December 2, 2016

Tenth Circuit: Admiralty Law Allows Limitation of Liability in Personal Injury Cases

The Tenth Circuit Court of Appeals issued its opinion in In re Aramark Sports & Entertainment Services, LLC on Monday, August 1, 2016.

Three couples vacationing at Lake Powell rented a boat from an Aramark facility. High winds caused the boat to capsize, and two of the couples died. Anticipating a lawsuit, Aramark filed a petition in admiralty in Utah district court under the Limitation of Liability Act, 46 U.S.C. §§ 30501–12, which permits a boat owner to obtain a ruling exonerating it or limiting its liability based on the capacity or value of the boat and freight. The district court denied the petition and Aramark appealed.

After a brief discussion of admiralty law, the Tenth Circuit evaluated the relevant provisions of the Limitation of Liability Act. The Circuit remarked that there are three possible outcomes from a limitation petition: exoneration, limitation, or no limitation of liability. Exoneration applies where no negligence is shown. Where the claimant demonstrates negligence, the burden shifts to the owner to show lack of privity or knowledge, capping the damages at the value of the vessel or freight if the owner meets this burden. If the owner fails to show privity or knowledge, there is no limitation of liability.

In this case, Aramark filed its admiralty proceeding before any negligence claim had been brought. The estates and heirs of the two deceased couples filed answers and counterclaims for wrongful death. The third couple filed an answer and counterclaim seeking indemnification from Aramark in case it was held liable for the deaths of the other couples. At the bench trial, the district court found that Aramark’s negligence had “at least in part” caused the accident and that the negligence was within Aramark’s privity or knowledge. The court therefore denied Aramark’s petition for limitation.

The Tenth Circuit disagreed with the district court’s methodology. First, the Tenth Circuit determined that Aramark had no duty to determine the weather conditions prior to renting the boat, finding that the boat’s weather radio was sufficient to apprise the boaters of any changes in weather conditions. The Tenth Circuit therefore found that Aramark had no duty to stop renting out boats when the weather would potentially change throughout the day, because claimants had an independent duty of care. However, the Tenth Circuit found a duty of Aramark to warn potential renters of the boat’s limitations. Because the district court did not decide whether Aramark exercised care in warning renters of the boat’s limitations, the Tenth Circuit remanded.

The Tenth Circuit vacated the judgment of the district court and remanded for further proceedings.

Tenth Circuit: Nothing in Rivers and Harbors Act Allows Personal Action Against Boat Owner

The Tenth Circuit Court of Appeals issued its opinion in United States v. Jantran, Inc. on Thursday, April 9, 2015.

The Miss Dixie is a cargo ship owned by Jantran, Inc. that operates on the Verdigris River in Oklahoma. While carrying cargo, the Miss Dixie lost power and struck and damaged a lock owned by the Army Corps of Engineers. The United States commenced an in personam action against Jantran under § 408 of the Rivers and Harbors Act to recover the costs of the repair. The district court dismissed the Corps’ suit, finding § 408 does not allow in personam damages against a boat owner but rather only allows in rem actions against the vessel that caused the damage.

The Corps appealed, arguing that without an in personam right of action, the United States cannot be fully compensated for its losses, and as a matter of consistency § 408 must therefore contain an implied right to in personam relief. The Tenth Circuit analyzed maritime law, which provides that any party injured by a maritime vessel obtains an automatic lien on the vessel at the time of the accident. The party can then bring an in rem action and foreclose its lien if successful. This method of compensation developed because usually ships traveled far from home, a ship’s captain may be unable to financially compensate the injured party, and the responsible ship owner may be a foreign party unwilling to honor the judgment.

The Tenth Circuit also evaluated the Supreme Court opinion in Wyandotte Transportation Co. v. United States, finding that although Wyandotte allowed in personam actions against a boat owner for damages, the decision construed § 409. However, Wyandotte created a circuit split about whether § 408 also allows in personam actions. The Tenth Circuit agreed with the Sixth Circuit that § 408 does not allow in personam actions.

The Tenth Circuit affirmed the district court’s order dismissing the action because nothing in the Rivers and Harbors Act indicates a congressional intent to allow a cause of action against a boat owner.

Colorado Court of Appeals: Action Seeking to Enforce Contractual Agreements In Personam in Nature; Maritime Law Not Implicated

The Colorado Court of Appeals issued its opinion in BDG International, Inc. v. Bowers on Thursday, April 11, 2013.

Subject Matter Jurisdiction—Maritime Law—Finality of Judgment—Contract—Duress—Offsetting—Attorney Fees.

Defendants Robert J. Bowers and Auxiliary Graphic Equipment, Inc. (AGE) appealed the judgment entered after a bench trial in favor of plaintiff BDG International, Inc. (BDG). The judgment was affirmed.

AGE purchased printing presses from a seller in Australia for a client located in Colorado. AGE contracted with Fortner Graphic Solutions, Inc. (Fortner) to dismantle the printing presses and transport them to Colorado. Fortner then subcontracted with BDG and other firms to perform its contractual duties. BDG was responsible for transoceanic shipping, and another company was responsible for packing and inland transportation to the client’s site in Colorado. BDG brought this action after defendants failed to pay all costs for inland and ocean freight for the dismantling and shipping of the presses and failed to make payment as required by the agreements to release the resulting liens. The court entered a judgment in favor of BDG and against defendants, jointly and severally.

On appeal, defendants contended that the trial court lacked subject matter jurisdiction over this case, because it involved admiralty or maritime law and exclusive jurisdiction resided with the federal courts. Contrary to defendants’ arguments, however, this action is not in rem in nature; rather, it is a proceeding in personam, because it sought to enforce the contractual agreements against defendants personally and not against the cargo or another type of property of a maritime nature. Accordingly, jurisdiction in this case did not lie exclusively in the federal courts, and the trial court did not lack subject matter jurisdiction to hear this case.

Defendants also contended that the judgment was not final because it does not dispose of the litigation. The judgment entered by the trial court resolved BDG’s and the third-party claim; dismissed the counterclaim with prejudice; and awarded a sum certain for damages, collection costs, and prejudgment interest. Although the trial court provided directions with regard to how the proceeds of any sums recovered by Bowers or AGE should be applied to the judgments they obtained against Fortner in Colorado and Missouri, those directions do not alter the finality of the underlying judgment.

Defendants also contended that the trial court erred in not finding the contracts voidable on the basis of duress. Although defendants may have felt economic pressure to sign the releases to obtain possession of the cargo, the lienholders did not engage in wrongful conduct to coerce payment from defendants.

Defendants further contended that the trial court erred in failing to set off against one another the judgments in this case. Contrary to defendants’ contention, however, the principle of offsetting judgments does not apply, because the judgments are not against the same parties.

BDG collection costs primarily were attorney fees amounting to 40% of the principal due under the agreements signed by defendants. The Court of Appeals therefore ruled that the trial court did not err in awarding BDG collection costs.

Summary and full case available here.

Somali Piracy: Legal and Policy Challenges

Upcoming panel at the University of Denver Sturm College of Law takes a deeper look at maritime piracy across the world’s oceans.

On Wednesday, January 25, 2012, a group of U.S. Navy Seals rescued Jessica Buchanan, an American, and Poul Hagan Thisted, a Dane, from a group of Somali pirates who had been keeping the two aid workers hostage in a town near Adado, Somalia.  The two foreign aid workers had been working with a de-mining unit of the Danish Refugee Council in the semi-autonomous region of Galmudug when armed Somali pirates kidnapped the two in October 2011.  See Washington Post, HuffPost World, New York Times.

While such an act might be considered quite heroic, and also garnered much popular support, it is not an effective long-term solution to the problem of widespread acts of piracy and organized crime in this region and other parts of the world according to Jon Huggins, the director of the Oceans Beyond Piracy Project at One Earth Future, a Longmont, Colorado-based NGO.  Mr. Huggins states in his post for CNN.com:

To break this cycle of crime, the international community must step up its commitment to investing in Somali stability and addressing the symptoms of the nation’s governance vacuum.

A recent report by the Center for American Progress estimated that $9 billion in humanitarian and development aid went into Somalia over the past 20 years. This is a stark contrast to the billions that piracy costs the world each year. A forthcoming One Earth Future report finds that $7 billion was spent on measures to address Somali piracy alone in 2011.

If the international community does not shift toward building sustainable Somali law enforcement capabilities at sea and ashore, the only realistic options to resolve hostage situations will continue to be through military action or ransom payments.

So, what would a sustainable solution to maritime piracy look like? This and other legal and policy challenges of maritime piracy are scheduled to be addressed in an upcoming expert panel co-hosted by The Ved Nanda Center for International and Comparative Law at the University of Denver Sturm College of Law and Mr. Huggins’ group Oceans Beyond Piracy—an NGO which seeks to develop a global response to maritime piracy that deals comprehensively with deterrence, suppression, and prosecution of piracy while building the foundation for a longer term solution.

The panel Somali Piracy: Legal and Policy Challenges will feature five maritime law and policy experts who will discuss international responses to Somali piracy, as well as the legal and policy challenges surrounding this issue.  The Panel will also discuss efforts to develop a comprehensive approach that shifts on-going efforts from addressing symptoms at sea to encouraging stabilization ashore.  Panelists include Ms. Donna Hopkins, Coordinator for Counter Piracy and Maritime Security at the U.S. State Department; Sir James Burnell-Nugent KCB, CBE, ADC, former Commander-in-Chief and Second Sea Lord of the Royal Navy and current advisor to the Oil companies International Marine Fund; and Dr. Swadesh Rana, former Chief of the United Nations Conventional Arms Branch in the Department of Disarmament Affairs, current Oceans Beyond Piracy India Program Adviser and Focal Point for South Asia, and Commander Kimberlie Young, Legal Advisor to NATO’s Allied Command Transformation.

Date and Time of the Event:      

Wednesday, March 7, 2012.  Evening begins at 5:00 pm with a light reception, and the program begins at 6:00 pm.

Location: 

University of Denver Sturm College of Law

Ricketson Law Building, First Floor

2255 E. Evans Avenue

Denver, CO 80208

RSVP:

The event is free and open to the public.  However, please RSVP to: kshorb@law.du.edu  or (303) 871-6655.

For more coverage and discussion of Maritime piracy, please visit the Ved Nanda Center blog, TheViewFromAbove: International Law at 5,280 Feet.