Hartford Acc. & Indem. Co. v. Costa Lines Cargo Services, Inc.

• Decision Date: 31 May 1990
• Docket Number: 89-3293,Nos. 89-3020,s. 89-3020
• Citation: 903 F.2d 352
• Parties: HARTFORD ACCIDENT & INDEMNITY COMPANY, Plaintiff-Appellant, v. COSTA LINES CARGO SERVICES, INC., et al., Defendants, Evergreen Marine Corporation (New York) Ltd., Etc., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 352

903 F.2d 352

16 Fed.R.Serv.3d 1306

HARTFORD ACCIDENT & INDEMNITY COMPANY, Plaintiff-Appellant, v. COSTA LINES CARGO SERVICES, INC., et al., Defendants Evergreen Marine Corporation (New York) Ltd., Etc., et al Defendants-Appellees.

Nos. 89-3020, 89-3293.

United States Court of Appeals Fifth Circuit.

May 31, 1990.

Gerard J. Sonnier, Lance S. Ostendorf, Michael J. Maginnis, McGlinchey, Stafford, Mintz, Cellini & Lang, New Orleans, La., for plaintiff-appellant.

Robert B. Deane, Thomas D. Forbes, Chaffe, McCall, Phillips, Toler & Sarpy, New Orleans, La., for Costa Lines Cargo Services, Inc.

Allen J. Krouse, III, Miles P. Clements, Lemle & Kelleher, New Orleans, La., for Evergreen.

D. Russell Holwadel, Robert M. Johnston, Adams & Johnston, New Orleans, La., for No Private Patrol.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before REAVLEY and KING, Circuit Judges, and LAKE, District Judge. ^*

KING, Circuit Judge:

Hartford Accident and Indemnity Company filed an action in state court which we construe as a Burnside claim under Federal Marine Terminals, Inc. v. Burnside Shipping, Co., Ltd., 394 U.S. 404, 89 S.Ct. 1144, 22 L.Ed.2d 371 (1969). The action was later removed to federal court and summary judgment was granted to the defendants. We conclude that complete diversity exists, that an objection to removal was waived, that the district court properly refused to stay these proceedings, that the district court did not abuse its discretion in denying plaintiff's motion for voluntary dismissal and that summary judgment was proper.

I. Facts and Proceedings Below

On November 25, 1987, Hartford Accident and Indemnity Company (Hartford), a Connecticut insurer, filed an action in state court as compensation insurer for New Orleans Marine Contractors (NOMC), a stevedoring company. Hartford alleged that it was entitled to reimbursement for workers compensation benefits voluntarily paid to Melville Maher (Maher), a worker injured when the truck he was driving struck a steel framework trailer chassis at NOMC's container facility. Hartford named as defendants Costa Container Lines of Italy and Costa Lines Cargo Services, Inc. (collectively, Costa)--an ocean carrier and its agent who chartered a vessel docked at the terminal where Maher was injured. Also named as defendants were Evergreen Marine Corporation of New York, Evergreen Marine Corporation (Taiwan), Ltd., Evergreen Marine Corporation, Ltd. (collectively, Evergreen)--the owner of the parked chassis struck by Maher; the New Orleans Private Patrol Service, Inc. (NOPPS)--the security unit for the NOMC facility; and the Board of Commissioners of the Port of New Orleans--the alleged owner of the property. Finally, Hartford joined Mr. and Mrs. Melville Maher (Mahers), Louisiana citizens, as party defendants pursuant to Louisiana Code of Civil Procedure Article 644. ¹ The Mahers subsequently filed a separate action in Louisiana state court, on November 28, 1987, and Hartford intervened in that action.

On November 26, 1986, the M/V Olandia was docked on the Industrial Waterway in the Port of New Orleans at the France Street Terminal, a terminal operated by NOMC. Costa had chartered the vessel, which was owned and manned by another company. By contract, NOMC performed all stevedoring activities for Costa in New Orleans--including, loading and unloading vessels and moving containers within the yard on wheeled conveyances, flatbed trailers or steel framework trailer chassis owned by Costa and other shippers. NOMC controlled the movement, storage and parking of chassis within its facility.

Maher, a trailer interchange receipt clerk and member of the International Longshoreman's Association, was assigned to the NOMC terminal. At approximately 5:30 on November 26, Maher was driving a pick-up truck owned by NOMC and struck a parked empty chassis owned by Evergreen. Hartford contends that the chassis' lack of front lights, reflectors or other illumination was a cause of the accident. Hartford also contends that NOPPS' failure to turn on certain lights at the facility contributed to the accident. Hartford, as compensation carrier and insurer for NOMC, voluntarily paid compensation to Maher under the Longshore and Harbor Workers' Compensation Act (LHWCA). Hartford subsequently filed this action in state court against the above named defendants.

On January 20, 1988, the defendants filed a petition for removal to federal district court, alleging complete diversity. Discovery began on February 2, 1988. In May, Hartford sought to remand the action back to state court, contending that the Mahers should be realigned as plaintiffs, thereby destroying diversity. On June 21, 1988, the district court denied Hartford's motion but directed counsel to submit briefs on the possibility of a stay pending resolution of the Mahers' state court proceedings. Costa moved for summary judgment in June 1988, and, the following month, Hartford sought reconsideration of the denial of its motion to remand. On July 29, 1988, the district court granted Costa's motion for summary judgment, denied Hartford's motion for reconsideration and refused to stay the federal proceedings.

Hartford then sought voluntary dismissal without prejudice of the entire action on September 27, 1988. The defendants filed oppositions. In addition, Evergreen and NOPPS filed motions for summary judgment. On December 7, 1988, the same day final judgment was entered in favor of Costa, Hartford again sought remand alleging, for the first time, that removal was improper under 28 U.S.C. Sec. 1441(b) because certain defendants were residents of the state where the action was originally filed. Hartford's motion to dismiss was denied, and its motion to remand was dismissed as moot. On January 4, 1989, Hartford filed notice of appeal from the district court's final judgment dismissing Costa. Subsequently, the district court granted summary judgment to the remaining defendants, and Hartford again appealed. Both appeals were later consolidated.

Hartford claims that complete diversity is lacking, that removal was improper, that the district court abused its discretion in refusing to stay this action or grant its motion for voluntary dismissal and that the district court erred in granting summary judgment to Costa, Evergreen and NOPPS. We disagree and affirm.

II. Diversity Jurisdiction

Hartford contends that complete diversity is lacking because the Mahers, though aligned as defendants under Louisiana Code of Civil Procedure Article 644, are properly considered plaintiffs and as such, are not diverse to certain defendants. According to Hartford, its claim for reimbursement of LHWCA compensation and benefits paid to the Mahers is a "lien" on any recovery the Mahers may obtain against the defendants, and Hartford's action is therefore essentially one in subrogation. Hartford sees the Mahers as indispensable to its subrogation claim, and properly viewed in light of their ultimate interests, the Mahers should be realigned as plaintiffs. Alternatively, Hartford asserts that even if its claim is viewed as a Burnside action for a breach of a duty owed the stevedore-employer (rather than a subrogation action based on a wrong to the Mahers), the Mahers are still necessary parties who should be aligned as plaintiffs, destroying diversity.

The nature of Hartford's claim, as either a subrogation claim or a Burnside action, determines the status of the Mahers in relation to this case. The Mahers' status, in turn, controls whether they should be considered in assessing diversity jurisdiction. Our decision in Peters v. North River Ins. Co., 764 F.2d 306 (5th Cir.1985) is instructive. As Peters explains, a Burnside claim is entirely separate, both in nature and in origin, from an employer/carrier's subrogation right.

An employer's right to subrogation allows it reimbursement for LHWCA compensation paid to an injured employee. This right is derivative of the third parties' breach of a duty to the worker. Id. at 312, 319. A Burnside claim, on the other hand, allows an employer/carrier who has paid LHWCA compensation to assert a direct action in tort (or other applicable theory) against the third party or parties who caused the injury. Id. at 312-13; see also Burnside, 394 U.S. at 416-17, 89 S.Ct. at 1151. "A Burnside cause of action is an independent cause of action based on the third party's independent wrong to the employer." Peters, 764 F.2d at 320 (emphasis in original). ²

The subrogation right and Burnside claim are controlled by different players. Because the source of a subrogation right is the wrong done to a worker, the worker controls the claim to which the subrogation right attaches. Although the employer/carrier has a subrogation interest, absent statutory assignment, ³ " 'exclusive control of the action' remains with the worker...." Id. at 317 (citing Rodriguez v. Compass Shipping Co., 451 U.S. 596, 600-01, 101 S.Ct. 1945, 1949, 68 L.Ed.2d 472 (1981)). Included within the scope of the worker's control is the power to commence suit. Id. at 316. ("[T]he worker's cause of action should be treated as a single, unitary cause of action for almost every purpose [including] commencing prosecution of the lawsuit...."). The Burnside action, being an action based on a wrong directly to the employer, is the flip side of the coin--controlled by the employer/carrier. See T. Schoenbaum, Admiralty and Maritime Law Sec. 6-13 (1987 & Supp.1989).

With Peters teachings in mind, Hartford's arguments crumble. First, as there was no statutory assignment and this action was brought by Hartford, Hartford's claim cannot be characterized as a right of subrogation. Only the Mahers could bring the worker's cause of action to which the subrogation right attaches. ⁴ Hartford's alternative suggestion that the Mahers are necessary parties even if this action is characterized as a Burnside cause also fails. ⁵ A...