International Tank Terminals, Ltd. v. M/V Acadia Forest, 76-2068

• Citation: 579 F.2d 964
• Decision Date: 11 September 1978
• Docket Number: No. 76-2068,76-2068
• Parties: INTERNATIONAL TANK TERMINALS, LTD., Plaintiff-Appellee, v. M/V ACADIA FOREST, her engines, boilers, etc., et al., Defendants. SPECIAL CARRIERS, INC., Claimant-Appellee, v. SYSTEM FUELS, INC., Movant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 964

579 F.2d 964

INTERNATIONAL TANK TERMINALS, LTD., Plaintiff-Appellee, v. M/V ACADIA FOREST, her engines, boilers, etc., et al., Defendants.

SPECIAL CARRIERS, INC., Claimant-Appellee, v. SYSTEM FUELS, INC., Movant-Appellant.

No. 76-2068.

United States Court of Appeals, Fifth Circuit.

Sept. 11, 1978.

Walter Carroll, Jr., New Orleans, La., for movant-appellant.

Louis J. Dutrey, Bertrand F. Artigues, New Orleans, La., for Int'l Tank Terminals.

J. Barbee Winston, Joseph P. Tynan, New Orleans, La., for Special Carriers, Inc.

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

Before HILL, RUBIN and VANCE, Circuit Judges.

JAMES C. HILL, Circuit Judge:

This is an appeal from an admiralty case which presents a single issue: whether the district court properly denied the motion of appellant, System Fuels, Inc., to intervene in the pending law suit. We affirm.

This appeal indirectly involves five companies and centers upon their interrelationships. Plaintiff-appellee, International Tank Terminals, Ltd., (I.T.T. ), is the owner of docking and oil storage facilities on the Mississippi River. Defendant A/S Molash Shipping Co. is the owner of the vessel involved, the M/V Acadia Forest. Defendant Special Carriers, Inc., pursuant to agreement with A/S Molash Shipping Co., is the demise charterer of the M/V Acadia Forest. Appellant System Fuels, Inc., in turn, under agreement with Central Gulf Lines, Inc., is the voyage charterer of the M/V Acadia Forest.

On April 5, 1973, the voyage charterer, appellant System Fuels, Inc., an oil dealer, entered into a lease with I.T.T. in which appellant agreed to lease the docking and oil storage facilities of I.T.T. The lease provided, in part: "Lessor (I.T.T.) warrants that the dock will be capable of berthing barges with a draft of 13 feet and tankers having a draft maintained by the Corps of Engineers for the Mississippi River. ¹" On December 20, 1973, and again on March 23, 1974, the M/V Acadia Forest allegedly caused damage to I.T.T.'s docking facilities while transporting appellant's fuel pursuant to the voyage charter arrangement. The vessel also allegedly suffered damage in the collision with the dock.

On December 18, 1974, plaintiff I.T.T. brought suit against defendant A/S Molash Shipping Co., through an In rem action against the M/V Acadia Forest, to recover for the damage to its docking and oil storage facilities. The demise charterer, defendant Special Carriers, Inc., answered the suit as owner Pro hac vice.

Plaintiff I.T.T. charged in its complaint that the damage to its facilities was caused by the negligence of the defendants in the navigation of the vessel. Upon answering defendant Special Carriers, Inc. asserted a counterclaim against plaintiff I.T.T. alleging that I.T.T. was liable to Special Carriers, Inc. (and defendant A/S Molash Shipping Co.) for damages to the vessel due to I.T.T.'s negligence in failing to provide to defendants a safe and proper berth.

In addition to answering and counterclaiming against I.T.T., Special Carriers, Inc., by letter, notified its time charterer, Central Gulf Lines, Inc., of the suit. In the charter agreement between Special Carriers, Inc. and Central Gulf Lines, Inc. appeared a standard clause, known as a safe berth warranty, imposing upon Central Gulf Lines, Inc. the duty to designate a safe berth when directing the demise charterer (defendant Special Carriers, Inc.) to a given port. This same charter agreement also contained a clause requiring that all disputes arising therefrom be submitted to arbitration in New York. Accordingly, in its letter, Special Carriers, Inc. notified Central Gulf Lines, Inc. that it would seek recovery of any amount which it was required to pay I.T.T. in the law suit through arbitration against Central Gulf Lines, Inc. Central Gulf Lines, Inc., as an alternative, was given the option of assuming the defense of the action and being bound thereby.

As previously stated, Central Gulf Lines, Inc. had voyage chartered the vessel to appellant System Fuels, Inc. This agreement, as well, contained a safe berth clause, imposing upon System Fuels, Inc. the duty to designate a safe berth in which to dock the vessel. The agreement also contained a clause requiring all disputes between them to be submitted to arbitration in New York. Upon receipt of the Special Carriers, Inc. letter, Central Gulf Lines, Inc. notified System Fuels, Inc. by letter that it would seek recovery of any sums due Special Carriers, Inc. through arbitration against System Fuels, Inc. and offered System Fuels, Inc. the option of accepting the defense of the action and being bound thereby.

Absent the arbitration agreements between the parties, this case would not be unusual. As in typical cases in which indemnity is sought, the vessel owner would implead the demise charterer who would implead the time charterer who would implead the voyage charterer. In such a suit, in addition to the question of initial liability, it would be expected to be determined whether the safe berth clause required indemnity by the third party defendant, fourth party defendant, Et cetera, in favor of its third party plaintiff, fourth party plaintiff, Et cetera. However, in this suit, due to the reliance on the arbitration provisions, no additional parties were impleaded. The party logically expected to implead, Special Carriers, Inc., apparently prefers to insist upon arbitration rather than a court determination.

On October 11, 1975, appellant System Fuels, Inc. moved to intervene in the suit between I.T.T. and Special Carriers, Inc., as a party defendant. The district court denied that motion, and this appeal was taken.

In this case, as outlined above, Special Carriers, Inc., in effect, demands indemnity from Central Gulf Lines, Inc. which demands indemnity from appellant System Fuels, Inc., by both demanding that the party next in line assume its defense and, presumably, any liability. Yet Special Carriers, Inc. did not implead the party next in line (Central Gulf Lines, Inc.) because it is bound upon motion of the opposing party to arbitrate and it also appears to prefer to resolve any possible claim-over by invoking the right to arbitrate.

Appellant System Fuels, Inc., therefore, is in the position of a spectator to the main event, but appellant expects that if the vessel owner Pro hac vice (Special Carriers, Inc.) loses, then a claim-over against appellant will be forthcoming through the arbitration process. Appellant is not content to stand by and await the outcome of the court contest. Instead, appellant would like to assist the vessel owner Pro hac vice in winning the court contest, thus foreclosing any further proceedings.

If appellant had acknowledged its...