McKeithen v. M/T FROSTA

• Decision Date: 30 June 1977
• Docket Number: 76-3275 and 76-3654.,Civ. A. No. 76-3251
• Citation: 435 F. Supp. 572
• Parties: Dorothy S. McKEITHEN, Individually and on behalf of her Deceased husband Charles F. McKeithen v. The M/T FROSTA, the M/V GEORGE PRINCE, A/S J. L. Mowinkels Rederi, and the Department of Highways of the State of Louisiana. In the Matter of A/S J. LUDWIG MOWINKELS REDERI, as owner of the M/T FROSTA, petitioning for exoneration from or limitation of liability. In the Matter of the DEPARTMENT OF HIGHWAYS, STATE OF LOUISIANA ex rel. William J. Guste, Jr., Attorney General, as owner of the M/V GEORGE PRINCE, petitioning for exoneration from or limitation of liability.
• Court: U.S. District Court — Eastern District of Louisiana

435 F. Supp. 572

Dorothy S. McKEITHEN, Individually and on behalf of her Deceased husband Charles F. McKeithen v. The M/T FROSTA, the M/V GEORGE PRINCE, A/S J. L. Mowinkels Rederi, and the Department of Highways of the State of Louisiana.

In the Matter of A/S J. LUDWIG MOWINKELS REDERI, as owner of the M/T FROSTA, petitioning for exoneration from or limitation of liability.

In the Matter of the DEPARTMENT OF HIGHWAYS, STATE OF LOUISIANA ex rel. William J. Guste, Jr., Attorney General, as owner of the M/V GEORGE PRINCE, petitioning for exoneration from or limitation of liability.

Civ. A. Nos. 76-3251, 76-3275 and 76-3654.

United States District Court, E. D. Louisiana.

June 30, 1977.

Daniel E. Becnel, Jr., Reserve, La., Joel T. Chaisson, Destrehan, La., Eldon E. Fallon, A. Remy Fransen, Jr., New Orleans, La., James A. George, Baton Rouge, La., Salvador H. Gutierrez, Jr., John R. Martzell, New Orleans, La., for plaintiff.

Walter Carroll, Jr., Charles F. Lozes, Benjamin W. Yancey, New Orleans, La., for M/T Frosta and A/S J. L. Mowinkels Rederi and Assuranceforeningen Skuld (Gjensidig).

John P. Hammond, John R. Peters, Jr., Henry J. Read, New Orleans, La., for the M/V George Prince.

Nigel Rafferty, New Orleans, La., for Southern American Ins. Co.

Donald Ensenat, New Orleans, La., for Department of Highways, State of Louisiana.

Francis J. Mooney, Jr., New Orleans, La., for New Orleans-Baton Rouge Steamship Pilots Association and Nicholas F. Colombo.

ALVIN B. RUBIN, District Judge:

A non-resident maritime liability insurer has filed a motion to quash service and dismiss this diversity action for lack of jurisdiction on the basis that the State of Louisiana has not by statute asserted personal jurisdiction over, and has provided no method for service of process on, a non-resident insurer that in the regular course of its business insures vessels entering Louisiana waters against liability but does not solicit business, deliver policies or maintain an office in Louisiana.

Important consequences flow from the resolution of this question. If the non-resident insurer is subject to the jurisdiction of this court, then the Louisiana direct action statute, LSA-R.S. 22:655, permitting suits by an injured person directly against the insurer of the tort-feasor, including maritime liability (protection and indemnity) insurers, Olympic Towing Corp. v. Nebel Towing Co., Inc., 5 Cir. 1969, 419 F.2d 230, 236, applies and the insurer may be liable for the full extent of its coverage, even if the insured is successful in limiting its liability pursuant to the federal Limitation of Liability Act, 46 U.S.C. § 185. Ibid 419 F.2d, at 234. On the other hand, if this court does not have jurisdiction over the insurer, then the insurer cannot be reached in a direct action and the liability of the insured (and presumably the obligation of the insurer to the insured) may be limited to the value of the vessel by the Limitation Act.

For reasons set forth below, it appears that Louisiana courts would decide that the state has personal jurisdiction over such a corporate defendant, that the state has provided a method of service of process and that this method has been employed properly. Hence, the motion is DENIED.

I.

The M/T Frosta, a vessel owned by Norwegian interests, was involved in a collision with a ferry boat, the George Prince, in the Mississippi River on October 20, 1976. Persons having claims arising out of the collision filed, inter alia, direct actions against the protection and indemnity underwriter of the M/T Frosta, Assuranceforeningen Skuld (Gjensidig) "Skuld". They sought to make service of process on the law firm of Terriberry, Carroll, Yancey & Farrell, ("Terriberry") as agent, by service on its managing partner, Benjamin W. Yancey, and also by substituted service on the Secretary of the State of Louisiana.

Skuld is a classic mutual club that undertakes to provide maritime protection and indemnity coverage for its members, all of them Norwegian. Its only offices are in Norway. It has never solicited insurance in Louisiana, and it has never insured any vessel owned by Louisiana interests. As will appear more fully in the later discussion, it has no agents in Louisiana for any purpose whatsoever, unless Terriberry is its agent.

Over 4,500 ships are entered in Skuld, and they engage in worldwide trade. Many vessels entered in Skuld ply Louisiana waters regularly and repeatedly in the course of commerce between Louisiana ports and foreign countries. Within the past twelve months, for example, 44 such vessels entered the Port of New Orleans, some of them several times. The Norwegian vessels entered in Skuld similarly travel the waters of practically every other American seaboard state and many other nations. The vessels that come into Louisiana waters do so as a result of their engaging in worldwide trade; their entry in Skuld is on that basis; Skuld does not invite their entry expressly or specifically for Louisiana.

Terriberry has been Skuld's counsel in New Orleans for over 40 years. It has appeared for Skuld in all litigation in this state. The plaintiffs assert, however, that Terriberry has been more than Skuld's attorney at law, and has been, in fact, Skuld's agent for other purposes. Skuld contends Terriberry has done only what lawyers do; it has assisted in giving legal advice, averting and investigating claims and handling litigation.

The instructions to the masters of vessels entered in Skuld contain a list of Skuld representatives in the principal ports of the world. Some of these representatives are lawyers; others are not. Terriberry is listed as the Skuld representative in New Orleans. Each master is advised to communicate with the Skuld representative in any port in connection with various problems that may arise in that port.

As Skuld's representative, Terriberry has arranged for medical services for members of the crew of a Skuld vessel, has obtained watchmen when necessary in problems relating to stowaways, and has executed bonds and letters of guaranty as security to avoid the arrest of vessels. It receives reports of personal injuries on Skuld-entered vessels. It has also appeared in many admiralty and legal proceedings as counsel of record for Skuld and by virtue of this role, as counsel for Skuld-entered vessels.

II.

The first issue is whether personal jurisdiction over Skuld is governed by Louisiana or federal law. Early consideration of this question gave rise to conflicting decisions. See the discussion by Professors Moore and Lucas, in Moore's Federal Practice, ¶ 4.257. In Arrowsmith v. United Press International, 2 Cir. 1963, 320 F.2d 219, overruling Jaftex Corporation v. Randolph Mills, 2 Cir. 1960, 282 F.2d 508, Judge Friendly's opinion held that in diversity cases personal jurisdiction is controlled by state law. Although Moore-Lucas espouse the view in their text that Arrowsmith was in error and Jaftex was correct, their 1976-77 Supplement states, "The Arrowsmith rule has been universally adopted." Among the courts that have adopted the state law rule is the Fifth Circuit; its view is succinctly stated in Mack Trucks, Inc. v. Arrow Aluminum Castings Co., 5 Cir. 1975, 510 F.2d 1029, 1031:

In a diversity case such as this one, a federal district court may exercise in personam jurisdiction over a foreign defendant only if a state court could do so in the proper exercise of state law, here the long arm statute. Erie R. R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1933); Arrowsmith v. United Press International, 320 F.2d 219 (2nd Cir. 1963); Stanga v. McCormick Shipping Corp., 268 F.2d 544, 548 (5th Cir. 1959).

See also Tetco Metal Products, Inc. v. Langhan, 5 Cir. 1968, 387 F.2d 721; Atwood Hatcheries v. Heisdorf & Nelson Farms, 5 Cir. 1966, 357 F.2d 847, 852; Walker v. Savell, 5 Cir. 1964, 335 F.2d 536, 540; Connor v. New York Times Co., 5 Cir. 1962, 310 F.2d 133, 134.¹

Strange as it may seem, Louisiana has not by any statute undertaken to declare explicit standards for determining the foreign marine insurance companies that are subject to the jurisdiction of its courts. Let us review briefly the state of statutory affairs in Louisiana:

A.

LSA-R.S. 13:3201 is Louisiana's general statute with respect to jurisdiction over nonresidents. The purpose of the statute was to extend the jurisdiction of Louisiana courts over non-resident corporations to the utmost reach permitted by the Constitution of the United States. LSA-R.S. 13:3201, Comment (a); Drilling Engineering, Inc. v. Independent Indonesian Am. Petroleum Co., La.1973, 283 So.2d 687; Mayeux v. Hughes, La.App.1976, 333 So.2d 273. It does not apply to suits on insurance contracts but relates to causes of action arising from a non-resident's transacting business in the state, committing a tort in the state, or similar conduct. Moreover, the legislature's intention that the statute not extend to suits on insurance contracts is made explicit by a comment:

It was not felt necessary to extend this section to insurance. Under R.S. 22:1253(A), there is an implied appointment of the Secretary of State as the agent for the service of process on any foreign or alien insurer which is not qualified to do business in Louisiana, but which transacts business in this state or issues or delivers a policy of insurance to a citizen or resident of this state. See, also, White v. Indiana Travelers Assur. Co., 22 So.2d 137 (La.App. 2d Cir. 1945). (Emphasis supplied.)

LSA-R.S. 13:3201, Comment (c).

Thus, this statute would not apply to Skuld with respect to the insurance claims made in this case even if it "transacts business" in the state by having Terriberry as its agent. The statute does not assert jurisdiction over a non-resident insurance company for purposes of suit on its policies, and we need not now determine whether a tort suit against Skuld for an act by Terriberry might be filed under it.

B.

Louisiana also has a...