Puerto Rico Ports Auth. v. M/V MANHATTAN PRINCE

• Decision Date: 04 September 1987
• Docket Number: Civ. No. 85-1755 HL,85-1776 HL.
• Citation: 669 F. Supp. 34
• Court: U.S. District Court — District of Puerto Rico
• Parties: PUERTO RICO PORTS AUTHORITY, Plaintiff, counterdefendant, v. M/V "MANHATTAN PRINCE", Defendant, Counterclaimant, and Third-party Plaintiff, v. CROWLEY TOWING & TRANSPORTATION CO., Oscar Camacho, ABC Insurance Company, and XYZ Insurance Company, Third-party Defendants. SUJEEN TRADING PTE., LTD., Plaintiff, v. CROWLEY TOWING & TRANSPORTATION CO., et al., Defendants. SUJEEN TRADING PTE., LTD., Third-party Plaintiff, v. Oscar CAMACHO, ABC Insurance, et al., Third-party Defendants.

669 F. Supp. 34

PUERTO RICO PORTS AUTHORITY, Plaintiff, counterdefendant, v. M/V "MANHATTAN PRINCE", Defendant, Counterclaimant, and Third-party Plaintiff, v. CROWLEY TOWING & TRANSPORTATION CO., Oscar Camacho, ABC Insurance Company, and XYZ Insurance Company, Third-party Defendants.

SUJEEN TRADING PTE., LTD., Plaintiff, v. CROWLEY TOWING & TRANSPORTATION CO., et al., Defendants.

SUJEEN TRADING PTE., LTD., Third-party Plaintiff, v. Oscar CAMACHO, ABC Insurance, et al., Third-party Defendants.

Civ. Nos. 85-1755 HL, 85-1776 HL.

United States District Court, D. Puerto Rico.

September 4, 1987.

Eduardo Castillo Blanco, Castillo-Blanco & Miranda, Hato Rey, P.R., for plaintiffs.

Héctor Cuebas Tañón, Harold D. Vicente, Santurce, P.R., for Sujeen Trading Pte., Ltd.

Harry A. Ezratty, San Juan, P.R., for third-party defendant Oscar Camacho.

William A. Graffam, San Juan, P.R., for third-party defendant Crowley Towing & Transp. Co.

Pedro Santiago Torres, San Juan, P.R., for P.R. Electric Power Authority.

MEMORANDUM OPINION

LAFFITTE, District Judge.

This memorandum opinion is being issued in conjunction with the findings of fact and of law issued by the Court on August 11, 1987 following a weeklong bench trial. In that action arising from the allision of the M/V "Manhattan Prince" with the Puerto Nuevo dock the Court found that the pilot, Oscar Camacho, and the ship's owner, Sujeen Trading Pte. Ltd. ("Sujeen") were equally negligent and equally liable for damages. It was further ruled that the Puerto Rico Ports Authority ("PRPA") was not answerable for the pilot's negligence or liability, despite the fact that the ship's use of the pilot was compulsory. As this is a question of first impression in this jurisdiction, we proceed to explain the ruling in greater detail.

The issue is one of vicarious liability. Should the doctrine of respondeat superior apply to the relationship between PRPA and the pilot? The Court's previous opinion and order dated July 23, 1987 held that PRPA could not defend against liability on the basis of Law 151, 23 L.P.R.A. 2303(b)¹ because providing harbor pilot services is a proprietary, rather than governmental, function. The focus thus switched to PRPA's alternative defense that harbor pilots are not agents of PRPA, but merely independent contractors. As there were not sufficient facts in the record at that time concerning the relationship between PRPA and the pilot, the issue was left unresolved pending the trial. As a supplement to the testimony adduced at trial, the parties submitted a stipulation of facts on the relationship. Before proceeding to consider the facts, and as a means for evaluating them, some background jurisprudence is in order.

PRPA is attempting to maintain a delicate balance. It would like to maximize control over harbor pilotage without incurring liability for pilot negligence. Presumably, greater control would reduce the likelihood of pilot negligence and resulting damage to PRPA's facilities, to cargo interests and to ships. Yet, too much control, in the manner of an employment relationship, begets vicarious liability. The case law accumulated over the years in this area is a tale of governmental entities attempting to structure pilotage in such a way as to avoid liability, but exercise control.

The first structural solution was successful for a time. Many municipalities created corporations, ports authorities, and endowed them with the important task of operating their ports. As a means of controlling the port, protecting facilities, and promoting trade, many ports authorities were assigned the task of providing pilotage. In addition, laws and regulations were enacted making pilotage compulsory in certain ports. Where pilotage was compulsory, a shipowner could not be held personally liable under a theory of respondeat superior for the negligent acts of pilots assigned to them, as they could be where pilotage was voluntary. Homer Ramsdell Transportation Co. v. La Compagnie Generale Transatlantique, 182 U.S. 406, 21 S.Ct. 831, 45 L.Ed. 1155 (1901). For a time in the nineteenth century the notion of sovereign immunity, even for municipalities, was so deeply rooted that it never occurred to parties involved in a harbor allision to seek to hold the municipal authority which administered the pilotage regulations liable for pilot negligence. Gilmore and Black, The Law of Admiralty, 2nd ed. p. 598. That left only the ship itself answerable in rem, despite the fact that the allision was caused by a pilot compulsorily assigned to it. The China, 74 U.S. (7 Wall.) 53, 19 L.Ed. 67 (1868). Holding a ship liable in rem for damages occasioned while under its own power was also a powerful notion. Of course, the pilot could also be held personally liable, though this is seldom satisfactory to an injured party as most pilots are judgment-proof.

As government entities continued to expand their operations into heretofore private enterprises, however, the doctrine of sovereign immunity came to be restricted to instances where the entities were engaged in more traditional governmental functions. Armed with this distinction it was not hard to view a municipality's employment of pilots and rendering of pilotage services for a fee as a propietary function not entitled to sovereign immunity. Courts began to hold that a ports authority or city which employed compulsory pilots could be held liable for a pilot's negligent acts. Workman v. Mayor of New York City, 179 U.S. 552, 21 S.Ct. 212, 45 L.Ed. 314 (1900); The Thielbek, 241 F. 209 (9th Cir.1917); U.S. v. Port Of Portland, 147 F. 865 (D.Or.1906).

Vicarious liability was not an alternative that all ports wanted to live with.² The control was great, but so were the financial risks. A different arrangement was needed. The case of City of Long Beach v. American President Lines, 223 F.2d 853 (9th Cir.1955) involved just such a different arrangement. The City of Long Beach contracted with an independent company to provide compulsory pilots in its harbor. Under the terms of the contract the pilots' fees would be paid to Long Beach, which would retain 40% and remit 60% to the independent contractor. The court determined that this arrangement did not shield Long Beach from liability for damages to the ship caused by the pilot. A contract between the city and the shipowner for piloting services could be implied because of the actual contract between the city and the company which employed the pilots. The city owed a duty of due care to the shipowner who could proceed against the city in tort or in contract. Naturally, the pilot company could also be held in tort for the negligence of the pilot.

Sometime later a successful structuring was hit upon and implemented. Concentrating on more traditional governmental, regulatory functions, the State of Washington sacrificed some of the control over the pilots inherent in an employment or contractual relationship. "The pilots remain independent contractors, hired by the vessel." State of Washington v. M/V Dilkara, 470 F.Supp. 437, 439 (W.D.Wash. 1979). A State Board of Pilotage Commissioners was given broad and exclusive power to regulate and control the professional behavior of Washington pilots, including...