In re Adm/Growmark River System
| Decision Date | 05 December 2000 |
| Docket Number | 5,9930535 |
| Parties | In Re: In the Matter of the Complaint of ADM/GROWMARK RIVER SYSTEM, INC., as Owner Pro Hac Vice of the Barge Rebecca, Praying for Exoneration From or Limitation of Liability ADM/GROWMARK RIVER SYSTEM, INC., Petitioner-Appellee, v. LEE ROY LOWRY, Claimant-Appellee, v. KOSTMAYER CONSTRUCTION, INC., Claimant-Appellant.IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT |
| Court | U.S. Court of Appeals — Fifth Circuit |
Appeal from the United States District Court for the Eastern District of Louisiana
Before REAVLEY, BENAVIDES and DENNIS, Circuit Judges.
This case requires that we determine whether section 905(b) of the Longshore and Harbor Worker's Compensation Act (LHWCA) invalidates certain liability allocation provisions in an agreement between two vessel owners, one of which also employs a harbor worker injured on the job. After thoroughly considering the language of section 905(b), the legislative history of the statute, as well as the cases interpreting the provision, we conclude that Congress did not intend its prohibition of liability allocation agreements to protect dual capacity employers beyond the extent of their immunity from tort liability as employers under section 905(a). As a consequence, we hold that a dual capacity employer sued for negligence in its capacity as vessel owner may terminate its rights to contribution from another vessel by agreeing to contractually indemnify that vessel. Based on this holding, we find that the liability allocation provisions relevant to this case are valid to the extent that they preclude a contribution claim by Kostmayer Construction, Inc. (Kostmayer), as a vessel owner, against ADM/Growmark River System, Inc. (ADM). We therefore AFFIRM the rulings of the district court.(FN1)
ADM owns a grain elevator in Ama, Louisiana used to transfer cargo to and from ships and river barges. In August 1995, ADM shut down its cargo operations to perform maintenance work on the elevator facility and the channel through which barges and ships access the facility. On August 15, 1995, ADM and Kostmayer Construction, Inc. (Kostmayer) executed a written contract in which Kostmayer agreed to replace a fender system in the access channel for a specified sum of money (the "Agreement"). The Agreement included four provisions allocating financial responsibility for injuries to Kostmayer's employees to Kostmayer (the "Liability Allocation Provisions").(FN2) Specifically, Kostmayer agreed to fully indemnify ADM and hold ADM harmless for any injuries suffered by Kostmayer employees during the course of the Kostmayer's work under the contract.
On August 19, 1995, Lee Roy Lowry, an employee of Kostmayer, suffered personal injuries while repairing ADM's fender system on behalf of Kostmayer.(FN3) On March 20, 1998, Lowry filed a personal injury suit in Louisiana state court against Kostmayer and ADM seeking damages pursuant to the general maritime law and LHWCA. Lowry's state court petition alleges that independent negligence by both Kostmayer and ADM vessels caused his injuries. On September 15, 1998, ADM filed a Complaint for Exoneration From Or Limitation Of Liability in the United States Court for the Eastern District of Louisiana citing section 183(a) of the Limitation Act. See 46 U.S.C. App. § 183(a). Lowry filed an Answer to the complaint, as well as a Claim in the proceeding. Kostmayer filed an Answer and Claim preserving its rights to indemnity or contribution from ADM in the event that Kostmayer should be cast in judgment in favor of Lowry. Kostmayer's federal claim for contribution against ADM does not seek reimbursement of benefits paid or payable to Lowry under the LHWCA. Rather Kostmayer's claim is limited to contribution for any negligence liability that Kostmayer may incur to Lowry in its capacity as a vessel owner.
ADM filed Motions for Summary Judgment seeking dismissal of both Lowry's and Kostmayer's claims. Kostmayer filed its own Motion for Partial Summary Judgment seeking to nullify the Liability Allocation Provisions in the Agreement using section 905(b) of the LHWCA. Kostmayer also sought dismissal of Lowry's claims against it. Finally, Lowry filed an Unopposed Motion for Modification of Stay and Restraining Order requesting that the district court lift the stay on his state court proceeding. Immediately following oral argument on these motions, the district court granted ADM's motion for summary judgment with respect to Kostmayer and Lowry's motion seeking to lift the stay. With respect to the grant of summary judgment, the district court interpreted the Liability Allocation Provisions to contain a "covenant not to sue" not prohibited by section 905(b) of the LHWCA. Finding Kostmayer's contribution action barred by the covenant not to sue, the court granted summary judgment for ADM. Left with a single-claimant exoneration action, the district court lifted the stay on state court proceedings based on appropriate stipulations by Lowry on the scope of ADM's liability and the continuing jurisdiction of the federal court to resolve issues related to that limit.(FN4) Kostmayer now appeals these rulings of the district court.
Lee Roy Lowry is an injured longshoreman seeking to exercise his rights under the savings to suitors clause to try his maritime personal injury claims against Kostmayer and ADM in the forum of his choice - Louisiana state court. See 28 U.S.C. § 1333(1) () At the same time, ADM has exercised its right to limit its liability in federal court under the Limitation Act. See 46 U.S.C. App. § 181 et seq.(FN5) In balancing the interests of an injured plaintiff in a particular forum against the right of a vessel owner to limited liability, we have previously recognized that the "primary concern is to protect the shipowner's absolute right to claim [the Limitation Act's] liability cap, and to reserve the adjudication of that right in the federal forum." See Magnolia Marine Transport Co. v. Laplace Towing Corp., 964 F.2d 1571, 1575 (5th Cir. 1992); ODECO Oil & Gas Co. v. Bonnette, 74 F.3d 671, 675 (5th Cir. 1996) ("ODECO II") ().
In order for claims to proceed in state court after an exoneration or limitation action has been filed in federal court, all claimants must sign a stipulation protecting the vessel owner's rights under the Limitation Act. In re Complaint of Port Arthur Towing, Co., 42 F.3d 312, 316 (5th Cir), cert. denied, 116 S.Ct. 87 (1995); ODECO Oil & Gas Co., Drilling Division v. Bonnette, 4 F.3d 401, 405 (5th Cir. 1993), cert denied, 511 U.S. 1004, 114 S.Ct. 1370 (1994). In the present case, Lowry and ADM have agreed to appropriate stipulations, but Kostmayer has not. This circuit has previously held that "parties seeking indemnification and contribution from a shipowner must be considered claimants within the meaning of the Limitation Act." ODECO II, 74 F.3d at 675. So long as Kostmayer retains a valid contribution claim against ADM, Kostmayer must also agree to stipulations protecting ADM's right to limited liability under the Limitation Act before any claims against ADM may proceed in state court.
The district court granted summary judgment for ADM on Kostmayer's contribution claim, thus allowing Lowry's state court claims to go forward based on the stipulations between Lowry and ADM. We review a district court's grant of summary judgment de novo, applying the same standard of review as would the district court. See Merritt-Campbell, Inc. v. RxP Products, Inc., 164 F.3d 957, 961 (5th Cir. 1999). The present appeal does not depend on the factual findings, but the resolution of legal questions. The district court's grant of summary judgment turned on its determination that (1) section 905(b) does not invalidate "covenants not to sue," and (2) the Agreement contained such a covenant.(FN6) We review questions of statutory interpretation de novo. U.S. v. Lowe, 118 F.3d 399, 400 (5th Cir. 1997); Estate of Bonner v. United States, 84 F.3d 196, 197 (5th Cir. 1996). Should we ultimately disagree with the trial court's reasoning, we may nevertheless affirm the summary judgment on any basis raised below and supported by the record. See Rushing v. Kansas City Southern Ry. Co., 185 F.3d 496, 517 (5th Cir. 1999); see also 10A CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE s. 2716, at 290 (3d ed.1998).
The LHWCA provides a comprehensive workers compensation scheme for longshoreman, harbor workers and other maritime laborers injured during the course of their employment. As with any workers compensation scheme, this one has always balanced the interests of injured workers in receiving substantial monetary relief quickly and irrespective of fault against the interests of employers in limited liability. See Thomas J. Schoenbaum, Admiralty and Maritime Law §7-1, 371 (2d ed. 1994). To this end, Congress guaranteed covered maritime workers injured on the job compensation from their employers without requiring proof of the employer's fault, but only up to certain statutory limits. See 33 U.S.C. § 904; Levene v. Pintail Enterprises, Inc., 943 F.2d 528, 531 (5th Cir. 1991). In exchange for accepting no-fault liability, employers of longshoreman and harbor workers also received immunity from suit for their negligence as employers or the negligence of their employees. See 33 U.S.C. § 905(a) ()
Though limiting the tort liability of employers, Congress expressly provided in section 905(b) that third party vessels...
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