In Re: Ctrl Gulf Lin ( 2003 )

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 01-31028
In Re: In the Matter of the Complaint of:
CENTRAL GULF LINES, INC., Owner; WATERMAN STEAMSHIP CORPORATION,
Owner Pro Hac Vice, Operator, and Bareboat Charterer of the Lash
Barge CG-F70, Praying for Exoneration from and/or Limitation of
Liability,
CENTRAL GULF LINES, INC., Etc.; ET AL.,
Petitioners,
CENTRAL GULF LINES, INC., Owner; WATERMAN STEAMSHIP CORPORATION,
Owner Pro Hac Vice, Operator,
Petitioners-Third Party Defendants-Appellees-Cross-Appellants,
versus
R. L. BARON SHIPPING S.A.; ET AL.,
Third Party Defendants,
R. L. BARON SHIPPING S.A.,
Third Party Defendant-Claimant-Appellant-Cross-Appellee,
and
MASAHIRO TOYODA; HAJIME ONO; TOSHIAKI TAKEUCHI; DOOYANG LINE
COMPANY LIMITED; DOOYANG SHIP MANAGEMENT COMPANY LIMITED; UNITED
KINGDOM MUTUAL PROTECTION AND INDEMNITY ASSURANCE ASSOCIATION
(BERMUDA) LTD.,
Third Party Defendants-Cross-Appellees,
and
SUN ALLIANCE AND LONDON INSURANCE PLC,
Movant-Cross-Appellee-Appellant,
and
BOTO COMPANY LIMITED,
Claimant-Cross-Appellee-Appellant,
and
ROYAL & SUN ALLIANCE INSURANCE (HONG KONG) LIMITED,
Claimant-Cross-Appellees,
versus
MINGTAI FIRE & MARINE INSURANCE COMPANY; CHIN LING STEEL COMPANY,
Claimants-Appellants.
R. L. BARON SHIPPING S.A.,
Plaintiff-Appellant-Cross-Appellee,
versus
WATERMAN STEAMSHIP CORPORATION,
as the time charterer of the Tug KAMRUP,
Defendant-Third Party Plaintiff-Appellee-Cross-Appellant,
versus
DOOYANG LINE COMPANY LIMITED; DOOYANG SHIP MANAGEMENT COMPANY
LIMITED; UNITED KINGDOM MUTUAL STEAMSHIP ASSURANCE
ASSOCIATION (BERMUDA) LIMITED,
Third Party Defendants-Cross-Appellees.
Appeals from the United States District Court
for the Eastern District of Louisiana
(97-CV-3829-E and 99-CV-1888-E)
March 3, 2003
2
Before SMITH, BARKSDALE, and EMILIO M. GARZA, Circuit Judges.
PER CURIAM:*
These matters arise out of a collision in India between a
barge and an ocean-going vessel. For the underlying Rule 54(b)
judgment, primarily at issue is whether the district court erred in
granting summary judgment to Central Gulf Lines, Inc. (CGL; barge
owner), and Waterman Steamship Corporation (Waterman; barge
bareboat charterer). Also at issue, concerning R. L. Baron
Shipping (Baron; vessel owner), are: (1) choice of law; and (2)
standing to appeal. We hold: Baron has standing; United States
law applies, with reference to Indian law for issues of
navigational error; and summary judgment was proper. AFFIRMED and
REMANDED.
I.
The collision occurred in June 1997, near Calcutta, India, on
the Hooghly River (tributary of the Ganges River). It involved the
M/V GREEN OPAL, an ocean-going vessel, and a dumb, unmanned LASH
Barge, CG-F70 (“LASH” is an acronym for “Lighter Aboard Ship”),
towed by the tug KAMRUP. As noted, Baron owned the GREEN OPAL; CGL
owned the barge; and Waterman bareboat chartered it.
Waterman operates a LASH shipping system, which involves
loading LASH barges, containing cargo, directly onto a mother
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
3
vessel. That vessel transports the barges to a deep water port,
where the barges are unloaded and towed to inland ports not
accessible to the mother vessel. The mother vessel takes on new
barges, again loaded with cargo, and proceeds to a new port. See
Wirth, Ltd. v. S/S Acadia Forest, 537 F.2d 1272, 1274 (5th Cir.
1976) (providing more detailed description).
Like most international shipping companies, Waterman hires
local agents at various ports to conduct its business. Waterman’s
general regional agent for Southeast Asia is Marco Shipping Company
(Marco); its local agent in India is Oceanic Shipping Agency Pvt.
Ltd. (Oceanic). Through its agents, Waterman negotiated, at arms-
length, with Eastern Navigation Private Limited (Eastern) in March
1974 to provide towage of its LASH barges (1974 Contract). The
1974 Contract was effective in June 1997, when the collision
occurred. The pertinent provisions follow:
WHEREAS the said Principal [Waterman]
carries on business in Calcutta through its
Agents [Oceanic, in 1997] ... AND WHEREAS ...
Waterman ... intends to operate their Lash
vessels (hereinafter called the “Mother Ship”)
to Calcutta Port which vessels due to their
size and draught will normally anchor in the
vicinity of Haldia,
AND WHEREAS [Waterman] has approached the
said Contractor [Eastern] for undertaking the
towage work of the Lash barges ...,
AND WHEREAS [Eastern] has agreed to
undertake the said work on the following terms
and conditions:
4
NOW IT IS HEREBY AGREED AND DECLARED as
follows:
1. For the purpose of carrying out the
aforementioned towing operation [Eastern]
shall purchase and/or procure suitable tugs as
may be approved by the Agents in writing for
the various stages of the operation. The
entire operation is required to be performed
with the help of three tugs – of which one tug
should be a very powerful one of a capacity of
minimum 1500 h.p., another of a capacity of
500 to 700 h.p. or more and a third one may be
a small launch mainly for moving the said Lash
barges from one place to another inside the
docks. It is understood that all those tugs
will be under the sole approval of the Agents
as aforesaid.
* * *
3. [Eastern] will not be entitled to use the
said tugs and equipments for Lash vessels of
any company other than those belonging to or
chartered by [Waterman]. Those tugs are meant
to be operated within the area of Calcutta
Port i.e. between sandheads and Calcutta.
However, when free from Lash operations
[Eastern] may with the prior permission in
writing of the Agents, do some other work in
Calcutta Port.
4. Ordinarily, but not exclusively, barge
operation will mean and include the following
under direction of the Agents:
a) Receiving the Lash barges at the water
level from Mother Ship as and when they
are lowered.
b) Safe handling and controlling of Lash
Barges as soon as they are floated on the
water.
c) To tow the Lash barges to a floating
area or areas in or around Haldia or to
any other place as may be found suitable.
5
d) To tow from the said floating area in
Haldia, loaded or empty lash barges, to
floating areas inside the Calcutta Docks
as may be directed by the said Agents.
e) To move the Lash barges from one place
to another inside the Calcutta Docks, as
may be required, for the loading and/or
unloading purposes to and from the
floating area as mentioned in Clause (d)
above.
f) Likewise to tow the Lash barges from
the floating area in Calcutta Docks to
the floating area in Haldia and from
there to tow the Lash barges to the side
of the Mother Ship for loading them on to
the Mother Ship as and when required,
strictly under the schedule chalked out
by the Agents.
* * *
10. The Contractor [Eastern] shall ensure
safe towing and handling of the barges in tow.
(Emphasis added.)
As renewed in February 1985, the contract (Renewal Contract)
provides specific provisions relating to the HOLLAND, the 1500
horsepower tug required by the 1974 Contract and referenced in its
paragraph 1:
It was clearly understood that Holland will be
kept in perfect working condition all the time
for the use of Waterman work only and, if at
all, it is held up for repairs and/or for any
other reasons (which must be discussed with
us) Eastern will make alternate suitable
arrangements for towage operation in place of
Holland at their own cost.
Over and above Holland or tug/tugs replacing
Holland as stated above, in the event a second
tug is required, Eastern will ensure that such
6
service is so provided for which they will be
paid for extra. For this purpose, it is
clarified that a suitable good tug capable of
operation and towage will be made available
whenever required.
(Emphasis added.)
At the time of the June 1997 collision, and because the
HOLLAND was being repaired, Eastern bareboat chartered the KAMRUP
to perform Waterman’s LASH towage. Oceanic knew of these
circumstances. Waterman and Marco had no knowledge of any serious
collisions occurring before that June and were satisfied with
Eastern’s work.
In June 1997, the mother vessel, GREEN ISLAND, carried LASH
barge CG-F70 and others to Haldia, India. Before arriving in
Haldia, the GREEN ISLAND contacted Marco and Oceanic. Oceanic
alerted Eastern of the new arrival.
In the morning of 16 June 1997, the LASH barges, including CG-
F70, were placed in the water and taken into Eastern’s possession.
The LASH barge discharge was completed in the early afternoon on 17
June, and the GREEN ISLAND departed. The KAMRUP’s tugmaster waited
one and one-half days for appropriate tidal conditions and decided
how many barges to tow. (Haldia is approximately 80 miles from
Calcutta.)
The KAMRUP towed five loaded barges, as it had often done.
For this tow, the KAMRUP pushed the barges upriver with the tug
7
attached to the port side of the last barge (“on-the-hip”). CG-F70
was the lead barge.
Although there is some dispute as to the exact events, in the
morning of 19 June, the KAMRUP rounded a river bend outside the
navigable channel of the Hooghly River. The GREEN OPAL had been
proceeding down river, full ahead, for an hour before the
collision. Visibility was clear. The GREEN OPAL cut to half; and,
30 seconds later, the lead barge, CG-F70, and the GREEN OPAL
collided. The GREEN OPAL sank in the navigable channel. The
Indian Government ordered wreck removal. Baron’s sole capital was
the GREEN OPAL; because of its loss, Baron was dissolved
approximately one year later.
Baron, its directors, and the United Kingdom Mutual Steamship
Assurance Association (Bermuda) Ltd. (GREEN OPAL’s insurer and
subrogated underwriter of its cargo) seek damages for the lost
ship, its cargo, and the wreck removal. Chin Ling Steel Company;
its insurer, Mingtai Fire & Marine Insurance Company; Boto Company
Limited; and its insurer, Sun Alliance and London Insurance Plc
(collectively, Cargo Claimants) seek damages for cargo that sank
with the GREEN OPAL. Waterman and CGL seek exoneration or
limitation of liability. And, Baron filed an action against
Waterman as the time charterer of the barge, contending that, as a
time charterer, limitation does not apply.
On 25 June 2001, through an extremely detailed and
comprehensive opinion, the district court granted summary judgment
8
to Waterman and CGL for both the limitation and time charterer
actions. It held Indian law applied to issues of navigational
error and United States law applied to all other issues; reiterated
CGL was awarded summary judgment because its motion was unopposed;
held that, even if Eastern or the KAMRUP were negligent, this could
not be imputed to Waterman; held Waterman was not independently
negligent; and, finally, held the 1974 and Renewal Contracts were
towage contracts, not time charters, and limitation law applied.
That July, the district court issued an order dismissing as
moot various motions, including Waterman’s motion to dismiss for
Baron’s failure to comply with discovery orders and vexatious
litigation tactics. The district court, pursuant to Rule 54(b),
directed entry of a final judgment of the 25 June order (with two
amendments).
II.
Baron appeals from that judgment. (Waterman and CGL contend
we lack jurisdiction because Baron, as a dissolved corporation,
lacks legal capacity to sue.) Waterman cross-appeals the denial,
as moot, of its motion to dismiss concerning claimed vexatious
litigation and discovery.
As hereinafter discussed: (1) Baron has legal capacity to
appeal because it filed this action within the time limit, provided
by Panamanian corporate law, for dissolved corporations to conclude
their affairs; (2) United States law, with reference to Indian law
regarding navigational error, is applicable; (3) summary judgment
9
for CGL and Waterman was proper; (4) Baron abandoned, through
inadequate briefing, its challenge to cost allocation; and (5) we
lack jurisdiction to review the denial, as moot, of Waterman’s
motion to dismiss concerning claimed vexatious litigation and
discovery.
A.
Waterman and CGL contend this controversy is moot because
Baron lacks legal capacity to sue. Needless to say, Article III of
the Constitution permits federal courts to adjudicate only actual
cases or controversies. E.g., Lewis v. Cont’l Bank Corp., 494 U.S.
472, 476 (1990). “A controversy becomes moot where, as a result of
intervening circumstances, there are no longer adverse parties with
sufficient legal interests to maintain the litigation. Mootness
can arise in one of two ways: First, a controversy can become moot
when the issues presented are no longer live. A controversy can
also become moot when the parties lack a legally cognizable
interest in the outcome.” Chevron U.S.A. Inc. v. Traillour Oil
Co., 987 F.2d 1138, 1153 (5th Cir. 1993) (internal quotations and
citations omitted).
A corporation’s dissolution abates all pending litigation,
absent a contrary provision under the law where that corporation
was formed. Oklahoma Natural Gas Co. v. State of Oklahoma, 273
U.S. 257, 260 (1927). Federal Rule of Civil Procedure 17(b)
incorporates this concept: “The capacity of a corporation to sue
10
or be sued shall be determined by the law under which it was
organized”. Because Baron was incorporated in Panama, we look to
Panamanian corporate law to determine Baron’s legal capacity to
sue.
Panamanian law provides a three-year period post-dissolution
for a corporation to conclude its affairs. PANAMANIAN LAW OF
CORPORATIONS, Art. 85 (Law No. 32, 26 February 1927). Baron
dissolved on 22 June 1998. Therefore, that three-year period ended
on 22 June 2001. Waterman and CGL contend Baron lacks capacity to
appeal because that three-year period has run. Baron counters:
Panamanian law only requires an action to be initiated within the
three-year period; thereafter, a dissolved corporation maintains
legal capacity to complete the action.
Articles 85 and 86 of the Panamanian Law of Corporation are
relevant. Article 85 provides:
A corporation the existence of which
terminates by the expiration of the period
fixed in the Articles of Incorporation or by
dissolution is, nevertheless, continued body
corporate for a term of three years
thereafter, for the express purpose of
maintaining special proceedings which may be
deemed convenient; of defending its interest
as defendants, settling and closing its
affairs, disposing and conveying its
properties and dividing its capital stock; but
under no circumstances shall the corporation
continue the business for which its was
established.
(Emphasis added.) In Spanish, Article 85 reads:
Toda sociedad anónima cuya existencia termina
por vencimiento del período fijado en el pacto
11
social o por disolución, continuará no
obstante por el término de tres años desde esa
fecha para los fines específicos de iniciar
los procedimientos especiales que consideren
convenientes defender sus intereses como
demandada, arreglar sus asuntos, traspasar y
enajenar sus bienes, y dividir su capital
social, pero en ningún caso podrá continuar
los negocios para los cuales fue constituida.
(Emphasis added.)
The parties submitted differing translations of this article.
CGL and Waterman’s translation, quoted above, reads: “for the
express purpose of maintaining special proceedings which may be
deemed convenient; of defending its interest as defendants ....”
Baron’s translation reads: “for the specific purpose of
prosecuting or defending suits by or against it ....” (Emphasis
added.) We have adopted the CGL/Waterman translation because it
better tracks the original Spanish. See also Tryforos v. Icarian
Dev. Co. S.A., 47 F.R.D. 191, 193 (N.D. Ill. 1969) (translating
Article 85 as CGL/Waterman does), modified on other grounds in
Tryforos v. Icarian Dev. Co. S.A., 518 F.2d 1258 (7th Cir. 1975),
overruled on other grounds in Felzen v. Andreas, 134 F.3d 873 (7th
Cir. 1998).
Article 86 states:
Whenever the existence of a corporation shall
terminate by the expiration of its duration
period, or by dissolution, the Directors shall
serve as Trustee of the corporation with power
to settle its affairs, collect all sums or
owing [sic], sell and transfer all class of
its properties, divide its properties among
shareholders, when the debts of the
12
corporation have been satisfied and they shall
also have the authority to sue for, in the
name of the corporation, and recover debts and
assets and to represent the corporation in
proceedings against it which may be
maintained.
(Emphasis added.) In Spanish, Article 86 reads:
Cuando la existencia de una sociedad anónima
termine por vencimiento del período de su
duración, o por disolución, los directores
actuarán como fiduciarios de la sociedad con
facultades para arreglar sus asuntos, cobrar
sus créditos, vender y traspasar sus bienes de
todas clases, dividir sus bienes entre sus
accionistas, una vez pagadas las deudas de la
sociedad; y además tendrán facultad para
iniciar procedimientos judiciales en nombre de
la sociedad con respecto a sus créditos y
bienes, y para representarla en los
procedimientos que se inicien contra ella.
(Emphasis added.)
As earlier discussed, Article 85 only authorizes “defending [a
corporation’s] interest as defendants”. (Emphasis added.)
Nonetheless, Article 86 provides that the directors, as trustees
post-dissolution, may sue in the corporation’s name. See also
Tryforos, 47 F.R.D. at 194 (recognizing Article 86 authorizes
action in the name of corporation, but also allows trustees to sue
in own name). Baron’s legal expert confirms this reading: “Among
the acts of liquidation, the company is entitled to commence legal
actions to collect moneys owed to the company arising out of ...
tortious acts commited [sic] against the company or it’s [sic]
property”. (Emphasis added.) See also A. Halcoussis & Co. v.
Coastal States Gas Corp., No. 82 Civ. 4963-CSH, 1985 U.S. Dist.
13
Lexis 14417 at *6 (S.D.N.Y. 29 October 1985) (considering Articles
85 and 86 and citing expert testimony that Panamanian corporation
“can sue and be sued” during the three-year period). We hold,
therefore, that, post-dissolution, Baron can bring, as well as
defend, an action.
Nevertheless, Article 85 authorizes continued legal action for
only three years after dissolution. Although more than three years
have passed, we hold that Baron has legal capacity to appeal
because it initiated this action within the three-year period.
First, the uncontroverted testimony of Baron’s Panamanian
legal expert supports our conclusion:
Whatever actions the company takes, as part of
the liquidation process, should be commenced
within a period of three years from the date
of it’s [sic] dissolution. ... Eventhough
[sic] a litigation process, to which the
dissolved company is a party, may last more
than three years, the statute only requires
that the judicial proceeding in question be
initiated within said period ....
(Emphasis added.)
Second, the Panamanian Corporation Code is based on Delaware
law. Features of Panama Corporations, at
http://www.geocities.com/WallStreet/4245/sa.htm; Panama
International Business Corporations, at
http://www.offshorexplorer.com/panama.htm; Panama Offshore Company
Incorporations, at http://www.milonline.com/mil-panama1.html.
Under Delaware law, litigation pending during the three-year period
14
can be continued after that period ends, but no new actions can be
initiated. In re Citidel Indus., Inc., 423 A.2d 500, 503 (Del. Ch.
1980) (“[E]xcept with regard to pending proceedings or litigation,
three years from the date of dissolution established the outside
limit after which the corporation could no longer act or be sued in
a corporate capacity”. (emphasis added)). Finally, this reading
comports with interpretations of similar statutes. E.g., Chicago
Title & Trust Co. v. Forty-One Thirty-Six Wilcox Bldg. Corp., 302
U.S. 120, 128 (1937) (under Illinois statute, no new proceedings
may be initiated, but pending proceedings initiated within
statutory dissolution period may be litigated to completion).
B.
Baron and the Cargo Claimants maintain Indian law applies to
substantive issues; Waterman and CGL, United States law. The
district court held the latter applies, with reference to the
Indian Rules of Inland Navigation to determine navigational errors.
A choice of law determination is reviewed de novo. Fogleman v.
ARAMCO, 920 F.2d 278, 282 (5th Cir. 1991).
Waterman and CGL contend that, as a matter of law, limitation
proceedings apply both procedural and substantive United States
law. We disagree.
While United States law governs the procedural
issues of the limitation proceeding, this
Court must decide what substantive law applies
to the underlying cause of action. The fact
that United States law determines limitation
does not automatically mean that United States
15
law should supply the substantive law for the
underlying claim.
Karim v. Finch Shipping Co. Ltd., 94 F. Supp. 2d 727, 735 (E.D. La.
2000) [Karim I], aff’d, 265 F.3d 258 (5th Cir. 2001) [Karim II].
See Oceanic Steam Navigation Co. Ltd. v. Mellor, 233 U.S. 718, 732
(1914) [The Titantic] (applying British substantive law to United
States limitation of liability action).
We determine what substantive law applies by evaluating the
eight factors set forth in Lauritzen v. Larsen, 345 U.S. 571(1953), and Hellenic Lines Ltd. v. Rhoditis, 398 U.S. 306 (1970):
(1) place of the wrongful act; (2) law of the flag; (3) allegiance
or domicile of the injured; (4) allegiance of the defendant
shipowner; (5) place of contract; (6) inaccessibility of the
foreign forum; (7) law of the forum; and (8) base of operations.
Although these factors were first enunciated in a Jones Act
context, they are applicable to maritime law generally. Romero v.
Int’l Terminal Operating Co., 358 U.S. 354, 382 (1959).
“These principles do not depend upon a mechanical application
.... The controlling considerations are the interacting interests
of the United States and of foreign countries ....” Id. at 383.
Courts have weighed the factors differently in different contexts.
E.g., Fogleman, 920 F.2d at 282 (“[T]he significance of each factor
in a nontraditional maritime context like offshore oil production
may vary from that in the traditional shipping context in which the
16
Lauritzen-Rhoditis test arose”.); Carbotrade S.p.A. v. Bureau
Veritas, 99 F.3d 86, 91 (2nd Cir. 1996) (noting several factors did
not apply because of the unique circumstances of that case).
Here, the eight factors, by themselves, point to numerous
possible choices of law. The place of the wrongful act is India.
The law of the flag yields three options: CG-F70 is United States;
GREEN OPAL, Panama; and KAMRUP, India. The allegiance of the
injured includes: Baron, a Panamanian corporation, with directors
from Japan, Korea, and China; the primary underwriter, a United
Kingdom corporation; and Cargo Claimants of Bermuda, Japan, Hong
Kong, and Norway. The allegiance of the defendants, CGL and
Waterman, is the United States.
Baron and Cargo Claimants assert Waterman was negligent
because of a contract executed in India. Further, Baron and Cargo
Claimants assert Indian law should be applied and Indian courts are
accessible. The law of the forum in which Baron and Cargo
Claimants instigated this action, as hereinafter discussed, is
United States.
Finally, the base of operations determination requires
consideration of both the ship’s and the shipowner’s contacts.
Rhoditis, 398 U.S. at 311. Courts have considered: the location
of corporate headquarters; the ownership interest in the
corporation; where the ship is regularly loaded; where the
management of operations occurs; where maintenance of the vessel is
17
performed; and where shipping agents are located. See, e.g., Sosa
v. M/V LAGO IZABAL, 736 F.2d 1028, 1032 (5th Cir. 1984).
Waterman’s home offices are in New Orleans, Louisiana,
although it has agents in Singapore and India. The CG-F70 was
registered by the American Bureau of Shipping from 24 August 1995
until 1 August 2000. It was loaded (grain for CARE) in Memphis,
Tennessee, and inspected by USDA representatives before its trip to
India. After the collision, the CG-F70 was repaired in the United
States. These facts indicate a United States base of operations.
We must now weigh these factors. The most significant factors
are: the place of the wrongful act; the allegiance of defendants;
the allegiance of the injured; the accessibility of the Indian
courts; and the law of the forum. We assign little weight to the
place of contract, because Baron and Cargo Claimants are not in
privity with Waterman or Eastern. E.g., Lauritzen, 345 U.S. at
588; Carbotrade, 99 F.3d at 90.
The place of the wrongful act is usually given little weight
for shipboard torts; a ship, by nature, passes through many
jurisdictions, and a territorial determination of law creates
little regularity. Lauritzen, 345 U.S. at 585. Therefore, “[t]he
law of the flag has traditionally been of cardinal importance in
determining the law applicable to maritime cases”. Fogleman v.
ARAMCO, 920 F.2d 278, 282 (5th Cir. 1991).
18
Here, however, we are concerned with a collision between two
ships, not a personal injury accident aboard ship. Obviously,
India has a strong interest in ensuring the safety of its
waterways; application of Indian navigation regulations, where
relevant, is enough to protect India’s interests in this dispute.
Other factors weigh in favor of applying United States law to the
other substantive issues.
In most cases, the law of the forum and accessibility of other
forums are not significant because it is the defendant, who is
involuntarily before United States courts, asserting application of
foreign law. Lauritzen, 345 U.S. at 591-92 (“Because a law of the
forum is applied to plaintiffs who voluntarily submit themselves to
it is no argument for imposing the law of the forum upon those who
do not.”). See, e.g., Rhoditis, 398 U.S. 306; Romero, 358 U.S.
354; Lauritzen, 345 U.S. 571; Karim II, 265 F.3d 258. Here,
however, the usual situation is reversed: Baron, and other
plaintiffs, seek to apply foreign law; defendants, United States
domicilaries, are asserting application of United States law.
Baron initiated an action against CGL on 26 June 1997, one
week after the collision. On 4 December, Baron attempted to
voluntarily dismiss the action and refile in Louisiana courts. CGL
opposed the dismissal and, with Waterman, filed, on 10 December, a
limitation action. The district court granted the voluntary
dismissal of Baron’s action. In June 1999, Baron filed a separate
19
action claiming the 1974 and Renewal Contracts were time charters
and, therefore, limitation law did not apply.
In short, this is not a case where the law of the forum is
being “imposed on defendants who are involuntarily made party to a
suit in the forum”. Merren v. A/S BORGESTAD, 519 F.2d 82, 83
(1975). See also Karim I, 94 F. Supp. 2d at 736 (rejecting
application of United States law where the United States is
fortuitously host forum – injured plaintiff merely treated in
United States). Here, the defendants, Waterman and CGL, are
arguing for the application of United States law, and the
plaintiffs, Baron and Cargo Claimants, voluntarily submitted
themselves to United States courts. The Indian courts were
accessible to them, and they chose not to institute an action
there, even though Eastern operates in India. Moreover, although
not all are United States domicilaries, none of the Baron interests
are Indian domicilaries. E.g., Karim I, 94 F. Supp. 2d at 735-36(applying Bangladeshi law where plaintiff is Bangladeshi).
Baron and Cargo Claimants, who chose to sue a United States
corporation in the United States and accept United States
limitation law, cannot now receive Indian substantive law. The
United States has a strong interest in preventing such manipulation
of our choice-of-law jurisprudence. Therefore, United States law
applies to all issues but navigational error. See, e.g., Rhoditis,
398 U.S. at 309-10 (finding base of operations another factor and
20
preventing avoidance of application of United States law where
foreign corporation only a facade for United States operations).
C.
Summary judgment was awarded CGL and Waterman for the
limitation action and for Waterman for the time charterer action.
CGL was granted summary judgment because its motion was unopposed.
And, as discussed supra, the district court held: even if Eastern
were negligent in using the KAMRUP to tow Waterman’s LASH barges,
Waterman was not liable because it was not independently negligent;
and the agreement between Waterman and Eastern was a towage
contract, not a time charter, and therefore limitation law applies.
A summary judgment, reviewed de novo, is proper if there is no
genuine issue of material fact and the movant is entitled to a
judgment as a matter of law. E.g., GATX Aircraft Corp. v. M/V
COURTNEY LEIGH, 768 F.2d 711, 714 (5th Cir. 1985); FED. R. CIV. P.
56(c). The record, as well as inferences based on it, are viewed
in the light most favorable to the non-movant. E.g., GATX Aircraft
Corp., 768 F.2d at 714.
1.
For the limitation action, Baron and Cargo Claimants contend
the district court erred in exonerating Waterman. First, they
assert Waterman can be held liable for negligently employing
Eastern’s tug, the KAMRUP. Second, they maintain Waterman allowed
21
the claimed dangerous operation of the KAMRUP by failing to ensure
the 1974 and Renewal Contracts' terms were followed.
The Limitation of Liability Act provides shipowners a means to
limit liability to the value of their vessel:
The liability of the owner of any vessel ...
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. app. § 183(a).
The shipowner is entitled to exoneration from, or limitation
of, liability when he shows his lack of knowledge or privity with
the negligent acts or conditions of unseaworthiness that caused the
collision. See Brister v. A.W.I. Inc., 946 F.2d 350, 355 (5th Cir.
1991). A shipowner free from fault will be exonerated. Tittle v.
Aldacosta, 544 F.2d 752, 755 (5th Cir. 1977).
Waterman, as bareboat charterer of the LASH barge CG-F70, is
the owner of the tow; however, Waterman is not the owner of the
tug, KAMRUP. It is well-settled that a tow is not liable for the
acts of the tug:
When damage is caused by a casualty involving
the tow or by the whole flotilla, the courts
employ the concept of “dominant mind” to place
liability on the tug and to absolve the tow
from liability. This doctrine holds that only
that vessel is liable whose people are
actually in control of the operation, even
though the whole flotilla causes the damage.
22
T. Schoenbaum, ADMIRALITY AND MARITIME LAW § 12-7, at 258 (West 3d ed.
2001) (internal citations omitted). Therefore, Baron and Cargo
Claimants must show Waterman is negligent, independent of possible
negligence by Eastern or KAMRUP. They fail to do so.
The record is devoid of evidence suggesting Waterman was
negligent for employing Eastern to tow its barges. In its eight-
years' experience, Oceanic (Waterman’s Agent) knew of no problems
with Eastern’s towing practices. Likewise, in its 26-years'
experience, Waterman had no notice of any problems. To the
contrary, the KAMRUP towed barges as it did on the day of the
collision many times in the past without incident. There is no
evidence Waterman or Oceanic (its Agent) instructed Eastern on the
makeup or movement of the tug and tow. Likewise, Oceanic or
Waterman employees were not present on the tug during the tow
giving rise to this action. See, e.g., Dow Chemical Co. v. Tug
THOMAS ALLEN, 349 F. Supp. 1354 (E.D. La. 1972) (holding owners of
tow liable for accident where employee of tow owner was on board
tug and required tug to navigate dangerous waters).
Further, Baron and the Cargo Claimants fail to show that,
under the 1974 or Renewal Contracts, Waterman had a duty to monitor
Eastern’s operations. Primarily, Baron and the Cargo Claimants
rely on two passages. First, they rely on the following from the
1974 Contract:
For the purpose of carrying out the
aforementioned towing operations the
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Contractor [Eastern] shall purchase and/or
procure suitable tugs as may be approved by
the Agents [of Waterman] in writing for the
various stages of the operation. The entire
operation is required to be performed with the
help of three tugs – of which one tug should
be a very powerful one of a capacity of
minimum 1500 h.p., another of a capacity of
500 to 700 h.p. or more and a third one may be
a small launch mainly for moving the said Lash
barges from one place to another inside the
docks. It is understood that all those tugs
will be under the sole approval of the Agents
as aforesaid.
(Emphasis added). Second, the Renewal Contract specifically
addresses the HOLLAND (1500 h.p.; being repaired at time of
collision):
It was clearly understood that Holland will be
kept in perfect working condition all the time
for use of Waterman work only and, if at all,
it is held up for repairs and/or for any other
reasons (which must be discussed with us)
Eastern will make alternative suitable
arrangements for towage operation in place of
Holland at their own cost.
Over and above Holland or tug/tugs replacing
Holland as stated above, in the event a second
tug is required, Eastern will ensure that such
service is so provided for which they will be
paid for extra.
(Emphasis added.)
These clauses establish no right on the part of Waterman or
its Agents to generally control Eastern’s operations. The 1974
Contract clause only provides Oceanic (Waterman's local Agent) with
a right to approve the purchase or other procurement of suitable
tugs. It says nothing about approval of the use of the tugs. The
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Renewal Contract clause does not require Eastern to use an
alternative 1500 horsepower tug in the event the HOLLAND is being
repaired. It only requires Eastern to make “alternative suitable
arrangements” and establishes who bears the costs when “tug/tugs”
are used to replace the HOLLAND.
The Waterman corporate representative stated by deposition:
“The actual employment of those tugs is left to the contractor
[Eastern]. Waterman is concerned about the delivery of its cargo,
not the details of what equipment is used by the towage contractor
[Eastern].” Along this line, Baron and the Cargo Claimants ignore
paragraph 10 of the 1974 Contract: “The Contractor [Eastern] shall
ensure safe towing and handling of the barges in tow”. (Emphasis
added.)
2.
As noted, the district court granted Waterman summary judgment
against Baron's time charter action. Baron contends: the contract
between Oceanic and Eastern is a time charter; the Limitation on
Liability Act does not apply to such charters; and, therefore,
Waterman can be held liable. Waterman responds: the contract is
instead one for simple towage; and, in any event, Waterman is not
independently negligent.
A time charter entitles the charterer to full possession and
control of the owner’s vessel for a specified period of time.
Agrico Chem. Co. v. M/V BEN W. MARTIN, 664 F.2d 85, 91 (5th Cir.
25
1981); Walker v. Braus, 995 F.2d 77, 80-81 (5th Cir. 1993). On the
other hand, a towage contract provides for one vessel, such as a
tug, to move another, such as a barge. Agrico Chem. Co., 664 F.2d
at 90. As Baron notes, these categories are not mutually
exclusive; for example, the purpose of a time charter could be
towage. Nevertheless, here, the character of the entire agreement
indicates it is solely a towage contract.
The 1974 Contract preamble states: “[T]he said principal
[Waterman] has approached the said Contractor [Eastern] for
undertaking the towage work of [Waterman's] Lash barges”.
(Emphasis added.) The contract is an agreement between the
“principal” and the “contractor”, not between the “charterer” and
the “owner”. In the preamble and throughout, the 1974 Contract
repeatedly refers to “towage”, never once mentioning “chartering”.
Finally, paragraph 4 of that contract enunciates Eastern’s duties,
which all specifically relate to towage.
Further, although the 1974 Contract, and its renewals, specify
a period of time after which the contract terminates, this period
relates to Eastern’s towage services, rather than a time over which
Waterman has possession and control of particular tugs. For
instance, unlike the typical time charter, the disputed contract
does not designate any specific chartered vessel. See generally
POOR ON CHARTER PARTIES AND OCEAN BILLS OF LADING, § 1, at 4-5 (5th ed.
1968); MICHAEL WILFORD ET AL., TIME CHARTERS 81-139 (4th ed. 1978).
26
Paragraph 1 of the 1974 Contract merely provides for the
procurement of three tugs. The evidence demonstrates this
paragraph was included only to describe the existing equipment
available at the time of contracting.
Also, Waterman did not control tug operations. It merely gave
a time frame for Eastern to deliver its barges to a certain
destination. It did not direct how Eastern should use its vessels,
which ones should be used, or what route they should take.
Although the 1974 Contract, paragraph 3 (as emphasized earlier),
contains a non-competition clause, it was not meant to limit
Eastern’s general operations; Eastern did tow for others.
Moreover, even were the 1974 Contract characterized as a time
charter, Waterman must still have been negligent in its direction
of the tugs. See Moore v. Phillips Petroleum Co., 912 F.2d 789,
792 (5th Cir. 1990). As discussed above, Waterman was not
negligent.
D.
Baron and Cargo Claimants consented, in district court, to the
exoneration of CGL. Nevertheless, Baron appealed from the
allocation of costs awarded CGL. Baron did not provide any
briefing, however, on this issue in its original brief. “An
appellant abandons all issues not raised and argued in its initial
brief on appeal”. Cinel v. Connick, 15 F.3d 1338, 1345 (5th Cir.
1994) (emphasis in original).
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E.
Waterman and CGL cross-appeal the district court’s denial, as
moot, of their motion to dismiss for Baron's failure to comply with
discovery orders and vexatious litigation tactics. The denial of
that motion is not included within the Rule 54(b) judgment.
Accordingly, we lack jurisdiction over this cross-appeal. See 28
U.S.C. §§ 1291 & 1292.
III.
For the foregoing reasons, Waterman’s motion to dismiss Baron
for lack of jurisdiction is DENIED; Baron’s motion to dismiss the
cross-appeal by Waterman and CGL is GRANTED; the summary judgment
awarded Waterman and CGL is AFFIRMED; and this matter is REMANDED
to the district court for further proceedings consistent with this
opinion.
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