Tanker Hits Missing ENSCO Rig Lost After Hurricane Ike; ENSCO Relieved of Liability
“Well, I have to say I agree with you. I do not think there is any need to go into any further evidence. I think I have everything I need. Obviously, I am going to have to make Findings of Fact and Conclusions of Law, but I just do not think the [ship]. . . proved that this was not a reasonable search or it wasn’t conducted in a reasonable manner. Therefore, I am going to grant your Motion for Judgment.” - Judge Melinda Harmon, Houston, Texas, United States District Court for the Southern District of Texas
With that ruling from the bench and a subsequent Order which was entered on October 9, 2014, the five year odyssey of the ENSCO 74 came to an end. Dee Flint and his trial team of Bret LeBreton and Larry DeMarcay concluded a two week trial, which was spawned by the catastrophic winds of Hurricane Ike on September 12 and 13, 2008. On the eve of September 11, 2008, the ENSCO 74, a LeTourneau 116 jack-up rig, was set up adjacent to a Mariner platform in South Marsh 149. Sometime after 8:00 a.m. on September 12, 2008, the storm ripped the barge portion of the ENSCO 74, from its legs. The barge portion, in the throes of the storm, went on a “walk-a-bout” and ended up 100.9 miles to the west northwest on the bottom of the Gulf of Mexico in a 115 feet of water. Despite using sophisticated underwater technology neither the MMS, Coast Guard nor ENSCO could find the remains of the rig.
On March 6, 2009, the M/T SATILLA, a 900 plus foot tanker allided with the remains of the rig. A 60 foot gash was opened up on the side of the vessel and luckily not a drop of oil was spilled.
The owners and operators of the ship filed suit against ENSCO Offshore Company and ENSCO responded by filing a Limitation of Liability. Some five other claimants filed $150,000,000.00 in claims, a number of which were pipelines who claimed that they were damaged by the passage of the rig. Notably, the facts demonstrated that the rig floated for approximately 92 miles before it turned turtle and came to the bottom and then dragged some 4.2 miles before it came to rest.
Two pipeline claims were rapidly dealt with when it became apparent that their pipelines sustained damage solely due to the natural forces of the hurricane.
ENSCO’s main defense vis-à-vis the pipelines was that the damages were caused by an Act of God. ENSCO, which is a leader in promulgating safety procedures for site selection had followed the rules of the IADC and the Code of Federal Regulations. Essentially, jack-up rigs are expected to be able to survive a Category 1 direct hit hurricane.
With respect to the litigation, ultimately all of the claims of the pipelines were dealt with and the sole remaining claimant was the owner and operator of the M/T SATILLA. They took the position that ENSCO did not conduct a proper search post storm. Essentially, they believed that a vessel owner has an obligation to search until they find a lost vessel. The admiralty law, in particular, the Fifth Circuit, is well settled. A shipowner is responsible to mark their wrecks. However, if they conduct good faith search and cannot find their vessel, they are absolved of all liability after having conducted a diligent and good faith search. Nunley v. M/V DAUNTLESS COLOCOTRONIS, 863 F.2d 1190, 1196 (5th Cir. 1989); Allied Chemical Corp. v. Hess Tankship Co. of Del., 661 F.2d 1044 (5th Cir. 1981).
In this case, ENSCO received aid from the Coast Guard and actually was able to use a vessel that was under contract to the United States Government to assist in searching for its vessel. Notably, a number of other companies that are involved in the search for the Malaysian Flight 370 also were involved in the search for the ENSCO 74. The critical facts in the case were that immediately after the storm there was a federal hold on flights in the area. As soon as the Federal Government lifted the restrictions, ENSCO had a fixed-wing aircraft in the air locating and assessing damage to all of their assets. By noon on September 14, 2008, ENSCO was aware that the 74 was no longer on location. At 6:00 p.m., they notified the Coast Guard that they could not locate the rig; and by 6:18 p.m., they were meeting with their own meteorological experts to try and forecast where the rig would have gone.
Nelson Robinson, a former National Weather Forecaster, with Alert Weather, which is based in Lafayette, Louisiana, played a key role in the attempts to locate the ENSCO 74. He had contacts with the U.S. Navy and Stennis Space Center in Mississippi, and using those contacts, predicted the best area to locate the rig.
ENSCO then used fixed-wing aircraft and helicopters to search for the rig. Using the INEZ McCALL, a specially equipped survey vessel, ENSCO began to conduct a 24 square mile search around the platform in South Marsh 149. As more information came in, the search moved to the west northwest direction. C&C, one of the leading subsea survey companies, identified a search area and plotted a line search. All told, the INEZ McCALL searched approximately 120 square miles of the bottom of the ocean floor looking for the ENSCO 74. The Coast Guard and the National Oceanic Atmospheric Association provided assistance to try to locate the rig’s remains. On approximately October 9, with the INEZ McCALL being returned to the Coast Guard to help clear navigation lanes, the search was terminated.
Ironically, during the course of trial, the expert called by the ship’s interests was forced to admit that with the benefit of four years of analysis, his calculations indicated a location where he believed the rig would be 24 hours after being blown off location. Notably, that location was over 100 miles away from where the rig was actually found. In rendering its decision, the Court cited the two lead cases, Nunley and Allied Chemical, and observed that the Fifth Circuit established that the standard is a good faith, diligent search, taking into account all of the circumstances. The Court further commented that “reasonable diligence is the standard, not perfection.” Judge Harmon ruled that ENSCO made a full good faith search for the ENSCO 74 in employing sophisticated sub-sea sonar experts and equipment, as well as aerial searches and began those searches, as soon as possible after Hurricane Ike struck the Gulf Coast. She went on to find that ENSCO was not negligent in failing to locate the ENSCO 74, that it was not liable in damages to the ship interests and exonerated ENSCO.
Norwegian Cruise Lines
On October 14, 2014, Fowler Rodriguez New Orleans attorneys, Toney Rodriguez, Skipper Chenault and Susan Keller-Garcia, successfully enforced the forum selection clause in a Norwegian Cruise Lines (NCL) guest ticket contract in a personal injury suit brought in the U.S. District Court in New Orleans. Through a motion to transfer venue, Fowler Rodriguez convinced Judge Lance Africk to transfer the case to the U.S. District Court in Miami, the forum designated in the ticket contract.
In her complaint, the plaintiff, a resident of Mississippi, alleged that she was injured shortly after boarding the vessel in New Orleans. In opposing the motion to transfer, she argued that she had obtained the cruise ticket through a friend, that she had no knowledge of the forum selection clause and had never received any documents from the cruise line containing the clause. She also argued that enforcement of the clause was unreasonable due to her age, her physical condition and the cost of litigating in Florida.
Fowler Rodriguez asserted the presumption of validity of forum selection clauses, which required the party challenging the validity of the clause to bear a heavy burden of proof, and cited many cases in which similar clauses have been enforced against plaintiffs who had not read them. Judge Africk agreed and held that the ticket had reasonably communicated the inclusion of the clause in question and that, consistent with the law of the Fifth Circuit, actual knowledge of the clause was not required for her to be bound by it. The Judge also rejected the plaintiff’s argument that enforcement was unreasonable and would deprive her of her day in court. In language nearly identical to that used in a reply memorandum submitted by Fowler Rodriguez, Judge Africk stated that, although the plaintiff’s cost of litigation may be higher in Florida, that factor alone was not enough to invalidate the forum selection clause, and that any inconvenience she faced was foreseeable at the time she used the cruise ticket. He also noted that, with the modern conveniences of electronic filing and videoconferencing, the plaintiff could have her day in court without ever setting foot in the courtroom. Finally, Judge Africk examined the public and private interest factors inherent in weighing a transfer of venue. Because of the valid forum selection clause, he deemed the private interest factors to weigh entirely in favor of transfer. Finding none of the public interest factors (e.g. court congestion, local interests, difficulty in applying the general maritime law, or conflict of law) to be relevant, he granted the NCL’s motion and transferred the case to the U.S. District Court in Miami.
Matthews Marine Exonerated After Barge Sinking
The defense team of John Scialdone, Todd Crawford and Mike Thompson won a trial victory for Matthews Marine, Inc. in Houston, Texas. U.S. District Court Judge Nancy Atlas found Matthews did not breach any duty to the owner of a super jumbo hopper barge that sank during Matthews’ offloading operations. The judgment exonerating Matthews validated the decision to try the case after the codefendant caved on the eve of trial.
The case arose from the Port of Texas City Dredging Project. Javeler was the general contractor. It hired Breathwit to provide barges and a tugboat, and contracted with Matthews to unload the dredged material from the barges. While offloading a barge, the Matthews crew discovered six to eight feet of water in the voids. They alerted the Breathwit crew members of the problem, but Breathwit’s pumps were broken. Matthews loaned them a pump and continued offloading spoil from the barge. The barge listed further to port and ultimately sank.
Breathwit’s subrogated insurer sued Matthews for nearly $1 million, claiming Matthews’ method of offloading the spoil caused the barge to list to the point the deck submerged, allowing water to enter the void spaces and sink. It argued the barges were in good condition based on pre-hire surveys conducted by Javeler, so the Matthews crew was either mistaken or lying when they reported seeing six to eight feet of water in the voids of the barge shortly before the sinking. Even if the barges were leaking to that extent, the plaintiff argued that Matthews should have exercised its “stop work” authority and suspended operations once it observed the voids.
The defense team proved that the Breathwit barges were old, in poor condition and were known to leak. They showed the pre-hire surveys were conducted while the barges were empty, and the leaks were discovered once the barges were placed in service and loaded with spoil material. The Project Manager for Javeler complained to Breathwit and said the barges should have been removed from service, but Breathwit and Javeler decided to use the leaking barges until replacement barges could be located. Breathwit’s barge sank in the interim.
Although the Court found Matthews owed a duty to unload the barge in a reasonably safe, workmanlike manner, the Plaintiff failed to prove a breach of that duty. The defense team proved that the barges were delivered to Matthews in a compromised, precarious position with six to eight feet of water in the voids. They engaged a naval architect who testified the presence of that much water in the voids of the barge degraded its stability by 97%, making it virtually impossible to offload without capsizing it. The defense team also established that the Matthews’ crew lacked the sophistication to recognize the danger presented by that much water in the voids. Ultimately, the judge found Matthews’ decision to continue offloading the barge was reasonable because they followed the same procedure that had been successful on every other barge on the job.
Fifth Circuit Upholds Dismissal of all Claims Against Hornbeck
On March 13, 2013, Fowler Rodriguez obtained the dismissal of all claims filed against Hornbeck Offshore Services Inc. and related entities in the U.S. district court for the Southern District of Texas. On May 21, 2014, the Fifth Circuit through a per curiam opinion affirmed the dismissal based on the doctrine of forum non conveniens holding “the district court’s balancing of the private and public interest factors did not constitute an abuse of the district court’s discretion.” Cotemar S.A. DE C.V. v. Hornbeck Offshore Servs., L.L.C., 569 Fed. Appx. 187, 188 (5th Cir. Tex. 2014). The appellate court rejected Plaintiffs’ challenge to Mexico’s status as an adequate forum and held “Appellants are wrong to suggest…that Appellees failed to provide sufficient proof for the district court to believe that litigation in Mexico would improve access to witnesses and evidence.” Id. at 192.
The claims arose out of an alleged collision that occurred in Mexico’s Bay of Campeche, within Mexico’s Exclusive Economic Zone. Fowler Rodriguez attorneys George Fowler, Timothy Strickland and Luis Llamas argued at the trial court level that the case belonged in Mexico and should be dismissed based on the doctrines of forum non conveniens, comity and lack of subject-matter jurisdiction. Judge David Hitner, of the Southern District of Texas, agreed and dismissed the case to Mexico.
At the appellate level, George Fowler, handled the oral argument before a distinguished panel of federal circuit judges including Eugene Davis, Patrick Higginbotham and Catharina Haynes. Bret LeBreton and Luis Llamas assisted with the appeal process. Currently, all that remains in this proceeding is for the district court to address two discrete issues on remand before the case can proceed in Mexico.
The case is an example of the decades of experience Fowler Rodriguez has developed in handling matters in the U.S., at both the trial and appellate level, that involve issues from Latin America. The case is also particularly important in light of the recent changes to Mexico’s Constitution to allow private and foreign firms to explore and produce energy in the country.
Drunken Employee Driving Home Found Not “In The Course And Scope” of his Employment; Great American Insurance Company Exonerated
The firm’s client, Great American Insurance Company, is an excess carrier ($4 million over $1 million) of a Florida company, which had a project in Texas. The project was completed and one of its employees, who was terminated, was driving home to Florida. In the early morning hours he rear-ended an automobile, killing one of its occupants and rendering the other a paraplegic. To date, the comp carrier for the paraplegic had paid over $2 million in medical expenses to the injured party. The ex-employee had been drinking and had numerous drugs in his system, including cocaine.
The issue was whether the employee was within the “course and scope” of his employment. Normally, if an employer pays employees travel expenses to and from work, the employee is considered to still be employed during that period. In this case, the employer paid a $250.00 signing bonus and a $250.00 completion bonus to all of its employees. The employer maintained that the bonuses were not for travel expenses, and the person could utilize the funds for any purpose. Unfortunately, prior to our involvement, the insured responded to interrogatories stating that the bonuses were for travel expenses. Fowler Rodriguez attorneys Jacob Gardner and Norman Sullivan filed a motion for summary judgment on the course & scope issue. On Dec. 8, 2014, at a hearing before the district judge in Bienville Parish, Great American Insurance Company obtained a summary judgment and dismissal in favor of the insured and insurance company finding that the employee was not in the “course and scope” of his employment and the insurers had no obligation to pay for his liabilities.
Fire Extinguished for Great Lakes Reinsurance
Fowler Rodriguez Houston attorneys Stacey Norstrud and Timothy Strickland prevailed on behalf of their client, plaintiff Great Lakes Reinsurance (UK) PLC. In 2011, the plaintiff issued a marine insurance yacht policy to the defendants, covering defendants’ vessel. Both defendants were listed as joint owners and named assureds on the insurance policy. The policy contained a condition and warranty that the policy was cancelled if the vessel is sold or ownership is otherwise transferred without Great Lakes’ consent. In 2013, the defendants transferred ownership of the vessel by deed of gift to the named operator on the policy, without the consent of Great Lakes. Subsequently, when a fire damaged the vessel in 2014, the defendants asserted a claim against plaintiff Great Lakes for the loss. Great Lakes filed a declaratory judgment action seeking declarations that the unauthorized transfer of vessel ownership breached the conditions of the policy. Defendants argued that their claimed loss was covered under the policy as the assured defendants remained the beneficial owner of the vessel. Stacey Norstrud successfully argued that the unauthorized transfer of ownership before the loss, and during the policy period, was a breach of the policy’s conditions which cancelled the policy and thus, any coverage under the policy for the subject incident was precluded. Accordingly, the United States District Court for the Southern District of Texas granted summary judgment in favor of Great Lakes.
Success in Bench Trial Affirmed by the Fifth Circuit for Smith Marine Towing
Norman Sullivan and Jacob Gardner successfully obtained a favorable ruling for their client Smith Marine Towing (“Smith”) in a suit against it by Cashman Equipment Corporation (“Cashman”).
In 2009, Smith chartered one of its tugs to a Cashman subsidiary. The parties orally agreed to a fixed sum for the charter arrangement between them; however, when Cashman did not get paid by its customer for the job it had chartered the tug for, Cashman refused to pay Smith for the charter, taking the position that they only had to pay the charter if they had gotten paid by their customer, for their job that they had leased the tug for. Despite that Cashman still owed Smith under the 2009 charter, the companies continued to engage in business with each other.
In late 2011, in a role reversal, Smith chartered a barge from Cashman (rather than Cashman chartering from Smith as before). The written agreement provided a set daily charter rate for the first thirty days, but allowed Cashman to adjust the hire at its sole discretion after 30 days. It also provided that Smith could not sub-charter the barge without Cashman’s written permission. After the first thirty days, Cashman demanded that Smith return the barge. Smith could not return the barge because of its commitment to its customer it had sub-chartered the barge. In response, Cashman increased the charter rate each day until Smith returned the barge. When this occurred, Fowler Rodriguez attorney Norm Sullivan advised its client Smith not to pay the increased, unreasonable hire. By the time Smith returned the barge, Cashman had raised the daily hire from $2,200 to $69,000 per day.
By the beginning of 2012, both companies owed each other money for chartered vessels. Settlement attempts failed. Cashman took the position that it was owed amounts exceeding $2.5 million, and its lowest settlement demand was $1.5 million. Smith was unwilling to pay that amount.
In the Eastern District of Louisiana, Judge Vance found that the position of Cashman, that Smith would not be paid for its tug charter if its subsidiary was not paid by its customer was not supported by the evidence, and that Smith was entitled to hire plus interest. She found that Smith breached the charter by sub-chartering the barge without written permission; however, she concluded that the dramatic rate increase was unreasonable and Cashman was only entitled to the $2,200 per day. Cashman was entitled to $81,888.04, plus interest and attorney’s fees for its of charter claim. The Court reduced Cashman’s claim for attorney’s fees by about one-third, to $41,000.
Calculation of the final damage award came down to timing. Cashman owed Smith the money for its charter longer than Smith had owed its amount. Consequently, once interest was taken into consideration, Smith only owed Cashman about $8,000 rather than the $2,500,000 that Cashman initially claimed it was owed. The District Court decision has been affirmed by the Fifth Circuit Court of Appeals.
Shipyard Liable for Tug's Sinking During Tropical Storm; Over $1.2 Million Judgement in Favor of Hornbeck Affirmed by Fifth Circuit
On June 30, in a unanimous opinion, the Fifth Circuit affirmed most parts of a district court victory on behalf of Hornbeck Offshore Services against the former R&R Marine shipyard in Port Arthur, Texas, and its liability insurer. This will result in a $1.2 million judgment, plus interest, in Hornbeck’s favor. The judgment includes both prejudgment interest and attorneys’ fees. The case arose when Hornbeck’s tug ERIE SERVICE was undergoing major repairs in September 2007 at R&R’s dock . The ship repair facility negligently took insufficient steps to protect the vessel from water ingress from a quickly developing tropical storm. Heavy rain and wave action on Sabine Lake caused the unprotected tug to fill with water and sink.
R&R and its liability insurer refused to pay for the tug’s salvage or for any damages, and the insurer began a declaratory judgment action in Houston to avoid coverage.
In its twenty-page opinion, the Fifth Circuit affirmed the district court’s conclusion that R&R had full custody of the ERIE SERVICE while at its shipyard, but failed to exercise due care and was negligent. The court also affirmed R&R’s liability for all of the time-and-materials salvage charges, noting that even if the salvage company had damaged the tug while trying to raise it, R&R would remain liable because that damage would have been a foreseeable consequence of R&R’s negligence.
Although Texas is not a direct action state, the Fifth Circuit upheld the judgment against R&R’s liability insurer because it had subjected itself to Hornbeck’s compulsory counterclaim by commencing its declaratory judgment action. The Fifth Circuit reduced the judgment to the $1 million policy limit, but rejected the insurer’s argument that the policy limits should be further reduced by the attorneys’ fees it had incurred defending itself. The court reversed the district court’s 18% penalty interest award, but allowed Hornbeck prejudgment interest at 6%, and affirmed a substantial attorneys’ fees award in Hornbeck’s favor.
Stacey Norstrud (Houston) and Skipper Chenault (New Orleans) tried the liability phase of the case, with Tim Strickland (Houston) assisting Norstrud in the damages portion. After opponents appealed the district court’s judgment, Norstrud, Mike Harowski (New Orleans), Toney Rodriguez (New Orleans) and Chenault prepared Hornbeck’s brief, and Chenault argued before the Fifth Circuit. New Orleans paralegal Rachel Ricca was a great help throughout.
National Liability & Fire Insurance v. R & R Marine, No. 10-20767 (5th Cir., June 30, 2014).
Asbestos Lawsuit Against Shipowner Clients Dismissed from La. State Court
New Orleans attorneys A.T. Chenault, Philip Brickman and Susan Keller-Garcia recently prevailed on behalf of Apex Oil Company and Trinidad Corporation on an exception of discharge in bankruptcy on behalf of a vessel owner in a Jones Act suit in the 19th Judicial District Court for East Baton Rouge Parish. The plaintiff alleged that he developed mesothelioma as a result of asbestos exposure on the clients’ vessel in 1966. Fowler Rodriguez successfully argued that the plaintiff’s claims were discharged by the confirmation of the owner’s Chapter 11 reorganization plan by a Missouri bankruptcy court in 1990. The court’s ruling in the client’s favor directly resulted in a very favorable settlement of the plaintiff’s claims that was well below the plaintiff’s earlier demands.
Houston Office Garners Three Case Victories in Liability Defense
Houston Mall Defended
Michael W. McCoy, with Allison Hooker, Sherry Weaver, and others, stepped in to defend well-known West Oaks Mall, essentially on the eve of trial. The case involved a personal injury lawsuit as a result of a certified air conditioning/heating specialist being shocked, blown off a ladder, and allegedly and severely injured as a result, while working on the A/C system on behalf of a tenant at West Oaks Mall. The case involved serious factual and legal issues, and resulted in difficult and protracted settlement negotiations after the filing of outstanding defense motions. One day before the final pre-trial conference, and only a few days before the actual trial, a settlement was achieved for less than the total medical lien, and much less than the total medical incurred by the Plaintiff.
Premise Liability Resolved in Favor of Houston Night Club
Very recently, McCoy and his team, including Allison Hooker, were successful in resolving a premises liability case which took place at a well-known nightclub in Houston. McCoy represented the owner of the club, but not the operator. McCoy was successful in demonstrating through documents and through a comprehensive Motion for Summary Judgment that the owner owed few, if any, duties to the particular patron who was severely injured by a bouncer, employed by the club operator, while escorting the Plaintiff out of the club.In fact, the bouncer was charged and pled guilty to felonious assault. However, through outstanding defense motions, it was shown from both a factual and legal standpoint that the owner had little or no liability, and the case settled at mediation for essentially nuisance value, despite a contention of mid-five figures in medical costs, and a prior demand for the $1,000,000.00 policy limit.
Property Damage Case Dismissed
A few weeks later, McCoy was successful in persuading Plaintiff’s counsel to dismiss a lawsuit against an insurance agent, who had placed a trucking policy that did not provide for property damage insurance coverage on behalf of the cab/tractor/trailer rigs, if such tractor/trailers were individually owned by the driver for the trucking company. A particular driver who had her truck stolen had sued, contending that the agent had allegedly misrepresented such coverages. McCoy and his team, including Allison Hooker, were successful through discovery in demonstrating that the Plaintiff driver had no privity with the agent, and that she could not have properly relied on any alleged misrepresentations by the agent, which would have thus, entitled the agent to summary judgment and possible attorney’s fees. McCoy was successful in getting the case dismissed without incurring large defense costs.
Fowler Rodriguez Admiralty-Asbestos Team Dispatches Class Action Litigants
In 2004, approximately 824 plaintiffs filed suit in 23 multi-party actions in Mississippi alleging that they had been exposed to asbestos in drilling mud. The lawsuits were aimed primarily at the manufacturers of the asbestos products, including Conoco/Phillips and Union Carbide, as well as many distributors located throughout Mississippi and the Gulf states. Many offshore drilling companies were also named as defendants. Some of these cases were transferred to the multi-district litigation in Pennsylvania, but the vast majority of them settled into two jurisdictions in State Court in Mississippi. ENSCO Offshore Company was named a party defendant in 62 of the 700 cases.
In February 2013, over eight years later, those 62 cases were transferred to Delos Flint and the Fowler Rodriguez Gulfport office. Working with Todd Crawford, Chris Schmidt and Skip Negrotto, Flint was able to evaluate the cases. He settled one that was scheduled for trial immediately and quickly secured dismissals of three others. The Gulfport team then analyzed the medical data and Flint and Crawford came up with a plan to prioritize the claims and began taking the necessary steps to defend them and put them in a posture for Summary Judgment or trial.
In late December 2013, Dee Flint and Todd Crawford traveled to Houston, Texas to meet with plaintiffs’ counsel and reached an agreement to settle the remaining 58 cases on favorable terms. The client, ENSCO Offshore Company, was pleased to get 62 cases that had been pending for nearly ten years resolved and off of their books in less than one year after the cases were transferred to Fowler Rodriguez for handling.
Serralles Secures Multimillion-Dollar License Agreements for Two Florida Hotels
Miami partner, Juan E. Serralles, Esq., recently negotiated franchise and licensing deals for two new South Florida hotels to operate under known hotel brands. Mr. Serralles has long represented South American hotel developers and operators who are focused on penetrating South Florida’s market. The most recent deals have involved negotiating two separate license/franchise deals for “mixed use” deals concerning his client, involving projects with a combination of hotel rooms, condominium units and retail facilities within the respective projects.
Mr. Serralles finalized license agreements with Holiday Hospitality Franchising, LLC, granting permissions for his client to operate a 140-room “Indigo Hotel” in the existing vibrant Brickell West area in Miami’s financial district. The other deal concerning the Sheraton, LLC, also known as ‘Starwood Hotels,’ involved finalizing a license agreement to allow Mr. Serralles’ client to operate an “Aloft Hotel” in the City of Coral Gables downtown area, which will culminate in the construction of a $32 million, 160-room hotel project. Both hotels have commenced construction.
Zero Verdict Against Plaintiffs for Oil and Gas Clients
Jon W. Wise recently concluded a lengthy trial in the 31st Judicial District Court for the Parish of Jefferson Davis, which resulted in a zero verdict in favor of the firm’s clients. The case was brought against clients Crimson Exploration, Inc., Anadarko Petroleum, Kerr-McGee and several other oil and gas companies on behalf of a group of landowners who were mineral royalty interest owners within producing units drained by two wells drilled in 1999. Seeking $16 million in damages, the plaintiffs claimed they were deprived of royalty revenue from these units due to the fact that the reservoirs were allegedly “destroyed” by the completion and/or workover of the wells by the operator defendants. Specifically, the plaintiffs alleged that improper cementing practices and well designs had permitted the incursion of extraneous water from nearby formations into the producing formations via the well bore and caused the producing formations to water out prematurely. This was an unprecedented claim, as there had been no prior cases where a court in Louisiana had awarded this type of damage principally because of the problems of proving the existence of damages.
The trial took over ten months to be completed in 2012 and was tried by a single judge. The opinion, which the trial court issued in May 2013, resulted in a finding of no liability on the part of the defendants. The case likely will be appealed, but the opinion of the court represents a major victory for oil and gas operators throughout the state.
Fifth Circuit Victory: Gulfport Team Overcomes Maritime Rule That a Moving Vessel That Allides With a Stationary Object is Presumed at Fault
The Gulfport trial and appellate team of John A. Scialdone, Todd G. Crawford and John S. Garner successfully navigated the troubled waters of maritime presumptions through the United States District Court for the Eastern District of Louisiana and United States Court of Appeals for the Fifth Circuit. In Mike Hooks Dredging Co. v. Marquette Transportation Co. Gulf-Inland, 716 F.3d 886 (5th Cir. 2013), the Fifth Circuit affirmed the district court’s apportionment of fault of 70% to plaintiff Mike Hooks Dredging Co. as operator of the dredge MIKE HOOKS; 15% to third party defendant Vizier, as operator of a picket boat required to physically assist passing navigation by the dredge under a Corps of Engineers contract; and the remaining 15% fault to Fowler Rodriguez’s client Marquette, as the operator of the PAT MCDANIEL, a tug that allided with the stationary dredge at the intersection of the Intracoastal Waterway near the Wax Lake Outlet in South Central Louisiana.
Mike Hooks claimed our client, Marquette’s, tug boat was solely at fault for striking its moored dredge, relying on the presumption of fault under the Oregon rule that when a moving vessel collides with a stationary object in the water, the moving vessel is presumed at fault and must prove it is not at fault. As the Gulfport trial team developed further evidence through discovery, however, other general maritime law presumptions began to swing in Marquette’s favor. For example, the dredge was required to provide a picket boat to comply with its dredging contract with the U.S. Corps of Engineers. Fowler Rodriguez also uncovered statements taken from Hooks’ employees that showed key dredge personnel knew the picket boat, operated by Vizier, refused to assist “passing vessels in navigation” as expressly required by the Corps contract. Nonetheless, the dredge proceeded to a dangerous location in the Intracoastal Waterway where currents intersect and create difficulty in navigation. Gulfport attorneys presented evidence of two near misses by vessels attempting to pass the dredge: a grounding caused by the heavy current that set the vessel to the southern bank of the intersection, and another collision with the dredge only a few hours before Marquette’s tug attempted to pass.
Fowler Rodriguez successfully rebutted the presumption against Marquette under the Oregon rule by arguing that the dredge violated the narrow channel rule, Inland Rule 9 (“INR9”), codified at 33 CFR § 83.09, which provides: “Avoidance of anchoring in narrow channels: Every vessel shall, if the circumstances of the case permit, avoid anchoring in a narrow channel.” The district court found Marquette had presented sufficient evidence to overcome the adverse presumption of the Oregon rule, agreed that Hooks violated the narrow channel rule and ultimately held that Hooks could not rebut the presumption triggered by the rule of the Pennsylvania, 86 U.S. (19 Wall) 125, 22 L.Ed. 148 (1874), which requires the offending vessel to show the statutory rule violation was “not merely her fault and might not have been one of the causes, or that it probably was not, but that it could not have been.”
The Fifth Circuit affirmed the district court’s apportionment of fault in all respects, but not without some questions on the interplay of these presumptions. The Gulfport appellate team emphasized that the Pennsylvania rule shifts the burden of persuasion to the offending vessel to show that particular statutory violation could not have been the cause of the incident. The Fifth Circuit agreed and wrote, “We agree with the district court that INR 9(g) establishes such a clear legal duty. The regulation expressly prohibits vessels from anchoring in narrow channels, except in exceptional circumstances.”
The Fifth Circuit panel also rejected Hooks’ legal argument that INR 9(g) is inapplicable unless the vessel is first found to be an obstruction. Instead, the panel agreed with the statutory interpretation and analysis offered by Gulfport Appellate Counsel and affirmed the 70% allocation of fault: “INR 9(g) is unambiguous. The rule (“shall…avoid”) expressly prohibits vessels from anchoring in narrow channels, subject only to the exception where circumstances do not permit alternative action.”
Ultimately, the Appellate Court affirmed the District Court’s judgment of liability in all respects. Like the Fifth Circuit opinion, the district court opinion provides useful guidance on navigating the troubled waters created by the presumptions in maritime law.
Another Fifth Circuit Victory: Successful Summary Judgment Appeal for Port of New Orleans
Fowler Rodriguez attorneys Edward F. LeBreton, III and Stuart Ponder successfully appealed a summary judgment to the United States Fifth Circuit Court of Appeals.
LeBreton and Ponder represented the Board of Commissioners for the Port of New Orleans in litigation against one of its bumbershoot insurers, Insurance Company of North America. The district court granted summary judgment in favor of INA on the basis that lack of notice to one of three severally subscribing insurers relieved all insurers of their obligations under the policy.
On appeal, the Board argued that, because the insurers’ obligations were several, notice to one insurer satisfied the requirement as to that insurer, regardless of possible lack of notice to one of the other insurers. In a per curium opinion, the Fifth Circuit held that any insurer who receives notice is obligated to provide its proportion of the coverage. More specifically, the duty of coverage is triggered for each insurer who receives notice under the policy. The Fifth Circuit remanded the case to the district court for further proceedings. The opinion may be found at Ins. Co. of N. Am. v. Bd. of Comm’rs of the Port of New Orleans, no. 12-30705, 2013 U.S. App. LEXIS 8884, 2013WL 1811892 (5th Cir. La. May 1, 2013).
Removal of Debris Claims Do Not Trigger Excess Insurance
On July 31, 2013, Edward LeBreton and Allison M. Hooker won a summary judgment declaring no coverage of a significant claim against their client, Liberty International Underwriters, in the U.S. District Court in Houston. Judge Kenneth M. Hoyt issued the Memorandum Opinion and Order.
The issue involved costs for removal of debris (ROD) following Hurricane Ike. The insured owned numerous production platforms in the Gulf of Mexico that were damaged in the storm. The insured used the limits of its Energy Package Policy and Windstorm Coverage to pay for property damage and Operators Extra Expense (OEE). The insured gave notice that it then intended to claim its ROD expenses under Excess Liabilities policies issued by Liberty and other underwriters. The total of the ROD claims against all layers of Excess Liabilities insurance was approximately $50,000,000.
The Excess Liabilities policies were endorsed to cover ROD. Liberty, however, reserved its right to deny coverage on the basis, among others, that the property damage and OEE claims did not reduce the retention under the Excess Liabilities Policies. The Excess Liabilities Policy provided that the retention would be depleted only by payment of claims that would be covered by the Excess Liabilities policy itself. While the property damage and ROD claims may have been covered under the Energy Package Policy, they were not covered by the Excess Liabilities Policy.
Working closely with counsel for the other Excess Liabilities underwriters, LeBreton and Hooker filed a complaint for a declaration that the property damage and OEE expenses did not reduce the retention and that the Excess Liabilities Policies were not triggered. The Memorandum Opinion and Order granted this relief. Indemnity Insurance Company of North America et al. v. W&T Offshore Inc., C.A. No. 4:12CV2469, 2013 U.S. Dist. LEXIS 111551, 2013 WL 4039594 (S.D. Tex. July 31, 2013).
Success in Bench Trial for Smith Marine Towing
Norman C. Sullivan and Jacob Gardner successfully obtained a favorable ruling for their client Smith Marine Towing (“Smith”) in a suit against it by Cashman Equipment Corporation (“Cashman”).
In 2009, Smith chartered one of its tugs to a Cashman subsidiary. The parties orally agreed to the charter arrangement between them; however, when Cashman did not get paid by its customer for the job for which it had chartered the tug, Cashman refused to pay Smith for the charter, taking the position that they only had to pay the charter if they had gotten paid by their customer. Despite that Cashman still owed Smith under the 2009 charter, the companies continued to engage in business with each other.
In late 2011, in a role reversal, Smith chartered a barge from Cashman (rather than Cashman chartering from Smith as before). The written agreement provided a set daily charter rate for the first thirty days but allowed Cashman to adjust the hire at its sole discretion after 30 days. It also provided that Smith could not sub-charter the barge without Cashman’s written permission. After the first thirty days, Cashman demanded that Smith return the barge. Smith could not return the barge because of its commitment to its customer. In response, Cashman increased the charter rate each day until Smith returned the barge. When this occurred, Fowler Rodriguez attorney Norm Sullivan advised Smith not to pay the increased, unreasonable hire. By the time Smith returned the barge, Cashman had raised the daily hire from $2,200 to $69,000 per day.
By the beginning of 2012, both companies owed each other money for chartered vessels. Settlement attempts failed. Cashman took the position that it was owed amounts exceeding $2.5 million, and its lowest settlement demand was $1.5 million. Smith was unwilling to pay that amount.
In the Eastern District of Louisiana, Judge Vance found that the position of Cashman, that Smith would not be paid for its tug charter if its subsidiary was not paid by its customer was not supported by the evidence, and that Smith was entitled to hire plus interest. She found that Smith breached the charter by sub-chartering the barge without written permission; however, she concluded that the the dramatic rate increase was unreasonable and Cashman was only entitled to the $2,200 per day. Cashman was entitled to $81,888.04, plus interest and attorney’s fees for its of charter claim. The Court reduced Cashman’s claim for attorney’s fees by about one-third, to $41,000.00.
Calculation of the final damage award came down to timing. Cashman owed Smith the money for its charter longer than Smith had owed its amount. Consequently, once interest was taken into consideration, Smith only owed Cashman about $8,000 rather than the $2,500,000.00 that Cashman initially claimed it was owed. Cashman has appealed.
All Claims Against Hornbeck Dismissed
George J. Fowler, III, Timothy W. Strickland and Luis E. Llamas obtained the dismissal of all claims filed against Hornbeck Offshore Services Inc. and related entities in the U.S. district court for the Southern District of Texas. The claims arose out of an alleged allision that occurred in Mexico’s Bay of Campeche, within Mexico’s Exclusive Economic Zone. Fowler Rodriguez argued that the case belonged in Mexico and should be dismissed based on the doctrines of forum non conveniens, comity and lack of subject-matter jurisdiction. Judge David Hitner addressed each factor required for a proper forum non conveniens analysis and dismissed the case to Mexico. He found Mexico to be an adequate and available forum. He then held that three of the five private interest factors weighed in favor of dismissal, while one weighed in favor of retention, and one was neutral. Similarly, Judge Hitner found three of the four public interest factors weighed in favor of dismissal, with the fourth being moot. The decision went on to note that Mexican law would likely apply if the case remained in the US.
The case is an example of the decades of experience Fowler Rodriguez has developed in handling matters in the US that involve issues in Latin America and vice versa.
Wells Fargo Lends $42 million for Construction of Double-Hull Fueling Ship
Wade Webster recently assisted a private client with a contract at a shipyard in Louisiana for the construction of a double-hulled tanker and the concomitant ship mortgage from Wells Fargo.
The Oil Pollution Act of 1990 provided for a phase-in requirement that all oil cargos be transported in double-hulled ships. The Act phases out single-hull tank vessels over time for vessels larger than 5,000 gross tons. The final deadline to comply ends in 2013, so there has been a recent rush at the shipyards to commence construction of vessels that will comply with the mandate for double hulls. After the phase-out date, a single-hull vessel can continue to ship other types of products, but it can no longer be used to transport oil in U.S. waters.
Although most double-hulled ships are built outside of the United States, where shipbuilding costs are significantly lower, the Jones Act prohibits foreign-built vessels from shipments between U.S. ports. The Jones Act provides that a vessel cannot transport cargos among U.S. ports unless it is built in the United States, registered in the United States, owned by a United States citizen, and operated by a United States crew. In addition to affecting crude oil shipments from Alaska, the Oil Pollution Act of 1990 also affects transportation of oil products from U.S. refineries to U.S. ports and transporting fuel to customers (typically performed by tankers and coastal tank barges).
Successful Defense Before the World Bank Sanctions Board
An important Cyprus construction-based company was hired by the Colombian government to build a submarine sewerage outfall off the coast of Cartagena through a World Bank loan. The Colombian entities engaged in a complex litigation strategy against the construction company including a request for sanctions by the World Bank; the case was even highlighted on the front page of the domestic newspaper.
Luis E. Cuervo successfully procured the dismissal of all claims against his client, including that it engaged in corrupt and fraudulent practices. Had sanctions been imposed, his client would have been declared ineligible to be awarded any projects financed by the World Bank. Despite an initial finding adverse to the client, Cuervo’s defense was successful before the World Bank Sanctions Board. The decision may be reviewed at the World Bank Sanctions Board web page under Decision No. 59, sanctions case 187. The Sanctions Board reviewed the dispute, concluded that INT’s allegations were insufficient, and terminated the proceedings in favor of Fowler Rodriguez’s client.
Cuervo’s effective litigation exemplifies Fowler Rodriguez’s experience and capabilities in resolving complex international commercial disputes as well as the firm’s established presence in Latin America.
Miami Jury Finds Rolls-Royce Committed Fraud Against Carnival Cruise Lines in Pod Litigation
Fowler Rodriguez obtained a $24 million verdict for Carnival Cruise Lines against Rolls-Royce. Rolls-Royce was found guilty of fraud by a unanimous jury. Rolls-Royce marketed its Mermaid pod propulsion system to Carnival for operation on their largest and most prestigious ship, the Queen Mary II. The jury found that at the time Rolls-Royce presented its pod to Carnival, Rolls-Royce knew the pod was defective and not fully developed.
George J. Fowler, III argued Rolls-Royce rushed into the market to defeat their competitors and sold an untested product that failed throughout the cruise industry. Furthermore, Fowler argued Rolls-Royce made money not only on the sales of the pods, but each time the bearings on the pods had to be replaced. He argued Rolls-Royce refused to pay for any of the replacement costs and made money off the repairs, which forced Carnival to file suit.
In his opening statement, Fowler expressed surprise as to why Rolls-Royce would allow this matter to go to trial. When the case was over, the judge and jury echoed Fowler’s initial concerns. U.S. District Judge Patricia Seitz said the jurors asked her why the case ever went to trial. “The first question they had was why didn’t these people settle when they have to work together,”. Judge Seitz also stated that she saw the trial possibly as a “bellweather for lawsuits” filed by other cruise lines that also found fault with Rolls-Royce’s pod system.
At trial, Rolls-Royce argued that problems with Carnival’s propulsion system were isolated incidents and that the Mermaid pods were not faulty. However, Carnival demonstrated that four sets of bearings were replaced on four pods from 2003 to 2008. A Carnival witness testified that the pod was so poorly engineered that the bearings could be made out of kryptonite and still be rendered useless. Rolls-Royce also argued that Carnival knew they were purchasing a risky, developmental product when they purchased the Mermaid pods.
Micky Arison, the Chairman of Carnival Corporation, testified at trial that the notion that he would take a risk on one of his company’s most prestigious ships was ludicrous. He had trusted and relied on Rolls-Royce’s assertions that the pods were going to function properly; he said he took people at their word and did his business deals “on a handshake.” When asked by Rolls-Royce counsel, the well-known criminal lawyer, Roy Black, whether he considered himself a “shrewd” businessman, Arison made the courtroom chuckle. He responded that he preferred to be considered a good scout of basketball talent, alluding to his successfull recruitment of LeBron James to his winning Miami Heat basketball team.
Arnaldo Perez, Carnival Corporation’s General Counsel, explained that
Carnival had trusted in the Rolls-Royce brand and its claim that the Mermaid pod was a “proven, well-tested product.” This highly contentious case took nearly three weeks to try. Fowler and Black each took two hours for their closing arguments.
Antonio J. Rodriguez said, “We are very pleased with the jury and their decision. This was an important case for Carnival, and it was made possible by the firm personnel from multiple offices functioning as one team.” Michael A. Rosen, from the firm’s Miami office, acted as trial attorney in support of the firm’s counsel from New Orleans, Messrs. Fowler and Rodriguez. The legal support team also included attorneys A.T. Chenault, Michael Harowski, and Cristi Fowler Chauvin.
Flint Wins for Ensco Offshore Company
It was ten days before Christmas and trial attorney Delos “Dee” Flint and associate Jacob Gardner sat in Federal Court waiting for a verdict. At 6:00 p.m., a jury of three wise men and four equally wise women re-entered the courtroom and returned a defense verdict in favor of Ensco Offshore Company, sending a plaintiff seeking $3 Million home to Pensacola, Florida empty-handed.
John Chapman, an electrician with 17 years experience both onshore and offshore , filed a suit against Ensco Offshore Company alleging Jones Act negligence, unseaworthiness and that he was owed additional maintenance. Chapman was injured as he disconnected a manifold gauge from a semi-submersible’s air-conditioning system and sustained severe Freon burns to the backside of both hands. Mr. Chapman rehabbed for close to a year and made over 150 visits to the physical therapists at the Andrews Institute (operated by noted orthopedic surgeon, Dr. James Andrews) in Gulf Breeze and Pensacola, Florida. A Functional Capacity Evaluation was conducted at the end of his rehabilitation, and he was released to return to medium to heavy level work. Mr. Chapman alleged that he was negligently trained, that he wasn’t provided a safe place to work and that the rig’s equipment was deficient in that the air conditioning system did not have Schraeder valves in all of the service ports. As a result of his injuries, Chapman alleged he could not return to work as an electrician.
Ensco countered that it had a Safe System of Work in place, which provided job safety analyses and work instructions and that the plaintiff ignored the safety precautions that were designed to prevent him from getting injured. Furthermore, he was injured when he performed a job which he was not assigned to do. The case was tried for three days before the Honorable Judge Jay Zainey in the United States District Court for the Eastern District of Louisiana. Late in the evening on December 15, 2010, the seven person jury returned a verdict finding that there was no Jones Act negligence, the rig was seaworthy and that no additional maintenance was owed to the plaintiff. Essentially, the jury found that the plaintiff failed to follow the safety rules that were in place and that he, and he alone, caused his injuries. Implicitly, the jury also found that the plaintiff, despite having a physical handicap as a result of the injury, could return to gainful employment.
At trial, the plaintiff’s co-workers, including his immediate supervisor, testified about the job to be performed and the nature of the work the plaintiff was involved in at the time of his injury.
Julie Slocum, Manager of Risk Management, testified on behalf of Ensco with respect to post accident rehabilitation and maintenance and cure issues. Rusty Fox, a rig manager based in Houston, Texas, testified concerning the Ensco Safe System of Work and the various checks and balances that now exist to ensure employees’ safety onboard semi-submersibles.
In addition to assistance from Jacob Gardner, new associate Andy Brown, paralegal Pat Bridges and secretary Linda Becnel assisted in the trial preparations which led to a successful outcome at trial.
Motion Victories Lead to Favorable Settlement in Construction Contract Dispute
In Seaward Marine Services, Inc. v. Grillot Construction, LLC et al, C.A. 08 cv 587, U.S.D.C - SDMS., Fowler Rodriguez obtained favorable rulings on key motions, which lead to a settlement and significant recoveries for Grillot Construction, Inc., and its co-plaintiff, Seward Marine Services, Inc. The case was litigated primarily by Edward “Bret” LeBreton, Todd Crawford, and Stuart Ponder.
Beau Rivage hired Grillot as its general contractor to perform a variety of maintenance and repair operations on the barges supporting its casino in Biloxi, Mississippi, including underwater painting, removal of marine growth and dredging. Grillot hired Seaward Marine as its subcontractor to assist with removal of growth and debris from the barges. When a dispute arose concerning what work was included in the bid and what would cost extra, Seaward filed suit against Beau Rivage and Grillot.
The firm’s attorneys first negotiated a settlement between Seaward and Grillot and then began prosecuting their claims jointly against Beau Rivage. Beau Rivage counter-claimed against Grillot alleging breach of contract, fraud, misrepresentation and failure to pay sales taxes.
The court granted motions brought by FR dismissing Beau Rivage’s claims based on alleged inconsistent terms in the general and subcontracts regarding debris, day rates, per diems and applicable law; failure to pay sales tax; overestimating the amount of debris and growth on the barges; waiver and settlement and attorneys fees.
The court also denied Beau Rivage’s motions based on: alleged failure to remove dredge spoils; whether unexpected debris and extra painting were included in the bid price or extras; premature billing for painting; alleged fraud in relation to a disposal subcontract and certain pay applications; negligent misrepresentation; and breach of contract.
While the court dismissed Grillot’s claim for quantum meruit, it denied Beau Rivage’s motion to dismiss claims for unjust enrichment. Following the rulings, the parties settled.
Jason Savarese v. Pearl River Navigation, LLC
The United States District Court Eastern District of Louisiana issued an important ruling on burden of proof in denying a Jones Act personal injury claimant any additional recovery. The case presented an obvious risk of liability. A 120-foot crane boom aboard a deck barge catastrophically failed when a shackle tore loose from the load, causing the boom to release, rise aloft, arc and crash onto the stern of the barge. The parties stipulated that the defendant was solely responsible for the crane failure. But the issue of medical causation was reserved because the plaintiff’s injuries did not occur as a direct result of the plaintiff’s response to the noise and commotion caused by the failure and subsequent crash. The plaintiff was not directly involved in the operation of the crane; he was cooking in the galley at the time.
There were no eyewitnesses to the plaintiff’s injury, and the Court found his testimony was not credible. The plaintiff testified that he injured himself while exiting the galley door, but an eyewitness contradicted his testimony. The court disbelieved the plaintiff’s contention that he fell exiting the galley door. Without other evidence in the record of how he was injured, the Court could not relate his injury to the crane collapse.
“It is possible that Savarese injured himself in some way as a result of this incident, but the Court need not speculate about that. The falling boom did not hit Savarese or the galley, and it fell 10 to 15 feet away. The standard of causation may be light for Jones Act negligence claims, but it is the plaintiff’s burden to show how he was injured and relate the injury to the defendant’s negligence or the unseaworthy condition of the vessel, and Savarese has not met this burden.”
Ultimately, the Court determined that even though there was an obvious event that might result in a number of personal injuries, the plaintiff still has the burden of proving how he was injured and tying that injury to the defendant’s negligence or other fault.
Bellsouth Extends Appreciation to FR
BellSouth recently thanked Fowler Rodriguez attorney, Wade P. Webster, for what it described as “Excellent!!” work persuading the United States Fifth Circuit Court of Appeals to reject the claims of a telephone splicer for overtime wages for repair work in the aftermath of Hurricane Katrina. BellSouth had to pay nothing under the decision. The Fifth Circuit Court of Appeals rejected the overtime wage claims under the Fair Labor Standards Act, even though the splicer worked twelve hour days for several months repairing the devastated telephone network surrounding New Orleans after Hurricane Katrina.
Wade P. Webster persuaded the Fifth Circuit Court of Appeals to reject the overtime wage claims on the grounds that the splicer was an independent contractor, even though the Court had previously held that the splicers working for BellSouth in Mississippi performing the same work were employees entitled to an award of overtime wages and penalties.
Juan E. Serralles, IV Aids in Hotel Acquisition
Juan E. Serralles, IV represented a Venezuelan principal and a group of investors in the acquisition of a 160 room - 14 story hotel in the Mary Brickell Village area. The representation also included negotiating a multi-year franchise agreement with Starwood Hotels. Located in the heart of Miami’s financial district, the hotel will be the first Starwood Hotel under the aloft flag. The client plans to acquire four additional hotels in the South Florida area.
Royal Caribbean Cruise Lines recognizes Fowler Rodriguez with a Celebrity Model Ship
Royal Caribbean Cruises Ltd. and Rolls-Royce announced that they reached a suitable and amicable resolution to the lawsuit regarding the Mermaid pod-propulsion system on Celebrity Cruises’ Millennium-class ships.
The day news of settlement broke George Fowler sent a letter out to his colleagues. He wrote:
My gratitude goes to all of you who worked on the case because you made us proud. I can tell you that virtually all our offices participated. Mary Hoelle and Frank Quesada from the Miami office were outstanding and of course, this case would never have progressed without the planning defined by Toney Rodriguez, and his experienced team.
We are grateful for RCCL’s leadership in Messrs. Fain, Stein and Hanrahan, who asked for and obtained for FR the full cooperation of RCCL’s committed staff. We became one team.
Royal Caribbean filed suit against Alstom Power Conversion and Rolls-Royce. Alstom first settled with Royal Caribbean for $38 million. On January 11, 2010, at the courthouse, Royal Caribbean Cruises Ltd. and Rolls-Royce announced they reached a suitable and amicable resolution to the lawsuit regarding the Celebrity Cruises’ Millennium-class ships.
The press release issued that day stated that the settlement would generate a net increase of approximately $65 million in Other Income (expense) in Royal Caribbean’s 2010 first quarter results.
Royal Caribbean Cruises Ltd. is a global cruise vacation company that operates Royal Caribbean International, Celebrity Cruises, Pullmantur, Azamara Cruises and CDF Croisieres de France. The company has a combined total of 39 ships in service and four under construction.
A Substantial Victory In Longshore/DBA Claim
In August 2009, Delos “Dee” Flint secured a substantial victory for clients, Chartis and Eagle Support Services, when Law Judge Lee J. Romero, Jr. issued an order denying compensation and medical benefits to the plaintiff. The plaintiff, a civilian contractor in Iraq, claimed he was injured while installing a 90 lb air conditioner in a Humvee. The plaintiff allegedly fell backwards while holding on to the air conditioner and incurred back and neck injuries as a result of the fall. The plaintiff reported the injury, but continued working for another four months in the deployed location. When the plaintiff returned home, he began seeing local physicians and orthopedic surgeons and later filed a claim against Chartis and Eagle Support Services under the Longshore and Harbor Workers’ Compensation Act (LHWCA) and its extension, the Defense Base Act.
During the trial in Savannah, Georgia, Mr. Flint introduced evidence that the problems the plaintiff complained of were related to a pre-existing condition and that his degenerative arthritis stemmed from the pre-existing injury, not his work-related accident in Iraq. Under the 20(a) presumption of the LHWCA, the law presumes that an employee’s injury is related to the conditions of his work.
Judge Romero found that Mr. Flint was able to successfully rebut the presumption through substantial evidence of a pre-existing condition, and that although the plaintiff sustained a neck strain during his fall, that strain had healed, and his current problems were due to an unrelated injury. The Court observed that there were no residual disabilities as a result of the neck strain that occurred in Iraq, and thus nothing to prevent the plaintiff from returning to work. The Court discussed that not only could the employee have returned to work, but that the employer established the availability of suitable alternate employment for the plaintiff. Judge Romero denied all past and future compensation benefits, future medical benefits, and attorney’s fees in favor of FR’s client.
Houston and New Orleans Offices Team Up To Win $1M+
Through a team effort, involving both the New Orleans and Houston offices, FR was recently able to secure more than $1,000,000 in damages for long-time client, Hornbeck Offshore Services, one of the world’s largest suppliers of Offshore Vessels (OSV).
Hornbeck’s OSV, the Eerie Service, sank in 2007 during Hurricane Humberto while in a facility owned by R&R Marine. Hornbeck brought suit against R&R Marine and its insurer in a bifurcated trial, a two stage trial where the liability is determined prior to and separately from money damages. New Orleans Attorney Skipper Chenault partnered with Stacey Norstrud of the Houston Office to secure a verdict in favor of Hornbeck during the liability portion of the two phase trial. The court held that R&R was responsible for the sinking of Hornbeck’s OSV. In December of 2009, Ms. Norstrud was back in the court room with Houston partner, Tim Strickland, to determine the damages portion of the case. The trial resulted in an award of more than $1,000,000 for Hornbeck. The diligent efforts of the trio of attorneys reflect great credit upon the firm and its ability to seamlessly operate though geographically separated.
Success In Tidewater Bench Trial
In January 2010 a case on behalf of Quality Shipyards, a Tidewater affiliate, was tried by New Orleans office partner Norman Sullivan before U.S. District Judge Kurt Engelhardt of the Eastern District of Louisiana. The plaintiff, Quality Shipyards, filed a claim against the defendant for approximately $500,000 of unpaid work Quality had performed on a vessel belonging to the defendant. The vessel was subsequently seized and the company who owned it declared bankruptcy. The defendant, a customer of Quality Shipyards, then decided to dispute the value of the work performed. At the end of the trial, Judge Engelhardt ruled in favor of Quality, awarding virtually the entirety of its claim against the defendant and its affiliate companies.
Warehouse Receipt Validated for Hayes/Dockside, Inc.
In Sasol Wax Americas, Inc. etc. v. Hayes/Dockside, Inc, C.A. No. 06-4790 (E.D. La. May 14, 2008), Edward LeBreton, III and Stuart Ponder were successful in defending Hayes/Dockside, Inc. The plaintiff sought recovery for a quantity of wax damaged by Katrina’s floodwaters. Evidence was produced that the plaintiff had accepted a receipt that provided for notice of claim within 60 days of redelivery of the goods to the depositor or notice of damage and that suit must be filed within nine months. The plaintiff had done neither.
The U.S. District Court in New Orleans found in the defendant’s favor holding that, between sophisticated business parties, these terms would be enforced. In particular, the court noted that the prohibition of the Louisiana Civil Code against making prescription more onerous means that prescription may not be made more onerous on the defendant by lengthening the time period. Therefore, the provision reducing the period to nine months is valid.
The decision should be of assistance to warehouse operators because the terms in question were based on the Standard Terms and Conditions for Merchandise Warehousemen promulgated by the American Warehouse Association in 1968 and the International Warehouse Logistics Association in 1998. The case is significant because similar provisions are included in many warehouse receipts, therefore, the decision should assist warehouse owners in defending a variety of claims.
When a Seaman Isn’t a Seaman
New Orleans partner Mat Gray successfully urged a motion for summary judgment to deny seaman status and for judgment in favor of their client Trinity Catering, Inc. in a Jones Act case. Trinity had provided a cook to work on a semi-submersible drilling barge owned by Manson Exploration Co. The cook had been employed by Trinity for three weeks and all of his work was performed on the Manson drilling barge until he was injured. The cook required a total knee replacement; he did not return to work. He filed suit in the United States District Court for the Eastern District of Louisiana as a seaman under the Jones Act against Trinity for negligence, and against Manson.
Under a U.S. Supreme Court decision, the legal standard for seaman status is whether (1) the employee’s duties contributed to the function of the vessel and the accomplishment of its mission and (2) whether he had a connection to a vessel (or identifiable fleet of vessels under common ownership) that is substantial in terms of both duration and nature. The plaintiff met the first test. The second test has a rule of thumb that unless the employee spends 30 percent or greater of his employment on a vessel, or fleet, he will ordinarily not be held to be a seaman. Although the plaintiff spent 100 percent of his time on the Manson vessel, on the basis of an affidavit and the work records of other employees over a one year employment period, the court concluded that, absent the injury, in the future the cook would have been assigned to various vessels owned by Trinity clients and could not prove he met the 30 percent threshold. The motion for summary judgment was granted in favor of Trinity on December 11, 2007. Manson settled.
The decision has precedential value considering that plaintiff performed his entire work on a vessel.
In Houston, the Best Defense is a Good Offense
Houston partner Tim Strickland, assisted by Justin Renshaw and George Gaitas, put this motto to work recently, turning a suit filed against a bulk material marine terminal operator into a moneymaker for the client by way of a counter claim.
The original claim arose from an agreement for the client to provide vessel discharge services at its pet coke facility, with the plaintiff agreeing to use the client’s terminal exclusively for discharging its imported pet coke. When the plaintiff filed suit seeking nearly $500,000, Fowler Rodriguez filed a counter claim for breach of the exclusivity provision. Documents produced only after aggressive discovery efforts by the firm’s Houston office showed the counterclaim was much stronger than plaintiff’s original claims. On the morning of trial, after two mediations and a court-ordered settlement conference had failed to resolve the case, the plaintiff- turned-defendant-settled the case for $160,000 in cash payments and the promise to add $600,000 in new pet coke business to the client’s Gulf Coast facilities over the next two years.
On a smaller scale, Tim Strickland and Kim Conkey showed their willingness to head to the courthouse to defend a large nationwide maritime terminal operator against a claim of damage to steel coils, which had been stored in the client’s Port of Houston warehouse. A thorough investigation, with significant input from the client’s “on the ground” personnel, revealed the damage claimed could not have occurred at the warehouse. Despite pressure from the plaintiff’s counsel and the court, the client made no settlement offer and the case was set for trial. Just days before the trial date, the plaintiff dismissed the case. The client recognized it was our willingness and ability to have this matter ready to go to trial that produced the dismissal.
Class Certification Denied
New Orleans partner Robert Johnston successfully opposed an effort by a group of property owners, crabbers, shrimpers and fishermen to obtain class certification for their claims following an oil spill in Bayou Perot, south of New Orleans. Mr. Johnston’s client was ExPert Oil & Gas, owner and operator of an oil well, which was run over by a tug and barge, resulting in a spill. The captain of the tug did not report the incident and instead took measures to conceal his involvement. This incident has spawned a complex web of litigation, including a petition for limitation of liability filed by the tug owner, a declaratory judgment action filed by the tug owner’s underwriters on the issue of insurance coverage, and the putative class action suit. Mr. Johnston argued on behalf of ExPert at the class certification hearing in the United States District Court for the Eastern District of Louisiana. At the conclusion of the hearing, Judge Feldman denied the motion for class certification and ruled that each member of the putative class instead had to assert its own claim individually.
Appeals Court Upholds Win for CSX
New Orleans partner Robert Johnston secured a win for defendant CSX World Crane Service in a Longshore and Harbor Workers Compensation Act claim by a former employee. The claimant asserted he had injured his back in an unwitnessed lifting incident and thereafter underwent both a hip replacement and a spinal fusion. At trial, Mr. Johnston was able to show the plaintiff had an extensive history of pre-existing back injuries, and that he had made numerous statements to a co-worker that he intended to stage an accident. The co-worker recorded these statements in a daily journal. The Administrative Law Judge found the plaintiff lacked credibility and had failed to prove a compensable injury had occurred, while CSX had proven its contention that the alleged incident did not occur as claimed. Thereafter, the Benefits Review Board affirmed the trial decision, and the United States Fifth Circuit Court of Appeals affirmed the trial decision as well.
A Strong Defense Wins Again
After one mistrial and weeks in a second trial, Houston partner Allison H. Gabbert, representing defen-dants, SecurityComm Group, Inc. and Westex Communications, LLC, recently prevailed on all defenses and counter-claims against allegations related to SecurityComm’s client’s acquisition of Westex Communications in 2003. Following years of discovery and case development, Ms. Gabbert was able to show the plaintiffs–a group of former Westex membership unit holders–had perpetrated fraud upon SecurityComm through numerous misrepresentations related to the acquisition. Plaintiffs, one of whom is a major league baseball player, had concealed information before and during the litigation, but Ms. Gabbert followed every lead and was able to track down witnesses and documents that exposed the fraud. After a big break in the case in November 2007, plaintiffs’ counsel immediately began requesting a walk-away, take-nothing judgment for all parties. Confident in the strength of their position, Ms. Gabbert and her clients refused. In 31 questions submitted to the jury, the plaintiffs failed to prevail on any of their claims, while SecurityComm and Westex prevailed on all of their defenses and counter-claims and were awarded actual damages and stipulated attorney’s fees.
Summary Judgment for London Underwriters
Summary judgment was obtained in favor of London Underwriters in a significant insurance coverage matter. The issue arose as to whether a contractor had liability coverage for defective paving work in a parking lot at a funeral home. After hundreds of thousands of dollars were incurred by the contractor to fix the defective work, coverage was sought from London Underwriters. Michael McCoy and Robin Wexler filed a declaratory judgment action in federal court in Austin, Texas and obtained summary judgment of no coverage based on a number of applicable exclusions in the policy.
Faux Fall Fails to Win in Court
Summary judgment was obtained for a defendant when a nurse was severely injured in an alleged fall at a rent house. Michael McCoy represented the management company of the rent house, and surprised the plaintiff in depositions by showing two pre-existing injuries that she had already denied on the record, and by also demonstrating that plaintiff had exhibited drug-seeking tendencies. The Court became convinced the incident did not happen.
Recovery Granted in Indemnity Claim
In the case of Brad Trahan vs. Stric-Lan Companies Corp., et al, Jim Carroll, was able to obtain recovery against Stric-Lan Companies Corp. in connection with an indemnity claim for defense costs. Carroll successfully defended Apache Oil and Gas Co. and Ensco Offshore Co. and had them dismissed by summary judgment. Carroll also successfully had Apache picked up for defense and indemnity purposes by Tiburon Divers and their underwriters wherein Apache recovered almost all of its defense costs and had Tiburon’s CGL underwriters settle the main claim against Apache and Cross Maritime, whom Apache had been defending. This case is significant due to the fact that defense costs are recoverable despite the applicability of the Louisiana Oilfield Indemnity Act in those situations where the indemnified oil company is found free of any fault in the main demand.
United National Insurance Scores in Dallas Court of Appeals
United National Insurance brought in Fowler Rodriguez to assist on an appeal of an unfavorable arbitration award in a personal injury case. As allowed under the Arbitration Agreement, Michael McCoy and his team filed notice of appeal with the American Arbitration Association (AAA). The plaintiff challenged the right of appeal and filed a proceeding in the Dallas County District Court.
The trial judge struck down the appellate provision in the Agreement and stayed any further appeal at the AAA level. This meant the plaintiff could seek to enforce the award and prevent any appeal. McCoy and his team thus appealed the decision of the trial judge to the Dallas Court of Appeals, and sought mandamus as to the trial judge’s decision so that the original appeal would be allowed to proceed at the AAA level. The Dallas Court of Appeals found that the plaintiff had waived her right to now challenge the appeal at the AAA level, conditionally granted mandamus, and stated that the appeal may continue at the AAA level.
Underemployment Equals Reduced Payments for Service Employers
A Pensacola, Florida claimant recently brought suit under the Defense Base Act against a KBR subsidiary, Service Employers International, Inc., for injuries allegedly sustained in Iraq in connection with civilian logistical support for the war effort. The claimant alleged that he was entitled to receive a compensation rate based upon his “uplifted” salary from Iraq. The claimant’s counsel asserted that the claimant was entitled to the maximum amount pursuant to the Zimmerman decision, which is currently before the United States Circuit Court of Appeal.
On behalf of the KBR subsidiary, Dee Flint countered with two legal arguments, the first of which was that the Zimmerman decision did not apply in this case and he argued that the duration of employment in Iraq was only temporary and that the court should focus on the domestic work history of the claimant in arriving at a compensation rate. Additionally, Flint argued that upon his return, the claimant was underemployed and that his compensation rate should be reduced from the maximum allowable rate.
The Court ruled that the claimant was indeed underemployed and had the capacity to earn quite a bit more. As a result, the Court reduced the claimant’s average weekly wage by approximately $300 per week, which equated to a savings of $15,600 per year and a savings of over $500,000.00 to the defendant over the life expectancy of the claimant.