Eleventh Circuit Court of Appeals

canstockphoto24924390In Seaboard Spirit LTD, et al. v. Antwon Hyman, et al., No. 15-12953, an unpublished opinion issued by the Eleventh Circuit on December 5, 2016, the Court of Appeals reversed a District Court’s opinion that had expanded a vessel owner’s liability to a longshoreman that has traditionally existed under 33 USC § 905(b) to also include a separate cause of action under 33 U.S.C. § 933. This decision fosters the precept that when a vessel is involved with an injury with one covered by the Longshore and Harbor Workers’ Compensation Act, 33 USC § 901 et seq. (LHWCA) the injured plaintiff’s cause of action is solely governed by 33 USC § 905(b).

When injured in the course and scope of his employment a longshoreman is provided compensation benefits pursuant to the LHCWA from his employer. The liability of the employer is one that is set by statute without a determination of fault. Where the longshoreman’s injury is brought about due to the negligence related to the operation of a vessel, he can additionally sue the owner of the vessel pursuant to 33 USC § 905(b), whether the vessel is owned by his employer or another party. Furthermore, if a non-vessel owner/third party’s negligence has caused his injury, the longshoreman is provided a right to sue for damages under 33 U.S.C. § 933.

In the instant case, the longshoreman in question, Mr. Hyman, was killed while involved in unloading operations aboard the M/V SEABOARD SPIRIT in the Port of Miami on May 4, 2011. The M/V SEABOARD SPIRIT was a RO/RO vessel that allowed for containers on chassis to be rolled on and off the vessel in the loading operations. The M/V SEABOARD SPIRIT had been loaded with cargo containers on chassis in the Bahamas on May 3, 2011. Once the containers were aboard the vessel, the vessel crew proceeded to attach lashing chains to secure the cargo for its sea voyage. The securing of containers was a job that would normally be performed by stevedores/longshoremen.

During the unloading operation of the M/V SEABOARD SPIRIT in the Port of Miami, Mr. Hyman was killed while working for the unloading stevedore when a chassis shifted during unloading and caught Mr. Hyman in a pinch point between the container and the side of the vessel.

The owners of the M/V SEABOARD SPIRIT filed a petition under the Limitation of Liability Act in which the heirs of Mr. Hyman made a claim under § 905(b) in addition to asserting a claim under § 933. In the latter assertion it was alleged that because the M/V SEABOARD SPIRIT’s crew secured cargo in the Bahamas, the owner of the M/V SEABOARD SPIRIT, in addition to being an owner, also acted as and assumed the duties of an on-loading stevedore. In this setting, the District Court ultimately determined that the heirs of Mr. Hyman had stated a claim against the vessel owners separate and apart from their status as owners of a vessel and one that could be recognized outside of the limitation proceeding and under § 933 due to their status as a loading stevedore.

The § 905(b) action was tried in the limitation proceeding after which the District Court ruled in favor of the ship owner, but it additionally found that the plaintiffs could proceed in a separate action against the vessel owner as on-loading stevedore under § 933.

This was appealed to the Eleventh Circuit. In review of prior precedent, the Eleventh Circuit found no case law that would allow a vessel owner to be sued separately in a different negligence action other than that provided for in 33 U.S.C. § 905(b) for any fault it may have had as an on-loading stevedore. It did note that a number of cases have found that the ship owner who participated in stevedoring operations would be held to a higher standard of negligence than that provided under the Supreme Court case of Scindia Steam Navigation Co. v. De Los Santos, 451 U.S. 156 (1981). It observed that the plaintiffs did not argue that the District Court should be reversed for not applying the higher standard of care to their § 905(b) claims as it applied to the ships stevedoring operations, and therefore, they had abandoned that argument.

In the unpublished opinion of  Adams Offshore, Ltd. v. Blake Marine Group, No. 11-12753 (11th Cir. Apr. 27, 2012), the Eleventh Circuit Court of Appeals adopted the Fifth Circuit’s suggestion in Beauregard, Inc. v. Sword Servs., L.L.C., 107 F.3d 351, 353 n. 8 (5th Cir. 1997), and affirmed the district court’s allocation of costs to each unsuccessful attaching party in proportion to the value that each party alleged was owed them by Oceanografia to the alleged value of all claims asserted against Oceanografia.  This decision addressed the infrequent scenario when significant expenses are incurred by a party in initially arresting/attaching the property, other creditors intervene in that suit, but the arrest/attachment of the property is subsequently vacated, resulting in there being no fund for which to pay the expenses of arrest/attachment and preservation of the property, more commonly referred to as custodia legis, literally expenses incurred “in the custody of the law.”

Oceanografia owned a modular diving system that had been installed on a vessel engaged in oil field work off the coast of Mexico.  Seizing on the opportunity to assert its claims against Oceanografia while the vessel and Oceanografia’s diving system were in Mobile, Alabama, Adams Offshore filed suit against Oceanografia and requested the attachment of the diving system under Rule B as security for its claims, alleged to be worth $7 million.  Thereafter, similarly situated creditors, Blake Marine and Cashman Equipment, intervened in Adams’ action, and asserted their respective claims of roughly $61 million and $1.7 million against Oceanografia.  Over one year after Adams had the diving system attached, the district court vacated the attachments of Adams, Blake and Cashman for equitable reasons.

During the time Oceanografia’s diving system was in the custody of the court, more than $200,000 in costs and expenses had accrued, including the Marshall’s fees, dockage, expenses to clear the diving system through customs, expenses to survey, oversee and remove the diving system from the vessel, storage and insurance, all of which had been initially borne by Adams as the first attaching creditor.  However, because the maritime attachments were vacated, there was no fund generated by the sale of Oceanografia’s property to pay the costs of attachment, much less the underlying claims of Adams, Blake and Cashman.

Local Admiralty Rule 6(c) for the Southern District of Alabama provided as follows:  “Intervenors under this rule shall be liable for costs together with the party originally effecting seizure on any reasonable basis determined by the court.”  S.D. Ala. Loc. Adm. R. 6(c).  The district court concluded that it was reasonable to assess the attachment costs against Adams, Blake and Cashman in proportion to the value that their respective claims bore towards the total of all claims asserted in the pleadings:  Adams – 10%, Blake – 87.5% and Cashman – 2.5%.  On appeal, the Eleventh Circuit affirmed the district court’s assessment of costs, concluding that allocating costs based on the respective value of the parties’ claims was reasonable.  Id. at 5 (citing Beauregard, supra.)

The Adams Offshore decision provides several lessons.  First, it is reasonable to share the costs of an unsuccessful attachment among all unsuccessful maritime claimants, not just the claimant that filed suit first.  Second, the days of a “costs free lunch” appear to be ending for creditors who subsequently intervene in another party’s action after the arrest/attachment of the property has been initially perfected.  Third, attorneys should avoid the temptation to “overstate” the value of their clients’ claims in cases of maritime arrest/attachment because the amount alleged is one basis a court could utilize in apportioning the costs of an unsuccessful maritime arrest or attachment.