Court Orders Sale of Seized Vessel Following Default and Unnecessary Delay

Judge Ivan Lemelle recently reinforced the old adage, “if you don’t use it, you lose it,” in a suit based upon the alleged breach of a rental agreement between Essex Crane Rental Corp. and Cross Maritime.  Under the agreement, Cross was to provide a 230 ton Manitowoc lift crane, as well as various services and personnel to the DB CROSSMAR 14, in exchange for a monthly rental fee. In filing its verified complaint against the DB CROSSMAR 14, in rem, the Crane, in rem, and Cross Maritime, in personam, Essex alleged that the parties failed to pay properly presented invoices for several months. As of May 2, 2016, Essex alleged that the amounts outstanding totaled approximately $213,000.00.

 

On June 6, 2016, the Court issued warrants for the arrest of the vessel and the crane.  Essex arranged for Admiral Security Services to be appointed as a substitute custodian and for the vessel to remain at its berth in Houma, Louisiana until such time as the debt could be paid or the vessel could be sold to recoup the debt.  The vessel was subsequently moved to the Port of Terrebonne, to allow the removal of dive equipment belonging to an unrelated party.

 

Over the course of several weeks, various other creditors came forward to assert interests in the vessel; however, Cross failed to take any action, including even making an attempt to post security for the release of the vessel.

 

On September 2, 2016, Essex filed a Motion for Default, seeking to have the sale of the vessel set, following publication of notice. Essex argued that Cross’s failure to take any actions toward release of the vessel constituted an unreasonable delay, and also noted that the vessel was accruing $720.00 in custodial costs per day, which amounted to more than $60,000.00 as of September 2, 2016.

 

In opposing Essex’s motion, Cross asserted that Essex should be made to detail the exact amount of the lien before the vessel was set for sale, and that Cross had been unjustly deprived its ownership interest.  Cross also argued that absent a proper accounting, they could not be expected to determine the amount required to discharge the lien and vacate the vessel’s arrest.

 

In addressing Cross’s claim that Essex owed it an exact accounting of the amounts owed, the Court disagreed.  Quoting Essex’s brief, the Court noted that Cross had failed to “cite a single case in which a court delayed the sale of a vessel due to the purported need for an accounting of a lien claim or the purported issue of standing to bring a claim.”  The Court also stated that if Cross had wanted to challenge the facts surrounding the vessel’s arrest, it could have filed for an evidentiary hearing under the Supplemental Admiralty and Maritime Claims Rule E(4)(f).

 

Ultimately, Judge Lemelle determined that the vessel should be sold and confirmed Essex’s Motion for Default based upon the unreasonable delay caused by Cross’s failure to take any action toward achieving the release of the vessel, the risk of deterioration, decay, and/or injury posed by an idle vessel; and, the expense of keeping the vessel under arrest exceeded $17,000.00 per month.

 

This case highlights a crucial, but often overlooked issue in vessel seizures – what to do with the res after seizure. The instant action shows the necessity of creditors and/or their attorneys, creating a clear plan of action regarding the disposition of a seized vessel, ideally in advance of the seizure, in order to avoid excessive custodial costs. Custodial costs can add up very quickly and can be potentially fatal because those costs could potentially exceed the value of the vessel if unchecked.  This danger may become especially apparent when vessels are seized in ports located significant distances from U.S. Marshall’s offices, or from the base of operations for private custodial services (e.g., Cameron Parish, Louisiana, Port Aransas, Texas). Seizures in distant locations will incur significant charges for custodial travel expenses, for every day the vessel is held.

 

Essex Crane Rental Corp. v. DB Crossmar 14, et al.

Punitive Damages Not Available For Failure To Pay Maintenance & Cure

In a case of first impression, the United States District Court for the Western District of Washington has held that punitive damages for the failure to pay maintenance & cure are not available where seaman’s status is reasonably disputed.

Plaintiff was a pile driver hired to work in the construction of a wharf for the federal government. He was assigned to work in connection with “flexi-floats,” which are used as floating work platforms in maritime construction. He alleged he injured his back in the course of his employment.

Plaintiff sued under the Jones Act and sought punitive damages for the failure to pay maintenance & cure. The employer filed a Motion for Summary Judgment seeking dismissal of the punitive damages claim. Whether Plaintiff was a seaman was disputed and the court previously denied Plaintiff’s Motion for Summary Judgment as to whether he was a seaman. The court held:

“Because reasonable minds could differ on whether Plaintiff’s duties rendered him a seaman, no rational juror could find that Defendants’ opposition to maintenance and cure was in bad faith. Therefore, the Court grants Defendants’ motion for summary judgment and finds that punitive damages are unavailable for Defendants’ allegedly wrongful refusal to pay maintenance and cure.”

Ward v. Ehw Constructors, U.S.D.C. W.D.WA. No. C15-5338

Death on Platform in State Waters May Be Within OCSLA Jurisdiction

A worker was killed on a platform located in Louisiana state waters when a pressurized valve blew, striking him in the head. The platform was a “collecting point” for pipelines running from Outer Continental Shelf platforms to shore. The platform owner filed a Motion for Summary Judgment to dismiss claims against it on the basis the OCSLA could not apply and that the decedent was covered by the Louisiana Workers’ Compensation Act. As a state worker, the decedent would be a statutory employee and the platform owner therefore protected from suit due to the exclusivity provision of the state act.

The District Court granted the Motion for Summary Judgment, but on a Motion for Reconsideration, denied the MSJ and allowed the suit against the platform owner to proceed. Citing the Supreme Court’s decision in Pacific Operators Offshore, LLP v. Valladolid, 132 S.Ct. 680 (2012), the court found that OCSLA has only two requirements: that extractive operations take place on the OCS, and that the injury in question must result from those operations. The “resulting from” standard requires a “substantial nexus” exist between the OCS operations and the injury.

Plaintiffs argued that the valve that blew causing the decedent’s death was pressurized to facilitate the movement of crude oil from the OCS through the transfer point on the platform. The court found this was a genuine issue of material fact sufficient to deny the Motion for Summary Judgment, as those facts could establish the necessary substantial nexus between OCS operations and the injury.

Mays v. Chevron Pipeline Co., No. 14-3098 U.S. D.C. W.D.LA. (2017)

Same Sex Spouse Can Recover Under DOHSA

In what appears to be a case of first impression, the U.S. District Court for the Southern District of Florida has held a same sex spouse can recover damages under the Death on the High Seas Act (DOHSA) arising from the death of his husband while on a cruise on the high seas.

The facts recited by the Court are compelling: Plaintiff and his husband were subjected to ‘repetitive anti-gay insults’ while passengers onboard the cruise. On their first day onboard, they were repeatedly called a ‘lipstick’ by a bartender. The couple immediately complained to the cruise operator’s management about the incidents. The next evening, the husband was extremely distraught when employees called him ‘a pedophile and other anti-gay slurs.’ He returned to his stateroom and told his husband about the insults. Afterward, security officers reported to the couple’s stateroom and ‘engaged in an argument’ with them. ‘A series of events’ ensued and the decedent fell over the couple’s seventh deck stateroom balcony onto a life boat on deck six. He held on to the life boat for several minutes as crewmembers attempted to rescue him. The crewmembers grabbed his hand but failed to rescue him, and he fell into the ocean. The ship did not stop for some time and did not timely deploy rescue boats. After receiving a distress call from the cruise, the United States Coast Guard searched for the decedent but did not find him.

The Plaintiff sued for wrongful death of his husband, as well as for the intentional infliction of emotional distress for witnessing his husband’s death. On a Rule 6 Motion to Dismiss, the Court allowed the DOHSA claim to continue, but dismissed the claim for intentional infliction of emotional distress because, although Plaintiff was mere feet away from his husband and witnessed his fall and disappearance, he was not himself in the ‘zone of danger’ where he was at risk of physical harm.

Elbaz v. Royal Caribbean Cruises, No. 16-24568, U.S.D.C., S.D.FL.