Opinion
No. 01 CV 8391 (ARR).
September 28, 2004
Edward C. Radzik, Donnovan Parry McDermit Radzik, New York, NY,
Tulio R. Prieto, Cardillo Corbett, New York, NY, Counsel for Plaintiff Stevens Technical Services, Inc.
William Francis Dougherty, Burke Parsons, New York, NY, Counsel for Defendant Mormac Marine Enterprises, Inc.
James Edward Mercante, Rubin, Fiorella Friedman LLP, New York, NY, Counsel for Third Party Defendants Walter H. Russell and Metropolitan Pilots Association
Richard Joseph Reisert, Clark, Atcheson Reisert, New York, NY, Counsel for Third Party Defendant Moran Towing Corp.
Edward Philip Flood, Lyons, Skoufalos, Proios Flood, LLP, New York, NY, Counsel for Third Party Defendant Tug Vivian L. Roehrig LLC and Tug VIVIAN L. ROEHRIG.
OPINION AND ORDER
This case arises out of the May 13, 2001 grounding of the S.S. CAPE ARCHWAY (the "CAPE ARCHWAY" or "vessel"), operated by defendant, Mormac Marine Enterprises, Inc. ("Mormac"), at Erie Basin, Brooklyn. Plaintiff shipyard, Stevens Technical Services, Inc. ("Stevens"), filed a complaint against Mormac asserting an admiralty and maritime claim within the meaning of Rule 9(h) of the Federal Rules of Civil Procedure, seeking damages for repairs and services rendered to the CAPE ARCHWAY. Defendant answered, asserting multiple counterclaims against plaintiff in contract and tort seeking recoupment for damages incurred as a result of the grounding of the vessel.
The court notes that defendant did not expressly assert counterclaims, but rather fashioned its responses in the form of "affirmative defenses." Nonetheless, because all parties chose to treat the affirmative defenses as counterclaims, the court will do the same.
Plaintiff subsequently impleaded third-party defendants Moran Towing Corporation ("Moran"), whose tugs, KATHLEEN TURECAMO and CATHERINE TURECAMO, assisted in docking the ship; Tug Vivian L Roehrig LLC, in persona, owner of Tug VIVIAN L. ROEHRIG (the "tug VIVIAN" or "VIVIAN"), also engaged by Moran to assist in the docking; Walter H. Russell ("Russell"), the docking pilot; and Metropolitan Pilots Association, LLC ("MPA"), the pilot association to which Russell belonged. The three tugs were also impleaded in rem. The third-party defendants served answers to Stevens' complaint and posited various cross-claims. Of relevance here, Russell cross-claimed against Mormac seeking defense and indemnification under a pilot ticket that Russell presented to the vessel's captain, Mormac cross-claimed against Russell seeking to hold him liable in negligence and gross negligence for damages sustained by the vessel, and Moran counterclaimed against Stevens seeking unpaid towage fees in the amount of $5,000, plus interest, for a portion of the services rendered to the CAPE ARCHWAY and Stevens on several occasions prior to the incident.
Moran rendered services to the CAPE ARCHWAY on February 12, February 15, March 27, and May 12, 2001. Other services were rendered to Stevens on November 6, and December 8, 2000, and January 6, January 7, February 3, May 11, May 21 and May 22, 2001. To date, Stevens, has paid all but $5,000 due for these services.
Presently before the court are three summary judgment motions. Third-party defendant Russell has moved for summary judgment seeking (1) an order dismissing Mormac's cross-claim against him alleging that he was grossly negligent in performing his pilotage services, causing damage to the ship's propeller, and (2) an order requiring that Mormac defend and indemnify Russell, pursuant to the terms of the pilot ticket, against claims asserted by Stevens. Defendant Mormac seeks partial summary judgment against Stevens holding Stevens liable in contract and for breach of implied warranty of workmanlike performance for Russell's conduct on the date of the accident. Finally, third-party defendant Moran has moved for summary judgment dismissing Stevens' third-party complaint seeking to hold Moran liable for any damages sustained by Stevens as a result of the negligence of the docking pilot, and also moves for summary judgment on its counterclaim against Stevens for $5,000, plus interest, for unpaid towage services dating from November 3, 2000 through the date of the accident. For the reasons stated below, Russell's and Moran's summary judgment motions are granted, and Mormac's motion for partial summary judgment is denied. Stevens is granted leave to amend its third party complaint against Moran to assert a claim that Moran is liable for damages caused by the negligence of the tug VIVIAN.
BACKGROUND
The following facts are uncontested unless otherwise noted. Mormac is the operator of the American Flag vessel S.S. CAPE ARCHWAY, which is part of the Ready Reserve Force maintained by the Maritime Administration of the United States Department of Transportation. On or about September 15, 2000, Mormac, as operator of the CAPE ARCHWAY, requested bids for drydocking, activation, sea trial and lay-up of the vessel. (Mormac's Rule 56.1 Stmt. ¶ 1; Stevens' Resp. to Mormac's Rule 56.1 Stmt. ¶ 1.) Defendant Stevens submitted a bid for the job, and was subsequently awarded the contract on or about October 17, 2000. (Id. ¶ 3.) Upon awarding the contract, Mormac advised Stevens that it expected strict adherence to all terms and conditions of the original Request Quotation for: Drydocking with Activation, Sea Trial and Lay-up of SS CAPE ARCHWAY ("Request Quotation"), as well as those terms discussed during a September 22, 2000 meeting between Mormac and Stevens and contained in certain revisions Stevens had made to its original bid package. (Dougherty Aff. ¶ 13, Ex. 12.) Under the terms of Mormac's Request Quotation (Dougherty Aff., Ex. 1), which became the controlling contract between Stevens and Mormac, Stevens was to provide, among other things, the services of tugs, pilots, and line-handlers when necessary to move the vessel. (Id., Ex. 1 at 26.)
Stevens contests this, claiming "Stevens had no obligation to provide docking and pilotage to the CAPE ARCHWAY during her departure for sea trials on May 12, 2001 and her return from sea trials on May 13, 2001." (Stevens' 56.1 Stmt. ¶ 6.) However, the Request Quotation issued by Mormac, which the parties do not contest became the controlling contract between Mormac and Stevens, states under its "Tugs and Pilots" provision that the contractor shall "[p]rovide the services of tugs and adequate horsepower, docking pilots, bay pilots and crew to safely handle vessel at Contractor's facility during" the vessel's departure for and return from sea trials. (Dougherty Aff., Ex. 1, at 26.) This duty is reiterated at Section 130 ("Sea Trials"), providing that the "[c]ontractor shall provide . . . tugs, pilots and bay pilot launches for departure from shipyard and movement to stream, for sea trial and return to shipyard after sea trial." Moreover, Fonda Mandas, Stevens' General Manager, testified that Stevens called Moran to arrange for a docking master to board and berth the ship at Pier 1 on May 13, 2001 "pursuant to" the "Tugs and Pilots" provision in the Request Quotation. (Mandas Dep. at 59.)
After repairing the vessel, Stevens was required to redeliver the CAPE ARCHWAY to the New York Shipyard. (Id.) For this May 13, 2001 maneuver, Stevens contacted Moran in order to obtain the services of tugs and a docking pilot. (Moran's Rule 56.1 Stmt. ¶ 13; Stevens' Resp. to Moran's Rule 56.1 Stmt. ¶ 9.) Moran provided two of its own tugs, KATHLEEN TURECAMO and CATHERINE TURECAMO, and arranged for the hire of a third tug, VIVIAN L. ROEHRIG, from another tug and towage service provider. (Moran's Rule 56.1 Stmt. ¶ 14; Stevens' Resp. to Moran's Rule 56.1 Stmt. ¶ 10.) Moran also arranged for the services of Russell as docking pilot, calling Russell to alert him of the job. (Russell Dep. at 50.) Moran's towage services were provided pursuant to a pilotage clause, standard in the industry, which was set forth on at least nine invoices that Moran had previously sent to Stevens for services provided to the CAPE ARCHWAY and the CAPE ANN, another vessel operated by Mormac (Reisert Aff., Ex. 11), and was also a provision in Moran's Schedule of Rates, Terms and Conditions, which was incorporated by reference into all of Moran's invoices to Stevens (Reisert Aff. ¶ 20, Ex. 2, stating "[t]he furnishing of tugs to assist in docking, undocking or transporting a vessel is subject to the terms and conditions set forth in our current `Schedule of Fares, Terms and conditions'"). Stevens paid Moran in accordance with each of these invoices, save for $5,000. (Id. ¶ 22.) Moran's pilotage clause notifies contracting parties that it does not furnish pilots, that it is agreed that any pilot engaged becomes the "borrowed servant of the vessel," and that Moran is not liable for any negligent act by such pilot. (See e.g., Reisert Aff., Ex. 6.) Specifically, the clause reads:
We do not furnish pilots or pilotage of vessels making use of or having available their own propelling power, so that whenever any licensed pilot, or a captain of any tug which is furnished to or is engaged in the service of assisting a vessel making use of or having available her own propelling power, it is agreed that he becomes the borrowed servant of the vessel assisted and her owner or operator for all purposes and in every respect, his services while so engaged being the work of the vessel assisted, her owner and operator, and being subject to the exclusive supervision and control of the vessel's personnel. Any such service performed by any such person is beyond the scope of his employment for us and neither those furnishing the tugs or lending any such person, nor the tugs, their owners, agents, charterers, operators or managers shall be liable for any act or omission of any such person. The provisions of this paragraph may not be changed or modified in any manner whatsoever except by written instrument signed by an officer of this company.
(Id.)
While being maneuvered into the dock, the CAPE ARCHWAY hit a sunken pier, sustaining damage to her propeller. At the time of the accident, Russell was serving as docking pilot of the vessel, and the three tugs — KATHLEEN TURECAMO, CATHERINE TURECAMO, and VIVIAN — were assisting in the maneuver. Captain Angel Montanez, Jr., a Mormac employee, was serving as master of the vessel.
Following the accident, Russell tendered a pilot ticket to Montanez, seeking his signature thereon to acknowledge services rendered. (Russell Dep. at 91.) The pilot ticket, like the pilotage clause, is commonly used in the industry, and similarly contains an exculpatory clause, incorporating language that exonerates the pilot for any negligent acts and asserts that in performing docking duties on board the vessel, the pilot is the servant of the vessel. (Reisert Aff., Ex. 5.) It also provides that the vessel will defend and indemnify the pilot in connection with any claims occasioned by the pilot's simple negligence during his service on the vessel. (Id.) It does not, however, purport to exculpate the pilot from liability for damage arising from willful misconduct or gross negligence. Russell's pilot ticket, drafted by MPA, the pilot association of which he was a member, provided:
The pilot is the servant of the vessel and its owner and/or operator and is not to be held personally liable. It is specifically agreed that the pilot is the servant of the vessel and its owner and is an advisor to the master and is at all times subject to the control of the master. The services of the pilot while participating in directing the navigation of a vessel from on board such vessel or from elsewhere are accepted on the understanding that neither the owner nor the operators of the vessel making use of or having available her own propelling power will assert any personal liability to respond in damages including any rights over, against the pilot for any damages sustained or caused by the vessel, even though resulting from the pilot's negligence, in respect to the giving of orders to any of the tugs furnished to or engaged in the assisting service and/or in respect to the handling of such vessel. Furthermore, in the event of any claim against the pilot by any third party, the owner and/or operator agrees to defend, save and hold the pilot harmless from any and all claims, except for actions which are found to be occasioned by the pilot's willful misconduct or gross negligence.
(Id.)
Russell had tendered an identical pilot ticket to Montanez on the prior day, May 12, when he first served as docking pilot for the CAPE ARCHWAY. (Russell's Rule 56.1 Stmt. ¶ 6; Mormac's Rule 56.1 Stmt. ¶ 13.) Montanez signed the ticket on May 12 without incident. (Id.) On May 13, following the grounding, Montanez refused to sign the ticket. (Id. ¶ 9.) MPA subsequently issued to Stevens invoice number 22395, dated May 21, 2001, in the amount of $190 for Russell's pilotage services of May 13. (Reisert Aff., Ex. 9.) This invoice, which also contained the exculpatory clause found on the pilot ticket, was paid by Stevens.
On May 18, Mormac requested that Stevens dry dock the vessel, remove the damaged propeller, and install a new propeller furnished by Mormac. The Delivery Order calling for this repair provided that it was to be performed on a time and materials basis. Stevens completed the repair and subsequently redelivered the vessel to Mormac's possession. The cost for the propeller repairs totaled $230,659.
It is uncontested that Mormac has to date paid to Stevens all but $253,386.15 of the amount due under the original contract, which amount was withheld by Mormac as consequential damages as a result of damage to the vessel's propeller. (See Dougherty Aff. ¶ 5.) Additionally, Mormac has not paid Stevens for the propeller repair work, which Stevens invoiced in the amount of $230,659. (Id.) The total amount in dispute is $484,045.15.
The total amount due to Stevens for the performance of the Activation/Deactivation Contract was $2,047,512.33. Mormac originally withheld $307,126.85 of the payment due, but subsequently remitted an additional payment of $53,740.70 to Stevens in partial discharge of the claim. (Dougherty Aff., Ex. 2.) Consequently, the amount still unpaid on the original contract is $253,386.15.
DISCUSSION
A. Standard for Summary Judgment
Under Rule 56, summary judgment is proper if the pleadings, depositions, answers, interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.Proc.56(c). An issue of fact is genuine when "a reasonable jury could return a verdict for the nonmoving party," and facts are material to the outcome of the litigation if application of the relevant substantive law requires their determination. See Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986). The moving party has the initial burden of "informing the district court of the basis for its motion" and identifying the matter that "it believes demonstrate[s] the absence of a genuine issue of material fact." Celotex Corp. v. Cartrett, 477 U.S. 317, 323 (1986). The substantive law determines the facts that are material to the outcome of a particular litigation. See Anderson, 477 U.S. at 250;Heyman v. Commerce Indus. Ins. Co., 524 F.2d 1317, 1320 (2d Cir. 1975). In determining whether summary judgment is appropriate, a court must resolve all ambiguities, and draw all reasonable inferences against the moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986) (citing United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)).
If the moving party meets its burden, the burden then shifts to the non-moving party to come forward with "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.Proc. 56(e). The non-moving party must "do more than simply show there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586. "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact."Anderson, 477 U.S. at 247-48. Only when it is apparent that no rational finder of fact "could find in favor of the non-moving party because the evidence to support its case is so slight" should summary judgment be granted. Gallo v. Prudential Residential Servs. Ltd. Partnership, 22 F.2d 1219, 1223 (2d Cir. 1994).
B. Russell's Motion for Summary Judgment
Third-party defendant Russell moves (1) for summary judgment dismissing Mormac's cross-claims against him alleging that his pilotage services were performed in a grossly negligent manner, and (2) for summary judgment on his cross-claim against Mormac for an order requiring Mormac to defend and indemnify Russell, pursuant to the terms of his pilot ticket, for any liability for Stevens' claims against him. Preliminarily, Russell urges that, as a matter of law, the record before the court cannot support a conclusion that his pilotage services for Mormac were characterized by willful misconduct or gross negligence. Accordingly, he contends further that the exculpatory clause in his pilot ticket, which is widely employed in the maritime community, (1) is effective against Mormac to bar its claims against him for simple negligence, and (2) entitles him to defense and indemnification by Mormac for any negligent act or omission committed by him while acting as docking pilot of the vessel. The court agrees with all of Russell's contentions.
As previously noted, Russell, as is his normal practice when serving as a docking pilot on a vessel, tendered a pilot ticket to the master for his signature on each of the two days of his service in assisting in the docking of the CAPE ARCHWAY. On the first day, May 12, Montanez, master of the CAPE ARCHWAY, signed the ticket without protest. On May 13, however, following the accident, Montanez refused to sign an identical pilot ticket. (Russell Dep. at 91.) The language of each ticket stated, in pertinent part:
The pilot is the servant of the vessel and its owner and/or operator and is not to be held personally liable . . . [by the] owner nor the operators [of the vessel] . . . for any damages sustained or caused by the vessel, even though resulting from the pilot's negligence. . . . Furthermore, in the event of any claim against the pilot by any third party, the owner and/or operator agrees to defend, save and hold the pilot harmless from any and all claims, except for actions which are found to be occasioned by the pilot's willful misconduct or gross negligence.
(Reisert Aff., Ex. 9.)
If the pilot ticket is valid and binding on Mormac, Russell is exculpated from liability to Mormac for acts of simple negligence. It is conceded by the parties, however, and clear from the language of the pilot ticket, that any gross negligence or willful misconduct on the part of the pilot renders the clause ineffective.
1. Pilot Tickets Effectively Exculpate Pilots from Liability for Negligence
U.S. Courts have regularly upheld as valid, enforceable, and consistent with public policy, both agreements in pilotage clauses and agreements in pilot tickets that exculpate pilots from personal liability for negligent performance of their services.See, e.g., Sun Oil, 287 U.S. at 293 (finding pilotage clause in agreement between towing company and vessel, indicating that towing company could not be held liable for docking pilot's negligence, valid as an application of the well-established borrowed servant doctrine); Virginia International Terminals, Inc. V. MV/KATSURAGI, 263 F.Supp.2d 1025 (E.D.Va. 2003) (finding commonly enforced limitations of liability in pilotage clause and pilot ticket valid and enforceable); Reederei Hagen v. Diesel Tug Resolute, 400 F.Supp. 680, 1976 A.M.C. 2133 (D.Md. 1975) (finding the policies underlying the enforceability of pilotage clauses between tug companies and vessel owners equally or more applicable to exculpatory clauses in pilot tickets); see also Thomas J. Schoenbaum, 2 Admiralty Mar. Law § 13-4 (4th ed.). In fact, Mormac concedes that courts typically enforce the exculpatory clauses found in pilot tickets. (Mormac Mem. Supp. Summ. J. at 8.)
"The economics of the shipping industry show the reasonableness of this result." Dominion Terminal Associates v. M/V CAPE DAISY, 24 F.Supp.2d 532, 535, 1998 A.M.C. 2955 (E.D.Va. 1998). Although the potential liability to docking pilots is great, those individuals simply cannot afford to carry liability insurance to protect themselves from personal liability for negligent acts committed while docking or undocking vessels. Id.; see also Reederei Franz Hagen, 400 F.Supp. at 689. To alleviate this burden, a system of exculpation is widely utilized throughout the industry. "The small charge paid by the shipowner for a docking master's services would indicate that the shipowner has recognized the validity of the exculpatory clause contained in the agreement and has undertaken to provide its own insurance against risk of loss occurring because of the docking master's negligence." Reederei Franz Hagen, 400 F.Supp. at 690.
In this case, Mormac attempts to evade the effectiveness of the exculpatory clause found in Russell's pilot ticket on two grounds. First, Mormac argues that because there existed no direct and explicit contractual relationship between Mormac and Russell, Mormac is not bound by the exculpatory provisions in Russell's pilot ticket. Second, Mormac argues that there is a factual issue as to whether Russell's conduct constituted gross negligence or willful misconduct, barring reliance on the exculpatory clause altogether. The court finds both of these arguments meritless.
2. Russell's Pilot Ticket, Including Its Exculpatory Clause, Is Effective against Mormac
Contrary to Mormac's contentions, the exculpatory clause in Russell's pilot ticket is valid even though a party other than Mormac made the arrangements securing Russell's services. On the undisputed facts in this record, the court finds that an implied contract arose when Mormac directed Stevens to obtain a pilot's services, and that this implied contract contained an acknowledgment that the pilot would tender a standard pilot ticket including an exculpatory clause that the vessel would honor. Accordingly, the argument that no contract binds Mormac to the exculpatory provisions of the pilot ticket fails.
Courts have upheld exculpatory clauses in pilot tickets tendered to the ship's master where the tug company, not the shipowner or its agent, obtained the services of the docking pilot. Dominion Terminal, 24 F.Supp.2d 532. This is the situation presented to the court here, as Russell's services were obtained by Moran, the towing company, rather than by Mormac directly.
In Dominion Terminal, the court rejected on summary judgment the shipowner's argument that there was no privity of contract between the owner and the pilot simply because the owner's agent did not hire the pilot. The court found that it was the regular practice at the pier for a ship's agent to call for tug services and for the towing service, in turn, to contact a docking pilot for assistance. Id. at 533. The court noted that the authorized agent of the vessel was well aware of the customary procedure for obtaining docking assistance at the pier, that the agent had engaged in this same course of dealing many times in the past, and that the ship had visited the same terminal, under the same arrangements, on eighteen separate occasions in the decade preceding the incident. Given this history, the court held that the request by the ship's agent that the towing company secure the services of a docking pilot gave rise to an implied contract between the ship and the docking pilot. Id. at 535. In requesting that pilotage be arranged, it was clear that "the agent understood perfectly that he was bargaining . . . for a docking pilot solicited by the tug company under the usual terms and conditions," namely that the docking pilot would tender for the master's signature a pilot ticket that would exculpate the pilot from liability for negligent acts during the course of his pilotage. Id. at 535.
This court finds the reasoning of the Dominion Terminal court persuasive. In the present case, Mormac prepared the Request Quotation and solicited bids from numerous shipyards. As part of that document, in two separate provisions, Mormac specifically requested — and, in fact, required — that the chosen shipyard provide docking pilots to handle the vessel during its return from sea trials. (Dougherty Aff., Ex. 1 at 26, 99.) Mormac's agent, John Gregory, testified that he did not expect that Stevens would itself perform the piloting services required. Instead, he "expected [Stevens] to go and sub it out," meaning that Stevens would hire another to perform that part of its contractual obligations. (Gregory Dep. at 40.)
In addition, Captain Montanez, another Mormac employee and master of the CAPE ARCHWAY, to whom Russell tendered the operative pilot ticket, testified that he had never taken a ship into New York without signing a pilot ticket, and that he had been into the Port of New York on over 50 occasions at the time of his deposition. (Montanez Dep. at 82.) Montanez's receipt and acceptance of an identical pilot ticket on May 12, the day preceding the accident, is further proof that Mormac had notice of the exculpatory provisions.
The record is thus undisputed that Mormac's agents were aware of standard industry practice with regard to securing pilotage services. Mormac knew not only that Stevens would contact another company to secure the needed services, but also that the pilot could be expected to tender a pilot ticket upon boarding the ship that would contain an exculpatory clause both exonerating the pilot from any acts of simple negligence committed in performing services for the vessel and rendering the vessel liable for his conduct.
Mormac's attempts to distinguish Dominion Terminal are unpersuasive. Mormac posits that this case differs markedly from Dominion Terminal because there, the vessel's authorized agent contracted directly with the tug company, which subsequently hired the pilot, whereas here, Mormac hired Stevens, which in turn contacted the tug company that engaged the pilot. The court finds this distinction immaterial. As in Dominion Terminal, Mormac knew the customary procedures for obtaining docking assistance and was well aware that the docking pilot would tender a pilot ticket with exculpatory language to the master of the ship. It is inconsequential that the ship's agent was one step further removed from the phone call to the pilot. Because, as in Dominion Terminal, awareness of the customary practice and Mormac's consistent course of past dealing form the basis of an implied contract between the docking pilot and the vessel, it is immaterial that the shipyard, rather than the tug company, was first contacted by Mormac to arrange for the services of the docking pilot.
The fact that Montanez refused to sign Russell's pilot ticket on May 13 following the grounding does not change this result. Had Montanez signed the ticket on that day, his conduct would further support the finding that he and the shipowner were aware of the exculpatory provisions found therein. Montanez's refusal to sign the ticket does not, however, vitiate Mormac's assent to the exculpatory provisions of the ticket. Express assent to the exculpatory clause by the shipowner is not necessary where, as here, the circumstances clearly establish that the shipowner knew of the customary industry practice and fully expected the pilot to tender a pilot ticket containing such a clause. See Federal Steam Navigation Co. V. Tugs SAVANNAH and ROBERT W. GROVES, 305 F.Supp. 1293, 1298 (S.D.Ga 1969). Such facts are clearly established here.
3. There Is No Evidence of Willful Misconduct or Gross Negligence on The Part of Russell
Mormac contends that Russell is not protected by the exculpatory clause of the pilot ticket because he performed the docking maneuvers in a grossly negligent manner or in a manner characterized by willful misconduct. The sole basis of its claim is an inference from the record drawn from an exchange between Russell and Montanez that occurred during the docking maneuver, when it became evident that the vessel was dangerously close to the submerged pier. Captain Montanez ordered "no more bells," meaning no further use of the ship's engines to propel the boat. (Montanez Dep. at 106, 108, 150; Dougherty Aff. Ex. 20.) Rather than follow Montanez's directive, however, Russell, assertedly aware of Montanez's order to berth the vessel by tug strength alone (Montanez Dep. at 152), within one to two minutes, ordered "dead slow ahead" and subsequently "slow ahead" (Montanez Dep. at 86-87, 151). Angered, Montanez ordered the engineers to shut off the engines, and told Russell, "[y]ou have no more bells," directing him to "put [the] boat alongside the dock with the tugs." (Montanez Dep. at 86-87.) The ship was ultimately maneuvered into the berth by the power of the tugs.
For purposes of this summary judgment motion, the court assumes that Captain Montanez did, in fact, order Russell to use "no more bells," as Mormac contends, and that Russell subsequently disobeyed the captain by issuing a contrary order. Notably, it is not entirely clear from the record that the exchange constituted anything other than a difference of views expressed during a discussion of how best to proceed under difficult circumstances. Construing the record in the light most favorable to Mormac, however, the court assumes that the captain issued an order that was disregarded by Russell, who thereafter issued a contrary order.
Mormac contends that Russell's order of "dead slow ahead," which contradicted the prior directive given by the ship's captain, is evidence that itself would warrant a finding by a reasonable juror that Russell's performance of his duty was grossly negligent or was characterized by willful misconduct. But, Mormac's conclusion concerning the implications of this exchange ignores the remainder of the record before the court establishing that, in the context in which Russell issued his order, no rational juror could find that order either grossly negligent or constituting willful misconduct.
The record is undisputed that Russell, at the request of Mormac, was acting as the docking master to berth the vessel. Russell had experience in such maneuvers, having obtained his federal pilotage license in roughly spring 1999, and having begun acquiring his licenses at least as early as 1989. (Russell Dep. at 13.) Russell was hired specifically for his knowledge and experience in the New York Harbor. Mormac employed the services of a docking master often, if not always, on these occasions. In fact, Montanez himself had entered the port on more than 50 occasions (Montanez Dep. at 82), presumably using a docking master each time.
Montanez testified that, while backing into the pier, in addition to Russell and Montanez, there were present on the bridge "a circus full of other people," including the Sandy Hook pilot, the second and third mates, the wheel man, the port engineer, a MARAD representative, and possibly others. (Montanez Dep. at 77-78.)
Regarding his exchange with Russell, Montanez testified that, believing the boat was "in the spoil," he relayed his concerns to Russell, who reassured Montanez that he knew the harbor and that there was no need to worry. (Montanez Dep. at 156.) In similar testimony, Montanez related that when he told Russell not to give any more bells, Russell stated, "I need to get some sternway off . . . I want to kick her ahead." (Montanez Dep. at 150-51.) Montanez, disagreeing with Russell's plans, testified that he said "no." (Id.) It is at or about this time that Russell's contrary orders forming the basis of Mormac's claim were issued. (Dougherty Aff., Ex. 21) (bridge bell book records a "dead slow ahead" engine order at 0852 and a "slow ahead" order a minute later, at 0853.) Montanez also acknowledged in his testimony that it is not uncommon for the vessel master and pilots to air disagreements regarding the best way to proceed in docking the ship. (Montanez Dep. at 70-71.) He explained, too, that the churning up of mud is normal in docking a ship. (Id. at 168.)
Additionally, Montanez affirmed that although he has retaken navigational control of vessels from pilots on prior occasions, he did not do so in this case. (Montanez Dep. at 156-57.) Instead, Montanez "allowed [Russell] to continue," but "kept an eye on him." (Id..) In fact, Montanez admitted that "all in all throughout the docking operation" he had confidence that Russell would successfully bring the vessel alongside the berth. (Id. at 155.) Finally, Montanez praised Russell's work overall, testifying that Russell "did a great job," (Montanez Dep. at 158-59) and later attested that Russell "did a very, very good job" (Id. at 203).
As a court sitting in admiralty, this court looks to the common law in considering maritime torts. Su v. M/V SOUTHERN ASTAR, 978 F.2d 462, 472 (9th Cir. 1992). Under common law, conduct is willful or wanton when (1) the conduct creates an unreasonable risk of very serious harm to others, and (2) the defendant is conscious of the risk and proceeds without concern for the safety of others. Dan B. Dobbs, The Law of Torts § 27 (2001); see also Restatement (Second) of Torts § 500. A willful act is done intentionally, and thus willfulness has been declared to imply intentional wrongdoing. Stuart M. Speiser, et al., The American Law of Torts § 10:1 (1986).
Gross negligence is defined as acts "done wilfully and intentionally with a conscious indifference to consequences so far as other persons are affected." Id. § 10:6. New York case law confirms that gross negligence is "conduct that evinces a reckless disregard for the rights of others or `smacks' of intentional wrongdoing." Colnaghi, U.S.A., Ltd. V. Jewelers Protection Services, Ltd., 81 N.Y.2d 821, 823-24 (1993); see also American Telephone and Telegraph Co. V. City of New York, 83 F.3d 549, 556 (2d Cir. 1996). "Gross negligence differs in kind, not only degree, from claims of ordinary negligence." Colnaghi, 81 N.Y.2d at 823.
It is well settled that the pilot holds responsibility for navigating the vessel. The Oregon, 158 U.S. 186, 194 (1895) ("[T]he pilot, doubtless, supersedes the master, for the time being, in the command and navigation fo the ship, and his orders must be obeyed in all matters connected with her navigation. . . ."). In fact, the pilot is employed due to his particular knowledge of local conditions. Nevertheless, maritime law makes it clear that the master is still in overall command of the vessel. Id.;Avondale Indus., Inc. v. Int'l Marine Carriers, Inc., 15 F.3d 489, 493 (5th Cir. 1994). Due to this relationship, in appropriate circumstances, the master is required to relieve the pilot of control. If the master observes or discovers that the pilot is manifestly incompetent or intoxicated, it is his duty to interfere with, warn, or even take over and relieve the pilot. The China, 74 U.S. 53 (1868); The Oregon, 158 U.S. 186; see Alex L. Parks Edward V. Cattell, Jr., Tug, Towing and Pilotage 1007 (1994). Courts have also clarified that the occasions on which the master of the ship is justified in interfering with the pilot in charge are very rare. See Dampskibsselskabet Atalanta A/S v. United States, 31 F.2d 961, 961 (5th Cir. 1929) (explaining that before he is justified in displacing the pilot, the master "should be sure that the pilot is for some reason incompetent" (emphasis added)). The master is only justified in interfering with the pilot's navigational command in exceptional circumstances, because if such interference were encouraged, "we should have a double authority on board, a divisum imperium, the parent of all confusion, from which many accidents and much mischief would probably ensue." Tug, Tow and Pilotage, at 1009 (quoting The Peerless (1860) 167 E.R. 16). Thus, unless and until the master chooses to interfere, the pilot remains solely responsible for the navigation of the ship. He has the authority to use his best judgment, experience and skill to make decisions necessary to that end, as "his is properly the duty to navigate the ship over and through his pilotage limits." Hobart v. Drogan, 35 U.S. 108 (1836).
Under these standards, on the undisputed evidence of record, no reasonable juror could find that Russell's order — contradicting that of Captain Montanez regarding the proper way to safely berth the vessel — constituted gross negligence or willful misconduct in the performance of his pilotage duties. Even assuming,arguendo, that Montanez's judgment regarding the proper way to berth the vessel in the instant case, i.e. by tug power and without the ship's own engine power, was superior to that of Russell, there is no evidence in the record to support the conclusion that Russell asserted his own judgment of the best way to berth the vessel without concern for the safety of others, or conscious that his order created an unreasonable risk of serious harm, or in reckless disregard for the safety of others, in a manner that "smacked" of intentional wrongdoing. Nothing in the record indicates that Russell issued his order with any intent other than to protect the ship and safely berth her.
The mere fact that Russell's directive differed from that of the captain is, in itself, an insufficient basis for a reasonable juror to conclude that Russell acted with gross negligence or willful misconduct. It is thus not surprising that Mormac cites no authority suggesting that in circumstances such as those presented here, the assertion by a pilot of a directive contrary to a captain could itself constitute gross negligence or willful misconduct. Nor has the court succeeded in locating such authority.
To the contrary, the only evidence in the record bearing on this issue, the testimony of Montanez, compels the opposite conclusion — that Russell's conduct was neither grossly negligent nor characterized by willful misconduct. Though free to reassume control from Russell, and fully knowledgeable of his right and duty to do so in appropriate circumstances, Montanez chose to continue to entrust navigational control to Russell. Montanez exercised his discretion not to disturb Russell's control over the vessel even though he had retaken control from pilots on prior occasions. Instead, Montanez merely "kept an eye on [Russell]"
(Montanez Dep. at 156), maintaining confidence that Russell would maneuver the vessel into the dock successfully, and Montanez later praised Russell's competence and the quality of his work, testifying that he "did a very, very good job." (Id. at 203.) It is clear from this evidence that Montanez did not, at the time of the accident, deem Russell's actions to constitute willful misconduct or gross negligence.
The maintenance and cure cases cited by Mormac are inapposite. A seaman who becomes ill or injured while in the service of the ship is entitled to medical treatment and support by the shipowner. This long-standing right, called maintenance and cure, is borne of the large responsibility the shipowner bears for the welfare of his crew, and is available even if the seaman's injury resulted from his own negligence. See Farrell v. United States, 336 U.S. 511, 513-14 (1949). It is in this context that the cases cited by Mormac arise. That a seaman's right to maintenance and cure may be forfeited by gross misbehavior is not meaningfully analogous to the circumstances presented here, where a pilot, hired by the vessel for his expertise in the surrounding waters, exercises his judgment as to the safest way to berth the ship, even though contrary to that of the captain. Moreover, the statements in these cases that "willful disobedience of orders," like other grossly negligent actions, forfeits a seaman's right to maintenance and cure, refer traditionally to misconduct such as intoxication or sexual activity resulting in injury to a seaman while on leave from the vessel. Dailey v. Alcoa Steamship Co., 337 F.2d 611, 612 (5th Cir. 1964). Such personal misconduct committed outside a seaman's employment on the vessel cannot be analogized to considered judgments made by an expert in the course of his employment by a vessel and aimed at insuring its safety.
In sum, it is the essence of a docking pilot's duty to make reasoned judgments, based on his expertise, about how to safely berth the vessel. That is exactly what Russell did here. While the court recognizes that Montanez, as master of the CAPE ARCHWAY, had a right to step in and retake control of the vessel's navigation, he did not, and he makes clear that he saw no reason to do so. As discussed above, the mere fact that Russell issued an order contrary to that of Montanez is not enough to support a reasonable juror in concluding that Russell acted with gross negligence or willful misconduct. Russell's motion for summary judgment denying Mormac's claim against him in negligence on the basis of the exculpatory clause in his pilot ticket is therefore granted.
4. Mormac Is Required To Indemnify Russell against Stevens' Third-Party Claim
In addition to the exculpatory clause, Russell's pilot ticket contained language requiring the owner/operator of the vessel to indemnify him against any third-party claims. Specifically, the ticket required Mormac to "defend, save and hold the pilot harmless from" such claims. (Mercante Aff., Ex. A.) The parties have offered no argument that this provision of the pilot ticket should be treated in a manner different from the remainder of the exculpatory provisions of the ticket. Moreover, courts have traditionally enforced indemnification clauses where, as here, "[a] party [has] clearly express[ed] its intent to indemnify another." See Enterprise Ship Co. v. Norfolk S. Ry. Co., 185 F.Supp.2d 622, 626 (2001) (citations omitted). Since, as discussed above, Mormac is bound by the pilot ticket, Mormac is obliged thereunder to indemnify Russell against Stevens' claims. Accordingly, Russell's motion for summary judgment requiring Mormac to indemnify him is granted. C. Mormac's Motion for Partial Summary Judgment Against Stevens
Mormac seeks partial summary judgment holding Stevens liable for any damage to the CAPE ARCHWAY on May 13, 2001 caused by the negligence of pilot Russell. Mormac appears to advance two distinct grounds in support of its claim that Stevens is liable for Russell's misconduct. First, Mormac argues that, under the express and unambiguous terms of the Mormac/Stevens contract, Stevens undertook to assume responsibility for Russell's proper and successful performance of his duties in piloting the vessel; and that in so doing, Stevens assumed liability for any damages sustained by Mormac as a result of Russell's failure to discharge his duties in a non-negligent manner. Second, Mormac posits that Stevens is liable for injuries to the vessel occasioned by Russell's negligence because, in securing Russell's services as pilot, Stevens breached the warranty of workmanlike performance implied in its contract with Mormac. As addressed below, the existence of genuine issues of material fact preclude the grant of summary judgment to Mormac on either ground.
In its reply brief, Mormac contends, assertedly as a second argument (not advanced in its opening brief), that "Stevens remains responsible for its subcontractor's performance of the contract's pilotage provisions" (Mormac's Reply Mem. Supp. Mot. Partial Summ. J. at 7). The ensuing argument relies principally on two Fifth Circuit opinions, Avondale Industries, Inc. v. International Maritime Carriers, Inc., 15 F.3d 489 (5th Cir. 1994), and Nathanial Shipyards, Inc. v. General Electric Co., 920 F.2d 1256 (5th Cr. 1991). Avondale is inapposite because there, the contract between Avondale, the shipyard, and the vessel owner, pursuant to which Avondale secured a pilot who negligently caused injury to the vessel, contained an explicit indemnification clause by which the shipyard expressly agreed to indemnify the owner against all claims, including personal injury or property damage, arising from the negligence of any subcontractor, agent or employee. Such an indemnification clause is clearly lacking in the present case. Moreover, the quoted portion of Nathanial simply makes clear that a contractor is not liable for the negligence of subcontractors unless the negligence complained of is simply the failure to live up to the terms of the contract. Thus, notwithstanding Mormac's suggestion that it is advancing a distinct argument, the issue is fully encompassed by the claim that the express terms of the contract obligate Stevens to remain liable for Russell, the first argument addressed below.
1. The Terms of the Mormac/Stevens Contract Are Ambiguous
"Summary judgment is only proper in contract disputes if the language of the contract is wholly unambiguous." Mellon Bank v. United Bank Corp., 31 F.3d 113, 115 (2d Cir. 1994) (internal quotations omitted). When the language of a contract is susceptible to different interpretations and "where there is relevant extrinsic evidence of the parties' actual intent, then the contract's meaning becomes an issue of fact precluding summary judgment." Sayers v. Rochester Tel. Corp. Supplemental Mgmt. Pension Plan, 7 F.3d 1091, 1094 (2d Cir. 1993) (internal quotations omitted).
"Ascertaining whether the language of a contract is clear or ambiguous is a question of law to be decided by the court." Mellon Bank, 31 F.3d at 115. Contract language is ambiguous if it is "capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement. . . ." Sayers, 7 F.3d at 1095 (internal quotations omitted). No ambiguity exists, however, "when contract language has a definite and precise meaning, unattended by danger of misconception . . . and concerning which there is no reasonable basis for a difference of opinion." Id. (internal quotations omitted).
Turning to the contract at issue in this motion, a lengthy Request Quotation (Dougherty Aff., Ex. 1) is the primary document setting forth the terms and conditions of the contract between Mormac and Stevens. Under this contract, Stevens agreed that it would activate Mormac's vessel, the S/S CAPE ARCHWAY, tow her to Stevens' ship repairyard in Brooklyn, New York, there perform specified overhaul and repair services on the vessel, conduct various sea trials, and return her to Mormac at the vessel's berth in Virginia's James River.
Much of the voluminous Request Quotation specifies overhaul and repair services Stevens was to perform at its shipyard, including well over 150 service "items" designated as "Dry Docking Items" (id. at 29-51), "Activation Items" (id. at 52-99), "Lay Up Items" (id. at 100-23), and "Supplemental Items" (id. at 124). This extensive list of repair items is preceded in the document by a preliminary section entitled, "Quoted Time and Services" (id. at 4-7), as well as by 20 pages of "General Instructions" (id. at 10-19) and specifications designated "General Service Items" (id. at 20-29).
In substance, the provisions of the preliminary "Quoted Time and Services" section direct the prospective contractor regarding matters governing the preparation of a proposal and the execution of the contract. They require, among other things, detailed itemization of the cost of each item specified, and set forth instructions and necessary information concerning the time within which the contractor will complete repairs, its production schedule, its available labor conditions and rates, its dry-docking conditions, and the identification of all subcontractors it proposes to engage in performing its duties under the contract. In connection with the subcontracting of work, the instructions also provide:
The contractor shall not sublet any portion of the work without the written permission of the engineer. Any permission given by the engineer shall not, however, relieve the contractor from the responsibility for the conduct and work of all subcontractors. The contractor shall properly direct and control all subcontractors and shall be responsible for the proper coordination of the work of the contractor and that of subcontractors. Should the contractor assign certain responsibilities to the subcontractors, the contractor shall not thereby be relieved of responsibility for the entire work and every part thereof.
(Id. at 6.)
Following this section and the "General Instructions" (id. at 4-19), the document enumerates under the subheading "General Service Items," various services to be supplied by the contractor, including towing, tugs and pilots, and crane, lighting, fuel, and water services (id. at 25-28). Specifically in connection with "Tugs and Pilots," Item 33 of the document requires the contractor to "[p]rovide the services of . . . docking pilots, bay pilots and crew to safely handle vessel at Contractor's facility" during enumerated events, which include departure for and return from sea trials. (Id. at 26.) As noted, these general service provisions are then followed by 100 pages setting forth under various headings the myriad items comprising the requisite overhaul and repair of the vessel. Under the heading "Activation Items," Item 130 is designated as "Sea Trials." (Id. at 98-99.) It provides, in part: "Contractor shall provide . . . pilots . . . for sea trial and return to shipyard after sea trial." (Id. at 99.)
The above quoted language, in the context of the overall document, obligates Stevens to provide pilots necessary "to safely handle the vessel" at specified times over the life of the repair contract. As Mormac urges, the language mandating Stevens' provision of pilots to safely handle the vessel might be read to constitute a guarantee by Stevens that any pilot it selects will not perform pilotage duties in a negligent manner. But the language of the document may as easily be interpreted merely to obligate Stevens to exercise reasonable care in the selection of pilots, providing only those who may reasonably be expected to safely handle the vessel. Neither of the two quoted items in the contract specifically addressing the provision of pilots — that is, Items 3 and 103 — unambiguously identifies which of the two competing interpretations was intended by the parties.
Nor does the earlier language in the document regarding sub-contractors generally, set forth in the section entitled "Quoted Time and Services," resolve the ambiguity. As Stevens contends, it is not clear that the parties intended this early provision to apply to the requirement, contained later in the document, that Stevens secure the services of pilots. This earlier paragraph may have been directed, rather, only to subcontracts involving the various overhaul and repair services that Stevens had contracted to perform. The requirement in this paragraph that the "contractor shall properly direct and control all subcontractors" suggests that the latter reading may be the more reasonable one. Apart from exercising care in selecting a qualified pilot, the shipyard would seem to have no control over the performance of the docking pilot, who is hired specifically for his expertise in maneuvering the vessel in waters about which he is knowledgeable. In this regard, nothing in the record indicates that the parties expected that a shipyard representative would be present on board the vessel with its master and crew when the pilot conducted his docking maneuvers. On the other hand, the language requiring the contractor to retain responsibility for subcontracted work (subcontracting of work "shall not . . . relieve the contractor from the responsibility for the conduct and work of all subcontractors" (id. at 6)) might imply the contractor's assumption of liability for damages arising from its subcontractor's negligence. Just as reasonably, however, it may mean only that the contractor remains liable for its subcontractor's breach of contract, for example, by failure to perform or delay in performance.
Finally, the last sentence in the paragraph, on which Mormac places substantial reliance, likewise does not resolve the ambiguity. As recited above, Stevens agrees by this language that, should it assign any responsibilities to a sub-contractor, it "shall not thereby be relieved of responsibility for the entire work and every part thereof." Mormac contends that, as applied to Stevens' provision of Russell's pilot's services, the sole import ascribable to this phrase is that Stevens assumed liability for all aspects of Russell's performance of his pilotage services, including negligent performance of his duties. But the language may also reasonably be interpreted to mean that Stevens' responsibility for the "entire work and every part thereof" of its duties under the contract extends only to its obligation to select a pilot who could be expected "to safely handle the vessel."
This ambiguity in the language of the contract is not remedied by extrinsic evidence in the record. Mormac does not contend to the contrary, relying instead on what it characterizes as the "plain meaning" of the contract's language. Because, as explained above, the contract provisions concerning Stevens' liability for Russell's performance are susceptible of more than one reasonable interpretation, the meaning of the contract presents a genuine issue of material fact, and Mormac's motion for summary judgment on this ground must be denied.
2. Stevens' Alleged Liability for Breach of Implied Warranty of Workmanlike Performance
Mormac next contends that Stevens is liable for damages to the vessel caused by Russell's negligent piloting because, in securing the services of a pilot who performed in a negligent manner, Stevens breached the warranty of workmanlike performance implied in its contract with Mormac. Mormac is correct that a warranty of workmanlike performance is implied in its contract with Stevens, just as it is implied in all maritime service contracts. See Navieros Oceanikos, S.S. v. S.T. Mobil Trader, 554 F.2d 43 (2d Cir. 1977); Fairmont Shipping Corp. v. Chevron International Oil Co., 511 F.2d 1252 (2d Cir. 1975); Marcinowski v. McCormack Boys Corp., 160 F.Supp.2d 708, 714 (S.D.N.Y. 2001). But Mormac sorely misconstrues the nature of the damages it may recover for Stevens' breach of that implied warranty in the circumstances of this case.
In advancing this argument in its opening brief, Mormac purports to rely on the Second Circuit's opinion and holding in Fairmont Shipping Corp., 511 F.2d 1252. In that case, Fairmont, a vessel owner, sued Chevron Oil Company to recover for damages to its vessel caused by the negligence of tugs that Chevron had agreed to provide to assist the vessel in taking on fuel. In its opinion, the Fairmont panel devoted extensive discussion to the circumstances in which, under the Supreme Court's holding in Ryan Stevedoring Co. v. Pan-Atlantic S.S. Corp., 350 U.S. 124 (1956), the law implies in an agreement between a shipowner and a contractor a right of indemnification against the contractor — a liability referred to as "Ryan indemnity." The court concluded that "Ryan indemnity applied only in cases in which a contractor rendered its services to a shipowner in a way that exposed the shipowner to strict liability (for example, under the doctrine of seaworthiness) and did not apply to situations . . . in which the shipowner would be liable, if at all, only in negligence." Lubrano v. Waterman Steamship Co., 175 F.3d 274, 275 (2d Cir. 1999) (discussing Fairmont Shipping Corp., 511 F.2d at 1257-58 n. 8). "But this statement [in Fairmont Shipping] . . . was made in dicta." Lubrano, 175 F.3d at 276. In fact, as clarified in Lubrano, theFairmont Shipping panel made these observations "only by way of distinguishing the contractor's warranty of workmanlike performance, which was involved in Fairmont Shipping, from a shipowner's right of indemnity against the contractor, which was not." Id. at 276 n. 4. Thus, the actual holding in Fairmont Shipping was a narrow one: "there should be implied in Chevron's contract to provide tug assistance an obligation to perform in a workmanlike manner — that is, a warranty of workmanlike performance."Fairmont Shipping, 511 F.2d at 1259-60.
"Two years later," in Navieros Oceanikos, S.A. v. S.T. Mobil Trader, 554 F.2d 43, 44-47 (2d Cir. 1977), the Second Circuit ruled that "a shipowner had no right of indemnification against the owner of a fuel barge that allegedly caused a fire while fueling the owner's vessel . . . [The Circuit] held that Ryan indemnity was not available because the shipowner seeking indemnification had not been exposed to liability without fault." Lubrano, 175 F.3d at 276 (discussing Navieros Oceanikos).Navieros Oceanikos also made clear that, absent any duty to indemnify, damages for breach of warranty of workmanlike performance are allocated between shipowner and contractor "in proportion to their relative fault — an outcome analogous to contribution under a comparative negligence paradigm." Lubrano, 175 F.3d 282 n. 13 (discussing Navieros Oceanikos). Further, as the Lubrano opinion clarified, "Ryan indemnity is virtually dead, at least in [the Second] Circuit." Id. at 276. Hence, "in the absence of an express indemnification clause to the contrary, the contract between a shipowner and a [contractor] does not obligate the [contractor] to indemnify the shipowner for . . . liability." Lubrano, 175 F.3d at 283. Rather, the sole means of calculating damages for a contractor's breach of warranty of workmanlike performance is by application of the doctrine of comparative negligence, allocating liability between shipowner and contractor in proportion to relative fault.
In its reply brief, Mormac purports to disavow any intention to secure indemnification from Stevens for damages caused by Russell's negligence. Rather, Mormac insists that it relies on the narrow holding of Fairmont Shipping, seeking only damages for Stevens' breach of its implied warranty of workmanlike performance. The flaw in Mormac's argument is that it obfuscates, if not misrepresents, the nature of the relief Mormac is actually seeking on this motion. By virtue of its acceptance of Russell's pilot ticket, Mormac has engendered liability not as a result of any form of strict liability, but rather in negligence, for whatever negligence might otherwise have been attributable to Russell. Under the doctrine of comparative negligence, Mormac is liable for its own fault — here, the negligence it has contractually assumed from Russell under the pilot ticket. Here, however, Mormac is seeking to recover from Stevens no more and no less than the precise liability Mormac itself assumed for Russell's negligence. In short, Mormac is actually seeking Ryan indemnification, a remedy not available for breach of implied warranty of workmanlike performance.
Although, as discussed above, the terms of the Mormac/Stevens contract might be interpreted to constitute an express agreement by Stevens to assume responsibility and liability for Russell's negligence, the implied warranty of workmanlike performance cannot render Stevens liable to Mormac for Russell's negligence. Hence, Mormac may not secure summary judgment on this ground.
D. Moran's Motion for Summary Judgment
Moran moves for summary judgment dismissing Stevens' third-party complaint seeking to hold Moran liable for any damages sustained as a result of the negligence of its tugs or the docking pilot, and also moves for summary judgment on its counterclaim against Stevens for $5,000, plus interest, for unpaid towage services dating from November 3, 2000 through the date of the accident. Preliminarily, Moran contends that its own tugs, KATHERINE TURECAMO and CATHERINE TURECAMO bore no fault for the grounding of the CAPE ARCHWAY. In support of its motion seeking exoneration from any liability for Russell's negligence, Moran relies on three theories. First, Moran urges that Stevens is bound by Moran's pilotage clause, which, by its terms, exculpates the towing company from liability for the acts of any pilot it provides and recites an agreement that such a pilot becomes exclusively a servant of the assisted vessel. Second, in the alternative, Moran argues, if the pilotage clause does not bind Stevens, Moran is not Russell's employer and thus cannot be vicariously liable for Russell's negligence. Third, Moran contends, it assumed no liability for Russell's negligence because Stevens' claims are in the nature of equitable subrogation, rendering Stevens, as subrogee, subject to the defense of the pilotage clause that Moran could successfully assert against Mormac, the subrogor. Finally, Moran contends that it cannot be held liable for the conduct of the tug VIVIAN.
As addressed below, the court finds, as a matter of law, that neither tug KATHERINE TURECAMO nor tug CATHERINE TURECAMO bore fault for the accident, and that Stevens is bound by Moran's pilotage clause exculpating Moran for the negligent conduct of the docking pilot. Accordingly, Moran's motion for summary judgment dismissing Stevens' claims arising from the conduct of the Moran tugs and Russell is granted without need to address Moran's arguments that it is not Russell's employer and that Stevens' claims are in fact based on equitable subrogation. Stevens, however, is granted leave to amend its third party complaint against Moran to assert a claim that Moran is liable for any damage caused by the actions of the tug VIVIAN.
1. The Moran Tugs Were Not at Fault
As Moran points out, it is undisputed that there is no evidence in the record that the Moran tugs were at fault in causing the grounding of the CAPE ARCHWAY. (Moran's Rule 56.1 Stmt. ¶ 25; Stevens' Resp. to Moran's Rule 56.1 Stmt. ¶ 21.) Moreover, because it is also uncontested that the Moran tugs, KATHERINE TURECAMO and CATHERINE TURECAMO, were not served in rem, dismissal is proper under Rule 4(m) of the Federal Rules of Civil Procedure (Moran's Rule 56.1 Stmt. ¶ 30). Even if service on the tugs in rem had been executed, however, the absence of any evidence of negligence by the tugs would warrant a sua sponte grant of summary judgment dismissing Stevens' claims against them. Accordingly, Stevens' claims against the Moran tugs are dismissed.
2. Moran is Not Liable for the Conduct of Russell
As noted, Moran claims that the pilotage clause exculpates it from any liability to Stevens for the conduct of pilot Russell. It is noteworthy that, in connection with this argument, neither Stevens nor Moran contests that Mormac, the operator of the CAPE ARCHWAY, is bound by that clause. To the contrary, both parties assume that Moran's pilotage clause is effective against Mormac. Such an assumption is amply supported by the case law. Courts have regularly upheld as valid, enforceable, and consistent with public policy, agreements in pilotage clauses exculpating the towing company from liability for negligence on the part of pilots it provides. Sun Oil, 287 U.S. at 293. Such pilotage clauses have been interpreted as well to require indemnification by the vessel owner for any third-party claims asserted against the towing company. See e.g. Pennsylvania Railroad Co. v. The Beatrice, 275 F.2d 209, 214 (2d Cir. 1960). For many years, pilotage clauses have been universally employed.See e.g. United States v. GTS. ADM. WM. CALLAGHAN, 683 F.Supp. 687, 693 (S.D.N.Y. 1986) (stating that "[i]t is common knowledge in the shipping industry that the pilotage clause is now included in all tug service contracts in the Port of New York," and explaining that such clauses have been in universal use in New York harbor for well over fifty years).
In opposing Moran's motion, Stevens makes two arguments in support of its claim that, unlike Mormac, it is not bound by the pilotage clause set forth in Moran's invoices. First, Stevens claims that in securing the tugs and pilot services for Mormac, it was acting as an agent of the shipowner and was not itself party to the contract with Moran pursuant to which Moran secured Russell's services. Therefore, Stevens claims, as a non-party to that contract, it is not bound by the contract's pilotage clause. Second, Stevens argues that the pilotage clause, by its very terms, binds only the vessel, its owner and operator, and thus has no application to a party in Stevens' position. Stevens contends that it is supported in these arguments by the absence of case law upholding pilotage clauses against parties other than the vessel, or her owner or operator.
The undisputed facts of record relating to the pilotage clause are briefly recapped as follows. Stevens contracted with Mormac to make necessary repairs to the CAPE ARCHWAY, and to provide certain services necessary to complete the repairs. As part of the contract, Stevens undertook to provide the services of tugs and pilots when necessary to move the vessel, including during return from sea trials. (Dougherty Aff., Ex. 1 at 26.) In order to fulfill this duty, Stevens contacted Moran on May 13, 2001 to obtain the services of tugs and a docking pilot. Moran provided these services, and subsequently invoiced Stevens for the tug services. The invoice contained Moran's standard pilotage clause, stating that any pilot supplied by Moran would be the servant of the assisted vessel and its owners or operators, and that Moran would not be held liable for any actions of the pilot. (Reisert Aff., Ex. 6.) The same pilotage clause was present on all nine Moran invoices sent to and paid by Stevens for services arranged by Stevens and rendered to Mormac vessels at least since November 2000. (See Reisert Aff., Ex. 11.) Stevens routinely paid Moran the amount due under these invoices.
As explained supra, at n. 3, Stevens claims it had no such duty. However, the terms of the contract clearly impose on Stevens a duty to secure tugs and pilots.
With regard to Stevens' first argument, that it acted only as an agent of the vessel and was thus not bound by any contract with Moran, in light of the uncontested facts discussed above, no reasonable juror could find that Stevens was not, in fact, party to the contract pursuant to which Moran secured and provided Russell's services. Stevens, obligated by the terms of its repair contract with Mormac to arrange for tugs and pilotage services when necessary, called Moran, which provided the necessary tugs and pilot services. Moran subsequently billed Stevens by means of an invoice — identical to at least nine invoices sent to and paid by Stevens prior to the date of the accident — containing a pilotage clause explicitly stating that Moran was not in the business of providing pilotage services and was not liable for the negligence of any pilot it provided, as such pilot became exclusively the "servant of the vessel." Stevens does not deny that the pilotage clause was a provision of the towage contract. In fact, Stevens assumes that were the contract concluded exclusively between Mormac and Moran (with Stevens acting solely as agent for Mormac), the pilotage clauses would be effective against Mormac. Moreover, it is undisputed that Stevens was familiar with the customary use of pilotage clauses in towage contracts, having secured Moran's services on at least nine prior occasions and having received and paid invoices containing the identical exculpatory language each time. (Moran's Rule 56.1 Stmt. ¶ 20; Stevens' Resp. to Moran's Rule 56.1 Stmt. ¶ 16.) On this record, it cannot reasonably be concluded that Stevens was not party to the contract with Moran, which contained, as an explicit provision, the pilotage clause.
Stevens' second argument, that the terms of the pilotage clause plainly state that the clause applies only to the owner or operator of the vessel, also fails. Moran's pilotage clause states that any pilot furnished by Moran "becomes the borrowed servant of the [assisted] vessel," and "neither those furnishing the tugs or lending any such person, nor the tugs, their owners, agents, charterers, operators or managers shall be liable for any act or omission of any such person." (See e.g. Reisert Aff., Ex. 6.) There is no language in the pilotage clause purporting to limit its application to the owners or operators of the vessel. Nor does the case law Stevens references upholding the pilotage clause against the vessel and its owner or operator (Stevens' Mem. Opp. Moran's Mot. Summ. J. at 14), namely Sun Oil, 287 U.S. 291, and cases cited in Moran's opening memorandum (e.g. United States v. CALLAGHAN, 638 F.Supp. 687; Bisso v. Inland Waterways Corp., 349 U.S. 85 (1955)) advance Stevens' claim. In each of those cases, the sole issue before the court was whether the pilotage clause was in fact binding on the noted parties. No case cited by the parties or located by the court has addressed the situation presented here, where a party that admittedly arranged for the provision of pilot and towage services, as it was contractually obligated to do, seeks to avoid being bound by the pilotage clause that was part of the contract to which it was a party.
The record shows clearly that Stevens was a party to the towage contract with Moran, and that the pilotage clause contained in the contract does not limit its application to vessel owners and operators. Thus, Stevens' arguments fail, and Moran's motion for summary judgment dismissing Stevens' claim holding Moran liable for the acts of Russell is granted.
3. There Are Issues of Fact Concerning Whether Moran is Liable for the Actions of the Tug VIVIAN
Finally, Moran seeks to dismiss any future, amended claim by Stevens that Moran is liable for negligent conduct of the tug VIVIAN. Moran makes three arguments in support of this motion. First, Moran claims that, as a matter of law, the tug VIVIAN was not liable for the grounding of the CAPE ARCHWAY. Second, Moran claims that because the Tug VIVIAN, as well as her owner, Tug Vivian L Roehrig LLC, have been independently sued and have appeared and vigorously defended the allegations made against the tug, Moran should be dismissed from the action. Finally, Moran observes that Stevens made no claim in its third-party complaint that Moran should be held liable for the conduct of the tug VIVIAN, contending, presumably, that Stevens should not be permitted to amend to do so in the future. All three arguments fail.
First, there are genuine issues of material fact as to whether the tug VIVIAN bears liability, in full or in part, for the grounding of the CAPE ARCHWAY. Martin Kehoe, master of the tug VIVIAN, and Captain Montanez, master of the CAPE ARCHWAY, testified that the tug VIVIAN shifted her position only following the grounding of the vessel, either on Russell's order or because the tug was in a dangerous position too near the sunken pier. (Reisert Aff. ¶¶ 27-28.) In reliance on such testimony, Moran contends that the tug VIVIAN could not have been responsible for the grounding. Russell, however, testified not only that he did not give any order for the tug VIVIAN to change position (Russell Dep. at 137-38, Kehoe Dep. at 20), but also that her movement may have contributed to or caused the accident (Russell Dep. at 94, 119). John Gregory, one of Mormac's employees, similarly testified that the tug VIVIAN's repositioning may have caused or contributed to the incident. (Gregory Dep. at 119.) Because there is clearly a disputed issue of material fact — namely whether VIVIAN moved prior to or after the CAPE ARCHWAY hit the sunken pier, and thus whether she may be responsible for the accident — the court cannot say on summary judgment that the tug VIVIAN is not liable as a matter of law. Moran's motion for summary judgment on this basis is therefore denied.
Stevens' second argument, that Moran should be dismissed since the tug VIVIAN and her owner, Vivian L. Roehrig LLC, have been impleaded by Stevens, similarly fails. Moran effectively acknowledges that if the tug VIVIAN were, in fact, responsible, in whole or in part, for the grounding of the vessel, Moran could also be held liable for that negligence under the authority of Todd Shipyards Corp. v. Moran Towing Transportation Co., 247 F.2d 626 (2d Cir. 1957). (Moran's Mem. Supp. Summ. J., at 12) ("Nor will Moran attempt to distinguish cases such as [Todd], which would hold that in sub-contracting with Roehrig, Moran is potentially liable with Roehrig for any fault of Tug VIVIAN"). In Todd, the charterer of a scow contacted Moran, a towing company, and requested the services of a tug to move the scow. Moran, having no available tug of its own, undertook to locate one through an independent source, contacting Sound Harbor, Inc. ("SH"), another towing company, to dispatch a tug to Todd to move the scow. The SH tug was negligent in the performance of those services, resulting in damage to the vessel. After trial, the district court held Moran liable to Todd for the negligence of the SH tug, and the Second Circuit affirmed, holding the evidence sufficient to support the finding that Moran was not a mere broker or agent of Todd in procuring the tug, but rather "had contracted with Todd to perform this task," and that SH was therefore a subcontractor or agent of Moran such that Moran was liable for its negligent performance. Id. at 627. Moran concedes that a similar finding — that it is liable under the Todd analysis for the negligence of VIVIAN, the tug it subcontracted — is possible on the record before the court. The presence in this suit of parties that may bear primary liability for damages resulting from negligence — here, VIVIAN and its owner, provides no basis for the dismissal of a party that concededly may be jointly and severally liable for the same damages — here, Moran.
Finally, Moran observes that Stevens' pleadings fail to assert a claim that Moran bears liability for the acts of the tug VIVIAN. It is true that Stevens did not make such a claim in its third-party complaint. However, Rule 15(b) of the Federal Rules of Civil Procedure provides that courts should "freely" grant leave to amend the pleadings to conform to the evidence "absent undue delay, bad faith, dilatory tactics, undue prejudice to the party to be served with the proposed pleading, or futility." Quaratino v. Tiffany Co., 71 F.3d 58, 66 (2d Cir. 1995) (citing Foman v. Davis, 371 U.S. 178, 182); Fed.R.Civ.Pro. 15(b). Because Moran acknowledges that amendment would not be futile in this case since it potentially bears liability for the acts of the tug VIVIAN under the Todd analysis, and because there is no other reason to deny leave to amend, Moran is granted leave to amend its third-party complaint to assert a claim that Moran is liable for the acts of the tug VIVIAN.
4. Moran's Counterclaim
Lastly, Moran moves for summary judgment granting its counterclaim against Stevens in the amount of $7,100 — $5,000 for unpaid towage fees, plus interest in the amount of 1.5% per month. Stevens does not contest that it owes Moran $5,000 for outstanding invoices covering services rendered. (Moran's Rule 56.1 Stmt. ¶ 21; Stevens' Resp. to Moran's Rule 56.1 Stmt. ¶ 17.) Although, in its memorandum of law, Stevens contests that it agreed to payment of interest in that amount (Stevens' Mem. Opp. Moran's Mot. Summ. J. at 2), the record contains no evidence supporting the existence of a genuine dispute regarding an enforceable agreement on interest. As discussed above, no reasonable juror could conclude, on the record before the court, that Stevens is not bound by the towage contracts represented by each of the Moran invoices for services arranged by Stevens and rendered to Mormac vessels. Further, each contract plainly incorporates Moran's Schedule of Rates, Terms and Conditions, which explicitly provides that Moran is entitled to interest on past due balances at a rate of 1.5% per month. (Reisert Aff., Ex. 10). Accordingly, Moran is entitled to summary judgment against Stevens for both the $5,000 principle owed and interest thereon at a rate of 1.5% per month.
Notwithstanding this conclusion, because the record is unclear concerning the date from which interest should run, the court cannot now calculate the amount of interest owed.
CONCLUSION
For the reasons discussed above, the court grants the summary judgment motions of Russell and Moran, and denies Mormac's motion for partial summary judgment. Stevens is granted leave to amend its third party complaint against Moran to assert a claim that Moran is liable for damages caused by any negligence of the tug VIVIAN.SO ORDERED.