Opinion
Civil Action No. 00-1602, Section "N"
October 18, 2002
ORDER AND REASONS
Before the Court is a Motion to Strike [Rec. Doc. No. 308] filed on behalf of cross-defendant West of England Shipowners Mutual Insurance Association ("West of England"). Cross-plaintiff Crescent Towing Salvage, Inc. ("Crescent") filed formal opposition. Following West of England's formal reply, the matter was deemed submitted for decision without oral hearing. For reasons set forth below, West of England's Motion to Strike Crescent's claim for payments above and beyond maintenance and cure is GRANTED.
I. Background
On September 24, 2002 via Mary Carter Agreement, plaintiff Steven Durgin ("Durgin") settled his claims for damages against Crescent. See West of England's Exhibit "G". Thereafter, Durgin settled his damage claims under the general maritime law against West of England. At the time of these settlements it is not disputed that Crescent reserved any right it may have to assert its cross-claims for contribution and indemnity against West of England for approximately $270,000.00, allegedly consisting of sums paid to Crescent's injured employees Durgin and Robert Minton ("Minton") for maintenance, cure, lost wages and temporary partial disability.
West of England acknowledges and does not dispute Crescent's right to pursue its cross-claim for contribution and indemnity insofar as it seeks reimbursement for payments of "maintenance and cure" to the injured seamen. West of England submits, however, that Crescent has no legal claim for either contribution or indemnity for sums above and beyond its legal obligation to pay "maintenance and cure." More particularly, West of England contends that the $10,713.11 payment to Durgin ( i.e., a loan supported by promissory note to help the injured seaman with his credit card debt) is not recoverable in a maritime contribution or indemnity action. See West of England's Exhibits "A" and "B". In addition, West of England argues that $57,897.84 in payments, whether characterized as "temporary partial disability" or "supplemental wage differential payments," are similarly gratuitous or voluntary payments, above and beyond amounts legally owed for maintenance and cure, and thus not recoverable under the general maritime law in an action for either contribution or indemnity.
For its part. Crescent contends that the question of whether or not the payments above and beyond maintenance and cure were gratuitous is more properly the subject of a motion for summary judgment. Crescent submits that the entire amount of $270,676.83, which is the subject of its pending claims for contribution and/or indemnity, is recoverable under the general maritime law in an action for indemnity. Crescent characterizes the payments made above and beyond maintenance and cure as bi-weekly payments of wages, and argues that as between itself and West of England, the latter should pay the past lost wages since its insured was actively at fault. Crescent contends West of England should not be relieved of its obligation to pay past loss of wages simply because these sums were paid by Crescent. Noting that seamen are wards of the Court, Crescent argues that as a matter of equity, it should be reimbursed because West of England's insured was actively at fault ( i.e., it was the defective mooring lines of the PANTODINAMOS which popped and struck the stationary vessel, the MN LOUISIANA, as well as two members of its crew, Durgin and Minton.
II. Issues Presented
1. Whether Crescent's payments of advance wages and temporary disability to the injured seaman Steven Durgin post-accident are properly characterized as payments incident to his relationship with the ship ( i.e., contractual) or gratuitous, and thus not recoverable whether proceeding under either the theory of contribution or tort indemnity?
2. Whether the general maritime law permits an innocent shipowner's claim for indemnity against a third party negligent tortfeasor for amounts paid to an injured seaman above and beyond the shipowner's maintenance and cure obligation (i.e., maintenance, cure, and wages until the end of the voyage), when both cross-plaintiff (shipowner) and cross-defendant (third party tortfeasor) settled all of their claims for damages with the injured seamen?
III. Analysis
Clearly Crescent has failed to show requisite nexus between payments made in excess of its maintenance and cure obligation to the injured seamen, and any legal obligation owed by Crescent. Maintenance and cure is the implied contractual right of a seaman who is injured in the service of the ship, regardless of fault, to payments from the shipowner through the time of maximum recovery. "The shipowner's obligation to pay maintenance and cure . . . is not based on fault but results from the relationship of ship and seaman." Adams v. Texaco, Inc., 640 F.2d 618, 620 (5th Cir. 1981) (citation omitted). Hornbook law characterizes and delimits maintenance and cure as follows: "Maintenance and cure — a right given by the general maritime law in consequence of the seaman's status resulting from any shipping contract between the seaman and the master of the vessel — gives to the seaman, ill or injured in the service of the ship without willful misbehavior on his part, wages to the end of the voyage and subsistence, lodging and care to the point where the maximum cure attainable has been reached." See Martin J. Norris, The Law of Seamen, § 26:2 (4th ed. 1985). Suffice it to say, payments of advanced wages covering periods beyond the voyage and for temporary disability do not come under the aegis of the shipowner's obligation to pay "maintenance and cure."
In Adams, the Fifth Circuit held that "a concurrently negligent tortfeasor should proportionately contribute to maintenance and cure paid by a negligent shipowner when the latter's negligence only concurrently contributed to the seaman's injury." 640 F.2d at 621.
Historically, an injured seaman had no right to recover damages sustained on account of the negligence of his employer. Indemnity against his employer beyond maintenance and cure and for consequential damages for the unseaworthiness of the vessel was not permitted. See Ivy v. Security, 606 F.2d 524, 525 ( citing The OSCEOLA, 189 U.S. 158, 23 S.Ct. 483, 47 L.Ed. 760 (1903). Congress enacted the Jones Act, 46 U.S.C. § 688 in response to OSCEOLA, extending to the seaman the remedies made available to railroad workers under the provisions of FELA.
The Court recognizes that in addition to the obligation to pay maintenance and cure, shipowners owe seamen a nondelegable duty to provide a seaworthy ship — including the ship's hull, gear, appliances, way's, appurtenances and manning" — that will be "reasonably fit for its intended purpose." Norris at § 27:3. This "warranty of seaworthiness" is a "species of liability without fault and is not limited by conceptions of negligence." Id. Nevertheless, it cannot be seriously argued in this case that Crescent's payments, whether characterized as advanced unearned wages and temporary partial disability, were made to satisfy any legal obligation such as the warranty of seaworthiness.
West of England aptly points out that all of the payments above and beyond maintenance and cure, with the exception of one payment, were made by Crescent before suit was filed on June 1, 2000, and the last payment was made before service of summons and complaint on July 28, 2000. A review of all of the pleadings filed on behalf of the plaintiff reveals that at no time has plaintiff ever pressed a claim against Crescent for breach of the non-delegable duty to provide a seaworthy vessel.
Durgin's original petition alleges only Jones Act negligence against his employer Crescent, and not unseaworthiness of the tug LOUISIANA. The only allegation of unseaworthiness was made against West of England's insured PANTODINAMOS MARITIME, INC. See Petition for Damages [Rec. Doc. No. 1]. Plaintiff's First Supplemental and Amending Complaint added only more allegations of Jones Act negligence against his employer Crescent. See Plaintiff's First Supplemental and Amending Complaint [Rec. Doc. No. 41]. Plaintiff's Second Supplemental and Amended Seaman's Complaint simply added General Reinsurance Corporation as a defendant and amended the prayer of his prior petitions to demand trial by jury on his Jones Act claim. All of the injured seamen's damage claims were settled.
There is no question but that general principles of public policy favor indemnification in situations involving an innocent shipowner. Indeed, the Fifth Circuit has stated that "[i]ndemnification of the innocent employer is based on the common sense principle that a party whose neglect has caused or contributed to the need for maintenance and cure payments should reimburse the cost of those payments." Savoie v. Lafourche Boat Rentals, Inc., 627 F.2d 722, 723 (5th Cir. 1980); see also Tri-State Oil Tool Industries, Inc. v. Delta Marine Drilling Co., 410 F.2d 178, 186 (5th Cir. 1969). The doctrine which permitted indemnity despite settlement was extended to an action for contribution in Adams v. Texaco., Inc., 640 F.2d 618 (5th Cir. 1981), a case in which the court allowed a negligent employer to recover contribution from a joint tortfeasor for maintenance and cure. See Adams, 640 F.2d at 621. Citing Wisconsin Barge Line, Inc. v. Barge CHEM 300, 546 F.2d 1125 (5th Cir. 1977), the Fifth Circuit specifically noted that the shipowner's settlement with Adams did not affect Texaco's liability to proportionately reimburse the shipowner for maintenance and cure paid to the injured seaman. See Adams, 640 F.2d at 621 n. 5.
General maritime law, however, no longer recognizes a plethora of tort indemnity theories. See Hardy v. Gulf Oil Corporation, 949 F.2d 826, 833 (5th Cir. 1992) (noting that while the non-negligent tortfeasor may be entitled to indemnity from a co-debtor guilty of actual fault, the term "non-negligent tortfeasor" applies only to those defendants on which the law imposes responsibility even though they committed no negligent acts).
West of England correctly notes that while the Fifth Circuit reversed the district court decision in the Wisconsin Barge Line case, it did so on a factual issue which did not undermine the legal premise that a voluntary payment is not recoverable by way of contribution or indemnity. Instead, the Fifth Circuit reversed because it disagreed with the district court's characterization of the settlement as a voluntary payment, noting that payment was made "pursuant to a Judgment Order of an Illinois state court." Wisconsin Barge Line, 546 F.2d at 1125 (5th Cir. 1977). The appellate court distinguished the case of Greenville Shipbuilding Corp. v. Hartford Accident and Indemnity Co., wherein the indemnitee paid the claim before suit was filed. In Wisconsin Barge Line, the Fifth Circuit concluded on the basis of the facts of the lawsuit pending in Illinois state court, that the appellant's payment to the claimant could hardly be characterized as "voluntary" in the sense of there being no legal liability, with the result of foreclosing indemnification. Id. at 1128.
Wisconsin Barge Line Inc. v. The Barge CHEM 301, 390 F. Supp. 1388, 1390, 1393-94 (M.D. La. 1975) (employer who voluntarily settled damages claims may not recover for damages from third-party tortfeasor, but is entitled to indemnity for maintenance and cure; unlike noncompulsory damages settlement, maintenance and cure payment is involuntary, and therefore recoverable), rev'd on other grounds, 546 F.2d 1125 (5th Cir. 1977) (remanding for a determination of whether settlement amount was reasonable).
334 F. Supp. 1228 (D.C. Miss. 1971), aff'd, 460 F.2d 1063 (5th Cir. 1972).
The following undisputed facts compel the conclusion that Crescent's payments made to the injured seamen above and beyond maintenance and cure constitute gratuitous or voluntary payments, to wit: (1) the absence of any "legal obligation" to pay wages beyond the voyage; (2) the absence of any potential for liability against the shipowner for indemnity above and beyond (a) maintenance and cure, and (b) damages; (3) the absence of any legal action pressed by the plaintiff at the time the payments were made by Crescent; and (4) liability for damages was settled by and between all of the parties ( i.e., including damages for loss of wages, earning capacity and disability suffered by the injured seamen). Under the circumstances, the subject "temporary disability" or "wage loss payments" cannot be reasonably characterized as anything other than voluntary payments made above and beyond the legal obligation to pay maintenance and cure.
Generally speaking, an indemnitee must establish actual liability on his part to recover payment from an indemnitor. See Wisconsin Barge Line, 546 F.2d 1125 (5th Cir. 1977). This rule is not absolute. Wisconsin Barge adopted the holding of Tankrederiet Gefion A/S v. Hyman-Michaels Co., 406 F.2d 1039 (6th Cir. 1969), and held that defendants need only' show potential liability to recover indemnity where either 1) defendants tender the defense of the action to indemnitor, 2) the claim for indemnity is founded on a judgment, or 3) the defendant's claim is based on a written contract of insurance or indemnification. Wisconsin Barge also requires that the settlement is reasonable. See Terra Resources v. Lake Charles Dredging Towing, 695 F.2d 828, 831 (5th Cir. 1983). In this case, Crescent paid the disputed amounts above and beyond maintenance and cure prior to the filing of plaintiffs lawsuit. Crescent's pre-suit payments in excess of its legal liability for maintenance and cure are unreasonable as a matter of law, so as to preclude contribution or indemnification for the excess portion.
In Complaint of Liberty Seafood Inc., 38 F.3d 755 (5th Cir. 1994), cert. denied, 514 U.S. 1109, 115 S.Ct. 1961 (1995), the Fifth Circuit noted that in the context of maritime personal injury claims, there are only "two separate lines of recovery for an injured seaman: damages, and maintenance and cure." Id. at 758. "Thus in a maritime collision, a third-party tortfeasor faces two distinct claims by the shipowner for contribution or indemnity: (1) for damages assessed against the shipowner; and (2) for maintenance and cure." Id. Once it is recognized that the both the shipowner (Crescent) and the third party tortfeasor (West of England) settled the damage claims, that leaves unextinguished only maintenance and cure, no more and no less.
The only damages claims pressed by the plaintiff in this case as against Crescent and West of England/PANTODINAMOS were Jones Act negligence as to Crescent and negligence and unseaworthiness as to West of England and its insured.
For all of the above and foregoing reasons, the Court GRANTS West of England's Motion in Limine to Strike Crescent's Contribution and Indemnity Claims seeking recovery of payments made above and beyond its legal obligation to pay maintenance and cure.