Cooper/t.Smith Stevedoring Co. v. State

• Decision Date: 09 July 2012
• Docket Number: No. A12A0760.,A12A0760.
• Citation: 730 S.E.2d 168,317 Ga.App. 362
• Parties: COOPER/T.SMITH STEVEDORING COMPANY v. STATE of Georgia, by and through it's DEPARTMENT OF ADMINISTRATIVE SERVICES et al.
• Court: Georgia Court of Appeals

317 Ga.App. 362

730 S.E.2d 168

COOPER/T.SMITH STEVEDORING COMPANY

v.STATE of Georgia, by and through it's DEPARTMENT OF ADMINISTRATIVE SERVICES et al.

No. A12A0760.

Court of Appeals of Georgia.

July 9, 2012.

Reconsideration Denied July 31, 2012.

Mabry & McClelland, James William Scarbrough, Atlanta, for appellant.

Samuel S. Olens, Atty. Gen., Nancy M. Gallagher, Asst. Atty. Gen., Robins, Kaplan, Miller & Ciresi, R. Dennis Withers, Rumsey & Ramsey, Austin L. Ramsey III, Atlanta, for appellees.

BOGGS, Judge.

This is the second appearance of this case before this court. The operative facts are recited in Cooper/T. Smith Stevedoring Co. v. Georgia Ports Auth., 301 Ga.App. 62, 686 S.E.2d 844 (2009) (hereinafter " CTS I "):

This is a breach of contract action brought by the Georgia Ports Authority [ ("the GPA") and The Georgia Department of Administrative Services ("DAS") ] against Cooper/T. Smith Stevedoring Company, Inc. ["CTS"] and Cooper/T. Smith Corporation¹ ... to enforce a contract by which [the] GPA leased a gantry crane to CTS to discharge cargo from a ship berthed at the GPA's Ocean Terminal located in Savannah in Chatham County. The contract terms are set forth in a document known as GPA Terminal Tariff No. 5 ["the Tariff"], which provided the rates, rules, and regulations governing various services at the Ocean Terminal, including the GPA's lease of cranes to stevedoring companies for discharge of cargo from ships. It is undisputed that, while CTS was using the crane, it fell over and was destroyed during an attempt to lift cargo from the ship.² The GPA and the DAS sued CTS in the Fulton County Superior Court to enforce contract terms which allegedly made CTS liable for the destruction of the crane and for the cost of replacement. CTS appeals from the superior court's order granting motions for partial summary judgment in favor of the GPA and the DAS on liability and the measure of damages, and denying CTS's motion for partial summary judgment on the measure of damages.

Id. In the 2009 appeal, this court held that the trial court "applied only state law to the maritime contract at issue without consideration of federal maritime law," and remanded the case with direction for the trial court to consider the application of both federal and state law. Id. at 64, 686 S.E.2d 844.

On remand, the trial court found that "the issue[s] presented are inherently local and are to be resolved pursuant to Georgia law." The court also reaffirmed its earlier ruling granting GPA's motion for partial summary judgment on the issue of liability on the ground that the crane operator was CTS's borrowed servant under the Tariff and that CTS was responsible for the operation of the crane under the Tariff. The court also affirmed its earlier ruling granting the GPA's motion for summary judgment on the measure of damages. CTS now appeals, enumerating several claims of error. For the following reasons, we affirm in part and reverse in part.

1. CTS contends that federal maritime law governs the enforceability of the Tariff because a terminal's practices and tariffs affect not only local interests, but also interstate and international interests.³ The trial court found that the Tariff was inherently local because the GPA operates ports for the benefit of Georgia citizens and there is "no federal master tariff governing all U.S. ports."

"Under the ‘saving to suitors' clause codified at 28 U.S.C. § 1333(1), state courts have concurrent jurisdiction with the admiralty jurisdiction of federal courts to entertain in personam claims based on maritime causes of action." (Citations omitted.) CTS I , supra, 301 Ga. App. at 62–63, 686 S.E.2d 844, citing in part, Norfolk Southern R. Co. v. Kirby, 543 U.S. 14, 22–25(II), 125 S.Ct. 385, 160 L.Ed.2d 283 (2004). While Georgia courts have concurrent jurisdiction over this cause of action, "the extent to which state law may be used to remedy maritime injuries is constrained by a so-called ‘reverse-Erie ’ doctrine which requires that the substantive remedies afforded by the States conform to governing federal maritime standards." (Citations omitted.) Offshore Logistics v. Tallentire, 477 U.S. 207, 223(IV), 106 S.Ct. 2485, 91 L.Ed.2d 174 (1986). In CTS I, supra, we held that "[t]he present in personam claim against CTS for money damages is a maritime cause of action because it is based on a contract directly related to a maritime service or transaction—the lease of a crane to a stevedoring company to discharge cargo from a ship berthed at the GPA's Ocean Terminal." Id. at 63, 686 S.E.2d 844.

After establishing that the contract here is maritime in nature, the second step is for the court to determine whether the case is inherently local. See Norfolk Southern R. Co., supra, 543 U.S. at 27(II), 125 S.Ct. 385. "For not every term in every maritime contract can only be controlled by some federally defined admiralty rule. A maritime contract's interpretation may so implicate local interests as to beckon interpretation by state law." (Citations and punctuation omitted.) Id.; see Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310, 314, 75 S.Ct. 368, 99 L.Ed. 337 (1955).

The state law involved here is the law of contracts and doctrine of borrowed servant under OCGA § 44–12–62(b). The GPA alleges that CTS breached the Tariff when the crane it leased to CTS tipped over and was destroyed. The GPA claimed that the crane operator was the borrowed servant of CTS and that because CTS was responsible for the operation of the crane, it was liable for its replacement under the Tariff. CTS counters that the crane operator was the employee of the GPA. In order to sustain a case for breach of contract, the GPA must prove "(1) the terms of a maritime contract; (2) that the contract was breached; and (3) the reasonable value of the purported damages." (Citation omitted.) Cornish v. Renaissance Hotel Operating Co., 2007 WL 4614776, *8, 2007 U.S. Dist. LEXIS 95115, *26 (M.D.Fla.2007).

The state interest here concerns the right of a state agency to seek recovery for the destruction of its land-based property used exclusively at a state port. Certainly there is a strong state interest in resolving a contract dispute between a Georgia administrative agency and a Georgia corporation that involves the loss of equipment located in Georgia, specifically equipment used to load or unload cargo at a Georgia port. The interpretation of this provision of the Tariff is therefore inherently local. See Brewer Environmental Indus. v. Matson Terminals, 2011 WL 1637323, *3–4, 2011 U.S. Dist. LEXIS 46429, *9–12(I) (D.Hawaii 2011) (while contract was a maritime one, no federal preemption where dispute—concerning the sale of stevedoring business and a workers' compensation policy—was inherently local). The trial court therefore did not err in concluding that the breach of contract action should be resolved pursuant to Georgia law.

2. CTS argues that the trial court erred in applying state law because any state law is preempted by federal law.

Pre-emption may be either expressed or implied, and is compelled whether Congress' command is explicitly stated in the statute's language or implicitly contained in its structure and purpose. Absent explicit pre-emptive language, we have recognized at least two types of implied pre-emption: field pre-emption, where the scheme of federal regulation is so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it, and conflict pre-emption, where compliance with both federal and state regulations is a physical impossibility, or where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.

(Citations and punctuation omitted.) Gade v. Nat. Solid Wastes Mgmt. Assn., 505 U.S. 88, 98(II), 112 S.Ct. 2374, 120 L.Ed.2d 73 (1992) ; see English v. General Elec. Co., 496 U.S. 72, 78–79(II)(A), 110 S.Ct. 2270, 110 L.Ed.2d 65 (1990). CTS argues that any state law is preempted by the Ocean Shipping Reform Act ( 46 U.S.C. § 40101 et seq. ) ("the Act").

While the Act contains no explicit preemptive language, CTS asserts that the following provisions establish both field and conflict preemption: 46 U.S.C. § 41102(c) ("A common carrier, marine terminal operator, or ocean transportation intermediary may not fail to establish, observe, and enforce just and reasonable regulations and practices relating to or connected with receiving, handling, storing, or delivering property"), 46 U.S.C. § 40501(g)(3) ("The Commission shall by regulation prescribe the form and manner in which marine terminal operator schedules authorized by this section shall be published"), and 46 C.F.R. § 525.2(a)(1) ("Any limitations of liability for cargo loss or damage pertaining to receiving, delivering, handling, or storing property at the marine terminal contained in a terminal schedule must be consistent with domestic law and international conventions and agreements adopted by the United States; such terminal schedules cannot contain provisions that exculpate or relieve marine terminal operators from liability for their own negligence....").

But here, there is neither field nor conflict preemption. Nothing in these provisions of the Act or the Code of Federal Regulations governing ocean shipping is so pervasive as to make an inference that Congress left no room for the States to supplement it with state contract law and the borrowed servant doctrine. Nor does state law stand as an obstacle here to the execution of the purposes of Congress to enforce reasonable regulations and to prohibit terminal operators from relieving themselves of liability for loss or damage to cargo due to their own negligence. CTS points to no other provision of the Act that explicitly or implicitly prohibits the GPA from assigning the risk of loss of leased equipment to the lessee. We therefore hold that the Act does not preempt the state breach of contract action here that...