Landon v. Leif Hoegh & Co., Inc.

Decision Date18 June 1975
Docket NumberD,No. 590,590
Citation521 F.2d 756
PartiesRonald LANDON, Plaintiff, v. LIEF HOEGH AND CO., INC., Defendant. A/S ARCADIA, Defendant and "Plaintiff" Seeking Joinder-Appellant, v. GULF INSURANCE COMPANY, Plaintiff or Defendant or Involuntary Plaintiff-Appellee. ocket 74-2304.
CourtU.S. Court of Appeals — Second Circuit

Joseph T. Stearns, New York City (J. Ward O'Neill, Richard A. Corwin, and Haight, Gardner, Poor & Havens, New York City, of counsel), for defendant-appellant.

Philip F. DiCostanzo, Brooklyn, N. Y. (Robert Klonsky, Anthony J. Cutrona, and DiCostanzo, Klonsky & Cutrona, Brooklyn, N. Y., of counsel), for involuntary plaintiff-appellee.

Before MULLIGAN, TIMBERS and GURFEIN, Circuit Judges.

GURFEIN, Circuit Judge:

This is a case of first impression in this circuit on the effect of the 1972 amendments to the Longshoremen's and Harbor Workers' Compensation Act (the "Act") with respect to a claim by a shipowner against the stevedore employer of an injured longshoreman. It marks another episode in the continuing struggle of shipowner against stevedore.

This is a personal injury action brought by a longshoreman, Ronald Landon, against the shipowner, A/S ARCADIA, sued as Lief Hoegh & Co., Inc. The plaintiff claims to have been injured on the deck of defendant's vessel, M/S HOEGH OPAL, while at work near her No. 4 hatch. The accident occurred February 7, 1973 after the effective date of the 1972 amendments to the Act. Gulf Insurance Company ("Gulf") is the compensation carrier for plaintiff's employer, Pittston Stevedoring Corporation ("Pittston"). Plaintiff received benefits under the Act for temporary total disability in the amount of $736 and also received the benefit of the insurer's expenditure of $377 for medical attention rendered to the plaintiff. Gulf notified the shipowner's Claim Bureau that it claims an "indemnity lien" for the total amount of compensation benefits extended to the plaintiff.

The shipowner moved to join Gulf as a necessary party plaintiff pursuant to Rule 19(a), and to implead Pittston as a third-party defendant under Rule 14. Judge Dooling granted the motion. Pittston was not served. 1

The shipowner alleged in the Rule 19 complaint that "(Gulf) may have a claim against the defendant" (shipowner) by virtue of its payment of compensation and medical expenses to and for the plaintiff pursuant to 33 U.S.C. § 933(h), under which Gulf was subrogated to the rights of its insured, Pittston. It alleged further that if the plaintiff sustained any injury the injury was caused by the contributing negligence of the plaintiff for whose actions Pittston and Gulf are responsible. The defendant shipowner demanded judgment extinguishing any claim of Gulf against the defendant for the amount of any compensation paid or to be paid to the plaintiff.

Gulf, the involuntary plaintiff, filed an answer seeking dismissal of the Rule 19(a) complaint, and also counterclaimed for the full amount of its compensation lien if plaintiff should recover. The shipowner moved to strike the affirmative defense of Gulf that the § 19(a) complaint failed to state a claim for relief. Gulf then moved to dismiss the § 19(a) complaint. The District Court denied the motion to strike the affirmative defense of Gulf and granted the motion to dismiss. The District Court certified that there is no just reason for delay, F.R.Civ.P. 54(b), ordering entry of judgment. We consider the appeal.

By a 1972 amendment to section 5, the Act provides in 33 U.S.C. § 905(b) in pertinent part as follows:

"In the event of injury to a person covered under this chapter caused by the negligence of a vessel, then such person, or anyone otherwise entitled to recover damages by reason thereof, may bring an action against such vessel as a third party in accordance with the provisions of section 933 of this title and the employer shall not be liable to the vessel for such damages directly or indirectly and any agreements or warranties to the contrary shall be void. If such person was employed by the vessel to provide stevedoring services, no such action shall be permitted if the injury was caused by the negligence of persons engaged in providing stevedoring services to the vessel. If such person was employed by the vessel to provide ship building or repair services, no such action shall be permitted if the injury was caused by the negligence of persons engaged in providing ship building or repair services to the vessel. The liability of the vessel under this subsection shall not be based upon the warranty of seaworthiness or a breach thereof at the time the injury occurred. The remedy provided in this subsection shall be exclusive of all other remedies against the vessel except remedies available under this chapter." As amended Oct. 27, 1972, Pub.L. 92-576, § 18(a), 86 Stat. 1263.

Though the statute states that the shipowner cannot sue "the employer," (the stevedore) it does not specifically say that the stevedore cannot sue the shipowner. The appellant shipowner constructs an argument as follows:

The employer (or his carrier) has no "lien" on any recovery to which the plaintiff may be found entitled. What it has instead is a claim, a "cause of action" Against the shipowner to recover damages for the shipowner's negligence to the extent of its exposure for compensation payments made for the benefit of the plaintiff. The employer Pittston (or its carrier) must assert this claim in this action because its claim to recover compensation payments is subject to defeat by proof of concurring negligence on the part of any employee of Pittston.

The appellant shipowner also moved to interpret the 1972 amendment to mean that the plaintiff can recover against it, in any event, only upon proof that his accident was caused by the Sole negligence of the shipowner without any negligence whatever of the stevedore-employer contributing thereto. This ingenious argument requires a review of the situation antecedent to the 1972 amendments. The 1972 amendments provided for a substantially increased level of benefits (33 U.S.C. § 906(b)), with more employees covered, and, aside from important administrative changes, made their most significant changes in section 5 quoted above, by repealing the right of a longshoreman to sue a ship for unseaworthiness and abolishing breach of warranty claims by the ship against the stevedore-employer.

The appellant recognizes at the outset that the Supreme Court in Pope & Talbot v. Hawn, 346 U.S. 406, 411-12, 74 S.Ct. 202, 98 L.Ed. 143 (1953), held that section 33 of the Act, 33 U.S.C. § 933, has specific provisions to permit an employer to recoup his compensation payments out of any recovery from a third person negligently causing such injury and that, in any event, a reduction of the shipowner's liability to the plaintiff by the amount of the compensation payments would be the substantial equivalent of contribution by the employer, which the Court declined to require in Halcyon Lines v. Haenn Ship Ceiling and Refitting Corp., 342 U.S. 282, 72 S.Ct. 277, 96 L.Ed. 318 (1952). Appellant contends, however, that Federal Marine Terminals, Inc. v. Burnside Shipping Co., 394 U.S. 404, 89 S.Ct. 1144, 22 L.Ed.2d 371 (1969), overruled Pope & Talbot, supra, which is said to be no longer controlling.

Appellant contends that Burnside, supra, established that an employer-stevedore has a direct common law claim for the recovery of his compensation payments against the shipowner, rather than a lien against the proceeds of plaintiff's recovery. In view of such direct claim he is said to be a proper party and, once joined, is subject to a counterclaim for concurrent negligence. 2

In the Burnside case, a shipowner sued a stevedore seeking indemnification for any judgment which the shipowner might be required to pay in a maritime wrongful death action brought by the executrix of an employee of the stevedore. The stevedore counterclaimed for the compensation it was required to pay to the widow and children. The counterclaim was dismissed on summary judgment and affirmed by the Court of Appeals. The Supreme Court reversed.

Generally, the right of subrogation ("assignment" to the employer, § 33(b) of the Act) which is afforded the stevedore's insurance carrier under § 33(h) suffices to permit it to recover the full amount of the compensation paid out of plaintiff's larger recovery. In Burnside, however, the applicable Illinois Wrongful Death Act limited the amount recoverable by the decedent's representatives to $30,000, far short of the stevedore's potential compensation liability of $70,000. The Burnside action turned on whether the stevedore had a claim against the shipowner for his whole compensation liability, including that amount in excess of his right of subrogation under Section 33. The Supreme Court held that the stevedore had such a claim against the shipowner. It emphasized, however, that this was not based on any theory of shared responsibility for joint negligence, and was not a departure from Halcyon, supra, 394 U.S. at 417-18, 89 S.Ct. at 1152; it was founded not on the shipowner's wrong to the Longshoreman, but on its "independent wrong" to the Stevedore in failing to provide a safe place to work which had caused the Stevedore damage. 394 U.S. at 418, 89 S.Ct. at 1152.

Burnside did not, however, overrule Halcyon, nor Pope & Talbot. The rule still remains that the shipowner may not deduct the compensation payments from the plaintiff's recovery but must pay them to the employer under section 33 of the Act. Only if there is a shortfall, as in the rather unusual circumstances of the Burnside case, is there any necessity for the employer to resort to a common law claim for the excess above the subrogated amount. In that event, he sues not on the theory of concurrent negligence to the plaintiff, but on the theory of direct negligence by the shipowner alone. This is an action he may never...

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