritime law and did not assert a non-removable Jones Act claim. Accordingly, Chief Judge Rosenthal denied the motion to remand.
Judge declined to rule that cruise line did not owe a duty to passengers on shore excursions beyond the duty to warn of known dangers; judge ruled that the passenger’s widow sufficiently alleged notice, but the allegations as a third-party beneficiary and for non-pecuniary damages were dismissed; Rae v. Celebrity Cruises, Inc., No. 1:21-cv-21688, 2022 U.S. Dist. LEXIS 55487 (S.D. Fla. Mar. 28, 2022) (Gayles).
Susan Rae and her husband, Gregory Azeltine, participated in a shore excursion in the Cayman Islands as passengers on the CELEBRITY EQUINOX. Azeltine drowned while snorkeling, and Rae brought this action in federal court in Florida against the cruise line and the operator of the excursion. The cruise line filed a motion to dismiss the negligence count because it included heightened, non-existent duties of care. The cruise line cited the decision of the Eleventh Circuit that reasonable care includes a duty to warn of known dangers beyond the point of debarkation and argued that the enumeration of breaches of duty in the complaint exceeded the duty to warn of known dangers. Noting that the Eleventh Circuit had not stated that the duty to warn was the only duty owed to a passenger after leaving the vessel, Judge Gayles declined at this stage of the litigation to dismiss additional duties asserted by the plaintiff. Citing the allegations in the complaint that the cruise line was co-owner of the excursion or controlled it and that the cruise line provided policies for the excursion operator to follow while operating the excursion and inspected and conducted site visits with reports of incidents, Judge Gayles found sufficient pleading of notice of a hazardous condition. Similarly, Judge Gayles considered the pleading of monitoring of the excursion during initial and annual inspections to be sufficient for notice on the claims of negligent hiring and negligent retention. Judge Gayles dismissed the count alleging that the passengers were third-party beneficiaries of the contract between the cruise line and the excursion operator as the intent to benefit a third party must be specific and clearly expressed, and the contract did not contain such specific provisions. Finally, as Azeltine died in the waters off the Cayman Islands, Judge Gayles held that the Death on the High Seas Act was applicable and that the claim for non-pecuniary damages was stricken.
Interpleader is the answer for owners/charterers facing claims from multiple parties when the bunker supplier goes bankrupt; Fujian Ocean Shipping Co. v. O.W. Bunker Far East (S) Pte. Ltd., No. 16-cv-401, 2022 U.S. Dist. LEXIS 55961 (S.D.N.Y. Mar. 28, 2022) (Caproni).
The collapse and bankruptcy of bunker supplier O.W. Bunker & Trading continues to occupy the courts. Vessel owners and charterers that had not yet paid for fuel when OW Bunker sought bankruptcy protection brought interpleader actions to resolve competing claims for payment for the bunkers. This action involved bunkers supplied to Fujian Ocean Shipping’s vessels M/V ZHENG RUN AND M/V ZHENG RONG. Fujian contracted with O.W. Bunker Far East for the supply of bunkers and was ultimately successful in this interpleader action with a discharge of its liability plus the decision of Judge Caproni that Fujian would be awarded attorney fees and costs from the interpleaded amount.
After declining to strike the industrial hygiene expert in a sailor’s mesothelioma suit, the judge applied maritime law to the maritime and non-maritime exposures and held that there were fact questions as to the sailor’s asbestos exposure after his naval career but not during his time as a sailor; Pritt v. Air & Liquid Systems Corp., No. 19-cv-10651, 2022 U.S. Dist. LEXIS 56017 (S.D.N.Y. Mar. 28, 2022) (Failla).
Arnold Pritt brought this suit in state court in New York, alleging that he contracted mesothelioma from exposure to asbestos during his service in the Navy and in his career as a civilian electrician after leaving the Navy. The case was removed to federal court based on the Federal Officer Removal Statute, and equipment supplier GE moved to strike Pritt’s industrial hygiene expert and for summary judgment. Dr. Candace Su-Jung Tsai performed an exposure evaluation in which she reviewed the tasks that Pritt performed in the military and civilian contexts and concluded that Pritt had significant asbestos exposures. GE objected that the opinion did not address the exposure from any GE product. Judge Failla explained that Dr. Tsai is an industrial hygienist, not an epidemiologist or pathologist. The purpose of her testimony was not to opine on whether GE’s products were a substantial factor in causing Pritt’s mesothelioma but to establish that his job tasks exposed Pritt to asbestos above baseline amounts. Accordingly, Judge Failla declined to exclude the opinions of Dr. Tsai. Considering GE’s motion for summary judgment, Judge Failla held that maritime law applied to the exposure of Pritt during his service on the destroyer USS PURDY (fireman and machinist’s mate in the engine room). That left Pritt’s exposure while working as a civilian electrician after he left the Navy, which did not occur on navigable waters and had no clear bearing on maritime commerce. However, the parties consented to the application of maritime law, and Judge Failla agreed to apply maritime law based on the agreement of the parties. Although Britt presented evidence that he was exposed to asbestos from the turbine portion of the vessel’s ship service turbine generators, he could not show that GE manufactured or designed the turbine. Consequently, Judge Failla granted summary judgment on Pritt’s claims arising from his service in the Navy. Finding that Pritt had sufficiently established that exposure to GE’s products during his work as a civilian engineer was a substantial factor in causing his mesothelioma, Judge Failla declined to grant summary judgment on the civilian claims.
English law applied to charter party guarantee agreement by its choice of law provision, allowing evidence of apparent authority for the guarantee; POSH Saudi Co. v. Dynamic Industries, Inc., No. 20-3453, 2022 U.S. Dist. LEXIS 56428 (E.D. La. Mar. 29, 2022) (Morgan).
POSH Saudi entered into a charter party with Dynamic Industries Saudi Arabia, whose performance was guaranteed by Dynamic Saudi’s parent company, Dynamic Industries. At the conclusion of the charter party, Dynamic Saudi owed POSH Saudi almost four million dollars, confirmed by an arbitration award. POSH Saudi then brought this action in federal court in Louisiana, seeking to recover against Dynamic Industries on the charter party guarantee agreement. Dynamic Industries argued that the parent company was not bound by the guarantee as there was no express written authority for the guarantee as required under Louisiana law. POSH Saudi answered that evidence of apparent authority was permissible under English law, which was applicable by a provision in the guarantee agreement that the agreement was governed by English law. Judge Morgan applied Louisiana conflicts rules in this diversity case to determine the applicable law and noted that Dynamic Industries was a Louisiana company, but the guarantee was principally negotiated and executed in Saudi Arabia and the guarantee was for the performance of a Saudi-based subsidiary in favor of a Saudi company. However, even assuming Louisiana law applied, Judge Morgan did not believe that the English-law clause violated Louisiana public policy and held that the guarantee agreement was governed by English law as specified in the agreement. Dynamic Industries also argued that English law provided for the application of Louisiana law to the issue of apparent authority because Dynamic Industries is a Louisiana company. Judge Morgan rejected that argument and held that, under English law, the issue of actual authority is determined by the law governing the relationship between the principal and the agent (Louisiana law), and the issue of apparent authority is governed by the law applicable to the agreement to which the agent purported to bind the company (English law). As English law applied to the issue of apparent authority and permitted evidence of apparent authority of an agent to execute a guarantee agreement, Judge Morgan denied Dynamic Industries’ motion to exclude evidence of apparent authority. After entry of the order, Dynamic Industries moved to certify the order for an interlocutory appeal and for a stay of the trial in the case. Judge Morgan denied the request on April 1, 2022, and the parties then advised the court that they had entered into a settlement.
Seamen who asserted Jones Act claims could not argue that they were not bound by the forum-selection clause in their employment agreements; Usme v. CMI Leisure Management, Inc., No. 21-21191, 2022 U.S. Dist. LEXIS 57119 (S.D. Fla. Mar. 29, 2022) (Gayles).
Dr. Mauricio Usme, Lukasz Zuterek, Carolina Vasquez, Javier Perez, Johan Ortiz, Luz Gavilan, and Marvin Paz worked as seamen on the GREG MORTIMER, a small cruise ship owned by Infinity Owner, Ltd. All of the seamen, except Zuterek, claimed that they contracted COVID-19 on the vessel, all of the workers were confined in their cabins, and Zuterek was fired after voicing objections to the plan for repatriation of the seamen. They brought this suit in federal court in Florida under the Jones Act and general maritime law against CMI Leisure Management and Cruise Management International, and the defendants moved to dismiss the case for improper venue/forum non conveniens. The seamen signed employment agreements that designated entities other than the defendants as their employer, and the agreements provided that any dispute arising out of their employment would be governed by the law of the flag of the vessel (The Bahamas) and with a forum-selection clause for The Bahamas only. The seamen argued that the forum-selection clause was not applicable because the action was not brought against the parties designated as employer in the employment agreements. Judge Gayles disagreed, reasoning that the seamen could not allege the benefits of the employment agreements while arguing that the defendants could not enforce the forum-selection clauses in the agreements. Finding the agreements were enforceable, Judge Gayles dismissed the action without prejudice on the basis of forum non conveniens.
Owner of yacht presented enough evidence to support a claim for loss of charter income despite no history of charters; In re Kuhl, No. 21-cv-60408, 2022 U.S. Dist. LEXIS 57130 (S.D. Fla. Mar. 29, 2022) (Bloom).
Reichen Kuhl’s 28-foot motorboat was docked at the Bahia Mar Marina (owned by Suntex) for fueling. A fire broke out on the vessel, and the vessel drifted into the 189-foot Feadship yacht M/Y W, owned by Seven LXXVII, which sustained damages requiring weeks in a shipyard to repair. Kuhl filed this limitation action in federal court in Florida, and Seven filed a claim in the limitation action along with a third-party claim against Suntex. As Seven was compensated by its hull insurer for the physical damage, it sought recovery for lost charter income in the claims against Kuhl and Suntex. Kuhl and Suntex then filed a motion for summary judgment, asserting that Seven was unable to establish any lost charter income as it had never had a charter of the W before the incident. David MacNeil, owner of Seven, purchased the W in 2019 as a recreational vessel, and the vessel underwent a retrofit that was completed in September 2020. On July 1, 2020, Seven entered into an agreement with Northrop & Johnson to manage charters for the W. Northrop and Johnson began marketing charters at a rate of $400,000 per week, and two offers came for charters during the Christmas and New Year’s holidays, but MacNeil turned them down because his family was using the W. Northrop & Johnson suggested reducing the charter rate to $355,000 per week, but at the time of the fire on January 17, 2021, the W had not been chartered and had no bookings. After repair on the W was completed on March 19, 2021 (the yacht was unavailable for charter for 9 weeks), it was chartered five times during the summer season, and two charters were booked for the holidays at the end of the year. The first charter began on May 22, 2021. Seven claimed a loss of between three and five weeks of charter hire at $400,000 per week, based on the testimony of its manager that there was a spike in demand for charters and inquiries about the W due to restrictions from COVID-19. Citing the active advertising of the W for charters, the subsequent charters, and the beneficial owner’s history of chartering yachts before the W, Judge Bloom held that there was sufficient evidence of loss of income to present a triable question.
Testimony from a manager of the deckhand’s employer was sufficient for an economist to base his opinions on future wage loss on two promotions for the deckhand who had only completed one hitch as a deckhand prior to his injury; In re Callais & Sons, LLC, No. 20-293, 2022 U.S. Dist. LEXIS 57818 (E.D. La. Mar. 29, 2022) (Morgan).
Michael R. Triplett injured his left hand and fingers while he was working as a deckhand on the towing vessel M/V JIMMY P LAFONT in the Mississippi River. The vessel owner brought this limitation action in federal court in Louisiana, and Triplett filed a claim in the suit. The vessel owner objected to the opinions of Triplett’s expert economist, Dr. G. Randolph Rice, who calculated lost earnings based on the assumption that Triplett would have been promoted twice in the two years after his accident. The vessel owner objected to the assumptions, arguing that Triplett had only completed a single hitch as a deckhand prior to his injury and that he had minimal, if any, work experience in the industry prior to this job. In support of the assumptions, Triplett cited the testimony of a manager for the vessel owner that deckhands could be promoted after even one hitch and all that was needed was for the captain to say that he was a good man. The manager also stated that Triplett would likely have reached the level of tankerman “probably quick.” The captain during Triplett’s single hitch confirmed that Triplett could have become a tankerman had he not been injured. Judge Morgan accepted that the testimony did not deal in certainty, but was of sufficient probability to support the economist’s assumption of promotions. Consequently, she declined to exclude the opinions.
United States choice-of-law provisions applied for bunkers supplied on order of the charterer in the Netherlands and Belize; arrest of the vessel in Italy did not prevent subsequent arrest of the vessel in the United States; Glander International Bunkering Inc. v. M/V DVINA GULF, No. 19-5206, 2022 U.S. Dist. LEXIS 58159 (D.N.J. Mar. 29, 2022) (Salas).
Glander International Bunkering supplied bunkers to the vessel M/V DVINA GULF in the Netherlands and Belize on order of the charterer, Sea Oil Shipping. The confirmation orders incorporated Glander’s General Terms and Conditions that were available on their website. The Terms provided that United States law governed the existence of a maritime lien. Sea Oil made one partial payment for the bunkers but de-registered as a corporation and re-delivered the vessel to its owner, Viterlef Management Co. Glander arrested the vessel in Ravenna, Italy to obtain security for potential claims against Viterlef, and Viterlef made a security deposit of EUR 950,000 to an Italian bank for release of the vessel. Two months later, Glander arrested the vessel in New Jersey. Viterlef transferred $1,078,065.90 to the trust account of its New York attorney as security for Glander’s claims, and the original Italian deposit was released and the Italian arrest was discontinued. Viterlef filed a claim of owner and restricted appearance, and the parties brought cross-motions for summary judgment. The first question addressed by Judge Salas was the law applicable to the bunker claim. Although Lauritzen v. Larsen involved a choice-of-law dispute over a Jones Act suit for a marine tort, Judge Salas applied the Lauritzen factors to the bunker contract and concluded that American law would apply because Glander is a domiciliary of the United States, at least part of the contract negotiation occurred in the United States, the United States provides a mechanism to address the breach at issue, and the United States is the forum. As American maritime law recognizes incorporation by reference of terms on a website, Judge Salas then determined that American maritime law would give effect to the choice-of-law clause. Applying American law, the charterer had authority to bind the vessel, and the liens for the bunkers (necessaries) were valid. The question was then presented whether the Italian arrest extinguished the liens. Judge Salas reasoned that, under Italian law, the arrest takes the form of an action in personam, directed against the owner of the asset. As the order authorized the arrest of the vessel against the owner as a guarantee for the claim and did not mention any maritime lien, it did not extinguish the lien. And, there was no potential for double recovery as the Italian proceeding was dismissed before any decision and the original security was returned to Viterlef. Finally, Judge Salas held that Viterlef had failed to establish that Glander had unreasonably delayed seeking enforcement of its lien or that Viterlef could show prejudice so as to establish a laches defense. Consequently, Judge Salas entered judgment in favor of Glander for the unpaid amounts for the bunkers and the costs for the arrest of the vessel.
Judge addressed application of the Carmack Amendment and contractual indemnity for the party that arranged the shipment of a submarine with inland and ocean carriage; Woods Hole Oceanographic Institution v. ATS Specialized, Inc., No. 17-12301, 2022 U.S. Dist. LEXIS 59567 (D. Mass. Mar. 29, 2022) (Gorton).
The Australian National Maritime Museum hired Ridgeway International Australia to arrange for the transportation of Woods Hole Oceanographic Institution’s experimental, deep-sea submarine, the DEEPSEA CHALLENGER, to the Australian Museum for a two-year loan of the submarine. Ocean carrier Wallenius agreed to donate the ocean carriage of the submarine from Baltimore, and ATS Specialized was engaged to transport the submarine via tractor-trailer from Woods Hole, Massachusetts to the Port of Baltimore. The rear wheel of the trailer caught fire during the inland carriage, and the fire spread to the submarine. Woods Hole brought this action against ATS, which asserted that the suit was untimely based on the one-year limitation in the Carriage of Goods by Sea Act. As the fire occurred before the ocean carriage, no bill of lading had been issued by Wallenius, and Judge Gorton held that the carriage was not intended to be a single, through shipment. ATS issued its own domestic bill of lading for the land transportation that did not mention COGSA, and Judge Gorton held that, as the shipment was outside the scope of COGSA, the suit was not barred by the limitation period in COGSA. See September 2021 Update.
Judge Gorton then addressed insurance coverage under the cargo policy arranged by Ridgeway with Eagle Underwriting Group. Eagle argued that it was not liable under the Policy because it was a managing general agent appointed by the underwriters to negotiate the policy on their behalf. Although Eagle had a stake in any potential recovery as a result of a settlement agreement, that agreement did not make Eagle an insurer under the policy, and Judge Gorton held that Ridgeway could not obtain coverage from Eagle as an insurer. However, Judge Gorton held that Ridgeway’s claims under Massachusetts law for unfair claim settlement practices were independent of the insurance contract and were not foreclosed by Eagle’s status as an agent. Although the policy was governed by English law, Judge Gorton held that Ridgeway could bring claims under state law even though other claims in the case were governed by English law. In response to Ridgeway’s claims against the insurers, the insurers argued that the Suit or Action Clause barred the action because it was not commenced within one year of the loss. Citing the opinion of an English insurance-law expert, Judge Gorton held that the Suit or Action Clause did not foreclose an indemnity claim against the insurers, and he declined to dismiss Ridgeway’s claim for indemnity in response to claims brought against Ridgeway. Judge Gorton next addressed Ridgeway’s argument that it was not liable for the damage because it was not liable as a carrier under the Carmack Amendment or for breach of bailment obligations or negligence. Judge Gorton noted that Ridgeway could be liable under the Carmack Amendment as a motor carrier if it accepted legal responsibility to transport the submarine, but it would not be liable under the Carmack Amendment if it merely arranged for transportation. Questioning whether Ridgeway could insulate itself from liability to the shipper by representations made to the consignee and finding disputes that required evaluation of the conflicting evidence presented by the parties, Judge Gorton declined to decide Ridgeway’s status as a carrier on motions for summary judgment. The next question was whether Ridgeway could be liable under the Carmack Amendment as a freight forwarder or whether it was merely a forwarding agent. Although Ridgeway did not assemble or consolidate goods with respect to the shipment of the submarine, that did not mean that it was not a freight forwarder because of the provision of these services in the ordinary course of its business, and Judge Gorton declined to hold that Ridgeway was not potentially liable as a freight forwarder. Although the Carmack Amendment generally preempts claims under state law, Woods Hole argued that Ridgeway could be liable for negligence or breach of bailment under state law if the Carmack Amendment was not applicable. However, as there was no evidence that Ridgeway exercised control over the performance of ATS sufficient to establish an agency relationship, Judge Gorton dismissed the claims for negligence and breach of bailment. Finally, Judge Gorton addressed the claims for indemnity between Ridgeway and the Museum, holding that Ridgeway was entitled to be indemnified by the Museum if it is found to have been an agent of the Museum, but it was not entitled to indemnity if it was acting as a principal (although noting that the agreement between them contained grammatical errors and was “less than artfully drafted”).
Judge bifurcated trial of damages from trial of liability, limitation, and apportionment of fault in limitation actions; In re Ingram Barge Co., No. 21-261, 2022 U.S. Dist. LEXIS 57899 (E.D. La. Mar. 29, 2022) (Fallon).
Three limitation actions were filed after a collision on the Mississippi River in Plaquemines Parish, Louisiana. The M/V LA BELLE, a push boat owned by Caillou Island Towing, and the M/V HELEN, a towing vessel owned by Central Gulf Towing, were towing a 500-foot dredge pipe down the River when the dredge pipe collided with the DAVID G. SEHRT, a towing vessel owned by Ingram Barge that was pushing 18 empty barges up the River. Cecil Brashear, a seaman employed by Caillou Island on the LA BELLE was injured, and there was damage to the vessels and dredge pipe. The vessel owners filed limitation actions, and asserted claims against each other; the owner of the dredge pipe filed a claim in the Ingram Barge limitation action; and Brashear filed suit in state court and then filed claims in the limitation actions. Brashear filed a motion to bifurcate the issues of exoneration and limitation from the issue of damages (the damages trial would include the allocation of fault), and Central Gulf and Ingram Barge responded that bifurcation could lead to inconsistent judgments, it would waste judicial resources, it was premature before an adjudication of limitation, and it did not contain stipulations from all claimants. Judge Fallon reasoned that the best way to economize and expedite the proceedings and to preserve the right of Brashear to seek a jury trial in state court on damages was to bifurcate the case to allow a trial on liability, limitation, and apportionment of fault. Despite Brashear’s objection, the first trial would include the allocation of fault as the alternate was inefficient. Judge Fallon rejected the argument that the claimants would have to file stipulations (required to lift the stay) as Brashear was not seeking to proceed in state court simultaneously with the limitation proceeding. The owners’ rights to limitation would be protected by trying limitation first and then freeing Brashear to seek damages in state court only if limitation is denied.
Passenger’s conclusory allegations of notice required repleading, and the claims of vicarious liability were dismissed for trying to bypass the notice requirement; Connell v. Carnival Corp., No. 21-23958, 2022 U.S. Dist. LEXIS 58521 (S.D. Fla. Mar. 30, 2022) (Altonaga).
Brenda Connell slipped and fell on a wet substance on the deck of the CARNIVAL HORIZON and brought this action against the cruise line, which moved to dismiss the action for lack of sufficient pleading of notice. For the counts alleging direct negligence of the cruise line, Connell asserted that the defendant knew or should have known of the dangerous condition due to the length of time it had been present, the occurrence of prior similar incidents, or otherwise. Chief Judge Altonaga reasoned that these allegations were conclusory and unsupported by factual statements. She noted that the plaintiff’s attorneys (“partially learning from their mistakes”) asked for leave to amend the complaint if the motion to dismiss was granted, and she afforded that opportunity for the counts alleging direct negligence. With respect to the counts alleging vicarious liability for negligent maintenance and failure to warn, Chief Judge Altonaga held that Connell could not bypass the requirement to plead notice to the cruise line by asserting vicarious liability, and she dismissed those counts as well.
Admiralty law applied to claim of passengers contracting COVID-19 on cruise ship, but the court could not determine on a motion to dismiss whether DOHSA applied; one statement set out in the pleading was sufficient to satisfy the pleading requirement for negligent misrepresentation; cruise line did not owe a duty to children of passengers when the children contracted COVID after the voyage; allegations were insufficient to support a claim of intentional infliction of emotional distress; Dome v. Celebrity Cruises Inc., No. 1:21-cv-20545, 2022 U.S. Dist. LEXIS 58763 (S.D. Fla. Mar. 30, 2022) (Gayles).
Ivonne and Robert Dome were passengers on the CELEBRITY ECLIPSE in March 2020. They asserted that they contracted COVID-19 on the vessel and that their children, Alec and Austin, who were not passengers, contracted COVID-19 from Ivonne and Robert. Robert died from COVID-19, and Ivonne brought this action against the cruise line in federal court in Florida, individually, for Robert’s estate, and on behalf of their children. The cruise line filed a motion to dismiss the suit, and Judge Gayles first held that maritime law applied to the tort allegedly committed by the vessel on navigable waters. Judge Gayles then considered whether the Death on the High Seas Act applied (limiting recovery to pecuniary losses). Although the complaint alleged that Robert began to experience symptoms of COVID-19 on March 29, 2020 (while the vessel was at sea), it was impossible to tell from the complaint whether the vessel was on the high seas or in state waters at the time Robert contracted the disease (the triggering event from the cases considering the application of DOHSA). Consequently, Judge Gayles declined (without prejudice) to strike the request for non-pecuniary damages. Citing the heightened pleading standard from Rule 9(b), the cruise line moved to dismiss the claims of negligent misrepresentation. Considering decisions of Judge Martinez and Chief Judge Altonaga, Judge Gayles held that the complaint failed the necessary detail with the statement that “no person onboard had COVID-19,” but the statement that “[a]ll guests onboard remain healthy and happy” (supported by the who, what, when, where, and how) was sufficient. The cruise line moved to dismiss all claims brought on behalf of Alec and Austin on the ground that the cruise line owed no duty of care to them as they were not passengers and contracted COVID-19 six days after being in a car with their parents. Although the plaintiffs argued that the children were in the foreseeable zone of risk, Judge Gayles held that the argument stretched the duty of care “well beyond its reasonable bounds.” Finally, Judge Gayles noted that the maritime law does not explicitly provide a cause of action for emotional distress, but admiralty judges typically look to the standards in the Restatement and under state law. As the plaintiffs did not allege sufficiently extreme and outrageous conduct necessary to support a claim of intentional infliction of emotional distress under Florida law (as applied by several judges in passenger COVID-19 cases), Judge Gayles dismissed the claim for intentional infliction of emotional distress with prejudice.
Doctor who did not treat the injured passenger or review her recent medical history could not opine on the need and cost of future medical care, but he could opine on medical causation and past medical bills based on his review of records; cruise line could introduce evidence of write offs and amounts paid with respect to medical bills; Price v. Carnival Cruise Lines, No. 20-cv-20621, 2022 U.S. Dist. LEXIS 58768, 60325 (S.D. Fla. Mar. 30, 31, 2022) (Bloom).
Gracie Lee Price brought this action in federal court in Florida, seeking to recover for injuries she sustained as a passenger on the M/V CARNIVAL VALOR. The cruise line filed a motion in limine, seeking to challenge the introduction of certain evidence at trial. The cruise line also filed a motion seeking to exclude the testimony of the passenger’s expert, Dr. John H. Shim. With respect to the motion in limine, Judge Bloom declined to addressed the issue of industry standards as discovery was not complete and the passenger had not supplemented her disclosures with the industry standards she would seek to introduce. The cruise line objected to the introduction of opinions of the passenger’s expert, Dr. Shim, on future medical care, medical causation, and as to the reasonableness and necessity of past medical bills. With respect to future medical care, the cruise line objected that Dr. Shim had not treated the passenger and had not reviewed the passenger’s medical history since January 2020. Concluding that the opinion on the need and cost of future medical care would be speculative, Judge Bloom held that Dr. Shim would not be allowed to testify on these subjects (although it was premature to decide whether other evidence, besides the opinions of Dr. Shim, could be introduced on the need and cost of future medical care). As to medical causation and past medical bills, Judge Bloom considered Dr. Shim’s opinions, based on review of medical records, to be premised on sufficiently reliable methodology to be permitted. The cruise line also requested that it be allowed to introduce evidence of the amount the passenger paid in full satisfaction of her medical bills if the passenger introduced the total amount of her medical charges. The passenger objected that the cruise line was attempting to introduce payments from collateral sources to write off its liability as a tortfeasor, but Judge Bloom cited the Eleventh Circuit’s Higgs decision and held that if the passenger introduced the total amount of her medical bills, the cruise line could introduce evidence of write-offs and the amount actually paid.
Terminal’s claims against the ILA for unfair labor practices and violations of federal labor law for supporting the pilots’ association were dismissed; Midwest Terminals of Toledo International, Inc. v. International Longshoremen’s Association, No. 3:18-cv-2560, 2022 U.S. Dist. LEXIS 59000 (N.D. Ohio Mar. 30, 2022) (Helmick).
Midwest Terminals of Toledo brought this action asserting that the International Longshoremen’s Association, ILA Division–Great Lakes District Council, and ILA Local 1982 conspired with the Lakes Pilot Association to prevent ships operated by international shipping companies from navigating to and from the Toledo Port operated by Midwest Terminals. Midwest asserted that the pilots and the ILA improperly set up a picket line to provide an excuse for the pilots to refuse to board and navigate ships. Earlier in the litigation, Midwest Terminals dismissed the ILA without prejudice but then Midwest Terminals moved for leave to add the ILA as a defendant. Concluding that discovery and motion practice had not proceeded to the point that it was prejudicial to add the ILA, Judge Helmick allowed the amendment. See February 2021 Update. The defendants then moved to dismiss the complaint, and, as the complaint did not allege any force or coercion other than picketing, Judge Helmick held that the allegations were insufficient and dismissed the complaint without leave to amend.
London arbitration agreement in vessel owner’s P&I policy was enforced in a seamen’s suit brought against the insurers as assignees of the vessel owner; Malin v. Osprey Underwriting Agency Ltd., No. 3:20-cv-119, 2022 U.S. Dist. LEXIS 59048 (D. Alaska March 30, 2022) (Sedwick).
This insurance dispute arose from the claims of crewmembers aboard the F/V AMERICAN BEAUTY, who claimed that they were assaulted by the captain of the vessel. The seamen filed a suit against the owner of the vessel and the captain, and the owner’s P&I insurer from the London marine insurance market refused to defend the action or to settle the case. The seamen and owner agreed to entry of judgment in favor of the seamen against the owner, and the owner assigned its claims against its insurers to the seamen. The seamen then brought this action in federal court in Alaska against the insurers for breach of contract and bad faith. The insurers moved to compel London arbitration under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) pursuant to the clause in the policy requiring arbitration in London and application of English law. In response, the seamen cited the Service-of-Suit Clause in the policy that the insurers would submit to the jurisdiction of a court of competent jurisdiction in the United States in the event the insurers failed to pay amounts claimed due under the policy. Judge Sedwick held that there was no conflict between the policy provisions as the arbitration clause applied notwithstanding any other provision in the policy to the contrary. As the requirements for arbitration under the New York Convention were satisfied, and as any ambiguity should be resolved in favor of arbitration, Judge Sedwick held that the arbitration clause was applicable. The seamen also argued that the court should not enforce the arbitration agreement to the extent the policy required the application of English law as it would deny them their bad faith claim and their underlying rights under the Jones Act. Judge Sedwick, however, ruled that this argument was not appropriate for the question whether the case should be arbitrated, reasoning that it would obstruct the enforcement of international arbitration agreements (and “effectively eviscerate the mutually binding nature of the Convention”) if countries could refuse to recognize arbitration agreements that contemplated the application of foreign law. Judge Sedwick held that the issue whether public policy for the treatment of seamen was stronger than the public policy in the Convention favoring arbitration was an issue that was more appropriately reserved for the review of the arbitration award. Consequently, Judge Sedwick compelled arbitration and dismissed the suit, subject to an action to enforce or set aside the award.
Tug and barge company waived its right to compel arbitration of worker’s wage and hour claim by failing to comply with the grievance procedure in the collective bargaining agreement; Miles v. Brusco Tug & Barge, Inc., No. 2:18-cv-2860, 2022 U.S. Dist. LEXIS 59423 (E.D. Cal. Mar. 30, 2022) (Nunley).
Frank Miles, a member of the International Organizations of Masters, Mates & Pilots, Pacific Maritime Region, brought this action in California state court against Brusco Tug & Barge for wage and hour violations. His employer removed the case to federal court based on diversity and moved to compel arbitration in accordance with the arbitration agreement in the collective bargaining agreement between his employer and the union. Miles objected on the ground that Brusco had waived its right to demand arbitration under the collective bargaining agreement because it had not complied with the grievance procedure in the agreement. Judge Nunley agreed that the agreement contained a multi-step grievance procedure that concluded with arbitration. As the employer did not seek to compel compliance with the initial steps, Judge Nunley held that the employer had forfeited its right to compel arbitration.
Judges dismissed suits by claimants who opted out of the medical class action settlement from the Macondo/DEEPWATER HORIZON blowout and who failed to produce expert evidence of causation; Perkins v. BP Exploration & Production, Inc., No. 17-4476, 2022 U.S. Dist. LEXIS 59337 (E.D. La. Mar. 31, 2022) (Milazzo); Troxler v. BP Exploration & Production, Inc., No. 17-4207, 2022 U.S. Dist. LEXIS 66189 (E.D. La. Apr. 11, 2022) (Milazzo); Kalinowski v. BP Exploration & Production, Inc., No. 17-4387, 2022 U.S. Dist. LEXIS 67120 (E.D. La. Apr. 12, 2022) (Milazzo); Danos v. BP America Production Co., No. 17-3240, 2022 U.S. Dist. LEXIS 72924 (E.D. La. Apr. 21, 2022) (Africk).
Isaac Perkins brought a claim for exposure to harmful substances and chemicals as a result of the oil spill and cleanup efforts from the DEEPWATER HORIZON/Macondo spill near his residence in Picayune, Mississippi. He opted out of the Medical Benefits Class Action Settlement Agreement and maintained his claim against BP, Transocean, and Halliburton for headaches, dizziness, watery eyes, muscle spasms, arthritis, and high blood pressure. Perkins produced no expert testimony to support his claims, and BP, Transocean, and Halliburton moved for summary judgment. Reasoning that the causal connection between exposure to oil or dispersants and the conditions asserted by Perkins was not within the common knowledge of a layperson, Judge Milazzo held that the failure to produce expert evidence to establish both general causation and specific causation was fatal to the claim and dismissed the suit with prejudice.
Richard Danos brought a claim for exposure to oil and dispersants while he performed carpentry work on a barge in Port Fourchon, Louisiana after the spill (his wife also asserted a claim for loss of consortium). He opted out of the Medical Benefits Class Action Settlement Agreement and maintained his claim against BP, Transocean, and Halliburton for difficulty breathing, anxiety, rib and back pain, a pulmonary embolism, anemia, and staphylococcus aureus. Danos did not produce an expert report, and BP, Transocean, and Halliburton moved for summary judgment. Danos asked for more time to produce the report, citing the large number of expert reports on which experts were working for the claims of clean-up workers represented by his attorneys. However, Judge Africk did not consider that to be an adequate explanation for the failure on the part of a self-employed worker who was not involved in the clean-up work. In the absence of expert evidence of causation, Judge Africk granted summary judgment and dismissed the suit with prejudice.
After opting out of the medical class action settlement entered into by BP, Clifford Troxler, Jr. and Kevin Kalinowski brought suits against BP, Halliburton, and Transocean seeking to recover for medical conditions they claimed resulted from exposure to oil and chemicals used as dispersants in response to the spill from the Macondo/DEEPWATER HORIZON blowout. When Troxler and Kalinowski failed to produce expert testimony to establish causation between the alleged exposure and their conditions, the defendants moved for summary judgment. Recognizing that medical causation in a toxic tort case is not within common knowledge, Judge Milazzo held that the failure to establish causation by expert testimony required dismissal of the cases.
Judge apportioned fault between the drillship that broke away in Hurricane Harvey and the assisting tugs and then allocated fault between the owner of the drillship and tugs in accordance with the tariff for the tugs and not the master charter agreement between the parties; In re Paragon Asset Co., Nos. 1:17-cv-203, 1:17-cv-247, 1:18-cv-35, 2022 U.S. Dist. LEXIS 59581 (S.D. Tex. Mar. 31, 2022) (Rodriguez).
When Hurricane Harvey made landfall near Corpus Christi, Texas as a Category 4 hurricane, the drillship DPDS1 was docked with two tug boats helping keep the drillship in place. Nonetheless, the drillship broke free from its moorings, propelling the two tugs (ENTERPRISE and ARCTURUS) into adjacent semisubmersible rigs, damaging the rigs, sinking one tug, and damaging the other. The drillship grounded in the ship channel, and the tug CONSTELLATION was assigned to assist the drillship. Later, when the hurricane came back ashore, the drillship refloated and allided with a research pier. The owners of the drillship and tugs brought limitation actions, and claims and counterclaims were filed in the limitation action. A question arose in the limitation action brought by Paragon whether it could bring the limitation action with respect to the drillship DPDS1. Before the storm, Paragon had moved the DPDS1 to Port Arthur, Texas, removing two of its thrusters before the voyage. The drillship was cold stacked with no maintenance and no running equipment, and it deteriorated accordingly. When the dock in Port Arthur was no longer available, the DPDS1 was towed to the Gulf Copper dock near Corpus Christi in May 2017. Paragon was unable to find a buyer for the drillship, and it appeared likely that the drillship would have to be scrapped. Nonetheless, the drillship remained fully outfitted with cranes, winches, electrical generators, and navigational lights, and a two-person maintenance crew stayed aboard to secure the craft and monitor its equipment. As Hurricane Harvey approached Corpus Christi in 2017, Paragon sought to tow the drillship offshore and obtained certification of its seaworthiness from a surveyor. However, the DPDS1 was at the dock when the Hurricane struck. The DPDS1 remained afloat after the storm and was towed back to the Gulf Copper dock and then to Brownsville, Texas, where it was scrapped. Paragon filed a motion for partial summary judgment that the DPDS1 was a vessel for purposes of the Shipowners’ Limitation of Liability Act. Judge Rodriguez agreed with Paragon, reasoning that the craft was capable of carrying things or people over water and that a reasonable observer would conclude that it was a vessel based on its physical characteristics and activities. Although the claimants in the limitation action cited Paragon’s intent to scrap the vessel, Judge Rodriguez noted the recent Fifth Circuit decision in Southern Recycling (see January 2021 Update), in which the owner transported a barge to a shipyard to be scrapped. The barge lost status as a vessel when the contractor cut gaping holes in the bow that prevented the barge from transporting people or property. As the DPDS1 still appeared to a reasonable observer to be capable of serving as a vessel, Judge Rodriguez held that it was a vessel subject to limitation of liability. See March 2021 Update.
Judge Rodriguez held a bench trial and noted that there were two discrete events for which liability had to be apportioned, the initial breakaway of the drillship and the damages incurred from that breakaway, and the subsequent refloating and allision with the research pier. Judge Rodriguez held that Paragon was solely at fault for the initial breakaway and the damages resulting from that breakaway; however, he allocated fault for the refloating and damage to the research pier at 50% for Paragon and 50% for Signet, owner of the CONSTELLATION. Signet and Paragon disputed whether a master charter agreement or Signet’s tariff provided for the allocation of responsibility between the parties. There was a dispute in the testimony whether the hiring of the tugs was in with pursuant to the master charter agreement, and Judge Rodriguez resolved the dispute by concluding that Signet did not agree that the master charter agreement would govern the work. As to the tariff, Judge Rodriguez found an oral agreement that Signet would work under the terms of the tariff, and he agreed that the oral agreement was valid under the general maritime law. Paragon raised defenses to application of the tariff, including that the tariff did not cover services to vessels that are aground or in distress. However, Judge Rodriguez held that a party may waive a provision in a contract intended for that party’s benefit and that Signet did that in this case. Paragon also argued that the tariff could not govern because it was a contract of duress or of adhesion, but Judge Rodriguez did not find either defense applicable, and he also concluded that Paragon’s conduct had ratified the agreement to work under the tariff. Accordingly, liability between Paragon and Signet was allocated in accordance with the provisions of the tariff.
Judge applied maritime law when entrenched and D.C. law when not entrenched to vessel owner’s contract and tort claims against his hull insurer; fact questions precluded summary judgment on coverage for vessel sinking, but the tort claims that were not independent from the contract were dismissed under D.C. law; Stokes v. Markel American Insurance Co., No. 19-2014, 2022 U.S. Dist. LEXIS 59804 (D.D.C. Mar. 31, 2022) (Stark).
James Stokes’ vessel, MIDNIGHT EXPRESS, sank while moored in Ocean View, Delaware during heavy rain from Hurricane Michael in October 2018. He brought this suit against the hull insurer for the vessel, Markel, in Florida state court, and Markel removed the case to federal court. Chief Judge Altonaga transferred the case to the federal court in Delaware, and the parties filed motions with respect to experts, choice of law, and summary judgment. Stokes argued that the court should strike the reports of Markel’s experts, Robert K. Taylor and Matthew Schmahl. Taylor, Markel’s expert engineer and naval architect, conducted a float test and leak test, but Stokes’ expert testified that the tests were not conducted in accordance with industry standards and did not provide reliable support for Taylor’s opinions. The assertions from Stokes’ expert did not, however persuade Judge Stark that Taylor had employed improper methodology, and Judge Stark declined to strike Taylor’s opinions. Stokes objected to the opinions of Schmahl, a marine surveyor with nearly 40 years of experience, and Judge Stark considered him to be qualified to discuss whether damage to component parts was caused by submersion and that his opinions were not duplicative of Taylor’s more general opinions on causation. Before considering the merits, Judge Stark had to decide the applicable law. As the suit was originally removed to federal court as a diversity case, Judge Stark applied Florida conflicts principles, including giving effect to the policy’s choice-of-law provision that maritime law would apply to the policy except that state law would apply when no substantive maritime principle or precedent was applicable. This left a decision to be made when there was no established maritime law. Regardless of whether maritime or state choice-of-law applied to determine what state law to apply to the contract, Judge Stark held that Florida law did not apply. Florida applies lex loci contractus, and the contract was not executed in Florida. Stokes purchased the insurance and executed the policy in the District of Columbia, although he used the boat for most of the year in Florida and was in Florida when he negotiated and accepted the terms of an endorsement that extended the contractual period. Thus, Judge Stark held that the law of the District of Columbia would apply to the contract claims in the absence of an established maritime principle. There was a conflict in the legal principles that would apply to the tort claims, so Judge Stark applied the Florida significant relationships test and held that the law of the District of Columbia would apply with respect to representations made by Markel during the purchase of the policy by Stokes in the District of Columbia. Turning to the merits, Markel argued that the loss was not fortuitous or accidental, that a design defect was the proximate cause of the loss, and that the vessel was unseaworthy, in violation of the policy’s seaworthiness warranty. The policy included a sudden accidental damage clause, which the parties agreed was synonymous with the fortuity doctrine. Judge Stark considered the fortuity doctrine to be an entrenched principle of admiralty law, applying when a loss is unforeseen, unexpected, unintended, unavoidable, or caused by the insured’s own negligence, but not when it results from intentional misconduct of the insured or an inherent defect or normal wear and tear. Although heavy rainfall can be considered to be a fortuitous event, there were disputes about the severity of the rain, whether design defects caused the loss, and whether the vessel was seaworthy. Judge Stark held that, under maritime law, courts consider the predominant or determining cause, and that, when two causes appear to exist, the court should consider the cause that rendered the loss inevitable (rejecting application of the concurrent causation doctrine under state law as it did not apply under admiralty law). As the parties presented different views of what caused the loss, the determination of coverage would depend on which party was found to be correct on causation. The fact dispute precluded summary judgment on the contract claim. Applying D.C. law to the tort claims, Judge Stark held that tort claims may be sustained concurrently with a contract claim only if they are based on conduct distinct from the conduct underlying the contract claim. The claims for negligent misrepresentation and fraud did not satisfy that requirement and were dismissed (as they were not independent of the contract); however, the claim for fraudulent inducement leading up to the procurement of the policy was independent and survived the motion for summary judgment.
Shipowner was not subject to personal jurisdiction in New York for grounding off the coast of Ecuador; NVOCCs were not liable under COGSA when there was no physical damage to the cargo or under the maritime law when they were not at fault; Mapfre Peru Compania de Seguros y Reaseguros S.A. v. M/V AS FORTUNA, No. 20-cv-5606, 2022 U.S. Dist. LEXIS 60746 (S.D.N.Y. Mar. 31, 2022) (Carter); Chubb Seguros Peru S.A. v. AS Fortuna OPCO B.V., No. 1:20-cv-3392, 2022 U.S. Dist. LEXIS 60964 (S.D.N.Y. Mar. 31, 2022) (Carter).
These opinions arise from the grounding of M/V AS FORTUNA off the coast of Ecuador with cargo that was shipped from Miami. Cargo and cargo insurers paid salvage expenses to salvors who recovered cargo and then brought suits in federal court in New York against the vessel owner, a Netherlands company, and non-vessel operating common carriers for the cargo. As the vessel had not called in New York when owned by this owner and had only called in the United States a few times at the direction of charterers, Judge Carter dismissed the vessel owner for lack of personal jurisdiction. With respect to the claims against the NVOCCs, Judge Carter rejected the argument that COGSA could be applicable as there was no physical loss or damage to the cargo, and he rejected liability under maritime law indemnity as there was no evidence that the NVOCCs were guilty of any fault.
Failure to declare value of cargo for cargo policy and failure to pay premium for the cargo resulted in denial of coverage for cargo that was not shipped; insurer could not recover costs for defense of cargo under a reservation of rights where no defense was owed under liability policy and there was no reimbursement clause; Chemical Equipment Labs, Inc. v. Travelers Property Casualty Co. of America, No. 19-3441, 2022 U.S. Dist. LEXIS 61298 (E.D. Pa. Mar. 31, 2022) (Jones).
Chemical Equipment Labs purchased a cargo of industrial road salt and chartered the vessel GENCO OCEAN to transport the cargo from Venezuela to the United States. After some of the salt had been loaded on the vessel, Venezuelan customs officials ordered a halt to cargo operations and ordered the discharge of the salt back to the pier. The ship left empty, and no bills of lading were issued to Chemical Equipment Labs. Travelers had issued two policies to Chemical Equipment Labs, a liability policy with a charterer’s legal liability rider and a cargo policy. The owner of the vessel instituted an arbitration proceeding in New York, seeking to recover for the failure to perform under the charter party, and Travelers agreed to defend Chemical Equipment Labs under the liability policy, subject to a reservation of rights. Travelers provided a defense until the completion of the arbitration, but it declined to pay for the judgment in the amount of $855,918.88. Chemical Equipment Labs brought this suit against Travelers in the Delaware County, Pennsylvania Court of Common Pleas based on both policies, and Travelers removed the case to federal court for the Eastern District of Pennsylvania. Chemical Equipment Labs brought claims for breach of contract and bad faith, and Travelers counterclaimed for reimbursement of the defense costs it had expended. Judge Jones first addressed what law to apply. As the court had admiralty jurisdiction because the claims related to marine insurance policies (although the case was removed based on diversity jurisdiction), Judge Jones applied federal conflicts rules and agreed to interpret the policies under Pennsylvania law where the policies were issued and countersigned. As the liability policy covered damage to the vessel or other property but the vessel sailed without any damage to the vessel or cargo, the claim was not covered (the policy also excluded damage to cargo carried or to be carried on the chartered vessel). The cargo policy required a declaration of every shipment coming within the terms of the policy as a condition to coverage and payment of premium on the value of all declared cargo. Chemical Equipment Labs did report the voyage, but it did not declare a value for the cargo and designated it as “Never Shipped.” As Chemical Equipment Labs did not pay a premium for the cargo, Judge Jones held that there was no coverage under the cargo policy and that Travelers did not breach the policy or commit bad faith under Pennsylvania law. With respect to Travelers’ claim for reimbursement of the defense costs, Judge Jones held that Travelers was not entitled to reimbursement, even though the defense costs were not owed, unless there was a provision in the policy authorizing reimbursement. As there was no such clause in the policy, Travelers was not entitled to reimbursement.
Judge had discretion to modify settlement agreement in dispute between boatyard and vessel owner because of noncompliance, but declined to modify the agreement; Bay Marine Boatworks, Inc. v. S/Y PURSUIT, No. 3:20-cv-5399, 2022 U.S. Dist. LEXIS 61622 (N.D. Cal. Apr. 1, 2022) (Orrick).
Christopher Wollen put his 82-foot racing sloop S/Y PURSUIT in Svendsen boatyard in 2019 to perform repairs on the vessel. There was a dispute over the adequacy of the repairs, nonpayment, and Svendsen’s holding the boat while charging fees. Svendsen arrested the vessel in August 2020, and the parties reached a settlement in February 2021. Judge Orrick dismissed the case but retained jurisdiction to enforce the settlement for a limited time. The deadline was repeatedly extended, and Judge Orrick even ordered the parties to appear weekly for case management conferences. Finally, a year after the initial dismissal, Svendsen filed a motion to amend the settlement agreement (providing that Wollen would pay $100 per day as a lay-day penalty) because Wollen had taken advantage of the relatively toothless penalty and the vessel remained at the boatyard instead of being moved when the repairs were completed in July 2021. In place of the penalty in the settlement agreement, Svendsen proposed that the lay-day penalty in the original contract be modified, which would increase the amount owed by tens of thousands of dollars. Judge Orrick first considered whether he had authority, under Rule 60(b) to modify or rewrite a settlement agreement between the parties. As his dismissal order retained jurisdiction to enforce the terms of the settlement and was based on it, Judge Orrick concluded that he had discretion to alter the terms of the agreement in appropriate circumstances, reasoning, “While I take Wollen’s point that settlement agreements are private contracts that courts do not usually rework, that does not prevent altering the terms because the judicial order itself is what allocated the parties’ rights and obligations.” Exercising his discretion, Judge Orrick chose not to alter the agreement. He agreed that the delay in removing the vessel was unreasonable, but the parties negotiated the penalty for that circumstance that Svendsen now contended was inadequate. Changing the penalty would not incentivize future action but give Svendsen a windfall for past actions. Judge Orrick noted that Svendsen had long had better options for judicial relief to compel compliance with the settlement agreement with coercive sanctions, but declined to make such a request. This time, Judge Orrick advised that, if the vessel is not removed in the time recently represented by Wollen, Svendsen could file a motion to enforce the settlement and it would be heard on an expedited basis.
Fact questions prevented summary judgment on claim arising from passenger’s trip over the lip of the shower in her room after 12 drinks on the cruise ship; experts could testify about the conspicuousness of the lip of the shower; orthopedic surgeon could testify about the passenger’s orthopedic recovery as it related to her pain, suffering, and anguish; Hall v. Carnival Corp., No. 21-cv-20557, 2021 U.S. Dist. LEXIS 61864 (S.D. Fla. Apr. 1, 2022) (Bloom).
Barbara Hall and her traveling companion Angela Vaughn were passengers on the CARNIVAL VALOR on a Caribbean cruise leaving from New Orleans. Hall purchased a drink package allowing her to buy 15 alcoholic drinks per day. Hall purchased at least 12 drinks on her first day, and her companion testified that Hall was drinking shots like they were going out of style and was drinking like a sieve. That evening, Hall went to bed after using the bathroom and got up in the middle of the night to use the bathroom again. She tripped over the shower lip in the bathroom and sought treatment in the ship’s medical center. She alleged that she was refused care because the medical center did not accept her health insurance and she was unable to pay $500. Two days later she sought help under a compassion exception, but the staff again declined to treat her. She ultimately had to have surgery to insert a metal plate and screws in her wrist and brought this action complaining of the cruise line’s failure to render first aid and seeking punitive damages for the cruise line’s wanton and outrageous conduct. The cruise line moved to dismiss the claim for punitive damages, but Judge Bloom denied the motion. First, she held that the allegations were sufficient to state a claim for negligence based on the failure to exercise reasonable care to a sick or injured passenger. Judge Bloom then addressed the split in the Southern District of Florida on the standard necessary for an award of punitive damages, whether punitive damages are available for wanton, willful or outrageous conduct or whether intentional misconduct is necessary. Judge Bloom sided with the cases holding that intentional misconduct is necessary for an award of punitive damages, but she held that the complaint plausibly alleged intentional misconduct on the part of the medical staff in failing to provide care to the passenger when the passenger demonstrated symptoms that needed to be attended to prevent further damage. See June 2021 Update.
The cruise line then moved for summary judgment on the negligence counts for creating a tripping hazard with an unreasonably and unexpectedly high threshold at the entrance to the shower, failing to warn about the tripping hazard, and failing to treat her injury because she could not pay the applicable fee. Although Hall had used the bathroom successfully before her fall, Judge Bloom held that there was a sufficient fact question to defeat summary judgment because the bathroom floor, shower pan, and threshold were all of the same color and there were no markings or warnings regarding the height of the threshold. Although the cruise line contradicted Hall’s version of events about the refusal to provide treatment, her testimony created a fact question that required the denial of summary judgment on the claim for failure to render aid. After denying summary judgment, Judge Bloom addressed Daubert challenges from the cruise line and Hall. The cruise line argued that Hall’s engineering expert, Mark Young, should be excluded from testifying because his opinions were unhelpful legal conclusions and lacked an appropriate methodology. Judge Bloom found Young’s opinion that the lip was not conspicuous without a differentiation in color or use of contrasting material was sufficiently helpful and not within the understanding of an average lay person and that the lack of any reference to industry standards or citation of a study or statistical survey of expectations did not mean that there was an impermissible analytical gap in methodology. Hall challenged the cruise line’s engineering expert, David Martyn, beginning with his qualifications to render opinions on conspicuousness because he is not an expert in the field of accident reconstruction. Judge Bloom held that this criticism missed the mark because Hall did not question Martyn’s qualifications as a forensic engineer specializing in naval architecture, marine engineering, and industrial and operations engineering. However, Judge Bloom did rule that Martyn’s opinion that the toilet was accessible without having to step on or over the shower threshold should be excluded because the jury could ascertain that plain fact from the photographs. For the same reasons that Judge Bloom rejected attacks on the methodology and helpfulness of the testimony of Mark Young, she rejected attacks on the rebuttal opinions of David Martyn with respect to the conspicuousness of the lip. Finally, Hall objected to the testimony of orthopedic surgeon Lewis Eastlick with respect to Hall’s mental anguish/pan/suffering/distress. Hall argued that an orthopedic surgeon is not qualified to opine on mental health and well-being, but Judge Bloom considered the argument to be misguided because the opinion involved her orthopedic recovery as relevant to her claim for pain and suffering.
Invoices from shipyard’s competitors were sufficient to present fact question on the reasonableness of the repair charges sought in the shipyard’s action against the vessel for repairs; Marine Diesel Repairs, LLC v. M/Y DREAM ON, No. 20-61375, 2022 U.S. Dist. LEXIS 61865 (S.D. Fla. Apr. 1, 2022) (Cannon).
Marine Diesel Repairs performed an inspection and repairs on the 105-foot Leopard motor yacht DREAM ONE, and submitted invoices for $219,235.29 to its owner, Allure II. The owner paid $152,235.29 and disputed the reasonableness of the balance. Marine Diesel then brought this action in federal court in Florida against the vessel to foreclose on its lien for necessaries and also for breach of contract and unjust enrichment. Allure moved for summary judgment that the charges were not reasonable, and Marine Diesel responded by producing invoices and estimates from several of its competitors for similar types of boat repairs, arguing that the rates charged were either the same or less than that charged by its competitors for similar work. Judge Cannon held that the competitor invoices presented a fact question whether Marine Diesel’s rates were reasonable and in accord with the prevailing charges for labor and materials and denied Allure’s motion for summary judgment.
Navy sailor’s widow did not overcome bare-metal defense of product suppliers; In re Asbestos Products Liability Litigation (No. VI); Sullivan v. A.W. Chesterton Co., No. 18-cv-3622, 2021 U.S. Dist. LEXIS 65336, 65338 (E.D. Pa. Apr. 1, 2022) (Robreno).
Jackie L. Sullivan, widow of John L. Sullivan, brought this suit against suppliers of asbestos products, asserting that her husband died from exposure to asbestos while serving as a sailor on the USS CHARLES F. ADAMS, the USS SARATOGA, and the USS LEXINGTON. Viad Corp., alleged successor to Griscom Russell Co., moved for summary judgment on two grounds, that Sullivan failed to establish that an asbestos-containing product for which Viad is responsible was a cause of Sullivan’s death and that Viad was not liable as a successor to Griscom Russell. Applying maritime law, Judge Robreno rejected Sullivan’s arguments that the vessels on which the decedent served had Griscom Russell products containing asbestos. Judge Robreno rejected evidence that other vessels of a different class had distillers that contained asbestos as it was not relevant to the distillers on the vessels on which Sullivan served. Evidence that high temperature uses require asbestos, that the distiller on the CHARLES F. ADAMS was insulated, and that asbestos was present on Navy ships of that era was even more remote. Moreover, the evidence was insufficient to establish that Sullivan performed substantial work on the Griscom Russell distillers, even if there were evidence that they contained asbestos. Finally, noting that the plaintiff has the burden of establishing successor liability, Judge Robreno held that Sullivan had failed to offer sufficient facts to support a finding of successor liability of Viad. Consequently, he granted the motion for summary judgment and dismissed Viad from the suit. See December 2021 Update.
On April 1, 2022, Judge Robreno considered the motions for summary judgment of CBS and General Electric, asserting a bare-metal defense that their products were delivered to the Navy “bare metal.” As the evidence established that the products were delivered without asbestos insulation included, and as the evidence did not establish that the products required the incorporation of asbestos or that the defendants directed the incorporation of asbestos, Judge Robreno held that the exceptions to the bare-metal defense enunciated by the Supreme Court in DeVries were not satisfied, and he granted summary judgment to CBS and General Electric.
Fact questions whether damage occurred during charter party precluded summary judgment against charterer and hull insurer; Delta Marine Support, LLC v. Marsh Buggies, Inc., No. 21-2003, 2022 U.S. Dist. LEXIS 62100 (E.D. La. Apr. 4, 2022) (Vance).
Shallow Water Equipment chartered the spud barge LA TIGER to Delta Marine, which chartered the barge to Marsh Buggies. Marsh Buggies purchased a hull policy for the barge, and the policy named Delta Marine as the loss payee. An on-hire survey at the commencement of the charter to Marsh Buggies reflected that the deck plating on the barge was moderately to heavily wash-boarded with 0 to 1-inch random indents. The off-hire survey reflected that the deck plating was heavily wash-boarded and that some areas of the deck plating were set down 0 to 2 inches. The surveyor also found that the forward spud was broken and the spud winch was torn apart. Delta Marine and Shallow Water brought this suit in federal court in Louisiana against Marsh Buggies and its hull insurer seeking repair costs, charter-hire fees until the repairs were completed, and damages under Louisiana law against the insurer for arbitrary denial of coverage. The plaintiffs moved for summary judgment, and the defendants answered that repairs had been completed on the forward spud and spud winch, and that there were fact questions whether the damage to the deck was caused during the charter. As the only repair issue that remained in dispute was the damage to the deck, and as there were questions as to when the damage occurred, Judge Vance denied the motion for summary judgment. Although the plaintiffs claimed that the damage to the barge precluded its return to service, the defendants’ expert testified that there were no restrictions to the use of the vessel until repairs were performed. Thus, there were questions that made it impossible to determine what might be owed for repairs, the necessity of those repairs, and the obligations to pay for loss of use of the vessel during required repairs.
Port and lessee of waterfront space at the port both owed duties to seaman allegedly injured by a line that snagged on the face of the dock; questions of fault precluded a decision on indemnity under a fault-based indemnity provision in the Lease Agreement; Cabading v. Port of Portland, No. 3:20-cv-312, 2022 U.S. Dist. LEXIS 62642 (D. Ore. Apr. 4, 2022) (Hernández).
Jonathan Cabading, chief mate on the M/V PUFFIN ARROW, was injured when a mooring line became fouled during a line-hauling operation and then snapped up and struck Cabading. The vessel was docked at Berth 410/411 at the Port of Portland’s Terminal 4 along the Willamette River. Kinder Morgan leases the waterfront property of Terminal Four from the Port of Portland to store soda ash and licenses the preferential use of the wharves and aprons at Berths 410 and 411 to load the soda ash onto vessels moored at Berth 410/411. The Lease Agreement provides that the Port will maintain the Berths in good operating condition, and that Kinder Morgan will provide notice to the Port of maintenance that was necessary. The Lease Agreement also contains indemnity and insurance provisions. Inspections reflected that the fender system was not in good condition, and Cabading contended that the mooring line had become snagged on a protruding section of sheathing on one of the steel pilings along the face of the dock. He brought this suit in federal court in Oregon against the Port of Portland and Kinder Morgan (he also named the vessel interests but entered into a settlement with them), and the Port and Kinder Morgan moved for summary judgment. Applying admiralty law to the tort claims, Judge Hernández rejected the Port’s argument that it owed no duty because no law, regulation, standard, or rule requires the Port to identify and repair snagging hazards. Judge Hernández noted that the parties’ experts disagreed with respect to the duty owed under industry standards, and he also noted that the Port had agreed to assume responsibility under the Lease Agreement to maintain the pilings and was aware of deficiencies from the inspections. Although the condition of the pilings was open and obvious, Judge Hernández did not believe that the hazardousness of the condition was open and obvious. Although the Port raised questions whether the vessel and line were in the area of the damaged pilings, that was a fact question that could not be determined on a motion for summary judgment. With respect to Kinder Morgan, Judge Hernández agreed that it did not have a duty to repair or maintain components of Terminal 4 that it did not lease from the Port and that it did not lease Berth 410/411. Even though Kinder Morgan could not have made repairs, Judge Hernández held that it did bear some responsibility for the safety of the Berth because it was required to provide notice to the Port of maintenance that needed to be performed at the Berth. Although the face of the dock was not leased by Kinder Morgan, the face abutted its leased premises and the mooring lines for the vessel had to go directly over the fender system in order to be tied up for work at Kinder Morgan’s leased premises. Thus, Judge Hernández held that Kinder Morgan had a duty to warn vessels of line hazards. Judge Hernández then addressed the indemnity and insurance obligations from the Lease Agreement. The agreement contained reciprocal indemnity by fault, so that each party agreed to indemnify and hold harmless the other party for its own negligence. As Judge Hernández could not determine the fault of the defendants at this stage of the proceedings, he could not determine whether indemnity was owed (which is why this type of indemnity should not be used by parties seeking to efficiently allocate responsibility). Judge Hernández also rejected the Port’s argument that Kinder Morgan should indemnify the Port for failure to maintain the premises as Kinder Morgan did not owe that obligation under the agreement. Finally, the Port cited the requirement in the agreement that Kinder Morgan would maintain commercial general liability insurance insuring Kinder Morgan and the Port for liability for damages because of bodily injury occurring by reason of the operations of Kinder Morgan on or from the premises. As Kinder Morgan was self-insured, the Port could not cite any language in a general liability policy that provided a duty to defend, and the language of the agreement did not independently create a duty to defend. And, as liability was yet to be determined, Judge Hernández declined to hold that Kinder Morgan had to indemnify the Port.
The United States brought this action in the federal court for the District of Columbia, seeking the forfeiture of the MOTOR YACHT TANGO, owned by sanctioned Russian oligarch, Viktor Vekselberg. The Treasury Department designated Vekselberg as part of sanctions on Russia and asserted that he used shell companies as part of an international promotional money laundering scheme and that the vessel was property involved in the money laundering violations. Magistrate Judge Faruqui believed that the United States had sufficiently established that the vessel was subject to forfeiture, but the vessel had to be located within the district or a place Congress has empowered the court to act. As the vessel was located in the port of Palma de Mallorca, Spain, and as Congress has empowered the federal court for the District of Columbia to seize property located in a foreign country, Magistrate Judge Faruqui held that the court had jurisdiction and venue to issue the warrant for the seizure of the vessel at its location in Spain. Magistrate Judge Faruqui then explained the “acute” harm to society from the financial crimes alleged in this case, noting that allowing Russian oligarchs to evade sanctions without consequences will “[e]nable Putin’s War Against Ukraine.” He added: “Far from being grossly disproportionate to Putin’s murder of civilians, destruction of Ukrainian cities, and attack on Ukraine’s sovereignty, forfeiture of the Target Property is wholly justified. The seizure of the Target Property is just the beginning of the reckoning that awaits those who would facilitate Putin’s atrocities. Neither the Department of Justice, nor history, will be kind to the Oligarchs who chose the wrong side.”
Dueling injunctions–American judge enjoined litigation in India after the Indian judge enjoined the American litigation arising from a disease suffered by an Indian seaman employed by an Indian company pursuant to an Indian employment agreement; Ganpat v. Eastern Pacific Shipping Pte, Ltd., No. 18-13556, 2022 U.S. Dist. LEXIS 12943, 12946 (E.D. La. Apr. 5, 2022) (Morgan).
Kholkar Vishveshwar Ganpat, a resident of India, signed a Mumbai Employment agreement with an Indian subsidiary of Eastern Pacific Singapore that provided for benefits in the event of his disability. Ganpat claimed that he contracted malaria while serving as a crewmember of the M/V STARGATE and brought this suit in federal court in Louisiana against Eastern Pacific under the Jones Act and general maritime law. Ganpat served Captain Owen Bona on the M/V BANDA SEA while the ship lay at anchor in the Mississippi River just below New Orleans, asserting that Captain Bona was a managing agent of Eastern Pacific. Eastern Pacific objected to the service, arguing that Captain Bona was an employee of Ventnor Navigation, not Eastern Pacific. Ganpat responded that Eastern Pacific was the manager of the STARGATE and that Captain Bona was a borrowed servant or managing agent of Eastern Pacific. As there was no evidence that Captain Bona was employed by Eastern Pacific, the question presented was whether he could be considered a managing agent of Eastern Pacific. However, the evidence established that Captain Bona was not involved in any aspect of Eastern Pacific’s business that related to the vessel on which the cause of action arose. Judge Morgan declined to conclude that service could be made on a foreign corporation that was not transacting business in Louisiana through a non-employee captain of a vessel on which the accident did not occur who had no control over any operations of the defendant in the forum state. See February 2020 Update. Judge Morgan gave Ganpat several extensions to properly serve Eastern Pacific. Finally, more than a year later, Ganpat filed a proof of service, an affidavit from a process server in Singapore who stated that he handed the summons and complaint to Eastern Pacific’s receptionist, who signed and affixed the company stamp to the summons. Eastern Pacific challenged the sufficiency of the service, and Judge Morgan held that the service complied with Rule 4(f)(2)(A) in that it was accomplished by a method prescribed by the laws of Singapore for service in that country in its courts of general jurisdiction. See September 2021 Update. After service was accomplished, Judge Morgan addressed Eastern Pacific’s argument that the case should be dismissed on the basis of forum non conveniens because Ganpat is a resident and citizen of the Republic of India, Eastern Pacific is a Singapore company with its principal place of business in Singapore, Ganpat experienced symptoms of malaria while the vessel was on the high seas sailing from Gabon to Brazil, he was hospitalized and treated for malaria in Brazil, and was repatriated to India where complications arose. Judge Morgan assumed there was an adequate alternative forum available in India, but she held that Eastern Pacific did not meet its burden of proof with respect to the private interest factors or the public interest factors. Judge Morgan noted, with respect to the private interest factors, that the witnesses were spread across the world. Although many of the crew reside in India, there were others in Romania, Ukraine, Bulgaria, the Philippines, Russia, and Turkey. There were medical witnesses from Brazil and India as well as witnesses with respect to the provisioning of the ship in Savannah before it sailed to Africa. There were also possible witnesses from Nigeria where the owner of the vessel and employer of Ganpat were located. Similarly, with respect to the public interest factors, Judge Morgan found no clear “home” for the dispute involving multiple international contacts. Factoring into the analysis the dilatoriness of Eastern Pacific’s filing of the motion (the longer the case was pending in the United States, the less the defendant can claim inconvenience in the United States), Judge Morgan could not conclude that Eastern Pacific had met the heavy burden of demonstrating that the public and private interest factors weighed in favor of dismissal, and denied the motion to dismiss. The facts were not developed sufficiently for Judge Morgan to decide whether Indian law applied in the context of Eastern Pacific’s motion to dismiss the suit for failure to state a claim under Indian law (there were disputes about which entities owned and employed Ganpat). Accordingly, Judge Morgan held that a determination of the applicable law was premature. See February 2022 Update.
While Ganpat was trying to serve Eastern Pacific, Eastern Pacific and its Indian subsidiary filed suit against Ganpat in South Goa, India (March 2, 2020), seeking an injunction restraining vexatious and oppressive foreign legal proceedings, i.e., the suit in federal court in Louisiana. On March 7, 2020, the court in South Goa, India issued an order temporarily restraining Ganpat from prosecuting the action in the United States, concluding that the parties and the ends of justice would be better served if trial on liability and damages in relation to the Mumbai Employment Agreement were in India. Almost a year and half after being restrained from pursuing his suit in Louisiana, Ganpat filed a motion in the Louisiana proceeding seeking to enjoin the Indian litigation that had restrained the prosecution of the American litigation. Noting that Eastern Pacific’s counsel had withdrawn its objections to personal jurisdiction in a telephone status conference on April 18, 2019 (although it was not served until later), Judge Morgan held that she had jurisdiction over the defendant and that its suit in India constituted vexatious and oppressive litigation. She also held that the need to prevent the litigation in India and to protect the jurisdiction of the American court outweighed the need to defer to principles of international comity. Consequently, she enjoined Eastern Pacific from litigating the Indian suit, ordered it to dismiss the Indian suit, and extended the injunction to its Indian subsidiary as it was acting in “active concert” with Eastern Pacific. Eastern Pacific filed a notice of appeal the next day.
Laches did not bar naming a defendant in a property-damage suit four years after the accident when the defendant was party to other cases from the incident and filed an intervention in the property-damage suit in which it claimed the laches defense; Clovelly Oil Co. v. BTB Refining, LLC, Nos. 17-14435, 18-5488, 18-9385, 18-9391, 2022 U.S. Dist. LEXIS 65350 (E.D. La. Apr. 8, 2022) (Barbier).
The consolidated cases for this opinion arise from an explosion and fire on an oil and gas production facility in Lake Pontchartrain. The owner of the facility brought a limitation action and a property damage action against various defendants in federal court in Louisiana, and there were suits by workers who were injured in the explosion. Select Oilfield Services filed a claim in Clovelly’s limitation action and answered Clovelly’s Rule 14(c) tender in that action. Select filed an intervenor complaint in this property damage action and was named as a defendant in two of the injury suits. Four years after the explosion, Clovelly filed an amended complaint in its property damage suit, naming Select Oilfield Services as a defendant. Select filed a motion for summary judgment that the claim was barred by the maritime doctrine of laches. As maritime law does not recognize the tolling rule applied in Louisiana when suit is timely filed against a joint tortfeasor, and as the naming of Select was beyond the one-year prescriptive period in Louisiana, Clovelly had to establish that Select was not unduly prejudiced by the inexcusable delay in adding it to the property damage suit. Judge Barbier found no undue prejudice in this case as Select’s legal team had been in communication with Clovelly’s legal team from the outset, Select was involved in the investigation after the accident, Select filed a claim in Clovelly’s limitation action, was a defendant in two of the injury suits, and even filed an intervention in this property damage suit before it was named as a defendant. Denying the motion, Judge Barbier stated, “You brought yourself into this court, and all those [cases] are consolidated. There is no way you can avoid being part of the mix in whatever trial occurs . . . .”
Judge resolved fact questions in favor of coverage under hull and P&I policies for sinking of the former movie prop HMS BOUNTY during Hurricane Sandy; Acadia Insurance Co. v. Hansen, No. 2:14-cv-6561, 2022 U.S. Dist. LEXIS 75760 (E.D.N.Y. Apr. 11, 2022) (Gujarati).
In 2001, Robert Hansen’s company, HMS Bounty Organization, purchased the HMS BOUNTY, built in 1960 as an enlarged replica of the famous British naval vessel for the 1962 movie, Mutiny on the Bounty. He had substantial repairs performed on the vessel over a number of years to upgrade the vessel from poor condition to very good condition, and Acadia Insurance issued a policy insuring the hull for $4 million, providing loss of earnings coverage of $100,000, and P&I insurance with a limit of $1 million. During the vessel’s final voyage from New London, Connecticut headed to St. Petersburg, Florida, the vessel sank during Hurricane Sandy, resulting in the loss of the vessel, two deaths, and other injuries. Acadia paid its limits of $4 million for the loss of the vessel, $100,000 for loss of earnings, and $1 million to settle the injury and death cases. Acadia brought this action in federal court in New York against Hansen and HMS Bounty Organization, seeking to declare the policy void ab initio based on breaches of warranties, uberrimae fidei, and unjust enrichment. The case was tried to Judge Gujarati, and the parties presented significantly different fact and expert testimony about the condition of the BOUNTY (either the vessel “was always sinking” and the crew was “losing the sinking battle at the dock, before we ever went into a hurricane,” or the vessel was “in great condition,” the best one crewmember had ever seen it). Judge Gujarati resolved the dispute by finding that the vessel was seaworthy before the storm, which resolved the uberrimae fidei and unjust enrichment issues as well. Consequently, Judge Gujarati rendered judgment for Hansen and HMS Bounty Organization. Thanks to Professor Michael Sturley of the University of Texas School of Law for bringing this case to our attention.
Bailee of barges did not have a salvage claim for recovery of the barges that broke free during a hurricane; Argos Ports (Houston) LLC v. Kirby Inland Marine, LP, No. H-18-327, 2022 U.S. Dist. LEXIS 67196 (S.D. Tex. Apr. 12, 2022) (Lake).
Argos Ports brought this action in federal court in Houston against Kirby Inland Marine, alleging that barges under Kirby’s control broke free during Hurricane Harvey and caused damage to Argos Ports’ property. Kirby retained T&T to remove the barges after the hurricane. Kirby paid T&T in full, took an assignment of salvage rights from T&T, and filed a third-party complaint against the owners of barges for the salvage of the barges. The barge owners moved for summary judgment arguing first that Kirby was not a voluntary salvor because of the bailment relationship and Kirby’s obligation to exercise reasonable care for the barges in its control. Kirby argued that it ceased to be a bailee when the barges broke away by the fault of a third party, so its salvage efforts were voluntary. Judge Lake rejected that argument, however, citing the decision of the Fifth Circuit in Terral River Service v. SCF Marine (see January 2022 Update) and reasoning that “[t]he bailee of a barge has a preexisting duty that forecloses any salvage claims it might make as to that barge as a matter of law, regardless of who was at fault for the sinking of the vessel.” Disagreeing with Kirby that once the barges broke loose it had no duty to “regain” them, Judge Lake held that Kirby’s salvage claim was foreclosed by Kirby’s duties as bailee. As to the assignment, T&T had no contract claim with the barge owners, so it had no claim for contract salvage. It also had no claim as a voluntary salvor as it was working for Kirby. And, even if T&T had a salvage claim, it had nothing to assign as it was fully paid by Kirby. Accordingly, Judge Lake granted summary judgment to the barge owners and dismissed Kirby’s third-party complaint.
Non-signatory affiliate was not liable for contract indemnity obligation that was applicable to affiliates; James River Insurance Co. v. Janmark Resources, Inc., No. H-20-4365, 2022 U.S. Dist. LEXIS 67198 (S.D. Tex. Apr. 12, 2022) (Miller).
This opinion involves indemnity and insurance in the wake of the settlement of the suit brought by Jeffery Allen Mauldin for injuries he sustained while working as a welder on the M/V LONESTAR. He brought a suit against Cal Dive, owner of the vessel, and Rife Industrial Services, Inc. based on negligence and unseaworthiness of the vessel. Mauldin was not sure whether his employer was Rife Industrial Services, Inc. or Rife Industrial Services, LLC, but discovery established that Rife LLC had paid Mauldin’s wages and that Rife Inc. had forfeited its charter in 2013. Cal Dive entered into a Master Service Agreement with Rife LLC that was signed for Rife LLC by Jeannette Rife. Jeannette Rife is also the owner and sole director of Janmark. The MSA recites that the parties to the MSA are Cal Dive, Rife LLC, and Rife LLC’s affiliated and related companies. The MSA required Rife LLC and its affiliated and related companies to indemnify Cal Dive for Mauldin’s injury claim. Cal Dive requested indemnity under the MSA, but, when it received no response, Cal Dive’s insurer, Lloyd’s, settled with Mauldin for $185,000. James River Insurance Company, which issued a policy to Janmark, brought this action against Janmark, Rife Inc., Rife LLC, Mauldin, Cal Dive, and ultimately Lloyds, seeking a declaratory judgment that it had no duty to defend or indemnify in connection with the Mauldin suit or settlement. Motions for summary judgment presented the indemnity issues from the MSA to Judge Miller. Applying maritime law to the MSA, Judge Miller held that Janmark did not owe Cal Dive a duty of defense/indemnity under the MSA because Janmark was not a signatory and, consequently, not a party to the agreement. Assuming that Janmark was an affiliate of Rife LLC, Judge Miller held that Rife LLC could not contractually bind Janmark, a separate legal entity, without Janmark’s assent to the terms of the contract (absent a claim to pierce the corporate veil). As the James River policy covered Janmark and not Rife LLC, James River had no duty to defend or indemnity Cal Dive, and the claims of Lloyd’s against James River were dismissed.
Sarabeth Witbart, a cosmetologist in the spa on the cruise ship AMERICA’S PRIDE OF AMERICA, brought this suit against the cruise line under the Jones Act and general maritime law (failure to provide maintenance and cure), seeking to recover after she suffered from pain in her neck. Her employer, Mandara Spa, asserted a McCorpen willful concealment defense, and Judge Gayles held an eight-day bench trial, finding that Witbart intentionally misrepresented and concealed her preexisting condition before her employment, that the condition was material to the decision to hire her, and that there was a causal connection between the withheld condition and the condition for which she sought recovery in the suit. On appeal, Witbart argued that Judge Gayles erred in not applying the decision of the Supreme Court in Vaughan v. Atkinson, requiring courts to construe disputed medical evidence in the seaman’s favor in maintenance and cure cases. The Eleventh Circuit rejected the argument as an incorrect reading of Vaughan, stating: “Vaughan did not state that all ambiguities, or even evidentiary ambiguities, were to be resolved in every seaman’s favor. Such a reading would strip district courts of their ability to make credibility determinations when confronted with conflicting evidence during a bench trial. Indeed, this Court ‘must give due regard to the trial court’s opportunity to judge the witnesses’ credibility.’” Concluding that there was no reversible error in Judge Gayles’ findings or rulings, the Eleventh Circuit affirmed the judgment denying Witbart’s maintenance and cure claim. See October 2021 Update.
After the affirmance by the Eleventh Circuit, Mandara Spa filed a motion to tax costs in the amount of $103,855.24; however, Magistrate Judge Otazo-Reyes recommended an award of $12,679.20 for service of subpoenas, deposition and trial written transcripts, but not expert fees, mediation expenses, and copy costs (as no explanation was given).
Unknown third party was responsible for rope hanging from bollard that fouled the propeller of a vessel and caused an allision; In re Plimsoll Marine, No. 19-14757, 2022 U.S. Dist. LEXIS 68023 (E.D. La. Apr. 13, 2022) (Milazzo).
While the M/V OKALOOSA was departing the First Street Wharf in New Orleans with two loaded barges, a rope became entangled in the vessel’s propeller, stopping the engine and causing the vessel to allide with property across the river. The City of Gretna filed a claim in the limitation action filed by the owner of the OKALOOSA, and the owner of the OKALOOSA filed a third-party complaint in the limitation action against the owner and operator of the First Street Wharf (the Board of Commissioners of the Port of New Orleans and Empire Stevedoring). The owner and operator of the wharf moved for summary judgment that there was no evidence that the rope was not debris in the River as opposed to a rope that was hanging from a bollard on the wharf that was owned and operated by the Board and Empire. The Board and Empire presented Judge Milazzo with photographs showing that the line found tied to the bollard after the incident had eyes at both ends (which, they suggested, demonstrated that the rope had not been broken at all). The owner of the OKALOOSA, however, presented the opinion of its expert, Robert Bartlett, who opined that the section of rope that was removed from the OKALOOSA’s propeller and the segment of rope hanging from the bollard at the wharf were from the same rope (the captain of the OKALOOSA also stated that he believed the vessel had caught a line from the wharf). As there was a dispute whether the rope that entangled the propeller of the OKALOOSA was part of the rope hanging from the wharf or was debris floating in the River, Judge Milazzo denied the motion for summary judgment. See March 2022 Update.
Judge Milazzo held a nonjury trial and, believing the captain of the OKALOOSA, found that the rope was tied to a bollard at the wharf about 100 feet upriver from the point where the OKALOOSA was moored. As it was night, the captain could not see how far the rope hung under the water. The fouling of the propeller on the OKALOOSA by the rope was the cause of the tow breaking free from the wharf so that the OKALOOSA drifted to the water intake facility across the river where it contacted dolphins protecting the water treatment pump. Assuming that the LOUISIANA Rule or the OREGON Rule applied in this case to the allision between the OKALOOSA and the dolphins, Judge Milazzo held that the vessel owner had carried its burden to show that the vessel acted with reasonable care. Judge Milazzo then addressed the duty of Empire and the Port to provide a safe berth and to remove hazards from the wharf. As the wharf was closed for the weekend, there were no employees working on the day of the accident, and Judge Milazzo found no fault on the part of the wharf or stevedoring company as they could not have known about the line placed on the bollard while the wharf was closed. As the sole fault was of an unidentified third party that left the line on the bollard hanging into the water, Judge Milazzo dismissed the claims of the City of Gretna as well as the claims of the owner of the OKALOOSA for damage to the vessel.
Seattle Credit Union arrested the M/V ZEN when the vessel’s owner defaulted on its Preferred Marine Mortgage. No claim of owner or answer to the complaint was filed, and defaults were noted against the vessel and its owner, who was sued in personam. Seattle Credit Union then file a motion to foreclose on the lien and to direct the sale of the vessel. Seattle Credit Union offered a “skeletal declaration” from the Member Solution Supervisor for the credit union stating the amount of the payoff balance, late charges, and interest. It also stated an amount for attorney fees, substitute custodian fees, and costs. Judge Rothstein declined to grant the motion, holding that the declaration lacked an explanation how the amounts were calculated, lacked a declaration from counsel to justify the attorney fees, and did not even identify how much was being sought for attorney fees, for custodial fees, and for costs. Judge Rothstein also advised that, when the credit union sought a judgment in personam, it should consider the amount of the sale proceeds and the amount of the deficiency after resolution of the in rem claim.
Failure to file timely claims resulted in default and judgment of exoneration in limitation action; In re G&J Fisheries, Inc., No. 20-11704, 2021 U.S. Dist. LEXIS 71687 (D. Mass. Apr. 14, 2021) (Gorton).
Eduino Costa was injured on the F/V GEORGES BANKS, and the vessel’s owner filed a limitation action in federal court in Massachusetts. The court ordered that all claims be filed by November 18, 2020, and Costa filed an answer on November 17, 2020 but did not file a claim. More than 7 months later, the owner filed a motion for entry of default as to all persons who failed to file claims, and Costa opposed the motion, arguing that his claim was preserved in the answer. Judge Gorton disagreed, stating that the assertion that Costa’s rights were protected by the answer was impossible to reconcile with the plain language of Rule F and the “clear precedent” that claimants must file claims. Alternatively, Costa sought permission to file a late claim, and Judge Gorton noted that the courts freely grant permission to file late claims upon a sufficient showing of reasons therefor. However, Judge Gorton did not find the assertions of Costa’s counsel, in contravention of Rule F and clear caselaw, to present a convincing excuse, stating that “the failure of his counsel to admit to this oversight in either his initial filing or his sur-reply undermines his good faith.” Consequently, Judge Gorton did not permit the filing of the late claim and entered the default. See December 2021 Update. Costa appealed the entry of default to the First Circuit and argued that the proceedings in the district court should be stayed pending resolution of the appeal. Judge Gorton reasoned that Costa had made no effort to meet the burden for a stay, and he was skeptical that Costa could meet the burden even if he tried. He therefore denied the request for a stay. Elizabeth & Niki Fishing Corp. also moved to set aside the entry of default to allow its claim against G&J for indemnity and contribution. Elizabeth & Niki attached a claim but did not ask for leave to submit a late claim. Judge Gorton rejected the claim, noting that Elizabeth & Niki had incorrectly characterized the standard for filing a late claim, which required not just “cause” but “good cause.” Judge Gorton reasoned that the explanation given failed to satisfy the good-cause standard and that Elizabeth & Niki had failed to explain why it had not sought permission earlier. Thus, Judge Gorton entered an order of judgment of exoneration by default.
Pleading ownership of the vessel in the alternative is sufficient for a limitation complaint; In re South Shore Lake Erie Assets & Operations, LLC, No. 1:21-cv-2343, 2022 U.S. Dist. LEXIS 71071 (N.D. Ohio Apr. 18, 2022) (Gwin).
Dr. Frank Opaskar and South Shore Marine were negotiating the purchase of a new boat with the trade-in of Dr. Opaskar’s 33-foot vessel. Dr. Opaskar set out in the vessel across Lake Erie with Christopher Kedas, a salesman for South Shore, and Christopher’s son. The boat’s engine exhaust malfunctioned during the trip, and all three passengers on the boat were found dead on the vessel, probably from carbon monoxide poisoning. There was a dispute whether ownership of the vessel had transferred, and limitation actions were filed by South Shore Marine and Dr. Opaskar’s widow. A separate Rule D action was brought to litigate ownership of the vessel between Dr. Opaskar and South Shore Marine. Three motions to dismiss were filed in the limitation actions, challenging whether the petitioners adequately pleaded ownership of the vessel as both actions denied that the petitioner was the owner of the vessel and claimed the right to exoneration/limitation in the alternative in the event the petitioner was found to be the owner. Judge Gwin held that the constitutional injuries alleged by the petitioners were actual and concrete. The petitioners were subject of suits that had to be defended, and those suits gave the petitioners standing to seek exoneration/limitation. As to whether the pleadings satisfied the Iqbal/Twombly standard for lack of privity or knowledge, Judge Gwin held that, although sparse, the allegations were sufficient.
Judge declined to dismiss limitation action, finding fact question when the shipowner reasonably believed the claim could exceed the limitation fund; In re Chem Carriers Towing, LLC, No. 21-1025, 2022 U.S. Dist. LEXIS 72930 (E.D. La. Apr. 21, 2022) (Brown).
Kai Hollingsworth was injured when the bunk where he slept broke free from the wall of the M/V SAM L. HAYS on June 10, 2020. Hollingsworth’s lawyer notified the owner of the vessel, Chem Carriers, of his representation on September 21, 2020, and requested medical records and demanded maintenance and cure. Chem Carriers provided medical records reflecting Hollingsworth had small bulging discs in his lumbar and cervical spine. Hollingsworth filed suit in Louisiana state court on December 2, 2020, and Chem Carriers filed this limitation action in federal court in Louisiana on May 27, 2021, within six months of the state suit but not within six months of the correspondence with Hollingsworth’s counsel. Hollingsworth moved to dismiss the suit for lack of jurisdiction or, alternatively, for summary judgment that it was not filed within six months of notice. Chem Carriers responded that there was no indication that the value of any potential claim could reasonably exceed the $1.57 million value of the vessel. Chief Judge Brown initially noted that, pursuant to the Fifth Circuit’s recent Bonvillian Marine case, the court had subject matter jurisdiction because the timeliness of the filing did not divest the court of subject matter jurisdiction. Thus, she considered the motion for summary judgment. Chem Carriers had paid less than $9,000 in medical expenses and less than $6,000 in maintenance at the time the state suit was served (.009% of the value of the vessel). Chief Judge Brown considered that the small amount paid raised a genuine fact dispute whether Chem Carriers could reasonably have believed that the claim could exceed the value of the vessel. Accordingly, she declined to grant summary judgment on the timeliness of the limitation action.
When injured passenger settled with the vessel owner and took an assignment of the owner’s claim against its insurer, the claim was subject to the arbitration clause in the policy; Cook v. XL Specialty Insurance Co., No. 21-cv-82186, 2022 U.S. Dist. LEXIS 73166 (S.D. Fla. Apr. 21, 2022) (Reinhart).
Christina Cook was on a charter for the diving vessel DEEP OBSESSION that provides scuba, swimming, and snorkeling services. She was injured off the coast of Palm Beach County, Florida when she was struck by the propellers of the vessel, owned by Deep Obsession LLC. Cook filed two lawsuits in Florida state court against Deep Obsession and settled the first suit for the $1 million limit of a policy issued by Lloyd’s that released Deep Obsession to the extent of that insurance coverage. She settled the second suit with a consent judgment in the amount of $3 million and agreed not to execute on the judgment in exchange for an assignment of rights under Deep Obsession’s Commercial Wet Marine Insurance Policy issued by XL Specialty. Cook then brought this action in federal court in Florida against XL Specialty, and XL Specialty filed a motion to dismiss or, in the alternative, to compel arbitration. Magistrate Judge Reinhart declined to address the policy provision addressing consent to a settlement or the exclusion for scuba activity on a motion to dismiss. After holding that Cook had standing to pursue the declaratory judgment action against XL Specialty, Magistrate Judge Reinhart reasoned that Cook’s claims under the assignment were to require the insurer to indemnify Deep Obsession under the policy. As she was seeking to enforce the policy to the extent it benefitted her, she was bound by the arbitration clause in the policy. Accordingly, Magistrate Judge Reinhart recommended that the contract claim be arbitrated. As to Cook’s bad faith claim, Magistrate Judge Reinhart concluded that judicial economy favored abatement of the bad faith claim until the issue of coverage was resolved in the arbitration proceeding.
Several negligent acts could, when considered together, be sufficient to support a finding of gross negligence; Gonzalez v. Sea Fox Boat Co., No. 2:19-cv-130, 2022 U.S. Dist. LEXIS 73958 (W.D. La. Apr. 22, 2022) (Cain).
This case arises from injuries suffered during an explosion when the plaintiffs were changing out the batteries on a 2014 Sea Fox Commander fishing boat in Louisiana waters [one of the plaintiffs subsequently died from mixed drug intoxication]. The plaintiffs brought this suit in federal court in Louisiana against Sea Fox, which designed and manufactured the vessel, and Yamaha, which sold the engines and water/fuel separating filters (Yamaha asserted that the filters were designed, manufactured, and tested by Dometic Corp./Sierra International). The complaint sought punitive damages. In our December 2021 Update, we discussed Judge Cain’s decision applying Louisiana law for the remedies for the survival action and Arkansas law to the remedies for the wrongful death action. In a subsequent opinion, Judge Cain addressed Yamaha’s argument that its actions/omissions did not rise to the level of egregious misconduct required to sustain a claim for punitive damages. The plaintiffs argued that the filters were defective because the cannister that contains the filtering device used materials that rust or corrode when submerged in water, that the filters are located in an area that allows them to be submerged in water, and that users are not warned that there is a risk that fuel and fuel vapors can be released in the event the filters rust to the point that their integrity is compromised. The plaintiffs argued that Yamaha knew that if the filters were to rust they would corrode and leak fuel and that Yamaha was reckless because it failed to perform design failure analysis on the filters to prevent the corrosion. Yamaha responded that it had sold 1.8 million filters between 2005 and 2020 and only received 4 claims related to corrosion with no claims for injury or death. Yamaha also argued that it could not be held liable for punitive damages for the design, testing, and manufacture of the filters by Dometic/Sierra. However, the plaintiffs demonstrated that Yamaha had played a significant role in the specification and creation of the filter, including removal of the corrosion testing requirement from the final set of specifications. There were also disputes whether testing for corrosion and/or rust was performed and whether the box in which the filter was contained warned of the danger of rust or corrosion. Accordingly, Judge Cain found sufficient evidence to allow the claim for punitive damages to be determined by the fact finder. See March 2022 Update.
Sea Fox also moved for summary judgment on the punitive damage claim, and it fared no better than Yamaha. Sea Fox argued that it complied with all standards and regulations and that its conduct fell short of conduct that constituted gross negligence or callous/reckless disregard for the rights of others. The plaintiffs cited several actions or inactions in manufacturing the vessel that they argued could constitute a pattern of negligence that, taken together, established a reckless or callous disregard for the rights of others (failure to have a build-plan for the boat, failure to have drawings which purportedly matched the manufacture of the boat and placement of the filters, failure to install the filters in the location shown on an inspection report of a similar vessel, installing the filters in a highly corrosive environment, and failure to have warnings of fire and explosion due to fuel leakage). Judge Cain considered the cumulative effect of these negligent acts sufficient to collectively constitute gross negligence.
Judge declined to reconsider ruling that attorney malpractice claims of economic loss claimants from the DEEPWATER HORIZON/Macondo blowout were not untimely; Henry v. Maxum Indemnity Co., No. 20-2995 c/w 20-2997, 20-2998; 2022 U.S. Dist. LEXIS 47443, 48619, 48651, 48652 (E.D. La. April 26, 2022) (Vitter).
After the DEEPWATER HORIZON/Macondo blowout, several attorneys formed a joint venture to solicit and engage subsistence claimants (Gulf Coast residents who harvested fish and seafood in the coastal area for their dietary consumption). Three groups of claimants (Henry, Billiot, and Pierce) brought suits in Louisiana state court after their claims were denied, naming the attorneys and their insurers. The cases, which asserted causes of action for malpractice and fraud, were removed to federal court based on diversity, and the attorneys and insurers filed motions to dismiss the suits because of peremption/prescription under Louisiana law and for failure to sufficiently plead fraud under Rule 9(b). The peremption/prescription issue required Judge Vitter to consider the Mississippi choice-of-law provision in the contracts between the claimants and attorneys. Applying Louisiana choice-of-law principles in the cases removed from Louisiana state court under the diversity jurisdiction, Judge Vitter held that the choice-of-law provision applied to contract claims and not to tort claims arising out of the contractual relationship. As Louisiana law views peremption/prescription as procedural in nature, Judge Vitter applied Louisiana’s one-year prescriptive period for tort actions (and not the statute for legal malpractice claims that applies only to attorneys licensed or duly admitted to practice in Louisiana as none of the attorneys were licensed in Louisiana). As the tort statute only accrued when the claimants had constructive knowledge of the alleged legal malpractice, and as the limitation periods were extended in response to the COVID-19 pandemic, Judge Vitter held that the malpractice claims were not time-barred. However, the fraud pleadings failed to contain specific details of the who, what, when, where, and how of the alleged fraud. Consequently, Judge Vitter held that the fraud pleadings failed to satisfy the standard for pleading fraud under Rule 9(b). As the claimants had been on notice of the deficiencies in their fraud allegations for more than a year and had not sought to correct them, Judge Vitter dismissed the fraud claims with prejudice and without leave to amend. See April 2022 Update.
The attorneys moved for reconsideration of Judge Vitter’s order with respect to peremption, asserting that she committed a manifest error of law in concluding that the legal malpractice claims were not preempted, arguing that the attorneys were “duly admitted to practice” in Louisiana under the Louisiana statute because they were admitted pro hac vice in the Louisiana oil spill litigation. Judge Vitter rejected that argument, however, concluding that Louisiana case law was unclear on the issue whether admission pro hac vice was sufficient to qualify as duly admitted to practice and as Louisiana peremptive statutes are strictly construed against peremption and in favor of allowing the claim to proceed.
From the state courts:
Terminal business that leased a dock to store and transport liquid petroleum products was not a “stevedore” that was subject to the port operator’s tariff for stevedoring; terminal business had an implied contractual right to make use of the road to its tanks, and the port operator could not block access to the tanks; Buckeye Partners, L.P. v. GT USA Wilmington, LLC, No. 2020-255, 2022 Del. Ch. LEXIS 69 (Del. Ch. Mar. 29, 2022) (Laster).
Buckeye Partners leases a dock from the operator of the Port of Wilmington, Delaware, where petroleum is discharged from ships and is piped to fuel storage tanks on property adjacent to the Port. Buckeye’s customers then pick up petroleum from the storage area in tanker trucks. Buckeye has paid a volume-based fee for the petroleum pursuant to its lease for the dock, but the operator of the Port asserted that it had the right to additionally collect from Buckeye a Terminal Usage Fee (assessed on stevedores) based on the volume of cargo loaded and unloaded at the Port’s docks. When Buckeye Partners declined to pay the Terminal Usage Fee, the operator of the Port blockaded the road providing access to Buckeye’s tanks. Buckeye then brought this action against the operator of the Port and sought a preliminary injunction preventing the operator from blockading access to Buckeye’s tanks pending the outcome of the litigation. Concluding that Buckeye had shown a reasonable probability of success on the merits, Vice Chancellor Laster enjoined the operator from preventing Buckeye and its customers from accessing the tanks pending a final ruling on the merits in this litigation. See June 2020 Update. After a three-day trial, Judge Laster held that the terminal business did not fit within the meaning of a “stevedore” within the tariff and did not owe the Terminal Usage Fee. Additionally, Judge Laster held that the terminal business had established an implied contractual right to use the road to the tanks to preserve the spirit of the parties’ bargain.
Maritime law did not apply to air crash in the Atlantic Ocean on flight from Newport, Rhode Island to East Hampton, New York; Maerov v. Long Island Airline, LLC, Index No. 153044/20, Appeal No. 15650, Case No. 2021-03520, 2022 N.Y. App. Div. LEXIS 2119 (N.Y. Sup. Ct. App. Div. 1st Dept. Apr. 5, 2022) (per curiam).
This decision arises from litigation in state court in New York involving the crash of an aircraft into the Atlantic Ocean during a flight from Newport, Rhode Island to its intended destination of East Hampton, New York. Judge Cohen of the Supreme Court of New York County denied the plaintiffs’ motion seeking the application of maritime law, and the Appellate Division, First Department, agreed. The appellate court distinguished transoceanic travel and travel to an unbridged island that could only have been conducted by water vessel before the advent of aviation. Concluding that the flight between Newport, Rhode Island and East Hampton, New York was not one that performed a “function traditionally performed by waterborne vessels,” the Appellate Division held that maritime law did not apply to the crash of the plane into the Atlantic Ocean.
Kenneth G. Engerrand
President, Brown Sims, P.C.
1177 West Loop South
Houston, TX 77027
1100 Poydras Street
New Orleans, LA 70163
2304 19th Street
Gulfport, MS 39501
4000 Ponce De Leon Blvd
Coral Gables, FL 33146
One might think “[h]aving a yacht is a reason for being more cheerful than most.” Litigating the ownership of a yacht, on the other hand, appears distinctly cheerless. Such is the fate of those contesting ownership of a motor yacht registered under the Delaware flag, docked in Turkish waters, and bogged down by litigation since 2016.
Master in Chancery Selena E. Molina, Saltiel v. Alize Yachting Corp., No. 2020-0002, 2022 Del. Ch. LEXIS 311 (Del. Ch. Feb. 23, 2022) (quoting Kurt Vonnegut, Cat’s Cradle (1963)).
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© Kenneth G. Engerrand, April 29, 2022; redistribution permitted with proper attribution.