Whitchurch v. Canton Marine Towing Co., Inc.

Filing 55

OPINION: Plaintiff's Motion to Dismiss Counterclaim (d/e 48 ) is GRANTED. Defendant Canton Marine's Amended Counterclaim (d/e 39 ) against Plaintiff is DISMISSED without prejudice and with leave to amend. Canton Marine is given 30 days from the date of this Order to file a second amended counterclaim. SEE WRITTEN OPINION> Entered by Judge Sue E. Myerscough on 01/31/2018. (SKN, ilcd)

E-FILED

Wednesday, 31 January, 2018 11:29:36 AM
Clerk, U.S. District Court, ILCD

IN THE UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION
KORI WHITCHURCH,
Plaintiff,
v.
CANTON MARINE TOWING CO.,
INC., and the M/V SIR J-ETTE,
in rem,
Defendants.

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No. 16-cv-3278

OPINION
SUE E. MYERSCOUGH, U.S. District Judge.
Before the Court is Plaintiff Kori Whitchurch’s Motion to
Dismiss Counterclaim (d/e 48). The Court finds that Defendant
Canton Marine Towing Co., Inc. (“Canton Marine”) has not alleged a
cognizable claim under federal maritime law. Therefore, Plaintiff’s
Motion is GRANTED and Defendant Canton Marine’s Amended
Counterclaim (d/e 39) is DISMISSED WITHOUT PREJUDICE and
with leave to amend.
I. BACKGROUND
This action arises from claims of negligence under the Jones
Act, 46 U.S.C. § 30104, and unseaworthiness and maintenance and
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cure under general maritime law. See Compl. (d/e 1). Plaintiff was
employed by Canton Marine as a deckhand and member of the crew
of the vessel M/V SIR J-ETTE. Id. at ¶ 4. On August 9, 2016, while
the M/V SIR J-ETTE was afloat on the Mississippi River, Plaintiff
alleges he hurt his shoulder pulling wire from a winch. Id. at ¶ 8.
Canton Marine’s paid maintenance and cure to Plaintiff until
January 2017, which totaled $18,258.97. See Amend.
Counterclaim at ¶ 12 (d/e 39). Plaintiff filed his Complaint on
October 13, 2016.
Shortly after this injury, on August 26, 2016, Plaintiff
underwent a mandated Department of Transportation (“DOT”)
physical. Id. at ¶ 4. During this physical, Plaintiff told the medical
examiner “that he had not… sustained any recent injury, had no
physical complaints, had no joint, nerve, or muscle problems, and
had unlimited use of his arms and hands.” Id.
Shortly after receiving a copy of the DOT physical report,
Canton Marine moved to file a counterclaim under Federal Rule of
Civil Procedure 13(e) on October 16, 2017, (d/e 33), which U.S.
Magistrate Judge Tom Schanzle-Haskins approved on November 2,
2017. See November 2, 2017 Minute Entry. Canton Marine then
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filed an amended counterclaim on November 15, 2017 (d/e 39).
Canton Marine alleges that Plaintiff lied about the existence of his
injury and fraudulently obtained benefits from Canton Marine. See
Amend. Counterclaim (d/e 39). In addition to allegations relating to
the inconsistent DOT physical, Canton Marine alleges that Plaintiff
presented inconsistent and implausible stories as to how the
accident occurred during the interviews and made inconsistent
statements on a disability questionnaire that his treating physician
acknowledged “were not truly representative of his capabilities.” Id.
at ¶¶ 3 and 10.
Plaintiff filed this Motion to Dismiss Counterclaim pursuant to
Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), arguing that
the Court lacks subject matter jurisdiction, that Canton Marine
failed to state a claim upon which relief can be granted, and that
Canton Marine has failed to meet the pleading requirements of
fraud under Federal Rule of Civil Procedure 9(b). See Pl. Mot. (d/e
48).
II. LEGAL STANDARD
Pursuant to Federal Rule of Civil Procedure 12(b)(1), a party
may move for dismissal of a claim for lack of subject matter
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jurisdiction. Fed. R. Civ. P. 12(b)(1). “Motions to dismiss under
Rule 12(b)(1) are meant to test the sufficiency of the complaint, not
to decide the merits of the case.” Ctr. For Dermatology & Skin
Cancer Ltd. v. Burwell, 770 F.3d 586, 588 (7th Cir. 2014). When
considering a Rule 12(b)(1) motion, this Court accepts as true all
well-pleaded factual allegations and draws all reasonable inferences
in favor of the plaintiff. Alicea–Hernandez v. Catholic Bishop of
Chi., 320 F.3d 698, 701 (7th Cir. 2003). However, the claimant
bears the burden of proving the jurisdictional requirements have
been met. Burwell, 770 F.3d at 588–89.
A motion under Federal Rule of Civil Procedure 12(b)(6)
challenges the sufficiency of the complaint. Christensen v. Cnty. of
Boone, 483 F.3d 454, 458 (7th Cir. 2007). To state a claim for
relief, a party need only provide a short and plain statement of the
claim showing he is entitled to relief and giving the defendant fair
notice of the claims. Tamayo v. Blagojevich, 526 F.3d 1074, 1081
(7th Cir. 2008). However, pursuant to Federal Rule of Civil
Procedure 9(b), “[i]n alleging fraud or mistake, a party must state
with particularity the circumstances constituting fraud or mistake.

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Malice, intent, knowledge, and other conditions of a person’s mind
may be alleged generally.” Fed. R. Civ. P. 9(b).
When considering a motion to dismiss under Rule 12(b)(6), the
Court construes the pleading in the light most favorable to the
pleader, accepting all well-pleaded allegations as true and
construing all reasonable inferences in pleader’s favor. Id.
III. ANALYSIS
Plaintiff brings this claim pursuant to Federal Rule of Civil
Procedure 12(b)(1), and alleges that the Court does not have subject
matter jurisdiction because maritime law applies and Canton
Marine has not alleged a cognizable claim under that body of law.
See Pls. Mot. at 1-2 (d/e 48). Canton Marine argues that there is a
basis for supplemental jurisdiction pursuant to 28 U.S.C. § 1367
and that its claim is cognizable under maritime law. See Defs.
Resp. at 5 (d/e 52).
The Court notes that a pleading that states a claim for relief
must contain a “short and plain statement of the grounds for the
court’s jurisdiction” pursuant to Federal Rule of Civil Procedure
8(a)(1). Canton Marine’s counterclaim fails to do so. However, the
Court has supplemental jurisdiction over any claims that are “so
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related to claims” over which the Court has original jurisdiction
such that the related claims “form part of the same case or
controversy” as the original claims. 28 U.S.C. § 1367(a). The
Seventh Circuit has held that “[c]laims form part of the same case
or controversy when they ‘derive from a common nucleus of
operative fact.’” McCoy v. Iberdrola Renewables, Inc., 760 F.3d 674,
683 (7th Cir. 2014) (quoting United Mine Workers v. Gibbs, 383
U.S. 715, 725 (1966)). “A loose factual connection between the
claims is generally sufficient” to establish such a common
nucleus. Ammerman v. Sween, 54 F.3d 423, 424 (7th Cir.
1995). In the instant case, Canton Marine’s counterclaim is that
Plaintiff fabricated his accident and injury in order to receive
maintenance and cure payments from Canton Marine. These
claims have a strong factual connection to Plaintiff’s claims for
negligence, unseaworthiness, and maintenance and cure based on
the same alleged accident and injury. Therefore, this Court would
have subject matter jurisdiction over Canton Marine’s counterclaim,
so long as it alleges a cognizable claim under the applicable law.
Here, the applicable law is federal maritime law. Canton
Marine’s counterclaim does not include a jurisdictional statement
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and does not invoke admiralty law pursuant to Federal Rule of Civil
Procedure 9(h). However, regardless of whether a maritime tort
claim is brought on the admiralty or the law side of a federal district
court, the parties’ rights and liabilities are controlled by federal
principles of maritime law if the case arises from conduct that
brings it within reach of the Court’s admiralty jurisdiction. See
Bodnar v. Hi-Lex Corp., 919 F. Supp. 1234, 1237 (N.D. Ind. 1996)
(collecting cases); Quirin v. Lorillard Tobacco Co., 17 F. Supp. 3d
760, 766–67 (N.D.Ill. 2014) (The fact that the case is before this
court pursuant to diversity rather than admiralty jurisdiction,
however, ‘does not preclude the application of maritime law.’) (citing
Carey v. Bahama Cruise Lines, 864 F.2d 201, 206 (1st Cir.1988)).
Here, in light of the Court’s admiralty jurisdiction, federal maritime
law will prevail. See Fed. Ins. Co. v. Speedboat Racing Ltd., 200 F.
Supp. 3d 312, 336 (D. Conn. 2016). Therefore, Canton Marine’s
counterclaim will only survive a motion to dismiss if there is a
cognizable claim under federal maritime law.
Generally, overpayments of maintenance and cure can only be
recovered as an offset to any damages a seaman may recover under
the Jones Act. The McCorpen defense arises out of the Fifth Circuit
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case McCorpen v. C. Gulf S. S. Corp., 396 F.2d 547 (5th Cir. 1968),
which held that an employer’s obligation to pay maintenance and
cure to an injured seaman is terminated upon proof that the
seaman, in procuring his employment, intentionally and willfully
concealed material information about a prior medical condition that
is related to the later injury. Id. at 548-49. Courts have been
reluctant to expand the defense, as it is in tension with Still v.
Norfolk & Western Railway Co., 368 U.S. 35 (1961). Still held “that
a worker’s fraud in procuring his employment does not vitiate the
employment relationship, allowing him to maintain a suit for
damages under the Federal Employers’ Liability Act.” Boudreaux v.
Transocean Deepwater, Inc., 721 F.3d 723, 726 (5th Cir. 2013).
Plaintiff argues that a claim to recover maintenance and cure
obtained by fraud is not cognizable under maritime law based on
the principles and holding of Boudreaux v. Transocean Deepwater,
Inc., 721 F.3d 723 (5th Cir. 2013), which held the McCorpen
defense cannot be used as an affirmative cause of action. Canton
Marine argues it has not invoked the McCorpen Defense, therefore
the holding of Boudreaux and similar cases are inapplicable to their
claims. See Defs. Resp. at 3 (d/e 52). The Court recognizes that
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the issue here is whether an employer may recoup maintenance
and cure from a seaman who lied about the injury and accident
itself, not whether he had an underlying injury that would have
prevented the employment. However, the Court still finds that cases
interpreting the McCorpen defense are at least informative on the
issue, especially in light of the paucity of controlling precedent in
the Seventh Circuit.
Most courts have not opted to extend the McCorpen defense or
convert other instances where maintenance and cure were paid due
to fraud into an affirmative cause of action. In Boudreaux v.
Transocean Deepwater, Inc., 721 F.3d 723 (5th Cir. 2013), an
employer sought to obtain maintenance and cure already paid to a
seaman by invoking the McCorpen defense as a counterclaim. Id.
at 724. The Fifth Circuit held “that once a shipowner pays
maintenance and cure to the injured seaman, the payments can be
recovered only by offset against the seaman’s damages award—not
by an independent suit seeking affirmative recovery.” Id. at 727.
See also, Block Island Fishing, Inc. v. Rogers, 844 F.3d 358, 366
(1st Cir. 2016) (adopting the holding of Bourdeaux). District courts
in the Seventh Circuit have followed this logic as well. See Williams
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v. Cent. Contracting & Marine Inc., 15-cv-867-SMY-RJD, 2017 WL
76937, at *2 (S.D. Ill. Jan. 9, 2017) (refusing to allow counterclaim
based on seaman’s alleged concealment of prior injuries); Am. River
Transp. Co. v. Benson, No. 12 C 6222, 2012 WL 5936535, *4-5
(N.D. Ill. Nov. 27, 2012) (refusing to allow an employer to use the
principles of the McCorpen defense to bring an affirmative case, but
“not rul[ing] out the possibility that [the employer] may recover
under another theory of liability based on [the employee’s]
misrepresentations”).
Accordingly, district courts in the Fifth Circuit have denied
similar attempts to bring counterclaims for restitution of
maintenance and cure, including cases where, like here, the
employer claims the seaman fabricated the injury itself. See e.g.
Crowe v. Marquette Transportation Co. Gulf-Inland, LLC, No. CV
14-1130, 2015 WL 13529959, at *1 (E.D. La. Mar. 10, 2015)
(collecting cases and holding that an employer cannot raise a
counterclaim for fraud in order to seek restitution of maintenance
and cure already paid where employer alleges that the injury is
fabricated.); Dolmo v. Galliano Tugs, Inc., No. CIV.A. 09-3976, 2011
WL 6817824 (E.D. La. 2011), aff'd, 479 Fed. Appx. 656 (5th Cir.
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2012) (refusing to allow a counterclaim based on fraud where the
employer alleged the employee fabricated the accident). See also,
Cotton v. Delta Queen Steamboat Co., 2009-0736 (La. App. 4 Cir.
1/6/10), 36 So. 3d 262, 268 (holding that no cause of action exists
to obtain restitution from maintenance and cure payments which
were unnecessarily paid).
However, from time to time, various district courts have
allowed counterclaims seeking restitution for maintenance and cure
payments received as a result of fraud. See, e.g., Souviney v. John
E. Graham & Sons, No. 93–0479, 1994 WL 416643, at *5 (S.D.Ala.
1994) (“Because plaintiff intentionally concealed material facts
about the very back injury for which he now seeks recovery against
the defendant, this Court finds that, as a matter of law, plaintiff is
not entitled to receive maintenance and cure benefits. To the extent
that such benefits have been paid by the defendant, the defendant
is entitled to recover the amount of those benefits by way of
judgment against the plaintiff.”); Quiming v. Int’l Pac. Enters.,
Ltd., 773 F.Supp. 230, 235–37 (D.Haw. 1990) (granting a
counterclaim for maintenance and cure already paid where the
Court found that plaintiff was never legally entitled to receive the
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benefits); Bergeria v. Marine Carriers, Inc., 341 F.Supp. 1153,
1154–56 (E.D.Pa.1972) (“In addition to our finding that the
counterclaim [for maintenance and cure obtained by
misrepresentation of prior medical condition] is cognizable within
the maritime jurisdiction, it must also be allowed as a contractual
set-off.”). See also, Brege v. Lakes Shipping Co., 225 F.R.D. 546,
548 (E.D. Mich. 2004) (“If a shipowner pays a seaman more than
required for maintenance and cure, he may recover the
overpayment by means of a set-off against other damages, . . ., or
through a counterclaim.”) (cite omitted).
Additionally, as Canton Marine notes, the U.S. District Court
for the Southern District of Illinois has allowed a counterclaim
where an employer sought to recoup maintenance and cure
fraudulently obtained by a seaman who fabricated an injury. See
Phillips v. Hunter Marine Transport. Ind., 09-CV-0997-SCW, 2012
WL 4471646 (S.D. Ill. Sept. 26, 2012). Despite Canton Marine’s
contention that the Phillips court rejected the “exact same”
argument being presented here, the Phillips court did not address
whether the claim was cognizable or not, as it was not raised by the
parties. Id. See also, Phillips v. Hunter Marine Transport. Ind.,
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United States District Court, Southern District of Illinois, Case No.
09-CV-0997-SCW, Motion to Dismiss Counterclaim (d/e 19)
(moving to dismiss counterclaim, but not raising any issues with
whether the claim is cognizable). Significantly, the Phillips court
was confronted with a seaman who attempted to conspire with
other crewmembers to fake an injury in order to get maintenance
and cure benefits. See Phillips, 2012 WL 4471646 at *2. The
factual allegations here are far from such a premeditated scheme.
The Court does finds that the instant case is distinguishable
from cases seeking to extend the McCorpen defense. Significantly,
when the McCorpen defense applies, the seaman was actually
injured and an accident occurred. Assuming all factual allegations
in the amended counterclaim are true, as the Court is required to
do in deciding a motion to dismiss, the seaman here has fabricated
the injury and accident itself.
However, the general principles of limiting the availability of
claims for restitution from maintenance and cure payments apply
to this factual scenario as well. Given that the only precedents
allowing such a cause of action did not thoroughly address the
issue, the Court is hesitant to allow such a cause of action to stand.
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The Court further finds the rationale in Dolmo convincing, a case
dealing with a nearly identical issue of a seaman who allegedly
fabricated his injury:
The problems with the potential ramifications of recognizing
this counterclaim for fraud are exponentially enhanced from
those associated with the mere repayment of maintenance and
cure. The Court finds that the threat of being sued for fraud in
response to a seaman's personal injury claim seriously
undercuts the historical rationale and the very deference the
admiralty gives its wards of the court. Not only does the risk of
facing such a counterclaim remain unrecognized in any
reported case, but its recognition will cause attorneys to refuse
to represent injured seamen. It should be emphasized that the
plaintiff here is facing this counterclaim despite the fact that
his claim is supported with some medical evidence and the
fact that the defendants are fully entitled armed with
their McCorpen defense at trial.
Dolmo, 2011 WL 6817824 at *2. Indeed, as the court in Williams
noted, “[e]mployers have the opportunity and right to investigate
maintenance and cure claims such as this before payments are
tendered and they can do so without subjecting themselves to
liability for compensatory or punitive damages.” Williams, 2017 WL
76937 at *2. Once the payments are made, any judgment would
likely be uncollectible, but could cause a powerful chilling effect on
seaman seeking to bring claims “and its threat would have a
powerful in terrorem effect in settlement negotiations.” Boudreaux,
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721 F.3d at 727. The Court is especially reluctant to allow an
unprecedented cause of action for restitution under the facts of this
case, where seaman appears to have medical evidence supporting
the existence of at least some injury. Therefore, the Court finds
that Canton Marine has not alleged a cognizable counterclaim
under maritime law and the Court lacks subject matter jurisdiction
over the counterclaim. As a result, the counterclaim must be
dismissed.
As to Plaintiff’s remaining arguments, the Court cannot and
need not address them absent subject matter jurisdiction.
IV. CONCLUSION
For the reasons stated, Plaintiff’s Motion to Dismiss
Counterclaim (d/e 48) is GRANTED. Defendant Canton Marine’s
Amended Counterclaim (d/e 39) against Plaintiff is DISMISSED
without prejudice and with leave to amend. Canton Marine is given
30 days from the date of this Order to file a second amended
counterclaim.

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ENTERED: January 31, 2018
FOR THE COURT:

s/ Sue E. Myerscough
SUE E. MYERSCOUGH
UNITED STATES DISTRICT JUDGE

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