345 F.2d 45 (5th Cir. 1965), 21263, Fidelity & Cas. Co. of New York v. C/B Mr. Kim

Docket Nº:21263.
Citation:345 F.2d 45
Party Name:The FIDELITY & CASUALTY COMPANY OF NEW YORK, Appellant, v. C/B MR. KIM, Its Engines, etc., et al., Appellees.
Case Date:May 14, 1965
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

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345 F.2d 45 (5th Cir. 1965)



C/B MR. KIM, Its Engines, etc., et al., Appellees.

No. 21263.

United States Court of Appeals, Fifth Circuit.

May 14, 1965

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[Copyrighted Material Omitted]

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W. K. Christovich, J. Walter Ward, Jr., New Orleans, La., for The Fidelity and Cas. Co. of New York, Christovich & Kearney, New Orleans, La., of counsel.

John Poitevent, New Orleans, La., for Norman Guidry, owner of the C/B 'Mr. Kim', Phelps, Dunbar, Marks, Claverie & Sims, New Orleans, La., of counsel.

Before JONES and BROWN, Circuit Judges, and SHEEHY, District Judge.

JOHN R. BROWN, Circuit Judge:

If not a new wrinkle, Mike Hooks, Inc. v. Pena, 5 Cir., 1963, 313 F.2d 696, this case presents at least a new ripple on the undulating sea of law dealing with maritime rights growing out of the application of state workmen's compensation statutes to a worker sustaining a maritime injury. The precise question is whether a compensation insurer, as a Louisiana statutory subrogee, seeking reimbursement from a vessel and its owner as tortious third parties may maintain a libel filed after the expiration of the state prescriptive period in which suit could be filed by the injured employee. The District Court, on motion for summary judgment holding in the negative, dismissed the libel. We disagree and reverse.

The facts for our purposes, neither complex nor conflicting, are simple.

The Insurer 1 was the Louisiana Workman's Compensation insurer of the Employer 2 for whom the Employee 3 was working as a floorman on a drilling rig

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located in Louisiana maritime waters. The injury occurred on April 4, 1961, when the crewboat MR. KIM hit a stump while navigating in broad daylight the calm waters of Grand Lake some 2,000 feet from a boat landing. The vessel was engaged in transporting Powell and fellow drilling rig crew members. Powell's injuries were apparently severe. Although the libel 4 was not filed until May 20, 1963-- about ten months after the Louisiana one-year prescriptive period 5 -- the vessel owner through authorized representatives within a very short time of the incident knew of the occurrence and the Insurer's claim for reimbursement of compensation benefits paid and payable.

Not later than January 11, 1962-- just four months after the incident-- the Insurer made formal letter demand on the vessel owner asserting that 'the accident was the direct result of a negligent operation of Guidry's crewboat 'Mr. Kim ". To this demand the present proctors, representing 'the P & I underwriters on the C/B MR. KIM', on January 22 made a safe, if somewhat ambiguous, but perhaps nevertheless traditional response. It first expressed the 'wish to deny any liability on behalf of the vessel MR. KIM and/or her owner.' But then with wisdom born of long experience plus whatever comfort or protection could be generated by the ubiquitous escape hatch 'without prejudice' counsel stated 'we are prepared to discuss this matter with you.' The letter then requested 'copies of the medicals in connection with Roy F. Powell's injury and any statements that you might have.' The letter obviously was not a peremptory rejection. It contemplated further negotiation for it concluded, 'after reviewing these documents, the merits of the case can be discussed * * *' always, of course, 'without prejudice.'

And, of course, the negotiations continued. On February 23, 1962, the Insurer advised the vessel owner's counsel that final settlement discussions could not then be held since it did not know what its total expenditures would be. At the same time, the Insurer furnished counsel with copies of all medical reports. The transmittal letter reiterated that the Insurer 'will continue to look to Mr. Guidry's insurance carrier for reimbursement of our expenditures in this case, at such time as we know the exact amounts of' them. On the first anniversary date of the accident, weekly compensation benefits were still being paid. The Insurer kept the vessel owner's counsel advised 'as to medical developments and as to when it would be possible to terminate compensation benefits.' The lines of communications were open at both ends for during the year prior to the anniversary date, the Insurer received 'no less than three' letters from the P & I Carrier's lawyer concerning the claim. Compensation benefits were paid from August 4, 1961 through February 22, 1963. Thereafter, on July 8, 1963, the Insurer paid a further substantial lump sum pursuant to a compromise judgment of the Louisiana State Court under the Compensation Act. LSA-R.S. § 23:1272.

On this showing, we think the District Court could not properly grant summary judgment. This is so whether based on an Erie (Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188) view of controlling Louisiana law or here the more surefooted view of maritime law.

On either approach, we accept, as we earlier have, American Universal Ins. Co. v. Chauvin, 5 Cir., 1964, 329 F.2d 174, the proposition so vigorously asserted

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that a Louisiana compensation insurer's right of recoupment is statutory subrogation dependent entirely upon the rights granted in § 23:1101-1103. 6 We do not, therefore, explore the Insurer's right, independent of § 23:1101, to press the claim in its own name as real party at interest as frequently and traditionally allowed in the admiralty. 7

But to accept this proposition which ties the Insurer to the Employee's rights is not at all the end of it. Under the yet undenied allegations of the libel, 8 the Employee had a whole arsenal of rights--state, federal, maritime and mixed. Under the quaint codal language of Art. 2315 9 the Employee clearly has state rights which, independent of the state watercraft statutes, 10 would be enforceable in the Federal Court on either the civil action or admiralty side, Southport Transit Co. v. Avondale Marine Ways, 5 Cir., 1956, 234 F.2d 947; W. E. Hedger Transp. Corp. v. United Fruit Co., 2 Cir., 1952, 198 F.2d 376, at least insofar as

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they do not reduce maritime rights. 11 His Federal rights were abundant. As a passenger for compensation, the Employee was the direct beneficiary of substantive rights arising from long recognized, exacting duties imposed by the federal maritime law. 12 The Linseed King (Spencer Kellogg & Sons v. Hicks), 1932, 285 U.S. 502, 52 S.Ct. 450, 76 L.Ed. 903. And the injuries having occurred on navigable waters, the Employee had an unquestioned claim under the 'settled principle of maritime law that a shipowner owes the duty of exercising reasonable care toward those lawfully aboard the vessel who are not members of the crew.' Kermarec v. Compagnie Generale Transatlantique, 1959,358 U.S. 625, 79 S.Ct. 406, 3 L.Ed.2d 550. And for none of these rights did the Employee have to make himself out a Sieracki-Yaka 13 seaman since unseaworthiness is not, certainly at this stage, needed to make out a case of liability. Nor is it needed if, as later discussed, the doctrine of laches does not bar the claim even though tardily filed. Cf. Flowers v. Savannah Machine & Foundry Co., 5 Cir., 1962, 310 F.2d 135.

To all of this, the vessel owner has an Erie reply. The contention is that by the reasoning of Marquette Casualty Co. v. Brown, 1958,235 La. 245, 103 So.2d 269, §§ 1101-1103 (note 6, supra) incorporate §§ 3536-3537 (note 5, supra) to effectually restrict the Insurer's statutory subrogation to the prescriptive period of one year. But neither for Erie nor for maritime purposes do we read the case that way. True, the Louisiana Supreme Court, expressly rejecting several of its earlier decisions, emphasized that there is 'but one cause of action against the tortfeasor for the injuries sustained by the employee' so that prescription starts to run with the employee's injury, not the time the insurer is 'hurt.' But it did not undertake to hold that if, as to some compensable injury sustained by some employee, the prescriptive period was longer or was not a mandatory bar-- e.g., an extraterritorial injury in Texas, laches, etc., there would be no enforceable statutory subrogation beyond one year. And, on this approach, if reading the Compensation Act and the Prescription Statutes together does not serve to extinguish the Employee's claim, certainly the right would not be extinguished on the prescription statute alone. For we have held that Art. 3536 is a procedural restraint which bars the remedy, but does not extinguish the right. Page v. Cameron Iron Works, Inc., 5 Cir., 1958, 259 F.2d 420, 422. It is also good Louisiana law, so we have held in an opinion written for the Court by Judge Wisdom that the codal 'Article expresses the general rule, supported by ample Louisiana authority, that prescription is procedural and the law of the forum governs.' Kozan v. Comstock, 5 Cir., 1959, 270 F.2d 839, 841, 80 A.L.R.2d 310.

That being so, the forum here is the Federal District Court in which the equitable doctrine of laches, not prescription, is controlling as to a maritime claim.

The inquiry on laches partakes of two parts-- (1) the excuse for the delay and (2) prejudice to the pursued. As Judge Friendly's opinion in Larios v. Victory Carriers, Inc., 2 Cir., 1963, 316 F.2d 63, carefully develops, the emphasis is more and more on (2)-- prejudice-- than on (1). 'A weak excuse may suffice if there has been no...

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