October 2024 Longshore/Maritime Update (No. 305)
Notes from your Updater:
The Department of Labor has announced the National Average Weekly Wage that is applicable for the 12-month period beginning October 1, 2024. The National Average Weekly Wage is $999.55. Consequently, the maximum compensation rate for total disability and death for the period beginning on October 1, 2024, and extending to September 30, 2025, is $1,999.10, and the minimum compensation rate (not always the minimum rate and not applicable to employees covered by the Defense Base Act) payable for disability incurred after October 1, 2024, is $499.78 per week. Cost-of-living adjustments effective on October 1, 2024, are 3.76%.
On August 19, 2024, Judge Boardman of the United States District Court for the District of Delaware declared the 2020 Biological Opinion on the Federally Regulated Oil and Gas Program Activities in the Gulf of Mexico violated the Administrative Procedure Act and the Endangered Species Act in a suit brought by the Sierra Club, the Center for Biological Diversity, the Friends of the Earth, and the Turtle Island Restoration Network with respect to the impact of oil and gas extraction in the Gulf of Mexico on protected marine life, include the Rice’s whale (underestimating the risks of harm to protected species and the adequacy of measures to mitigate the risks). See Sierra Club v. National Marine Fisheries Service, No. 20-cv-3060, 2024 U.S. Dist. LEXIS 147292 (D. Md. Aug. 19, 2024).
On September 4, 2024, the Fifth Circuit affirmed the decision that reamers, who supervise the use of an oilfield service company’s underreaming tool on offshore drilling rigs, were exempt from overtime under the Fair Labor Standards Act. See Venable v. Smith International, Inc., No. 22-30277, 2024 U.S. App. LEXIS 22468 (5th Cir. Sept. 4, 2024) (Graves).
On September 4, 2024, Chief Judge Jarbou of the United States District Court for the Western District of Michigan held that logistic consultants, a freight broker, and a carrier procurement representative/dedicated operations representative for Fifth Wheel Freight, a logistics and transportation company, were not “transportation workers” whose employment contracts were exempt from arbitration under the Federal Arbitration Act, and their claims for overtime compensation were subject to arbitration. See Schuler v. B&L Systems, LLC, No. 1:24-cv-219 (W.D. Mich. Sept. 4, 2024).
On September 10, 2024, Judge Moss of the United States District Court for the District of Columbia entered judgment in favor of the United States in its action for civil forfeiture of the cargos of the M/T ARINA and M/T NOSTOS with respect to oil that originated from an oil terminal in Iran (based on the assertion that the oil was an asset of an entity that engaged in the planning and perpetration of a federal crime of terrorism—providing material support to a foreign terrorist organization). See United States v. All Petroleum-Product Cargo Onboard the M/T ARINA, Nos. 21-cv-3234, 21-cv-2817, 2024 U.S. Dist. LEXIS 162252 (D.D.C. Sept. 10, 2024). Aspan Petrokimya Co., which submitted claims in both actions, filed a notice of appeal on September 17, 2024).
On September 16, 2025, Harland & Wolff, the shipbuilder that was founded in 1861 and that constructed the TITANIC, announced that it was insolvent (and the appointment of administrators) after its request for assistance from UK Export Finance was denied. Operations at its Belfast shipyard, where it is building three warships for the UK, are continuing.
On the LHWCA Front . . .
From the federal appellate courts
Catherine Berry worked for the Air Force Central Welfare Fund at Lackland Air Force Base in Nevada. She fell and sought benefits under the LHWCA, and Administrative Law Judge Gee issued a compensation order awarding benefits and attorney fees to Berry. The Air Force Insurance Fund paid benefits to Berry for four years but stopped after identifying suitable alternative employment. Berry sought a default order from the District Director, and the District Director issued default orders in the amount of $88,105.01 plus attorney fees to secure the default orders. Berry then brought this suit against the Air Force Central Welfare Fund and Air Force Insurance Fund in federal court in Nevada, and the defendants paid the defaulted amounts (including penalties and interest on the default orders). The defendants moved to dismiss the case as moot, but Berry argued that she was entitled to attorney fees. Magistrate Judge Weksler recommended denial of Berry’s request and dismissal of the case as moot, as Berry did not successfully prosecute her claim, and Judge Mahan adopted the recommendation, reasoning: “No proceeding in this court gave a party any legal right or obligation it did not already have, which is required for fee shifting.” Berry appealed to the Ninth Circuit, arguing that her claim was not moot. She asserted that a judgment was mandatory under the LHWCA even if compensation was fully paid, citing the language of Section 18(a) and arguing that the role of the district court was merely to decide whether the default order was in accordance with law and then enter judgment for the amount declared in the default order. Writing for the Ninth Circuit, Judge Desai disagreed. She answered that a suit under Section 18 is “not exempt from Article III and prudential jurisdictional requirements, including mootness principles.” Judge Desai noted that Berry had been paid the entire amount she was owed and that attorney fees were “ancillary to the underlying action.” The claim for attorney fees did not “resuscitate an otherwise moot controversy.” Therefore, the Ninth Circuit affirmed the dismissal of the suit. Even though the case became moot, the district court had jurisdiction to consider the fee request, and Judge Desai addressed the dispute whether Berry successfully prosecuted her case in the district court. As Berry obtained no relief from the district court, she relied on the “catalyst theory” that she was the prevailing party because her lawsuit was the catalyst for her recovery. Judge Desai noted that the Supreme Court had rejected the catalyst theory as a basis for recovery of attorney fees under two prevailing-party fee-shifting statutes, and the Ninth Circuit “expressly held that the Supreme Court’s analysis was applicable to claims under Section 28(a) of the LHWCA. Judge Desai concluded: “Because Berry relies only on the defendants’ voluntary conduct without the necessary ‘judicial imprimatur,’ she is not a successful party and cannot recover fees.”
From the federal district courts
Lonnie Stubblefield, Sr. developed mesothelioma and allegedly died from exposure to asbestos from products containing asbestos while doing environmental clean-up and working as a ship scaler at various facilities in Washington. Stubblefield’s personal representative brought this suit in state court in King County, Washington, listing seven facilities at which Stubblefield was allegedly exposed to asbestos: Lockheed Shipyard, Todd Shipyard, and Lake Union Drydock in Seattle; Tacoma Boat, ASARCO and Simpson St. Regis in Tacoma, and Weyerhaeuser in Snoqualmie. After the parties exchanged discovery, Puget Sound Commerce Center (PSCC), successor to Todd Shipyard, removed the case to federal court in Washington based on the Federal Officer Removal Statute, asserting that the discovery responses provided the information of exposure to asbestos while Stubblefield was working on U.S. Navy ships at Todd Shipyard that made the case removable. The plaintiff responded that PSCC was on notice of the government contractor defense, as reflected in the defenses raised by PSCC prior to its removal. Judge King answered that PSCC was entitled to raise an affirmative defense without possessing the information necessary to remove the case based on the Federal Removal Statute. Reviewing the documents exchanged by the parties, Judge King concluded that it was not unequivocally clear that removal was proper until the testimony and declaration of the decedent’s brother, which was within 30 days of the removal. Accordingly, Judge King denied the motion to remand (although he sanctioned PSCC $250 for violating the court’s standing order prohibiting citations in footnotes and its order to remove the footnotes from its response brief.
Nearly 30 workers and/or surviving relatives brought suit (individually and as a class action) against 20 government contractors and insurance carriers seeking $2 billion in damages for federal statutory violations and common-law torts to “remedy the injuries and destruction caused to the lives, finances, and mental and physical well-being of thousands of American families and others whose loved ones were injured while serving America under contracts with the United States, and to punish the companies who made massive profits.” One of the defendants, Global Linguist Solutions, was subject to a class of “All Americans who worked for Global Linguist Solutions or its subsidiaries, in Iraq and Afghanistan who had injuries under the DBA that disabled them from working, and who have qualified disabilities under the ADA, who were subject to GLS’s policy of letting them go from work and refusing to rehire, reasonably accommodate their disabilities, and who could perform the essential functions of the job as translator and advisor to GLS with or without reasonable accommodation.” Global Linguist moved to dismiss the suit, arguing that the ADA claims asserted by the plaintiffs were “for all intents and purposes” claims for discrimination and retaliation under the Defense Base Act. Therefore, the claims should have been brought before the Department of Labor and could not be brought in federal court until the administrative process was exhausted. As the suit claimed that the workers were terminated because of DBA-compensable injuries when they could not return to work, Global Linguist argued that the workers were trying “to repackage their garden variety DBA disability/retaliation claims as ADA claims through artful pleading” and that permitting the case to go forward “would render the DBA’s ‘exhaustion rule too easy to bypass.’” Judge Nachmanoff disagreed, reasoning that the workers alleged that they were discriminated against “on account of their disabilities.” He added: “That claim is analytically distinct from allegations that they were discriminated against because they made a claim for compensation under the DBA.” Accordingly, Judge Nachmanoff held that the court had subject matter jurisdiction, and he considered the merits of the claims (rejecting the claims because the workers did not identify a reasonable accommodation that Global Linguist refused and because the workers did not allege that they requested reasonable accommodations during their time as employees of Global Linguist).
Kevin McCray, a longshore worker employed by Houston Terminal, was injured while lashing containers that were being loaded on the M/V MAERSK TENNESSEE, owned by Maersk Line. McCray asserts that he was standing on a metal grating on a walkway when it suddenly gave way underneath him, causing him to fall into the void space below. McCray brought this suit against Maersk Line in federal court in Houston, seeking to recover for negligence of the vessel under Section 5(b) of the LHWCA. Maersk Line moved for summary judgment and to exclude the sworn statement of John Depaolo, the gang foreman for Houston Terminal, that McCray submitted in opposition to the motion for summary judgment together with the supplemental report from McCray’s expert, Ronald Signorino, which was based on Depaolo’s sworn statement. Judge Ellison declined to exclude Depaolo’s statement. Maersk Line argued that the statement was ex parte and that Maersk Line was not given an opportunity to participate in its taking, but Judge Ellison answered that Maersk Line had not presented any rule or precedent that required McCray to notify Maersk Line before taking a witness’s statement. He added that most sworn statements are ex parte and that Maersk Line was free to depose Depaolo. Maersk Line also objected that Depaolo was not properly designated in McCray’s disclosures, but McCray listed him as a person with knowledge of relevant facts (although McCray did not include a telephone number or address). Eventually, McCray amended the disclosures to submit the statement and to include Depaolo’s phone number. As Depaolo was a witness with important testimony, and as any prejudice could be cured by granting a continuance, Judge Ellison declined to exclude the sworn statement. With respect to the submission of the supplemental expert report after the deadline for submission of reports, McCray argued that the expert did not know about Depaolo’s observation that the grating clip was not secure until after the deadline for expert reports had passed. As McCray agreed to let Maersk Line designate a rebuttal witness and to depose Signorino again, Judge Ellison did not find that Maersk would be prejudiced by allowing the supplemental report. Maersk Line also objected that Signorino, who is not an engineer, was not qualified to offer a structural engineering opinion that the weight of McCray would not have caused the clamps to bend or loosen. Judge Ellison disagreed, concluding that Signorino’s 60 years of experience in marine transportation, including promulgating safety regulations, qualified him to opine on this issue based on his experience with similar vessels and grates. Maersk Line also argued that Signorino did not provide the methodology he used to determine what would or would not cause the clamps to bend or loosen. Although Signorino did not examine the grate, he did rely on Depaolo’s statements and photographs as well as his own experience with grates, and Judge Ellison held that Signorino could base his opinion on his industry experience after reviewing the evidence presented. Judge Ellison then considered the motion for summary judgment on the Scindia duties of the vessel. He began with the active control duty and concluded that McCray had not submitted any evidence to preclude the court from finding that the walkway had been turned over to the stevedore and was not under the active control of the vessel (McCray testified that he and his co-worker were the only two people in the area). McCray argued that the vessel crew remained responsible for maintaining and inspecting the grating, but Judge Ellison responded that the responsibility cited by McCray did not establish that the vessel had active control over the walkway at the time of the accident. Therefore, Judge Ellison granted summary judgment on the active control claim. Judge Ellison then addressed whether there was evidence of a violation of the turnover duty. Maersk Line argued that McCray had not proffered any evidence on what caused the grate to fall; however, Depaolo stated that he inspected the grate after the accident and its securing clip (used to hold the grate in place) was bent and was loose. Thus, Judge Ellison concluded that a jury could infer that the grate gave way due to a faulty latching mechanism (“Laypersons are equipped to understand the cause-and-effect relationship between a ‘bent’ and ‘loose’ securing clip and a falling grate.”). And Depaolo’s statement was supported by the expert report of Signorino implicating the vessel’s failure to properly inspect and maintain the grating. Although the issue of whether the condition of the grate was present at the time of the turnover was more difficult because McCray and his co-worker had walked over the grate many times and they did not notice any defect when the inspected the walkway at the start of their shift, Judge Ellison found that there was sufficient evidence from Depaolo and Signorino that walking across the grate would not have caused it to give way in the absence of a defect (he also found that there was a fact question whether a reasonably competent stevedore would have anticipated the falling grate). Therefore, Judge Ellison declined to grant summary judgment on the turnover duty.
Blaine Parfait was employed by Coating Services as a painter/foreman to work on a job for Swiftships shipyard in Amelia, Louisiana, along the Avoca Island Cutoff. Parfait was below deck, inspecting the paint job performed on piping on the LCU 2026, a vessel that was docked at the Swiftships shipyard. Parfait fell through an open hatch that had been opened by an employee of Swiftships without any warnings. He was paid benefits under the LHWCA by the compensation carrier for Coating Services. Parfait brought this suit in federal court in Louisiana against Swiftships, seeking to recover for negligence under Section 33(f) of the LHWCA and the general maritime law. Swiftships moved for summary judgment, arguing that it did not owe a duty to warn an experienced worker like Parfait of the open and obvious condition of the hatch, comparing the duty it owed to the duty owed by vessel owners to injured longshoremen under Section 5(b) of the LHWCA. Judge Vitter responded that Swiftships did not cite any legal authority that the exception applicable to a vessel owner’s duty to warn of hidden or latent dangers applies to non-vessel owners like Swiftships. She added that the Fifth Circuit had rejected application of the Scindia duties to a loading stevedore in a suit by an employee of a discharging stevedore. Therefore, she declined to hold that the open and obvious nature of a dangerous condition would be a defense to the suit against the shipyard. Instead, Judge Vitter held that Swiftships owed Parfait a duty of ordinary care under the circumstances. Thus, the question was whether the injury suffered by Parfait was reasonably foreseeable from the failure to warn of the open hatch. As there was evidence that Parfait was not aware that the hatch was open and that his view of the open hatch was partially obstructed by a Swiftships employee, Judge Vitter found a fact question whether Swiftships had a duty to warn Parfait that required denial of the motion for summary judgment.
Wood Group contracted with Talos Energy to supply production operators on Talos Energy’s production platforms in South Marsh Island Block 130 on the outer Continental Shelf of the Gulf of Mexico. One of the workers Wood Group supplied to Talos Energy, Brian Spears, was working as a crane operator during the transfer of Joseph Sylvester, a crane mechanic employed by Gulf Crane Services, to a Talos Energy platform. Sylvester alleges that he was injured during the transfer to the platform from the M/V MISS PEGGY ANN when the personnel basket swung rapidly causing Sylvester to slam violently into a Connex box on the deck of the vessel. Sylvester brought this suit in federal court in Louisiana against Talos Energy, Wood Group, and Rodi Marine (owner/operator of the MISS PEGGY ANN). Talos Energy and Wood Group moved for summary judgment, asserting that both Sylvester and Spears were borrowed employees of Talos Energy and, therefore, both Talos Energy and Wood Group could not be held liable for the negligence of Spears because Sylvester is barred by the LHWCA from recovery for the negligence of a fellow servant. Sylvester argued that Wood Group had a greater burden than Talos because Talos only needed to prove that Sylvester was a borrowed employee of Talos, but Wood Group had to prove that both Spears and Sylvester were co-borrowed employees. Sylvester also argued that Louisiana law was applicable under the OCSLA, and that, under Louisiana law, Wood Group remained vicariously liable for the negligence of its nominal employee, Spears, even if he was found to be a borrowed employee of Talos Energy. Judge Hicks agreed that Wood Group would still be liable for the negligence of Spears, and then he turned to the application of the Ruiz factors to determine if Sylvester was a borrowed employee of Talos Energy. Judge Hicks found a fact question on the most important factor (which party had control of Sylvester), and the remaining factors were not overwhelmingly in favor of Sylvester being a borrowed employee. Therefore, Judge Hicks denied Talos Energy’s motion for summary judgment. He stated that the jury would resolve the disputed facts, and then the court would determine the borrowed employee status as a matter of law.
Irma Lee LaGrange claims that she contracted mesothelioma from laundering the clothes of her husband, Allen C. LaGrange, who worked at Avondale’s shipyard in Bridge City, Louisiana and was exposed to asbestos in his work as a laborer, welder, and pipefitter. Irma brought this suit in state court in Orleans Parish, Louisiana against the shipyard successor, Huntington Ingalls, and others, and Huntington Ingalls removed the case to federal court based on the Federal Officer Removal Statute. Irma filed an emergency motion to remand the case to state court (and to decline supplemental jurisdiction) based on the court’s ruling in another case that the defendants could not establish a government contractor defense under Boyle and Yearsley. Thus, all the claims and defenses would arise out of state law. Judge Barbier did agree that the government contractor defense was not available and granted Irma’s motion to bar the defendants from using the defense. Despite the denial of the defense, the defendants argued that the court should not remand the case because they had sufficiently established jurisdiction at the time of removal based on the Federal Officer Removal Statute. Judge Barbier agreed with the defendants that removal was established by the assertion of the government contractor defense that was not insubstantial or obviously frivolous on its face and that the exercise of supplemental jurisdiction was proper. Therefore, he held that the court would continue to exercise supplemental jurisdiction over the remaining state claims.
Patrick Bass, a contract employee of CSA Equipment Co., was injured while performing duties as a longshore worker on the M/V STAR ISFJORD near the Port of Mobile, Alabama, when he fell through a concealed manhole. He and his wife brought this suit in federal court in Alabama against the vessel and its owners/operators pursuant to Section 5(b) of the LHWCA. On the eve of closing arguments after an 8-day non-jury trial, the parties announced that they had reached a settlement, and Judge Moorer directed the parties to present the settlement information to the court reporter. Two months later, the parties submitted a joint status report that Bass refused to execute the negotiated settlement agreement, refused to discuss settlement of his workers’ compensation claim with the LHWCA carrier (Bass agreed in the settlement to be responsible for liens), and had grievances with his counsel. The defendants moved to enforce the settlement and to compel Bass to sign the release, and Bass argued that he did not have the capacity to enter into the agreement because he had taken Oxycontin and Diazepam earlier in the day of the settlement (and had been taking them throughout the trial and on a daily basis for a number of years). Magistrate Judge Murray recommended the enforcement of the settlement and that Bass and his wife execute the settlement agreement, concluding that Bass did not meet his burden of proving that he lacked the mental capacity to perceive and understand the nature and terms of the settlement agreement. Bass (not counsel) filed objections, and Judge Moorer noted that Bass could not represent his wife and that the objections were not specific and would likely not merit a de novo review. Nonetheless, Judge Moorer applied a de novo review to the findings as they relate to Bass and a clear error review as to his wife. Judge Moorer also noted that Magistrate Judge Murray had recommended redaction of the amount of the settlement because the settlement was confidential. Judge Moorer disagreed that the agreement of the parties rendered the amount of the settlement immaterial in this proceeding, and he ordered the redaction removed. He also stated in his opinion that the settlement amount was $4,250,000. Judge Moorer then pointed out that this was not a settlement in which the plaintiff argued that his lawyers settled the case without his consent. Rather, Bass was consulted and accepted the terms before the court reporter. Therefore, the questions were whether he was competent to enter into a settlement agreement and whether he had the same understanding of the terms as everyone else. Judge Moorer, who observed Bass throughout the trial, who knew that Bass took numerous medications, and who extended to Bass the ability to come and go as needed at trial based on his health and level of pain, could not find that Bass had a diminished capacity, reasoning: “To hold otherwise would in essence invalidate the entirety of his testimony at trial when it was clear that he was competent and capable of providing such testimony.” It was not until after the motion to enforce the settlement that Bass raised capacity as an issue. As to Bass’ understanding of the terms, the defendants asserted that federal law determined whether the settlement agreement is valid when the rights and liabilities derive from federal law, but Magistrate Judge Murray assumed that Alabama law applied. As the suit was based on Section 5(b) of the LHWCA, Judge Moorer stated that, generally, maritime law governs the interpretation of a settlement agreement, which is a “maritime contract.” Judge Moorer quoted the Strange case from the Fifth Circuit: “In the absence of a factual basis rendering it invalid . . . an oral agreement to settle a personal injury cause of action within the admiralty and maritime jurisdiction of the federal courts is enforceable and cannot be repudiated.” Judge Moorer contrasted Alabama law, which typically requires a signed, written document to create a valid settlement; however, an attorney may bind the client with the entry of settlement on the minutes of the court. Differing with the report of Magistrate Judge Murray, Judge Moorer applied federal common law and held that the settlement was binding. Judge Moorer also addressed the validity of the agreement under Alabama law, which was less clear because the settlement was orally dictated to the court reporter and was not entered in open court in the presence of the judge. However, Judge Moorer found the agreement was also enforceable under Alabama law as articulated on the record. He rejected Bass’ argument that, although he agreed to the settlement amount, he regretted that he had not presented a counteroffer after being told that the offer was on a take-it-or-leave-it basis. Judge Moorer found nothing in the record that would lead Bass to complain, other than his regret. Concluding that the amount appeared fair, Judge Moorer held that Bass and his wife were bound by the agreement and that the settlement would be enforced (Judge Moorer did order some modifications in the settlement agreement, including the removal of the confidentiality language as the amount had been publicly disclosed). Judge Moorer did not, however, believe that he had the authority to compel the plaintiffs to sign the agreement. Instead, he held that the plaintiffs had an option. They could sign the agreement and receive the payment, or they could refuse to sign and the case would be dismissed with prejudice in accordance with the settlement agreement. The latter would allow them to appeal the ruling, which would protract the litigation and subject them to the possibility of more fees and costs. As Judge Moorer did not want to deprive the plaintiffs of their appellate rights, he declined to order the plaintiffs to execute the release contained in the settlement agreement.
Cline Cockburn was employed by AmSpec as a petrochemical inspector and was performing work for Marathon Petroleum on the M/V SAN ROBERTO, owned and operated by Buffalo Marine Service. The vessel was moored at a dock owned and operated by Apex Co. in Mt. Airy, Louisiana. Cockburn was injured when the gangway from the vessel to the dock gave way. Cockburn brought this suit in federal court in Louisiana against Apex, Marathon, Buffalo Marine, and the SAN ROBERTO, asserting claims under the general maritime law, LHWCA Section 5(b), and Louisiana law. Apex brought a third-party action against Cockburn’s employer, AmSpec, seeking defense and indemnity pursuant to a contract giving AmSpec’s employees the right to access Apex’s facilities to perform work. AmSpec and Apex filed cross-motions for summary judgment with respect to Apex’s claim for defense and indemnity. The language of the agreement provided that AmSpec was granted the right to access Apex’s terminals for the purpose of performing work or providing services as specified under contracts or purchase orders with Apex. The agreement then stated that AmSpec would indemnify Apex from suits involving the exercise by AmSpec or its employees of the privileges granted by Apex to AmSpec under the agreement. AmSpec argued that the indemnity was not applicable because AmSpec was performing work for Marathon, not Apex, so AmSpec was not using the privilege of access that was granted by the agreement. Apex responded that the agreement applied because it was the only means by which AmSpec could access Apex’s secure terminal facility. As AmSpec was performing work for Marathon, Judge Ashe believed that it was clear and unambiguous that the indemnity did not apply. He explained: “If Apex intended for the access agreement to apply any time AmSpec’s employees entered its terminal facility, regardless of the contract or purchase order under which AmSpec was working, Apex should have said so in the agreement. It did not.” Therefore, Judge Ashe granted summary judgment to AmSpec, dismissing Apex’s third-party claim.
Alberto Alvarado, a nominal employee of Labor Finders, was sent to work at JacintoPort terminal in Houston, Texas to assist in loading cargo on the M/V BBC SAPPHIRE. While descending a wet and muddy ladder into the hold, he slipped and fell into the hold. Alvarado brought this suit in state court in Harris County, Texas against JacintoPort and the owner and operator of the vessel, and the vessel defendants removed the case to federal court based on diversity. JacintoPort and the vessel defendants moved for summary judgment. JacintoPort argued that it was the borrowing employer of Alvarado, and its exclusive liability was LHWCA compensation. Judge Hoyt agreed, noting that Alvarado was supervised by one of JacintoPort’s gang foremen and was working at JacintoPort’s dock. Although Alvarado was paid by Labor Finders and received LHWCA compensation from Labor Finders’ insurance carrier, Judge Hoyt held that JacintoPort was entitled to summary judgment. Judge Hoyt then considered the Scindia turnover duty with respect to the vessel defendants. Alvarado argued that the ladder, lighting, and chute through which the ladder descended were hidden hazards that could not be anticipated by any stevedore. However, Judge Hoyt answered that the responsibility for lighting and pointing out latent defects or unreasonably dangerous equipment lies with the stevedore, not the vessel. He added that mud, moisture, and dimly lit areas on a vessel are not, as a matter of law, unreasonable hazards. Accordingly, there was no violation of the turnover duty. Judge Hoyt also rejected the claim that there was a violation of the active control duty, concluding that the hold was under the control of the stevedore and vessel crewmembers were not involved in the operations concerning the movement of the cargo. Finally, Alvarado argued that the vessel had a duty to intervene due to the poor lighting, foggy condition, and mud on the ladder and platform for which the vessel crew had actual knowledge. However, Judge Hoyt pointed out that it was only after the hold was inspected that Alvarado was permitted to descend into the hold, and that inspection eliminated any duty on the part of the ship’s crew to intervene. Therefore, Judge Hoyt granted summary judgment dismissing the claims against the vessel defendants.
From the state courts
Gabriel Flueraru was employed by Dohle Manning Agency Romania as the third officer on the cargo vessel M/V INDUSTRIAL CRESCENT, owned by Hammonia Reederei. Stevedore Gulf Stream Marine was loading cargo into Hold No. 3 of the vessel at the Port of Houston, Texas, and Flueraru descended into the hold using a ladder affixed to the wall. Flueraru asserts that the handrail gave way, and he fell approximately 20 feet into the hold. Another crewmember attempted to descend the ladder and fell onto Flueraru. Flueraru brought this suit in state court in Harris County, Texas against his employer, the vessel owner, and the stevedore, and he nonsuited the claims against his employer and the vessel owner. Gulf Stream Marine moved for summary judgment, contending that it did not breach a duty of care to Flueraru. Judge Morris granted the motion, and Flueraru appealed to the Fourteenth Court of Appeals. Writing for the court, Justice Hassan noted that a stevedore is charged with the duty to perform its duties with reasonable safety and in a workmanlike manner. Flueraru asserted that Gulf Stream Marine breached its duty of workmanlike performance by inappropriately placing cargo in the hold to block its deck-level entrance and by failing to inspect and report the ladder’s hazardous condition. To support his first theory, Flueraru argued that he had to use the ladder because the stevedore blocked the deck-level entrance, but Justice Hassan held that the argument was insufficient to defeat the motion for summary judgment. Gulf Stream Marine submitted the declaration of the port captain who designed the stowage plan for the cargo (approved by the vessel) who stated that “the ladder was the designated means of entry and exit from the hold” and that the cargo was placed with the approval of the vessel officers. Flueraru presented testimony from Gulf Stream Marine’s walking foreman that it would have been wrong to block the deck-level entrance; however, the walking foreman admitted that if cargo was blocking the entrance, “that would have been because the stowage plan dictated it.” Thus, Justice Hassan concluded that it was not a breach of duty for Gulf Stream Marine to stow cargo that blocked the entrance. As to the second theory about the defect in the condition of the ladder, the evidence demonstrated that the ladder was used before the incident without incident with no complaints and that it was used after the incident without incident (all of the longshore workers exited the hold using the ladder). Accordingly, Justice Hassan concluded that there was no fact issue whether Gulf Stream Marine breached its duty of workmanlike performance in a manner that caused Flueraru’s fall, and Judge Morris did not err in granting summary judgment.
And on the maritime front . . .
From the federal appellate courts
John F. Curran III considered purchasing a marina located on the Tennessee River, but he discovered that the seller, Carl Fronabarger, had abandoned it and the marina had broken free from its moorings and drifted downriver. Curran allegedly salvaged the fuel tanks to avoid spillage of fuel, and he sought a salvage award from Fronabarger. Fronabarger refused to pay, and Curran filed a lien against the marina’s anchorage and moorings and refused to honor a check that he had issued to a crew member who helped him with the salvage. The State of Tennessee indicted Curran for filing a false lien for his salvage services (and for passing a worthless check), and Curran filed this suit in federal court in Tennessee against the State of Tennessee, Fronabarger, the presiding judge, and the prosecuting attorney, asserting that the State lacked subject matter jurisdiction to prosecute him for actions taken in connection with securing compensation for salvage services (arguing that his services in navigable waters fell squarely with the federal courts’ exclusive admiralty jurisdiction). He sought an injunction to halt the criminal proceedings, and Magistrate Judge York recommended denial of his request. Judge Anderson agreed with the recommendation for denial of the request for a preliminary injunction because the Younger abstention doctrine prevented the federal court from interfering with the state criminal prosecution. Curran filed an interlocutory appeal to the Sixth Circuit, citing the exception to abstention when the plaintiff challenges a statute that is flagrantly violative of express constitutional prohibitions. Curran argued that “Tennessee lacks jurisdiction to prosecute him for actions taken in connection with securing compensation for ‘a salvage operation [that] took place on federal property’—i.e., the Tennessee River—because such conduct falls squarely within the federal court’s exclusive admiralty jurisdiction.” The Sixth Circuit disagreed, responding that Curran could not show that Tennessee’s fraudulent lien law flagrantly violated express constitutional prohibitions and that the extension of admiralty jurisdiction did “not necessarily preclude a state from exercising concurrent jurisdiction with the federal government over criminal acts committed within its territorial waters.” Concluding that Curran did not show a likelihood of success on the merits, the Sixth Circuit affirmed the denial of an injunction.
John Wunstell, Jr. worked on the oil spill response as a captain in the Vessels of Opportunity program, assisting in controlled burns of crude oil that was floating on the surface of the Gulf of Mexico after the Macondo/DEEPWATER HORIZON blowout (he also claimed that dispersants were sprayed from the air onto his vessel during the cleanup). Wunstell alleged that he had to be airlifted by helicopter from his vessel in the Gulf of Mexico to West Jefferson Hospital. Claiming that he suffered from acute bronchitis and irritant rhinitis as well as post-traumatic stress disorder, major depressive disorder, somatic symptom disorder, and general mental anguish, Wunstell brought this suit against BP in federal court in Louisiana. BP moved to exclude the opinions of Wunstell’s causation expert, Dr. Judd Shellito, a pulmonologist, and for summary judgment. As with the opinions of Dr. Cook in other cases involving cleanup workers, Judge Milazzo held that Dr. Shellito’s opinions on general causation and specific causation were insufficient and should be excluded. In the absence of expert support on causation, Judge Milazzo granted summary judgment to BP with respect to Wunstell’s physical injuries (also rejecting Wunstell’s argument that he did not need expert testimony to prove his acute, transient medical conditions because they were within the knowledge of lay persons). As Wunstell could not prove his claims for physical injuries, Judge Milazzo also ruled that Wunstell could not succeed on his claim for mental damages (there was no causally related physical injury to support an emotional distress claim). Finally, Judge Milazzo rejected Wunstell’s claim for mental damages based on a zone-of-danger theory. Wunstell argued that he satisfied the test of being within a zone of danger because the vessel was tethered to the controlled burns, and he could not leave the dangerous area. Judge Milazzo noted that the Fifth Circuit had rejected more compelling arguments by workers who came upon the immediate aftermath of the explosion of the DEEPWATER HORIZON, were under the threat of subsequent explosions, could feel the extreme heat of the burning rig, and could hear deep rumbling sounds coming from below the surface of the water. See June 2023 Update.
Wunstell appealed the dismissal of his suit to the Fifth Circuit, and the court of appeals agreed that Judge Milazzo properly excluded Dr. Shellito’s causation opinions and properly granted summary judgment on Wunstell’s physical injury claims. The court held that Dr. Shellito’s opinions were insufficient on general causation because he did not identify the level of exposure to any substances (to which Wunstell was exposed) at which rhinitis and bronchitis appear in the general population. Wunstell argued that Dr. Shellito stated which chemicals caused his injuries at his deposition, relying on “the composite chemicals of these substances” through BP’s material safety data sheets. The Fifth Circuit answered that the court has previously rejected an expert’s reliance on the material safety data sheets alone without information on the level of exposure necessary for a person to sustain the injuries about which the MSDS warned. Shellito’s failure to include in his report the dose of the chemicals that he identified from the MSDS that could cause rhinitis or bronchitis was fatal to the general causation requirement. Wunstell also argued that Judge Milazzo erred by requiring expert testimony for general causation at all because the corporate representative for BP testified that the chemicals at issue could generally cause Wunstell’s rhinitis and bronchitis. The Fifth Circuit responded that this argument was raised for the first time in response to a Rule 59(e) motion to alter or amend and was not preserved for appeal. The Fifth Circuit then considered Judge Milazzo’s denial of Wunstell’s claim for mental injury damages on the grounds that he could not prove a predicate physical injury and, even if his claim was cognizable under a zone-of-danger theory, he did not present sufficient facts to sustain the claim. The appellate court explained that there must be physical contact that is more than trivial and that “transitory, non-recurring physical phenomena, harmless in themselves, such as dizziness, vomiting, and the like” are insufficient to establish physical impact. As with the prior discussion, Wunstell could not prove his emotional injuries were caused by the cleanup work because he did not provide “admissible expert causation evidence linking his contact with smoke and chemicals to his current emotional injuries.” The Fifth Circuit noted that the court has repeatedly declined to adopt or preclude the zone-of-danger theory in maritime cases. Once again, the court declined to decide the issue because Wunstell did not plausibly allege that he was at immediate risk of physical harm. The appellate court agreed with Judge Milazzo’s comparison of the case to the workers who were involved in the immediate aftermath of the explosion and fire on the DEEPWATER HORIZON and whose claims were denied. Although Wunstell complained that Judge Milazzo failed to assign any merit to the “inherent dangerousness” of his work, the Fifth Circuit agreed that is not what is required to satisfy the test. Consequently, the Fifth Circuit affirmed the denial of Wunstell’s claims.
This case involves a “gruesome accident” suffered by a maintenance diver, Eduardo Loaiza, while servicing the sailboat ALLORA, which docks in Marina Del Rey, California. S&K Dive Service dispatched Loaiza and David Jacobson to examine the bow thruster and propeller, and Loaiza dove underwater while Jacobson lowered the bow thruster. Unfortunately, Jacobson activated the propeller, which cut through Loaiza’s hands. The owners of the ALLORA, Live Life Bella Vita LLC and Gary and Nava Dordick brought this action in federal court in California seeking exoneration/limitation of liability, and the court issued the stay after the owners provided security in the amount of $788,000. Loaiza filed a claim in the federal action and a third-party complaint against S&K Dive Service, Jacobson, and others. The owners of the ALLORA also filed third-party claims against the third-party defendants for indemnity and contribution. Loaiza moved to lift the stay in the limitation action so that he could pursue his claims in state court, stipulating that the federal court had exclusive jurisdiction to decide exoneration and limitation and waiving any right to claim res judicata with respect to proceedings outside the limitation action. Judge Staton agreed to lift the stay so that Loaiza could proceed in state court, reasoning that Loaiza presented a single claimant situation despite the expectation of indemnity and contribution claims from the third-party defendants. Judge Staton reasoned that the case would be determined by Loaiza’s damages, and she did not see how the indemnity and contribution claims would affect the overall amount of damages. The owners appealed that decision to the Ninth Circuit, and S&K Dive did file the expected claim against the vessel owners for indemnity and contribution, with a claim for attorney fees and costs. Writing for the Ninth Circuit, Chief Judge Murguia explained the relationship between the Limitation Act and the Saving-to-Suitors Clause with the single claimant exception based on stipulations that protect the rights provided in the Limitation Act. She added that the single claimant exception “is not an end-run around limited liability for the shipowner,” and that a single claimant’s stipulations “provide insufficient protection to a shipowner . . . where there are multiple claimants to a fund that is inadequate to satisfy all claims.” The issue to be addressed was whether the indemnity and contribution claims presented a genuine “multiple-claims-inadequate fund” situation. Chief Judge Murguia concluded that “a party seeking indemnity or contribution is a separate claimant for purposes of the Limitation Act.” She noted that the Eighth and Sixth Circuits have held that indemnity and contribution claims do not create a multiple claimant situation because those claims are “derivative” of the underlying tort claim. Chief Judge Murguia disagreed with those decisions, stating that “this reasoning overlooks that a third-party claim may nevertheless increase a shipowner’s overall liability relative to the limitation fund.” In addition to the claims for indemnity and contribution, Chief Judge Murguia noted that the third-party defendants were seeking attorney fees and costs, which are not derivative of the injured party’s claims. That was a separate basis to conclude that there were multiple claimants. The fact that there were multiple claimants did not end the appellate inquiry whether the stay should be lifted. The stipulations could still be sufficient to protect the shipowners’ right to limit liability. Although Loaiza asserted that he would execute a revised stipulation to take into account the indemnity and contribution claims, Chief Judge Murguia held that all claimants, including the third-party defendants, “must bind themselves to equivalent stipulations” before the district court can lift the stay (citing the decisions of several circuit courts, including the Fifth Circuit’s Odeco case: “[I]n order to proceed in state court, all claimants must sign the stipulation protecting the shipowner’s rights under the Limitation Act.”). As S&K Dive Service asserted claims for indemnity, contribution, and attorney fees but did not agree to the same stipulations as Loaiza, it was improper to dissolve the stay, and the Ninth Circuit remanded the case to resume the limitation proceeding.
This case involves payment for the shipment of a cargo of aviation jet fuel from Singapore to California that Valero purchased from Koch Refining. Milos, the owner of the SEAWAYS MILOS, entered into a voyage charter party with GP Global on a SHELLVOY 6 form. The charter provided that freight and other charges were due on completion of discharge and that, if original bills of lading were not available at the discharging port, the owner would release the cargo in line with the charterers’ instructions against a letter of indemnity. Valero requested documentation regarding the charter from GP Global, and it was provided information that included the provisions on discharge and freight, including wiring instructions from Milos. Valero agreed to purchase the cargo from Koch on CIF/CFR terms (so that the seller would pay the costs and freight for the shipment). The negotiable bills of lading issued for the shipment listed GP Global as the shipper and Valero as the notify party. Milos released the cargo at the Vopak Terminal in Wilmington, California in accordance with GP Global’s letter of indemnity, directing that delivery be made to Valero, and Valero paid Koch more than $15 million for the fuel (including the cost of transportation). In lieu of the original bills of lading, Koch issued a letter of indemnity certifying that it transferred title to the cargo to Valero in accordance with the agreement for sale of the cargo. Milos was not paid the freight, demurrage, or speed-up charges (a total of $1,054,456.74), and GP Global had financial difficulties and commenced a debt restructuring process in which Milos submitted a proof of claim. Milos brought this suit against Valero in federal court in California, seeking to recover on the grounds that Valero agreed to be bound by the bills of lading (incorporating the terms of the charter party), that Valero is bound by the charter party under applicable English law, and that Valero assumed an implied obligation to pay the freight when it accepted the cargo. With respect to the claim that Valero had an express contractual obligation to pay freight because it was bound by the bills of lading and the incorporated charter party, Valero argued that its listing as the notify party on the bills of lading at most established that it was a third-party beneficiary of the bills of lading and did not impose obligations on it. There was no course of conduct by which Valero could be said to have consented to be bound by the bills of lading, and Valero had not brought a suit under the bills of lading that would adopt their terms. The issue was therefore whether Valero consented to be bound by the bills of lading by its acceptance of the cargo. Judge Snyder noted that judges have held that a non-party to the bill of lading became bound by its terms when it presented the original bill of lading and took possession of the cargo. However, she found sufficient evidence that Valero consented to be bound by the bills of lading because it organized the discharge operations and provided the discharge orders to the vessel, received and accepted the cargo pursuant to a letter of indemnity because the charter party instructed that delivery should be made by letter of indemnity in the event the original bills of lading were not available, and because the original bills of lading were endorsed to Valero. Judge Snyder then noted that the charter party did not expressly identify the party that was responsible for paying the freight, stating that the freight must be paid immediately upon completion of discharge as per owner’s telexed/emailed invoice. In this case, Milos sent an email to Valero, Koch, and others stating that freight was due and instructed that payment was to be made directly to Milos as the owner. Judge Snyder considered this email to demonstrate that Milos looked to Valero, among others, for payment of the freight charges as set forth in the email. In view of this holding, Judge Snyder did not address the argument that Valero was bound to pay the charges under English law, but she did address the argument that Valero assumed an implied obligation to pay freight by its acceptance of the cargo on discharge as the owner of the cargo. Judge Snyder agreed with that contention, holding that, by accepting and taking possession of the cargo that it owned throughout the voyage, Valero benefitted from the carriage and was subject to an implied obligation to pay the freight. Consequently, Judge Snyder granted summary judgment to Milos and entered judgment in its favor against Valero in the amount of $1,054,456.74. See August 2023 Update.
Valero appealed to the Ninth Circuit, arguing that it paid once for the cost of the carriage, and it should not have to Milos for the freight charge that it had already paid. Valero argued that it was not a party to the charter party that required GP Global to pay the freight and that Valero did not consent, directly or indirectly, to be bound by the bills of lading. Writing for the Ninth Circuit, Judge Hinderaker of the United States District Court for the District of Arizona, sitting by designation, began with the general principle of maritime freight liability that the party who sends the goods, the shipper, is primarily liable to the carrier for the freight charges, even when the bill of lading purports to impose liability on the party receiving the goods, the consignee. Judge Hinderaker did note that the parties may modify the general rule by contract, but the nonparty must consent to be bound under the contract. For example, the consignee may demonstrate consent to be bound by presenting the bill of lading and accepting the goods or by suing on the bill of lading (the context shows that the consignee was aware of the terms in the bill of lading). Judge Hinderaker added that courts may find an implied promise to pay in the situation of common carriage where there are publicly posted rates subject to default terms of a uniform bill of lading that binds the parties. In the district court, Judge Snyder relied on the Ninth Circuit’s States Marine decision for the proposition that a party’s acceptance of the goods or assertion of control over the goods may give rise to an implied obligation to pay for the shipping costs, even in the context of private carriage. Judge Hinderaker recognized that States Marine is susceptible to different readings and that it has caused confusion in the lower courts. The Ninth Circuit had to “clarify” its decision and did so “by adopting a narrow reading of it,” holding that “States Marine applied rules established in railroad cases to ocean carriers only to the extent that both are common carriers.” He reasoned that the narrow reading was in harmony with the basic principle that private carriage (primarily in charter parties) is governed by freedom of contract. With common carriage, the published rate forms an offer that is accepted by receipt of the goods under a bill of lading, charter party, or default rules obligating a consignee. In contrast, private-carriage consignees are not presumed to know key terms simply because they received and accepted the goods, and “they are certainly not expected to know they are liable for freight when an express contract says they are not.” Judge Hinderaker then considered whether there was an express contract between Milos and Valero that would rebut the presumption that the shipper pays the freight. The charter party provided that GP Global would pay the freight and demurrage, and the contract between Valero and Koch provided that freight was included in the purchase price. Judge Hinderaker concluded: “Perhaps Valero’s payment of freight to Koch was expected to pass through GP Global to Milos. We need not wonder. The Charter Party provides that GP Global and GP Global alone will pay freight. That is the end of it.” Milos also argued that Valero’s conduct reflected consent to be bound by the bills of lading. In the first place, the bills of lading stated: “freight payable as per Charter Party.” As the charter party made the freight payable by GP Global, it did not matter if Valero was bound by the bills of lading or not. Additionally, Valero did not sue under the bills of lading, and it did not present the bills of lading to receive the fuel. Milos released the fuel under a letter of indemnity from GP Global. Although Milos characterized the presentment of the bills of lading as a formality, Judge Hinderaker termed that “an odd way of putting it,” reasoning: “Presenting a bill of lading before accepting goods is customary because that ensures notice of the bill’s terms. If a party does not agree to the terms, they can choose not to exchange the bill for goods. Requiring presentation to precede acceptance is thus a formality for a good reason.” Finally, Judge Hinderaker rejected the argument that it was inequitable for Valero to benefit from the carriage of the fuel, explaining that Valero did not benefit unjustly because it paid the freight charge when it purchased the cargo. Therefore, the appellate court reversed the order granting summary judgment to Milos.
The United States brought suit in federal court in Texas against the State of Texas and its Governor, Greg Abbott, after Texas installed a 1,000-foot floating barrier in the Rio Grande River near Eagle Pass, Texas (“one of the nation’s busiest hotspots for illegal border crossings”). The United States asserted that Texas violated the Rivers and Harbors Act of 1899 by obstructing the navigable capacity of the Rio Grande. Judge Ezra granted a preliminary junction, ordering Texas to reposition the barrier to the Texas riverbank, and Texas appealed to the Fifth Circuit. A panel of the appellate court affirmed the preliminary injunction, and the full court granted rehearing en banc. A majority of the en banc court held that the United States was not likely to prove that the barrier is in navigable water and was not likely to succeed on its claim under the Rivers and Harbors Act. Writing for the majority, Judge Willett explained that navigability in a case under the Rivers and Harbors Act (Commerce Clause power) is a question of fact based on whether the waterway is used or susceptible of being used in its ordinary condition as a highway for interstate or foreign commerce over which trade and travel are or may be conducted in the customary modes of trade and travel on water. He added that a waterway is navigable if non-commercial uses evince its suitability for commercial traffic, even though the river is not currently being used for commerce or if reasonable improvements could make it suitable for commercial use. He noted that the river does not have to be suitable for commercial traffic during all seasons of the year, and the river remains navigable even if natural or artificial changes later render it incapable of commercial use. Judge Willett then addressed “where” the court must look for navigability when evaluating the regulatory power of the United States, and the majority held that the court must consider navigability for the stretch of the river containing the obstruction. After reviewing the evidence presented, Judge Willett concluded that the navigability of the Rio Grande was obstructed by rocks and ledges at lower water stages and that the question was whether ferries transporting cotton across the River at Eagle Pass in the 19th century established that the river was navigable. Citing the decisions in which the Supreme Court looked for trade or travel “up” or “down” a river, Judge Willett answered that “bank-to-bank” ferry travel did not suffice, as it did not “leverage the river’s flow and course to transport goods or people along the river, as they would if they used the river as a highway” (reasoning that ferries are an extension of land-based transportation in which the river is an obstacle to the transportation). Judge Willett added that, even if ferry traffic established navigability, the evidence did not demonstrate that the ferries were historically located in the 1,000-foot area where Texas put the barrier. Finally, Judge Willett addressed the argument that the Rio Grande could be made to be navigable with improvements (citing a 1975 study of the Corps of Engineers that improvement of the river for navigation was physically possible). However, he rejected the argument because the study and evidence from the United States did not establish that improvements would be cost-effective. As the majority concluded that the barrier was not in a navigable stretch of the Rio Grande River and that the Rivers and Harbors Act did not apply, the United States did not show a likelihood of success, and the full Fifth Circuit reversed the preliminary injunction. See August 2024 Update.
While the appeal of the preliminary injunction was proceeding, Judge Ezra denied Texas’ motion to dismiss the claim of the United States under the Rivers and Harbors Act, and he set the case for a non-jury trial. Texas demanded a trial by jury, and Judge Ezra rejected the argument on the ground that the case was a purely equitable action seeking an injunction, for which no jury was allowed at common law. Texas sought mandamus in the Fifth Circuit, arguing that the claim under the Rivers and Harbors Act served the same essential function as a historical claim for ejectment at common law. Texas reasoned that the claim permitted the United States to regain possession of the portion of the Rio Grande where Texas placed the barrier, and the United States had no such right because the Rio Grande was not a water of the United States under the Rivers and Harbors Act. The United States responded that its claim was not premised on a claim of ownership or possession, and instead was based on its seeking to ensure navigation and commerce free of obstruction. Writing for the Fifth Circuit, Judge Stewart held that Texas’ argument failed because the action for ejectment is to recover possession of land when the party is out of possession. Judge Stewart did not believe that Texas had “effectively disseised the United States of this section of its border.” The purpose of the suit was not to put the United States into possession; rather, it was to compel Texas to remove the barrier. Judge Stewart reasoned that the more appropriate analogy was the abatement of a public nuisance or purpresture, where there is a long tradition of equitable suits to clear obstructions. Finally, Judge Stewart held that Texas failed to establish that the injunctive relief sought by the United States under the Rivers and Harbors Act was legal in nature (rejecting the focus on the prayer for all “just and proper” relief as a “standard prayer for relief”). As Texas was not entitled to a jury trial, the appellate court declined to issue a writ of mandamus.
From the federal district courts
Chavis Barrs and others were on Rick Vines’ fishing vessel for an offshore fishing excursion that embarked from Murrells Inlet in South Carolina. As the vessel departed, they were warned by the captain of another vessel that sea conditions were too rough for a trip offshore. Nonetheless, Vines navigated his vessel toward the open ocean. Vines accelerated the throttle without warning, which caused the vessel to pitch in the rough sea. Barrs, who was not yet seated, was thrown to the deck and brought this suit in federal court in South Carolina against Vines, basing jurisdiction on admiralty and alleging a single count for maritime negligence. Vines moved to dismiss the complaint for two reasons, that the case was outside of the court’s admiralty jurisdiction and that it did not allege sufficient facts to support his negligence claim. Instead of replying to the motion, Barrs filed an amended complaint that added factual allegations of negligence but that did not substantively alter the jurisdictional allegations. Vines filed a Notice of Non-Opposition, arguing that Barrs was deemed unopposed to Vines’ motion to dismiss because he had not responded to the jurisdictional challenge. Barrs responded that his amended complaint mooted the motion to dismiss, and Vines replied that his original motion was still valid because the same jurisdictional defects were present in the amended complaint. After reviewing the contentions of the parties on the issue of who conceded what, Judge Norton denied as moot the motion to dismiss the complaint and stated that Vines could file a new motion to dismiss the amended complaint.
Jeffrey Fiorentino engaged Italian yacht manufacturer Cantiere Delle Marche to build a custom explorer yacht, entering into a Standard Yacht Construction Contract. The Contract contained a Publicity clause that provided for Fiorentino to use the yacht in its advertising and to make the yacht available at the 2021 Fort Lauderdale International Boat Show (at Cantiere’s expense). The construction was delayed, and the parties agreed to the yacht being displayed at the 2022 Fort Lauderdale International Boat Show. The parties also entered into an oral agreement that Cantiere could use photographs of the vessel during the Cannes Boat Show (with Cantiere paying all expenses associated with the exhibition). Cantiere failed to reimburse Fiorentino for costs associated with the Cannes Boat show, and Fiorentino revoked permission to use Fiorentino’s copyrighted images of the vessel and demanded that Cantiere discontinue use of the images. Cantiere continued to use the copyrighted photographs of the yacht, without authorization, and Fiorentino brought this suit against Cantiere and its founder/CEO, Vasco Buonpensiere, in federal court in Florida, alleging breach of contract, account stated (failure to pay expenses from the oral agreement), and copyright infringement. The defendants moved to compel arbitration based on the London arbitration clause in the Contract, citing the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention). After Fiorentino voluntarily dismissed Buonpensiere from the suit, Judge Altman addressed the central question—whether the claims asserted arose from the contract so as to require arbitration in accordance with the arbitration clause. Although the Cannes Boat Show was not enumerated in the Publicity clause (like the Fort Lauderdale show), Judge Altman held that the Cannes Boat Show fell squarely within the scope of the clause that the yacht would be made available at any other following boat show (reachable depending on where the yacht will be located and the buyer not using the yacht) and reiterating that Cantiere would have access to the yacht for any further promotional initiative in Florida or elsewhere. Fiorentino argued that the expenses for the Cannes Boat Show arose from the separate oral agreement and not from the original Contract, but Judge Altman answered that the Cannes Boat Show “plainly falls within” the scope of the Contract’s provision addressing further promotional events. He added that the Contract contained merger and modification clauses that the Contract constituted the entire agreement relating to the yacht and could not be modified except in writing. As the oral agreement was not in writing, it had no effect on the written agreement reflected in the Contract. Fiorentino also sought damages under the Copyright Act for unauthorized use of copyrighted photographs, but Judge Altman reasoned that the claim for use of the photographs involved “the very same acts” for which Cantiere was authorized under the Contract. Judge Altman noted that Fiorentino did not explain why it was relevant that the purpose of the Contract was the construction of a yacht, not the licensing of use of photographs of the yacht. The arbitration clause was not limited to disputes involving construction of the yacht; instead, it covered all disputes arising under the Contract, whose provisions addressed the use of photographs. Accordingly, Judge Altman agreed that all of the claims brought by Fiorentino in the suit were subject to the arbitration clause. Finally, Judge Altman addressed the defenses asserted by Fiorentino. Fiorentino argued that Buonpensiere told him that Cantiere would not enforce the arbitration provision, but Judge Altman answered that Florida law does not allow parole evidence that directly contradicts the express provision of the written agreement. Likewise, the assurances of Buonpensiere did not constitute a waiver as the Contract required waivers be made in writing. Consequently, Judge Altman stayed the case pending London arbitration.
On August 19, 2022, there was an explosion inside a building at the Mattapoisett Boatyard on Buzzards Bay in Massachusetts. The fire was believed to have originated from the vessel SEA-RENITY NOW, owned by James R. Silver, and the fire destroyed or damaged eight buildings, 47 motor vehicles, three houses, 28 boats, and other machinery and property. Silver brought this limitation action in federal court in Massachusetts. Several parties sought to bring claims against Z Glassing, LLC, a limited liability corporation with its principal place of business in Florida, which performed repairs on the SEA-RENITY NOW, including installation of a fiberglass fuel tank. Z Glassing responded that the federal court in Massachusetts lacked personal jurisdiction over it, asserting that it performed the repair on the vessel in Florida, that it did not commit a tort in Massachusetts, that it does not transact business in Massachusetts, and that it has never performed work on a vessel in Massachusetts. The claimants against Z Glassing did not contest its arguments, but they sought jurisdictional discovery “to test the averments.” However, the time had already been extended to respond, and the claimants did not even offer a “hunch” that discovery might yield relevant jurisdictional facts. Judge Talwani was not interested in permitting a “fishing expedition” in the absence of a “colorable case” for the existence of personal jurisdiction. Therefore, Judge Talwani granted Z Glassing’s motions to dismiss for lack of personal jurisdiction.
The Albert Revocable Trust, through its trustees Kevin S. Albert and Kimberly Leblanc Albert, purchased the yacht NAKOA for $1,425,000, using a loan of $1,140,000 from Luxury Financial Group (and its president, Noelle Norvell). Two months later, the Alberts agreed to sell their yacht to Noelani Yacht Charters (owned by Jim Jones) with payments over time. While the Trust was still the registered owner and insured, the yacht sank through the fault of Jim Jones and others. The Trust filed an insurance claim with ION Insurance Co., which was denied. The Alberts then brought this suit in federal court in Hawaii against ION Insurance and persons/entities involved in the procurement of the policy (Edward William SL, Allied Financial Network, and Allied’s president, Steve Bonner. The Alberts later amended their complaint to name Luxury Finance and Norvell, asserting claims for breach of contract, negligence, and breach of fiduciary duty (claiming that these defendants were required to ensure that the appropriate insurance for the vessel would be secured from a reputable marine insurance company that would insure the Trust against foreseeable losses). Luxury Finance and Norvell moved to dismiss the claims on the ground that they had no duty to secure the insurance on the vessel. The Alberts claimed that the duty owed by Luxury Finance and Norvell arose from the agreement for the loan that contained requirements for the closing, including proof of acceptable insurance coverage that included a breach of warranty insurance endorsement in an amount no less than the loan amount. A representative of Luxury Finance, Heidy Marrero, sent an email to Steve Bonner with Allied Financial (the Alberts’ insurance broker), enumerating the specific lender requirements for the insurance, including a breach of warranty endorsement in an amount no less than the loan amount. Bonner sent a certificate of insurance, and Marrero replied that she did not see a breach of warranty endorsement. The Alberts alleged that the policy was not issued with the required endorsement and that they relied on Luxury Finance to meet their insurance needs. After Luxury Finance produced an email chain in which Bonner sent Marrero an updated certificate that listed the breach of warranty endorsement, the Alberts focused on a different failing—that Luxury Finance had a duty to investigate whether the certificate of insurance was fraudulent (it should have looked to see that the policy actually contained the endorsement). With respect to the claim for breach of contract, Judge Mollway noted that the Alberts alleged two failings with respect to the insurance—failure to obtain whatever insurance was “appropriate” to protect the vessel from foreseeable losses and failure to obtain the breach of warranty endorsement. Judge Mollway found that both assertions survived the motion to dismiss. Luxury Finance only focused on the breach of warranty, so Judge Mollway declined to dismiss the first claim. Turning to the breach of warranty endorsement, Luxury Finance argued that the endorsement is to protect the interests of the lender, not the borrower, in the event the insured causes damage to the property (citing a 1992 Texas case). Judge Mollway was not inclined, however, to dismiss the claim from this one case that did not involve a marine policy or what the lender engaged the finance company to obtain. Luxury Finance also argued that the structure of the agreement indicated that Luxury Finance had no duty to procure the endorsement. Luxury Finance cited the cannon of construction noscitur a sociis, which “provides that the meaning of words may be determined by reference to their relationship with other associated words and phrases.” There were seven requirements prior to closing, and the Alberts were responsible for four of them, one was the responsibility of a third party, and one was a condition precedent. Luxury Finance argued that “it would make little sense for the parties to have ‘slipped one item into that list that, unlike all others, both parties expected the Luxury financial Group to be responsible for.’” Judge Mollway answered that rules of construction are “guides, not binding law.” She noted that courts typically cited canons of construction in summary judgment rulings and stated that Luxury Finance was “prematurely giving primacy to a canon of construction.” Therefore, she did not believe that Luxury Finance had established that it was entitled to dismissal of the breach of contract claim (she similarly declined to dismiss the claim for breach of fiduciary duty as the agreement was not clear enough to support a conclusion that Luxury made no agreement giving rise to a fiduciary duty). Judge Mollway then considered the negligence claim in which the Alberts argued that Luxury Finance failed to follow up that a breach of warranty endorsement was obtained. As noted, that allegation was proven to be incorrect, as Luxury Finance did follow up and received the certificate of insurance with the endorsement. The Alberts then changed their argument to claim that Luxury Finance should not have relied on the certificate of insurance and should have demanded to see the actual policy. The Alberts cited no authority establishing a duty to look beyond the certificate, and Judge Mollway declined to create such a duty. Therefore, she dismissed the negligence count.
BAE Systems Norfolk Ship Repair entered into a contract with the Navy to perform maintenance, modernization, and repairs on the USS TORTUGA at its shipyard in Norfolk, Virginia. The contract was for a fixed price, but it included a clause providing for reimbursement of reasonable costs when the Navy activated BAE’s heavy weather plan. The Navy activated the plan in connection with Hurricane Dorian in 2019, and the Navy paid a portion of the costs sought by BAE on its own behalf and on behalf of its contractors. BAE brought this suit in federal court in Virginia seeking to recover a total of $1,954,382 ($903,274 on its behalf and $1,051,108 on behalf of its subcontractors) for a 21-day schedule delay. The case was tried to Chief Judge Davis, who found that the direction to implement the heavy weather plan caused 11 days of critical path delay for a total recovery of $443, 127 ($429,539 to BAE for its claims, $11,269 for its subcontractor claims, and $2,319 for its expenses and profit on the subcontractor claims).
RMK Merrill brought this action against the M/Y “LIFESTYLE” and its owners seeking to recover for repairs and storage for the vessel. The court granted a default judgment in favor of RMK Merrill, and the vessel was sold at a Marshal’s sale to RMK Merrill for a credit bid of $5,000. When RMK Merrill sought to sell the vessel, it discovered that there was still a lien on the vessel’s state title document in favor of USAA Federal Savings Bank in the state records despite the sale that “extinguished all liens and encumbrances” on the vessel. RMK Merrill contacted USAA to try to obtain release of the lien, but it received no response. RMK Merrill then amended its complaint to name USAA to seek an order to remove the lien and to require USAA to pay a share of the custodia legis expenses. Magistrate Judge Sanchez addressed the issue whether the court had supplemental jurisdiction over the amended claim and recommended that the claim did not arise from the same common nucleus of facts as the original action. He reasoned that the original claim involved the maritime agreement for repairs and storage, and the amended claim arose from subsequent acts/inactions of USAA in response to the default judgment against the vessel. Although Magistrate Judge Sanchez considered the court “powerless to grant a default judgment” on the amended claim, he also held that RMK Merrill had not stated a claim on which relief could be granted, reasoning that RMK Merrill had “failed to allege facts showing that USAA had an obligation to release its electronic lien where plaintiff acknowledges that the lien was already ‘terminated at the US Marshal Sale’ and ‘no longer exist[ed].’” As Magistrate Judge Sanchez did not believe that USAA had any obligation to act, there was no cognizable theory of recovery. See August 2024 Update.
RMK Merrill filed objections to the recommendation. RMK Merrill did not object to the finding that the court lacked subject matter jurisdiction over the claim against USAA and that a default should not be entered against USAA. However, RMK Merrill objected to the finding that it failed to state a claim against USAA so that it could preserve its claims against USAA. Judge Scola agreed that the court lacked subject matter jurisdiction against USAA as there was no admiralty or diversity jurisdiction and the claim against USAA did not arise from the same operative facts as the claim for repairs. As the court lacked subject matter jurisdiction over the claim against USAA, the court could not consider the merits of the claim. Although Judge Scola believed that Magistrate Judge Sanchez’s conclusion that the count failed to state a claim was well reasoned and most likely correct, he agreed with RMK Merrill that the court should not address the merits of the claim. Accordingly, Judge Scola dismissed the count against USAA without prejudice.
Patsy Watson, a passenger on the CARNIVAL MARDI GRAS slipped and fell on a puddle of liquid as she walked on the tile flooring through the casino on the vessel. Watson brought this suit against the cruise line in federal court in Florida, asserting direct negligence, negligent failure to warn, negligent training and supervision, negligent design and construction, and vicarious liability. The cruise line moved to dismiss the pleading for several reasons, and Magistrate Judge Goodman began with the argument that the complaint was an impermissible shotgun pleading. Watson responded that the pleading could not be a shotgun pleading because she separated her allegations of negligence into five separate causes of action. Magistrate Judge Goodman disagreed with Watson because the counts commingled claims for direct negligence with claims for vicarious liability. For the counts asserting direct negligence, the allegations of notice were conclusory and lacked factual support. Magistrate Judge Goodman noted that Watson sought to establish notice by asserting the length of time the condition existed, but she did not allege the details. In fact, Watson appeared to abandon her argument on the duration of the dangerous condition and to claim that notice could be established from prior similar incidents. However, her assertion of a recurrent spill problem did not identify a single prior incident. Magistrate Judge Goodman did not believe that her allegation of the high traffic in the casino and undocumented frequency of spills was sufficient to plead notice. Magistrate Judge Goodman noted that the cruise line has an “own the spill” policy, but that did not put it on notice of every transitory substance on all cruise ships at all times. Therefore, he did not believe that the complaint was sufficient with respect to notice for the direct liability claims. The cruise line objected to the failure to warn count on the ground that it did not allege that the danger was not open and obvious. Watson simply alleged that the condition was “hidden,” but she did not allege facts to support that conclusion. As she will be filing an amended complaint, Magistrate Judge Goodman stated that “she might as well clean up the fuzzy allegations concerning the failure to warn claim.” Although Watson did not contest the cruise line’s arguments with respect to the claims for vicarious liability, negligent training and supervision, and negligent design and construction, Magistrate Judge Goodman stated that the complaint would be dismissed without prejudice and that Watson could pursue those claims if she had sufficient facts (and could do so under her Rule 11 obligations).
Kyle Ellison was a deckhand on the M/V ST. PEREGRINE when a collision occurred with two barges while the ST. PEREGRINE was building a tow. Ellison brought this suit in federal court in Louisiana against Marquette Transportation as the owner/operator of the ST. PEREGRINE, and Marquette moved for summary judgment on Ellison’s claims for Jones Act negligence and unseaworthiness. Marquette argued that Ellison was trained to watch for the bump when a tug is building a tow of barges and that this accident was the result of the deckhand failing to brace himself when he knew the bump was about to occur, noting that Ellison’s co-worker was uninjured. Ellison responded that Marquette was negligent for failing to announce, “watch the bump” and that the bump that led to his injury was “harder than normal” because the captain was “coming in too hot.” Chief Judge Brown concluded that there were fact disputes that precluded granting summary judgment on the negligence count. As to unseaworthiness, Marquette argued that this incident was, at best, an isolated incidence of operational negligence for coming in too fast; however, Ellison argued that the crew was not properly trained and engaged in unsafe work methods because the captain overworked the deckhands and frequently took risks by doing dangerous maneuvers. Therefore, Chief Judge Brown held that there were fact disputes whether the tug was unseaworthy.
Ellison sought recovery of damages for loss of enjoyment of life, and Marquette moved for partial summary judgment that Ellison was not entitled to recover (on his claims for Jones Act negligence and unseaworthiness) certain non-pecuniary damages (such as loss of enjoyment of life, mental anguish, emotional distress, and scarring/disfigurement). Ellison conceded that he was not entitled to recover non-pecuniary damages, and Chief Judge Brown dismissed Ellison’s claim for non-pecuniary damages with prejudice.
Marquette moved to exclude the opinions of Ellison’s expert economist, G. Randolph Rice, because of his use of an improper base wage rate for his calculations. Marquette argued that Rice used a base wage rate of $75,400.19 per year, which was double the gross earnings of Ellison at the time of his accident, $35,000 per year. Ellison agreed that the base wage rate used by Rice was incorrect, but he responded that Rice should be allowed to supplement his report with correct figures. Chief Judge Brown noted that the deadline had passed for the submission of reports and that Ellison would have to show that the failure to submit the opinion was substantially justified or harmless. Ellison did not offer an explanation why Rice used an incorrect wage rate, but Chief Judge Brown reasoned that Rice’s testimony was critical to Ellison’s case, and there was no evidence that the downward change in the economic loss would unfairly prejudice Marquette or require a continuance. Therefore, Chief Judge Brown denied the motion to exclude Rice’s opinion and ordered that Ellison submit a supplement report.
Marquette moved for summary judgment on Ellison’s claim that its denial of maintenance and cure was willful and callous, justifying an award of punitive damages. Marquette argued that its conduct did not justify an award of punitive damages because Ellison did not report an acute injury from the incident, that the text message exchanges between Ellison and his crew manager reflected that the injury was “done at my house,” and that the medical records at the time of the incident did not mention an acute injury on a vessel. In response to the demand for maintenance and cure, Marquette interviewed Ellison, one of his medical providers, and the captain of the vessel. After an unsuccessful mediation meeting with Ellison, Marquette agreed to pay maintenance and cure for Ellison’s leg injury but not for his lower back (based on the lack of complaints and the opinion of Marquette’s choice of orthopedic surgeons). Ellison argued that Marquette knew that Ellison was unable to work after the incident because his leg was swelling and that the text about the injury occurring at home was only sent because of veiled threats about Ellison’s job. Ellison also asserted that the medical records did reference his job and that Marquette failed to interview the lead deckhand on the vessel. Chief Judge Brown concluded that there was a fact question whether Ellison’s injury was caused or aggravated by his work, citing a record two weeks after the barge bump stating that the swelling “oftentimes will follow his left foot when he works on the River” and an intake form stating that wires constantly dropped on Ellison’s feet. As Marquette did not institute maintenance and cure for two years after receipt of these records, Chief Judge Brown believed that a reasonable fact finder could determine that Marquette’s denial was callous and arbitrary. Therefore, she denied the motion for summary judgment.
Kyle Rak was employed as a pilot technician of remotely operated vehicle systems by C-Innovation. He had just finished a hitch on the OSV ISLAND PERFORMER, a vessel owned by Island Ventures, which was located in Guyana. Rak was injured in an incident that occurred at the Sleepin Hotel and Casino in Georgetown, Guyana. Rak’s employment was terminated the next day, and Rak brought this suit in federal court in Louisiana against C-Innovation and Island Ventures, alleging an injury claim as a Jones Act seaman together with a claim for retaliatory/wrongful discharge. The defendants moved for summary judgment that Rak was not a seaman, and the parties did not dispute that Rak satisfied the requirements that his duties contribute to the function or mission of the vessel and that his connection to a vessel or fleet of vessels was substantial in duration. Judge Morgan applied the Sanchez factors to determine whether Rak’s connection was substantial in nature and noted that the defendants did not dispute that the work Rak performed was sea-based. The defendants contested the other two factors, whether the worker owed his allegiance to the vessel or a shoreside employer and whether the worker’s assignments were limited to performance of discrete tasks after which his connection to the vessel ended. Finding that the facts in this case were similar to those addressed by the Fifth Circuit in the Santee case (see April 2024 Update), Judge Morgan held that Rak was not a seaman and dismissed all of his claims. See June 2024 Update.
Four days after Judge Morgan’s decision, the panel of the Fifth Circuit in Santee granted rehearing and withdrew the opinion on which Judge Morgan based her grant of summary judgment. Rak filed a motion for reconsideration, and Judge Morgan believed that the second decision in Santee (see September 2024 Update) was an intervening change in controlling law that warranted reconsideration of her prior decision granting summary judgment to Rak. Applying the second Santee decision, Judge Morgan held that there were fact issues on Rak’s status as a seaman, and she vacated her prior grant of summary judgment.
Lesroy St. Bernard Christian, a passenger on the CARNIVAL CONQUEST, slipped and fell on a liquid substance on the deck as he approached the ice cream and beverage station on Deck 9 of the vessel. It was the last day of the three-day cruise, and Christian and his wife had witnessed liquid on the deck in the same area (in front of the self-serve drink machine). Christian brought this suit against the cruise line in federal court in Florida alleging negligence and negligent failure to warn, and the cruise line moved to dismiss the complaint. The cruise line argued that Christian did not adequately plead notice because he did not allege a specific length of time that the condition occurred or that any staff member knew of the dangerous condition. Christian alleged that his wife noticed the liquid in the same spot on prior days and that the crew regularly observed the liquid when they cleaned the deck each day. However, Magistrate Judge Goodman answered that there was no factual support as to when or how often his wife saw the liquid or when the cruise line cleaned the deck. Thus, the allegations did not sufficiently plead actual notice. Christian sought to plead constructive notice through substantially similar incidents, alleging that the cruise line had “previously been sued for the dangers a drink machine can pose,” and the same counsel defending the cruise line in this case represented the cruise line in the prior suit. Magistrate Judge Goodman did not believe that this pleading alleged notice with enough specificity “because there is no specificity.” Christian also argued that the cruise line was on notice of the dangerous condition of the drink machine because the cruise line had a specific company policy of using warning signs or cones in the area of the drink station as far back as 2009. However, Magistrate Judge Goodman noted that Christian did not plead that the cruise line had such a policy in effect on the CONQUEST at the time of this injury. Therefore, Magistrate Judge Goodman recommended that the complaint be dismissed with leave to adequately and plausibly allege notice. The cruise line also argued that Christian misstated the duty of care (reasonable care under the circumstances) by his allegation that the cruise line had a duty to keep the premises in a reasonably safe condition. Magistrate Judge Goodman agreed that Christian’s allegation was “problematic” because it was a duty based in Florida law, not maritime law. He recommended that Christian should remove and revise that language in an amended complaint. The cruise line objected to the pleading as to the failure to warn on the ground that Christian had not sufficiently pleaded that the dangerous condition was not open and obvious. As Christian pleaded that the liquid was obscured on one side by the drink machine, that the liquid was clear, and that the hazard was not open and obvious, Magistrate Judge Goodman recommended that the court deny this portion of the cruise line’s motion to dismiss. Finally, Magistrate Judge Goodman recommended that the court deny the cruise line’s assertion that the cruise line commingled different types of negligence within his negligence count. Magistrate Judge Goodman disagreed, reasoning that Christian had separated his claims for negligence and negligent failure to warn, and the negligence count did not contain distinct claims with distinct elements.
Karla Colarte, a passenger on the CARNIVAL CONQUEST, tripped and fell over an uneven/protruding molding while walking to breakfast at the Monet Restaurant on Deck 4 of the vessel. Colarte brought this suit against the cruise line in federal court in Florida, asserting claims for negligence, negligent failure to warn, and negligent failure to render first aid. She sought punitive damages with respect to the claim for failure to provide medical care, asserting that the cruise line refused to provide medical care because she could not pay the mandatory clinic fee. The cruise line moved to dismiss the complaint for failure to properly allege notice, because the cruise line had no duty to provide medical care, and because punitive damages were not available. Colarte alleged that the cruise line knew of the condition of the molding on Deck 4 because it existed for a sufficient length of time or occurred with sufficient regularity. Magistrate Judge Goodman reasoned that Colarte did not allege what the length of time was or how many reoccurrences there were. And, even if the condition had been present for a certain length of time, there was no allegation that the cruise line was aware of any danger. Colarte also alleged two similar trip-and-fall incidents to satisfy the notice requirement. However, the incidents did not involve the same vessel, the same area, or the same alleged dangerous condition. Accordingly, Magistrate Judge Goodman recommended that the counts for negligence and negligent failure to warn should be dismissed without prejudice. Turning to the claim for failure to provide medical treatment and the demand for punitive damages, Magistrate Judge Goodman noted the intra-district split on whether punitive damages are available in a passenger’s injury suit; however, he sided with the decisions permitted punitive damages if the injury is due to the defendant’s wanton, willful, or outrageous conduct. The cruise line argued that it did not have a duty to provide medical care, but Magistrate Judge Goodman answered that the cruise line could not provide and staff an infirmary on the ship and then avoid liability when it refused to accept the passenger’s insurance card and the passenger could not immediately pay the clinic fee. Magistrate Judge Goodman determined that Colarte stated a claim for failing to exercise reasonable care to furnish such aid and assistance and a reasonably prudent person would under similar circumstances. Similarly, Magistrate Judge Goodman believed that the allegations sufficiently alleged intentional conduct necessary to justify punitive damages.
Weatherford Artificial Lift Systems purchased 50 Rotaflex Machines (used in oil production on non-flowing wells) that were to be shipped from Tianjin, China to Everett, Washington. Weatherford contacted with freight forwarder Air Express/DHL Global Forwarding, which arranged for the shipment on the M/V IMABARI LOGGER through a charter with Pacific Basin and with Non-Vessel Operating Common Carrier Danmar Lines. During the voyage, 26 of the machines were lost overboard, and others sustained damage. 24 of the machines were discharged in Everett, Washington. There were three documents at issue in determining the rights of the parties. Weatherford entered into a Master Transportation Services Agreement with Air Express. Pacific Basin agreed with DHL Global Forwarding (China) for the charter of the IMABARI LOGGER, and it issued a billing of lading listing DHL Global Forwarding (China) as the shipper and DHL Global Forwarding as the consignee. The number and kind of packages listed: “50 packages.” It added that 50 packages were shipped on deck at shipper’s risk and that the carrier was not responsible for any loss or damage howsoever arising. The bill of lading also provided that it was subject to the Hague Rules, and it contained a limitation of liability for £100 per package. Danmar issued an Express Sea Waybill listing Shandong Weatherford as the shipper and Weatherford as the consignee. It provided that the shipment was governed by the Carriage of Goods by Sea Act, and it listed “50 packages” under the heading for the number and kind of packages. It also contained the provision that 50 packages were shipped on deck at shipper’s risk; however, the bill of lading contained a calculation for ocean freight based on cubic meters, although the carrier’s liability for a shipment to which COGSA applied was limited to $500 per package or freight unit billed for goods not packages. The bill reiterated that goods stated to be carried on deck were carried without responsibility of the carrier for loss or damage. Weatherford and its insurance carrier (AGCS Marine Insurance) brought this suit in federal court in New York against the vessel and Danmar entities, and they brought a separate action against Air Express in federal court in Texas. The cases were consolidated in the New York action. Danmar and Air Express filed a joint motion for summary judgment, and the owner of the vessel filed a motion for summary judgment. All of the defendants sought exoneration based on the “shipper’s risk” clause in the bills of lading. Alternatively, Danmar and Air Express moved to limit their liability to $21,200, and the vessel owner moved to limit its liability to either £4,200 or, alternatively £510,005. Magistrate Judge Lehrburger first addressed whether the case was governed by COGSA or the Harter Act, which are “compulsorily” applicable to shipments of goods to and from the United States. As COGSA does not regulate cargo that is stated to be carried on deck, and as neither bill of lading purported to extend COGSA to on-deck cargo, Magistrate Judge Lehrburger held that the Harter Act governed the shipment of the machines on the deck of the IMABARI LOGGER. Magistrate Judge Lehrburger then considered the validity of the exoneration of liability. As the Harter Act invalidates provisions by which carriers seek to exonerate themselves from negligence in loading, stowage, custody, care, or delivery of cargo, Judge Lehrburger held that the defendants could not use the clauses to avoid liability (he added that the clauses would also be void under federal common law). Judge Lehrburger then addressed the limitation clauses in the bills of lading, rejecting Danmar’s argument that it was entitled to invoke the limitations in the Pacific Basin bill of lading and holding that the defendants’ liability would be determined in accordance with the provisions of their respective bills of lading. Although Weatherford and AGCS argued that the limitations on liability were invalid under the Harter Act, Magistrate Judge Lehrburger disagreed, answering that the Harter Act does not allow complete exoneration, but it does not prohibit limitations on liability. Magistrate Judge Lehrburger then addressed whether the limitation should be based on 50 packages or a volume in cubic meters. He noted that the machines were prepared for shipment by placing them in bubble wrap covered by sheet metal and packaging foam and braided cables. Magistrate Judge Lehrburger had no doubt that this preparation qualified the machines as packages. As the Pacific Basin bill of lading repeatedly referred to the cargo as 50 packages, and as it contained no other indication of a unit of measurement to determine liability, Magistrate Judge Lehrburger granted partial summary judgment to Pacific Basin, limiting its liability to £100 per package (he did note that at some point the amount of the limitation might be so low as to be, in effect, the equivalent of an exoneration that would violate the Harter Act, but that issue was not raised in this case). With respect to the Danmar bill of lading, the limitation was in the amount of $500 per package or per freight unit billed for goods not packaged. As Magistrate Judge Lehrburger concluded that the machine was packaged, he held that Danmar should be granted partial summary judgment limiting its liability to $500 per package. The final issue was the liability of Air Express pursuant to the Master Transportation Services Agreement with Weatherford. The Agreement incorporated COGSA, as applicable, for international transportation by air, ocean, road, or rail, and for all services not governed by the statute, the liability was limited to 8.33 Special Drawing Rights per kilo. Based on his previous analysis, Magistrate Judge Lehrburger held that COGSA did not apply to the on-deck shipment. Although Weatherford and AGCS argued that the Agreement should be governed by the Harter Act in the absence of the applicability of COGSA, Magistrate Judge Lehrburger answered that a freight forwarder does not generally fulfill the same functions as a carrier; however, the evidence reflected that Air Express performed tasks outside the limited role of a freight forwarder. Nonetheless, it was not necessary to decide whether the Harter Act applied because the limitation of liability was not an exoneration and was not invalidated if the Harter Act applied. Therefore, Magistrate Judge Lehrburger recommended that the liability of Air Express should be limited to 8.33 SDR per kilo (the bill of lading described the shipment as 1427.7 MT).
Marguerite Dorrian, a passenger on the CARNIVAL VENEZIA, tripped and fell on a raised metal floor strip on Deck 4 of the vessel. She brought this suit in federal court in Florida against the cruise line, asserting negligence counts for failure to maintain and failure to warn. The cruise line moved to dismiss the complaint for failing to adequately allege that the cruise line was on notice of the dangerous condition and for failing to plausibly allege a breach of duty. With respect to notice, Dorrian pleaded that a number of passengers who saw Dorrian being attended by medical personnel posted that they had tripped on the same strip or had witnessed other passengers tripping on the strip. Magistrate Goodman did not consider that pleading to be sufficient to allege notice because she did not allege how long the condition existed or that the cruise line knew of the experiences of the other passengers who later posted about what they saw or experienced. Additionally, it was impossible to determine if the comments were made by passengers on the VENEZIA or even made by real people (as opposed to bots) or were accurate and relevant. Magistrate Judge Goodman also noted that the complaint did not allege in the count asserting a failure to warn that the danger was not open and obvious and that Dorrian did not respond to the argument that she failed to adequately allege a breach of duty. He recommended that the motion to dismiss be granted with leave to amend.
Maria Mattera, a passenger on the M/S MERAVIGLIA, slipped and fell on a large accumulation of water on the tiled walkway as she left a buffet dining area of the ship. Mattera brought this action against the cruise line in federal court in Florida, alleging a single count of negligence. The cruise line moved to dismiss the complaint for failing to properly plead notice, and Mattera responded that the cruise line had notice because the area covered in water was large, the water was dirty and discolored (indicating that it had been tracked and transferred about the floor), there was a “wet floor” sign previously placed in the vicinity, and a mop and cleaning kit had previously been placed in the vicinity. Mattera cited cases holding that warning signs were sufficient to constitute notice when the passenger alleged damages caused by the dangerous condition. However, Judge Damian did not believe that the mere allegation that a sign had previously been placed in the vicinity was sufficient, reasoning: “The reader is left to wonder where the sign was, how close it was to the alleged incident, how big it was, and how long it was there.” Judge Damian distinguished Judge Altman’s decision in Iacoli involving a cone and plaque (see September Update). Iacoli clearly alleged descriptions of the two signs and where and when they were placed; however, Mattera did not allege what type of sign was present, its size, nor where or when it was placed. With respect to the mop and cleaning kit, Judge Damian noted that the cases cited by Mattera involved the presence of crewmembers in the area prior to the fall. She did not cite authority that the mere presence of a mop and cleaning kit could establish notice to the cruise ship. And the same deficiencies that were noted for the pleading of the “wet floor” sign were also present with respect to the conclusory pleading about the mop and cleaning kit. Finally, Judge Damian did not believe that the single conclusory statement about the dirty and discolored condition of the water that had been tracked and transferred about the floor, without factual support, was sufficient to plead notice. Therefore, Judge Damian dismissed the complaint without prejudice with leave to file an amended complaint.
Sanare Energy Partners operates a small platform/caisson at Main Pass Block 64 on the outer Continental Shelf of the Gulf of Mexico off the coast of Louisiana. Sanare Energy engaged SBS Energy Services to conduct tubing change operations on its #19 well with a Master Service Agreement. GOL, LLC, is a broker that provides charters of vessels. Sanare Energy entered into a Blanket Time Charter with GOL that provided for the periodic charter by Sanare Energy of vessel brokered by GOL. GOL and All Coast, LLC, entered into a Brokerage Agreement by which GOL obtained charters for All Coast’s fleet of liftboats. Through this arrangement, the liftboat SWORDFISH was on charter working for Sanare Energy at Main Pass Block 64. Ronnie Blanchard, an employee of SBS Energy Services, was part of a crew engaged in rigging up a hydraulic workover unit. The unit fell into the water with Blanchard attached, and Blanchard was killed. Blanchard’s widow brought this suit in state court in Harris County, Texas against Sanare Energy, and Sanare Energy removed the case to federal court in Texas based on federal question jurisdiction from the Outer Continental Shelf Lands Act. The plaintiff amended her complaint to allege claims against All Coast and SBS Energy, and All Coast brought a cross-claim against Sanare Energy, seeking indemnity under the terms of the Blanket Time Charter between GOL and Sanare. The Charter provided for defense and indemnity to GOL as well as the vessels and owners with respect to injuries sustained by employees of Sanare and its contractors, whether caused by the negligence of the indemnitees or the unseaworthiness of the vessel. As Blanchard was an employee of SBS Energy, a contractor of Sanare Energy, and as All Coast was the owner of the vessel, Judge Hanks held that the Charter unambiguously provided for the defense of All Coast. Judge Hanks declined, however, to decide before the facts were established regarding liability, whether Sanare had a duty to indemnify All Coast.
Where’s Eileen, LLC (owned by Mark J. Fischer and Eileen Fischer) owned the yacht WHERE’S EILEEN. The vessel was insured with ACE American Insurance Co. In 2019, the yacht sustained two losses, a lightning strike and a partial flood, and the owner notified ACE in April 2020 of the losses and claimed $13.5 million in damage. ACE issued a partial payment in May 2020 of $1,404,179.22 and noted that it was prevented from fully determining the quantum of damage. ACE advised that it would consider and review additional documentation and damages, but it did not anticipate paying any additional sums. The owner submitted an additional claim three years later in April 2023 and notified ACE of its intent to litigate in December 2023. On December 18, 2023, Where’s Eileen, LLC and Mark and Eileen Fischer brought suit against ACE in state court in Broward County, Florida, and ACE removed the case to federal court in Florida. Citing the alternative dispute resolution clause in the policy, ACE moved to compel arbitration. The plaintiffs responded that a demand for arbitration had to be served within one year of the date the insurer issued its final coverage determination, and the demand was not timely because it was not made within a year of the partial payment. Magistrate Judge Hunt cited the arbitration provision that covered “breach, termination, enforcement, interpretation, or validity of this Policy, including the determination of the scope or applicability of this Dispute resolution provision” and reasoned that the central objection to the enforcement of the clause raised by the plaintiffs—that ACE “has made a final coverage determination and ostensibly waived arbitration—itself indicates the need for arbitration.” And, as the question whether ACE made a final determination on coverage was better left to the arbitrator, “then so too is its natural successor: whether Defendant has waived the right to enforce arbitration.” Magistrate Judge Hunt then addressed whether the arbitration clause could extend to Mark and Eileen Fischer, even though only the company was named as an insured in the policy. As the clause covered any dispute or claim related to the policy, and as the Fischers’ claims are inextricable from those of the corporate owner, Magistrate Judge Hunt recommended that their claims should be arbitrated. The plaintiffs did not object, and on September 5, 2024, Judge Dimitrouleas adopted the recommendations and compelled the arbitration.
This case involves three vessels, the CAPT. FRANK BECHTOLT (owned by Manson Construction Co.), the CIT-103 (owned by Caillou Island Towing), and the IDLER (formerly owned by T.W. LaQuay Marine). LaQuay bareboat chartered the BECHTOLT and the CIT-103 and contracted with John Bludworth Shipyard to assist in combining the three vessels into a single dredging unit for work along the Gulf Coast. LaQuay filed for bankruptcy and did not pay Bludworth for the work. Bludworth filed claims and asserted liens against the vessels in the LaQuay bankruptcy. However, when Bludworth learned that the BECHTOLT and CIT-103 were bareboat chartered, it brought this action in which it arrested the BECHTOLT, the CIT-103, and the IDLER. Caillou moved to vacate the arrest of the CIT-103 on the grounds that Bludworth did not provide necessaries to the vessel or rely on the credit of the vessel when it contracted with LaQuay, and because any lien against the vessel was extinguished by laches. Prior to the work of combining the vessels, the CIT-103 was an unpowered flat deck barge, but it has been converted into a booster barge (housing a booster pump that allows the dredge pump to operate more efficiently). Caillou argued that the work on the CIT-103 was to serve the BECHTOLT, so that the CIT-103 could be used as a platform for auxiliary equipment for the BECHTOLT. The work in modifying the CIT-103 and combining it with the other two vessels was for the purpose of the dredge project, not to serve the particular function of the CIT-103. Judge Bennett cited the Fifth Circuit for the view that a necessary is determined by “the need of the vessel.” Bludworth did not cite authority to support the argument that “modifications to one vessel so that it can be combined with separate vessels and serve the purposes of those vessels constitutes necessaries to create a maritime lien.” Finding that Bludworth did not provide necessaries to the CIT-103, Judge Bennet vacated the arrest. Bludworth sought summary judgment to enforce its maritime lien on the BECHTOLT, and Judge Bennett noted that Bludworth did a significant amount of work on the vessel besides connecting the BECHTOLT to the CIT-103. The work included blasting, coating, removal and modification of a ladder, adding sponsons, modifying the pump, adding swing winches, changing the fenders, adding anodes, replacing sea valves and strainers, repairing doors in the engine room, adding machinery guards on the generator, adding a new stairway, adding and modifying piping, and replacing hatches. Judge Bennett concluded that there were fact issues whether all of the work performed by Bludworth constituted necessaries (including an issue whether the work served the function of the BECHTOLT or perhaps a “new” vessel that the BECHTOLT “served to create.” Similarly, Judge Bennett found fact issues with respect to whether the work on the IDLER (converting it to a spud barge) constituted necessaries for that vessel.
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 (see January, February, April, July, and November 2022, April 2023, and August 2024 Updates). Both ships were bound for destinations in Singapore, and they collided approximately 24 nautical miles from the Singapore mainland. The claimants sought to apply the test set forth by the Supreme Court in Jones Act cases in Lauritzen v. Larsen (as expanded by the Court in Hellenic Lines Ltd. v. Rhoditis). However, Judge Crotty held that the Lauritzen/Rhoditis test was unsuited to deciding a choice-of-law question involving a collision halfway around the globe involving a U.S. Navy warship based in Japan and a Liberian-flagged vessel. Although there was a dispute between Malaysia and Singapore over sovereignty of the area in question, Judge Crotty applied Singapore law to the collision based on the fact that the vessels were both headed to Singapore and were in the Singapore Traffic Separation Scheme.
Judge Crotty split the trial of the case into two phases and tried the liability issues in five days in November 2021. In a 70-page opinion, Judge Crotty apportioned 80% of the fault to the JOHN S. MCCAIN and 20% of the fault to the ALNIC. He then addressed whether the owner of the ALNIC was entitled to limit its liability to $16,768,480. As the owner engaged Stealth Maritime to manage the vessel, Judge Crotty looked to its privity or knowledge “as a proxy” for the owner. In this case, Stealth Maritime was aware of deficient staffing practices and other “risky behavior” and “allowed ALNIC—one of the worst vessels the Stealth Marine Superintendent had ever audited—to again travel through one of the busiest shipping lanes in the world.” This was sufficient to establish privity or knowledge. However, Judge Crotty noted that the Limitation Act, as amended, broadens the privity or knowledge for seagoing vessels to the master at or at the beginning of the voyage. Finding that the captain planned, before the voyage, to understaff the bridge, Judge Crotty ruled that there was additional support for denying limitation to the owner of the ALNIC. Applying Singapore law, Judge Crotty held that the United States should recover 20% of its damages, and the owner of the ALNIC should recover 80% of its damages, with those damages offset. He awarded prejudgment interest in accordance with Singapore law. Going forward, Judge Crotty held that the wrongful death and injury claims for the sailor-claimants would proceed with a Phase II trial, and he reserved the questions whether the sailor-claimants would be entitled to a jury and whether the owner of the ALNIC would be entitled to contribution from the United States. Both the United States and Energetic Tank filed interlocutory appeals.
After issuing a correcting order, nunc pro tunc, with respect to damages and certifying the decision for appeal pursuant to Rule 54(b), Judge Crotty addressed the contribution claim brought by the owner of the ALNIC against the United States in connection with the claims of the sailors on the JOHN S. MCCAIN. Judge Crotty set forth the issue: The sailor-claimants brought suit against the owner of the ALNIC but not against the United States. Under admiralty law, a tortfeasor, such as the owner of the ALNIC, which pays more than its apportioned share of an injured party’s damages, may generally seek contribution from the other tortfeasors. However, the United States, which was found to be 80% at fault, is a sovereign with sovereign immunity. Although Judge Crotty previously held that Singapore law applied to the substantive issues of liability and damages, the question was presented whether Singapore law would incorporate American sovereign immunity law to bar the contribution claim. Judge Crotty noted that federal sovereign immunity is a jurisdictional matter, and he could apply American sovereign immunity principles even though foreign law provided the applicable substantive law for the case. One jurisdictional bar is the Feres–Stencel doctrine, which provides sovereign immunity against certain claims by military service members (and claims for contribution/indemnity with respect to those claims). The owner of the ALNIC argued that the United States waived its claim to sovereign immunity through the Public Vessels Act and the Suits in Admiralty Act. However, Judge Crotty held that both statutes incorporate an exception to their waiver of immunity: the Feres–Stencel doctrine. Reasoning that Feres and Stencel are directly on point, and declining to overrule the cases as wrongly decided, Judge Crotty dismissed the contribution claim for lack of jurisdiction.
Having addressed the allocation of fault, Judge Crotty turned to the determination of damages. Although he held that Singapore law governed the substantive aspects of the case, he agreed with the parties that the issue whether a jury would decide the damages was governed by federal law. Judge Crotty noted the conflict between the concursus of claims in a limitation action and the Saving-to-Suitors Clause, which preserves common law remedies that include the right to a jury trial and the balance whereby an independent basis for jurisdiction, such as diversity, may provide for the right to a jury. As limitation was denied to the owner of the ALNIC, the issues were whether the requirements for diversity jurisdiction were satisfied for the claimants and what was the effect of the Death on the High Seas Act. Judge Crotty found that there was diversity over the claims and then addressed the effect of the application of DOHSA, which, according to the Supreme Court in Tallentire, was designed to “provide a uniform and effective wrongful death remedy for survivors of persons killed on the high seas.” In contrast to the decision of the Seventh Circuit in In re Lion Air Flight JT 610 Crash (discussed in our September 2024 Update), that the presence of diversity did not give the claimants the right to a jury trial in federal court on DOHSA claims (there were no survivors and, consequently, no injury claims), Judge Crotty was persuaded that there was an exception to the non-jury result when there is a wholly independent jurisdictional predicate and an independent cause of action. In this case, the wrongful death claimants did not allege any independent causes of action that would entitle them to a jury trial. However, claims were also brought by injured claimants, who did not allege a cause of action under DOHSA, and there was diversity jurisdiction for their claims. As the wrongful death and injury claims arose from the same accident, Judge Crotty held that a jury trial should be held on both the wrongful death and injury claims based on principles of judicial economy.
The Second Circuit heard appeals from Energetic and the plaintiffs and affirmed the rulings on apportionment of liability of liability and sovereign immunity; however, the appellate court declined to rule on the plaintiffs’ appeal of the decision on choice of law, finding it to be a non-appealable collateral order. Writing for the Second Circuit, Judge Walker first addressed the jurisdiction over the several appeals. As to the decision in Phase I, apportioning fault, Judge Walker agreed that the district court properly certified the case for an interlocutory appeal under Rule 54(b). He also agreed that there was appellate jurisdiction over the dismissal of Energetic’s contribution claim as an interlocutory admiralty order under Section 1292(a)(3), but he did not believe that the appeal by the plaintiffs of the decision on the application of Singapore law was appealable. Judge Walker agreed with Judge Crotty that Singapore law applied in determining liability for the collision, although he stated that the elements of negligence were substantially the same under Singapore law and United States maritime law. Judge Walker then turned to the merits of Energetic’s challenge to the apportionment of fault and rejected all of its arguments, affirming Judge Crotty’s apportionment of fault (20% to the ALNIC and 80% to the JOHN S. MCCAIN). Judge Walker then addressed Energetic’s appeal of the decision that it must pay the full amount of the Plaintiffs’ damages even though the ALNIC was only 20% at fault, with no right of contribution or indemnity against the United States. Energetic argued that the Feres doctrine should not apply to a suit under the Public Vessels Act or the Suits in Admiralty Act, but Judge Walker responded that the Second Circuit had already applied the doctrine to claims against the United States under the Public Vessels Act and the Suits in Admiralty Act, despite the immunity waivers in those statutes. Judge Walker recognized that some jurists have criticized the Feres doctrine, but he concluded: “It is not for us to say that the United States’s assertion of immunity here goes too far.”
Meanwhile, in the district court, Judge Preska addressed the standing to assert claims by the beneficiaries of Kevin Bushell, an officer in the Navy who served on the MCCAIN and was killed on the high seas as a result of the collision. Jennifer Simon, Kevin Bushell’s widow, and Karen Bushell, Kevin Bushell’s mother, both filed claims in the limitation action filed in federal court in New York by the owner of the ALNIC, and Jennifer Simon filed a petition in Maryland state court that resulted in her being substituted for Karen Bushell as the personal representative of the estate. Jennifer Simon then filed a motion in the limitation action to confirm her status as the personal representative so that she could recover damages on behalf of all of the dependents of her late husband, and Karen Bushell responded by not opposing Jennifer Simon’s confirmation as personal representative but requesting that Karen Bushell be allowed to maintain her own claim for damages in her individual capacity. Judge Preska noted that, under the Death on the High Seas Act, only the personal representative may bring the wrongful death suit, and the personal representative has a fiduciary duty to bargain for the rights of all beneficiaries. Thus, other beneficiaries generally lack standing to maintain their own wrongful death claims. However, Judge Preska did recognize an exception that allows a beneficiary to intervene in the case if the beneficiary can establish that his/her interests are at odds with those of the personal representative. Therefore, Judge Preska considered whether there was a conflict of interest between Karen Bushell and Jennifer Simon that would allow Karen to maintain a separate wrongful death claim. Judge Preska reasoned that Jennifer Simon had an incentive to maximize the size of recovery on behalf of all of the beneficiaries, but she also had an incentive to maximize the portion of that recovery that she receives and to minimize the portion received by the other beneficiaries. Consequently, Judge Preska concluded that there was a conflict of interest, and he allowed Bushell to maintain a separate claim in her individual capacity.
The parties then turned their attention to the issues for the trial on damages. Judge Crotty held that Singapore law applied to the determination of liability and damages, and the owner of the ALNIC sought to use the Guidelines for the Assessment of General Damages in Personal Injury Cases during the trial on damages. The Guidelines is a compendium of damage awards published by the courts in Singapore that the courts use to determine damages. A group of plaintiffs objected to the use of the Guidelines at the trial, and the owner of the ALNIC responded that it did not intend to introduce the Guidelines or even to call on expert on Singapore law to testify about the Guidelines. However, the owner advised that it intended to use the Guidelines to fashion jury instructions. Based on the representations of the owner, Judge Preska agreed that the Guidelines would not be introduced into evidence. However, Judge Preska noted that the jury’s determination of damages is an issue of substantive law that may require reference to the precedent of damage awards under Singapore law. The plaintiffs made a thinly veiled attack on the prior ruling on applicable law, arguing that under Singapore law, the calculation of damages is procedural. Judge Preska refused to lead the court into the “‘bog’ of renvoi” (referring to the “situation in which a court applying foreign law, as is the case here, would apply a rule of the foreign law that would ‘refer back to the law of the forum state, thus creating an endless cycle in which the conflicts provisions of each state point to the application of the other state’s law”). Judge Crotty held that Singapore law was the law applicable to determine substantive issues of liability and damages, and Judge Preska added that calculation of damages is an issue of substantive law under United States maritime law. Therefore, the New York court could import Singapore law on damages without referring back to United States substantive law. Consequently, Judge Preska held that the Guidelines “will guide, if not govern” the instructions to the jury on the calculation of damages.
Stefano Markell Parker is an inmate in the North Kern State Prison in Delano, California. He asserts that around February 2013, his then-employer, Chet Morrison Contractors, called him for an emergency project to fix a gas leak on a pipeline in the Gulf of Mexico. Parker was transported to the gas leak on the KELLY MORRISON, boarded an oil rig connected to the pipeline, and cut off the pressure to stop the leak. The weather worsened, and the ship could not get close enough to the rig for Parker to board the vessel by a personnel transfer for the return. Parker was ordered to jump into the ocean and swim to the vessel, but the straps on the life jacket were missing (his co-workers were allowed to remain on the rig and were picked up by a helicopter). Parker was swept out to sea for 45 minutes with one arm holding his life jacket around his chest and the other arm trying to swim. Eventually, Parker was pulled to the ship, but he did not receive medical attention. Parker asserts that other employees were promoted, but he (a Black male) did not move up in the ranks, was not paid properly, was the subject of a very hostile work environment because of his race, and was treated differently (he was not invited to a safety meeting or a cookout held shortly after the near drowning). Parker pleaded that he was diagnosed with PTSD in 2006 from the trauma of his near drowning, and in 2023, Parker brought this suit in federal court in Louisiana (pro se) against Chet Morrison, asserting seven claims: negligence (and a count for Jones Act negligence) for having life jackets that were out of service, violation of equal protection (because the other divers were picked up by helicopter), violation of his right to medical care (for failing to provide medical care after the near drowning), cruel and unusual punishment (for failing to invite him to a safety meeting and cookout after the near drowning), racial discrimination (for failing to promote or pay him at the appropriate level and for the hostile work environment), and unseaworthiness of the KELLY MORRISON (for its failure to get close enough to the rig for a personnel transfer). Parker filed several motions, which were presented to Judge Long. Parker sought appointment of counsel to perform the many functions he could not perform while he was in prison, such as contacting witnesses and experts and obtaining records and other documents. Judge Long declined to appoint counsel as he did not find that there were extraordinary circumstances that would merit appointment of counsel in a civil case. Parker filed a motion for summary judgment, arguing that Chet Morrison did not file an answer within 60 days of service. Judge Long denied the motion, however, as Chet Morrison filed a timely motion to dismiss, which suspended the obligation to answer pending the ruling on the motion to dismiss. Parker also filed a motion for protection, requesting that he be placed in protective custody because he was attacked and beaten by other inmates at the prison. Judge Long denied the motion, reasoning that the federal courts do not sit to supervise state prisons and lack the authority to order officials to place inmates in protective custody. Judge Long then considered Chet Morrison’s motion to dismiss. He agreed with Chet Morrison that all of the claims were time-barred and that Parker had raised no basis for tolling the running of the statute of limitations. Additionally, the employment-discrimination claims were barred because Parker did not exhaust his administrative remedies. His constitutional claims were barred because Parker could not establish that Chet Morrison, a private actor, was acting under color of law. Finally, Parker moved to add two more counts to his pleadings. The eighth count was that Chet Morrison exposed Parker to criminal activity when it sent him offshore in 2013 to work with and around C4 explosives despite knowing that he was a felon. His ninth count asserted that the superintendent for Chet Morrison “tried to murder” Parker when he ordered Parker to swim from the rig to the KELLY MORRISON during the near drowning incident in 2013. Parker told a lawyer about his near-death experience, and a letter from the lawyer’s office identified another lawyer at the firm with a middle initial of “M” (Parker suspected that the initial stood for “Morrison” and that there was a conspiracy between the lawyer and Chet Morrison against his civil rights). As there was no indication that the amendment would cure any of the deficiencies in Parker’s 12 prior filings, Judge Long declined to allow the amendment and dismissed the suit with prejudice.
This litigation arose in connection with the drowning of Jackie L. Jones on July 1, 2022, when two recreational vessels became disabled and collided with a commercial vessel in the Ohio River near Little Hocking, Ohio. Lee Hawks, owner of a cabin cruiser, brought this action in federal court in Ohio on December 29, 2022, seeking to limit liability to the value of his cabin cruiser. The deadline to file claims in the limitation action expired on January 19, 2024, and ten days later, HFL Vessels and Hines Furlong Line, owner and operator of the WARREN W. HINES, sought leave to file a late claim in the limitation action for the damage to the WARREN W. HINES and for contribution/indemnity for any liability they may have to third parties. HFL and Hines Furlong asserted that they did not have notice of the limitation action until after the deadline. This was not the first limitation arising from the collision. On July 22, 2022, HFL and Hines Furlong filed a limitation action in federal court in Kentucky. The deadline to file claims in that action was December 15, 2022, and the court noted defaults on April 28, 2023. Eight months after the deadline, Hawks filed a motion to strike the defaults. HFL/Hines Furlong filed a response objecting to the motion “not so much with respect to the relief it seeks, but rather to its flagrant and unnecessary distortion of the facts concerning the incident of July 1, 2022.” Based on HFL/Hines Furlong’s “failure to object” to the motion to set aside the default, “and despite the parties’ curious decision to dispute at length many factual issues not pertinent to the pending motion,” the Kentucky court set aside the defaults and authorized the filing of late claims. In the Ohio litigation, Hawks sought entry of defaults and opposed HFL/Hines Furlong’s request to file a late claim. Hawks asserted that he gave notice by publication and did not have to give notice individually to HFL/Hines Furlong. Additionally, he argued that allowing the claim would prejudice Hawks and his family. He argued that allowing the claim would lead to a conflict of interest between him and his family who asserted claims against HFL/Hines Furlong in the Kentucky case, reasoning that if the family member succeeded in obtaining damages in Kentucky, HFL/Hines Furlong would seek to recover those damages from Hawks in the Ohio claim. Judge Sargus disagreed with Hawks, noting that the motion was filed only ten days after the deadline and that no trial had been set. He added that denying the motion would prejudice HFL/Hines Furlong, particularly when the parties have a litigation history involving the same incident. Therefore, Judge Sargus allowed the filing of the HFL/Hines Furlong claim.
This suit involves a shipment of a 20-foot container with 5 crates of water filtration equipment and accessories that was to be transported from Oakland, California to Jebel Ali, United Arab Emirates. The container was delivered to the Oakland International Container Terminal, operated by SSA Marine and SSA Terminals, and it was placed in a stack waiting to be loaded on a Mediterranean Shipping vessel. The container was struck and knocked down by SSA’s mobile crane, and cargo insurer Zurich American Insurance paid $997,605.52 for the loss. Zurich American brought this subrogation suit in federal court in California against SSA Marine, SSA Terminals, and the longshore worker who was operating the crane, Kibreab Weldeab, with jurisdiction based on diversity. The defendants moved to dismiss the suit for lack of subject matter jurisdiction, arguing that the amount in controversy was less than $75,000 because the Carriage of Goods by Sea Act limited the liability of the defendants to $500 per package. The defendants argued that Mediterranean’s Sea Waybill agreed to incorporate the $500 package limitation of COGSA and that the shipper had an opportunity to declare a higher value but did not do so. Zurich American responded that Weldeab was not entitled to assert the package limitation, implying that he may not have been working in the course of employment at the time of the incident and asserting that the Himalaya Clause in the bill of lading did not extend the package limitation to Weldeab. However, Judge Martínez-Olguín answered that Zurich American’s position was inconsistent with its pleading that Weldeab was SSA’s agent, and she accepted Zurich American’s allegation as true in the absence of evidence to the contrary. She then noted that the Himalaya Clause provided: “every [] servant, agent, and subcontractor shall have the benefit of all terms and conditions of whatsoever nature contained herein or otherwise benefitting the Carrier under this Sea Waybill.” She concluded: “Because Weldeab was operating as SSA’s agent, the COGSA limitations also apply to Weldeab.” As the maximum recovery could not exceed $500 for five packages ($2,500), the amount in controversy for diversity was not satisfied, and Judge Martínez-Olguín dismissed the case for lack of subject matter jurisdiction.
Constance Joy II, LLC brought this action in Florida state court against an engine parts and services company, Stewart & Stevenson FDDA LLC (and the designer/manufacturer of engines for the yacht) seeking to recover for faulty repair work on its yacht, CONSTANCE JOY II. Stewart & Stevenson removed the case to federal court in Florida (based on admiralty jurisdiction and diversity), and Judge Ungaro transferred the case to Texas pursuant to a forum-selection clause. Stewart & Stevenson argued that a service repair order allegedly signed by Chief Engineer Anthony Waugh limited the owner’s recovery, and the owner argued that the engineer lacked actual or apparent authority to bind the owner to the terms of the repair order. Citing the employment contract with Waugh, Judge Hughes found no actual authority for Waugh to sign the order. The owner argued that neither the captain nor the chief engineer had apparent authority because the owner did not act to hold them out as agents. Stewart & Stevenson argued that it had the chief engineer sign the order to verify the authority that was never contradicted by the owner during the work. Noting that the only parties who could corroborate either party’s position were the captain and chief engineer and that these crew members had been unavailable for the duration of the lawsuit, Judge Hughes declined to decide the issue of apparent authority on cross-motions of the parties, holding that it would be decided at trial. See June 2022 Update.
Stewart & Stevenson then moved for summary judgment, asserting that there was an enforceable contract between the parties and that the economic loss rule accordingly barred the negligence tort claim. Before addressing the merits, Judge Tipton considered the owner’s motion to strike two affidavits and three opinions proffered by Stewart & Stevenson’s expert. Judge Tipton denied the objections to the affidavits as he did not rely on the evidence in his ruling, and he declined to strike the opinions of the expert as the case will be tried to the bench as opposed to a jury. Judge Tipton then considered whether there was an enforceable contract. He noted that Judge Ungaro had found, for purposes of Rule 12(b)(6), that apparent authority existed. Judge Hughes later determined that there was a fact question on the issue of apparent authority, and he directed that additional discovery be conducted on the issue. Stewart & Stevenson did not argue that Engineer Waugh or Captain Nicholls had actual authority to bind the owner. Engineer Waugh testified that he did not recognize the signature on the repair order, and Stewart & Stevenson confirmed that the signature was that of Captain Nicholls. Thus, the issue was whether Captain Nicholls had apparent authority to sign the repair order. The owner argued that Captain Nicholls did not have apparent authority because the inquiry only looks to the conduct of the owner, whose principal, Barry Skolnick, did nothing to make Stewart & Stevenson believe that the captain was authorized to act on behalf of the owner. However, Nicholls was the captain of the vessel, and Judge Tipton reasoned that Stewart & Stevenson might have believed the captain was authorized to act for the owner. He could not say, as a matter of law, that Captain Nicholls did not have apparent authority (he also found fact issues as to whether the owner ratified the agreement). Judge Tipton then applied Texas law in considering the negligence claim, stating that the economic loss generally precludes recovery in tort for economic losses resulting from failure to perform under a contract when the harm consists only of economic loss of a contractual expectancy. Judge Tipton then found that the losses suffered in this case were not “the subject of the contract.” The failure to properly refasten the hose caused flooding in the engine room that damaged the vessel’s electrical system. The contractual expectancy was unrelated to the damage that was caused, and the economic loss rule did not bar a tort recovery, even if the court found there was a binding contract.
Arnold Edmonds claims that he contracted non-small cell lung carcinoma from exposure to asbestos while he served on the aircraft supercarrier USS SARATGOGA from 1962 to 1964. He brought suits in state court in Hillsborough County, Florida against suppliers of parts and machinery for the SARATOGA under theories of negligence and strict liability that were removed under the Federal Officer Removal Statute and consolidated in federal court in Florida. The defendants sought to exclude or limit the testimony of Edmonds’ industrial hygienist expert, Dr. Candace Su-Jung Tsai, primarily because her testimony did not opine on exposure from the products of the respective defendants. The defendants complained that Dr. Tsai opined generally on Edmonds’ exposure to asbestos on the vessel and other workplaces and not on whether a specific product caused his asbestos-related cancer. Judge Honeywell found no authority that the expert must opine on whether a specific product caused the cancer in order for the testimony to be admissible. Recognizing that maritime law requires evidence of the specific exposure for a defendant, Judge Honeywell explained that the argument presented by the defendants relates to the sufficiency of evidence of causation and not the admissibility of the expert’s testimony. Finding Dr. Tsai’s methodology to be sufficiently reliable, Judge Honeywell declined to exclude the opinions, stating that the arguments were “more appropriate for consideration on a summary judgment order, or as to the weight of the expert testimony, not its admissibility.” See August 2024 Update.
Two of the suppliers moved to exclude or limit the testimony of Edmonds’ expert, Dr. David Zhang, a physician specializing in pathology and occupational medicine, who opined, after considering Edmonds’ exposure to asbestos, his history of smoking, and his family history of cancer, that Edmonds has asbestos-related lung cancer, and that his exposures to asbestos were substantial contributing factors to the development of his asbestos-related lung cancer, asbestosis, and pleural plaque. The defendants argued that maritime law requires a medical causation expert to opine that the defendant’s product caused the plaintiff’s injury and that opinions based on “cumulative exposure” should be rejected. Judge Honeywell considered the divergent case law on this issue and agreed with the defendants that this statement was improper: “the cumulative exposure of each asbestos-containing product significantly contributed to the development of [Plaintiff’s] lung cancer.” However, Judge Honeywell found this statement to be sufficient reliable to survive the Daubert challenge: “that all of Mr. Edmonds’ asbestos exposures increased his risk of asbestos-related lung cancer in a cumulative, dose related manner and that all of Mr. Edmonds’ exposures that are found to be regular, frequent and proximate were substantial contributing factors to the development of his asbestos-related lung cancer, asbestosis and pleural plaque.”
This litigation arose from all allision between a 1999 Sea Ray Sundancer motor vessel and a draw bridge in the vicinity of Miami Beach, Florida, which resulted in multiple injuries. The owner and beneficial owner of the vessel filed this action in federal court in Florida, seeking exoneration/limitation. Eight claims were filed in the limitation action, and the eight claimants collectively moved to lift the stay to allow them to proceed with their claims in state court. Following the Eleventh Circuit’s Beiswenger case, the claimants agreed that the federal court had exclusive jurisdiction to determine all issues related to limitation of liability, waiving any claim of res judicata or issue preclusion, and that they would not seek to enforce any judgment against the owners or any other entity that would be entitled to contribution or indemnity, until such time as the federal court adjudicated the owners’ right to limit liability. In the event the owners are granted limitation, the claimants agreed to divide the limitation fund on a pro rata basis. The owners did not oppose the motion to lift the stay, and Judge Altman agreed that the stipulations were sufficient under Beiswenger. Therefore, he dissolved the stay so that the claimants could proceed with their claims in state court.
This litigation arises from a collision between a recreational vessel, operated by Robert G. Bozeman, and the Barge CTTE 2088 in the Gulf Coast Intracoastal Waterway near Orange Beach, Alabama. Passengers on the recreational vessel brought suit against the owner of the barge, CTTE Barge Co. in state court in Baldwin County, Alabama, and SMG Equipment, operator of the barge, and CTTE Barge Co. brought this action seeking exoneration/limitation of liability in federal court in Alabama. A separate action seeking exoneration/limitation of liability was filed by the owner and operator of the tug M/V FRANCIS EVELYN that had been towing the barge prior to the incident, and the suits were consolidated. The passengers and Bozeman filed claims in both limitation actions, and they moved to lift the stays in the limitation actions so that they could pursue their claims in state court. The limitation petitioners moved to bifurcate. The claimants stipulated that they would not seek to recover or enforce any judgment that would subject the petitioners to liability, directly or through contribution, that exceeds the limitation funds, until the right to exoneration/limitation was decided by the federal court. Although the petitioners argued that the stipulations failed to stipulate the priority of the claims, Judge DuBose disagreed, noting the claimants’ stipulation that attorney fees and costs would have first priority and then the claims of the passengers and Bozeman would be paid on a pro rata basis from the remaining funds. Reasoning that this was sufficient under the Eleventh Circuit’s Beiswenger case, Judge DuBose held that the claimants had effectively transformed the multiple-claims/inadequate-fund situation into the functional equivalent of a single-claim case so that the stay could be lifted. Accordingly, Judge DuBose believed a bifurcation was not warranted, and she denied the petitioners’ motion.
Skipper Marine, owner of a marina in Madison, Wisconsin, provided what it asserted were necessaries to Robert M. Turner, owner of a 2019 VR5 Bayliner, including ship stores and long-term storage. Turner paid for the necessaries until he damaged the vessel’s engine and stopped making payments. Skipper Marine then filed this in rem action against the vessel in federal court in Wisconsin, and the vessel was arrested. The warrant of arrest was also served on Turner and on Summit Credit Union, which was identified as having a security interest in the vessel. Turner did not appear, but Summit filed a verified statement of interest in the vessel based on a security agreement by which Summit provided financing for the purchase of the vessel. Summit moved to dismiss the suit for lack of admiralty jurisdiction, arguing that some of the services (particularly storage fees) were not necessaries and that the vessel was a dead ship. Judge Conley noted the broad definition given to necessaries and held that the storage fees fit within the definition. He then addressed Summit’s argument that the court lacked jurisdiction because Skipper Marine removed and tore down the vessel’s engine after oil in the engine had turned into the consistency of peanut butter, and that the vessel had been in uninterrupted storage without an engine. Judge Conley was unable to determine whether the vessel was permanently or temporarily withdrawn from navigation, although the fact that the owner had abandoned the vessel and the fact that the vessel had been held in long-term storage for more than 3 ½ years were significant. He granted Skipper Marine 30 days to amend its complaint to allege additional facts to establish that the court had admiralty jurisdiction. Judge Conley also ordered Skipper Marine to brief whether there was admiralty jurisdiction over Lake Mendota, which is “wholly inside the bowels of the State of Wisconsin” (the deadline has been extended to allow the parties to attempt to reach an agreement on the disposition of the vessel). Skipper Marine countered Summit’s motion to dismiss with a motion to dismiss Summit’s claim for lack of standing. Summit argued that it had standing because Turner defaulted on his loan, giving Summit a right to possess the vessel as a secured party under Wisconsin law. Skipper Marine asserted that Summit’s interest in the vessel was not from a preferred ship mortgage (that would support a maritime lien) and that it did not arise from a maritime contract. Judge Conley agreed that Summit’s state-law lien did not appear to be cognizable under the court’s admiralty jurisdiction. However, if Skipper Marine is able to establish entitlement to a maritime lien in its amended pleading, the court could exercise supplemental jurisdiction to award any surplus proceeds, after payment of the lien for necessaries. That award would be as a creditor and not because Summit had an interest in the vessel that could be asserted in admiralty.
This case arises from a collision between two vessels owned by Texas Petroleum in the inland waters of Plaquemines Parish, Louisiana. One was being operated by James Pierre, Jr., an employee of Eagle Services, who was working as a contract hand for Texas Petroleum. The other was being operated by Clayton Hall, an employee of Texas Petroleum. Pierre was injured and filed suit in state court in Plaquemines Parish, Louisiana against Texas Petroleum. Texas Petroleum filed this action in federal court in Louisiana seeking exoneration/limitation of liability, and Texas Petroleum made a demand on Eagle Services and its general liability insurer, QBE International, seeking defense and indemnity pursuant to the terms of the Master Service Agreement between Texas Petroleum and Eagle Services that contained a reciprocal indemnity agreement. QBE, which was brought into the suit by Pierre, filed a motion for summary judgment that it had no liability in this case because of the employee exclusion. Judge Zainey agreed that Pierre was an employee of QBE’s insured, Eagle Services, so QBE had no liability for Pierre’s claim. However, Judge Zainey noted that there is a carve-out from the employee exclusion in the general liability policy with respect to the assumption of liability under an insured contract. He added that the indemnity obligation in the contract between Eagle Services and Texas Petroleum was just such an insured contract. Therefore, QBE was not entitled to summary judgment with respect to the coverage under its policy for Eagle Services’ agreement to indemnify Texas Petroleum. QBE requested, in the alternative, that its potential liability under the insurance policy should not exceed the insured’s liability if it is allowed to limit liability. This implicated Judge Brown’s en banc decision in Crown Zellerbach, which allows insurers to limit liability in direct action proceedings when the policy contains language permitting that limitation. Judge Zainey concluded that the language that QBE will pay those sums “that the insured becomes legally obligated to pay as damages” was sufficient, even though it was not as explicit as the language in Crown Zellerbach. Therefore, he granted partial summary judgment to QBE, limiting its liability under the policy to the amount of its insured’s liability.
Judge Zainey then considered three motions for summary judgment. Pierre moved for summary judgment, arguing that the vessels did not qualify for limitation based on the recent amendment to the Limitation Act that excluded “covered small passenger vessels.” Pierre did not provide the definition for small passenger vessels, and Judge Zainey noted that the definition did not apply in this case for several reasons, including that neither vessel carried more than six passengers, with at least one being a passenger for hire. Texas Petroleum and Clayton Hall moved for summary judgment, asserting that they are immune from liability to Pierre, as a borrowed employee of Texas Petroleum, pursuant to the LHWCA. Judge Zainey then evaluated the Ruiz factors. Although most of the factors, including the control issue, were in favor of Pierre being a borrowed servant, there were fact questions on two of the factors and one was neutral. Therefore, Judge Zainey was not convinced, as a matter of law, that Pierre was a borrowed servant.
Richard C. Murphy, III, chartered a Cessna 402B from Airway Air Charter for a flight from Opa Locka, Florida to Chub Cay, The Bahamas. The aircraft is owned by Venture Air Solutions and was operated by Airway Air Charter. Atlantic Aviation provided supplies and fuel. Murphy was the sole passenger, and the plane was piloted by Alex Gutierrez. The plane ran out of fuel during the flight, causing it to crash into the ocean. Murphy and his wife brought this suit in state court in Miami-Dade County, Florida, against Airway Air Charter, Venture Air Solutions, and Gutierrez, asserting claims under Florida law. The defendants moved to dismiss the case, arguing that the claims were governed by the Warsaw Convention (as updated by the Montreal Convention), not Florida law, and the plaintiffs filed an amended complaint based on the Warsaw Convention. The plaintiffs added Atlantic Aviation in a third amended complaint, and Atlantic Aviation removed the case based on federal question jurisdiction from the Warsaw Convention and admiralty jurisdiction. In federal court, the plaintiffs filed a fourth amended complaint, attaching the Charter Agreement. Airway Air Charter and Gutierrez moved to dismiss the fourth amended complaint, citing the liability waiver for injuries in the Charter Agreement. The plaintiffs responded that Airway Air Charter and Gutierrez had waived their right to raise the waiver as a defense by repeatedly failing to raise it as an affirmative defense in their answers to the previous complaints filed by the plaintiffs against them. Alternatively, the plaintiffs argued that the waiver was unenforceable under the Warsaw Convention. Airway Air Charter and Gutierrez argued that they did timely raise the waiver defense because they raised it in their first response to the fourth amended complaint, which was the operative pleading at the time. Judge Bloom rejected that argument as the Eleventh Circuit has held that an amended complaint does not automatically revive all defenses or objections that the defendant may have waived in response to a prior complaint. She held that Airway Air Charter and Gutierrez waived reliance on the waiver by failing to raise it as an affirmative defense when answering the complaint in state court. Judge Bloom also addressed the argument that the waiver was unenforceable and the defendants’ argument that the Warsaw Convention does not prevent the parties from entering into a different agreement limiting liability. Judge Bloom agreed that the parties can enter into agreements for different limitations on liability, but the agreements may only provide a limitation in excess of the cap on liability of $75,000. As the waiver in this case provided for a release of all liability, Judge Bloom held that the defendants had not shown that Murphy failed to state a claim based on the waiver provision. See May 2024 Update.
The parties filed several motions that were addressed by Judge Bloom. The defendants challenged the testimony of Murphy’s accident reconstruction expert, Mark Pottinger, that the aircraft most likely experienced dual engine failure as the result of fuel starvation when the pilot mismanaged available fuel by operating on the main fuel tanks until the fuel in those tanks was depleted. Although the defendants argued that Pottinger only held a single-engine private pilot’s license, not the multi-engine license required to fly the Cessna 402B, Judge Bloom noted that Pottinger had extensive qualifications from his education, training, and experience. The defendants next argued that Pottinger’s testimony should be excluded because the overwhelming evidence indicated the main tanks were fueled, but Pottinger opined the auxiliary tanks were fueled, and because his opinions were based on an unreliable Report of the Aircraft Investigation Authority of The Bahamas. However, Judge Bloom found sufficient support for Pottinger’s opinions, and the fact that the Report is inadmissible did not mean that his testimony was unreliable. Judge Bloom did agree that Pottinger could not testify that there was a violation of aviation regulations; however, he could testify as to the requirements of the regulations and about the evidence that may indicate those regulations were not followed. Judge Bloom also held that Pottinger’s opinion that Atlantic should have taken steps to preserve all video of the aircraft fueling, which deprived the accident investigators of valuable information, should be excluded because Pottinger’s experience and training did not demonstrate reliability of his opinions with respect to video footage and because his opinion was not probative of whether the defendant acted negligently in fueling the aircraft. Murphy sought to exclude the opinion of the defendants’ rebuttal expert, Keith O. Major, that the Report of the Bahamian Authority was inadmissible under Bahamian law. Judge Bloom agreed to strike that opinion because Murphy’s expert could rely on an inadmissible report in formulating his opinion and because Bahamian law was not applicable in this case. Judge Bloom next considered Murphy’s motion for summary judgment that the limitation of liability was unenforceable under the Warsaw Convention. The parties provided confusing briefing on whether the original Warsaw Convention or its subsequent protocols (the Hague Protocol or the Montreal Convention) applied. Murphy argued that the Hague Protocol applied because The Bahamas is not a party to the Montreal Convention, but the United States is a party to all three. As the flight was part of a round trip to/from the United States, Judge Bloom held that the Montreal Convention applies with its prohibition on agreements absolving a carrier from liability and its prohibition on limitation of liability of damages of $75,000 or less. Consequently, Judge Bloom held that the defendants could not rely on the limitation. Finally, Atlantic moved for summary judgment, arguing that any breach of duty in fueling the aircraft was not the proximate cause of the accident because the pilot bears the ultimate responsibility for the operation of the plane, including ensuring there is sufficient fuel. Judge Bloom believed, however, that the issue of proximate causation was properly left to the jury.
Abigail Dembinski, a passenger on the NORWEGIAN JOY, claims that she was overserved alcohol in the vessel’s social club. After she had been visibly intoxicated for an extended period, the bartender stopped serving alcohol to Dembinski and asked her to leave. As she walked away, she tripped and fell. Dembinski brought this suit against the cruise line in federal court in Florida, asserting five counts of negligence. The cruise line moved to dismiss the counts for negligent supervision, general negligence, and negligent failure to warn. Chief Judge Altonaga agreed that the claim for negligent supervision was insufficient because it did not allege that the cruise line should have known of the bartender’s unfitness to serve alcohol or to assist Dembinski. She did not however, believe that the general negligence count was improperly pleaded because it described multiple ways in which the cruise line acted negligently. Chief Judge Altonaga pointed out that the count identified the duty to ensure the safety of passengers who are intoxicated, explained how the cruise line caused her fall, and provided a list of how the cruise line may have breached its duty. Chief Judge Altonaga stated that this type of pleading is expressly permitted by Rule 8(d)(2), which allows a party to set out two or more statements of a claim in a single count or in separate counts. Finally, the cruise line argued that it did not have a duty to warn passengers that alcohol may impair their senses, as that is an open and obvious danger. Chief Judge Altonaga answered that Dembinski pleaded that the cruise line failed to warn passengers that it would not monitor passenger intake of alcohol to prevent overservice. Chief Judge Altonaga did not believe that the extent of this duty was properly resolved on a motion to dismiss.
Delasco, Inc. was hired to perform tank cleaning services for the SIM 2 TANK BARGE, which was berthed at Galveston Terminal in Galveston, Texas. Its employee, Anacleto Acosta, claims that he was injured on the barge when he was struck by a falling piece of sulfur. Acosta filed suit against the owner of the barge and other parties in state court in Galveston County, Texas, and the case was removed to federal court based on diversity. The owner of the barge filed this action in federal court in Texas, seeking exoneration/limitation of liability, and Acosta moved to bifurcate the limitation action, trying the core limitation issues (negligence and privity) and then allowing Acosta to have a jury determine the fault of additional parties, the relative degrees of fault, and damages. Alternatively, Acosta asked the court to try all of the issues, with the judge deciding negligence/unseaworthiness and privity, and a jury (because the injury case was removed based on diversity) deciding all non-limitation issues (with the benefit that the judge could use the jury as an advisory jury on liability). The owner was opposed to the concurrent trial, but it was not opposed to bifurcating the case, although it argued that Acosta could only try the non-limitation issues to a jury if the court denied limitation. Magistrate Judge Edison noted the efficiency of the procedure used by other judges in which the court first tries fault and allocation of fault; however, he declined to follow that procedure, reasoning that “allocation of liability is not a core limitation issue that must be decided before the bench in a federal forum.” Therefore, he held that the court would hold a bench trial to determine negligence/unseaworthiness and privity. If the court exonerates the owner, then the federal case would be over. If the court finds liability and that the owner did not establish lack of privity or knowledge, the court will deny limitation, and Acosta will be allowed to proceed as if the limitation suit never existed, having a jury allocate fault and award damages. And, if the owner succeeds in limiting liability, a jury may still decide the issues of allocation of fault and damages if the claimants agree to stipulations that protect the owner’s rights under the Limitation Act.
Terri Marshall, a passenger on the CARNIVAL CELEBRATION, was injured in the Common Area on Deck 18 of the vessel when she misplaced her foot and fell on a step that she claims was not illuminated. She brought this suit against the cruise line in federal court in Florida, and the cruise line moved to dismiss four of the five counts. With respect to the direct liability claims of failing to turn on the light near the step and failure to post a warning to passengers of the “then-invisible” step, Judge Gayles held that the complaint was devoid of allegations that the cruise line was on notice of the lack of lighting. Therefore, he agreed that the direct liability counts should be dismissed. With respect to the vicarious liability counts that a member of the crew who was responsible for ensuring proper lighting failed to turn on the lights and failed to warn passengers, the cruise line argued that the allegations were for direct liability “in disguise” and should be dismissed for the failure to properly allege notice. Judge Gayles disagreed, noting that the Eleventh Circuit’s Yusko decision contemplated actions in which the passenger pleads both direct and vicarious liability claims, and that Yusko does not bar a passenger from asserting vicarious liability claims for negligent maintenance and failure to warn. Judge Gayles added that the passenger need not name a specific employee, and that it is sufficient to describe the crewmember as the one who was responsible for making sure the area was illuminated. Consequently, he held that the vicarious liability claims were sufficiently pleaded.
Clear Spring Property & Casualty Insurance Co. uses underwriting agents, such as Concept Special Risks, to receive and evaluate applications for marine insurance. Dream On Yacht LLC (whose sole member is William Pyznar) engaged Lucantha Marine Insurance, an approved producing broker for Concept, to obtain insurance for its 90-foot Tecnomar vessel, DREAM ON. Pyznar and the vessel’s named operator, Jovanny Rodriguez, filled out the application (Pyznar reviewed and signed the application). Pyznar answered “no” to the question whether he or any named operator had been involved in a loss in the last ten years; however, the vessel suffered a loss in 2018, shortly after Pyznar purchased it (the vessel ran aground while being transported to Miami). Pyznar answered “no” to the question whether any named operator had been convicted of a criminal offense, but named operator Rodriguez had been convicted of burglary, grand theft, and criminal misdemeanor. Concept approved the application and issued a policy with $1,030,000 in coverage. During the term of the policy, the vessel suffered a partial loss when a fitting broke and the engine room filled with water. Following an investigation, Clear Spring denied the claim based on material misrepresentations of fact during the underwriting, and Clear Spring brought this action in federal court in Florida against Dream On Yacht, seeking a declaration that there was no coverage for the loss under the policy as it was void ab initio. Clear Spring filed a motion for summary judgment on its assertion that the policy was void under the doctrine of uberrimae fidei, for misrepresentation and/or nondisclosure of material facts. Judge Altman agreed that Dream On’s failure to disclose the prior loss constituted misrepresentation of a material fact that was sufficient to void the policy (he did not have to reach the issue whether the denial of criminal convictions was sufficient to deny coverage). Although some courts have concluded that the marine loss history is a fact that is material to the risk assumed in providing insurance, Judge Altman noted that the Eleventh Circuit has not adopted a bright line to that effect, and he engaged in a fact-specific inquiry regarding materiality of the misrepresentation. Clear Spring supported its position with a declaration and deposition testimony of its Managing Director and Senior Underwriter that contained specific details and not conclusory statements as to why Clear Spring would have charged a higher premium had it been aware of the prior loss. Judge Altman found the statements to be competent evidence of the materiality of the misrepresentations, and he added that Clear Spring had offered other evidence from Concept’s underwriting manual. Dream On responded with arguments intended to show that Pyznar, not Dream On, was the owner of the vessel at the time of the loss, but Judge Altman answered that the doctrine of uberrimae fidei requires the applicant to disclose all facts material to the calculation, even if they are not directly inquired into by the insurer. Thus, even though the application asked if “you” [Dream On] or any named operator had been involved in a loss in the last 10 years, Dream On should have disclosed a loss while the vessel was owned by Dream On’s sole member. Judge Altman also rejected the argument that the loss had been disclosed when Pyznar advised his broker of the loss, because the broker was not an agent of Clear Spring (even if he told Pyznar that he was a dual agent, as the broker could not imbue himself with apparent authority). Accordingly, Judge Altman granted summary judgment to Clear Spring that the policy was void ab initio and there was no coverage for the loss.
Opinion Fees/Nonpecuniary Damages
This litigation arises from an allision between a tug and barge (the tug M/V BIG HORN and barge CHELSEA A, owned by Gulf Inland Contractors) and the Bayou Terrebonne Miter Gate Lock System while the tug and barge were transiting Bayou Terrebonne in Louisiana. The Lock System is owned (and was built by) the Terrebonne Parish Consolidated Government, and Terrebonne Levee and Conservation District is responsible for operating and maintaining the lock system. Gulf Inland filed this petition for exoneration/limitation in federal court in Louisiana, and Terrebonne Parish/Terrebonne Levee and their insurer Great American filed claims seeking to recover for negligence and unseaworthiness. Gulf Inland moved for summary judgment on the unseaworthiness claim, arguing that the claimants are not owed the warranty of seaworthiness because owners of a marine structure with which a vessel allided do not fall within the narrow class of persons owed the warranty of seaworthiness. The claimants did not disagree, and Judge Barbier granted summary judgment on the unseaworthiness claim, holding that the liability of Gulf Inland would be measured under the standard of reasonable care.
In response to the claims filed in the limitation action, Gulf Inland asserted that there was comparative fault on the part of the claimants as well as GIS Engineering and Sealevel Construction (for a defect in the design and function of the lock structure that was designed and built by GIS and Sealevel). However, Gulf Inland did not file a third-party complaint against GIS and Sealevel, and Great American argued that fault could not be attributed to the non-parties, reasoning that liability under the maritime law is joint and several and that the claimants could obtain a judgment for the full amount from all joint tortfeasors. Judge Barbier agreed that joint tortfeasors are held jointly and severally liable; however, he added that a joint tortfeasor’s liability is determined through comparative fault under Reliable Transfer. He rejected the argument that the doctrine of comparative fault enunciated in Reliable Transfer only applied to collision cases, and he held that Gulf Inland was not required to make GIS or Sealevel third-party defendants in order for their fault to exonerate or reduce the liability of Gulf Inland.
After the allision, the claimants had discussions with Gulf Inland’s insurer, Clear Spring Property & Casualty Co., until Gulf Inland filed the limitation action. The claimants brought Clear Spring into the litigation as a third-party defendant, seeking attorney fees, penalties, and special damages for failure to timely pay for the property damage under the Louisiana Insurance Code. Clear Spring and Gulf Inland moved for summary judgment, arguing that attorney fees are not recoverable under the general maritime law and that penalties are non-pecuniary and are not recoverable under the general maritime law. Judge Barbier agreed that this case is governed exclusively by the general maritime law and that attorney fees and penalties for bad faith claim handling are not available in the claimants’ action against the vessel’s insurer. Therefore, he granted summary judgment dismissing those claims.
Terrebonne Levee and Conservation District (TLCD) sought damages for engineering costs, cost of repairs, costs associated with retrieving and backing up security footage, payment of wages of TLCD employees, and administration costs. Gulf Inland moved for summary judgment on TLCD’s claims, citing the economic loss rule from Robins Dry Dock, arguing that TLCD had no proprietary interest in the lock system that would allow it to recover economic losses. TLCD argued that it had a sufficient proprietary interest in the lock system because it operated the system with actual physical possession and was responsible for repairing the damage. Judge Barbier agreed that something less than outright ownership was sufficient to bring a claim for economic loss, but the party would have to be “tantamount to an owner.” Finding that there was a genuine fact issue whether TLCD had a sufficient interest to be considered an owner, Judge Barbier denied Gulf Inland’s motion for summary judgment.
Ervin Megill, Jr., a passenger on the OASIS OF THE SEAS, visited the cruise line’s privately owned island, Coco Cay, and was injured while attempting to exist a swimming pool via its crowded stairs when someone siting on the stairs bumped into him. Megill brought this suit in federal court in Florida against the cruise line and Starguard Elite, the contractor hired by the cruise line to provide lifeguards and aquatic safety services at the pool. The defendants moved to dismiss the complaint as an improper shotgun pleading, and Chief Judge Altonaga agreed to the dismissal. Megill asserted three counts with over 83 alleged breaches of duty. Chief Judge Altonaga explained that the passenger may allege a list of failures (different breaches of the same duty) within the same general negligence claim (as was the case in the Dembinski opinion that is discussed above in this Update). That was not the case with the Megill complaint, as the passenger attempted to bring claims of negligent training nestled within his general negligence claims (a negligent training claim sounds in negligence, but it has distinct elements). Additionally, Chief Judge Altonaga explained that the count alleging vicarious liability impermissibly conflated vicarious liability and direct liability [compare Chief Judge Altonaga’s statement, “negligent maintenance and failure to warn claims are limited to a theory of direct liability,” with Judge Gayles statement in the Marshall case, discussed above in this Update, that a majority of judges in the Southern District of Florida have ruled that “Yusko does not bar a plaintiff from asserting negligent-maintenance or failure-to-warn claims under a theory of vicarious liability”]. Chief Judge Altonaga cautioned: “Plaintiff would be well-advised to ensure his vicarious and direct liability counts are kept separate if he amends his Complaint.” Finally, Chief Judge Altonaga noted that each of the counts contained “a specious allegation” that the defendants are negligent for all other acts and/or omissions learned in discovery. She stated: “This kind of ‘allegation’ is ‘the very model of a fishing expedition,’” and she explained that if new information was obtained during discovery, the plaintiff was “welcome to seek leave to amend his Complaint.”
This case involves a cargo of electrical wire harnesses scheduled to be transported from Barcelona, Spain to Charleston, South Carolina for shipper Mahle Behr Charleston. Mahle Behr engaged Kuehne + Nagle, a non-vessel operating common carrier for the carriage, and Kuehne + Nagle issued four sea waybills for the cargo. One of the containers fell into the water while it was being loaded in Barcelona, and cargo insurer HDI Global paid for the damage. HDI Global brought this suit in federal court in New York against Kuehne + Nagle, and the defendant moved for summary judgment based on the package limitation in the Carriage of Goods by Sea Act. The parties agreed that the package limitation applied; however, they disagreed as to the number of COGSA packages. HDI Global argued that there were 480 packages based on the listing in the waybills of 480 packages under the heading “Number of Packages” (there were 480 cartons). Kuehne + Nagle argued that there were 24 COGSA packages because the waybills described that the packages were “into” 24 pallets. Although HDI Global argued that the list of the number of packages was dispositive, Kuehne + Nagle argued that there was plain contrary intent with the statement that the packages were “into” 24 pallets. As neither party provided satisfactory evidence of the contemporaneous understanding of the document consistent with the wording or significant evidence of industry practice, and as the case was set for a non-jury trial, Judge Liman declined to decide the issue on a motion for summary judgment and awaited “further elucidation” at the bench trial.
Transatlantica Commodities chartered its vessel TAC IMOLA to Hanwin Shipping, which directed the vessel to load cargo in China to be discharged in the ports of Newark, New Jersey, Albany, New York, and Baltimore, Maryland. During the voyage across the Pacific, the plywood cargo caught fire, resulting in delays in unloading the vessel. Transatlantica brought this suit against Hanwin in federal court in Texas for refusing to pay the additional charges resulting from the delay and sought a writ of garnishment from American Shipping and Chartering Corp. (responsible for husbanding vessels owned, operated, and chartered by Hanwin in the United States). Hanwin filed a counterclaim, and the court ordered American Shipping and Chartering to deposit funds into the registry of the court and ordered Transatlantica to deposit countersecurity. After the deposits, Cooper/Ports America filed a complaint in intervention, asserting a claim for stevedoring services with respect to the SINGAPORE SPIRIT and YANGTZE SPIRIT, that were chartered by Hanwin. Counsel for Hanwin withdrew from the case, and the court dismissed Hanwin’s counterclaim and returned the deposit for countersecurity to Transatlantica. The court then dismissed Cooper/Ports America’s intervention as moot. Cooper/Ports America moved for reconsideration, arguing that it should be allowed to intervene because Hanwin’s funds were still in the registry of the court and the entitlement to the funds had not been adjudicated. Concluding that Cooper/Ports America’s breach of contract claim was in accordance with Rule B, Magistrate Judge Bennett granted the motion for reconsideration and agreed to issue a separate ruling whether the intervention would be allowed. However, in that separate opinion, Magistrate Judge Bennett denied the motion to intervene. Cooper/Ports America argued that it should be allowed to intervene “by virtue of the unconditional right to intervene” granted by former Admiralty Rule 42, which broadly provided that “[a]ny person having an interest in any proceeds in the registry of the court shall have a right, by petition and summary proceedings, to intervene . . . .” Cooper/Ports America argued that Admiralty Rule 42 was incorporated into Fed. R. Civ. P. 24(a) after the 1966 Merger of the Admiralty Rules and the Federal Rules of Civil Procedure. Rule 24(a) allows intervention when (1) an unconditional right to intervene is given by a federal statute and (2) when the intervention claims an interest relating to the property or transaction that is the subject of the action and is so situated that disposing of the action may impair or impede the movant’s ability to protect its interest. Magistrate Judge Bennett first ruled that Cooper/Ports America’s argument that Admiralty Rule 42 was incorporated in Rule 24(a) was “devoid of any legal precedent.” Turning to the language of Rule 24(a), Magistrate Judge Bennett held that Cooper/Ports America did not demonstrate an interest relating to the property or transaction that was the subject of Transatlantica’s action. He reasoned that Cooper/Ports America’s only interest in the stevedoring charges was purely economic and was unrelated to the charter party dispute that is the subject of the suit. Thus, he recommended that Cooper/Ports America did not have a right to intervene. Finally, Cooper/Ports America argued that the court could permit the intervention under Rule 24(b) because the intervention involved common questions of law and fact, claiming that the intervention involved damages owed by Hanwin related to its chartered vessels and attachment of the same funds. Magistrate Judge Bennett disagreed, as the claims involved different vessels unrelated to the dispute between Transatlantica and Hanwin. Accordingly, Magistrate Judge Bennett recommended that the intervention be denied.
Jane Doe, a passenger on a round-trip cruise from West Palm Beach, Florida to The Bahamas on the MARGARITAVILLE AT SEA PARADISE, claims that she was sexually assaulted while she was a guest at Viva Fortuna Beach by Wyndham in The Bahamas by an employee of the resort. She brought this action in federal court in Florida against the cruise line and Wyndham, basing jurisdiction on diversity and admiralty. Wyndham moved to dismiss the complaint, and Doe responded that the court had admiralty jurisdiction. She argued that the locality test was satisfied because her claim involved, in part, the obligations of the cruise line to its passengers with respect to a scheduled port of call. She quoted the reasoning of the Eleventh Circuit’s Doe v. Celebrity case: “Where a passenger or cruise vessel puts into numerous ports in the course of a cruise, these stopovers are the sine qua non of the cruise.” Thus, she argued that her stay at the resort should be considered as part of her cruise over water, satisfying the locality requirement for admiralty jurisdiction. Judge Rosenberg distinguished the Eleventh Circuit case as representing “the outer boundaries of admiralty jurisdiction.” She explained that the incident in that case involved an assault by a crewmember that effectively began and ended on the ship and “there was little practical difference between the port-of-call and other parts of the ship.” In contrast, the incident in this case involved “an alleged assault committed at a Bahamian resort, by a Bahamian employee of that resort, while Plaintiff was a guest staying at that resort.” The only allegation against the cruise line was that it arranged for the passenger’s accommodations at the resort, and that was not sufficient to satisfy the locality test. Judge Rosenberg added that the broad interpretation of locality advocated by Doe would result in “almost every conceivable injury a passenger incurs on shore” qualifying for admiralty jurisdiction. Therefore, Judge Rosenberg held that the court lacked admiralty jurisdiction. Although Doe also pleaded diversity, she did not properly allege citizenship of the defendants, and Judge Rosenberg gave her leave to file an amended complaint.
Naval Logistic (d/b/a Middle Point Marina) brought this action in federal court in Florida on June 27, 2023 to enforce a maritime lien for repairs to the vessel M/V FAMILY TIME, owned by Commercial Holdings Group, whose principal is Andrew Vilenchik. The dispute centered on whether the vessel’s condition was worse than what was disclosed, necessitating additional repairs. The vessel was arrested on September 7, 2023, and Middle Point Marina was appointed substitute custodian. Vilenchik appeared and sought reconsideration of the appointment of the marina as substitute custodian (and return of custody of the vessel to the U.S. Marshal), arguing that the marina had caused damage to the vessel and was not an appropriate custodian. Judge Scola noted that the courts routinely appoint substitute custodians on an ex parte basis based on allegations that the custodian had experience caring for vessels and acting as a substitute custodian. In this case the marina made the proper allegations and provided the required indemnification. Judge Scola was not persuaded that the owner’s concerns for the fate of its vessels in the marina’s hands were well-founded, as the marina had the incentive to preserve the vessel to protect its own recovery. Therefore, he declined to reconsider his order appointing the marina as substitute custodian. See December 2023 Update.
On January 9, 2024, Middle Point Marina filed a motion for an interlocutory sale of the vessel, arguing that the costs of storage and maintenance were disproportionate to the value of the vessel and that the owner had unreasonably delayed in securing the release of the vessel. The marina stated that the vessel was accruing storage charges of $135 per day, and the amount that had accrued by February 2, 2024 was $23,704.79, excluding the salvage claim for saving the vessel from a maritime peril. The marina argued that two of the three grounds for an interlocutory sale under Rule E(9) were satisfied because almost six months had passed since the arrest on September 7, 2023 (longer than the four months usually considered to be sufficient) and because the expenses were disproportionate to the value of the vessel (estimated to have a value between $50,000 and $99,000). The owner did not offer an explanation for the delay, and Judge Scola held that the sale was warranted by the unreasonable delay. Although one of the conditions in Rule E(9) was sufficient, Judge Scola also addressed the argument that the expenses were disproportionate. The owner disputed the marina’s evidence, but it did not argue that the vessel was worth more than $100,000. Weighing the cost of storage against the value of the vessel, even at the high range of the marina’s estimate, Judge Scola concluded that an interlocutory sale was justified. Finally, the owner argued that the interlocutory sale would prejudice the counterclaim that it recently sought to file. Judge Scola responded that the interlocutory sale was merely a substitution of the proceeds of sale for the vessel and would not prejudice the counterclaim. Therefore, Judge Scola ordered the interlocutory sale of the vessel. See April 2024 Update.
The parties then filed cross-motions for summary judgment. Middle Point Marina argued that it notified Vilenchik that he would have to remove the vessel after he refused to approve the revised estimates for the cost of additional repairs, and this was a breach of the Agreement for which storage charges were owed. Vilenchik argued that he created a fact question on Middle Point Marina’s contract claim because he submitted an affidavit in which he argued that Middle Point Marina had caused damage to the vessel. Judge Scola answered that the claims made by Vilenchik were not responsive to the claim that Middle Point Marina provided necessaries (storage) for the vessel and that Vilenchik breached the contract by failing to remove the vessel. Vilenchik also argued that Middle Point Marina had not refuted the affirmative defenses raised by Vilenchik in the answer, but Judge Scola responded that the defendant, not the plaintiff, has the burden of proof with respect to affirmative defenses. Therefore, Judge Scola granted Middle Point Marina’s motion for summary judgment, but he deferred ruling on the amount of damages, costs, and attorney fees until the conclusion of the case. Vilenchik moved for summary judgment that he was not individually liable as the principal of the vessel owner, Commercial Holdings Group. However, Judge Scola noted that Vilenchik had signed the Shipyard Agreement and placed his name on the line marked “Owner.” Additionally, Middle Point Marina disputed whether Vilenchik ever mentioned that Commercial Holdings Group was the owner. Therefore, Judge Scola denied Vilenchik’s motion. See September 2024 Update.
Vilenchik moved for reconsideration on the granting of summary judgment to Middle Point Marina, arguing that there was a fact issue whether Vilenchik represented himself as owner of the vessel so as to be a proper defendant. Judge Scola responded that the argument was arguably waived by the failure to raise it in opposition to the motion for summary judgment. However, Judge Scola reiterated that Vilenchik had signed the agreement and placed his name on the line marked “Owner,” which warranted granting of the motion for summary judgment. Although Vilenchik submitted an affidavit disputing ownership of the vessel, Judge Scola did not believe that the affidavit, standing alone, was probative evidence that would rebut the motion for summary judgment. Therefore, he declined to grant reconsideration. As the parties stipulated to the damages, Judge Scola granted a final judgment in favor of Middle Point Marina for pre-arrest storage fees, custodia legis expenses, arrest costs, and attorney fees and costs. The defendants filed a notice of appeal to the Eleventh Circuit on September 27, 2024.
Kanaway Seafoods, d/b/a Alaska General Seafood (AGS), and Liberty Packaging brought this action against the PACIFIC PREDATOR, claiming a maritime lien for necessaries and seeking petitory relief under Supplemental Rule D. Bryan Howey, beneficial owner of the vessel, and Dana Howey entered into a Loan and Security Agreement with Liberty by which Liberty loaned $800,000 to the Howeys to pay off an outstanding loan to a credit union. In exchange for the loan, the Howeys agreed to enter into a Fishing Agreement with an affiliate of Liberty (AGS) to deliver and sell seafood products to the affiliate. The Loan Agreement granted to Liberty a security interest in the vessel and certain fishing rights. The affiliate (AGS) also loaned amounts to the Howeys on an open account for necessaries for the vessel. When the Howeys defaulted on the loan payments, Liberty and AGS arrested the vessel. AGS argued that its lien on the vessel extended to necessaries for the vessel, which included the salmon seine limited entry permit issued by the Alaska Commercial Fisheries Entry Commission, that permitted fishing in Alaska waters. The vessel owner objected to the lien claim by AGS, arguing that the limited entry permits are within Alaska’s exclusive jurisdiction, were not transferrable under Alaska law, and did not give rise to a maritime lien. Judge Kindred disagreed, reasoning that the lien claim hinged on whether funds that were loaned by AGS were used for necessaries so that a maritime lien arose. Judge Kindred did not believe that the case involved a conflict between Alaska law and the general maritime law. The lien was asserted against the vessel, not the permits themselves, and the lien was created by maritime law because the permits were necessaries of the vessel. Therefore, Alaska law with respect to restrictions on transfer of permits did not affect the court’s determination of whether there was a lien on the vessel. Accordingly, Judge Kindred held that there was a lien on the vessel for the amounts loaned to purchase the permits. Judge Kindred then turned to the complaint for relief under Rule D. Liberty Packaging argued that it was bringing a possessory action, not a petitory action. Liberty argued that it had obtained a security interest in the vessel under the Loan Agreement, that the owners had breached the Loan Agreement, that Liberty was entitled to foreclose on its lien rights on the vessel and to take possession of the vessel, and, therefore, Liberty was entitled to take possession of the vessel under Rule D. Judge Kindred disagreed, reasoning that a possessory action is brought to reinstate an owner of a vessel who alleges wrongful deprivation of property. In this case, Liberty claimed the right to possess the vessel, but it was never in physical possession of the vessel, nor did it acquire legal title to the vessel such that it had constructive possession. As its claim was to obtain, and not to recover, possession of the vessel, the claim was not a possessory action under Rule D. Consequently, Judge Kindred granted the motion to dismiss the Rule D claim. See July 2023 Update.
The Howeys filed a counterclaim for wrongful arrest, arguing that the note signed in favor of Liberty Packing in late 2019 should have “zeroed out” their debt (and necessaries lien). Liberty and AGS moved for summary judgment on the wrongful arrest claim, and Judge Gleason agreed on the merits that, if the Howeys were correct that the 2019 note eliminated that portion of the lien claim as of January 1, 2020 (which was disputed by Liberty and AGS), it would not alter the validity of the lien for necessaries for 2020 and 2021. Judge Gleason also rejected the Howeys’ argument that they were unable to obtain evidence of the bad faith, malice, and gross negligence of the plaintiffs, reasoning that they were not diligent in seeking discovery. Accordingly, Judge Gleason dismissed the counterclaim for wrongful arrest.
This case arises from the allision in the Neches River in Texas between the GAS ARES, a liquefied petroleum gas carrier that was operated by KSS Line, and the SABINE, a tug owned and operated by Graham Offshore and Seabulk Towing. The GAS ARES was transiting inbound to load a cargo of liquefied petroleum gas at the Sunoco Logistics berth in Nederland, Texas, and was being conned by a state-licensed pilot with the assistance of an escort tug, the HAYLEY MORAN. The SABINE was moored at the Motiva Dock 1, secured side-by-side to the tug FLORIDA, with its engines turned off. As the GAS ARES approached the Motiva terminal, it slowed to avoid disrupting a nearby pipeline removal project, and the wind pushed the GAS ARES toward the docks. THE GAS ARES sounded multiple blasts from its whistle, and the captain of the SABINE, Arthur Wolford, headed to the wheelhouse where he observed the GAS ARES headed toward the SABINE. He rang the general alarm and told his crew to hold on for impact. The GAS ARES allided with the SABINE, the FLORIDA, and the dock, and Wolford claims that he was injured. Wolford filed suit in state court in Jefferson County, Texas against Seabulk Towing and others, and Seabulk Towing and Graham Offshore filed this action in federal court in Texas, seeking exoneration/limitation of liability. Seabulk Towing and Graham Offshore then filed a motion for summary judgment in the federal limitation action, arguing that they should be exonerated because there were no actions by them, the SABINE, or Wolford that caused or contributed to the allision, and that the sole cause was the fault of the GAS ARES. Wolford and KSS Line responded that Seabulk Towing/Graham Offshore had an inadequate number of crew, did not have appropriate policies concerning being on watch, and failed to enforce their policies for monitoring radio communications and standing watch. They argued that had the SABINE designated a crew member to be on watch in the wheelhouse to perceive dangers (such as an out-of-control vessel), they may have had time to move the vessel out of the way, evacuate the vessel, or more effectively brace for impact, citing Seabulk’s policy requiring a proper lookout when the vessel is underway or at anchor with the officer of the watch in the wheelhouse. The policy also required the person on watch when the vessel is docked to monitor the radio channel required by the dock, channel 16 or 13, and the VTS frequency for the area. Wolford was on watch, but he was also “on rest” because the SABINE was set to begin a job some time after midnight. The parties disputed whether the policies applied to the situation in which the SABINE was docked and was not standing by at the service of the facility and whether Graham Offshore and Seabulk Towing ensured compliance with the International Convention on Standards of Training, Certification, and Watchkeeping for Seafarers and the Inland Navigation Rules. Accordingly, Judge Crone concluded that there were fact questions concerning the SABINE’s duty to maintain an appropriate and effective watch at the time of the allision, and she declined to exonerate Seabulk Towing and Graham Offshore.
This litigation arises from the allision between the M/V YOCHOW and the barge OSG 243 that was moored at a dock in the Port of Houston. The allision damaged both the barge and the dock where the barge was moored. The YOCHOW was owned by Grand Famous Shipping, which entered into a ship management contract with Beikun Shipping and time chartered the vessel to China Navigation Co. (New York Produce Exchange form). Judge Ellison heard motions for summary judgment of several of the parties and issued rulings on them. He granted the motion of OSG, denying the claim of the YOCHOW interests that OSG’s docked barge was not properly lighted. Judge Ellison rejected the testimony of the Captain of the YOCHOW that neither he nor the compulsory pilot on the YOCHOW saw the barge, as the pilot’s testimony, video evidence, and an email from the Coast Guard Marine Safety Specialist established that the barge was illuminated prior to the incident. Judge Ellison concluded that the lack of expert testimony, coupled with the presumption of fault from THE OREGON, caused there to be no genuine issue of material fact regarding the negligence of OSG. The YOCHOW interests also contested the allegations of unseaworthiness asserted against the YOCHOW, arguing that the warranty of seaworthiness only applies to claims of crew members. Citing cases in which the Fifth Circuit analyzed evidence of unseaworthiness proffered by non-seamen limitation claimants, Judge Ellison denied the YOCHOW interests’ argument [compare Judge Barbier’s decision in Gulf Inland Contractors, discussed above in this Update, granting summary judgment on the unseaworthiness claim in an allision case]. Additionally, as he was going to have to hear evidence of negligence, Judge Ellison declined to dismiss the claims of gross negligence on the part of the YOCHOW. Finally, Judge Ellison addressed the arguments of the Port of Houston, whose dock was damaged by the allision, that the YOCHOW was liable to the Port for breach of the Port’s tariff. As the YOCHOW owner and manager had not signed the berth application (containing the terms and conditions of the tariff), and as the charterer of the vessel was the party who received the services of the Port, Judge Ellison dismissed the Port’s claims for breach of contract against the YOCHOW owner and manager. See August 2020 Update. On September 15, 2020, however, Judge Ellison granted reconsideration and sustained the Port’s motion for summary judgment that the YOCHOW was subject to the Port’s tariff. The application of the Port’s tariff was raised again when OSG, owner of the docked vessel that was exonerated of fault, moved for summary judgment on the contract claims presented by the Port against OSG. The Port cited Subrule 059 that provided for liability for “Users causing damage” to Port property or facilities. As the Port presented “no evidence to indicate that the Barge served as anything other than a big metal bumper” between the YOCHOW and the dock, Judge Ellison held that Subrule 059 could not be the basis for contractual liability of OSG. The Port also cited Subrule 052(5)(a), which provided that Users are responsible for all damages or injury to Port property or facilities occurring during the occupation or use, without regard to who caused it. Judge Ellison did not apply that provision to OSG as it conflicted with Subrule 059. Additionally, the context of the Subrule and the evidence militated in favor of a narrow reading. After OSG filed its motion, the YOCHOW sought to reconsider the ruling from a year earlier that the tariff applied to the YOCHOW. Judge Ellison did not find a sufficient reason for giving the YOCHOW a “third bite at the apple,” noting that it appeared that YOCHOW had “read OSG’s Motion and regretted not making the argument.” However, if he were to consider the argument, Judge Ellison did not consider it to be sufficiently persuasive to qualify for reconsideration. See December 2021 Update.
Judge Ellison then considered the motion for summary judgment of China Navigation that it was not liable for damages to the dock. He first addressed the language of the charter and held that the charter reserved navigation to the owner. As there was no evidence that China Navigation directed the operations of the vessel or meddled in its procedures, Judge Ellison rejected the dock’s theory that China Navigation should be considered the de facto owner of the YOCHOW. Judge Ellison then considered the decisions holding that the charterer’s duties do not stem solely from the charter (contract principles) but also arise from independent principles of tort law. The lessor of the dock asserted that China Navigation was negligent for chartering the vessel without vetting the owner’s finances or the vessel’s safety protocols, but Judge Ellison declined to extend a duty to the time charterer to vet the owner’s financial stability or safety protocols in the traditional time charter context. See January 2022 Update.
The lessor of the dock appealed, presenting questions whether the charterer exercised sufficient operational control over the vessel so that it should be considered its de facto owner and whether the time charterer should have a duty to vet a vessel owner prior to executing a time charter. With respect to the control, the dock did not argue that the time charter contractually transferred control over the vessel to the charterer. Instead, the dock argued that the charterer held itself out to the world as the owner because it was allowed to rename the vessel, paint the vessel its house colors, paint its logo on the vessel, and fly its house flag. The charterer was listed as the “Manager” in Lloyd’s Register of Ships, and the charterer directed the vessel’s captain to download its reporting software so that he could send data to the charterer. Writing for the Fifth Circuit, Judge Clement stated that the dock’s arguments were “unmoored from reality.” She noted that if the parties had wanted to shift responsibility to the charterer, they could have done so. “There’s a charter party for that—a demise charter. But they didn’t.” She found the allegations of control to be “unpersuasive” as they reflected the division of responsibility set forth in the charter party, which did not give the charterer operational control over the vessel. Judge Clement then turned to the argument that the charterer acted negligently by failing to vet the owner’s finances and safety management protocols prior to executing the time charter (asserting that diligent investigation would have discovered that the owner and manager were “woefully insufficient”). Judge Clement was “on board” with the charterer’s response that the duties of a time charterer to a third party are well-defined and do not extend beyond certain “spheres” of activity—negligently conducting its activities as time charterer. Thus, the charterer could be liable for negligence even though it did not assume control of the vessel. However, time charterers are not liable, as a matter of law, for acts taken outside the spheres unless the parties agree by contract or custom. As ensuring the competence of a contractual counterparty does not fall within the traditional sphere of activity over which time charterers exercise control, and as there was no indication that the parties intended to vary the spheres of responsibility, Judge Clement held that the charterer did not owe a duty to vet the owner’s finances or safety management protocols prior to executing the time charter. [Judge Clement also held that the charterer was not responsible for discovering the owner/manager’s work/rest standards and for violating Stubb’s twelfth commandment, “sleep when you can,” citing Herman Melville, Moby Dick]. Accordingly, the Fifth Circuit affirmed the dismissal of the charterer. See September 2022 Update.
Judge Ellison then held a bench trial on the issues of liability, limitation, and damages. He found that the cause of the collision was the fault of the helmsman, Nan Win, mistakenly steering the YOCHOW hard to port instead of hard to starboard. Judge Ellison did not find that Win was fatigued or that any fatigue was the cause of the allision. Judge Ellison also found that Captain Xiaofei Yang had been on duty for a continuous 18 hours before the allision, in violation of 46 C.F.R. Section 15.1111, invoking the presumption of causation from THE PENNSYLVANIA Rule; however, as Captain Yang was not present on the bridge during the allision (the Second Officer had assumed control), Judge Ellison did not find that Captain Yang’s fatigue was a cause of the allision. Although Win is able to speak only Burmese and maritime English, Judge Ellison did not find any evidence to suggest that Win’s faulty turn was the result of a language or communication issue. Therefore, he concluded that the only relevant act of negligence that proximately caused the allision was Win’s steering error. This conclusion led to his finding that the vessel was not unseaworthy, as there was no condition of the vessel that caused the faulty steering. Judge Ellison then considered whether the owner had privity or knowledge of the cause of the allision. Judge Ellison found no evidence that the owner failed to exercise reasonable care in hiring or training Win or that Win had a history of navigational errors of which the owner should have been aware. Although there was evidence that the owner had some shoddy recordkeeping with respect to the hours worked, Judge Ellison did not believe that proper recordkeeping would have caught any violation relevant to the accident “as there was no violation to catch.” Judge Ellison believed that this was a steering error for which the owner was entitled to limit liability. He then turned to the claims against the total limitation fund of $18,983,949.99, stating that the damages in this case were governed by the “new for the old rule,” that the injured party “is entitled to recover only that which is necessary to restore his damaged property to the same condition as existed immediately prior to the delict.” TPC Group, which leased the dock from the Port of Houston Authority, completed temporary repairs on the dock so that it would be serviceable while a new dock was constructed. The owner of the YOCHOW argued that the repairs adequately restored the dock to its condition prior to the accident and that the recovery should be limited to the cost of those repairs. Judge Ellison concluded that the repairs did make the dock serviceable, but they were insufficient to return the dock to its pre-allision condition because of the inability to install a new vertical support system under the dock. Judge Ellison then addressed whether the allision caused the dock to suffer a total loss, constructive total loss, or partial loss. As the temporary repairs could not return the dock to its pre-allision condition, Judge Ellison concluded that the dock was a total loss. He noted that this was not the archetypal total loss case because the dock was still standing and was in use at the time of the trial, but he could not find that the dock was a constructive total loss or partial loss because it could not be repaired [how can you determine if repair costs exceed the pre-allision value if the dock cannot be repaired?]. Accordingly, Judge Ellison sought to determine the market value of the dock at the time of the allision. As there was no applicable market value for the dock, Judge Ellison used replacement cost less depreciation and betterment for the measure of damages. He found that replacement of the dock would cost $25,406,154, that the new dock had an expected life of 75 years, and that the original dock had a remaining useful life of 25 years. Therefore, he reduced the replacement cost by two thirds (not including the cost of demolition of the old dock). This resulted in replacement damages of $9,068,718. As he held that the dock was a total loss, Judge Ellison ruled that the dock lessor was not entitled to recover consequential damages for the temporary repairs that it performed. In summary, Judge Ellison awarded the dock lessor $9,068,718; he awarded the owner of the barge $3,600,000 in physical damage and loss of use in accordance with the stipulation of the parties; and he held that the owner of the YOCHOW was entitled to limit its liability (but the damages were within the limitation fund). See September 2024 Update.
The final issue to be addressed by Judge Ellison was prejudgment interest. The owner of the YOCHOW argued that TPC Group was not entitled to prejudgment interest, arguing that TPC Group claimed damages in excess of $40 million throughout the majority of the case, sought more than $33 million in its proposed findings of fact, and was ultimately awarded $9 million. Thus, the owner of the YOCHOW asserted that peculiar circumstances existed to a gross extent from the award of less than three quarters of the claimed damages such that an award of prejudgment interest was inequitable. Judge Ellison disagreed, answering that prejudgment interest was “compensation for the use of funds to which the claimant was rightfully entitled,” and he then addressed the rate to be used. TPC Group argued that the court should award interest at the average post-judgment interest rate during the prejudgment interest period, and OSG and TPC Group argued that they should be awarded interest based on the average Federal Reserve prime rate during the prejudgment interest period. Judge Ellison agreed with OSG and TPC Group that setting the interest rate based on the approximate cost of borrowing (based on the Federal Reserve prime rate) “best accomplishes the purpose of prejudgment interest.” Judge Ellison held that the interest for the physical damages would begin on the date of the collision, and for OSG’s claim for loss of hire, the interest would begin to run on the date its loss of hire began.
From the state courts
Integr8 Fuels entered into a contract to supply fuel to the prior owner of the vessel AUZONIA, Harmony Innovation Shipping. Integr8 arrested the vessel in Rotterdam, and the court in Rotterdam ruled that the arrest was wrongful under US law, and Integr8 was found liable to reimburse the new owner of the vessel, Amelia Maritime, for its legal fees. A year later, Integr8 arrested the vessel in the United Arab Emirates while the vessel was undergoing repairs, causing the shipyard to stop working on the repairs and resulting in economic losses for Amelia Maritime. Amelia Maritime posted cash security in the amount of $209,410 to release the vessel so that repairs could continue. Integr8 demanded arbitration in New York against Amelia, and Amelia brought suit in federal court in New York against Integr8, seeking injunctive relief to stop the arbitration and seeking a declaratory judgment that Integr8 had no in personam claim against Amelia Maritime. That suit was dismissed with a stipulation that Integr8 would not demand arbitration against Amelia Maritime or maintain that there was an agreement to arbitrate between Integr8 and Amelia Maritime. After the Supreme Court in the United Arab Emirates dismissed Integr8’s claim against Amelia Maritime, Amelia Maritime brought this suit in state court in New York against Integr8, seeking to recover damages of nearly a million dollars for the wrongful arrest of the AUZONIA in the United Arab Emirates. Integr8 moved to dismiss the suit for lack of personal jurisdiction, and Judge Cohen held that the court lacked general or specific jurisdiction over Integr8. Amelia Maritime’s suit named two Integr8 entities, Integr8 Fuels, Inc. and Integr8 Fuels America LLC, as defendants. Amelia Maritime did not allege that there was specific jurisdiction over the defendants as the wrongful arrest involved the United Arab Emirates and the fuel was supplied in Thailand. The only connection to New York is that Integr8 America maintains a trading office in New York with one fuel oil trader who was not alleged to be involved. Amelia Maritime argued that there was general jurisdiction over Amelia Maritime because it is authorized to do business in New York and appointed the Secretary of State as its registered agent to accept service on its behalf. Amelia Maritime cited the recent decision of the United States Supreme Court in Mallory v. Norfolk S. Ry. in which the Court held that when a state (Pennsylvania) enacts a statute that permits a corporation to register to do business on the condition that it consents to jurisdiction, that consent is sufficient to meet the due process requirement for personal jurisdiction. Judge Cohen found that statute to be inapplicable, however, as the New York statute does not contain the language mandating consent to jurisdiction in New York as a condition to conducting business in New York. In contrast, the New York Court of Appeals has held that registration to do business and designation of an agent for service does not constitute consent to general jurisdiction. Thus, although Integr8 America does business in New York, Amelia Maritime did not establish that the business was sufficient to establish general jurisdiction, and Judge Cohen dismissed the complaint for lack of personal jurisdiction.
Houston
1990 Post Oak Blvd
Suite 1800
Houston, TX 77056
O 713.629.1580
New Orleans
365 Canal Street
Suite 2900
New Orleans, LA 70130
O 504.569.1007
Gulfport
1110 Cowan Road
Suite B #214
Gulfport, MS 39507
O 228.867.8711
Miami
2801 SW 149th Ave
Suite 120
Miramar, FL 33027
O 305.274.5507
Quote:
From Judge Seeger in In re Major Glen Corp., No. 22-cv-5852, 2024 U.S. Dist. LEXIS 138238 (N.D. Ill. Aug. 5, 2024):
This case is about a flaming yacht. The Patriyacht, a 33-foot pleasure vessel, caught on fire. The boat went up in smoke, and down in flames. But the Patriyacht did not sink to Davey Jones’s locker. In fact, at the time of the inferno, it was out of the water. The boat was living the high and dry life in a heated, indoor storage facility.
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© Kenneth G. Engerrand September 30, 2024; redistribution permitted with proper attribution.
