November 2021 Longshore/Maritime Update (No. 270)
Notes from your Updater:
After Judge Moore granted summary judgment to the cruise line in a suit by a passenger who tripped and fell on a threshold that ran across the deck on the hallway of the Carnival VISTA, Magistrate Judge Becerra recommended that the cruise line be awarded $9,892.62 for the cost of serving subpoenas for medical records and expert witnesses, deposition transcripts and court reporter fees, and copying costs. Magistrate Judge Becerra also awarded post-judgment interest on the costs and declined to stay the judgment pending resolution of the appeal of the granting of summary judgment. Roberts v. Carnival Corp., No. 19-cv-25281, 2021 U.S. Dist. LEXIS 180211 (S.D. Fla. Sept. 21, 2021).
Judge Gleason of the federal district court in Alaska declined to issue a temporary restraining order or preliminary injunction against the United States with respect to the notices of penalties in the hundreds of millions of dollars for violations of the Jones Act with respect to shipments of frozen seafood from Alaska to the ports of the eastern United States, noting that the denial was without prejudice for the plaintiffs to demonstrate that they have filed a rate tariff with the Surface Transportation Board and that they were diligently pursuing administrative remedies. Two weeks later, on October 10, 2021, Judge Gleason issued the temporary injunction. See Kloosterboer International Forwarding LLC v. United States, No. 3:21-cv-00198, 2021 U.S. Dist. LEXIS 185739, 195312 (D. Alaska Sept. 28, Oct. 10, 2021).
In District No. 1, Pacific Coast District, Marine Engineers Beneficial Association v. Liberty Maritime Corp., No. 17-2173, 2021 U.S. Dist. LEXIS 187725 (D.D.C. Sept. 30, 2021), Judge Jackson held that a dispute between the Pacific Coast District of the Marine Engineers’ Beneficial Association and Liberty Maritime Corp. over whether the LIBERTY PEACE was covered by the parties’ collective bargaining agreement was subject to the arbitration clause in the agreement.
Our longsuffering readers are aware of the ongoing litigation throughout the country over the timeliness of the removal of cases from state to federal court when a case was not initially removable. Recognizing that “more guidance” was needed, a panel of the Ninth Circuit adopted the “unequivocally clean and certain” standard in a non-maritime case involving asbestos exposure that was removed under the Federal Officer Removal Statute. Dietrich v. The Boeing Co., No. 19-56409, 2021 U.S. App. LEXIS 29628 (9th Cir. October 1, 2021) (Bennett).
Chief Administrative Law Judge Stephen R. Henley has noted that “Proceedings before the Office of Administrative Law Judges (“OALJ”) involving foreign parties, foreign witnesses, and/or foreign evidence may present complex adjudicative issues, particularly when a party is located outside the territorial jurisdiction of the United States, or when a party seeks to present testimony of a person located outside the territorial jurisdiction of the United States and/or evidence obtained outside the territorial jurisdiction of the United States.” On October 5, 2021, Chief Judge Henley issued the linked Administrative Notice for Cases Involving Foreign Parties, Witnesses, and/or Evidence.
On the LHWCA Front . . .
From the federal district courts:
Longshore worker’s exclusive remedy against the vessel was a negligence action pursuant to Section 905(b) of the LHWCA; Anthony v. Deep South Airboats, LLC, No. 21-1070, 2021 U.S. Dist. LEXIS 186507 (E.D. La. Sept. 29, 2021) (Ashe).
Kendrick Anthony, a longshore worker employed by Weeks Marine, was being transported to his worksite near Port Fouchon and West Belle Pass in Louisiana on a vessel owned and operated by Deep South when the vessel struck a sandbar, throwing Anthony out of the boat. Anthony brought this action in federal court in admiralty against Deep South alleging negligence and unseaworthiness and mentioning res ipsa loquitur and respondeat superior as methods of imposing liability. Anthony also demanded a jury. Reasoning that the exclusive remedy provided against the vessel for longshore workers covered by the Longshore & Harbor Workers’ Compensation is based on negligence under Scindia, Judge Ashe dismissed the unseaworthiness claim; however, he declined to dismiss the allegations of res ipsa loquitur and respondeat superior because they are legal theories in support of negligence and are not independent causes of action. As the claim under Section 905(b) is based on the general maritime law and does not independently confer a right to a jury trial, Judge Ashe struck Anthony’s jury demand.
And on the maritime front . . .
From the federal appellate courts:
Full Fifth Circuit declined to change the panel ruling that cooks and crane operators on a lift boat did not fall within the seaman exception in the FLSA to preclude recovery of overtime; Adams v. All Coast, L.L.C., No. 19-30907 (5th Cir. Sept. 30, 2021) (Clement).
William Adams filed this collective action on behalf of himself and other employees who performed maritime jobs on All Coast’s lift boats. Adams contended that the workers “spent most of their time doing something completely terrestrial: operating cranes attached to the boats to move their customers’ equipment on and off the boats, the docks, and the offshore rigs” (the crane operators were joined in the action by cooks on the liftboats). All Coast contended that the crane operators (and cooks) fell within the seaman exclusion to the overtime rules in the Fair Labor Standards Act, and Judge Milazzo agreed, reasoning that the work served the liftboats’ operation as a means of transportation (the second criterion promulgated by the Department of Labor to determine if an employee is a seaman). Judge Milazzo ruled that it did not matter whether the workers spent 10% or 100% of their time operating the crane, because crane operation is seaman’s work that aids the vessel as a means of transportation. However, Judge Clement, writing for a panel of the Fifth Circuit, noted that an example provided in the regulation stated that assisting in loading or unloading of freight at the beginning or end of a voyage was not connected with operation of the vessel as a means of transportation. The work performed by the crew was performed while the liftboats were stationary, never under weigh, so that the work was not seaman’s work by the language of the regulation. All Coast countered with dictionary definitions of the term seaman from the time of the enactment of the FLSA, because the term seaman is not defined in the FLSA, asserting that the Department of Labor regulations are only persuasive and do not have the force of law. However, after reviewing the various definitions, Judge Clement concluded that they reinforced the thrust of the regulations that a seaman’s duty must serve the ship’s operation “as a ship.” As the work was performed when the liftboats were jacked up, Judge Clement answered that the workers were not engaged in seaman’s work when operating the cranes. The case was therefore remanded to Judge Milazzo to re-evaluate the work performed by the employees. The ruling on the crane operators implicated the summary judgment on the claims of the cooks as well. The Fifth Circuit has held that cooks are usually seamen under the FLSA because they cook for seamen. As the ruling that the crane operators were seamen was reversed, Judge Milazzo would have to reconsider the status of the workers for whom the cooks were cooking. That would include an analysis of whether the cooks were cooking for other workers or passengers on the liftboats and the amount of time spent cooking for seaman and non-seaman (but the court should not conflate the FLSA determination with the duration test enunciated by the Supreme Court in Chandris v. Latsis in deciding whether a worker is a Jones Act seaman). See March 2021 Update. All Coast sought rehearing en banc, but the full Fifth Circuit declined to grant rehearing en banc. The court did withdraw the previous opinion and Judge Clement issued a substituted opinion in which she held that the crane operators were seamen when they performed nautical tasks when the lift boats were under weigh and even when the boats were jacked up. However, their duties operating the cranes were not the work of seamen for the FLSA, distinguishing work for the upkeep or maintenance of the boats or cranes. Essentially, the workers “were not performing duties that were necessary to the operation of the liftboats as boats, but merely as platforms for the hydraulic cranes.” With respect to the cooks, Judge Clement noted that a cook is a seaman when he cooks for seamen. On remand, Judge Milazzo will have “to determine how much time the cooks spent preparing food for the crew when they were not performing seamen’s work, and how much time they spent preparing food for non-crew members.” Judge Jones, joined by Judge Elrod, dissented, reasoning that “crane operations are a sine qua non of the liftboat’s function as a means of transportation.” She believed that the court’s holding upended the longstanding expectations as to the seaman exemption and cautioned that the ”splice and dice” interpretation of the exemption rendered it “practically worthless.”
Fifth Circuit rejected Indian seaman’s efforts to avoid arbitration for accident in the past century; Neptune Shipmanagement Services PTE, Ltd. v. Dahiya, No. 20-30776 (5th Cir. Oct. 1, 2021) (Costa).
Judge Costa echoed the sentiment in the quote at the end of this month’s Update in the first sentence of his opinion, quoting a decision from the Fifth Circuit that “arbitration does not always fulfill its goal of avoiding court and ‘increas[ing] the speed of dispute resolution.’” Vinod Kumar Dahiya, an Indian national who was serving as an engine cadet on the M/T EAGLE AUSTIN, was injured in international waters in 1999. He brought suit against the vessel interests in Louisiana state court in 2002, and the defendants removed the case to federal court pursuant the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) invoking the arbitration clause in his contract that called for arbitration in India or Singapore. Judge Feldman remanded the case, and the Fifth Circuit held that the remand order was unreviewable. Dahiya then obtained a judgment of $579,988 in state court, but the state appellate court reversed the award and ordered Dahiya to arbitrate his claims in India. The Indian arbitration resulted in a judgment of approximately $130,000 on January 25, 2020, and Dahiya thereafter moved the Louisiana state court to reinstate the original judgment or to grant him a new trial. The vessel interests then removed the case a second time and also filed a suit in federal court to confirm the award. Holding that the second removal was timely and that the case was not removed on the same ground as the first removal, Judge Feldman held that the removal was permissible, and he denied the seaman’s motion to remand. See October 2020 Update. In federal court, Dahiya “press[ed] on in an increasingly quixotic bid to win greater damages in the United States;” however, Judge Feldman “end[ed] that effort.” He confirmed the arbitration award and enjoined all pending or future legal actions arising from Dahiya’s injury in 1999. Dahiya appealed to the Fifth Circuit from the new federal action that confirmed the award. Dahiya argued that the district court lost jurisdiction to enforce the award when it remanded the pre-arbitration case to state court in 2002. Judge Costa disagreed, reasoning that the federal action to confirm the award was never pending in state court and was a new action based on a different set of facts—confirmation of an award. Judge Costa also rejected the argument that the new suit was an impermissible collateral attack on the remand order for two reasons. First, the order of remand in the removed action was not the same as an action to confirm an award under the New York Convention where federal law affords original jurisdiction. Second, an unappealable ruling, such as a remand order, does not give preclusive effect. The decision of the state courts, that Dahiya’s case was subject to arbitration, was conclusive, however, with respect to the arguments made by Dahiya that the arbitration clause was invalid because it was not signed by Neptune and because the other defendants were not party to the document. Judge Costa concluded, “Having secured an arbitral award for his injuries, Dahiya cannot now double dip via litigation.”
Objections to formation of yacht charters were insufficient to prevent enforcement of arbitration clauses in the charters; Cheruvoth v. SeaDream Yacht Club Inc., No. 20-14450 (11th Cir. Oct. 6, 2021) (per curiam).
Ramesh Cheruvoth, a citizen of Saudi Arabia, signed two contracts to charter a yacht (on behalf of Abdullah Saleh Kamel) with SeaDream Yacht Club. He paid the required deposits, but Mr. Kamel was unable to embark on the planned charters because he was detained by the Saudi Arabian government. Cheruvoth then brought suit in federal court in Florida, seeking return of the deposits on various quasi-contract theories. Although the suit was not based on the contracts, SeaDream invoked the Norwegian arbitration clause in the contracts applicable to all disputes arising out of or in connection with the agreements. Cheruvoth argued that the contracts were never formed because the parties failed to fulfill conditions precedent. Judge Gayles granted SeaDream’s motion to compel arbitration, and Cheruvoth appealed to the Eleventh Circuit. Although the appellate court first held that the arguments about conditions precedent did not go to the threshold issue of contract formation, the court held that the charters were actually formed. The first charter provided that it was not binding until signed by both parties and returned with a mutually agreed deposit by August 4, 2017. Cheruvoth argued that it was not binding because it was not signed by the stated deadline; however, the court held that the tardy signature was not an impediment to the formation of the charter because there was substantial compliance with the condition when it was signed and returned only five days after the deadline. Cheruvoth cited the provision in the second charter that the agreement had no effect unless a fully executed original copy was received by SeaDream at its executive offices together with the original letter of credit by the date set forth. A copy was returned, however, and the agreement provided that a copy was sufficient. As to the provision for the letter of credit, the parties agreed not to require delivery of a letter of credit. Consequently, there was no impediment to the formation of the charters. Accordingly, the appellate court affirmed the decision compelling arbitration under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Appellate court lacked jurisdiction of seaman’s appeal of decision compelling arbitration; Martinez v. MSC Cruises S.A., No. 21-12935, 2021 U.S. App. LEXIS 30301 (11th Cir. Oct. 8, 2021) (per curiam).
Darwin Humberto Cortez Martinez, a citizen of El Salvador, claimed to suffer from aggravations of his kidney and cardiovascular injuries while serving as a crewmember of the MSC POESIA. His employment was subject to a collective bargaining agreement between MSC and an Italian trade union that contained a London arbitration clause. However, his employment contract contained a forum-selection clause (also a Panama choice-of-law clause) requiring disputes related to his employment on the vessel to be adjudicated in Panama, where the vessel was flagged. Martinez brought this action in federal court in Florida under the Jones Act and general maritime law, and MSC moved to compel arbitration. Martinez argued that the arbitration and forum-selection clauses conflicted, but Judge Singhal noted that the employment contract provided in the sentence following the forum-selection clause that all rights and obligations within the collective bargaining agreement applied to the employment contract. As the collective bargaining agreement expressly required arbitration of the claims in the suit, Judge Singhal held that the New York Convention (Convention on the Recognition and Enforcement of Foreign Arbitral Awards) was applicable. He therefore entered an order that compelled arbitration and stayed the case pending arbitration. See October 2021 Update. Martinez appealed the order of Judge Singhal compelling arbitration, but the Eleventh Circuit, sua sponte, dismissed the appeal for lack of jurisdiction. The appellate court noted the distinction between a case in which there is an order compelling arbitration and dismissing the case (which is final and appealable) compared to an order compelling arbitration and staying the case pending arbitration. As the latter order, which was entered in this case, is not immediately appealable, the Eleventh Circuit lacked jurisdiction.
Court upheld repair lien on vessel that had been out of service and on land for a year; award included work orally approved outside of the written contract; American Marine Tech, Inc. v. World Group Yachting, Inc., No. 21-11336, 2021 U.S. App. LEXIS 30660 (11th Cir. Oct. 14, 2021) (per curiam).
World Group Yachting entered into a written contract for American Marine Tech to perform engine work on the M/Y ALCHEMIST, a recreational yacht owned by World Group Yachting. The yacht was inoperable and had sat on land with a nonoperational engine for about a year, but the owner sought to sell the yacht once its engine had been repaired. A dispute arose over the amount that was owed as AMT performed additional work beyond what was in the written contract. AMT then brought this action against WGY, in personam, and the yacht, in rem. After a bench trial, Judge Singhal addressed whether there was admiralty jurisdiction to support the claims and held that AMT had established a maritime lien on the vessel for the costs incurred for the repairs under the written and oral contracts. The Eleventh Circuit agreed that the yacht did not cease to be a vessel “simply because she sat on land for some time” and that there was admiralty jurisdiction and a lien for necessaries. The appellate court also affirmed the findings of the amount of the lien, reasoning “that although WGY signed only the engine-replacement cost estimate, AMT’s other work was part of the parties’ agreement because it was necessary to reach the parties’ express goal: a total repower of the ALCHEMIST.” Finding that WGY requested additional work separate from that described in the cost estimate, the court affirmed the judgment awarding more than the cost estimate.
Mutual release of claims between the United States and a ship repairer related to the contract for repair of one vessel precluded litigation for the Government’s withholding of funds in a second repair contract when the funds were withheld based on the late delivery of the first vessel; East Coast Repair & Fabrication, LLC v. United States, No. 20-2146, 2021 U.S. App. LEXIS 30722 (4th Cir. Oct. 14, 2021) (Motz).
East Coast Repair entered into contracts with the United States for repair of the THUNDERBOLT, TEMPEST, and the HURRICANE. The United States alleged that East Coast delivered the TEMPEST late for which the United States was entitled to liquidated damages of $474,600. As the United States had already paid for all of the work on the TEMPEST (except $1,000), the United States withheld $473,600 from the amounts due for the work on the HURRICANE. East Coast brought an action against the United States under the TEMPEST contract and also proceeded administratively with respect to the amounts due under the HURRICANE contract. After the parties settled the claims involving the TEMPEST and entered into mutual releases, East Coast brought this action against the United States seeking to recover under the HURRICANE contract, including the amounts withheld for the late delivery of the TEMPEST. The district court dismissed the suit for lack of jurisdiction because East Coast had asserted the setoff in the administrative proceeding and because it was barred by the release. Rather than tackling the difficult jurisdictional question related to the administrative proceeding, the Fourth Circuit affirmed the dismissal based on the release. As East Coast released the United States from liability for all claims arising out of or relating to the TEMPEST contract, the appellate court agreed that the setoff arising from the late delivery of the TEMPEST was part of the release, which barred East Coast’s claim in the suit involving the HURRICANE contract.
Suits by BELO claimants who had actual and constructive knowledge of the running of the limitation period because of BP’s election not to mediate were barred; In re: DEEPWATER HORIZON, No. 20-30673 (5th Cir. Oct. 19, 2021) (per curiam).
This appeal involves the claims of three members of the Medical Benefits Class Action Settlement in connection with the DEEPWATER HORIZON/Macondo blowout, who brought Back-End-Litigation Option claims for conditions that were diagnosed after April 16, 2012. The process for the BELO claims required the claimant to submit a Notice of Intent to the claims administrator, and BP was required to decide within 30 days whether to mediate the claim. If BP decided not to mediate the claim, the claimant had six months to file the BELO suit. BP decided not to mediate the claims of Darleen Moore, Barry Dumolin, and Judy Jones, and BP contended that it issued its notices of the elections on November 2, 2018 by uploading the notices to the online Attorney Portal. The class members asserted that they did not receive the notices until 2020 and that their suits were filed within six months of that receipt. However, the attorneys had access to the Portal, their counsel periodically logged into the Portal, and the plaintiffs conceded that they had knowledge of the notices more than a year prior to their suits, even if they denied receiving mail copies of the notices in 2018. Based on that actual and constructive notice, the Fifth Circuit affirmed the decision of Judge Barbier that the cases were barred. Additionally, the Fifth Circuit agreed that equitable tolling could not be used to extend the time to file suit as the plaintiffs had not exercised diligence.
From the federal district (and bankruptcy) courts:
Valladolid substantial nexus test for causation applied in OPA cases; Judge found a fact question based on initial discovery for economic losses of a vehicle rental business whose financial records did not establish a loss after the DEEPWATER HORIZON/Macondo blowout but rejected claims based on new ventures that were mere ideas; In re Oil Spill by the Oil Rig “DEEPWATER HORIZON” in the Gulf of Mexico, on April 20, 2010, Classy Cycles, Inc. v. BP P.L.C., No. 16-05923, 2:10-md-2179, 2021 U.S. Dist. LEXIS 172677 (E.D. La. Sept. 7, 2021) (Barbier).
Classy Cycles rents street-legal golf carts, mopeds, and motorcycles in Panama City Beach, Florida. As its business is based on tourism, Classy Cycles filed a claim against BP under the Oil Pollution Act of 1990 and the general maritime law for loss of business after the DEEPWATER HORIZON/Macondo blowout caused a reduction of tourists in Panama City Beach. Classy Cycles also asserted that it would have opened car washes and purchased an investment property known as Party Shack West were it not for the oil spill. Citing Classy Cycles’ financial statements and tax returns, which reflected that it earned more money in the months after the spill compared to the same months the year before the spill, BP moved for summary judgment, arguing that there was insufficient evidence of any causally connected economic loss. Before addressing OPA, Judge Barbier dismissed the claims under the general maritime law as Classy Cycles did not assert that it suffered any direct physical damage to its property under the Robins Dry Dock/economic loss rule. Classy Cycles responded on the OPA claim with deposition testimony and sworn declarations from its owners that the financial records reflecting that there was an increase in income were incorrect because one of the owners and his father had loaned money to the business in 2010 to keep it afloat and the money was mistakenly recorded as revenue. BP argued that the testimony and declarations should not be considered under the sham affidavit rule, but Judge Barbier noted that only limited discovery had been permitted under the pre-trial order and that he would not grant summary judgment at this time. Judge Barbier did warn, however, that Classy Cycles would need to establish through documents, such as bank records, the full amount it claims to have received in loans. Judge Barbier did grant summary judgment on the claims that the oil spill prevented Classy Cycles from starting other businesses for two reasons. First, the business did not disclose the lost opportunity claims in accordance with the court’s pre-trial order. Second, Judge Barbier agreed with BP that the plans for these new ventures, “which were mere ideas without any written business plans, signed agreements, or financing,” were impermissibly speculative. Finally, Judge Barbier addressed the standard of causation for an OPA economic loss claim (Section 2702(b)(2)(E) permits loss of profits “due to the injury, destruction, or loss of real property, personal property, or natural resources”). BP has argued that the losses must be proximately caused by the oil spill; the claimants have argued that only but-for causation is required. Concluding that Congress was probably aware of both standards and adopted neither and that but-for causation “could lead to a perpetual domino effect of ‘infinite liability,’” Judge Barbier adopted a “Goldilocks standard” that is “looser than ‘proximate cause’ yet tighter than ‘but for’” causation. He found that standard in the substantial nexus test chosen by the Supreme Court in Pacific Operators Offshore, LLP v. Valladolid, for the extension of the LHWCA to injuries “occurring as the result of operations conduction on the outer Continental Shelf.” Consequently, Judge Barbier held that “there must be a significant causal link between the injury, destruction, or loss of property or natural resources and the plaintiff’s lost profits or impaired earning capacity.” Applying that standard to this suit, Judge Barbier stated that “if a fact-finder determined that the oil spill’s injury to water and/or beaches caused fewer tourists to travel to Panama City Beach and further determined that Classy Cycles lost profits because of the decline in tourists, then this Court would hold that the ‘substantial-nexus’ test is satisfied.
Insurer’s shotgun claims in limitation action for damage to vessels had to be repleaded, but the insurer was not entitled to a jury trial; In re Lohengrin, Ltd., No. 20-60970, 2021 U.S. Dist. LEXIS 184829 (S.D. Fla. Sept. 27, 2021) (Smith).
Lohengrin, Ltd., owner of the motor yacht LOHENGRIN, filed this limitation action after a fire broke out on the vessel while it was docked at the Universal Marine Center in Fort Lauderdale, Florida. Travelers, insurer for two vessels that were damaged from the fire, brought claims in the limitation action. As the negligence count asserted multiple theories of liability (negligence, negligence per se, gross negligence, and negligent hiring, retention, and supervision), Judge Smith gave Travelers leave to file amended claims asserting separate causes of action for each theory of liability. Travelers sought a jury trial on its claims in the limitation action based on the saving-to-suitors clause, but it had not filed an action in state court at the time the stay was issued. Travelers proposed that the court order a stay of the limitation action to enable it and other claimants to determine whether they could agree to stipulations to pursue their claims in state court. Judge Smith declined to grant the stay in the case as it had been pending for more than a year. Thus, he held that Travelers’ claims for a jury trial were stricken and could not be resurrected in an amendment to its claims.
Submission of claims to the United States for deaths and injuries of boaters at the W.D. Mayo Lock and Dam #14 in the McClellan-Kerr Arkansas River Navigational System under the Federal Tort Claims Act did not equitably toll the statute of limitations under the Suits in Admiralty Act; Farhat v. United States, No. 19-401, 2021 U.S. Dist. LEXIS 190474 (E.D. Okla. Sept. 27, 2021) (Shreder).
William, Kristy, Physher, and Weston Farhat were boating in the McClellan-Kerr Arkansas River Navigational System approximately half a mile west of the W.D. Mayo Lock and Dam No. 14 when their boat’s motor failed and they were pulled under the gates, resulting in the deaths of William, Kristy, and Physher Farhat and injuries to Weston Farhat. Administrative claims were filed against the United States Army Corps of Engineers under the Federal Tort Claims Act, but the Corps had not made a final determination on the claims before the plaintiffs filed this action under the FTCA more than two years after the accident. The United States moved to dismiss the case for lack of jurisdiction, asserting that the case fell within the Suits in Admiralty Act, which has a two-year statute of limitations, arguing that the untimely filing was a jurisdictional defect. Alternatively, the United States moved to dismiss the case for failure to state a claim (based on the statute of limitations). Magistrate Judge Shreder agreed that the Suits in Admiralty Act was applicable with its two-year limitations period, but he did not agree that the failure to file within that time deprived the court of jurisdiction. Therefore, he addressed the plaintiffs’ argument that the United States was equitably estopped from asserting the statute of limitations on the ground that the Corps had induced the plaintiffs to believe that the statute of limitations was tolled until the Corps acted on their administrative claim (merely filing a claim under the FTCA does not toll the limitations period for an action under the SIAA). Noting that the defense was raised as a motion to dismiss, Magistrate Judge Shreder declined to consider the evidence in support of equitable tolling as it was not contained in the complaint. Therefore, he ordered that the case should be dismissed but that the plaintiffs should be given leave to file an amended complaint to assert the basis for equitable tolling. See October 2020 Update. After the filing of the amended complaint, the United States again moved to dismiss the complaint for failure to state a claim (asserting the claims were time barred under the SIAA and that the plaintiffs had not alleged facts sufficient to support the application of the equitable tolling doctrine. Magistrate Judge Shreder first held that there was no implied-in-fact contract with respect to the SIAA. The correspondence from the United States was with respect to the effect of the filing of an administrative claim under the FTCA and the effect that the FTCA permitted the filing of a suit six months after the claim was filed. It did not address the effect of the filing of the FTCA claim on the deadline to file an action under the SIAA. There was no basis for equitable tolling because the plaintiffs did not exercise diligence to file a timely suit, as research would have demonstrated that the filing of the FTCA action did not toll the two-year limitation period in the SIAA. Consequently, Judge Shreder dismissed the suit on the merits as time barred.
Passenger’s failure to give written notice of claims within the time limits in the ticket resulted in dismissal of his suit; Carter v. BPCL Management, LLC, No. 19-60887, 2021 U.S. Dist. LEXIS 186147 (S.D. Fla. Sept. 28, 2021) (Dimitrouleas).
Paul Carter was a passenger on Paradise Cruise Line’s GRAND CELEBRATION. Carter asserted that he became ill and sustained other injuries after drinking the tap water on the vessel, and he brought this action against the cruise line for negligence, violation of the Florida Deceptive and Unfair Practices Act, and violation of the Telephone Consumer Protection Act. Citing the requirements in the ticket that no suit may be maintained against the cruise line unless the passenger provided written notice of an injury claim within six months and written notice of a non-injury claim within 30 days, the cruise line moved for summary judgment on the claims. Judge Dimitrouleas first held that the ticket provided adequate notice of the procedural requirements and that the passenger had the opportunity to become meaningfully informed of the terms. Judge Dimitrouleas then addressed the passenger’s argument that he gave notice of his claims to employees while he was on the vessel. As the ticket required written notice be provided, Judge Dimitrouleas rejected the passenger’s argument and granted summary judgment that the passenger take nothing.
Economic loss rule barred tort claims from vessel sinking after repair work; Atlantic Specialty Insurance Co. v. General Ship Repair Co., No. 19-3194, 2021 U.S. Dist. LEXIS 186894 (D. Md. Sept. 29, 2021) (Blake).
Raven Power Barge Co. entered into an agreement with General Ship Repair Corp. to perform work on the MISS T, including drydocking the vessel, polishing the propellers, pumping and cleaning the bilges, blasting/power washing, painting, renewing zinc anodes, repairing wasted steel before painting, cleaning the aft void, and repairing two doors. GSR performed the work (except for the steel repairs), and the vessel departed the shipyard. Nine days later, the vessel sank at Hawkins Point, Maryland, because the deck hatches were not properly dogged down in a watertight fashion or had no gaskets. Raven Power’s insurer paid for repairs and brought this action against GSR to recover for damage to the MISS T. The contract between the owner and shipyard contained a red-letter clause that required suit be filed within a year of completion of the work. As the suit was not brought within a year, the parties agreed to dismissal of the contract claims. GSR then sought to dismiss the tort claims based on the economic loss rule, but Raven Power argued that it was entitled to recover economic loss for damages to parts of the vessel that are outside the scope of the contract. Judge Blake first followed the authority from the Fifth Circuit that the economic loss rule applies to contracts to provide vessel repair services. She then considered the question whether the contract was for a vessel overhaul or merely for a paint job and renewed zinc anodes. Reasoning that the contract contemplated activity throughout the entire vessel, Judge Blake held that the economic loss rule should apply even to portions of the vessel not mentioned by name in the contract that were part of the contract’s overall subject. Concluding that the suit belonged in the world of contract and not tort, Judge Blake dismissed the negligence claim.
Marine insurer did not have duty to declare vessel a total loss without abandonment, but the insurer could be liable for breach of the duty of utmost good faith; Polar Vortex, LLC v. Certain Underwriters at Lloyd’s, London, No. 20-61978, 2021 U.S. Dist. LEXIS 187516 (S.D. Fla. Sept. 29, 2021) (Smith).
Polar Vortex insured its Fontaine Pajot catamaran sailing vessel for hull and P&I coverage with an agreed value of $1 million. During Hurricane Irma, the vessel broke loose from its moorings, was impaled on a piling, and sank. The owner undertook its obligations to lift and haul the vessel to a shipyard under the salvage and sue-and-labor provisions of the policy, and there was lengthy discussion about whether the vessel was a constructive total loss (cost of recovering and repairing the vessel would exceed the agreed value). The insurer’s representatives insisted that the vessel was repairable, and the owner proceeded with the repair process until its total expenditures exceeded $1.2 million. The owner then submitted a Notice of Tender of Abandonment and Sworn Proof of Loss, which was rejected by the insurer. The owner brought this action in federal court in Florida on several grounds, and the insurer moved to dismiss the count asserting a breach of contract for the insurer’s failure to declare the vessel a constructive total loss. Judge Smith agreed that the insurer did not have an obligation to declare the vessel a total loss and that the allegations in the complaint improperly shifted the burden to the insurer. However, Judge Smith noted that if a tender would have been futile, a failure to tender does not block recovery for a constructive total loss. He gave the owner leave to replead the allegations. Similarly, Judge Smith gave the owner leave to replead the allegations with respect to breach of contract in the second count that the insurer did not pay the claim after the tender. The complaint did not allege that the owner made a claim for the damages related to the tender. Judge Smith did conclude that the allegations of breach of the duty of utmost good faith (uberrimae fidei) were sufficient with respect to communications from the insurer about the feasibility of repairing the vessel, complete and accurate assessment of the damages and repair costs, and policy provisions. Finally, Judge Smith dismissed the request for attorney fees as there was no pleading of facts supporting bad faith that would allow an award of fees.
Trial resolved disputes between vessel purchaser and seller over fire on the vessel; Hatteras/Cabo Yachts, LLC v. M/Y EPIC, No. 4:17-cv-25, 2021 U.S. Dist. Lexis 187559 (E.D.N.C. Sept. 29, 2021) (Britt).
Hatteras entered into a sales contract with Spisso as agent for Acquaviva to construct a yacht. After Spisso filed suit for breach of contract and warranties, the parties entered into a settlement agreement for a purchase/sale of another yacht. The day after Spisso arrived to take possession, the yacht (EPIC) caught fire with him and his guests onboard, and the vessel was returned to shore where it remained in custody of Hatteras. Hatteras offered to repair the damage, but Spisso refused to take possession, and Hatteras incurred costs for which it brought suit against the yacht and Acquaviva. Acquaviva (and Spisso as an intervenor) brought a fifteen-count counterclaim against Hatteras and two other entities, and the claims were tried to Judge Britt. Spisso argued that he had justifiably revoked his acceptance of the EPIC and could not be liable for necessaries after title had transferred back to Hatteras. Finding that the attempt to revoke acceptance was objectively unreasonable, Judge Britt held that Spisso and Acquaviva were liable for the necessaries for which Hatteras provided sufficient evidence in support. Concluding that the Hatteras express limited warranty for the EPIC met the legal requirements necessary to disclaim implied warranties of merchantability and fitness under North Carolina law, Judge Britt rejected Spisso’s implied warranty claims. Noting that the claim for the fire on the vessel did not constitute a claim for breach of the express warranty, Judge Britt held that the only express warranty claim was for repair or replacement of defective parts or materials, and there was no evidence of the cost of repairing the EPIC’s alleged defective fire system. Judge Britt also declined to find that Hatteras was negligent, that it had wrongfully possessed or converted the EPIC, that it had violated an implied covenant of good faith and fair dealing under North Carolina law, or that it had committed a deceptive trade practice under North Carolina law. Therefore, Judge Britt entered judgment in favor of Hatteras for the value of the necessaries it had provided.
Federal court lacked admiralty jurisdiction over suit to quiet title to vessel that the owner claimed was fraudulently sold; Aquarius Aqua USA, Inc. v. M/Y VOGUE/JIMBO, No. 20-22281, 2021 U.S. Dist. LEXIS 190125 (S.D. Fla. Sept. 30, 2021) (Cooke).
Aquarius Aqua purchased the M/Y VOGUE/JIMBO yacht and had it transported to the United States where it was registered in Delaware. Aquarius Aqua contracted with Petho Axel to care for, maintain, and charter the vessel when Aquarius Aqua was not using it. Eventually, Aquarius Aqua discovered that the vessel had been sold and mortgaged several times, with the documentation registered with the Coast Guard. Aquarius then brought this action in federal court in Florida to quiet title to the vessel and for breach of contract, unjust enrichment and conversion against Petho Axel. Petho Axel moved to dismiss the complaint for lack of admiralty jurisdiction and laches, and Judge Cooke reasoned that there must be a maritime question in order to support a Rule D possessory/petitory suit. As the underlying issues for the suit to clear title involved purchase agreements for the vessel, Judge Cooke held that Aquarius Aqua had not established admiralty jurisdiction for the claim to quiet title, and she dismissed that count in the complaint.
Vessel purchaser failed to state claims against the seller of the vessel for fraud, racketeering, unjust enrichment, and rescission; Francois v. Hatami, No. 21-cv-22528, 2021 U.S. Dist. LEXIS 189511 (S.D. Fla. Oct. 1, 2021) (Scola).
Mazyer Hatami entered into a contract to sell the M/V HOPE II to Charite Francois. Although there were representations about the vessel’s condition and operability, the sale was made “as is, where is” with no warranties. Almost four years later, Francois brought this suit in Florida state court against Hatami, based on fraud, racketeering, unjust enrichment, and rescission, claiming that the boat was “essentially worthless.” Hatami removed the case to federal court based on federal question with respect to the RICO allegations and moved to dismiss the action. Judge Scola agreed and dismissed the complaint. He concluded that the allegations of an enterprise and pattern of racketeering for the state and federal RICO claims were conclusory and did not state a claim. Judge Scola dismissed the claim of fraud in the inducement as the addendum to the agreement (providing that the buyer accepted the vessel as is, where is and had no responsibility for repairs) reflected that Francois could not have relied on representations concerning the state of the vessel and repairs that would have to be made. Judge Scola dismissed the claim for conspiracy to commit fraud as Francois did not adequately plead an agreement between two or more parties and did not plead any overt acts. As Francois pleaded that there was a contract between the parties, Judge Scola dismissed the unjust enrichment count (Francois did not plead unjust enrichment as an alternative to the existence of a contract). Finally, Judge Scola dismissed the claim for rescission as Francois did not allege a mutual mistake. The dismissal was without prejudice, but Judge Scola did not grant leave to replead the allegations as Francois’ request was contained in his opposition to the motion to dismiss and not in a motion for leave to file an amended complaint.
Claim of wrongful seizure of vessel and conversion of fuel oil stated a claim for maritime tort to support attachment/garnishment; Preble-Rish Haiti, S.A. v. Republic of Haiti, No. 4:21-cv-01953, 2021 U.S. Dist. LEXIS 190669 (S.D. Tex. Oct. 4, 2021) (Ellison).
Preble-Rish Haiti claimed that it was owed more than $27 million for fuel delivered to Haiti by vessel and consequential damages and commenced an arbitration in New York pursuant to the arbitration clause in the contracts between the parties. However, Preble-Rish sought security for the arbitration and tried to garnish/attach funds in the possession of BB Energy, located in Houston, that were designated for payment to Haiti. BB Energy sought to invoke sovereign immunity on behalf of debtor Haiti, and Judge Ellison held that BB Energy had standing to assert Haiti’s assertion that it was immune from prejudgment attachment/garnishment. The parties argued about whether there was admiralty jurisdiction, but Judge Ellison reasoned that the jurisdiction inquiry began and ended with the Foreign Sovereign Immunity Act because it is the sole basis for jurisdiction over foreign sovereigns, such as Haiti. Turning to the immunity issues, Judge Ellison first held that the arbitration provisions in the contracts between the parties demonstrated the intent to waive foreign sovereign immunity from suit. Judge Ellison then discussed the exception to the general rule in the FSIA that sovereigns are immune from prejudgment attachment and held that the exception was established because the property was used for a commercial activity in the United States, Haiti had agreed to provide security in the contracts, and the purpose of the attachment/garnishment was to secure satisfaction of a judgment and not to obtain jurisdiction. Therefore, Judge Ellison denied the motion to dismiss the attachment, but stayed the proceedings pending developments in the arbitration proceeding (whether the contracts were maritime in nature). See September 2021 Update. Judge Ellison gave Preble-Rish leave to amend its complaint to include maritime tort claims and then addressed whether the tort claims were maritime. Preble-Rish asserted that Haiti had wrongfully seized the MT AQUILA L, converted her shipment of fuel oil, and failed to pay for the oil. Noting that the wrongs took place on navigable waters at or near the coast of Haiti and that the conversion of the cargo of fuel oil had the potential to disrupt maritime commerce, Judge Ellison concluded that the court had admiralty jurisdiction. Consequently, he ordered garnishee BB Energy to provide a list of Haiti’s assets in its possession and to provide a corporate representative to testify concerning property of Haiti in its possession and a description of handling and transfers of the property.
In the New York action between the parties, discussed in the October 2021 Update, Preble-Rish filed an attachment action seeking to attach/garnish funds in a Citibank account in the name of a Haitian governmental agency. After discovering that the name of the account was in the name of the central bank of Haiti, the attachment was supplemented, and the bank sought to intervene and to vacate the attachment. Preble-Rish did not argue that the bank had waived its immunity from attachment and instead argued that the bank did not hold the funds for its own account so that its immunity did not apply. However, Judge Castel held that Preble-Rish did not establish that the bank was acting solely as an intermediary facilitation a payment, noting that accounts that are used for mixed purposes are immune from attachment, even if used for commercial purposes. Consequently, Judge Castel vacated the attachment. Preble-Rish Haiti, S.A. v. Republic of Haiti, No. 21-cv-4960, 2021 U.S. Dist. LEXIS 167927 (S.D.N.Y. Sept. 3, 2021). On October 5, 2021, Judge Castel declined to grant a stay of the court’s order vacating the attachment pending appeal to the Second Circuit, but he did grant a temporary stay so that Preble-Rish could apply for a stay to the Second Circuit. 2021 U.S. Dist. LEXIS 191986 (S.D.N.Y. Oct. 5, 2021).
Jones Act defendant could not use forum-selection clause in seaman’s employment agreement with a different entity; Lopez v. CMI Leisure Management, Inc., No. 21-cv-22001, 2021 U.S. Dist. LEXIS 190606 (S.D. Fla. Oct. 4, 2021) (Bloom).
Miguel Angel Sarmiento Banegas was a Honduran citizen who was working on the MV WORLD ODYSSEY. Asserting that his employer, CMI Leisure Management, failed to provide him prompt and adequate medical care for malaria or a similar disease, resulting in his death, his personal representative brought this action in federal court in Florida against CMI Leisure Management under the Jones Act, general maritime law, and the Death on the High Seas Act. The defendant moved to dismiss the claim based on the Bahamian forum-selection clause in the seaman’s employment agreement with CMI Leisure, Ltd., a non-party to the suit. As the jurisdiction issue was presented by a motion to dismiss the complaint, Judge Bloom considered whether the employment agreement, which was not referenced in the complaint, was necessary or central to the claims that were asserted. Noting that the agreement was with a non-party to the suit, Judge Bloom held that the agreement could not be central to the Jones Act claim against CMI Leisure Management and that an employment agreement was not necessary for the maritime and DOHSA claims. Without the forum-selection clause, Judge Bloom held that venue was proper in the Southern District of Florida, where the defendant resides.
Judge transferred seaman’s case from Nebraska, where the accident occurred, to Kentucky, the state where the employer’s operation is located; Smith v. River Marine Enterprises, LLC, No. 8:21-cv-255, 2021 U.S. Dist. LEXIS 191145 (D. Neb. Oct. 4, 2021) (Zwart).
Wilburn Frank Smith, a resident of Louisiana, was injured while serving on River Marine’s GENERAL ASHBURN on the Missouri River in Nebraska. The administrator of his estate, an Alabama resident, brought this suit under the Jones Act and general maritime law in federal court in Nebraska, and River Marine, which operates out of Paducah, Kentucky, moved to transfer the case to the Western District of Kentucky. The Administrator did not oppose the motion, and Magistrate Judge Zwart considered the facts to determine whether the transfer would advance the convenience and fairness of the proceedings. Although the accident occurred in Nebraska, there were no witnesses from Nebraska and the parties had no connection to Nebraska. As the defendant’s land-based employees worked in the Paducah office (other employees lived throughout the United States), records related to the accident are located in the Paducah office, and the defendant no longer operates in Nebraska, Magistrate Judge Zwart transferred the case to the Western District of Kentucky.
Sexual assault victim on cruise ship was denied leave to file a third amended complaint asserting a claim that did not state a viable cause of action and allegations that were futile to an amendment; Doe v. Royal Caribbean Cruises Ltd., No. 20-25152, 2021 U.S. Dist. LEXIS 191713 (S.D. Fla. Oct. 5, 2021) (Scola).
A passenger on the LIBERTY OF THE SEAS brought this action against the cruise line asserting that she was sexually assaulted by a crewmember of the vessel. The cruise line moved to dismiss various counts of her complaint, and Judge Scola addressed the sufficiency of her pleading. As the passenger failed to plead facts establishing that the cruise line was put on notice of the harmful propensities of the employee, Judge Scola dismissed the counts of negligent hiring, retention, and supervision. Although Judge Scola was skeptical that a failure to warn of the risk of sexual assault on its vessel was a proximate cause of the sexual assault in this case, he did not dismiss the failure-to-warn count on the ground that it was duplicative of the passenger’s count of strict liability for sexual assault. Judge Scola dismissed the claim of negligent misrepresentation under the heightened pleading standard of Rule 9(b) for lack of allegations of the timing of the purportedly false statements and lack of allegations that the cruise line should have known it made materially false statements. As Judge Scola could not conclude that the cruise line’s alleged negligent warning of the risk of crime on the vessel put the passenger in immediate risk of physical harm, Judge Scola dismissed the count of negligent infliction of emotional distress. Judge Scola declined to dismiss the count alleging negligent security. The cruise line argued that the count was duplicative of the count of strict liability for an assault on a passenger, but Judge Scola held that the pleading alleged negligence separate from the assault, such as failure to have sufficient cameras, failure to enforce training on sexual harassment, and failure to thoroughly investigate reports of sexual harassment. With respect to the count alleging intentional infliction of emotional distress, Judge Scola noted that the cruise line could be held strictly liable for the sexual assault. Therefore, he reviewed the allegations asserted by the passenger of the conduct of the crewmember and held that the claims for the crewmember’s actions were sufficient to constitute intentional infliction of emotional distress. Consequently, he held that the count could stand against the cruise line. Finally, Judge Scola ruled that citations in the complaint to the Pennsylvania Rule were legal arguments that did not have any place in a complaint and he ordered that they be struck. He permitted the passenger to file an amended pleading in accordance with his order. See August 2021 Update. The passenger filed her second amended complaint (pleading negligent security, negligent hiring and supervision, strict liability for sexual assault, negligent and intentional infliction of emotional distress, and negligent failure to warn) and then, three weeks after the deadline to amend, sought leave to file a third amended complaint to add a claim of negligent misrepresentation. She claimed that she learned through discovery that the cruise line made misrepresentations to the passenger regarding the whereabouts of the assaulting crewmember and his remaining on the vessel, which caused the passenger emotional distress and physical symptoms from the emotional distress. Judge Scola rejected the request to add the negligent misrepresentation claim as it did not connect how the misrepresentations caused emotional distress when she discovered that the representations were not true months later after the cruise was over. Additionally, she did not cite any authority supporting a duty of the cruise line to inform her of the passenger’s whereabouts. The passenger also sought leave to add allegations to the emotional distress pleadings that the cruise line did not report the incident to law enforcement agencies. The allegations did not, however, rise to the level of outrageous conduct as the conduct did not expose the passenger to continued sexual abuse or interfere with an ongoing criminal investigation. As the amendment would be futile, Judge Scola declined to permit it.
Judge upheld indemnity provision in contract to provide vessel for cleanup after DEEPWATER HORIZON/Macondo blowout; Sanchez v. American Pollution Control Corp., No. 12-164, 2021 U.S. Dist. LEXIS 193743 (E.D. La. Oct. 7, 2021) (Barbier).
Victoria Sanchez was employed by AMPOL for 23 days in the summer of 2010 as a Hazardous Material Technician during the clean-up of the oil spill from the DEEPWATER HORIZON/Macondo blowout. She spent her first 17 days working on land picking up trash, digging holes, moving cinderblocks, and loading and unloading boats at AMPOL’s dock in Venice, Louisiana. She spent each of the last 6 days of her employment working on the NO GAS II, a shrimp or oyster boat that deployed and retrieved boom that was used to contain or absorb oil on the water. Sanchez met the vessel around dawn and traveled with the vessel from location to location where she would help load, stow, and deploy boom. At the end of the day the vessel returned to the dock, and Sanchez helped remove the trash from the vessel before leaving the vessel. She slept onshore at AMPOL’s operations base in Venice. While tying one piece of boom to another, the vessel was hit by two large waves, injuring Sanchez. Sanchez brought this suit as a Jones Act seaman against AMPOL and BP, and AMPOL moved for summary judgment that Sanchez was not a seaman, arguing that Sanchez failed to satisfy the requirements that the worker’s connection be substantial in duration and connection. As Sanchez only spent 26% of her time with AMPOL on the vessel, she invoked the “change-of-assignment” exception, arguing that the duration element should be considered only from the time she began working on the NO GAS II. AMPOL presented evidence that her work on the vessel was temporary, that her job never changed, and that she was subject to assignment on a daily basis depending on the needs of the response effort. Sanchez, however, testified that a supervisor told her that she was being reassigned to offshore duty and that other supervisors told her the assignment was permanent and that she could not return to work on the dock. Judge Barbier declined to weigh the evidence and held that there was a fact question whether Sanchez had been permanently reassigned to work on the vessel. AMPOL’s argument that Sanchez did not satisfy the nature element gave Judge Barbier the opportunity to apply the en banc decision of the Fifth Circuit in Sanchez v. Smart Fabricators. Victoria Sanchez’s situation on the NO GAS II differed substantially from that of Gilbert Sanchez, who worked on a vessel that was jacked up at a dock. Applying the factors set forth by Judge Davis in the Fifth Circuit’s en banc opinion, Judge Barbier noted that Victoria Sanchez accompanied the vessel as it travelled on water between locations and worked on the vessel on the water; her job was not performed in discrete locations in port but was co-extensive with the vessel’s travels; she took orders from the vessel’s captain; and she was injured by a peril of the sea. Consequently, Judge Barbier concluded that Victoria Sanchez satisfied the nature element but that a fact question remained whether she satisfied the duration element. See July 2021 Update. Sanchez settled her claims with the defendants, and BP sought indemnity from United States Environmental Services (USES), the company which hired AMPOL, pursuant to a Master Service Contract between BP and USES. USES first argued that the Master Service Contract did not apply to the work because there was no work order or work release for the specific work in which Sanchez was injured. However, as the contract provided that it governed work performed irrespective of whether a work order or release had been executed, Judge Barbier held that the contract was applicable. Judge Barbier then addressed whether maritime law or Louisiana law was applicable. The work performed was spill-response services, and BP established that the work contemplated the use of vessels as the only way to clean up the maritime oil spill. Moreover, there was no dispute that a vessel was involved in the work in which Sanchez was injured. Consequently, Judge Barbier held that the agreement was a maritime contract. Even if the contract was not maritime, however, Judge Barbier concluded that anti-indemnity provisions of the Louisiana Oilfield Indemnity Act were not applicable in view of the exception in the Act for injury resulting from retainment of oil spills and clean-up and removal of structural waste subsequent to a wild well. Finally, Judge Barbier held that the indemnity clause was sufficiently clear and unambiguous to require USES to indemnify BP.
Evidence of work on the vessel in the vicinity of the defendant’s refrigeration/air conditioning plant that contained gaskets with asbestos was insufficient to establish that the defendant’s product was a substantial factor in causing the seaman’s mesothelioma; Wineland v. Air & Liquid Systems Corp., No. C19-0793, 2021 U.S. Dist. LEXIS 195222 (W.D. Wash. Oct. 8, 2021) (Lasnik).
John Dale Wineland died from mesothelioma that he claimed was caused by exposure to asbestos contained in Alfa Laval products while he served in the engine rooms of United States Navy vessels. Although there was evidence that Wineland was exposed to significant levels of asbestos dust while working in the engine room of at least one vessel, the evidence was insufficient to establish that the products of the William Powell, Cleaver-Brooks, Warren Pumps, or IMO Industries (successor to DeLaval Steam Turbine) was a substantial factor (the maritime standard for causation) in causing Wineland’s disease or that asbestos-containing replacements were necessary (in the case of Cleaver-Brooks) for its products to function as designed. Therefore, Judge Lasnik dismissed these defendants from the suit. See September 2021 Update. In this opinion, Carrier, which manufactured the refrigeration and air conditions plants installed on the USS TUSCALOOSA while Wineland was assigned to the vessel, moved for summary judgment. Both plants utilized asbestos-containing gaskets, but the plants were enclosed in their own compartments. Although there was evidence that Wineland worked with and around the Carrier equipment, the evidence was insufficient to establish that he was involved with the removal or replacement of gaskets during his service on the vessel. Concluding that a reasonable jury could not find that exposure to asbestos from Carrier’s equipment satisfied the maritime requirement of a “substantial contributing factor” to Wineland’s mesothelioma, Judge Lasnik granted summary judgment to Carrier.
Judge allowed opinion from professional mariner and marine accident investigator based on unsubstantiated prior complaints; Cole v. Aramark Sports & Entertainment Services LLC, No. 20-8030, 2021 U.S. Dist. LEXIS 196346 (D. Ariz. Oct. 12, 2021) (Humetewa).
David Cole was piloting a boat in Lake Powell with his wife Joleen as a passenger when the boat passed Aramark’s tour boat, CANYON EXPLORER, which was traveling in the opposite direction. The Coles allege that contact between their boat and the wake of the CANYON EXPLORER caused Joleen to suffer fractures in the vertebrae in her spine. The Coles brought this suit in federal court in Arizona, seeking damages for negligence and punitive damages. The Coles submitted the opinion of John Sutton, a professional mariner and marine accident investigator, concluding that Aramark could have avoided wake-related incidents if it had adopted a Safety Management System. He opined that avoidance policies should have been developed based on learning from past incidents, citing 28 prior wake complaints. Aramark objected that the opinion was based on unproven, unsubstantiated hearsay allegations; however, Judge Humetewa answered that marine investigators routinely use such complaints to understand whether an operator has engaged in a pattern of behavior. Thus, she held that the opinion of Sutton was admissible even if he relied on inadmissible data. Having denied Aramark’s motion to exclude his report, Judge Humetewa denied Aramark’s motion for summary judgment/motion to strike on the punitive damages claim and denied the motion for summary judgment on the negligence claim in light of testimony from witnesses that the wake was higher than Aramark’s experts testified could have been generated by the CANYON EXPLORER.
Seaman’s choice of forum in the federal district in Louisiana where his lawyer resides, which is closer to Texas where the seaman lives, was insufficient to avoid transfer to the district where the accident occurred and the witnesses reside; Cornelius v. American Commercial Barge Line LLC, No. 20-cv-00222, 2021 U.S. Dist. LEXIS 196723 (W.D. La. Oct. 12, 2021) (Kay).
James Cornelius, a resident of Port Arthur, Texas, was injured while serving on the M/V FLICKER near Destrehan or Harahan, Louisiana, in a collision with a barge in tow of an American Commercial Barge Line vessel. Cornelius brought this action against ACBL in the federal district court for the Western District of Louisiana, and ACBL moved to transfer the case to the Eastern District of Louisiana, where the accident occurred and where the limitation action brought by the owner of the FLICKER was pending, and where another injury action from the accident was pending in state court. Cornelius argued that the court should give weight to his choice of forum because he lives in Texas, closer to the Western District of Louisiana, and because his attorney resides in the Western District of Louisiana. Concluding that the easiest way to coordinate discovery and proceedings was to have all of the cases pending in the same district, Magistrate Judge Kay ordered that the case be transferred to the Eastern District of Louisiana.
Judge awarded damages for breach of contract, fraud, and alter ego liability with respect to contract to provide vessel and equipment to locate planes that crashed off the coast of Venezuela; the fraud claim was not subject to the economic loss rule and damages were trebled under state law; Grupo HGM Tecnologias Submarina, S.A. v. Energy Subsea, LLC, No. 1:18-430, 2021 U.S. Dist. Lexis 197021 (S.D. Ala. Oct. 12, 2019) (Beaverstock).
After Grupo entered into a contract to provide services and equipment to locate two aircraft that crashed into Venezuelan waters, Grupo entered into a contract with the defendants to supply some of the needed equipment, including a suitable vessel, using the BIMCO Supplytime 2005 form. Grupo paid more than a million dollars without any mobilization from the defendants, who continued to demand more than a million additional dollars (even though the quoted price was $650,000), leading to Grupo suing for breach of contract plus causes of action for fraud, and violations of the Alabama Deceptive Trade Practices Act. Grupo moved for a default judgment, asserting the application of Alabama law, but Magistrate Judge Nelson noted that maritime law should apply to the contract even though Grupo had brought the case pursuant to the diversity jurisdiction and not admiralty jurisdiction. See September 2019 Update. Two years later, the case was tried in a bench trial to Chief Judge Beaverstock. Chief Judge Beaverstock found in favor of Grupo on its claim for breach of a maritime contract, found that Energy Subsea’s managing member, Oddgeir Ingvartsen controlled Energy Subsea in such a manner as to make it a mere instrumentality of himself so as to be jointly and severally liable, that the claim for unjust enrichment failed in light of the contract between the parties, and that Energy Subsea and Ingvartsen were liable for fraud. The defendants claimed that the economic loss rule (a party may not recover economic loss in a tort claim that is not associated with a physical loss) barred recovery on the fraud claim, but Chief Judge Beaverstock held that the claim of fraud in the inducement was an exception to the economic loss rule. As compensatory damages, Chief Judge Beaverstock awarded $1,727,000. With respect to the punitive damages for fraud, Chief Judge Beaverstock concluded that Grupo paid $616,046.32 more than the original contact amount because of the fraud, and he trebled that amount under Alabama law ($1,848,138.90). Therefore, his award against Energy Subsea and Ingvartsen was in the amount of $3,575,138.90.
Collateral source rule did not apply, and drydock owner could not recover damages from towing company that were reimbursed by the owner’s insurer and for which there was a waiver of subrogation in the towing agreement; Western Towboat Co. v. Vigor Marine, LLC, No. C20-0416, 2021 U.S. Dist. LEXIS 197569 (W.D. Wash. Oct. 13, 2021) (Martinez).
Vigor Marine sold its three-section drydock, constructed in 1956, to a shipyard in Mexico to be scrapped. Vigor then contracted with Western Towboat to tow the drydock from Seattle, Washington to Ensenada, Mexico, using the tug OCEAN RANGER. A surveyor noted significant corrosion but opined that the drydock was appropriately prepared and rigged for the tow in an extended configuration with the bow and stern sections attached. The surveyor did require that the tow avoid heavy head or beam seas to avoid pitching or rolling. The Navy operating manual for the drydock provided that the bow and stern sections should be detached and docked on the center section, and Vigor’s sales contract required that the three sections be detached and carried on a heavy-lift ship. During the tow the drydock began taking on water and listing, and the tug headed toward San Francisco Bay to seek assistance. After communicating with the Coast Guard, the tug concluded it was unsafe to enter San Francisco Bay in the event the drydock sank. The Coast Guard approved the tow entering Monterey Bay where the drydock sank .92 miles inside the Monterey Bay Marine Sanctuary. The National Oceanic and Atmospheric Administration informed Vigor, Western Towing, and the Mexican shipyard of their liability under the NMSA for damages from the sinking in the sanctuary, and Western filed this action against Vigor, seeking recovery for its services under its towing agreement, and a declaratory judgment against the United States exculpating it of liability in any forthcoming enforcement action under the NMSA. Chief Judge Martinez first held that the court lacked subject matter jurisdiction, based on lack of ripeness and standing, of the action against the United States as NOAA has not taken any final action against the parties. Chief Judge Martinez then turned to the claims between Western and Vigor. He denied Vigor summary judgment that Western had breached the towing agreement by failing to adequately perform its duties when it proceeded into Monterey Bay and stood by while the drydock sank in a marine sanctuary as the contract did not contain a requirement that the tug keep the tow in a safe place to sink. Chief Judge Martinez then addressed the knock-for-knock indemnity provisions in the towing agreement and held that claims arising out of or relating to damage to a party’s own property could not be recouped (such as Vigor’s loss of the drydock); however, that did not bar Vigor from recouping costs incurred as a result of Western’s negligent injury to third parties. With respect to Vigor’s claim that Western was negligent, Chief Judge Martinez declined to find that the last clear chance doctrine or the Pennsylvania Rule applied; however, he concluded that Western breached its duty of prudent seamanship as a matter of law when it allowed the drydock to sink in the marine sanctuary. Although Western objected that its crew was unaware that the drydock was inside the sanctuary and was unaware of the legal, environmental, or economic consequences of the sinking in the sanctuary, Chief Judge Martinez held Western was negligent as a matter of law with respect to its lack of cognizance of the vessel’s position with respect to the sanctuary. Western moved for reconsideration with respect to the awareness of the tug’s crew of the sanctuary. Chief Judge Martinez recognized that there were factual disputes whether the crew knew that the tug had entered a sanctuary, but it was their failure to be aware of the hazards presented by the sanctuary to a tug together with their lack of positional awareness that led to the finding of negligence. Additionally, Western argued that it was not negligent for the tug to release the line on the drydock while it was in the sanctuary as it was necessary to save the life of its crew in the emergency presented by the sinking drydock. Chief Judge Martinez responded that it was not the response to that emergency that was the source of the fault but the failure to exercise prudent seamanship in entering the sanctuary with a sinking drydock. See July 2021 Update. Chief Judge Martinez conducted a bench trial of the case, and on the final day of trial, Western argued that Vigor was not entitled to recover damages on its counterclaim against Western because Vigor’s insurers paid for a portion of the damages Vigor incurred from its exposure to liability under the NMSA. After holding that Vigor was a real party in interest and could maintain the counterclaim, Chief Judge Martinez addressed the question whether the collateral source rule applied when Vigor had been partially reimbursed for its losses and there was a waiver of subrogation in the towing agreement. Concluding that the payments were not “benefits from a wholly independent source which Vigor had the foresight to arrange,” Chief Judge Martinez held that the collateral source rule did not apply and that Vigor could not recover to the extent it had been paid by its insurers.
Bankruptcy judge awarded damages for charterer’s failure to pay hire for two tows, reduced by the damages incurred by one of the vessels during the tow; In re Chester J. Marine LLC, No. 20-11002, Adversary Nos. 20-1042, 1048, 2021 Bankr. LEXIS 2833 (Bankr. E.D. La. Oct. 13, 2021) (Grabill).
Actions by Russell Marine and Chester J. Marine arising from two oral charters were consolidated in Chester J. Marine’s bankruptcy proceeding in which Bankruptcy Judge Grabill held a trial and then issued his findings of fact and conclusions of law. Russell Marine is a broker that finds tugs to tow barges for its client barge companies. Russell first engaged Chester to tow a barge by an oral charter, and during the tow the barge was discovered to be taking on water through a hole in its wing tank. The damage was caused because the barge was too heavy and was hitting the bottom. The tow was completed, but Russell did not pay the charter hire. During the second tow, a crewman incorrectly put fuel into one the engines, causing it to become airlocked. Chester’s mechanic fixed the airlock issue, but the engine would not restart because the starter was not working. While the crew members were waiting for the mechanic to repair the starter (it was replaced within three to four hours), Russell fired Chester and advised that it would not pay for the tow. Chester obtained a replacement job hauling rocks, asserting that it was not as lucrative as the Russell work. Bankruptcy Judge Grabill first held that the agreements between Russell and Chester were maritime contracts and held that Russell breached the contracts. With respect to the first tow, which was completed, he awarded Chester the amount of its invoice for the tow, but he then deducted the cost for repair to the barge, concluding that Chester, which was in sole control of the barge, was responsible for the damage. For the second tow, Bankruptcy Judge Grabill held that the delay was not a basis for termination of the charter because time was not of the essence in the performance of the contract. He therefore awarded damages to Russell for partial performance of the tow and standby fees while Russell obtained a replacement. However, Bankruptcy Judge Grabill did not award lost profits to Chester as Chester’s evidence did not establish with a reasonable certainty that it had lost profits. No attorney fees were awarded, but prejudgment interest was allowed on the awards and setoff.
Summary judgment was granted to manufacturer of rope in seaman’s injury case when the rope was not preserved and could not be identified as being manufactured by the defendant; Ruiz v. Turn Services, LLC, No. 19-1400, 2021 U.S. Dist. LEXIS 197968 (E.D. La. Oct. 14, 2021) (Fallon).
Trevor Ruiz was injured while working as a crew member on Turn Services’ M/V AFFIRMED when he was struck by a tow line that broke. He brought suit against Turn Services under the Jones Act and general maritime law, invoking Rule 9(h). Turn Services answered and sought a jury trial, but Judge Fallon struck the jury demand. Ruiz amended his complaint to name Al Cenac Towing, the owner of the vessel from which the rope originated, and Cenac filed a third-party action against HWC Wire & Cable. Turn Services then brought a cross-claim against Cenac, and Ruiz amended his complaint to include claims against HWC. Cenac and HWC requested a jury trial, and Ruiz moved to quash the demands. The jurisdictional basis for Cenac’s claim against HWC was diversity, and HWC argued that the Fifth Circuit’s decision in Luera v. M/V ALBERTA, in which the Fifth Circuit allowed a jury trial when the plaintiff brought claims based on both admiralty and diversity, supported the argument that a jury should be allowed in this case in which there were claims based on admiralty and diversity. Judge Fallon disagreed, as Ruiz brought all of his claims against the defendants in admiralty pursuant to Rule 9(h). Therefore, Judge Fallon declined to entertain a jury trial on any of the claims brought by Ruiz against Turn Services, Cenac, or HWC. See September 2020 Update. HWC then sought summary judgment on the claims of Ruiz and Cenac. The rope was not preserved, and HWC argued that the rope depicted in photographs taken after the incident was plainly not HWC’s product as there were obvious differences between the rope in the pictures and HWC’s product. As there was no other evidence identifying the rope as a product of HWC, Judge Fallon dismissed HWC from the case.
Minimum contacts are not required for Rule C arrest; prior bond to release the vessel did not prevent its arrest by a different party; vessel owner did not have carrier’s lien on cargo carried under a contract entered into by the time charterer; court had quasi-in-rem jurisdiction for attachment, and the judge declined to transfer the case; MARMAC, LLC v. InterMoor, Inc., No. 21-115, 2021 U.S. Dist. LEXIS 197972 (E.D. La. Oct. 14, 2021) (Morgan).
The litigation arising from the failed transportation of equipment for the construction of a wind farm off the coast of Ocean City, Maryland, returns to the Update. See October 2021 Update in which Judge Gallagher in the District of Maryland declined to transfer a case from the federal court in Maryland to the federal court in Texas. US Wind obtained leases off the coast of Ocean City, Maryland for a wind farm and commissioned the construction of a meteorological mast in Houma, Louisiana, to measure the wind and other environmental conditions. US Wind hired InterMoor for the transportation of the Met Mast from Louisiana to the wind farm, and InterMoor chartered the barge MARMAC 261 under a time charter with MARMAC to transport the Met Mast. Weather conditions forced delays in the installation, and US Wind requested that InterMoor deposit the Met mast at US Wind’s facility in Baltimore. MARMAC told US Wind to work out the details with charterer InterMoor, but negotiations failed, and InterMoor directed MARMAC to return the Met Mast to Louisiana. On the return, the Met Mast was arrested by US Wind in North Carolina in a Rule D possessory action (while the Met Mast was on the barge), and InterMoor attached the Met Mast under Rule B as security for an action against US Wind for breach of contract. The Met Mast was released under a bond issued by US Wind with US Wind and InterMoor splitting the custodia legis costs during the arrest/attachment. US Wind filed a separate action for breach of contract against InterMoor in federal court in Maryland, and the North Carolina suit was transferred to the federal court in Maryland. A suit by InterMoor against US Wind that was filed in federal court in Texas was dismissed for lack of personal jurisdiction over US Wind. MARMAC, which was not a party to the other actions, brought this action in federal court in Louisiana against InterMoor, in personam, and against the Met Mast in rem (asserting a maritime lien for trespass because US Wind failed to retake possession of the Met Mast, depriving MARMAC of the services of its barge). MARMAC also brought a Rule B attachment (and quasi in rem action against US Wind) for maritime trespass and for unjust enrichment because MARMAC had to pay storage for the Met Mast after it was removed from the barge. The court released the Met Mast from arrest and attachment on bond, and the Met Mast and US Wind filed motions addressed by Judge Morgan in this opinion. MARMAC asserted a carrier’s lien against the Met Mast for the arrest, and US Wind argued that the court lacked jurisdiction over the in rem claim in Louisiana because the Met Mast was taken to Louisiana contrary to the instructions of US Wind and there was no purposeful availment of the Louisiana forum by US Wind. Describing that argument as irrelevant, Judge Morgan held that minimum contacts are not required for the arrest of the vessel and that once the procedures of Rule C were satisfied, the court had jurisdiction. Judge Morgan then addressed the issue whether the arrest and attachment of the Met Mast in North Carolina prevented MARMAC from arresting it in Louisiana. As the Met Mast was released on a bond that was only applicable to damages sought by InterMoor, the bond/prior arrest did not provide security to MARMAC and did not prevent MARMAC from arresting the vessel in the subsequent proceeding. That was not the end of the story for the arrest, however. Judge Morgan found that the Met Mast was on the barge pursuant the charter with InterMoor. That charter did not extend the carrier’s lien to cargo owned by third parties and no notice of any carrier lien was given to owner US Wind. Accordingly, Judge Morgan held that MARMAC did not have a carrier’s lien on the Met Mast and she dismissed the in rem claim. US Wind also argued that the court lacked general or specific personal jurisdiction with respect to US Wind, but Judge Morgan held that minimum contacts were not required for the quasi in rem jurisdiction over the Met Mast owned by US Wind. As MARMAC pleaded a prima facie claim of maritime trespass by abandoning the Met Mast on the barge, depriving MARMAC of the use of the barge, and as US Wind was not present within the district, Judge Morgan held that the requirements for the attachment and jurisdiction against US Wind were satisfied, and she declined to dismiss those claims. Finally, Judge Morgan declined to transfer MARMAC’s claims to the federal court in Maryland, considering that the barge, the Met Mast, and MARMAC are in Louisiana and that InterMoor is headquartered in Texas; however, she severed and transferred InterMoor’s cross-claim against US Wind to Maryland as it was substantially similar to the litigation in Maryland (involving breach of the contract between US Wind and InterMoor over the transportation of the Met Mast).
Judge declined to exercise supplemental jurisdiction over a seaman’s maritime negligence claim against the Port for an injury on a floating dock but gave the seaman leave to plead a claim under state law; Campbell v. Delma Ann, LLC, No. 6:20-cv-00591, 2021 U.S. Dist. LEXIS 198240 (D. Ore. Oct. 14, 2021) (McShane).
Danny E. Campbell, a deckhand on the F/V DELMA ANN, was injured when he fell while carrying garbage on a floating dock at the Port of Newport’s commercial marina. Campbell brought this suit against his employer under the Jones Act and against the Port of Newport under the general maritime law. Judge McShane held that there was federal jurisdiction over the Jones Act claim but the claim against the Port was not maritime because it did not occur on navigable waters. Campbell asserted that the court had supplemental jurisdiction over the claim against the Port, but Judge McShane held that supplemental jurisdiction applied to state-law claims. As the claim for maritime negligence did not fall within the maritime jurisdiction and was not a state-law claim, there was no jurisdiction over that claim. Judge McShane gave Campbell leave to amend his complaint to allege a state-law claim that would fall within the supplemental jurisdiction of the court.
Judge declined to issue protective order to protect retired Navy officer, serving as an expert against the United States, from retaliation; In re Energetic Tank, Inc., No. 1:18-cv-1359, 2021 U.S. Dist. LEXIS 198298 (S.D.N.Y. Oct. 14, 2021) (Crotty).
The collision between the destroyer U.S.S. JOHN S. MCCAIN and the Liberian merchant vessel M/V ALNIC MC, resulting in the deaths of ten sailors and injuries to more than 40 others, returns to the Update (January, February, and April 2020 Updates). The owners of the ALNIC engaged Daniel E. Voth, a retired Captain in the Navy, as an expert on naval shipboard operations. Voth is receiving pension and insurance benefits from the United States. During his deposition, Voth testified that he was unaware of the Touhy regulations that require written permission from the Navy before current or retired personnel can testify as expert witnesses in certain Navy-related matters. The Navy advised that it would not move to disqualify Voth, but he asked for guarantees that the Navy would not take other actions that might result in his losing his retirement benefits. When the Government did not respond, the owners of the ALNIC sought a protective order to prevent the United States from interfering with Voth’s serving as an expert. Although Voth stated that he would not testify further in this case without assurance of protection from discipline, Judge Crotty held that, without some indication of impending Government retaliation, Voth’s concerns were too speculative to warrant a protective order.
Maritime lienor may plead fraudulent transfer under state law in the alternative to its maritime lien claim; Sea Green Partners, LLC v. BARBARA GAIL, No. C20-5142, 2021 U.S. Dist. LEXIS 198467 (W.D. Wash. Oct. 14, 2021) (Settle).
Sea Green Partners, a boatyard in Port Townsend, Washington, performed work on the pleasure vessel BARBARA GAIL, owned by MarGene, LLC. When it was not paid, Sea Green brought this suit in rem against the vessel and in personam against MarGene and its two members. After the vessel was arrested, MarGene transferred its interest in the vessel to Western Waters for $1, a company owned by the same members who own MarGene. Sea Green then moved to assert a claim against Western Waters for a fraudulent transfer under Washington law. The defendants argued that there was no need for the amendment as the maritime lien on the vessel survived the transfer. They also presented an affidavit that the transfer was for business planning purposes and was not to avoid liability. Noting that the defendants disputed the validity of the lien and that the pleading of fraudulent transfer was in the alternative in the event the lien was flawed or unenforceable, Judge Settle permitted the amendment.
Texas court lacked personal jurisdiction over death claim for Texas seaman, asserting that the seaman contracted COVID-19 while working offshore Louisiana for a Louisiana company; Jimenez v. Grand Isle Shipyard, Inc., No. 21-cv-0013 (W.D. Tex. Oct. 15, 2021) (Moses).
Armando Jimenez, Jr., a resident of Texas, departed from Grand Isle’s shipyard in Louisiana to work on a sandblasting project on a platform on the outer Continental Shelf, offshore Louisiana. When he returned home, he had COVID-19 symptoms, tested positive for the virus, and died a few days later. His widow brought this action against Grand Isle under the Jones Act, general maritime law, and the Longshore & Harbor Workers’ Compensation Act in federal court in Del Rio, Texas, and Grand Isle moved to dismiss the complaint for lack of personal jurisdiction. Grand Isle, which is a Louisiana company, has offices in Texas, but none of its Texas offices were involved in this case. Although Jimenez was a Texas resident, he was hired by Grand Isle in Louisiana, and Jimenez was responsible for transporting himself to the project’s departure point in Louisiana. As Grand Isle’s contacts with Texas were not connected to this case, Judge Moses held that the court lacked specific personal jurisdiction over Grand Isle. Additionally, Judge Moses found that Grand Isle’s contacts with Texas were insufficient to establish general personal jurisdiction over Grand Isle, whose incorporation and principal place of business are in Louisiana. As the statute of limitations was not implicated, Judge Moses dismissed the suit without prejudice rather than transferring the case to Louisiana.
Passenger injured on pre-embarkation transport escalator had to allege what was wrong with the escalator before proceeding to discovery; Penzo v. Celebrity Cruises, Inc., No. 1:21-cv-20891, 2021 U.S. Dist. LEXIS 199190 (S.D. Fla. Oct. 15, 2021) (Moore).
Bruno Andrea Penzo was preparing to board the CELEBRITY EDGE at the Port of Everglades in Fort Lauderdale, Florida. While ascending the pre-embarkation transport escalator, the escalator entrapped Penzo’s carry-on bag and caused him to be pulled down on his back on the escalator steps. Penzo brought this suit in federal court against the cruise line, Broward County (operator of the Port), and Oracle, which provided the inspection, repair, and maintenance of the escalator. The defendants moved to dismiss Penzo’s Second Amended Complaint on the ground that it failed to allege facts stating how a dangerous condition caused injury to Penzo. Penzo responded that he needed discovery to identify the exact mechanical failure or maintenance deficiencies and to establish notice to the defendants of the dangerous condition. Although sensitive to Penzo’s argument, Judge Moore dismissed the complaint with leave to file a Third Amended Complaint. Defendants Oracle and Broward County also moved to dismiss Penzo’s claim based on res ipsa loquitur as it is an evidentiary doctrine, not a stand-alone cause of action. Judge Moore noted that the district courts have reached different results on this issue, but he agreed with the courts that have dismissed claims asserting res ipsa loquitur as a separate cause of action. As part of his discussion, Judge Moore pointed out that the doctrine did not appear to be implicated in this case as it was not alleged that the instrumentality causing the injury was under the exclusive control of Oracle or Broward County.
Louisiana’s lien statute was not inconsistent with admiralty law that was applicable to a drilling contractor’s work on the OCS for a bankrupt oil company, but there were fact questions whether the debt was discharged; In re Fieldwood Energy LLC, No. 20-33948, 2021 Bankr. LEXIS 2867 (Bankr. S.D. Tex. Oct. 15, 2021) (Isgur).
Atlantic Maritime performed drilling services on five leases on the outer Continental Shelf in the Gulf of Mexico for Fieldwood. Fieldwood did not pay Atlantic for its work and filed this bankruptcy action. Atlantic filed statements of privileges under the Louisiana Oil Well Lien Act to perfect its lien on the offshore leases on which Atlantic worked, and a purchaser of Fieldwood assets challenged the liens in the bankruptcy proceeding. Citing the Fifth Circuit’s Doiron case, Bankruptcy Judge Isgur held that the drilling contracts were maritime, but the privileges under the Louisiana statute did not arise out of the drilling contract and were extracontractual. Concluding that the purchaser had not shown that the Louisiana statute was inconsistent with federal law, Bankruptcy Judge Isgur declined to grant summary judgment to the purchaser of the Fieldwood leases. He also concluded that there were fact questions whether the bankruptcy satisfied Atlantic’s claims and whether one of the leases (Mississippi Canyon 948) was offshore Louisiana so as to be subject to the Louisiana statute.
Manufacturer’s sale of engine to the owner of the vessel, not the shipyard, for construction of the vessel was subject to state law, and the implied warranty claim was barred under state law; however, the vessel owner’s maritime tort claim for damage to the vessel was not barred by the economic loss rule; Atlantic Specialty Insurance Co. v. Caterpillar Inc., No. 20-1863, 2021 U.S. Dist. LEXIS 199831, 199842 (Oct. 15, 18, 2021) (Brown).
These opinions arise because one of the engines on the M/V KELLY ANN CANDIES suffered a catastrophic failure allegedly caused by a defective crankshaft manufactured by Caterpillar, causing a fire on the vessel. The vessel owner’s insurers brought this subrogation action against Caterpillar based on breach of an implied warranty and in tort, and Caterpillar moved for summary judgment on both theories. Citing Louisiana law, Caterpillar argued that the implied warranty claim was time barred, but the insurers argued that the engine was purchased directly from the owner for itself, not through a contract to purchase a completed vessel, so the contract was a maritime contract and not subject to state law. Chief Judge Brown rejected that argument, however, reasoning that a contract to supply materials for the construction of a vessel is no more maritime than a contract to build the vessel. The factual distinction that the engine was sold to the owner and not the shipyard did make a difference with respect to Caterpillar’s assertion of the economic loss rule as a defense to the tort claim. Caterpillar argued that the economic loss rule barred recovery on the insurer’s tort claims because the engine was an integrated part of the vessel, and the damage caused by the engine to the vessel was not damage to “other property.” Chief Judge Brown noted that the Fifth Circuit has held that the completed vessel is the product for purposes of the economic loss rule when the shipyard provides the components and performs the construction. However, the vessel owner’s contracts with Caterpillar and the shipyard were separate agreements. Consequently, Chief Judge Brown held that the vessel was “other property,” and damage to the vessel was not subject to the economic loss rule.
Lienor’s close relationship with the vessel was not enough to prevent intervention in arrest of vessels to assert liens on vessels; Truist Bank v. F/V BELLA SKY, No. 21-cv-10841, 2021 U.S. Dist. LEXIS 199881 (D. Mass. Oct. 18, 2021); Truist Bank v. F/V QUINBY ALLIE, No. 21-cv-10835, 2021 U.S. Dist. LEXIS 199884 (D. Mass. Oct. 18, 2021) (Burroughs).
Truist Bank brought these actions against the vessels and their owners for defaulting on notes, and L. D. Armory sought to intervene to assert maritime liens on the vessels. The owners of the vessels (but not the bank) objected that LDA’s close relationship to the owners made it a joint venture and unable to assert a maritime lien because of that relationship. The owners claimed that LDA’s president/secretary is a co-owner of the vessel owning companies, that LDA guaranteed the vessels’ mortgages, and that LDA provided financing for the vessels’ operation. Noting that a close relationship does not establish a joint venture, Judge Burroughs allowed the intervention on the limited and disputed record currently before the court, noting that the court could determine whether LDA had a lien at a later date.
This case was brought in the Superior Court of Marin County, California, by the son and daughter-in-law of Lucio Gonzalez, a passenger on the GRAND PRINCESS, asserting claims for the death of Gonzalez from COVID-19 that he allegedly contracted while on the defendant’s vessel. The cruise line removed the case to federal court based on the district court’s original admiralty jurisdiction, and the plaintiffs’ moved to remand for lack of removal jurisdiction. The cruise line cited the forum-selection clause in the decedent’s ticket (federal court for the Central District of California in Los Angeles) and argued that the clause waived the right to object to removal to the federal forum. The cruise line also asserted that a motion to remand based on any defect other than lack of subject matter jurisdiction must be made within 30 days of the removal and that the plaintiffs did not address the argument on the forum-selection clause until their reply. Citing the Kamm decision from the Ninth Circuit that a motion to remand based on a forum-selection clause is not a defect subject to the thirty-day time limit, Judge White held that the plaintiffs were not precluded from challenging the removal based on the forum-selection clause. Turning to the issue whether the case was properly removed, Judge White noted the different arguments whether a maritime case can be removed based on original admiralty jurisdiction and held that he did not need to resolve that dispute. As the forum-selection clause designated the federal court, the passenger waived his right to invoke the saving-to-suitors clause as a basis to remand the case. Therefore, as the federal court had admiralty jurisdiction, Judge White denied the motion to remand and transferred the case to the Central District of California in accordance with the forum-selection clause.
Seaman’s agreement (that provided for arbitration) applied when he returned to the vessel after medical disembarkment; Doe v. Carnival Corp., No. 21-22301, 2021 U.S. Dist. LEXIS 200385 (S.D. Fla. Oct. 18, 2021) (Altonaga).
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.
Mesothelioma suit against shipyard by patron of restaurant located near the shipyard was removable under the Federal Officer Removal Statute; Clark v. Huntington Ingalls, Inc., No. 21-1483, 2021 U.S. Dist. LEXIS 200895 (E.D. La. Oct. 18, 2021) (Lemelle).
Reginald A. Hamilton, Jr. frequented his grandmother’s restaurant, the Rail Restaurant, which was located near the Main Yard of Avondale’s shipyard and which was patronized by workers at the shipyard (as well as employees of the Army, Navy, and Marines related to the US vessels at the shipyard). Hamilton asserted that he was frequently exposed to asbestos on the clothing of customers of the restaurant and that his mesothelioma was caused by that exposure. This suit was brought in Louisiana state court against the shipyard after Hamilton died, and the shipyard removed the case under the Federal Officer Removal Statute on the ground that the shipyard used asbestos-containing materials in the construction of vessels for the Navy and the Maritime Administration as required by the government contracts. Finding that all of the elements necessary for removal under the Statute were satisfied, Judge Lemelle held that the removal was proper.
Judge addressed admissibility of expert testimony and motions in limine in preparation for trial of passenger’s injury suit; Bahr v. NCL (Bahamas) Ltd., No. 19-cv-22973, 2021 U.S. Dist. LEXIS 199658, 201821 (S.D. Fla. Oct. 18, 20, 2021) (Bloom).
Mai Lis Bahr, a passenger on the Norwegian PEARL, slipped and fell on the gangway while existing the vessel at Skagway, Alaska, allegedly because of the wet and slippery condition of the gangway. She brought this action against the cruise line in federal court in Miami asserting that the cruise line was negligent for failing to maintain slip-resistant materials, failing to provide adequate railings, and failing to warn of inadequate railings and slip resistant materials. The cruise line moved for summary judgment on the basis that it lacked notice of any hazard in the gangway, and Bahr first argued that it is not clear whether a notice requirement applies in a gangway case where there is a heightened standard of care. Judge Bloom noted that the Eleventh Circuit had referred to a high degree of care, but the appellate court had not held that the degree of care was actually different than the degree of reasonable care generally owed in maritime cases. Therefore, she held that notice was a requirement for an injury on a gangway. However, Judge Bloom found sufficient evidence of notice in this case. There were warning cones at the top and bottom of the gangway, but the cruise line argued that the purpose of the cones was to raise situational awareness rather than to warn of a wet floor. As the warning signs in this case stated, “Caution, wet floor,” Judge Bloom was not convinced by the cruise line’s argument and held that it had notice of the potentially hazardous condition of the gangway. See October 2021 Update. The parties then filed motions seeking to exclude each other’s experts and motions in limine. With respect to Dr. Joseph Sala, an expert in human factors hired by the cruise line, who opined about how human factors interact with the environment around them and how features and controls in place mitigate potential walking hazards, Judge Bloom held that the testimony could be helpful to the jury to determine what caused the fall. However, as Dr. Sala is not a doctor, he would be permitted to give non-medical opinion on human factors. Judge Bloom held that Dr. Marian Rosado, an expert neuropsychologist hired by the cruise line to testify about Bahr’s past, present, and future medical condition, used reliable methods and would be permitted to testify except on the credibility of Bahr, even though her opinions were drawn from her psychological evaluation (test results showing material discrepancies were admissible but not opinions on credibility). With respect to Bahr’s objection to the testimony of the cruise line’s neurologist, Dr. Jeffrey B. Gelblum (that he should not testify about Bahr’s ability to work), the cruise line agreed that he would be testifying about Bahr’s medical condition and not his ability to work. The cruise line objected to Bahr’s vocational counselor, Dr. Julianne Frain, but Judge Bloom ruled that Dr. Frain was qualified to give her vocational opinion, relying on her co-author’s medical opinion. The cruise line objected to the opinions of radiologist Dr. Andrew Walker, who reviewed Bahr’s MRIs but did not examine Bahr and did not disclose the methodology for his opinions. Judge Bloom held that his opinions would be limited to his observations, diagnosis, and treatment from the MRIs, which did not require a disclosure of the methods used, but he would not be permitted to testify about the causes of Bahr’s condition or to provide general statistics about TBI patients. Judge Bloom rejected the objection to Dr. Craig Lichtblau as a psychiatrist and brain injury expert, concluding that he relied on objective criteria recognized in the field and not just his own experience (although Bahr withdrew his opinion as to the need for lumbar fusion surgery). Similarly, Judge Bloom held that Dr. Nicholas Suite would be limited to his opinion on Bahr’s TBI and would not be permitted to opine about Bahr’s lumbar spine, cervical spine, and incontinence. Judge Bloom rejected arguments that Dr. Lawrence Salmansohn should not be allowed to testify about Bahr’s cognitive impairment on the ground that he did not review Bahr’s pre-incident records and relied on facts provided by Bahr and her husband, noting that the objection went to the weight and persuasiveness of the testimony, not its admissibility. With respect to Bahr’s human factors expert, Joellen Gill, who did not inspect the gangway, Judge Bloom held that her opinions as to the design of the gangway, marine-related safety, gangway handrails, and the need for gangway inspection documents were admissible, but that her opinion on Bahr’s conduct in reading a pamphlet was not helpful and her testimony about prior incidents was not admissible because the incidents were not substantially similar. Finally, Judge Bloom permitted the testimony of Bahr’s CPA, Oscar Padron, about Bahr’s damages, which was based in part on the testimony of experts Frain and Lichtblau, which Judge Bloom had held was admissible.
In the second opinion, Judge Bloom addressed the parties’ motions in limine. She denied Bahr’s request to exclude evidence of Bahr’s attorneys referring Bahr to a doctor, noting that the doctors were not covered by the attorney-client relationship and the defendant may elicit evidence of a referral relationship. Judge Bloom reiterated her ruling about testimony on the credibility of Bahr, holding that Dr. Rosado’s beliefs about the credibility of Bahr were inadmissible, but she would be permitted to testify that the test results are not a true representation of Bahr’s cognitive ability given the inconsistencies. Bahr sought to exclude evidence of her and her family’s financial ability, but Judge Bloom held that her financial ability was in issue. Her family’s financial ability was not in issue and was not admissible. Judge Bloom excluded evidence of Bahr’s breast augmentation and subsequent drainage of silicone breast implants as not relevant when the cruise line reserved the right to introduce it. The cruise line objected to introduction of six prior incidents, and Judge Bloom held that they were not substantially similar and were inadmissible. As Bahr did not provide timely disclosure of her claim for incontinence, Judge Bloom held that this evidence was inadmissible. Judge Bloom held that references to the cruise line’s superior resources, the disparity in resources between the parties, sending a message to the defendant, and the justness of the plaintiff’s case were inadmissible. Finally, Judge Bloom rejected the cruise line’s argument that evidence of billed charges was inadmissible because it did not reflect the amount paid by Bahr, as an improper attempt to avoid the collateral source holding of the Eleventh Circuit in Higgs v. Costa Crociere.
Although it was “unknowable” whether the seaman was conscious while drowning, the judge found sufficient circumstantial evidence to present a fact question on the survival claim for the seaman’s pain and suffering; Harder-Grant v. Prolifik Fisheries, LLC, No. 6:21-cv-257, 2021 U.S. Dist. LEXIS 203320 (D. Ore. Oct. 19, 2021) (McShane).
Norman C. Grant, Jr. worked as a deckhand in the service of the F/V PROLIFIK. The vessel docked in Newport, Oregon, and the Captain gave the crew the weekend off due to poor weather. Grant went ashore for lunch and consumed a large quantity of alcohol. He walked back to the ship at 7:45 pm, and a ping from his phone six minutes later showed the phone in the middle of Yaquina Bay. His body was recovered 16 days later. Because the body was headless, the medical examiner opined that it was “unknowable” whether Grant was conscious while drowning as she could not rule out a head injury. Grant’s employer moved for summary judgment on the claim for pain and suffering in the survival claim brought in federal court in Oregon, and Judge McShane noted that the Ninth Circuit has held that summary judgment is usually granted when the evidence equally supports theories of instantaneous death and pre-death pain and suffering. In this case Judge McShane found circumstantial evidence to support the argument that McShane was conscious when he entered the water as there was no blood, hair, torn clothing, or other sign of injury on the dock or in the water; the video surveillance showed Grant walking on his return toward the vessel; there were dangerous conditions on the return to the vessel, such as the lack of a gangway so that Grant would have to step on the rail to the vessel; and it was a short distance from the dock to the water.
Waiting to assert ace-in-the-hole contractual defense precluded recovery of attorney fees; Supreme Rice, L.L.C. v. Turn Services, L.L.C., No. 20-1212, 2021 U.S. Dist. LEXIS 200894 (E.D. La. October 19, 2021) (Ashe).
Supreme Rice contracted with the United States to provide 12,666 metric tons of long grain milled rice (LGMR) to an ocean-going vessel in Myrtle Grove, Plaquemines Parish, Louisiana, for shipment to Conakry, Guinea. Supreme Rice contracted with SCF Marine to provide seven hopper barges to transport the rice to Myrtle Grove. The barges all had covers and grain doors designed to protect the cargo from the weather but that allowed air flow and ventilation to prevent mold growth and overheating. SCF’s subcontractor delivered the barges with the rice to Turn Services, which operates a barge fleeting service near Myrtle Grove. The facility is upriver from one coal/petcoke terminal and across the river from another. Before delivering the barges, SCF sent an email to Turn’s dispatcher advising that the barges contained “LGMR” (although Turn disputed whether it received the email). Turn inspected the barges and accepted them into its fleet, placing three of the barges in the upriver section of the fleet next to seven uncovered barges loaded with coal/petcoke. As a result of prior contamination, Turn has a standing order not to place milled rice barges close to coal barges. When the barges with the rice were inspected prior to the loading of the ocean-going vessel, it was discovered that rice in the three barges that were near the coal barges was contaminated with black dust. The surveyor opined that the dust came from the nearby barges and entered the SCF barges through gaps in the hopper covers and coaming. Supreme Rice brought this suit against Turn, and the parties filed cross-motions for summary judgment. The motions presented the question of the duty owed by Turn as fleeter. Turn argued that the duty of a fleeting service is only to ensure that the barges are adequately moored so that they do not break away, sink, or sustain hull damage. Judge Ashe began his analysis with the principle that a bailment existed when the barges were delivered to the fleeting service. The bailor establishes a prima facie case of negligence by establishing that the barges were delivered in good condition and were damaged on redelivery. Judge Ashe found that the barges were in a seaworthy condition when delivered because they had passed inspection by the United States and Turn. It was then up to Turn to establish that it did not breach any duty. The question was whether the fleeting service’s duty to ensure adequate mooring extended to the placement of the barges within the fleet so as to protect their cargo from contamination. Judge Ashe considered Turn’s policy of not placing milled rice barges near coal barges because it knew from experience that coal dust could damage the rice to be an acknowledgement that it had a duty to properly position the barges to avoid a known risk to cargo. Although recognizing the duty, Judge Ashe could not decide from the evidence presented whether there was a breach, so he denied the motions of both parties. See July 2021 Update. SCF then amended its answer to assert a claim for breach of contract against Supreme Rice, including a request for attorney fees to the extent that Supreme Rice accepted Turn’s tender and pursued direct claims against SCF Marine (including breach of Supreme Rice’s obligation to hold SCF Marine harmless). Supreme Rice and Turn settled on the eve of trial, leaving SCF Marine’s claim for attorney fees to be resolved by the court. SCF Marine argued that Supreme Rice breached the contract by not moving to dismiss the Rule 14(c) tender because the contract required suit be brought within nine months after the loss. However, Judge Ashe noted that SCF Marine had “participated in lengthy discovery, most of it self-generated, running up hundreds of thousands of dollars in attorney’s fees and costs, only to roll out its ace-in-the-hole time-bar defense in a motion for summary judgment on the eve of trial and then seek to blame Supreme Rice for not ending the litigation against SCF Marine sooner.” Reasoning that “Supreme Rice cannot and should not be held accountable for an action that SCF Marine could, and should, have taken earlier on its own behalf,” Judge Ashe declined to award attorney fees to SCF Marine.
Court had admiralty jurisdiction over action against company supplying spud barges and excavators for dredging work and the bonding company for the work; United States ex rel. B&S Equipment Co. v. North American Specialty Insurance Co., No. 21-1373, 2021 U.S. Dist. LEXIS 200897 (E.D. La. Oct. 19, 2021) (Morgan).
The United States entered into a contract with Carter’s Contract Services for work on the Gulf Intracoastal Waterway. Carter’s subcontracted with Fish Tec, which subcontracted with Quality First to perform some of the dredging work in Franklin County, Florida, and North American Specialty issued a payment bond on behalf of Quality First. Quality First subcontracted with B&S Equipment to provide spud barges and excavators for the dredging work, and B&S alleged that Quality First did not pay it for the equipment. B&S brought this action against North American Specialty and Quality First, with count one against both defendants on the bond and with count two against Quality First for breach of a maritime contract. The defendants moved to dismiss count one, asserting that the bond did not qualify under the Miller Act (the Act does not extend its protections to third-tier contractors like B&S) and did not afford jurisdiction to the federal court. Judge Morgan agreed that the court lacked jurisdiction on that basis and then considered whether the court had admiralty jurisdiction. Concluding that the subcontract to provide spud barges and excavators for dredging in the Gulf Intracoastal Waterway was a maritime contract, Judge Morgan held that the court had admiralty jurisdiction over the claims by B&S under the contract. Although the bond was not a Miller Act bond, Judge Morgan held that B&S had sufficiently stated grounds for a claim against Quality First and North American Specialty on the payment bond in the action over which the court had subject matter jurisdiction. Therefore, she did not dismiss count one on the bond.
Judge found fact questions on seaman status with respect to Port Captain/engineer/deckhand on his employer’s vessels; Ton v. ABC Insurance Co., No. 6:18-cv-01194, 2021 U.S. Dist. LEXIS 202697 (W.D. La. Oct. 20, 2021) (Hanna).
Jason Ton was employed by Abe’s Boat Rentals as an engineer, deckhand, and Port Captain. While working as a Port Captain, Ton fell down an open hatch on the ABRAHAM and then brought this action in federal court as a seaman under the Jones Act. Arguing that a majority of Ton’s work was land-based and the connection to vessels was transitory, Abe’s moved for summary judgment on Ton’s claim of seaman status. Magistrate Judge Hanna found a fact question from the evidence presented whether Ton performed substantial work on vessels (duration element of the connection test). Magistrate Judge Hanna then addressed whether Ton satisfied the nature element of the connection test for seaman status under the recent en banc decision of the Fifth Circuit in Sanchez v. Smart Fabricators. In contravention of the Supreme Court’s Papai decision, that was the basis for Sanchez (maintenance work on a vessel at the dock is not sea-based work and does not satisfy the nature element), Magistrate Judge Hanna stated: “His work was arguably sea-based or involved seagoing activity, even when he was working shoreside, because the task of providing a seaworthy vessel, which is a non-delegable duty, is uniquely tailored to the demands required of a vessel working on the oceans and subject to the perils of the sea.” Consequently, Magistrate Judge Hanna denied the motion for summary judgment. Magistrate Judge Hanna did note that Ton spent at least some of his time sailing with the vessels from location to location, but did not discuss whether that time was substantial in duration.
Dale M. Spurlin claimed that he developed mesothelioma from exposure to asbestos-containing equipment while serving on Navy ships. He brought this action against the manufacturers of equipment allegedly containing asbestos, and the manufacturers moved for summary judgment on the grounds that they had no duty to warn of product hazards, there was no proof of causation, they were insulated from liability by the government-contractor-immunity defense, and Spurlin was not entitled to punitive damages. Judge Battaglia first addressed the applicable law and held that maritime law applied to the claims. The defendants then asserted that their products did not require incorporation of asbestos and that the Navy required incorporation of asbestos parts. Judge Battaglia rejected that the involvement of the Navy was relevant to the question whether the products required incorporation of asbestos for the duty question. Therefore, Judge Battaglia proceeded to analyze whether the products in this case required incorporation of asbestos. With the exception of one defendant, whose product was not shown to be on the vessels, Judge Battaglia found that all of the products required incorporation of asbestos and that there were triable issues whether the defendants had reason to know that the integrated product was likely to be dangerous to its intended users and that the users would not realize the danger. Consequently, Judge Battaglia held that the defendants owed a duty, and he then addressed the causation evidence and found sufficient evidence of product-specific exposure to deny summary judgment. As there were fact questions whether the defendants knew more about the dangers of their equipment than the United States did but did not warn the United States, there were triable issues on the application of the government-contractor immunity defense. The defendants also moved to dismiss Spurlin’s (and his wife’s) claims for loss of consortium and punitive damages based on the Miles uniformity principle. Although Spurlin did not bring a Jones Act claim, he would not have been entitled to recover these elements of nonpecuniary damages if he had. Concluding that the Jones Act is a parallel statutory scheme that provides an appropriate benchmark in assessing the damages in this case, Judge Battaglia held that Spurlin and his wife were not entitled to recover loss of consortium or punitive damages. Turning to Spurlin’s motion to dismiss the defendants’ sophisticated purchaser defense, Judge Battaglia agreed with a previous decision holding that the sophisticated purchaser defense is not available under maritime law in cases involving asbestos. See June 2021 Update. The manufacturers then filed a motion for summary judgment asserting that they were entitled to derivative sovereign immunity under the Yearsley case. Judge Battaglia rejected the manufacturer’s argument, however, as the failure to warn about the hazards of asbestos could not be attributed to any specific government instruction prohibiting the manufacturers from warning about the dangers of asbestos. Instead, the Navy authorized the manufacturers to provide warnings and relied on them to identify hazards in their products. Therefore, the manufacturers were not entitled to sovereign immunity.
Judge did not decide whether Louisiana law applied to bad faith claim in connection with policy with a New York choice-of-law clause; IFG Port Holdings, LLC v. Underwriters at Lloyds, No. 2:19-cv-00835, 2021 U.S. Dist. LEXIS 204386 (W.D. La. Oct. 22, 2021) (Doughty).
IFG operates an export grain terminal at the Port of Lake Charles, Louisiana. On June 28, 2018, self-heating of soybeans stored in Silo C-5 ignited the soybeans, resulting in a combustion explosion that blew the top off the silo. When Underwriters at Lloyds, which issued a cargo policy to IFG, declined to pay for the damage to the soybeans, IFG brought this action. Clause 3 of the policy afforded coverage for all risks of physical loss or damage to the cargo from any “external cause.” Clause 6 provided that the insurance covered fire while the goods were on shore and included the risk of explosion howsoever or wheresoever occurring. IFG moved for partial summary judgment, and the underwriters responded that there were material disputed facts whether the loss was from an external cause. However, Judge Doughty noted that IFG moved for partial summary judgment based on Clause 6 and that Clause 6 did not include any language requiring the fire or explosion to be from an external cause. The underwriters argued that the policy required an occurrence, which is defined as an accident and that an accident requires a fortuitous event. Assuming that the policy required a fortuitous event, Judge Doughty did not equate that requirement with the necessity of an external cause. In upholding coverage under New York law in accordance with the choice-of-law provision in the policy, Judge Doughty stated that “certainly soybeans self-starting, catching fire and causing an explosion to silo 5 . . . would be a fortuitous event and/or an accident.” See July 2021 Update. After Judge Doughty’s discussion of the New York choice-of-law clause, the underwriters moved to dismiss IFG’s bad faith claims brought under Louisiana law. Considering that his prior ruling on New York law was not controlling on the issue whether Louisiana’s bad faith statutes were applicable to the fire/explosion in Louisiana and the suit in Louisiana, Judge Doughty denied the motion, finding an issue whether enforcement of the contractual choice-of-law clause would be unreasonable or unjust.
Under Wilburn Boat, the law of the state of the insured’s principal place of business and of the accident was applied to a P&I policy despite the New York choice-of-law clause in the policy; the party for whom the insured was working was an additional insured on the policy; deletion of the “as owner” clause extended coverage to the charterer’s non-vessel liabilities; liabilities arising out of a seaman’s boarding the vessel were “in respect of the vessel” and were covered; Badeaux v. Eymard Brothers Towing Co., No. 2:19-cv-13427, 2021 U.S. Dist. LEXIS 204863 (E.D. La. Oct. 25, 2021) (Vance).
Clifton Badeaux, captain of Eymard Towing’s M/V PEARL C. EYMARD, was in the process of stepping onto the vessel from an adjacent spar barge when he slipped and fell. The spar barge was owned and operated by ARTCO, a subsidiary of ADM. Eymard Towing had entered into a time charter with ADM to employ the PEARL C. EYMARD to move barges in the vicinity of ADM’s export facility in Destrehan, Louisiana. Eymard Towing, the owner, was required to maintain P&I insurance on the vessel with the “as owner” clause deleted as to the charterer, ADM, and its affiliates and related companies and with contractual coverage for the obligation of Eymard Towing to ADM. The charter required that the charterer and its affiliated or related companies be named as additional insureds. Eymard Towing procured P&I coverage for the vessel with Stratford Insurance. The policy provided that Eymard Towing could name as additional insureds others for whom Eymard Towing was performing work and also where required by contract provided the loss occurred during and as a result of the actual performance of the work. The policy also provided that the “as owner” clause would not apply. Badeaux brought suit against Eymard Towing, ARTCO, and ADM, and ARTCO and ADM brought a third-party action against Stratford seeking defense and indemnity. In addressing the parties’ cross-motions for summary judgment, Judge Vance first had to determine the applicable law. Stratford’s policy contained a New York choice-of-law clause, and Judge Vance held that state law was applicable under Wilburn Boat (finding no established maritime rule on additional insureds). However, there was not a single connection with New York, and Judge Vance declined to apply New York law, choosing to apply Louisiana law, noting that Eymard Towing is a Louisiana corporation, doing business exclusively in Louisiana, the accident was in Louisiana, and the plaintiff is a Louisiana citizen. Judge Vance found that the policy unambiguously included both ADM and ARTCO as additional insureds—companies (and their affiliates and related companies) for whom Eymard Towing was working, directly or indirectly). Judge Vance then addressed whether the liability of ARTCO and ADM was covered under the vessel’s P&I policy, noting the deletion of the “as owner” language that has produced so many disputes under the Fifth Circuit’s Lanasse case. That presented the question whether the liabilities were sufficiently vessel related as the losses covered under the policy must be “in respect of” the covered vessel. Badeaux was not aboard the vessel when he was injured, but he was in the process of stepping onto the vessel when he slipped and fell. Judge Vance considered the policy wording to be ambiguous, even after applying rules of construction, so she held that the ambiguity would be resolved against the insurer. Accordingly, she concluded that an injury during the boarding of the vessel was in respect of the vessel and was covered.
From the state courts:
Filing limitation action and raising substantive objections to a claim was held to waive the owner’s right to arbitration; Mirro v. Freedom Boat Club, LLC, No. 2D20-3132, 2021 Fla. App. LEXIS 13990 (Fla. 2d DCA Oct. 15, 2021) (Khouzam).
Virginia Mirro, a member of Freedom Boat Club, sustained an injury on the Club’s vessel MAMA’S BUOY at Passage Key, near Venice, Florida, and the Club filed a limitation action in federal court in Tampa. Mirro filed a claim in the limitation action, and Freedom filed an objection to the claim and opposed her demand for a jury trial. Freedom asserted defenses that Mirro had not been injured and that any injuries she alleged were preexisting or the result of her own negligence. After the stay in the limitation action was lifted, Mirro brought this suit in Florida state court, and the Club asserted its right to arbitration based on the provision in the membership agreement signed by Mirro. Mirro opposed arbitration, arguing that the Club had waived its right to seek arbitration by failing to raise arbitration as a defense in its limitation action. The circuit court held that the Club had not waived its right to arbitrate because its conduct in the limited admiralty proceeding was not inconsistent with the right to arbitration. Writing for the appellate court, Judge Khouzam acknowledged that the filing of the limitation action, standing alone, did not waive the Club’s right to arbitration. However, Judge Khouzam noted that the Club had also sought exoneration and had raised substantive objections to the claim without asserting its right to arbitration. Considering the Club’s conduct to be inconsistent with an intent to arbitrate, Judge Khouzam held that the Club had waived its right to arbitration.
Federal law did not preempt application of California law on failure to prosecute suit, resulting in dismissal of Jones Act action filed in state court; Bartel v. American Trading & Production Corp., No. B308297, 2021 Cal. App. Unpub. LEXIS 6600 (Cal. App. 2d Dist. Oct. 20, 2021) (Currey).
The administrators of the estate of deceased seaman, Carsie Fairman, and his widow, brought this action in California state court under the Jones Act and general maritime law, claiming that Fairman developed lung cancer from exposure to asbestos products while employed on the defendant’s vessels. Over six years later, the defendant moved to dismiss the action under section 583.310 of the California Code of Civil Procedure, for failure to bring the case to trial within five years. The plaintiffs argued that the California statute was preempted by the Jones Act “because it gnaws at the substantive rights guaranteed by the Jones Act.” Holding that the statute providing for dismissal of a case for failure to prosecute was procedural and not substantive, the district court dismissed the case. Analyzing the Supreme Court’s American Dredging case, the appellate court held that uniform application of a rule regarding dismissal of an action for failure to prosecute was not necessary to maintain the harmony of the maritime law. The appellate court consequently agreed that the California law was not preempted. The appellate court then addressed the plaintiffs’ equitable estoppel argument and declined to apply the doctrine as the defendant made no representations concerning the five-year rule, nor did the plaintiffs rely on the defendant’s conduct as a basis for failing to bring the action to trial in five years.
Texas appellate courts reached different results with respect to injuries to Texas residents in dredging operations outside of Texas; Weeks Marine, Inc. v. Carlos, No. 01-21-00015, 2021 Tex. App. LEXIS 8514 (Tex. App.—Houston [1st Dist.] Oct. 21, 2021) (Kelly).
In our July 2021 Update we discussed the opinion of the San Antonio Court of Appeals in Weeks Marine Co. v. Landa, No. 04-20-00499-CV (Tex. App.—San Antonio June 30, 2021). In that case, Weeks Marine, whose headquarters is in New Jersey, was engaged to perform a dredging operation in New York, one mile out in the Atlantic Ocean off the coast of West Hampton Dunes. Its employee, David Landa, a resident of Starr County, Texas, was injured and brought this suit in Starr County under the Jones Act and general maritime law. Weeks filed a special appearance, which was denied by the district court. The San Antonio Court of Appeals, however, reversed the district court and rendered judgment that the case be dismissed for lack of personal jurisdiction. Weeks asserted that it has a regional office in Houston, but Landa and his co-employee, Luis Mijares, whom Landa blamed for the accident, also a resident of Texas, worked for the Dredging Division of Weeks located in Covington, Louisiana. Although both workers were recruited from Texas, and Landa took a physical and drug test in Texas, was paid by direct deposit to his bank account in Texas, once worked on a project in Texas, and received medical care in Texas after his accident, Justice Valezuela held that the contacts did not establish specific jurisdiction over Landa’s negligence claims. Landa also asserted a claim that Weeks failed to pay maintenance and cure to him in Texas and tried to base jurisdiction on breach of a contractual obligation to pay him in Texas. Judge Valenzuela held that Landa’s residence in Texas could not be the basis for Texas jurisdiction and that Weeks’s contacts with Texas were not substantially connected to the operative facts of the maintenance and cure claim. Finally, Justice Valenzuela rejected Landa’s argument that there was general jurisdiction over Weeks in Texas, noting that merely doing business in Texas is not sufficient for Weeks to be “at home” in Texas.
The decision of the Houston Court of Appeals involved injuries of Mario Carlos, a resident of Starr County, Texas, while working in the Mississippi River near the Port of New Orleans and in the New Zydeco Ridge near Slidell, Louisiana. When Carlos was hired, he was given a pre-employment physical and drug test in Hidalgo County, Texas, and Carlos accepted employment in Texas. He was paid a per diem when he travelled between his home in Texas and his work that was outside the state, and he did receive some training in Texas. Carlos brought this suit against Weeks Marine in state court in Houston under the Jones Act and general maritime law, and the district judge denied Weeks’ special appearance. In contrast to the decision of the San Antonio Court of Appeals, the Houston Court of Appeals held that Weeks had purposefully availed itself of the Texas forum and that the contacts related to Carlos’s claims because his supervisor, who allegedly ordered Carlos to take unsafe actions, lives in Texas, was recruited in Texas, and received training from Weeks in Texas. Justice Kelly, writing for the Houston court, did not cite the contrary Landa decision of the San Antonio court.
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
Almost 10 years ago Monica Markovich and I wrote an article, Forum Selection and Arbitration Clauses in Seamen’s Injury Claims, 11 Loy. Mar. L.J. 109 (Fall 2012). That article cautioned those contesting the enforceability of arbitration clauses about the delay such contests have in achieving resolution of their claims. The article noted that it took almost eight years before Vinod Kumar Dahiya determined the forum where his claim would be determined (arbitration). The decision of the Fifth Circuit that is discussed above, issued 9 years later, affirmed the arbitration award, 22 years after Dahiya’s accident.
This is an excerpt from the article (footnotes omitted):
The litigation arising out of the injury suffered in November 1999 by Vinod Dahiya demonstrates the consequences that may arise from an attempt to jump the “high bar” in challenging an arbitration agreement. . . .
The decision of the court of appeals in Dahiya was appealed both to the Louisiana Supreme Court and to the United States Supreme Court, and the United States Supreme Court denied the writ of certiorari on May 29, 2007. Almost eight years after his injury, Dahiya finally determined the forum where he could proceed with his claim.
We did not know at the time that it would be 22 years after his accident before his challenge to the award would be concluded by the Fifth Circuit.
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