StarNet Insurance Company v. LA Marine Service LLC et al

Filing 75

FINDINGS OF FACT AND CONCLUSIONS OF LAW. Signed by Judge Sarah S. Vance on 12/27/2017.(caa)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
STARNET INSURANCE COMPANY
VERSUS
LA MARINE SERVICE LLC AND
LEONARD JOURDAN, JR

CIVIL ACTION
NO. 16-13511
SECTION “R” (3)

FINDINGS OF FACT AND CONCLUSIONS OF LAW
I.

INTRODUCTION
This case arises out of the sinking of Defendant LA Marine Service

LLC’s vessel, the M/V CAPT. LJ. Defendant Leonard Jourdan, Jr. is the
owner and operator of LA Marine Service. 1 Plaintiff StarNet Insurance
Company supplied a time-hull insurance policy to defendants to cover the
M/V CAPT. LJ for the policy period of September 24, 2015, through
September 24, 2016. 2 LA Marine Service and Leonard Jourdan are each
listed as named assureds on the policy. 3 The M/V CAPT. LJ sank on the night
of April 7, 2016, or the early morning of April 8, 2016. 4

1
2
3
4

R. Doc. 65 at 12.
Id.; Joint Ex. 1.
Joint Ex. 1 at 6.
R. Doc. 65 at 12.

On August 2, 2016, plaintiff filed suit requesting a declaratory
judgment that it does not owe insurance coverage for losses arising out of the
sinking of the M/V CAPT. LJ.5 Defendants filed an answer, affirmative
defenses, and a counterclaim for declaratory judgment and contractual and
statutory damages.6 On July 21, 2017, the Court struck defendants’ jury
demand because plaintiff designated its claim as an admiralty claim under
Federal Rule of Civil Procedure 9(h). 7 The Court later granted plaintiff
partial summary judgment and dismissed defendants’ counterclaims for
statutory penalties and lay up damages. 8
The only unresolved claims are the parties’ cross-claims for declaratory
judgment on the issue of insurance coverage. After a pretrial conference on
November 2, 2017, the parties agreed to try this case on a stipulated record
and written submissions to the Court in lieu of a live trial. 9 The parties
further agreed to waive hearsay and authenticity objections to expert reports
and depositions.10 The parties have submitted joint trial exhibits.11 After
reviewing the evidence, the Court rules as follows.

5
6
7
8
9
10
11

R. Doc. 1.
R. Doc. 13.
R. Doc. 60.
R. Doc. 62.
R. Doc. 66.
Id.
R. Doc. 67; R. Doc. 68-1.
2

II.

FINDINGS OF FACT AND CONCLUSIONS OF LAW
A. Legal Framework
It is undisputed that, at the time of its sinking, the M/V CAPT. LJ was

insured by plaintiff. But plaintiff argues that no insurance benefits are owed
because the vessel sank as a result of defendants’ negligence. 12
1. Choice of Law
As a threshold matter, the Court must determine whether state law or
federal maritime law governs this dispute. “A marine insurance contract is
indisputably a marine contract within federal admiralty jurisdiction.” New
Hampshire Ins. Co. v. Martech USA, Inc., 993 F.2d 1195, 1198 (5th Cir.
1993). But “the interpretation of a contract of marine insurance is—in the
absence of a specific and controlling federal rule—to be determined by
reference to appropriate state law.” Albany Ins. Co. v. Anh Thi Kieu, 927
F.2d 882, 886 (5th Cir. 1991) (internal quotation marks and citation
omitted). The Fifth Circuit has identified three factors a court must consider
to determine whether to apply state law or federal maritime law: “(1) whether
the federal maritime rule constitutes ‘entrenched federal precedent’; (2)
whether the state has a substantial, legitimate interest in application of its
law; and (3) whether the state’s rule is materially different from the federal

12

R. Doc. 68.
3

rule.” New Hampshire Ins. Co., 993 F.2d at 1198 (citing Albany Ins. Co., 927
F.2d at 886).
The central issue in this case is whether defendants’ negligence
precludes coverage under the implied warranty of seaworthiness and/or the
Liner Negligence Clause of the insurance contract. The parties assume that
federal law governs this dispute. “Entrenched federal precedent exists on the
implied warranty of seaworthiness and the interpretation of Inchmaree
clauses in maritime insurance contracts, which displaces Louisiana law” with
regard to the issue of seaworthiness. Thanh Long Partnership v. Highland
Ins. Co., 32 F.3d 189, 193-94 (5th Cir. 1994). The Liner Negligence Clause at
issue here is closely related to the Inchmaree Clause and is similarly
governed by Fifth Circuit precedent.

Both clauses expand maritime

insurance to cover additional perils, subject to the assured’s due diligence.
See id. at 191; Employers Ins. of Wausau v. Occidental Petroleum Corp., 978
F.2d 1422, 1437-39 (5th Cir. 1992). The Court therefore applies federal
maritime law to this dispute.
2. Implied Warranties of Seaworthiness
The Fifth Circuit has explained that “federal maritime law implies two
warranties of seaworthiness in a time hull insurance policy”: an absolute
warranty of seaworthiness at the inception of the policy and “a modified,
4

negative warranty, under which the insured promises not to knowingly send
a vessel to sea in an unseaworthy condition.” Employers Ins. of Wausau,
978 F.2d at 1431-32. These implied warranties of seaworthiness are together
known as the “American Rule.” See Sask. Gov’t Ins. Office v. Spot Pack, Inc.,
242 F.2d 385, 388 (5th Cir. 1957).
If a vessel owner, through bad faith or neglect, knowingly permits the
“vessel to break ground in an unseaworthy condition,” the insurer may deny
coverage for “loss or damage caused proximately by such unseaworthiness.”
Id. at 388. The insurer bears the burden of proving unseaworthiness, and
that such unseaworthiness was the cause of the loss. Id. at 389; see also
Tropical Marine Prods., Inc. v. Birmingham Fire Ins. Co. of Pa., 247 F.2d
116, 119 (5th Cir. 1957) (explaining that the vessel owner need not prove that
the vessel was seaworthy).
3. Liner Negligence Clause
The insurance contract between the parties includes a Liner Negligence
Clause, which covers losses caused by:
A. Breakdown of motor generators or other electrical machinery and
electrical connections thereto; bursting of boilers; breakage of
shafts; or any latent defect in the machinery or hull;
B. Loss of or damage to the subject matter insured directly caused by:
1. Accidents on shipboard or elsewhere . . .
2. Negligence, error of judgment or incompetence of any person;
5

. . . provided such loss or damage (either as described in said “A” or
“B” or both) has not resulted from want of due diligence by the
Assured(s), the Owner(s) or Manager (s) of the Vessel, or any of them.
Master, mates, engineers, pilots or crew not to be considered as part
owners within the meaning of this clause should they hold shares in
the vessel.13
A Liner Negligence Clause, like the related Inchmaree Clause, broadens the
coverage available under a marine insurance policy beyond the “classic
‘perils’ clause” to cover losses caused by certain machinery or hull defects, or
by the negligence of certain individuals. See Employers Ins. of Wausau, 978
F.2d at 1437-38 (citing 1 Alex Parks, The Law and Practice of Marine
Insurance and Average, 363-406 (1987)).
The Liner Negligence Clause appears to form the sole possible basis for
defendants’ claim for insurance proceeds.

Plaintiff’s complaint and

defendants’ counterclaim both state that the M/V CAPT. LJ sank because
water entered the engine room through the shafts, stuffing boxes, and
packing gland assemblies.14 Defendants assert that the damage to the M/V
CAPT. LJ resulted from a premature failure of the stuffing box. 15

As

explained in more detail below, a stuffing box or packing gland assembly
consists of a chamber filled with packing rings that create a seal around the

13
14
15

Joint Ex. 1 at 18-19 (emphasis added).
R. Doc. 1 at 3; R. Doc. 13 at 9.
R. Doc. 13 at 10.
6

vessel’s propulsion shaft, permitting the shaft to rotate while preventing
almost all leaks into the engine room. 16 Plaintiff represents that a sinking
caused by defects in, or breakdown of, the shafts and stuffing boxes is not
covered by the insurance policy unless defendants satisfy the requirements
of the Liner Negligence Clause.17
As the insured party, defendants bear the initial burden of proving that
their loss falls within the policy’s coverage. See New Hampshire Ins. Co.,
993 F.2d at 1200.

The insurer then bears the burden of proving the

applicability of any policy exclusions. 18 Id. Defendants’ briefing fails to
specify which clause of the insurance contract covers the sinking of the M/V
CAPT. LJ. But defendants’ claims representative, Nicholas Cozad, asserted
in a letter to plaintiff on behalf of defendants that the vessel’s sinking “was
the result of an unforeseen and sudden failure/accident which is a covered
peril under the Liner Negligence Clause of this contract.”19

Because

Joint Ex. 9 at 18-19; Joint Ex. 20 at 13. In their response to plaintiff’s
interrogatories, defendants explain that the vessel’s external propeller is
attached to its motor through a shaft, which passes through a stuffing box.
Defendants further state that “[a] sound stuffing box installation is critical
to safety because failure can admit a catastrophic volume of water into the
vessel.” See Joint Ex. 20 at 13.
17
R. Doc. 68 at 7.
18
Although the Court applies federal maritime law, the parties’
respective burdens of proof are the same under Louisiana insurance law.
See Tunstall v. Stierwald, 809 So. 2d 916, 921 (La. 2002).
19
Joint Ex. 8 at 3.
7
16

defendants have not pointed to any other provision in the insurance contract
that covers their loss, the Court finds that defendants’ claim for insurance
benefits is governed by the Liner Negligence Clause.
Defendants argue that the Liner Negligence Clause’s exclusion for
losses that result from “want of due diligence by the Assured(s), the Owner(s)
or Manager (s) of the Vessel” should not apply to preclude coverage because
the Liner Negligence Clause is intended to “broaden and not restrict, to
expand, not withdraw, coverage” (quoting Spot Pack, 242 F.2d at 391).20 A
Liner Negligence Clause does permit recovery for some losses that would not
be available under traditional maritime insurance contracts, such as losses
caused by the negligence of the vessel’s builder and construction supervisor.
See Employers Ins. of Wasau, 978 F.2d at 1440. But the clause’s expansion
of coverage is not unlimited. As is clear from the explicit terms of the policy,
“to come within the protection of the Liner Negligence Clause, the loss in this
case must not have resulted from a want of due diligence” by the assured,
owner, or manager of the vessel. Id. at 1439; see also Spot Pack, 242 F.2d at
392 (noting that the proviso in the Inchmaree Clause excluding coverage for
loss or damage caused by want of due diligence “refers only to acts of which
the owner had privity and knowledge”).

20

R. Doc. 67 at 5.
8

Thus, under the terms of the insurance policy, plaintiff does not owe
insurance benefits if it can establish that the sinking of the M/V CAPT. LJ
resulted from the lack of due diligence of Leonard Jourdan as the assured
party and vessel owner. Plaintiff argues that the American Rule and the
Liner Negligence Clause constitute independent defenses to coverage, and
that a violation of either results in a denial of insurance benefits.21 But the
Fifth Circuit has found that a Liner Negligence Clause or Inchmaree Clause
can waive or displace the American Rule’s implied warranties of
seaworthiness. 22 See Employers Ins. of Wasau, 978 F.2d at 1440; Tropical
Marine Prods., Inc., 247 F.2d at 122-23; Spot Pack, 242 F.2d at 392. Thus,
the Court examines whether plaintiff properly denied coverage under the
Liner Negligence Clause.
B. Cause of Sinking
The M/V CAPT. LJ was moored to a spud barge in the Quality Pipeline
yard in Empire, Louisiana, when it sank during the night of April 7, 2016, or

R. Doc. 68 at 4.
In its order granting partial summary judgment, the Court found that
the American Rule and the Liner Negligence Clause together provided
plaintiff with reasonable grounds to believe that it could defend against
defendants’ insurance claim. See R. Doc. 62 at 9-11. The summary
judgment briefs did not address, and the Court did not rule on, whether the
Liner Negligence Clause and the American Rule employ the same
negligence standard.
9
21

22

the early morning of April 8, 2016.23 Two marine surveyors, Austin Glass
and Nicholas Paternostro, issued reports related to the sinking. Glass,
Paternostro, and Jourdan also testified as to the condition of the M/V CAPT.
LJ and the maintenance of its stuffing boxes.
1. Glass Report
Austin Glass of Rivers & Gulf Marine Surveyors conducted a
preliminary inspection and survey of the vessel, and issued a preliminary
advice report on April 10, 2016.24 Glass has worked as a marine surveyor for
Rivers & Gulf since 2011, and was previously with the U.S. Coast Guard for
six years.25 Glass’s report stated that the vessel’s “stuffing boxes were
believed to be leaking, but an automatic bilge pump was used to keep the
water pumped out of the vessel. To do this the generator was left running at
all times.”26 The report further noted that “[i]t is believed that at some point
during the night the generator engine stopped running and the engine room
started to fill with water as the bilge pump did not have any power to it,”
causing the vessel to sink. 27

23
24
25
26
27

R. Doc. 65 at 12.
Id.; Joint Ex. 2.
Joint Ex. 14 at 3-4.
Joint Ex. 2 at 1.
Id. at 2.
10

Glass later testified that he did not inspect the stuffing boxes himself,
and instead based his report on his conversation with Jourdan and their
discussion of what might have caused the sinking.28 He noted that the only
scenario that he and Jourdan “could come up with was there was a failure in
the stuffing boxes.”29 Glass further testified that he discussed with Jourdan
a slight leak of the stuffing boxes, but “that is the industry standard for those
types of stuffing boxes.”30 Glass noted that stuffing boxes are designed to
leak for cooling purposes.31 Further, Glass testified that he did not know
whether and to what extent the stuffing boxes were leaking.32 Nor did he
know whether the generator was running at the time of the sinking. 33 Glass
explained that he was not asked to determine the cause of the sinking of the
M/V CAPT. LJ, and he did not determine the cause. 34
2. Paternostro Report
On June 23, 2016, Nicholas Paternostro conducted a survey of the M/V
CAPT. LJ at plaintiff’s request. 35

28
29
30
31
32
33
34
35

Paternostro has worked as a marine

Joint Ex. 32 at 21-22, 47.
Id. at 22.
Id. at 24.
Joint Ex. 14 at 11.
Id. at 10.
Joint Ex. 32 at 13.
Id. at 12.
R. Doc. 68 at 11; Joint Ex. 9.
11

surveyor with the firm Dufour, Laskay & Strouse since 2006, and he
estimates that he has completed several hundred surveys during that time
period. 36 Paternostro was previously employed as a machinery technician
for the U.S. Coast Guard between 1997 and 2006. 37 Paternostro’s survey of
the M/V CAPT. LJ concluded that “the most probable cause of the vessel’s
sinking was the result of uncontrolled seawater ingress into the vessel’s
engine room through the packing gland assemblies.” 38 The packing gland
assemblies, also known as stuffing boxes, consist of a chamber where packing
rings are compressed around the vessel’s propulsion shafts, creating a seal
that eliminates almost all water. 39 According to Jourdan, the packing in the
M/V CAPT. LJ consisted of a graphite type material. 40
Paternostro’s report explained that the packing rings in the stuffing
boxes should “establish a compression seal around the shaft which is
required to maintain watertight integrity in the engine room and at the same
time allow for sufficient cooling of the main propulsion shafts.” 41
Paternostro found that the M/V CAPT. LJ’s port and starboard propulsion

36
37
38
39
40
41

Joint Ex. 28 at 6, 10.
Id. at 8.
Joint Ex. 9 at 23.
Id. at 18.
Joint Ex. 29 at 45.
Joint Ex. 9 at 19.
12

shafts were heavily worn, resulting in an hourglass appearance.42 The port
propulsion shaft was worn down from an original shaft diameter of 3 inches
to a diameter of 1.75 inches, and the starboard propulsion shaft was worn
down from an original shaft diameter of 3 inches to a diameter of 2.25
inches. 43 Photographs attached to Paternostro’s report show significant
wear at one point in the length of each shaft, giving the shafts an hourglass
appearance.44
Paternostro concluded that the shafts were worn down because of a
lack of maintenance.45 His report noted that, over time, packing rings will
wear down, and worn or old packing can become hard.46 Paternostro opined
that the packing rings in the M/V CAPT. LJ’s packing gland assemblies “were
subjected to compression failure due to old packing rings not being removed
when new packing rings were installed in the packing chamber.”47
Paternostro further explained that this practice of “jamming packing
material up against the main propulsion shaft journals stimulated shaft wear
resulting from a combination of frictional heat and abrasive contaminates

42
43
44
45
46
47

Id. at 18.
Id.
Id. at 62-64.
Id. at 23.
Id. at 19.
Id. at 23.
13

over time.”48 Heavily worn shafts can in turn “present a poor sealing
condition between the shaft and the packing chamber.”49 Based on these
observations, Paternostro’s report concluded that the condition of the
packing gland assemblies provided an opportunity for an uncontrollable
volume of seawater to enter the engine room. 50 Paternostro later testified
that, “if you have an improper seal or excessive amount of water entering an
engine room, that is a non-seaworthy condition.” 51
3. Defendants’ Account
Jourdan testified as to his maintenance practices with regard to the
packing gland assemblies. Jourdan stated that he would add packing rings
to the stuffing box as needed, such as when he observed excess leaking.52 He
testified that, when he added new packing, he did not remove the old packing
unless it was hanging out or easily accessible.53 Jourdan further stated that
he did not know what happened to the old packing, and was “not sure if it
wears and goes away or . . . goes out the other end. I have no idea.”54

48
49
50
51
52
53
54

Id.
Id.
Id. at 23-24.
Joint Ex. 28 at 63.
Id. at 41-42.
Id. at 48-49.
Id. at 49.
14

In their counterclaim, defendants state that “the M/V CAPT. LJ sank
because water infiltrated the engine room by way of the shafts, stuffing
boxes, and packing gland assemblies, flooding the engine room and bilge.”55
Defendants further assert that the vessel was damaged “when it suddenly and
unexpectedly began to take on water due to a premature failure of the
stuffing box while moored in Empire, LA.”56 But defendants do not contest
that they lack physical evidence to support the theory that the sinking was
caused by a sudden and unexpected failure of the stuffing boxes. 57
4. Conclusions
Plaintiff contends that the M/ V CAPT. LJ sank because of Jourdan’s
improper maintenance of the vessel’s stuffing boxes.58 Defendants do not
offer an alternative theory of the cause of the sinking of the M/V CAPT. LJ.
Instead, defendants appear to argue that Paternostro’s report is unreliable
because he was hired to confirm plaintiff’s preexisting theory of how the
vessel sank, and plaintiff allegedly directed him to focus on the vessel’s shafts
and packing assemblies.59 But defendants offer no specific facts to contest

55
56
57
58
59

R. Doc. 13 at 9.
Id. at 10.
R. Doc. 36-2 at 3; Joint Ex. 29 at 82-83.
R. Doc. 68.
R. Doc. 67 at 10-11.
15

Paternostro’s detailed findings regarding the deteriorated condition of the
M/V CAPT. LJ’s propulsion shafts and stuffing boxes.
The Court finds that Paternostro’s report is credible, and that plaintiff
has proven that the M/V CAPT. LJ sank because of a leak through the vessel’s
stuffing boxes. Further, the Court finds by a preponderance of the evidence
that this leak was caused by overstuffing of packing material against the
propulsion shafts, which wore down the shafts and led to a failure of the
compression seal around the shafts.
C. Due Diligence
The sole question remaining is whether the leak from the stuffing boxes
resulted from want of due diligence by Jourdan as the assured party and
vessel owner. With regard to a vessel’s seaworthiness, “[w]here the standard
of due diligence is applicable, it comprehends inspection and investigation,
where prudent, to determine the existence of deficiencies before they become
critical.” Ionion S.S. Co. of Athens v. United Distillers of Am., Inc., 236 F.2d
78, 84 (5th Cir. 1956); see also Black’s Law Dictionary (1oth ed. 2014) (Due
diligence is the diligence, or attention and care, “reasonably expected from,
and ordinarily exercised by, a person who seeks to satisfy a legal requirement
or to discharge an obligation.”).

16

Due diligence is judged by an objective standard rather than the vessel
owner’s subjective beliefs regarding acceptable practices. See Deutsche Shell
Tanker Gesellschaft mbH v. Placid Refining Co., 993 F.2d 466, 473 n.29 (5th
Cir. 1993). Objectively inadequate maintenance constitutes a lack of due
diligence. See Steel Coils, Inc. v. M/V LAKE MARION, 331 F.3d 422, 430-31
(5th Cir. 2003) (affirming district court judgment that defendant vessel
interests failed to exercise due diligence because the ship’s hatches were
insufficiently maintained and had not been properly tested for
watertightness before embarkation); Deutsche Shell Tanker, 993 F.2d at
472-73 (affirming district court finding that vessel owner failed to exercise
due diligence in maintaining radar unit because owner did not follow the
manufacturer’s recommendations).
It is essentially uncontested that Jourdan failed to maintain the vessel’s
stuffing boxes and propulsion shafts properly. In response to plaintiff’s
interrogatories regarding maintenance of the stuffing boxes, defendants
stated that the “maintenance performed generally included opening the
stuffing boxes, inserting additional packing rings/glands and/or tightening
the stuffing boxes. No written procedures or policies exist.” 60 Jourdan
himself testified that he added new packing material to the stuffing boxes

60

Joint Ex. 20 at 5.
17

without removing the old packing, and that he “ha[d] no idea” what
happened to the old packing material.61
Paternostro testified that Jourdan’s practice of adding new packing
rings

without

removing

old

packing

material

constituted

poor

maintenance.62 He explained that “[y]ou can’t just keep jamming packing
in” because it “pushes up against the shaft, the rotating shaft. What happens
over time is it loses lubrication, efficiency. You build up heat. The packing
gets hard . . . that’s an abrasive, and it scores the shaft.”63 Paternostro noted
that the packing rings on the M/V CAPT. LJ “were basically welded to the
inner diameter of the packing chamber. They hadn’t been touched in, it
looked like, a long period of time.”64
Andrew Minster, the owner of Rivers & Gulf Marine Surveyors and a
marine surveyor with about 40 years of experience, also testified regarding
the maintenance of the stuffing boxes on the M/V CAPT. LJ. 65 Minster stated
that the maintenance “might not have been proper maintenance, great
maintenance. But some maintenance had been done” because new packing

61
62
63
64
65

Joint Ex. 29 at 48-49.
Joint Ex. 28 at 35-36.
Id. at 36-37.
Id. at 33.
Joint Ex. 33 at 6.
18

material was added. 66

But Minster agreed that continuously packing

material into the stuffing boxes can lead to further wear of the shaft and
additional leaking.67
Defendants assert that Paternostro gave conflicting testimony with
regard to whether packing rings should have been removed, and they
contend that it would have been reckless and unreasonable to attempt to
replace the packing rings while the M/V CAPT. LJ was afloat. 68

But

defendants mischaracterize Paternostro’s testimony. Paternostro explained
that taking out too many packing rings at once could present a risk of
flooding, but he did not suggest that it was never safe to remove and replace
packing rings. 69 He instead stated that “[y]ou would only take out about
three packing rings,” and “if you’re adding three rings of packing, you should
take out three rings of packing.”70 Paternostro’s testimony indicates that it
would have been safe to remove and replace small amounts of packing
material while the M/V CAPT. LJ was moored, and defendants offer no
explanation why Jourdan failed to do this.

66
67
68
69
70

Id. at 12.
Id. at 13.
R. Doc. 67 at 6-7.
Joint Ex. 28 at 34.
Id. at 34, 36.
19

Further, the evidence indicates that Jourdan was aware of leaks from
the stuffing boxes that exceeded acceptable levels. Based on the condition of
the shafts and packing gland assemblies, Paternostro formed the impression
that it was likely “that both packing gland assemblies were leaking seawater
at a rate that should have provoked the necessity of an inspection and/or
repairs.” 71

Paternostro testified that, per most commercial industry

standards, a leak should not exceed a pencil lead-sized stream of water,
“[n]ot the pencil itself, just the lead.”72 Jourdan testified that the stuffing
boxes had a small drip every five to ten seconds when the vessel was not
running, but that the stream of water out of the stuffing boxes would be about
as thick as a number 2 pencil when the vessel was running hard. 73
Contrary to defendants’ representations, Paternostro did not state that
an excessive leak is a subjective term dependent on the opinion of the person
inspecting the packing glands. 74 Paternostro instead explained that there
can be “variable opinions, but it goes back to our industry standards or, you
know, we said earlier a pencil lead stream . . . . If you can’t control it, that
should provoke an inspection.”75 Glass testified that, according to industry

71
72
73
74
75

Joint Ex. 9 at 23.
Joint Ex. 28 at 40-41.
Joint Ex. 29 at 88-89.
R. Doc. 67 at 4.
Joint Ex. 28 at 66.
20

standards, a vessel working in shallow water like the M/V CAPT. LJ should
have had a light to moderate drip of water from the stuffing boxes, which
would consist of droplets but not a steady stream. 76 Neither Paternostro nor
Glass suggested that a pencil-sized stream of water was acceptable.
Based on this evidence, the Court finds that Jourdan failed to exercise
due diligence to maintain the M/V CAPT. LJ’s stuffing boxes. At a minimum,
a vessel owner would reasonably be expected to ascertain what happens to
the packing material already in a stuffing box before adding more packing
rings. Jourdan’s practice of continuously adding packing rings to the stuffing
boxes without removing old material damaged the propulsion shafts and
stuffing boxes, undermined the watertight seal, and permitted seawater to
flood the vessel. Additionally, the evidence indicates that Jourdan was aware
of an excessive leak from the stuffing boxes and failed to take reasonable
steps to ensure that the stuffing boxes were in seaworthy condition.
Although defendants argue that they “employed maintenance activities
that were within acceptable tolerances of generally accepted industry
standards,” they provide no factual support for this assertion. 77 On the
contrary, in arguing that plaintiff lacks evidence of bad faith under the

76
77

R. Doc. 32 at 24-26.
R. Doc. 67 at 11.
21

American Rule, defendants themselves state that “the proof shows nothing
more than negligence on the part of defendants to use simple means to make
the vessel seaworthy.”78 The Court finds that plaintiff has demonstrated that
the loss of the M/V CAPT. LJ resulted from the want of due diligence of
Leonard Jourdan as the assured and vessel owner. The vessel’s sinking is
therefore excluded from coverage under the Liner Negligence Clause. 79

III. CONCLUSION
For the foregoing reasons, the Court directs judgment to be entered
declaring that StarNet Insurance Company does not owe insurance
coverage in connection with the sinking of the M/V CAPT. LJ, on or about
April 7, 2016. Defendants’ counterclaim for declaratory judgment is
DISMISSED.
27th
New Orleans, Louisiana, this _____ day of December, 2017.

_____________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE
Id. at 9.
Plaintiff has also shown that Jourdan breached the implied warranty
of seaworthiness under the American Rule because he, through neglect,
knowingly permitted the M/V CAPT. LJ to break ground in an unseaworthy
condition. See Spot Pack, 242 F.2d at 389. The unseaworthy condition of
the stuffing boxes proximately caused the vessel’s sinking.
22
78
79