Admiralty - Thomas S. Rue

• Publication year: 1997

Admiraltyby Thomas S. Rue^*

The Court of Appeals for the Eleventh Circuit decided fourteen admiralty cases with written opinions in 1996. Four of the decided cases involved issues of first impression. Of the cases involving issues of first impression, one considered the tension between a shipowner's right to a nonjury trial in admiralty of its right to limitation of liability and the damage claimants' right to a jury trial in a forum of their choice.¹ In that case, the Eleventh Circuit allowed a multiple-claims-inadequate-fund case to be transformed into the functional equivalent of a single claim case, thereby creating another exception to the shipowner's right to a concursus.² In another case, a subcontractor who asserted a maritime lien against a public vessel persuaded the Eleventh Circuit that the lien claim fell outside the scope of the Public Vessels Act³ and was therefore subject to the Suits in Admiralty Act,⁴ allowing the recovery of interest.⁵ In yet another case, the Eleventh Circuit became the first court of appeals to approve the use of self-help remedies in preferred mortgage foreclosures.⁶ In the last case of first impression, the Eleventh Circuit held that the Suits in Admiralty Act bars a seaman's suit for willful denial of maintenance and cure against an agent of the United States.⁷

Although the remaining cases were not cases of first impression, some of them amplified existing law. For instance, in its first application of Grubart v. Great Lakes Dredge & Dock Co. ,⁸ the Eleventh Circuit took occasion to define admiralty jurisdiction as encompassing the repair, conversion, and maintenance aboard a vessel in navigable waters.⁹ In the lone cargo case decided by the Eleventh Circuit, it elaborated on when the terms of the bill of lading establish prima facie proof that the carrier received the goods as described in the bill of lading.¹⁰ In a limitation of liability case, the Eleventh Circuit reaffirmed precedent from the old Fifth Circuit constituting a fourth exception to a shipowner's right to a concursus in admiralty.¹¹ The one case involving marine insurance dealt with a "held covered" clause.¹² The remaining decisions were of a garden variety and did not change existing law in this circuit.

I. Admiralty Jurisdiction

In Alderman v. Pacific Northern Victor, Inc.,¹³ the Eleventh Circuit addressed the question of whether an injury to a carpenter assisting in the installation of an elevator aboard a vessel docked in navigable waters of south Florida, where it was being converted from an oil-drilling vessel to a fish-processing vessel, involved a maritime tort.¹⁴ The carpenter slipped in oil that had leaked from a codfish heading machine. After the carpenter filed suit in state court, the suit was removed to a federal court based upon diversity and admiralty jurisdiction.¹⁵

The district court found that the incident was a maritime tort and granted summary judgment for the vessel on the ground "that the suit was time barred because it had not been filed within the applicable three-year statute of limitations."¹⁶ In reaching its decision, the district court relied upon Sisson v. Ruby¹⁷ and Kelly v. Smith.¹⁸ After the district court had rendered its decision, the United States Supreme Court decided Grubart v. Great Lakes Dredge & Dock Co.¹⁹ and specifically rejected the test set forth in Kelly.²⁰

In applying Grubart, the Eleventh Circuit set forth the elements necessary to invoke admiralty jurisdiction: "the activity from which the claim arises must satisfy a location test and it must have sufficient connection with maritime activity."²¹ The location test was satisfied when both parties agreed that the tort occurred on navigable waters.²² The Eleventh Circuit then found that the connection test raises two issues.²³ The first is "whether the incident has 'a potentially disruptive impact on maritime commerce,'"²⁴ and the second is "whether 'the general character' of the 'activity giving rise to the incident' shows a 'substantial relationship to traditional maritime activity.'"²⁵

The carpenter erroneously relied on the fact that there had been no actual impact of the incident upon maritime commerce.²⁶ The Eleventh Circuit was careful to point out that its "focus is not on what actually happened, but upon the potential effects of what could happen."²⁷ In other words, the court had to consider "whether the incident could be seen within a class of incidents that posed more than a fanciful risk to commercial shipping."²⁸ The Eleventh Circuit described the general features of the accident "as an onboard injury which occurred during the repair, maintenance or conversion of a vessel."²⁹ From there the Eleventh Circuit proceeded to find that "[u]nsafe working conditions aboard a vessel under repairs, maintenance, or conversion, therefore, pose a potentially disruptive impact upon maritime commerce."³⁰

In addressing the second prong of the test, the Eleventh Circuit rejected the carpenter's assertion that he was merely a construction worker and that, therefore, the accident was not a maritime tort.³¹ The Eleventh Circuit held that "[t]he work of the injured plaintiff does not determine whether there is a substantial relationship to maritime activity."³² The court quoted Grubart and said that the focus is "'whether a tortfeasor's activity, commercial or noncommercial, on navigable waters is so closely related to activity traditionally subject to admiralty law that the reasons for applying special admiralty rules would apply in the case at hand.'"³³ Before considering the activities of the tortfeasor, the Eleventh Circuit noted that its "examination of the actions of the tortfeasor should be given a 'broad perspective.'"³⁴ The Eleventh Circuit then observed that the parameters of the "relevant activity" of the tortfeasor are not the discrete circumstances surrounding the incident in question, but the general conduct out of which the incident arose.³⁵ Applying that standard to the activity of the tortfeasor in the case, the Eleventh Circuit found that converting an oil-drilling vessel to a fish-processing vessel was substantially related to traditional maritime activity.³⁶

The court broadened the holding beyond the dictates of the case by stating, "[W]e believe that conversions, repairs, or maintenance aboard a vessel in navigable water are substantially related to traditional maritime activity. Work upon ships at sea or docked in navigable waterways is an indispensable maritime activity. It is essential to the continued productive use of those vessels."³⁷ Once the court determined that admiralty jurisdiction applied with the application of substantive admiralty law, the Eleventh Circuit held that the incident was a marine tort and time barred under the applicable three-year statute of limitations.³⁸

II. Appellate Jurisdiction

In Central State Transit & Leasing Corp. v. Jones Boat Yard, Inc.,³⁹ the Eleventh Circuit decided whether summary judgment against the vessel owner on the question of damages for the loss of use was appealable.⁴⁰ In this case, the owner of a motor yacht initially sought recovery for damage to its vessel while it was being raised out of the water on a floating drydock manufactured by one defendant and owned and operated by another defendant.⁴¹ When the vessel owner amended its complaint to add a claim for damages for loss of use, both defendants filed a motion for partial summary judgment on the claim for loss of use.⁴² In granting the motion, the district court noted that the vessel was documented and insured as a pleasure vessel; therefore, the owner had not lost any profits while the vessel was being repaired.⁴³ After the district court denied the owner's timely motion to alter or amend, the vessel owner filed the appeal.⁴⁴

The defendants filed a motion to dismiss the appeal, contending that the partial summary judgment was "not appealable because it does not resolve the principal liability issue between the parties in this case."⁴⁵ In deciding the issue, the Eleventh Circuit noted the proper standard that "[t]o be appealable, however, the order must have 'the effect of ultimately determining the rights and obligations of the parties.'"⁴⁶ The Eleventh Circuit found that the district court had not decided "whether either of the defendants is responsible for damage to the . . . vessel."⁴⁷ In essence the district court's order struck the claim for damages for loss of use but did not dispose of a separate claim for relief. Thus, the court did not determine liability. Accordingly, the court of appeals granted the motion to dismiss the appeal.⁴⁸

III. Cargo

The sole cargo case decided by the Eleventh Circuit was Plastique Tags, Inc. v. Asia Trans Line, Inc.,⁴⁹ in which the court decided when a bill of lading is prima facie proof that the carrier received the cargo as described therein.⁵⁰ In this case, the shipper contracted with Asia Trans Line, Inc., for the carriage of one sealed container from Korea to New York. Upon the representation of the shipper that there were 4,437,500 plastic bags in the container, Asia Trans Line issued a bill of lading for the cargo that stated: "Shipper's Load & Count Said To Contain: 5,600 boxes/4,437,500 . . . plastic bags."⁵¹ Asia Trans Line,

Inc. in turn contracted with DSR Senator Lines for carriage of the container aboard the M/V Cho Yang World. Upon delivery of the sealed container directly to Senator by the shipper, Senator issued its bill of lading, the terms of which were identical in all material respects to those of Asia Trans Line. When the vessel delivered the container to New York, Senator released it with its seal intact to a trucking company that transported the container to a customer of Plastique. After the customer inventoried the container, it found 2,618,500 bags missing and refused to pay for the shipment. This caused Plastique to bring suit for the shortfall against the carriers but not the shipper.⁵²

The Eleventh Circuit...