Horizon Navigation Ltd. v. Progressive Barge Line, Inc. et al
Filing
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ORDER AND REASONS DENYING 63 Motion for Judgment on the Pleadings. Signed by Judge Eldon E. Fallon on 3/21/2019. (jeg)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
HORIZON NAVIGATION LTD.
CIVIL ACTION
VERSUS
NO. 18-4497
PROGRESSIVE BARGE LINE, INC. ET AL
SECTION "L" (3)
ORDER & REASONS
Before the Court is a motion to dismiss filed by Third-Party Defendant Ausca Shipping
Limited (“Ausca”). R. Doc. 63. Plaintiff Horizon Navigation Ltd. (“Horizon”) and Defendant
Progressive Barge Line, Inc. (“Progressive”) oppose the motion. R. Docs. 67, 69. The Court heard
oral argument on the motion on March 20, 2019. R. Doc. 70. Having considered the parties’
arguments and reviewed the applicable law, the Court is ready to rule.
I.
BACKGROUND
This case arises out of an oil spill in the Mississippi River that occurred during the refueling
of the M/V VITAHORIZON, for which the vessel’s owner, Horizon, seeks to recover “fines,
penalties, response costs and/or damages exceeding $1.1 million” from Defendant Progressive. R.
Doc. 1 at ¶ 14. According to Horizon’s complaint, Progressive overfilled the M/V
VITAHORIZON’s fuel tanks after allegedly failing to inform those aboard the vessel that the
amount of the original fuel order had been increased from 1600 metric tons to 1650 metric tons.
Id. at ¶¶ 6–12.
Prior to the spill, Ausca entered into a time charter with Horizon for the M/V
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VITAHORIZON. R. Doc. 28 at ¶ 11.1 According to Progressive’s third-party complaint, the time
charter “obligates Charterer, Ausca, to provide and pay for all fuel (also known as bunkers) for the
M/V VITAHORIZON.” Id. at ¶ 12. Pursuant to this obligation, Progressive alleges, “Ausca
contracted with [non-party Glander International Bunkering (Norway) AS (“Glander”)] . . . to
arrange for purchase of, and delivery to, M/V VITAHORIZON a quantity of bunkers.” Id. at ¶ 15.
In turn, Glander, allegedly acting as Ausca’s agent, contracted with non-party Chevron Marine
Products LLC (“Chevron”) to purchase fuel for the VITAHORIZON. Id. at ¶ 17. On August 30,
2017, Chevron contracted with Progressive to deliver fuel to the M/V VITAHORIZON. R. Doc.
1 at ¶ 6. The next day, Chevron instructed Progressive to increase the amount of fuel to be delivered
to the VITAHORIZON from 1,600 metric tons to 1,650 metric tons. Id. at ¶ 7.
Horizon alleges that, “[d]espite the increased order amount, on or about September 2, 2017,
Progressive informed the VITAHORIZON that it would be delivering 1,600 metric tons of [heavy
fuel oil (“HFO”)] to the ship. Progressive never informed the VITAHORIZON that the amount of
HFO ordered for delivery had been increased to 1,650 metric tons, or that it would pump more
than 1,600 metric tons to the VITAHORIZON.” Id. at ¶ 8. As a result, on September 3, 2017,
“Progressive’s crew overfilled the VITAHORIZON’s bunker tanks causing HFO to spill onto the
ship’s deck, down her side, onto one or more of Progressive’s vessels and into the Mississippi
River.” Id. at ¶ 12.
On May 1, 2018, Horizon filed suit against Progressive for “damages, expenses, costs and
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The time charter is routine practice in the marine transport industry. Sagaan Developments & Trading Ltd. v.
Quail Cruises Ship Mgmt., No. 11–23873, 2013 WL 2250793, at *5 (S.D. Fla. May 22, 2013) (unpublished). “The
general scheme of a time charter is that the owner turns over a fully equipped ship to the charterer and operates the
ship for the charterer’s benefit, being compensated by monthly hire.” Marcial Ucin, S.A. v. SS Galicia, 723 F.2d 994,
998 (1st Cir. 1983). Typically, “the owners pay the crew wages and supply their food, pay for engine room stores,
keep the vessel repaired and pay for insurance[;] almost everything else falls upon the charterer.” Id. (internal quotation
marks omitted).
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all other losses resulting from the incident,” alleging the damage was caused by Progressive’s
negligence and its vessels’ unseaworthiness. Id. at ¶ 15. 2 On August 30, 2018, Progressive filed a
counterclaim against Horizon. R. Doc. 21. On September 21, 2018, Progressive filed a third-party
complaint against Ausca and tendered to Ausca Horizon’s complaint against Progressive, pursuant
to Federal Rule of Civil Procedure 14(c). R. Doc. 28 at ¶ 1. Progressive alleges Ausca, as the
charterer, had the legal duty and contractual obligation to purchase fuel for the vessel, provide
orders and directions to the M/V VITAHORIZON’s captain, and to advise Horizon of the number
of bunkers to be delivered. Id. at ¶¶ 23–24. Progressive contends the damages sustained by both
Progressive and Horizon were caused by Ausca’s fault, negligence, want of due care, and breach
of contractual obligations. Id. at ¶¶ 25–26.
On November 12, 2018, Ausca filed a motion seeking dismissal of Progressive’s claims
against it, or alternatively, to stay Progressive’s Rule 14(c) tender pending arbitration. R. Doc. 34.
The Court denied the motion in part and granted the motion in part following oral argument on
February 5, 2019. R. Doc. 59. The Court denied the motion to the extent Ausca sought dismissal
of Progressive’s direct claims against it, but stayed the claims against Ausca brought by Horizon
via Progressive’s Rule 14(c) tender pending the outcome of contractually mandated arbitration. Id.
at 15.
II.
PENDING MOTION
a. Ausca’s Motion to Dismiss Progressive Barge Line Inc.’s Claims for Indemnity
and Contribution
In its motion, Ausca argues the Court should dismiss Progressive’s indemnification and
Horizon submits it has “maritime liens against the MN JUSTICE and the barge PBL 3001, her engines, boilers,
tackle, apparel, furniture, etc., in rem, for the sum of about $ 1.1 million, plus interest from the date of the incident,
costs and attorneys’ fees, representing Horizon’s losses due to the aforesaid incident.” R. Doc. 1 at ¶ 16.
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contribution claims against it, as it agrees with Progressive’s prior suggestion that the Court treat
Ausca as a settling Defendant, thereby allowing Horizon to recover from Progressive only the
proportion of liability for which the Court finds Progressive responsible at the bench trial of this
matter. R. Doc. 63. According to Ausca, because the Court stayed the Rule 14(c) tender,
Progressive’s claims for indemnification or contribution “have been vitiated or voided . . . [and]
are no longer operative.” R. Doc. 63-1 at 3, 6. Further, Ausca contends, to allow Progressive to
seek contribution from Ausca following trial would constitute an “end-run” of the arbitration
clause between Ausca and Horizon, as litigating the contribution claim would require Ausca to
defend claims that it is liable to Horizon. Id. at 4–5. Finally, Ausca points to this Court’s prior
order, which states “even if Horizon never brings claims against Ausca, Progressive’s interests
will be protected, as apportionment of liability exists whether or not Ausca is impleaded under
Rule 14(c).” Id. at 7 (quoting R. Doc. 59 at 14). According to Ausca, based on this quoted sentence,
the apportionment of liability approach is already the law of this case. Id.
b. Progressive’s Opposition
Progressive opposes Ausca’s motion, arguing “if Progressive and Ausca are found to be
concurrently at fault for Horizon’s alleged damages, and Horizon seeks to recover all of its
damages from Progressive, then Progressive would have a right to seek contribution from Ausca
for any amounts paid over and above Progressive’s proportionate share of the damages.” R. Doc.
67 at 4. Next, Progressive argues that a judgment on the pleadings dismissing Progressive’s
contribution and indemnity claims would effectively operate as a dismissal of those claims on the
merits. Id. at 5. Thus, Progressive argues, a premature dismissal of Progressive’s contribution and
indemnity claims on the merits, with prejudice, could potentially preclude Progressive from
attempting to demonstrate at trial that Ausca is actually the party at fault for Horizon’s alleged
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damages. Id. at 6.
c. Horizon’s Opposition
In its opposition, Horizon argues joint and several liability must apply to this case,
contending, “the longstanding maritime rule of joint and several liability has been repeatedly
reaffirmed by the U.S. Supreme Court and the Fifth Circuit,” and that, therefore there is no
compelling reason to deviate from the firmly established rule of joint and several liability merely
because Progressive alleges Ausca is wholly or partially responsible for the claims Horizon has
asserted against Progressive. Id. at 6. Horizon further submits that, “[i]f a defendant-tortfeasor
contends that another entity is partially or wholly liable for the loss, it is the defendant’s
responsibility – not the plaintiff’s – to bring that entity into the suit so that liability can be
apportioned,” and that “[t]he defendant bears the risk that the shares of other tortfeasors will be
uncollectible.” Id. at 7.
III.
LAW & ANALYSIS
In its motion, Ausca contends the best solution to the issue of whether Progressive may
seek indemnity or contribution from Ausca despite the Court having previously stayed
Progressive’s Rule 14(c) tender of Horizon’s complaint to Ausca is for the Court to treat Ausca
as a settling joint-tortfeasor, thereby limiting Horizon’s recovery at trial against Progressive to
Progressive’s proportionate share of the liability only. This scheme, Ausca contends, would
extirpate the need for Progressive to seek contribution from Ausca in the event Progressive is
found liable to Horizon at trial. Ausca has not, however, pointed to any case in which a court has
treated an alleged joint-tortfeasor that has an arbitration agreement with the plaintiff as though
the plaintiff had settled its claims against that party. Instead, Ausca points to McDermott, Inc. v.
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AmClyde, 511 U.S. 202 (1994) and asks the Court to extend the rule established thereby to the
case at bar.
In McDermott, a crane owner brought an admiralty action against several joint-tortfeasors
but settled with one of the defendants before going to trial. The U.S. Supreme Court was
therefore called upon to determine how a settlement with less than all of the defendants in an
admiralty case should affect the liability of the non-settling defendants. The Court held that
under such circumstances, joint and several liability would not apply; rather, the “proportionate
share” approach would be applicable, whereby the non-settling defendants were responsible only
for their portion of fault. Based on that premise, the Court held that “no suits for contribution
from the settling defendants are permitted, nor are they necessary, because the nonsettling
defendants pay no more than their share of the judgment.” 511 U.S. at 209. The Supreme Court
cautioned, however, that “the proportionate share rule announced in [McDermott] applies when
there has been a settlement,” as “[i]n such cases, the plaintiff’s recovery against the settling
defendant has been limited not by outside forces, but by its own agreement to settle.” Id. at 221
(emphasis added).
Since the U.S. Supreme Court issued its opinion in McDermott, many courts have
declined to extend its rationale beyond settling defendants. For example, in Hays v. Foster
Wheeler Energy Corp., No. 09-81881, 2014 WL 12661273, at *2 (S.D. Fla. Sept. 15, 2014), the
court declined to allow the jury to apportion fault to non-parties from whom the plaintiff
received funds via bankruptcy settlement trusts. There, the court rationalized that, the “[a]mounts
received by Plaintiff from bankruptcy settlement trusts are limited by outside forces,” and did not
involve a situation in which the plaintiff “voluntarily negotiated a meager settlement.” Id. at *3.
Accordingly, the Hays court held the non-settling defendant was not entitled to a setoff for
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amounts the plaintiff received from the bankruptcy trust, nor would the defendant be permitted to
apportion liability to any bankrupt defendant. Id.
In some limited cases, courts have found the application of the proportionate fault rule to
non-parties is consistent with the rule announced in McDermott. In Sigler v. Grace Offshore Co.,
for example, Louisiana’s Third Circuit Court of Appeals held that a voluntary dismissal of a case
is akin to a settlement sufficient to bar one defendant’s third-party claim against the defendant
against whom the plaintiff voluntarily dismissed its claims. 95-357 (La. App. 3 Cir. 10/4/95),
663 So.2d 212 at 215. As the Louisiana court explained,
Although there has not been a settlement per se in this case, the plaintiff
voluntarily dismissed his claims against Grace and CNA with prejudice. For
purposes of the proportionate allocation of fault, we discern no distinction
between a settlement and a voluntary dismissal. Both are agreements entered into
by the plaintiff which serve to limit his recovery as opposed to the outside forces
such as insolvency or statutory immunity discussed in McDermott.
Id. at 215; see also Cargill Ferrous Intern. Div. of Cargill, Inc. v. M/V PRINCESS
MARGHERITA, No. 98–3825, 2001 WL 1426678, at *1 (E.D. La. Nov. 13, 2001) (applying
McDermott after plaintiff voluntarily dismissed one defendant with prejudice, rejecting
plaintiff’s argument that McDermott was inapplicable because “no formal settlement agreement
was confected (i.e. no money changed hands),” noting that “there is no requirement under
AmClyde that the settlement be for a reasonable amount, or for any amount of money at all”).
In this case, Ausca seeks to extend McDermott’s holding to cases in which an alleged
joint-tortfeasor holds a valid and enforceable arbitration agreement with the plaintiff. Because
“the apportioned share set-off rule is superior to a rule permitting (or requiring) suits for
contribution and indemnity because the former rule promotes both judicial economy and
settlement—while also avoiding collusive settlement by placing the burden of a low settlement
on the plaintiff,” Ausca’s proposed course of action is a tempting proposition. Koppers Co. v.
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Aetna Cas. & Sur. Co., 98 F.3d 1440, 1453 n.15 (3rd Cir. 1996); see also McDermott, 511 U.S.
at 211 (stating the aim of the rule announced in that case was to encourage settlement and avoid
“unnecessary ancillary litigation” (emphasis added)).
Moreover, like the plaintiff in Sigler and indeed McDermott itself, Horizon’s inability to
bring claims against Ausca in this litigation is a product of its choice—namely, Horizon’s
decision to enter into an arbitration agreement with Ausca. This arbitration agreement, which
Horizon freely entered, prevents Horizon from bringing suit against Ausca in this Court.
Moreover, as this Court held in its February 5, 2019 opinion, Progressive’s Rule 14(c) tender of
Horizon’s complaint to Ausca cannot be maintained precisely because of the arbitration
agreement between Horizon and Ausca. See cf. McDermott, 511 U.S. at 221 (“[T]he plaintiff's
recovery against the settling defendant has been limited not by outside forces, but by its own
agreement to settle.”). That Horizon’s recovery has been limited by its own choice and not
outside forces militates in favor of filing McDermott applicable in this case.
However, expediency, fairness, and judicial economy are not the Court’s only
considerations in determining whether to extend the rule of McDermott to cases in which a joint
tort-feasor holds a binding arbitration agreement with the plaintiff. As Plaintiff Horizon points
out, in maritime cases, “defendants, not the plaintiff, bear the risk of noncollection of a
judgment.” R. Doc. 69 at 6. As the Fifth Circuit has explained:
The common law has long held that each and every one of several tortfeasors is
liable for the full amount of an injured plaintiff's damages. In its purest
application, this rule of “joint and several liability” permits a plaintiff to obtain
full legal redress from any defendant, even if that defendant's actions were not
solely responsible for the plaintiff's injuries. Thus, joint and several liability can
produce a seemingly inequitable result: one defendant might alone be required to
bear the burden of several defendants’ wrongs.
Hardy v. Gulf Oil Corp., 949 F.2d 826, 829–30 (5th Cir. 1992).
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Here, although it appears Horizon has chosen to forgo any claims it has against Ausca, it
has not formally reached any type of settlement with Ausca. Moreover, Horizon clearly has not
voluntarily dismissed its claims against Ausca. While Horizon chose to sue only Progressive,
joint and several liability entitles it to do just that and still collect the full amount of its damages.
See Coats v. Penrod Drilling Corp., 61 F.3d 1113, 1128 (5th Cir. 1995) (en banc) (citing
McDermott, 511 U.S. at 221); Sands v. Kawasaki Motors Corp., USA, 513 F. App’x 847, 854–55
(11th Cir. 2013) (determining that joint and several liability meant that the plaintiff in a personal
injury admiralty action was “permitted to sue [the named defendant] for the full amount of her
damages, even though [another individual who was not a party to the litigation] might have
contributed to her injuries” and refusing to apply the proportionate fault approach). Horizon’s
decision not to initiate arbitration with Ausca is akin to a maritime plaintiff’s choice to sue one
joint-tortfeasor and not another. Unlike a settlement or voluntary dismissal with prejudice,
Horizon’s right to pursue Ausca has not been extinguished. As a result, the Court will not limit
Horizon’s recovery from Progressive at trial to only Progressive’s proportion of liability for
which the Court finds Progressive responsible.
Having determined Progressive may not ask the finder of fact to allocate fault to Ausca at
trial, the Court must now consider Ausca’s argument that Progressive may not seek contribution
from Ausca, as doing so “would render meaningless the very arbitration clause that the Court has
recognized is applicable as to any claim between Horizon and Ausca.” R. Doc. 63-1 at 5. Despite
making this argument, however, Ausca has pointed to no case law that would limit Progressive’s
ability to seek contribution from Ausca, simply because the time charter between Ausca and
Horizon contains a binding arbitration agreement. Thus, should Progressive be held liable in this
action for what it considers to be more than its equitable share, it can initiate a contribution
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action against Ausca. See The Juniata, 93 U.S. 337, 340 (1876) (stating that “if defendant vessel
has any rights against non-party vessel, they must be settled in another proceeding”); Combo
Mar., Inc. v. U.S. United Bulk Terminal, LLC, 615 F.3d 599, 602–03 (5th Cir. 2010) (“The right
of contribution in admiralty collision claims is of ancient lineage.”). Accordingly, the Court will
deny Ausca’s motion to dismiss Progressive’s indemnity and contribution claims against it.
IV.
CONCLUSION
Because there is no case law directly on point that would allow the Court to extend the U.S.
Supreme Court’s holding in McDermott to cases in which a joint tort-feasor holds a binding
arbitration agreement with the plaintiff, and there is no cases law indicating that Progressive would
be barred from seeking contribution from Ausca based on Ausca’s arbitration agreement with
Horizon,
IT IS ORDERED that Third-Party Defendant Ausca Shipping Limited’s Motion to
Dismiss, R. Doc. 63, be and hereby is DENIED.
New Orleans, Louisiana on this 21st day of March, 2019.
________________________________
Eldon E. Fallon
U.S. District Court Judge
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