John W. Stone Oil Distributor, LLC et al v. Penn Maritime Inc. et al
Filing
83
ORDER AND REASONS DENYING 63 Motion for Partial Summary Judgment. Signed by Judge Barry W Ashe on 11/16/18. (Reference: Both Cases)(clc)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
JOHN W. STONE OIL DISTRIBUTOR,
L.L.C., et al.
CIVIL ACTION
VERSUS
NO. 17-4942 c/w 17-5700
applies to both actions
PENN MARITIME, INC., et. al.
SECTION: M (5)
ORDER & REASONS
Before the Court is a Motion for Partial Summary Judgment1 filed by defendant, Penn
Maritime, Inc. (“Penn”), seeking dismissal of the cross-claim filed by co-defendant Bisso Towboat
Co., Inc. (“Bisso”) for contractual defense and indemnity. Bisso opposed the motion.2 Penn filed
a reply in support of the motion, 3 to which Bisso responded with a surreply in opposition to the
motion. 4 Having considered the parties’ memoranda and the applicable law, the Court issues this
Order & Reasons.
I.
BACKGROUND
This litigation arises out of a January 15, 2016 maritime accident that occurred on the
Mississippi River. However, the relevant facts concerning the business relationship between Bisso
and Penn, which is a wholly-owned subsidiary of Kirby Offshore Marine (“Kirby”) (collectively,
“Kirby/Penn”), predate the accident.
In 2013, Charles Ferrer (“Ferrer”) of Kirby/Penn contacted Scott Slatten (“Slatten”),
Bisso’s president, to request a meeting to discuss the companies’ entering into a business
relationship whereby Bisso would provide towing services to Kirby/Penn’s articulated-tug-and
1
R. Doc. 63. Unless otherwise noted, the documents referenced are from Civil Action No. 17-4942.
R. Doc. 72.
3
R. Doc. 77.
4
R. Doc. 82.
2
barge units (“ATBs”) operating on the Mississippi River.5 On May 8, 2013, Slatten met with
Ferrer at Kirby’s office in Houston, Texas, to discuss rates and terms, including Bisso’s standard
terms and conditions, also known as its “Tariff.”6 Slatten states in his affidavit that the rates set
forth in the Tariff are a starting point for negotiations, and those rates apply in the absence of
another negotiated agreement.7 Slatten and Ferrer negotiated a rate of $550 per hour.8 On May
10, 2013, Bisso’s tugs began assisting Kirby/Penn’s ATBs on the relevant portion of the
Mississippi River, and Bisso has been Kirby/Penn’s exclusive provider of tug services in that area
ever since.9
On February 11, 2014, Slatten again met with Ferrer at Kirby’s office in Houston to discuss
the general business relationship between the companies.10 Thereafter, on June 14, 2014, Ferrer
agreed by email to a rate increase to $825 per hour for Bisso tugs working with Kirby/Penn’s ATBs
on the Empire/Ostrica stretch of the Mississippi River, while the rate remained $550 per hour for
other areas of the river.11 Slatten and Ferrer had another meeting on September 23, 2014, to discuss
the business relationship between the companies.12
On February 26, 2015, Slatten sent an email to Bisso’s customers, including Kirby/Penn
through Ferrer and William Block (“Block”), who also worked for Kirby, advising them that Bisso
would soon send a new Tariff with increased rates.13 Slatten followed up on March 19, 2015, by
5
R. Doc. 72-2 at 1-2. In its reply memorandum, R. Doc. 77 at 2-4, Penn asks the Court not to consider
Slatten’s affidavit, arguing that it is a “sham affidavit,” because some of the statements therein differ slightly from
Slatten’s later-obtained deposition testimony. The “sham affidavit” doctrine does not apply since the affidavit in
question here actually preceded the deposition. Moreover, the deposition testimony does not necessarily contradict
the affidavit so much as explain it. Hence, the Court will consider Slatten’s affidavit as a whole, but give deference
to the deposition testimony, to the extent that there are material discrepancies.
6
R. Doc. 72-2 at 1.
7
Id. at 2.
8
Id.
9
Id.
10
Id.
11
Id.
12
Id.
13
Id.
2
sending an email to Kirby/Penn, again through Ferrer and Block, and Bisso’s other customers,
informing them of an approaching rate increase and Bisso’s new Tariff, which were set to become
effective on April 1, 2015.14 A copy of the Tariff, along with the incorporated Towage Contract
and Rates, Terms and Conditions (collectively, “Tariff/Towage Contract”) was attached to the
email.15 Penn does not dispute that Kirby/Penn received a copy of the Tariff/Towage Contract.
The Tariff/Towage Contract contained, among others, the following Terms and Conditions:
These “Terms and Conditions” shall apply to all ship assist towing, escort towing
and general towing or tug services on the Mississippi River for which no other
express written contract signed by Bisso, or any applicable Tariff of a terminal or
elevator facility in favor of Bisso exists. The ordering of any services provided by
Bisso or the acceptance of any services provided by Bisso or on behalf of Bisso,
constitutes acceptance to all of the “Terms and Conditions” and provisions stated
herein and posted on Bisso Towboat’s website www.bissotwoing.com at the time
such services are ordered, verbally requested, or performed. Updates to theses
“Terms and Conditions” may be made from time to time by posting updates to
www.bissotowning.com.
The person or entity requesting or ordering the tug services warrants that it has full
authority to bind the vessel to be assisted, and its Owners and Operators (and
charterers, if any) or the Owner, to the Rates, Terms and Conditions and all
provisions contained in this Tariff/Towage Contract, and shall indemnify, defend
and hold harmless Bisso … from and against all costs, expenses, liabilities and
damages of any nature whatsoever, including reasonable attorney’s fees and costs,
incurred and sustained in defending against any such liability or in enforcing this
paragraph in consequence of such person or entity lacking such authority.
*
*
*
… (3) Bisso … shall not be liable for any losses or damages of any nature
whatsoever, injury, or death sustained by any person or entity arising out of or
occurring while such services are being rendered or incident thereto, so long as the
assisting tugs follow and carry out the orders and directions of the master and/or
pilot of the assisted vessel, unless such losses or damages are proven to have been
caused solely by the willful failure of the assisting tug’s captain or crew members
to carry out such directions and orders of the assisted vessel, and (4) Owners and
the assisted vessel, its owners, operators, charterers and insurers shall defend,
indemnify and hold harmless Bisso … from and against any and all claims,
demands, suits, costs, expenses, liabilities and damages of any nature whatsoever
14
15
Id. at 2-3.
Id. at 3.
3
(including reasonable attorney’s fees and costs incurred by Bisso) and from any
cause whatsoever, including negligence of the assisting tug, its captains and crew
members, except to the extent such losses or damages are caused solely by the
willful failure of the assisting tug’s captain or crew members to carry out the
directions and orders of the assisted vessel as provided in subpart (3), resulting from
or connected with damage, injury or death of any person or entity (including third
parties), arising out of or occurring while such tug services are being rendered.16
The Tariff/Towage Contract provides spaces for both Bisso and the customer to sign.17 Neither
Bisso nor Kirby/Penn signed the document.18 Penn contends that it never agreed to the Terms and
Conditions of Bisso’s Tariff/Towage Contract.19
After he sent the March 19, 2015 email, Slatten negotiated rates with Bisso’s customers,
using the Tariff as a starting point.20 Slatten states in his affidavit, and he testified at his deposition,
that he met with Ferrer on May 5, 2015, and gave him a copy of Bisso’s new Tariff/Towage
Contract.21 According to Slatten, Ferrer acknowledged that he had already received the documents
via email.22 Slatten contends that, at that meeting, Ferrer agreed to increase the rate to $600 per
hour, but requested that the new rate not go into effect until June 1, 2015.23 At his deposition,
Slatten testified that he and Ferrer did not specifically discuss the Terms and Conditions of the
Tariff/Towage Contract; thus, Ferrer never expressly agreed to nor expressly disavowed such
Terms and Conditions.24
Slatten further states in his affidavit that he met with Ferrer and Block on October 13, 2015,
in Houston, and neither of them expressed any concern about the Tariff/Towage Contract.25 Bisso
16
R. Doc. 63-4 at 3-4.
Id. at 1.
18
R. Doc. 63-2 at 2.
19
Id.
20
R. Doc. 72-2 at 3.
21
Id.; R. Doc. 77-1 at 10.
22
R. Doc. 72-2 at 3.
23
Id.
24
R. Doc. 77-1 at 10.
25
R. Doc. 72-2 at 3.
17
4
and Kirby/Penn’s business relationship continues to this day, with Bisso providing assistance to
Kirby/Penn’s vessels approximately 50 times per month.26
On January 15, 2016, during the existence of Bisso and Kirby/Penn’s business relationship,
the M/V Lucia and T/B Caribbean, which were both owned and operated by Penn, were mated as
an articulated-tug-and-barge unit (“ATB Lucia/Caribbean”), and operating on the Mississippi
River.27
The ATB Lucia/Caribbean needed to turn around from an upriver direction at
approximately mile 96.6 in order to proceed downriver to its destination.28 Federal pilot Al
Kostner boarded the M/V Lucia, and Bisso was contacted to provide a vessel to assist with the
maneuver.29 The M/V William S, a towboat that was owned and operated by Bisso, arrived at the
scene.30 The William S’s mate, Tony Cutrer (“Cutrer”), was at the helm of the vessel while it
assisted the ATB Lucia/Caribbean with the turnaround.31 During the maneuver, the bow of the
T/B Caribbean allided with a barge that was moored to a dock owned by plaintiff John W. Stone
Oil Distributor, L.L.C. (“JWS Oil”).32
On May 15, 2017, JWS Oil and its insurers (collectively, “Plaintiffs”) filed Civil Action
No. 17-4942 against Penn and Bisso, in personam, and the vessels, in rem, alleging claims under
the general maritime law for negligence and unseaworthiness, and seeking compensation for the
property damage JWS Oil sustained as a result of the allision.33 On June 9, 2017, JWS Oil, on
behalf of itself and its underwriters, filed Civil Action No. 17-5700 against Penn, Bisso, and Kirby
26
Id.
R. Doc. 1 at 5.
28
R. Doc. 63-1 at 2.
29
Id.
30
Id.
31
Id.
32
Id.
33
See R. Doc. 1.
27
5
Corporation (“Kirby Corp.”),34 in personam, and the vessels, in rem, alleging claims under the
general maritime law for negligence and unseaworthiness, and seeking compensation for the
property damage JWS Oil sustained, and for amounts JWS Oil and its insurers expended to
mitigate potential pollution, all as a result of the allision.35 The lawsuits were consolidated because
they concern claims arising from the same maritime accident.36
Thereafter, Bisso answered both complaints and filed cross-claims against Penn and Kirby
Corp. for defense and indemnity pursuant to the Terms and Conditions of the Tariff/Towage
Contract.37 Penn answered Bisso’s cross-claim, denying the existence of the contract and that it
was obligated to defend and indemnify Bisso against Plaintiffs’ claims.38
Penn filed a cross-claim against Bisso alleging that the allision was solely the fault of the
William S, because its crew willfully failed to follow the directions of the M/V Lucia’s captain.39
Penn also alleges that Bisso owes it indemnity and/or contribution under the general maritime law
because Bisso was at fault for any damages Plaintiffs may have sustained as a result of the
accident.40 Further, Penn asserts a claim against Bisso for damages to the ATB Lucia/Caribbean.41
II.
PENDING MOTION
Penn filed the instant motion for partial summary judgment seeking dismissal of Bisso’s
cross-claim against it for contractual defense and indemnity.42 Penn argues that it did not ratify
the Tariff/Towage Contract that contains the defense-and-indemnity provision; the defense-and-
34
JWS Oil and its underwriters voluntarily dismissed their claims against Kirby Corp. pursuant to Rule
41(a)(2) of the Federal Rules of Civil Procedure. R. Doc. 23.
35
See R. Doc. 1, Civil Action No. 17-5700.
36
R. Doc. 6, Civil Action No. 17-5700.
37
R. Doc. 14 at 2-3 & R. Doc. 15 at 2-3.
38
R. Doc. 18 at 1-3.
39
Id. at 4.
40
Id. at 4-5.
41
Id. at 5.
42
R. Doc. 63.
6
indemnity provision is voided due to Bisso’s failure to follow the instructions of the captain of the
M/V Lucia during the maneuver that led to the allision; and the defense-and-indemnity provision
is void under the “Bisso rule” announced by the Supreme Court in Bisso v. Inland Waterways
Corp., 349 U.S. 85 (1955).43
III.
a.
LAW & ANALYSIS
Summary Judgment Standard
Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to a judgment as a matter of law.” Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing Fed. R. Civ. P. 56(c)). “Rule 56(c) mandates
the entry of summary judgment, after adequate time for discovery and upon motion, against a party
who fails to make a showing sufficient to establish the existence of an element essential to that
party’s case, and on which the party will bear the burden of proof at trial.” Id. A party moving
for summary judgment bears the initial burden of demonstrating the basis for summary judgment
and identifying those portions of the record, discovery, and any affidavits supporting the
conclusion that there is no genuine issue of material fact. Id. at 323. If the moving party meets
that burden, then the nonmoving party must use evidence cognizable under Rule 56 to demonstrate
the existence of a genuine issue of material fact. Id. at 324.
A genuine issue of material fact exists if a reasonable jury could return a verdict for the
nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1996). The substantive
43
R. Doc. 63-1 at 1. Penn also argues that Bisso’s Tariff/Towage Contract is not a mandatory “tariff” because
it is not filed with the appropriate governmental agencies. R. Doc. 63-1 at 11-12. Bisso acknowledges that it does
not contend that the Tariff/Towage Contract was the type of mandatory tariff that needs to be registered; rather, Bisso
used the term “tariff” to refer to its “schedule of rates, terms, and conditions,” as it says is common in the industry.
R. Doc. 72 at 11-12. This is the meaning the Court will ascribe to Bisso’s use of the term.
7
law identifies which facts are material. Id. Material facts are not genuinely disputed when a
rational trier of fact could not find for the nonmoving party upon a review of the record taken as a
whole. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986);
Equal Emp’t Opportunity Comm’n v. Simbaki, Ltd., 767 F.3d 475, 481 (5th Cir. 2014).
“[U]nsubstantiated assertions,” “conclusory allegations,” and merely colorable factual bases are
insufficient to defeat a motion for summary judgment. See Anderson, 477 U.S. at 249-50; Hopper
v. Frank, 16 F.3d 92, 97 (5th Cir. 1994). In ruling on a summary judgment motion, a court may
not resolve credibility issues or weigh evidence. See Delta & Pine Land Co. v. Nationwide
Agribusiness Ins. Co., 530 F.3d 395, 398-99 (5th Cir. 2008). Furthermore, a court must assess the
evidence, review the facts, and draw any appropriate inferences based on the evidence in the light
most favorable to the party opposing summary judgment. See Tolan v. Cotton, 572 U.S. 650, __,
134 S. Ct. 1861, 1866 (2014); Daniels v. City of Arlington, 246 F.3d 500, 502 (5th Cir. 2001). Yet,
a court only draws reasonable inferences in favor of the nonmovant “when there is an actual
controversy, that is, when both parties have submitted evidence of contradictory facts.” Little
Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (citing Lujan v. Nat’l Wildlife
Fed’n, 497 U.S. 871, 888 (1990)). Nor must the court consider uncited evidence in the record.
Fed. R. Civ. P. 56(c)(3).
After the movant demonstrates the absence of a genuine dispute, the nonmovant must
articulate specific facts and point to supporting, competent evidence that may be presented in a
form admissible at trial. See Lynch Props., Inc. v. Potomac Ins. Co. of Ill., 140 F.3d 622, 625 (5th
Cir. 1998); Fed. R. Civ. P. 56(c)(1)(A) & (c)(2). Such facts must create more than “some
metaphysical doubt as to the material facts.” Matsushita, 475 U.S. at 586. When the nonmovant
will bear the burden of proof at trial on the dispositive issue, the moving party may simply point
8
to insufficient admissible evidence to establish an essential element of the nonmovant’s claim in
order to satisfy its summary judgment burden. See Celotex, 477 U.S. at 322-25; Fed. R. Civ. P.
56(c)(B). Unless there is a genuine issue for trial that could support a judgment in favor of the
nonmovant, summary judgment must be granted. See Little, 37 F.3d at 1075-76.
b. The “Bisso Rule”44
Penn argues that the indemnity provision in the Tariff/Towage Contract is void as a matter
of public policy pursuant to the “Bisso rule.”45 In Bisso v. Inland Waterways Corp., 349 U.S. 85
(1955), the Supreme Court considered “whether a towboat may validly contract against all liability
for its own negligent towage.” Id. at 85 (emphasis added). The Bisso towboat involved in that
case, the Cairo, was in the Mississippi River towing an oil barge that “had no motive power,
steering apparatus, officers or crew, [and] its movements [were] being completely controlled by
the Cairo.” Id. at 86. The Cairo collided with a bridge pier and sank as a result of negligent
towage on the part of those operating the Cairo. Id. Bisso’s towage contract contained clauses
that relieved Bisso “from liability for its negligence.” Id. The Supreme Court held that towers
cannot “contract wholly to escape liability for their own negligent towing.” Id. at 94. The purpose
of the rule is “(1) to discourage negligence by making wrongdoers pay damages, and (2) to protect
those in need of goods and services from being overreached by others who have power to drive
hard bargains[,]” because “vessels in American ports [need to] be able to obtain towage free of
monopolistic compulsions.” Id. at 91.
In applying the “Bisso rule,” the Fifth Circuit considers whether the exculpatory clause at
issue shelters a party “from all liability,” as did the clause at issue in Bisso, and invalidates those
44
The Court considers Penn’s arguments regarding the application of the “Bisso rule” first because, if the
indemnity provision is void as a matter of public policy, it is irrelevant whether Penn agreed to it.
45
R. Doc. 63-1 at 19-23.
9
that do. Int’l Shipbreaking Ltd. LLC v. Smith, 44 F. App’x 653, at *4 (5th Cir. June 11, 2002)
(emphasis in original). On the other hand, the Fifth Circuit upholds exculpatory provisions in
which a party retains “sufficient exposure to liability to deter negligence.” Id. (citing Todd
Shipyards Corp. v. Turbine Serv. Inc., 674 F.2d 401, 410 (5th Cir. 1982) (upholding red letter
clause limiting defendant’s liability for negligence and breach of contract to $300,000)).
The exculpatory clause in Bisso’s current Tariff/Towage Contract does not attempt to
insulate Bisso from all liability for its own negligence. To the contrary, it states that Bisso is
relieved from liability only if a Bisso captain and crew are following the orders of the master and/or
pilot of the vessel being assisted by the tug, and that Bisso is not relieved from liability if the losses
or damages are caused solely by the Bisso captain’s or crew members’ willful failure to carry out
the directions or orders of the assisted vessel’s master and/or pilot.46 Thus, the exculpatory clause
protects Bisso if its captain and crew are following orders given by personnel on the assisted tug
(i.e., not making the decisions for themselves), and places liability back on Bisso if its captain or
crew willfully fails to follow those orders and causes an accident. In the case at bar, Bisso was not
the dominate party because the captain of Penn’s vessel was giving the orders for Bisso’s crew to
follow. Indeed, there is a dispute about whether Cutrer willfully failed to follow the orders given
by the captain of the Penn vessel, and whether that alleged failure caused the allision.
Further, on the record before the Court, it appears that the towage contract was not
adhesionary and the parties had equal bargaining power. Slatten stated in his affidavit that there
are other towing operators on the relevant stretch of the Mississippi River, and Kirby/Penn is free
to use the services of these other companies.47 Moreover, Kirby/Penn’s bargaining power is
46
47
R. Doc. 63-4 at 3-4.
R. Doc. 72-2 at 2.
10
evidenced by the fact that it negotiated a lower rate for Bisso’s services for this job than the
standard rate stated on the Tariff.48
The facts of this case are markedly different than the scenario that existed in Bisso. There,
the towboat was towing an unmanned barge and the Supreme Court found that the contract was
adhesionary. Here, the Bisso towboat was assisting a vessel that was moving on its own power,
and was taking orders from the captain of that vessel. Further, the contract here is not adhesionary
because the parties had equal bargaining power and Kirby/Penn had the choice of other services.
Therefore, the “Bisso rule” is inapplicable, and Penn’s motion for partial summary judgment that
the defense-and-indemnity clause is void as against public policy is DENIED.
c. Existence of a Contract between Penn and Bisso
Penn argues that it never agreed to the Terms and Conditions stated in Bisso’s
Tariff/Towage Contract because it never signed the document, its legal department never approved
the contract, and the contract is not on file with Kirby/Penn.49 Penn also argues that the parties’
course of dealing does not establish that Penn assented to the Terms and Conditions of the
Tariff/Towage Contract because the contract was presented to Kirby/Penn only twice – once in an
email, and then handed to Ferrer by Slatten – and was not part of the parties’ common
understanding regarding their business relationship.50 Penn contends that Bisso simply proposed
a contract and Penn never agreed nor objected to the terms stated therein, which is insufficient to
prove a meeting of the minds.51
“As a general rule, admiralty law applies to all maritime contracts,” including towing
contracts. 1 THOMAS J. SCHOENBAUM, ADMIRALTY & MAR. LAW § 5:1 (6th ed. 2018) (citing Aqua
48
Id. at 3.
R. Doc. 63-1 at 12-17 & R. Doc. 77 at 5.
50
R. Doc. 63-1 at 17-18 & R. Doc. 77 at 5.
51
R. Doc. 77 at 5.
49
11
Marine Constructors, Inc. v. Banks, 110 F.3d 663, 670 (9th Cir. 1997)). The general maritime law
“is the product of the maritime jurisprudence of the federal courts” and “‘is an amalgam of
traditional common law rules, modifications of those rules, and newly created rules’” that are
“‘drawn from state and federal sources.’” Id. (quoting E. River Steamship Corp. v. Transam.
Delaval, Inc., 476 U.S. 858, 864-65 (1986)). Applying federal law in the context of maritime
contracts “includes looking to ‘principles of general contract law’ that can be found in treatises or
restatements of the law.” Int’l Marine, L.L.C. v. FDT, L.L.C., 619 F. App’x 342, 349 (5th Cir.
Aug. 10, 2015) (citing Univ. of Tex. Sys. v. United States, 759 F.3d 437, 443 (5th Cir. 2014)
(quoting Franconia Assocs. v. United States, 536 U.S. 129, 141-42 (2002))).
The general rules of contract law apply to the formation of towage contracts.
2
SCHOENBAUM, supra, § 12:2. “[O]ral contracts are generally regarded as valid by maritime law.”
Kossick v. United Fruit Co., 365 U.S. 731, 734 (1961). Further, because the statutes of frauds do
not apply to towage contracts, there is no requirement that a towage contract be in writing; “in fact
many towage contracts are oral.” 2 SCHOENBAUM, supra, § 12:2.
A contract is formed when at least two parties with the legal capacity to contract manifest
mutual assent to a bargained-for exchange of consideration.
RESTATEMENT (SECOND)
OF
CONTRACTS §§ 9, 12, 18 & 71 (2018). Neither Penn nor Bisso dispute that they had the capacity
to contract for the towage services, and they both concede that they had an oral agreement as to
the price that Penn would pay for Bisso’s services. Penn disputes only whether that oral contract
included its assent to the Terms and Conditions of Bisso’s Tariff/Towage Contract.
The “[m]anifestation of mutual assent to an exchange ordinarily takes the form of an offer
or proposal by one party followed by an acceptance by the other party.” Id. § 22. “Acceptance of
an offer is a manifestation of assent to the terms thereof made by the offeree in a manner invited
12
or required by the offer,” which can include acceptance by performance that operates as a return
promise. Id. § 50. However, “[a] manifestation of mutual assent may be made even though neither
offer nor acceptance can be identified and even though the moment of formation cannot be
determined.” Id. § 22. Assent may be given in writing, orally, by the performance of other acts,
or by the failure to act. Id. § 19. A party’s conduct is effective as a manifestation of his assent if
“he intends to engage in the conduct and knows or has reason to know that the other party may
infer from his conduct that he assents.” Id. Further, the parties’ course of dealing gives meaning
to or supplements their agreement by “establishing a common basis of understanding for
interpreting their expressions and other conduct.” Id. § 223.
In construing maritime contracts, the Fifth Circuit has examined the parties’ course of
dealing and held that standardized provisions can become a part of contracts between the parties
when the parties have a substantial history of business dealings. One Beacon Ins. Co. v. Crowley
Marine Servs., Inc., 648 F.3d 258, 265 (5th Cir. 2011) (citing Campbell v. Sonat Offshore Drilling,
Inc., 979 F.2d 1115, 1120 (5th Cir. 1992)). In One Beacon, Crowley Marine Services, Inc.
(“Crowley”), a vessel owner, hired Tubal-Cain Marine Services, Inc. (“Tubal-Cain”), a ship
repairer, to perform work on one of its vessels. Id. at 261. Crowley’s port engineer met with
Tubal-Cain’s president to discuss the repair work, which commenced shortly thereafter. Id. at 263.
Crowley had contracted with Tubal-Cain for vessel repair work eight times the preceding year,
and then fifteen additional times following the job at issue in the case. Id.
For each project,
Crowley sent Tubal-Cain a repair service order (“RSO”) that stated the scope of the repairs, but
did not include pricing information and was not signed by either party. Id. Each RSO stated that,
unless another written agreement applied, the RSO was “issued in accordance with the purchase
13
order terms and conditions” found on Crowley’s website. Id. Crowley’s terms and conditions
included a defense-and-indemnity provision. Id.
An employee of a Tubal-Cain subcontractor was injured while working on Crowley’s
vessel. Id. at 261. Crowley demanded defense and indemnity from Tubal-Cain in accordance with
its standard terms and conditions. Id. Tubal-Cain rejected the request, contending that the parties
had an oral agreement as to the price for the work, but that Crowley’s terms and conditions were
not a part of that agreement because the RSO was sent to Tubal-Cain after the work began and
Tubal-Cain did not have the opportunity to review and assent to the terms. Id. at 264-65. Neither
party disputed that Crowley did not specifically discuss the terms and conditions with Tubal-Cain,
nor did Crowley furnish Tubal-Cain with a hard copy of those provisions. Id. at 264.
Applying the general maritime law of contracts, and examining the parties’ course of
dealing, the Fifth Circuit held that Crowley’s terms and conditions, which were available on its
website and referenced in the RSOs, were part of the contract between Crowley and Tubal-Cain.
Id. at 270. The court noted that the RSOs put Tubal-Cain on notice of the terms and conditions,
which were reasonably accessible on Crowley’s website, “and Tubal-Cain manifested assent by
accepting the RSOs without objection to the terms and conditions.” Id. Thus, the court held that
Tubal-Cain was bound by Crowley’s terms and conditions even if nobody at the company ever
read them. Id.
This case is analogous to One Beacon. On Penn’s motion for summary judgment, this
Court must assess the evidence in the light most favorable to the party opposing summary
judgment.52 Here, Kirby/Penn and Bisso have a course of dealing that dates back to 2013.
Kirby/Penn has ordered tugs from Bisso multiple times per month for at least five years. In 2015,
52
On summary judgment, doubtful matters are not resolved in favor of the judgment seeker. At a bench trial,
though, a court is no longer encumbered by this standard of review.
14
Bisso’s president gave Kirby/Penn’s employees, on two occasions, Bisso’s Tariff/Towage
Contract. Although the parties negotiated a different rate for Bisso’s services than the one reflected
on the Tariff, and neither party signed a copy of the document, Kirby/Penn never objected to
Bisso’s Terms and Conditions and was on notice of their existence. Bisso’s Tariff/Towage
Contract, of which Kirby/Penn had at least two copies, specifically states that Bisso’s Terms and
Conditions “apply to all ship assist towing, escort towing and general towing or tug services on
the Mississippi River for which no other express written contract signed by Bisso … exists,” and
that the ordering or acceptance of any services provided by Bisso constitutes the acceptance of
Bisso’s Terms and Conditions.53 Further, Bisso’s Terms and Conditions are readily available on
its website under a tab clearly marked “Tariff.” The factual question is whether this puts anyone
ordering Bisso tugs on notice that it will be subject to Bisso’s Terms and Conditions. Bisso insists
that it did, arguing that, although Bisso’s invoices to Kirby/Penn did not reference its Terms and
Conditions, Kirby/Penn, through its long and frequent course of dealing with Bisso, was certainly
aware of such Terms and Conditions. At this summary judgment stage, the Court is obligated to
see the evidence this way.54 Thus, Kirby/Penn may well have bound itself to Bisso’s Terms and
Conditions by virtue of its course of dealing in ordering tugs from Bisso. As such, Kirby/Penn’s
motion for partial summary judgment that it is not bound by Bisso’s Terms and Conditions is
DENIED.
d. Failure to follow instructions
Penn argues that Bisso is not entitled to be excused from liability under the terms of the
exculpatory and defense-and-indemnity clauses because Cutrer failed to follow the directions of
53
R. Doc. 63-4 at 3-4.
And the Court may continue to see it that way after a bench trial, but does not intend by this ruling to
prejudge this matter.
54
15
the M/V Lucia’s captain.55 Cutrer admitted at his deposition that twice during the maneuver he
failed to follow the instructions given by the M/V Lucia’s captain.56 Cutrer testified that the M/V
Lucia’s captain instructed him to push against the T/B Caribbean at 75% power, but Cutrer
provided 60% power instead, without informing the instructing captain of his actions.57 Cutrer
also testified that the M/V Lucia’s captain instructed him to push “hard straight in” (i.e., 100%
power at a 90-degree angle), when the ATB Lucia/Caribbean was commencing its turn in the
middle of the river, but he decided to push at 40% power instead.58 However, Cutrer also testified
that he did not think that the orders of the M/V Lucia’s captain were safe for him to perform.59
Under a summary judgment standard, the evidence that Cutrer failed to perform certain orders
given by the M/V Lucia’s captain is insufficient to demonstrate beyond dispute that his failure was
willful, and that any such “willful failure” was indisputably the sole cause of the allision so as to
invalidate the exculpatory and defense-and-indemnity clauses. Thus, Penn’s motion for partial
summary judgment that Cutrer’s actions voided the defense-and-indemnity provision is DENIED.
IV.
CONCLUSION
Accordingly, IT IS ORDERED that Penn’s motion for partial summary judgment (R. Doc.
63) is DENIED.
New Orleans, Louisiana, this 16th day of November, 2018.
________________________________
BARRY W. ASHE
UNITED STATES DISTRICT JUDGE
55
R. Doc. 63-1 at
R. Doc. 63-5 at 2-5.
57
Id. at 2-3.
58
Id. at 5.
59
R. Doc. 72-3 at 8-16.
56
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