Whitchurch v. Canton Marine Towing Co., Inc.

Filing 62

OPINION: Plaintiff's Motion to Dismiss Second Amended Counterclaim 57 is GRANTED. Defendant Canton Marine's Second Amended Counterclaim 56 is DISMISSED without prejudice. SEE WRITTEN OPINION. Entered by Judge Sue E. Myerscough on 06/29/2018. (SKN, ilcd)

E-FILED

Friday, 29 June, 2018 10:31:02 AM
Clerk, U.S. District Court, ILCD

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

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16-cv-3278

OPINION
SUE E. MYERSCOUGH, U.S. DISTRICT JUDGE:
Before the Court is Plaintiff Kori Whitchurch’s Motion to
Dismiss Second Amended Counterclaim (d/e 57). The Court finds
that Defendant Canton Marine Towing Co., Inc. (hereinafter Canton
Marine) has not alleged a cognizable claim under federal maritime
law. Therefore, Plaintiff’s Motion is GRANTED and the Second
Amended Counterclaim (d/e 56) is DISMISSED WITH PREJUDICE.
I. BACKGROUND
On August 9, 2016, after working on the M/V SIR J-ETTE,
Plaintiff reported that he hurt his shoulder pulling wire from a
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winch. Compl. ¶¶ 7, 8. Shortly after making this report, on August
26, 2016, Plaintiff underwent a Department of Transportation
(“DOT”) physical. d/e 39-1. 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.
After receiving a copy of the DOT physical report, Canton
Marine filed an amended counterclaim alleging that Plaintiff
obtained maintenance and cure fraudulently by fabricating the
story about his injury. In addition to allegations relating to the
inconsistent DOT physical, Canton Marine alleged that Plaintiff
presented inconsistent and implausible stories as to how the
accident occurred and made inconsistent statements on a disability
questionnaire that his treating physician acknowledged “were not
truly representative of his capabilities.” First Am. Counterclaim ¶¶
3 and 10.
On January 31, 2018, the Court granted Plaintiff’s Motion to
Dismiss Counterclaim (d/e 48). The Court held that, under Federal
Rule of Civil Procedure 12(b)(6), Canton Marine did not allege a
cognizable counterclaim under maritime law. The Court dismissed
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the First Amended Counterclaim without prejudice and granted
Canton Marine leave to file a second amended counterclaim within
30 days.
On February 27, 2018, Canton Marine filed its Second
Amended Counterclaim (d/e 56). Canton Marine alleges that
Plaintiff lied about the existence of his injury and fraudulently
obtained benefits from Canton Marine. The claim of fraud is
supported by the allegation of Plaintiff’s statements during the DOT
physical. Canton Marine alleges those statements were
inconsistent with Plaintiff’s statements to Captain Jones on August
9, 2016, and other unspecified statements to Canton Marine. Sec.
Am. Counter. ¶ 7. The Second Amended Complaint omits
allegations of inconsistent stories and the statements on the
disability questionnaire.
Plaintiff has now moved to dismiss the Second Amended
Counterclaim pursuant to Rule 12(b)(6). Plaintiff alleges that the
Second Amended Counterclaim suffers from the same issues as the
First Amended Counterclaim and that it does not assert a
cognizable claim under maritime law.
II. LEGAL STANDARD
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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). 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 the pleader’s favor.
Id. 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. Malice, intent,
knowledge, and other conditions of a person’s mind may be alleged
generally.” Fed. R. Civ. P. 9(b).
III. JURISDICTION
The Court finds that it has subject matter jurisdiction over the
Second Amended Counterclaim. The Complaint invokes the Court’s
admiralty jurisdiction under federal maritime law. Because the
claims of the Second Amended Counterclaim “form part of the same
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case or controversy” as the claims of the Complaint, over which the
Court has original jurisdiction, the Court has supplemental
jurisdiction over the Second Amended Counterclaim’s claims. 28
U.S.C. § 1367(a).
IV. ANALYSIS
A. Canton Marine does not assert a claim for relief under
federal maritime law.
Canton Marine purports to bring its counterclaims under
federal maritime law, incorporating federal and Illinois common law
of fraud. As the Court ruled in its January 31, 2018 Opinion,
federal maritime law controls the rights and liabilities of this case
because the case arises from conduct that invokes 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)). In light of the Court’s admiralty
jurisdiction, Canton Marine’s counterclaim must be cognizable
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under federal maritime law. See Fed. Ins. Co. v. Speedboat Racing
Ltd., 200 F. Supp. 3d 312, 336 (D. Conn. 2016).
However, federal maritime law generally prohibits an action by
an employer against a seaman-employee to recover overpayments of
maintenance and cure. The Federal Employers’ Liability Act voids
any “device” that is intended to exempt a common-carrier employer
from liability under the Act. 45 U.S.C. § 55. Instead, when
defending an action brought under the Act, the employer may offset
the sums it has already paid. Id.
Federal maritime case law generally supports this limit on an
employer’s ability to recover overpayments by bringing an
affirmative claim. Under McCorpen, a shipowner’s duty to pay
maintenance and cure to its injured employee is extinguished upon
proof that, in procuring his employment, the employee willfully
concealed material information about a prior medical condition that
is related to the later injury. McCorpen v. C. Gulf S. S. Corp., 396
F.2d 547, 548-49 (5th Cir. 1968). However, courts have refused to
extend this defense to allow employers to bring a counterclaim
seeking to recover payments made before it learned of the

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misrepresentation. Boudreaux v. Transocean Deepwater, Inc., 721
F.3d 723 (5th Cir. 2013).
Our fellow district courts in the Seventh Circuit have similarly
declined to extend the McCorpen defense into an affirmative cause
of action. See Williams v. Cent. Contracting & Marine Inc., 15-cv867-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”).
Courts are split on whether an employer may bring an
affirmative claim for restitution of maintenance and cure where, like
here, the employer claims the seaman fabricated the injury or
accident itself. See, e.g., Dolmo v. Galliano Tugs, Inc., No. 09-3976,
2011 WL 6817824 (E.D. La. 2011), aff’d, 479 Fed. Appx. 656 (5th
Cir. 2012) (refusing to allow a counterclaim based on fraud where
the employer alleged the employee fabricated the accident); contrast
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Crowe v. Marquette Transp. Co. Gulf-Inland, LLC, No. 14-1130
(E.D. La. May 8, 2015) (setting aside magistrate’s denial of
counterclaim to recover payments made due to seaman’s
falsification that injury occurred while at work) (overruling Crowe v.
Marquette Transp. Co. Gulf-Inland, LLC, No. 14-1130, 2015 WL
13529959 (E.D. La. Mar. 10, 2015); 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.”).
The Court notes that the instant case is distinguishable from
cases regarding a McCorpen counterclaim on the existence of the
employment relationship because in those cases, the seaman was
actually injured and an accident occurred. Nonetheless, the Court
finds that the general principles of limiting the availability of claims
for restitution from maintenance and cure payments apply to this
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factual scenario as well, in which Canton Marine asserts that
Plaintiff fabricated the injury and accident itself. The Fifth Circuit’s
finding in Boudreaux provides support for this proposition: “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
Boudreaux). The breadth of this statement suggests that the
prohibition on affirmative causes of action by the employer applies
beyond the context present in Boudreaux. The Court also considers
the paucity of on-point precedent and the policy rationale of limiting
counterclaims by employers because they chill actions by
employees to protect their Jones Act rights. Dolmo, 2011 WL
6817824 at *2.
The Court is especially reluctant to allow an unprecedented
cause of action for restitution under the facts of this case, where
the seaman appears to have medical evidence supporting the
existence of at least some injury. See id.; Aug. 2016 Medical

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Records, d/e 35-1, at 4, 7, 9, 11; Sept. 2, 2016 MRI Report, d/e 352, at 3.
B. The allegations that Plaintiff precluded Canton Marine
from investigating the injury does not support a claim
for relief.
The allegations in the Second Amended Counterclaim that
Plaintiff thwarted Canton Marine’s investigation of the injury do not
help to state a claim upon which relief can be granted. “Employers
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. The
correlation of this right is that the employer may rely on certain
legal defenses to deny claims where the employee willfully concealed
a material fact, such as an existing injury. Brown v. Parker Drilling
Offshore Corp., 410 F.3d 166, 171 (5th Cir. 2005) (“An employer is
allowed to rely on certain legal defenses to deny these claims, such
as the defense that the injured seaman willfully concealed a preexisting medical condition from his employer.”). However, the
employer’s right to investigate and accordant defenses do not create
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a cause of action upon which the employer can sue to recover
overpayments. See Boudreaux, 721 F.3d at 728 (McCorpen defense
allows employer to offset but employer cannot bring independent
suit seeking affirmative recovery).
IV. CONCLUSION
The Court finds that Canton Marine has not alleged a
cognizable counterclaim under maritime law. As a result, the
counterclaim must be dismissed.
The Court finds that Count I of the Second Amended
Counterclaim does not state a cognizable claim for relief under
federal maritime law because that law limits an employer’s ability to
bring a claim for recovery against a seaman-employee and because
Canton Marine cannot recover on the claim that Plaintiff prevented
Canton Marine from investigating the accident and injury. No other
allegation in Count I of the Second Amended Counterclaim supports
a claim for which relief can be sought.
Count II of the Second Amended Counterclaim must also be
dismissed. Count II rests on the Illinois state common law of fraud.
As stated above, because the facts alleged in the Second Amended
Counterclaim arise from the same conduct that brings the
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Complaint within admiralty jurisdiction, federal maritime law
applies. Therefore, Canton Marine cannot circumvent the
parameters of that law with a state common-law claim.
For the reasons stated, Plaintiff’s Motion to Dismiss Second
Amended Counterclaim (d/e 57) is GRANTED. Defendant Canton
Marine’s Second Amended Counterclaim (d/e 56) is DISMISSED
without prejudice.
ENTERED: June 29, 2018
FOR THE COURT:

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

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