Opinion
CIVIL ACTION NO. 01-2227 SECTION "C" (1)
April 29, 2002
ORDER AND REASONS
Before the Court is a Motion to Increase Security filed in the above-captioned case by Claimant Michael L. Little ("Little") and joined by Claimant William Daigre, IV ("Daigre") (together, hereinafter, "Claimants"). After reviewing the record, the arguments of counsel, and the relevant law, IT IS ORDERED that the Motion is hereby GRANTED.
BACKGROUND
This lawsuit arises from alleged injuries suffered by Claimants in the November 18, 2000, sinking of the M/V FRITZI K, a tugboat owned by Offshore Specialty Fabricators, Inc. ("OSFI"). See Rec. Doc. 1, Complaint at ¶ 6; Rec. Doc. 9, Mem. in Supp. of Mot. to Increase Security at I. At the time of the sinking, the M/V FRITZI K was on its way to assist the DB-1, a derrick barge involved in the second phase of construction of a 4-pile platform jacket, deck, piles, helideck, oil and gas process facility and appurtenances for Samedan Corp. ("Samedan") in West Cameron Block 499 in the Gulf of Mexico. See Rec. Doc. 12 at Ex. A, ¶ 8; id. at Ex. B. Also performing work on the second phase of the project was another vessel, the M/V OFFSHORE MONARCH, which Little alleges was the towing vessel for the DB-1 and handled the latter's anchors. See Rec. Doc. 57 at 4.
According to OSFI, the first phase of the job involved installation of the jacket, piles and boat landing. See Rec. Doc. 56 at 4. This work, according to OSFI, was performed between July 25, 2000, and July 29, 2000. See id. OSFI states that the second phase constituted installation of the deck. See id. at 6. In claiming that the job phases were distinct, OSFI also produced evidence that each part was priced, invoiced and paid separately and involved different vessels, crews, and Samedan customer representatives. See Rec. Doc. 56, Ex. 1 at 31-36, 76-79, 195, Ex. I, Ex. P.
OSFI states that this phase of the project required both of OSFI's derrick barges, the DB-1 and the DB-RAEFORD. See Rec. Doc. 56 at 6. OSFI also contends that the job could not begin until both vessels were in place and the deck was at the platform location. See id. On November 12, 2000, OSFI asserts, the DB-1, towed by the M/V OFFSHORE MONARCH, arrived at West Cameron 499, where "preliminary activities" for the job began. Id. Several hours later, due to weather, work stopped, and the DB-1 was towed from the job location. See id. OSFI contends that because no Samedan customer representative was "on board" at the time, "neither OSFI nor Samedan considered that the second job had "started" for contractual purposes." Rec. Doc. 56 at 7. OSFI also points out that the DB-RAEFORD was necessary for the "dual lift" of the deck and had not then been mobilized. Id. Additionally, OSFI notes, the deck itself did not depart for the job site until after the M/V FRITZI K sank. See id. The logs of the DB-1 and M/V OFFSHORE MONARCH, however, list Samedan as the client and customer, respectively, for November 18, 2000. See Rec. Doc. 57 at Exs. D, E.
Although it is unclear on which vessel the Samedan representative would need to be on board for the contractual parties to consider the job as having started, it appears that the relevant vessel here is the DB-1. See Rec. Doc. 56, Ex. 3 at 62.
Also pertinent to the analysis here is the role of OSFI Vice President Jay Henderson ("Henderson"). Henderson manages "all phases of the derrick barge division of the company." Rec. Doc. 12, Ex. A at ¶ 2. He testified that he determines the vessels involved in a particular job. See Rec. Doc. 56, Ex. I at 52-55. Additionally, Henderson testified, "I tell them where I want them to be and when I want them to be there." Id. at 54. He directs the captains of vessels himself or through intermediate personnel. Id. at 52. Specifically, Henderson directed another OSFI employee to send the M/V FRITZI K "to assist the DB-1 if the DB-1 needed to be evacuated in the event of bad weather." Rec. Doc. 12, Ex. A at ¶ 8; Rec. Doc. 56, Ex. 1 at 204. Henderson also directed the vessel to bring fuel to the DB-1 for use in performing the work for Samedan. See id. at 205.
Claimants then separately sued OSFI in the 32nd Judicial District Court for the Parish of Terrebonne, State of Louisiana. See Little v. Offshore Specialty Fabricators, Inc., No. 131038 (filed Jan. 12, 2001); Daigre v. Offshore Specialty Fabricators, Inc., No. 131332 (filed Feb. 14, 2001). The cases were subsequently consolidated in that court on April 24, 2001. See Little v. Offshore Specialty Fabricators, Inc., No. 131038.
On May 25, 2001, OSFI filed the Complaint in this case in the U.S. District Court for the Western District of Louisiana, Lake Charles Division, seeking exoneration from or limitation of liability pursuant to Rule F of the Supplemental Rules for Certain Admiralty and Maritime Claims, Federal Rule of Civil Procedure 9(h), and the Limitation of Liability Act, 46 U.S.C. § 181-189. See Rec. Doc. 1 at Complaint. Specifically, pursuant to the statute, OSFI sought to limit the amount of security to the value of the M/V FRITZI K, which it determined was $125,000. See id. at ¶ II. The case was then transferred to the Eastern District of Louisiana. See id. at Mem. Order. Claimants now bring this motion under Supplemental Admiralty Rule F(7), Fed.R.Civ.P., contending that the fund established by OSFI is insufficient because it accounts for neither all the vessels engaged in the common venture or enterprise, namely the DB-1 and the M/V OFFSHORE MONARCH, nor the freight then pending, i.e., the value of the Samedan contract.
Claimants initially sought to include the value of a number of other vessels in the limitation fund. See Rec. Docs. 9, 10, 16, 17, 21. Following subsequent orders by the Court to supplement their motion with additional memoranda, see Rec. Docs. 27, 40, claimants now specifically assert that only the value of the DB-1 and the M/V OFFSHORE MONARCH should be used to increase the limitation fund. See Rec. Doc. 57.
ANALYSIS
The Limitation of Liability Act provides, in pertinent part:
The liability of the owner of any vessel, whether American or foreign, for any embezzlement, loss, or destruction by any person of any property, goods, or merchandise shipped or put on board of such vessel, or for any loss, damage, or injury by collision, or for any act, matter, or thing, loss, damage, or forfeiture, done, occasioned, or incurred, without the privity or knowledge of such owner or owners, shall not . . . exceed the amount or value of the interest of such owner in such vessel, and her freight then pending.
46 U.S.C. § 183 (a).
The "flotilla doctrine"
Section § 183(a) notwithstanding, Claimants first ask for an increase in the security posted for the limitation fund based on the "flotilla doctrine," which they argue calls for inclusion of the value of the DB-1 and the M/V OFFSHORE MONARCH. Under the flotilla doctrine, the value of all vessels in a flotilla is included in the limitation fund. See In re Tom-Mac, Inc., 76 F.3d 678, 684 (5th Cir. 1996) (citing Cenac Towing Co. v. Terra Res., Inc., 734 F.2d 251, 254 (5th Cir. 1984)). The test for whether vessels are considered part of a flotilla is whether they are devoted to a single venture. See Brown Root Marine Operators, Inc. v. Zapata OffShore Co., 377 F.2d 724, 727 (5th Cir. 1967). More specifically, for vessels to be considered a flotilla, they must be "owned by the same person, contractually engaged in a common enterprise, and under a single command." Tom-Mac, 76 F.3d at 684 (citing Cenac, 734 F.2d at 254).
This Court has further limited "common venture" "to the particular task at hand, not all work contemplated by the contract." In re Greenhill Petroleum Corp., No. 96-338, 1997 U.S. Dist. LEXIS 14189, at *5 (E.D. La. Sept. 10, 1997). The "contract" in question in Greenhill was a master servant contract between the employer of the employee allegedly injured in the case and owner of the vessel on which the employee suffered the alleged injury. See id. at *1-3. Thus, the Court specifically rejected the proposition that a "common venture" was defined by such a master servant contract. The Court did not, however, specifically define "particular task at hand." Here, the two phases of the work were covered by one contract. Nevertheless, given\that work was broken into two distinct segments months apart, the Court concludes that "particular task at hand" refers only to the project's second phase. Thus, under the circumstances here, the flotilla may only include vessels used in that part of the project.
Here, OSFI concedes that the above-mentioned vessels all were owned by OSFI at the time of the accident. See Rec. Doc. 12 at 3. OSFI, however, disputes that they were contractually engaged in a common enterprise or under a single command.
"contractually engaged in a common enterprise"
The Court finds that the vessels were contractually engaged in a common enterprise. See In re United States Dredging Corp., 264 F.2d 339 (2d Cir. 1959). In United States Dredging, a case in which a crew member was killed in a fire on one of the petitioner's vessels, the Second Circuit affirmed the district court's order that the limitation fund should include the value of five other vessels "engaged in the same venture at the same time where all of the attending vessels were necessary for performance of their owner's contract." In re Cross Contracting Co., 454 F.2d 408, 411 (5th Cir. 1972). In affirming the order, the Second Circuit noted that the district court had affirmed the following factual finding of the commissioner: "`It was impossible for the dredge to operate and work unless some craft brought the crews aboard, transported the water and fuel barges to and from the dredge, lifted the anchors, towed away the gravel barges and towed the dredge from place to place.'" 264 F.2d at 340. The facts in this case similarly lead to the conclusion that the vessels by whose value Claimants seek to increase the limitation fund were contractually engaged in a common enterprise. The M/V OFFSHORE MONARCH had performed necessary work on this phase of the project by towing the DB-1 to the job site. The M/V FRITZI K also was necessary to the project: it had journeyed toward the DB-1 to assist it in case of bad weather as well as taken on fuel to transfer to the DB-1, fuel intended to be used in the work in which the DB-1 was engaged. Additionally, the DB-1 had at least performed some work on the contractual job prior to the bad weather. Therefore, the vessels here were contractually engaged in the common enterprise of installing the deck.
OSFI contends, nevertheless, that the vessels at issue were not contractually engaged in a common enterprise because work for Samedan on the second phase of the contract had not started at the time of the sinking. For this proposition OSFI notes that (1) no Samedan representative was "on board" and thus-neither contractual party considered that work had begun under the contract; (2) the DB-RAEFORD, a vessel necessary for the installation of the deck, had not been mobilized; (3) the deck itself did not depart for West Cameron 499 until after the sinking; and (4) although vessel logs identify Samedan as the client or customer, these identifications do not necessarily compel the conclusion that work actually was being performed for Samedan at the time of the sinking.
Again, the Court disagrees. See In re Brown Root Marine Operators, Inc., 267 F. Supp. 588 (S.D. Tex. 1965), aff'd, Brown Root, 377 F.2d 724. In Brown Root, the district court considered all contractually engaged vessels part of a flotilla even though they were standing by because of bad weather at the time. See 267 F. Supp. 588, aff'd, 377 F.2d 724. Here, likewise, the DB-1 and the M/V OFFSHORE MONARCH were standing by to perform work necessary under the Samedan contract, as the logs of these vessels indicate. As OSFI concedes, at the time of the sinking, preliminary work had begun on the project, had ceased due to weather, and was to resume four days after the sinking. See Rec. Doc. 56 at 6-12. Thus, the mere fact that the vessels were not actively performing work on the contract does not necessarily lead to the conclusion that they were not contractually engaged in a common enterprise for the purposes of including their value in the limitation fund. Likewise, given the commencement of work, the Court is not persuaded by OSFI's argument that it was not "contractually engaged" because only preliminary work had begun or that key personnel or equipment was absent. Additionally, in the circumstances here, the logs' identification of Samedan as the customer or client is at least some evidence that OSFI was contractually engaged in work for Samedan. As OSFI notes, "Many times, while waiting on weather, a clerk will simply list the job they [sic] want to do next as the "client" on the [Daily Progress Report]: Given that work for Samedan had commenced, however, and that work for Samedan continued shortly following the sinking, the aforementioned log notations bolster the conclusion that work was in progress. Therefore, in these circumstances, the stand-by status of the vessels is sufficient to warrant the conclusion that they were contractually engaged in a common enterprise.
"under a single command"
The Court also finds that the vessels in question were under the single command of Henderson. Henderson testified that his duties include management of all phases of the derrick barge division of the company. Also, he determines the vessels involved on a particular job and directs the captains of particular vessels, either directly or indirectly, where to go. Additionally, with respect to the job in question, he controlled the movements of at least some of the work performed by the M/V FRITZI K. Such testimony establishes the single command requirement.
OSFI argues, however, that the single command requirement is necessarily nautical, see Greenhill, 1997 U.S. Dist. LEXIS 14189, at *5, a term OSFI apparently interprets as synonymous with the captain of a particular ship. Although this Court did hold in that case that (1) the single command requirement is nautical, (2) the vessel upon which the claimant in that case was injured was under the "single command" of the operator of the specific boat, and (3) none of the other vessels sought to be included in the flotilla was under this "single command," Greenhill did not limit the meaning of "command" to on-board direction. Nor should it have. Black's Law Dictionary defines "command" as, inter alia, "[p]ower to dominate and control." 267 (6th ed.). This dictionary defines "nautical" as " [p]ertaining to ships or to the art of navigation or the business of carriage by sea." 1027 (emphasis added). In a corporate setting, as here, there are many gradations of control over ships. Thus, the Court's use of the term "nautical" in Greenhill does not limit the single-command requirement to on-board direction.
Fifth Circuit precedent, as well as caselaw interpreting this precedent, bears out this broader definition. See Tom-Mac, 76 F.3d at 680-81, 684. See also In re Falcon Workover Co., Inc. No. 98-0005 c/w 98-1443, 1999 U.S. Dist. LEXIS 5994, at *3, *16 (E.D. La. Apr. 21, 1999).
In Tom-Mac, the Fifth Circuit found that the single command requirement was satisfied by looking not at the captain of the vessels in question, but at the project foreman. See 76 F.3d at 680-81, 684. The Tom-Mac court specifically noted that one of the two vessels was operated by a single captain, but nevertheless concluded that both the vessels at issue were under the "common command" of the foreman. Thus, under the Fifth Circuit's reading of the single command requirement, it is proper for the Court to go over the head of the captain on an individual boat to determine whether a vessel's value may be included in a limitation fund.
Although the Tom-Mac court used the term "common command," it is clear in the context of that court's discussion that this usage is synonymous with "single command," particularly as its discussion of this element occurs in the midst of its analysis of the other flotilla doctrine requirements. See id. at 684.
The Falcon Workover court's analysis of the issue illustrates the Fifth Circuit's conception of the single command requirement. See 1999 U.S. Dist. LEXIS 5994, at *3, *16. In Falcon Workover, the claimant sought to include in the limitation fund a crewboat and jack-up workover vessel. In determining that the single command requirement had been satisfied, the court looked not at the captain of the crewboat on which the claimant was allegedly injured, but instead noted that both vessels in question shared the"same management personnel." Id. at *16. Thus, it is proper to travel up the corporate chain to identify whether a claimant has satisfied the single command requirement.
The question then becomes to what level of hierarchy the Court may look in its "single command" analysis. OSFI contends that construing the DB-1 and the M/V FRITZI K as being under Henderson's single command would render the single command requirement a nullity. OSFI's argument goes that if all the vessels in a limitation action have a common owner, they always will be under a single command — to satisfy this single command requirement in such a case, all a claimant would have to do would be to climb the company ladder high enough to find an official, such as Henderson, with supervisory authority over the vessels in a particular project.
The Court acknowledges the initial attractiveness of this argument, but on closer examination, disagrees. First, there may well be a rung high enough on the organizational ladder, which, if taken to satisfy the single command requirement, would render this factor superfluous. Given the particularities of Henderson's control of the vessels at issue, however, the Court need not reach this question. It is enough to note that under the facts of this case, Henderson's control is sufficient to meet the single command requirement. Second, it is at least hypothetically possible for an owner of two vessels working on a particular project to transfer command of one of the vessels to another entity, thereby creating a situation in which the vessels are under single ownership, but not under a single command. Thus, the Court's finding that the vessels at issue here were under Henderson's single command does not render this prong of the analysis a nullity.
The Court need not and does not decide here whether such an arrangement would suffice to avoid the inclusion of the value of both ships in a limitation fund.
"freight then pending"
Under the Limitation of Liability Act, in addition to the value of the relevant vessels, the limitation fund includes "freight then pending." § 183(a). This term is defined as "freight for the voyage." 46 U.S.C. § 184. The Supreme Court has further explained that "real object" of the limitation statute is "to limit the liability of vessel owners to their interest in the adventure." The Main v. Williams, 152 U.S. 122, 131, 14 S.Ct. 486, 488, 38 L.Ed. 381 (1894). This amount has been defined as the entire value of the contract at issue. In re Falcon Inland, 1998 U.S. Dist. LEXIS 5640, at *7 (E.D. La. Apr. 15, 1998) (citing, e.g., The Carson, 104 F.2d at 765 (9th Cir. 1939)). Nevertheless, the limitation fund is defined by the "adventure" at issue. See In re Barracuda Tanker Corp., 281 F. Supp. 228, 232-33 (S.D.N.Y. 1968), modified on other grounds by In re Barracuda Tanker Corp., 409 F.2d 1013 (2d Cir. 1969) (construing the term "freight" to encompass all earnings of individual voyage).
Given the distinct phases of the project here, the Court finds that its "common venture" analysis is applicable to the instant issue and now concludes that the "voyage" or "adventure" here also refers only to the project's second part. Thus, although the entire value of the contract at issue encompasses both phases of the project, to include the entire value in the limitation fund would be to increase the fund beyond the scope of the "voyage." Thus, the value of the "freight pending" here must be limited to that pertaining only to the second phase of the project; therefore, only this amount shall be added to the value of the vessels in increasing the limitation "fund.
CONCLUSION
In light of the above analysis,
IT IS ORDERED that:
the Motion to Increase Security is hereby GRANTED to include in the limitation fund the value of the DB-1 and the M/V OFFSHORE MONARCH and the amount of that portion of the contract pertaining to the second phase of the project in question.
The Court does not here establish the value of any of the vessels for purposes of the limitation fund. Initially, Claimants appeared to advance valuations for the vessels based on their insured values. See Rec. Doc. 9, Mem. in Supp. of Mot. to Increase Security at 5-6, 8. Insurance coverage, while relevant to establishing its value, does not lay a floor for the value. See Signal Oil Gas Co. v. The Barge W-701, 654 F.2d 1164, 1173 (5th Cir. Unit A Sept. 1981).
Additionally, the Court does not here establish the amount pertaining to\the second phase of the contract.
The parties are directed to attempt to stipulate to these values and to meet with the magistrate judge in this case for such purpose, if necessary.