Admiralty - Robert S. Glenn, Jr. and Colin A. Mcrae

• Publication year: 2002

Admiraltyby Robert S. Glenn, Jr.^* and Colin A. McRae^**

I. Introduction

In the decisions rendered by the Eleventh Circuit Court of Appeals in 2001, the court addressed a wide variety of issues. Among them were: the presumption of fault in allision cases; the Carriage of Goods by Sea Act ("COGSA") package limitation; the doctrine of uberrimai fidei in marine insurance; the interaction of the Limitation of Liability Act and Park System Resource Protection Act; the calculation of maintenance and cure benefits; contractual indemnity; and the interpretation of the savings to suitors clause.

In general, the court's decisions were founded upon well-established precedent, much of it from the court's own admiralty opinions handed down over the twenty years since it was created in 1981. The wisdom and well-reasoned exposition of this growing body of admiralty law can be favorably compared to that of the Second, Fifth, and Ninth Circuits, the older courts that have played such an important role in fashioning our general maritime law.

II. Allision

In the case of Bunge Corp. v. Freeport Marine Repair, Inc.,¹ the Eleventh Circuit was asked to revisit the traditional Louisiana Rule² in order to determine whether its burden-shifting principles should be applied when the alliding craft is a partially-constructed vessel.³ Under the rule of The Louisiana, when a moving vessel strikes, or "allides" with a stationary object, it is presumed that the moving vessel is at fault.⁴ The burden of persuasion is thereby shifted onto the moving vessel,⁵ and "the presumption [against it] is universally described as 'strong,'. . . and as one that places a 'heavy burden' on the moving ship to overcome."⁶

The moving object which allided with the stationary structure in Bunge Corp. was Hull No. 40, a partially-constructed casino ship that broke free from her moorings during Hurricane Opal and allided with the plaintiff's grain-loading facility near Freeport, Florida. The district court determined that the burden-shifting analysis of The Louisiana applied and held the defendant, Freeport Marine Repair, Inc. ("Free-port"), liable for $196,500 in damages to the grain-loading facility.⁷

In its first enumeration of error, Freeport averred that Hull No. 40 was not a "vessel," and therefore admiralty law and its Louisiana Rule should not have applied.⁸ In order to determine whether the district court had properly applied the Louisiana Rule, the court of appeals undertook a fundamental admiralty jurisdiction inquiry, parsing out the "locality" and "nexus" tests as they apply to vessels under construction.⁹ The court of appeals conceded that caselaw exists that would suggest that a vessel under construction may not be subject to admiralty jurisdiction.¹⁰ The court ultimately concluded, however, that because "the allision occurred in navigable waters due to the imperfect mooring of a nearly complete vessel, the incident bore a substantial relationship to a traditional maritime activity and was [therefore] properly within [the purview of] admiralty jurisdiction" and its Louisiana Rule.¹¹

Freeport next challenged the district court's conclusion that Hurricane Opal was not a vis major, or "Act of God," and that the drifting of the vessel was not an inevitable accident "which human skill and precaution and a proper display of nautical skill could not have prevented."¹² The Eleventh Circuit affirmed the district court's factual findings that the force of the winds buffeting the partially-constructed casino ship were such that the breaking free of Hull No. 40 was avoidable, and therefore Freeport was not absolved from fault.¹³

As a final defense, Freeport argued that Bunge's grain-loading facility partially obstructed the navigable waterway, Four Mile Creek, without a proper permit in violation of 33 U.S.C. Sec. 403,¹⁴ thereby barring Bunge from recovering under the Pennsylvania Rule.¹⁵ The court of appeals reasoned that because construction of Bunge's facility was completed before December 18, 1968, Bunge was within the purview of the statute's Grandfather Clause, and thus its failure to procure a proper permit was not a violation of 33 U.S.C. Sec. 403.¹⁶ Because there was no violation of the statute, Bunge was not subject to the preclusive effect of the Pennsylvania Rule.¹⁷

III. Maintenance and Cure

The Eleventh Circuit Court of Appeals faced the challenge of reconciling the general maritime law on maintenance and cure benefits with the often inconsistent "sick wage" provisions of seamen Collective Bargaining Agreements ("CBAs") in the two-part case of Espinal v. Royal Caribbean Cruises, Ltd.¹⁸ The first part of the case (."Espinal D dealt with the plaintiff crewmember's back injury sustained while working aboard a Royal Caribbean Cruise ("RCC") vessel as a "tip-earning" employee. After his injury, Espinal received $766 per week for the remaining 112 days of his contract under the "sick wages" provision of the CBA.¹⁹ The general maritime law principle of "maintenance and cure," however, bases the calculation of benefits for a sick or injured "tip-earning" seaman on that individual's average weekly tip income.²⁰ Therefore, the plaintiff brought suit in the Southern District of Florida to recover his average weekly tip-based salary, which amounted to approximately $1500 per week. The district court agreed, ordering RCC to pay Espinal his average weekly tip income for the 112 sick days.²¹

The court of appeals reversed the district court in Espinal I, holding that the terms of the CBA should be honored with respect to its sick wages provision, even though this provision may be inconsistent with general maritime law.²² The court of appeals recognized that CBAs typically represent "a series of trade-offs between an employer and employees [in furtherance of] a mutually satisfying agreement[, and thus] [c]ourts should be loathe ... to abrogate clauses in such contracts absent a pressing legal reason."²³ The Eleventh Circuit has previously allowed the remedies provided for in maritime law to be altered, although not abrogated, by CBAs.²⁴ Accordingly, as long as the method of calculating sick wages is explicitly provided for in the CBA, the level of sick wages may be set below the amount of the average tip income received.²⁵

In Espinal II, the court of appeals clarified a misconception regarding the amount of time for which an employer is required to pay sick wages to an injured worker. While working aboard an RCC cruise vessel during a different voyage, Espinal sustained an eye injury that required medical attention. Espinal did not receive medical attention for his eye condition until the vessel had reached its final destination on October 1, 1997, after he had signed off the ship. His CBA specifically stated that an employee is covered until the date the employee signs off the ship.²⁶ The court of appeals accordingly affirmed the district court's grant of summary judgment to RCC on the grounds that Espinal was not entitled to receive sick pay until after October 1, 1997, the date Espinal terminated his contract by signing off the ship.²⁷

IV. "Saving to Suitors" Clause

The court of appeals re-examined the longstanding principles regarding the applicability of the general maritime law to actions brought pursuant to the "saving to suitors" clause²⁸ in the case of Diesel "Repower," Inc. v. Islander Investments, Ltd.²⁹ This case involved a breach of contract action brought in the District Court for the Northern District of Florida by the plaintiff engine repair yard to recover payment for work done in reconditioning and installing a diesel engine, transmission, and propulsion system in the HERO, a vessel owned by Islander Investments, Ltd. ("Islander"). Islander counterclaimed, invoking admiralty jurisdiction, on theories of breach of contract, fraud, and negligence. On the day discovery closed, Islander moved the court for leave to amend its counterclaim in order, in part, (1) to raise a punitive count, and (2) to recast its other counts as arising under the saving to suitors clause, thereby asking the court to apply the substantive law of Alabama. The district court denied Islander's motion as to these parts, on the basis that allowing the counterclaim to be amended to include a punitive claim would expand the factual basis of Islander's counterclaim. The district court further reasoned that an amendment of the counterclaim to recast the counts already pled would amount to a futile gesture because substantive admiralty law would govern even if the case were converted to a "saving to suitors" clause case.³⁰

The court of appeals affirmed the district court's decision to deny Islander's motion for leave to amend its counterclaim.³¹ The court began by noting the district court's reasoning that if admiralty law governed the claims brought by Islander, then recasting the counterclaim would not change the substantive law and would amount to a futile amendment.³² The court invoked a three-step balancing test in deciding whether to apply admiralty principles or state law to the claim asserted.³³ Under this balancing test, the court must:

identify the state law involved and determine whether there is an admiralty principle with which the state law conflicts, and, if there is no such admiralty principle, consideration must be given to whether such an admiralty rule should be fashioned. If none is to be fashioned, the state rule should be followed. If there is an admiralty-state law conflict, the comparative interest must be considered—they may be such that admiralty shall prevail or if the policy underlying the admiralty rule is not strong and the effect on admiralty is minimal, the state law may be given effect.³⁴

The court examined each of the claims asserted in the counterclaim under this balancing test and concluded that each count would be controlled by substantive admiralty principles.³⁵ Because all claims would be governed by substantive principles even...