Overseas African Const. Corp. v. McMullen, s. 948

• Decision Date: 23 July 1974
• Docket Number: Nos. 948,1064 and 1108,D,s. 948
• Citation: 500 F.2d 1291
• Parties: OVERSEAS AFRICAN CONSTRUCTION CORP., Employer, and St. Paul Mercury Insurance Co., Carrier, Appellants-Cross Appellees, v. Eugene McMULLEN, Deceased, by George McMullen, Executor, and John D. McLellan, Jr., Deputy Commissioner, United States Employees Compensation Commission, Second Compensation District, Appellees-Cross Appellants. ockets 74-1092, 74-1103 and 74-1538.
• Court: U.S. Court of Appeals — Second Circuit

Page 1291

500 F.2d 1291

OVERSEAS AFRICAN CONSTRUCTION CORP., Employer, and St. Paul Mercury Insurance Co., Carrier, Appellants-Cross Appellees, v. Eugene McMULLEN, Deceased, by George McMullen, Executor, and John D. McLellan, Jr., Deputy Commissioner, United States Employees Compensation Commission, Second Compensation District, Appellees-Cross Appellants.

Nos. 948, 1064 and 1108, Dockets 74-1092, 74-1103 and 74-1538.

United States Court of Appeals, Second Circuit.

Argued May 17, 1974.

Decided July 5, 1974, Rehearing and Rehearing En Banc Denied

July 23, 1974.

Irwin B. Silverman, Brooklyn, N.Y., (Jacowitz & Silverman, P.C., Brooklyn, N.Y., of counsel), for appellants-cross appellees.

Angelo C. Gucciardo, New York City (Israel, Adler, Ronca & Gucciardo, New York City, of counsel), for appellee-cross appellant McMullen.

Joshua T. Gillelan II, Atty., Dept. of Labor, Washington, D.C. (William J. Kilberg, Sol. of Labor, James G. Johnston, Asst. Sol. of Labor, George M. Lilly, Washington, D.C. of counsel), for appellee-cross appellant McLellan.

Before MEDINA, HAYS and OAKES, Circuit Judges.

OAKES, Circuit Judge:

The principal appeal is by St. Paul Mercury Insurance Co. (St. Paul) on behalf of itself and Overseas African Construction Corp. (Overseas African). St. Paul questions the jurisdiction of the deputy commissioner, United States Employees Compensation Commission, to make a $12,495.50 award, ¹ handed down June 22, 1972, on the behalf of claimant Eugene McMullen (claimant), a former employee of Overseas African, who died some five months prior to the awards being made. Jurisdiction was assumed and the award made by the deputy commissioner under the Defense Base Act, as amended, 42 U.S.C. 1651 et seq. (the 'Act'), ² which applies the provisions of the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C. 901 et seq. (LHWCA), to certain types of employees. The deputy commissioner and the estate of the claimant have taken a cross appeal in connection with the district court's refusal to assess attorney's fees against St. Paul.

St. Paul filed its action to set aside the award on July 21, 1972, pursuant to 33 U.S.C. 921. In a memorandum opinion and order dated November 21, 1973, on cross motions for summary judgment, the district court dismissed St. Paul's challenge to the award and affirmed the award in claimant's favor. The court also imposed a statutory penalty on St. Paul under 33 U.S.C. 914(f). ³ The court also denied claimant's demand for payment by St. Paul of his legal fees spent in prosecuting his claim, a claim apparently based solely on 33 U.S.C. 926, saying that the basis for St. Paul's appeal was not so 'frivolous or malicious' as to require such an assessment. The court did not comment on the possible impact of an amendment to 33 U.S.C. 928-- which had become effective on November 26, 1972 ⁴ -- on the question of assessing legal fees against St. Paul. On November 30, 1973, claimant's counsel wrote a letter to the district court which pointed out the possible relevance of the amended version of 928 to the question of legal fees. The court, treating the letter as a motion to reargue, adhered to its prior determination (which had reached the question of attorney's fees under 926 but not 928) and assessed legal fees in the sum of $1,800 against the claimant's estate under 928 as it existed prior to its amendment.

The claimant was hired in New York by Overseas African and was assigned to a project at Chisimaio, Somalian Republic, Africa, during the period from May, 1968, to December, 1968, as project manager and chief accountant. ⁵ The project was under the general supervision of the United States Army Corps of Engineers, which approved for acceptance the various parts of the construction project as they were completed. The project was funded by AID, the Agency for International Development, United States Department of State. The funds came from 'Chisimaio Port and Municipal Facilities Loan No. 649-H-002 (Chisimaio loan).' While working on this project, claimant contracted a skin disorder, diagnosed as neurodermatitis, which eventually forced his return to the United States and which all parties concede to be a legitimate basis for the compensation awarded by the deputy commissioner and approved by the district court. Claimant's death on January 30, 1972, from unrelated causes, came about five days after the hearing on his claim before the deputy commissioner. ⁶ There is no dispute whatsoever that claimant was temporarily totally disabled and, if the Act conferred jurisdiction on the deputy commissioner, was entitled to the award which was made together with the penalty assessed by the district court. ⁷

The claim of St. Paul is that the deputy commissioner and the court below were without jurisdiction to enter an award and judgment respectively under the Defense Base Act. The claim is evidentially based solely on a letter from AID bearing a date of February 22, 1972, which is set forth in the margin. ⁸ The district court affirmed the deputy commissioner's finding that this letter did not overcome the statutory 'presumption' of jurisdiction. ⁹ St. Paul argues that the construction contract was between the employer and the Republic of Somalia, and that while it may have been approved and financed by the United States, there is an exception as a matter of law to jurisdiction of employees' compensation claims under the Defense Base Act as amended, 42 U.S.C. 1651(a) (5), in the case of projects financed from the Development Loan Fund. Section 1651(a) does state that

the provisions of the Longshoremen's and Harbor Workers' Compensation Act . . . shall apply in respect to the injury or death of any employee engaged in any employment . . . (5) under a contract approved and financed by the United States or any executive department . . . or agency thereof . . . where such contract is to be performed outside the continental United States, under the Mutual Security Act of 1954, as amended (other than title II of chapter II thereof unless the Secretary of Labor, upon the recommendation of the head of any department or other agency of the United States, determines a contract financed under a successor provision of any successor Act should be covered by this section) . . ..

St. Paul's argument is, then, that since title II of chapter II of the Mutual Security Act of 1954 established a Development Loan Fund as an agency of the United States and body corporate authorized to make loans to promote the economic development of underdeveloped friendly countries, and since the letter from AID says that the work performed by Overseas African was 'totally financed on a development loan basis,' the work here was not work to which the Defense Base Act and the LHWCA extended. ¹⁰

Apparently this highly technical argument is a bit of an afterthought, for both the employer and St. Paul thought that the Chisimaio project was a Defense Base Act project and respectively sought and supplied insurance coverage in relation to it. The contract of employment between Overseas African as employer and Mr. McMullen, the employee, provided that the employer would

procure and pay the premiums for such compensation insurance as will accord to Employee . . . the statutory benefits for death or injury to which the Employee may be entitled under the applicable Federal law of the United States including but not limited to the Defense Base Act and War Hazards Compensation Act. Said workmen's compensation insurance shall also include coverage of Employee for illness due to endemic diseases of Somalia . . ..

St. Paul's policy originally had provided in Section 2, Coverage A,

The company agrees to pay voluntarily on behalf of the insured, to the employees defined in Section 1 of this endorsement, the compensation, medical and other benefits specified in the Workmen's Compensation Law and Occupational Disease Law of the state designated in Item 3 of the declarations (New York) in the same manner as if such employees were covered under the provisions of said law or laws.

By endorsement the policy was amended to read 'Policy includes employees working in Chisimaio, Somalia (estimated at eleven)' and another endorsement provided rather cryptically, 'It is understood and agreed that Public Law 208 benefits apply as respects the A.I.D. Projects only.' ¹¹ 'Public Law 208' is the Defense Base Act.

Certainly a prima facie showing of federal jurisdiction in this case is made out by the contract of insurance itself, especially in light of the apparently successful argument of St. Paul-- after claimant had originally proceeded in the New York state courts to attempt to establish compensability under the relevant state statutes-- that a federal forum was the appropriate one for resolution of the dispute. A strong argument can be made that St. Paul should be estopped from challenging federal jurisdiction over the dispute, or from raising the point that, as a factual matter, the contractual relationships involved a specific exception to jurisdiction over a dispute that is otherwise clearly a federal matter. Without rendering our decision on this basis. We would nevertheless remark that St. Paul's actions during the course of this dispute can and should be weighed in connection with whether it has overcome the statutory presumption of jurisdiction.

So doing, we agree with the deputy commissioner and with the court below that the AID letter of February 22, 1972, is insufficient to overcome the statutory presumption of jurisdiction. The rule, of course, is that so long as any reasonable inference from the facts supports jurisdiction under the statutory presumption that jurisdiction may be found. Cardillo v. Liberty Mutual Insurance Co., 330 U.S. 469, 474, 67 S.Ct. 801, 91 L.Ed. 1028 (1947); Michigan Mutual Liability Co. v. Arrien, 344 F.2d 640, 645-646 (2d Cir.), cert. denied, 382 U.S. 835, 86 S.Ct. 80, 15 L.Ed.2d 78 (1965). But see ...