Lubrano v. Waterman Steamship Co.

• Decision Date: 30 April 1999
• Docket Number: Docket No. 98-7849
• Citation: 175 F.3d 274
• Parties: Damian LUBRANO, Plaintiff, v. WATERMAN STEAMSHIP COMPANY, Defendant-Appellant, Weeks Marine, Inc., sued here as Weeks Off-shore Crane Company, Defendant-Appellee, Bay Crane Co., Inc., John Doe (1-10) and XYZ Inc. (1-10), Defendants.
• Court: U.S. Court of Appeals — Second Circuit

Page 274

175 F.3d 274

Damian LUBRANO, Plaintiff, v. WATERMAN STEAMSHIP COMPANY, Defendant-Appellant Weeks Marine, Inc., sued here as Weeks Off-shore Crane Company, Defendant-Appellee Bay Crane Co., Inc., John Doe (1-10) and XYZ Inc. (1-10), Defendants.

Docket No. 98-7849.

United States Court of Appeals Second Circuit.

Argued Jan. 26, 1999.

Decided April 30, 1999.

Michael E. Unger, of counsel, De Orchis, Walker & Corsa, LLP (LeRoy S. Corsa, of counsel, on the brief), New York, N.Y., for Defendant-Appellant Waterman Steamship Company.

Michael N. Cotignola, New York, N.Y., for Defendant-Appellee Weeks Marine, Inc.

Before: NEWMAN, WALKER, and CALABRESI, Circuit Judges.

CALABRESI, Circuit Judge:

This case presents the issue of whether a shipowner who successfully defends against a suit by an injured longshoreman may recover its litigation costs from a stevedore ¹ who caused the longshoreman's injuries and who is not the employer of the longshoreman (hereinafter the "nonemploying stevedore"). The district court held that an obligation to indemnify is not an implied term of the contract between a shipowner and a stevedore. We agree, and affirm the district court's decision.

BACKGROUND

On February 24, 1994, plaintiff Damian Lubrano, who worked as a longshoreman for American Stevedoring, was loading a barge owned by defendant-appellant Waterman Steamship Company ("Waterman"). Waterman had rented a crane from defendant-appellee Weeks Marine, Inc. ("Weeks")--the stevedore whose liability is at issue in this case--for the purpose of loading its barge. A piece of ice fell from the Weeks crane and struck Lubrano on the left wrist and forearm.

The Longshore and Harbor Workers' Compensation Act ("LHWCA"), 33 U.S.C. §§ 901-950 (1994), prevented Lubrano from recovering anything more than workers' compensation benefits from American Stevedoring. See id. § 905(a). The LHWCA allows recovery, however, against negligent shipowners and any other party (except the employer) responsible for a covered employee's injury. See id. §§ 905, 933. Accordingly, Lubrano brought suit against Waterman and Weeks, alleging that their negligence had caused his injuries. Waterman asserted a cross-claim for indemnification against Weeks.

At the conclusion of trial, a jury found that Weeks, but not Waterman, had negligently caused Lubrano's injuries. ² Waterman sought to recover its litigation expenses from Weeks, and the district court denied indemnification. See Lubrano v. Weeks Marine, Inc., No. 95-CV-3642, 1998 WL 765135 (E.D.N.Y. May 19, 1998).

DISCUSSION

Can a shipowner who successfully defends against a suit by an injured longshoreman recover its litigation costs from a nonemploying stevedore who caused the longshoreman's injuries? ³ On the basis of Second Circuit precedents, the answer to this question is clearly "no." The path to this conclusion is tortuous, however, and merits explication.

A.

In 1946, the Supreme Court held that longshoremen who were injured by a dangerous or defective condition aboard a vessel on which they were working could recover from the vessel's owner on the theory that the owner had breached its implied warranty of the seaworthiness of the ship. See Seas Shipping Co. v. Sieracki, 328 U.S. 85, 99-102, 66 S.Ct. 872, 90 L.Ed. 1099 (1946). Later, the Court established an implied warranty of workmanlike performance, which held that a stevedore who contracted with a shipowner implicitly promised that it would perform its services competently and safely. See Ryan Stevedoring Co. v. Pan-Atlantic S.S. Corp., 350 U.S. 124, 130-31, 76 S.Ct. 232, 100 L.Ed. 133 (1956). At the same time, the Court read the contract between the shipowner and the stevedore to give the shipowner an implied right of indemnification against the stevedore for damages sustained as a result of any breach of this warranty. See id. at 130, 76 S.Ct. 232. To decide the case before us, we must consider the continued viability of this so-called "Ryan indemnity" in light of our precedents since Ryan.

In Fairmont Shipping Corp. v. Chevron International Oil Co., 511 F.2d 1252 (2d Cir.1975), we stated that Ryan indemnity applied only in cases in which a contractor rendered its services to a shipowner in a way that exposed the shipowner to strict liability (for example, under the doctrine of seaworthiness) and did not apply to situations (like the one currently before us) in which the shipowner would be liable, if at all, only in negligence. See id. at 1257-58 Two years later, however, we ruled that a shipowner had no right of indemnification against the owner of a fuel barge that allegedly caused a fire while fueling the owner's vessel. See Navieros Oceanikos, S.A. v. S.T. Mobil Trader, 554 F.2d 43, 44-47 (2d Cir.1977). Citing Fairmont Shipping, we held that Ryan indemnity was not available because the shipowner seeking indemnification had not been exposed to liability without fault. See id. at 46-47. Navieros Oceanikos thus made the dictum in Fairmont Shipping into the binding precedent of this Circuit.

                & n. 8. But this statement, although expressed unequivocally and after carefully reasoned analysis, was made in dicta. 4  As such, even though the language of Fairmont Shipping directly covers the case now before us, Fairmont Shipping does not bind us
                

In the instant case, Lubrano sued Waterman only in negligence. ⁵ Accordingly, if the rule we stated in Fairmont Shipping and Navieros Oceanikos applies to the facts before us, we are bound to affirm the district court's decision disallowing Waterman's indemnification claim. If, instead, Ryan indemnity still obtains, then Waterman is entitled to recover its litigation costs from Weeks. This is because in Massa v. C.A. Venezuelan Navigacion, 332 F.2d 779 (2d Cir.1964), we held that Ryan indemnification applies to compensate shipowners for the costs of successfully defending against suits brought by longshoremen injured by a stevedore's breach of its contractual duties to the shipowner. See id. at 782.

Whether the Fairmont Shipping-Navieros Oceanikos rule applies depends on whether Navieros Oceanikos can and should be distinguished from the situation before us. The factual contexts of the two cases do differ. Navieros Oceanikos involved a claim for property damage by a shipowner against a bunkering contractor, and the instant case involves personal injury. But nothing in our reasoning in Fairmont Shipping or Navieros Oceanikos indicates that this distinction mattered at all to the courts in these cases. ⁶ Nor do we see a basis for making such a differentiation in deciding whether to imply an indemnification agreement into a contract. We therefore affirm the district court's ruling that Weeks had no obligation to indemnify Waterman.

B.

The Fairmont Shipping-Navieros Oceanikos rule means that Ryan indemnity is virtually dead, at least in this Circuit. ⁷ How this came to be, and in particular how it happened that a Supreme Court doctrine

that was neither abrogated nor expressly overruled came no longer to apply, is a long and tortured tale. Nevertheless, we believe that we owe it to the litigants to explain how this point was reached. The answer, in short, is that by the time we decided Fairmont Shipping and Navieros Oceanikos in the mid-1970s, the legal relationship among longshoremen, shipowners, and stevedores had come to differ fundamentally from what it had been when the Supreme Court established and developed the concept of Ryan indemnity in the 1950s and 1960s. These changes in the legal relations made it unlikely that the shipowner and stevedore would have intended a duty to indemnify. Accordingly, such indemnity was no longer appropriately implied into the shipowner-nonemploying stevedore contract. Cf. Great Lakes Transit Corp. v. Marceau, 154 F.2d 623, 628 (2d Cir.1946) (L. Hand, J., concurring) (noting that the task of courts in construing implied terms of a contract is to determine what the parties would have intended if they had explicitly considered the issue).

1.

The LHWCA, like most other workers' compensation systems in the United States, has always immunized employers covered by the Act from suit by their injured employees. In return for this protection, the employers incurred an obligation to compensate their employees for occupational injuries according to a statutorily prescribed scheme. See 33 U.S.C. § 904(a) (establishing the employer's liability for compensation); id. § 905(a) (immunizing employers against liability to injured employees other than under the statutory compensation scheme); see generally Note, Exceptions to the Exclusive Remedy Requirements of Workers' Compensation Statutes, 96 Harv. L.Rev. 1641, 1643 (1983) ("These limited [statutory] benefits are the exclusive remedy for injured workers against their employers. Employer immunity from tort actions for work-related injures has frequently been deemed the quid pro quo that turn-of-the-century employees granted in exchange for the statutory guarantee of swift and certain compensation." (footnotes omitted)).

As originally enacted, however, the LHWCA did not preclude longshoremen from bringing a workplace injury suit against persons or entities other than the longshoremen's employers. Thus, in 1946, the Supreme Court held that longshoremen could recover from a shipowner under the warranty of seaworthiness ⁸ if they were injured by a dangerous or defective condition aboard the owner's vessel. See Seas Shipping Co., 328 U.S. at 89-100, 66 S.Ct. 872. The Court also ruled more generally that the LHWCA had not affected any of a longshoreman's common law rights against an owner of a vessel on which the longshoreman was injured (unless the owner also happened to be his employer). See id. at 101-02, 66 S.Ct. 872. In the wake of Seas Shipping Co., therefore, shipowners could be liable to injured longshoremen not only for negligence but also strictly for any breaches of the implied warranty of seaworthiness.

Although...