New Version of Nautical Rules of the Road Published

The United States Coast Guard has published a new amalgamated version of the nautical Rules of the Road to improve the readability and understanding of the navigation rules (commonly called “Rules of the Road”). The version combines the Rules of the Road and associated regulations. This edition shows the rules in a one-page format—as opposed to the previous two page, side-by-side. Rule differences are shown in either a two-column table or in bracketed text. Italics text is used to differentiate the Inland Rules from the International Rules. This new edition is available online.

Seaman’s Widow’s Claim for Punitive Damages Denied

Recently, the United States District Court for the Eastern District of Louisiana further shored up the clearly delineated avenues for recovery available to plaintiffs involved in Jones Act and personal injury suits arising under general maritime law.  In Wade v. Clemco Industries Inc., et al, No. 16502 (E.D. La. Feb. 2, 2017), the court affirmed the Fifth Circuit’s decision in Scarborough v. Clemco Industries, Inc., and denied the widow of a Jones Act seaman the recovery of punitive damages from non-employer third-parties.


Court documents show that the decedent, Garland Wade, worked as a sandblaster and paint sprayer on vessels owned by Coating Specialists, Inc., and performed work on permanent fixed platforms owned and/or operated by Chevron USA both in Louisiana and Federal waters.  Several years after leaving his employment as a sandblaster, the decedent died of connective tissue disease. In the case at bar, it was alleged that the decedent was not provided with a protective hood, not given instructions for the proper use of the hood he may have been given, and that he was not provided with a safe work place.


Plaintiff, Rose Wade, initially filed suit on grounds that her husband’s death was caused by products manufactured, marketed, designed, sold, and/or distributed by the defendants, and which contained asbestos which she alleged directly caused or aggravated her husband’s illness and death.  As a result of the defendant’s respective actions and/or inactions, Plaintiff sought $5,000,000.00 in damages for the wrongful death of her husband.


Defendant quickly filed motions for partial summary judgment seeking the dismissal of Plaintiff’s claims for non-pecuniary losses, under the well-established rule that Jones Act seamen and their survivors are not entitled to recover non-pecuniary damages from a non-employer third parties. (Scarborough v. Clemco Industries, Inc., 391 F.3d 660, 668 (5th Cir. 2004).)  In conjunction with their efforts, Defendants noted that the Plaintiff in the instant matter had already filed a state court suit in which the decedent had been adjudged to have been a Jones Act seaman, and therefore there could be little question that Scarborough would apply to the claims at issue before the Eastern District.  Defendants also argued that the Supreme Court’s holding in Townsend, which had previously resulted in an award of punitive damages for Employer’s arbitrary withholding of maintenance and cure, did not apply, because the Wade matter did not involve the issues of maintenance and cure.


In response, Plaintiff averred that her claims against the non-employer third-parties did not arise under the Jones Act or general maritime law; however, the Court disagreed with this assertion.  In so doing, the Honorable Judge Eldon Fallon found this case to be analogous to McBride v. Estis Well Serv., L.L.C., 768 F.3d 382 (5th Cir. 2014), cert. denied, 135 S. Ct. 2310 (2015), and noted that in that matter, as in the instant case, Plaintiff elected to bring her claim under general maritime law, and thus the parties were to be bound by the limitations on damages previously established under that body of law.  In granting the defendants’ motions in Wade, the court further solidified the foundation laid by McBride and its progeny, in wrongful death cases brought under general maritime law, which continue to limit a survivor’s recovery from employers and non-employers to pecuniary losses in cases where the Jones Act is implicated.

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.

The Implications of Hanjin’s Bankruptcy

Hanjin Shipping Company originates in South Korea but is internationally recognized in the maritime industry. Responsible for a substantial portion of the industry’s shipping needs, Hanjin is the world’s seventh-largest container shipper. The company is now facing a detrimental dilemma: too many ships and not enough cargo. In order to protect its remaining assets, the company filed for bankruptcy in the United States. So far, eight of Hanjin’s ships have been seized. Approximately 80 more are awaiting their fate and are, in the meantime, preventing approximately $14 billion worth of cargo orders from being delivered. On September 9, 2016, a U.S. judge granted an order allowing Hanjin provisional protection from U.S. creditors, thus enabling some of its vessels to dock and unload.

Despite the court ordered protection, the company’s collapse has already made waves across the board. Retailers are predicting delayed shipments in advance of the holiday season, the impact of which will be felt by the consumer. U.S. exporters are estimating a 50% increase in shipping fees as a direct result of Hanjin’s bankruptcy. Additionally, commentators are noting that the bankruptcy is reflective of an industry-wide problem, citing Maersk Line’s $114 million loss in the first six months of 2016. Though the fate of the company and its vessels is uncertain, we can be sure that all members of the industry will feel the impact, either directly or indirectly.