“Flotilla Doctrine” Applied and the Court Granted Claimant’s Motion to Increase Security in a Limitation Action

The flotilla doctrine applies where vessels are owned by the same person, engaged in a common enterprise, and under a single command.  The flotilla doctrine requires, for limitation for liability purposes, the owner’s tender of all the vessels in the flotilla, or the value thereof, pending resolution of the underlying claims.

Claimant was allegedly injured when a third party’s vessel collided with the M/V CROSBY MARINER.  Claimant was a crewmember assigned to the M/V CROSBY MARINER.  The M/V CROSBY EXPRESS were transporting a barge together at the time of the accident.  Crosby Marine Transportation, LLC (“Crosby”) owned both the M/V CROSBY EXPRESS and the M/V CROSBY MARINER.  The M/V CROSBY EXPRESS was the lead tug while the M/V CROSBY MARINER was attached to the port side of the barge to stabilize it while under tow.  The decisions pertaining to the speed of the tow and navigation came from the captain of the M/V CROSBY EXPRESS.

Claimant sued Crosby and the owners of the third party vessel.  Crosby filed a limitation action pursuant to the Limitation of Liability Act and supplied security in accordance with the value of the M/V CROSBY MARINER and its pending freight.  Claimant filed a Motion to Increase Security arguing the applicability of the flotilla doctrine.

The Magistrate agreed with the Claimant.

Here, the CROSBY MARINER and the CROSBY EXPRESS were both owned by the same owner, Crosby.  Additionally, both were engaged in a common enterprise, that is, towing the same barge.  Further, both vessels were under Captain Naccio’s command.  Accordingly, the Court finds that the flotilla doctrine applies in this case.

Accordingly, the Court ordered an appraisal of the M/V CROSBY EXPRESS and M/V CROSBY MARINER by a Court-appointed appraiser or for the parties to stipulate and agree to the valuation of both vessels and the freight involved.

Crosby Marine Transp., LLC v. Triton Diving Servs., LLC, CIV. 13-2399, 2014 WL 5026070 (W.D. La. Oct. 8, 2014)

Maintenance and Cure Not Owed in Case Defended By MBLB

Recently, Will Bland, Beth Bernstein, and paralegal Meredith Foster of Mouledoux, Bland, Legrand & Brackett, LLC, successfully invoked the McCorpen defense for their client, St. June, LLC, resulting in Judge Barbier granting St. June’s motion for summary judgment and dismissing plaintiff’s claims for maintenance and cure with prejudice.  See Eldon P. Foret, Jr. v. St. June, LLC, No. 13-5111 (E.D. LA. 2014).

On January 11, 2011, Eldon Foret sustained injuries to his neck and back while employed as the captain of the M/V ST. JUNE.  Foret filed suit against St. June, LLC on July 18, 2013, asserting claims under the Jones Act, maintenance and cure, as well as punitive damages.  St. June filed a counterclaim on May 14, 2014, seeking reimbursement for all money paid to Foret regarding maintenance and cure and associated legal fees.

St. June’s counterclaim relied on the McCorpen defense.  Specifically, it alleged that Foret had failed to disclose the existence and extent of injuries to his neck and lower back, and that the failure to disclose these facts was material to St. June’s decision to hire Foret.

St. June filed its motion for Summary Judgment before Judge Carl Barbier of the Eastern District on August 26, 2014.

To succeed on the McCorpen defense, an employer must show: (1) The seaman intentionally misrepresented or concealed medical facts; (2) The non-disclosed facts were material to the employer’s decision to hire the seaman; and (3) A causal link exists between the pre-existing injury and the injury incurred during employment.

Whether or not the seaman intentionally misrepresented facts depends on whether or not the employer requests a pre-employment examination.  If the employer requests an examination, the seaman must disclose those medical facts that are plainly desired.  On the other hand, if the employer does not request an examination, the seaman must disclose medical facts that, in the seaman’s own opinion, would be considered important by the ship-owner.

In determining what facts a seaman should consider important to his employer, courts consider the seaman’s employment history.  For instance, an extensive work history over a long period of time familiarizes seamen with what employers expect to uncover regarding their employees’ medical history.  In this case, Foret had worked on shrimp boats for 42 years and acknowledged that several boating companies as well as every oilfield company he had ever worked for had inquired into medical problems with his neck and back.  Further, Foret failed to disclose an injury he sustained to his neck and back on July 2012, or that he was taking pain medication during his employment with St. June.

Regarding materiality, the Fifth Circuit has routinely held that back injuries are precisely the type of information employers consider material in deciding to hire a seaman.  See Brown v. Parker Drilling Offshore, Corp., 410 F.3d 166 (5th Cir. 2005)see also Jauch v. Nautical Servs., Inc., 470 F.3d 207 (5th Cir. 2006).

Finally, courts have regularly found causal links between pre-existing and post-employment injuries where these injuries arise in the same area of the body.  Brown v. Parker Drilling Offshore, Corp., 410 F.3d 166 (5th Cir. 2005).  Here, the record showed that multiple doctors had treated Foret’s lumbar-spine region years before his employment with St. June.  Thus, the court found a causal link between the pre and post-employment injuries based on their extreme similarities.

Fifth Circuit Addresses Bailment and Eroding Policy Limits After Vessel Sank

 National Liability & Fire Ins. Co. v. R&R Marine, Inc., — F.3d —- (5th Cir. 2014):

This case arises after the sinking, and subsequent salvage, of a vessel owned by Hornbeck Offshore Services. Hornbeck Offshore owned the M/V Erie Service, which was in need of repairs.  Hornbeck entered into a Shipyard Repair and Drydock Agreement with R&R Marine for the repair and refit of two of Hornbeck’s vessels, one being the M/V Erie Service, at R&R Marine’s shipyard.  Per this Agreement, Hornbeck retained access to its vessel and reserved its authority over the vessel with the use of two on-site managers.  Despite Hornbeck’s oversight, it was undisputed that the Erie Service was in the custody of R&R Marine upon delivery.

On September 12, 2007, the National Weather Hurricane Center issued a tropical storm warning which included an area in which R&R Marine’s shipyard was located.  R&R Marine ensured Hornbeck pumps were available should water entry become an issue.  R&R Marine also ensured Hornbeck the shipyard docks were monitored “around the clock.”  However, in anticipation of the weather advisory, R&R personnel evacuated the shipyard and failed to take any precautions, apparently underestimating the severity of the storm.  The following morning, the M/V Erie Service sank.

Hornbeck entered into a time-and-materials salvage bid which totaled $627,324.64.  Hornbeck and R&R Marine demanded National, R&R Marine’s insurer, pay the salvage costs directly.

National sought a declaratory judgment that it was not required to pay the salvage cost.  Hornbeck counterclaimed asserting National’s policy required them to pay for damage to the M/V Erie Service since it was in the custody of R&R Marine, its insured, at the time of loss.  Hornbeck filed a cross-claim asserting R&R Marine’s negligence proximately caused the sinking of the M/V Erie Service.

The district court held R&R Marine was negligent in failing to secure the M/V Erie and that National was required to pay Hornbeck salvage costs, and interest and attorney’s fees associated with said costs.  Both National and R&R appealed.

The Fifth Circuit concluded the district court did not clearly err in finding R&R Marine to be negligent.  Hornbeck had established a prima facie case of negligence, as the M/V Erie Service was delivered to R&R Marine afloat and R&R Marine had full custody of the vessel.  The Court did not agree with R&R Marine that only a limited bailment was created due to the presence of Hornbeck’s on-site managers; to the contrary, the Court determined the district court was not clearly erroneous in finding that neither the presence nor authority of Hornbeck’s personnel affected R&R Marine’s exclusive control and full custody.

R&R Marine next argued Hornbeck was unreasonable in choosing a time-and-materials salvage contract, as opposed to a less expensive, “no cure, no pay” agreement.  Again, the Court determined the district court’s determination of Hornbeck’s reasonableness was not clearly erroneous and therefore upheld its determination.

The district court determined National was liable for the salvage costs associated with the sinking of the M/V Erie Service, as provided by its policy with R&R Marine.  National argued Hornbeck lacked standing as a third-party claimant to bring its counterclaim.  The Court of Appeals, reviewing the district court’s decision de novo, looked to Texas law to determine the parties’ substantive rights.  The Court engaged in an analysis of procedural law application and determined Hornbeck had standing to assert its counterclaim but agreed with National that the district court erred in the total amount of damages awarded in excess of National’s policy limits.  Accordingly, the award to Hornbeck was reduced to $1,000,000.00 plus reasonable attorney’s fees.

More Briefs Filed in Dize v. Association of Maryland Pilots

In 1995, the Supreme Court decided Chandris, Inc. v. Latsis, 515 U.S. 347 (1995), wherein it announced a test for determining “seaman” status.  To qualify as a “seaman” the employee must (1) contribute to the function of a vessel or to the accomplishment of its mission, and (2) have a connection to a vessel in navigation that is substantial in both duration and nature.  The Supreme Court favorably cited a rule of thumb from the Fifth Circuit whereby an employee would be denied “seaman” status if they spent less than 30% of their time in the service of a vessel in navigation.

Last year, the Court of Appeals of Maryland decided Dize v. Association of Maryland Pilots, which addressed the “seaman” status of an employee who maintained vessels that are dockside or ashore.  The court determined that such work does not factor into the 30% rule because maintaining a moored vessel is not “sea-based duties” that exposes the employee to the “perils of the sea.”

In April, this blog mentioned that Ms. Dize filed a petition for certiorari, asking the Supreme Court to review the lower court’s decision.  The question presented by Ms. Dize is: “When applying the Chandris 30-percent rule, may a court consider the time a maritime worker spends in the service of a vessel in navigation that is moored, dockside, or ashore, as the Third, Fifth, Sixth, and Ninth Circuits have held, or must a court categorically exclude such time, as the Eleventh Circuit and the Maryland Court of Appeals have held?”

Now, Ms. Dize has gained additional support for her petition.  Three amicus (or amici) briefs were recently filed by (1) Inland Boatmen’s Union, Pile Drivers, Divers, Bridge, Wharf & Dockbuilders Union, and the Sailors’ Union of the Pacific; (2) Practicing Maritime Lawyers; and (3) Maritime Law Professors.  Although the Inland Boatmen’s Union’s brief is not online–after a very short search on my part–the briefs filed by the Practicing Maritime Lawyers and Maritime Law Professors are available at SCOTUSblog.

The Practicing Maritime Lawyers argue in their brief:

In Chandris v. Latsis, 515 U.S. 347 (1995), this Court endorsed a 30-percent rule of thumb to establish “seaman” status but the Court has never specified the types of activities that count toward the 30-percent threshold.  As a result, lower courts are in irreconcilable conflict over whether to count the time a maritime worker spends in the service of a vessel in navigation that is moored, at the dock, or ashore.  The resulting confusion and uncertainty harms thousands of maritime workers due to loss of benefits, delays in receiving benefits, the extra burdens in obtaining benefits, and waste of time and money in pursuing benefits to which they are not entitled.  It also harms maritime employers and insurers who are uncertain of their responsibilities and, as a result, face increased expenses and exposure to legal risks.  Finally, it imposes unnecessary costs on the judicial system, which must devote substantial resources to deciding which regime governs a particular case before it can resolve the underlying merits of a claim.

The work of a seaman preparing the vessel for sea and conducting or waiting to conduct the vessel’s business should be included in the time credited to seaman status.  The application of Dize to the Alaska salmon fishery, and many other small vessel undertakings, would have devastating consequences for employers, employees and their insurers.  Vessel owners deserve to know under which status their employees will fall so they can procure appropriate insurance.  Employees deserve to have proper insurance coverage for their work injuries.  The Court should take this opportunity to bring clarity to the seaman-status jurisprudence.

The Maritime Law Professors argue in their brief:

“Seaman’s status” is a mixed question of law and fact.  However, the incorrect result below is not simply due to a failure to correctly apply the facts to the law, bur rather to a misinterpretation of the law as set forth in Chandris, Inc. v. Latsis, 515 U.S. 347 (1995).

Inconsistent interpretation of Chandris can have substantial effects on the maritime industry.  Because maritime employers are subjected to personal liability if they fail to secure compensation under the Longshore and Harbor Workers’ Compensation Act (hereinafter “the LHWCA”), inaccurately predicting which way a court may decide can cause a substantial personal loss to the President, Secretary, or Treasurer of a maritime employer.

These inconsistent results can be redressed by a clarification of the duration requirement in Chandris.  Therefore the undersigned maritime law professors request that the Court grant certiorari.

Tip of the hat to SCOTUSblog.  I can’t wait to see the respondent’s brief which is presently due on July 21, 2014.