Ramos v. Continental Insurance Company, No. 73-1042.

• Decision Date: 20 March 1974
• Docket Number: No. 73-1042.
• Citation: 493 F.2d 329
• Parties: Francisco Torres RAMOS, Plaintiff, Appellant, v. CONTINENTAL INSURANCE COMPANY, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

493 F.2d 329 (1974)

Francisco Torres RAMOS, Plaintiff, Appellant, v. CONTINENTAL INSURANCE COMPANY, Defendant, Appellee.

No. 73-1042.

United States Court of Appeals, First Circuit.

Argued February 6, 1974.

Decided March 20, 1974.

Gustavo A. Gelpi, San Juan, P. R., with whom Nachman, Feldstein & Gelpi, San Juan, P. R., was on brief, for plaintiff, appellant.

Alberto Santiago-Villalonga, Rio Piedras, P. R., with whom Hartzell, Ydrach, Mellado, Santiago, Perez & Novas, Hato Rey, P. R., was on brief, for defendant, appellee.

Before COFFIN, Chief Judge, McENTEE and CAMPBELL, Circuit Judges.

LEVIN H. CAMPBELL, Circuit Judge.

This appeal is one more effort by plaintiff, a resident of Puerto Rico, to recover under federal maritime standards for injuries sustained in 1963 while working as a longshoreman aboard the S.S. DETROIT in San Juan harbor. Soon after the accident, he unsuccessfully sued Beauregard, the vessel's owner, and Sea-Land, its demise charterer. Ramos v. Beauregard, Inc., 423 F.2d 916 (1st Cir.), cert. denied, 400 U.S. 865, 91 S.Ct. 101, 27 L.Ed.2d 104 (1970). The claim against Sea-Land based upon the vessel's alleged unseaworthiness was held to be barred by Puerto Rico's exclusive workmen's compensation remedy.¹ Recovery from Beauregard was denied because it did not control the vessel; and an in rem claim was dismissed because neither the charterer nor owner were personally liable. Id. at 917-918.

On May 3, 1971, plaintiff brought the present action against Continental, a New York based insurer of Sea-Land. He alleged that pursuant to Title 26 of the Laws of Puerto Rico, §§ 2001, 2003, "an insurer is absolutely liable to third parties for damages and injuries caused by the negligence of its insured."² He then repeated his maritime claim against Sea-Land, to wit, that he was injured while doing traditional seamen's work aboard the S.S. DETROIT, and that his injury was due to the failure of Sea-Land, operator of the DETROIT, to supply a seaworthy vessel. While plaintiff seemed to be invoking diversity jurisdiction in order to pursue a direct action claim created under Puerto Rico law, he alleged in the complaint that "all and singular, the premises are true and within the admiralty and maritime jurisdiction of the United States and this Honorable Court."

Defendant moved for summary judgment, and the district court ruled that the one year prescription in 31 L.P.R.A. § 5298 was a complete bar to the action. Fraticelli v. St. Paul Fire & Marine Insurance Co., 375 F.2d 186 (1st Cir. 1967).

We held in Fraticelli that Puerto Rico's direct action legislation created "a separate cause of action", tying together an insured's contract rights against his insurer with a third party's tort rights against the insured. While the action was "created by reason of the insurance contract", id. at 188, it was based "on the same factual situation" as was the legal liability of the insured. We reasoned that a direct action was not a contract action but rather one in which damages arose from the commission of a tort — hence subject to Puerto Rico's one year tort prescription rather than the 15 year contract prescription. As injuries in Fraticelli arose from an automobile accident, there was, of course, complete identity between the prescription applicable to the underlying tort and the direct action itself. We noted this, saying it would be "illogical to provide two different periods of limitation — one year and fifteen years" for the two actions. Id. at 189.

Plaintiff sees the instant case as a test of the latter logic since here the underlying claim, a federal maritime cause for unseaworthiness, is not subject to Puerto Rico's one year tort prescription, but rather is measured by the equitable doctrine of laches. Gardner v. Panama R.R., 342 U.S. 29, 72 S.Ct. 12, 96 L.Ed. 31 (1951). If the logic of Fraticelli requires the direct action to be prescribed identically to the underlying tort, then the laches measure should apply.

The Supreme Court of Puerto Rico, agreeing with our holding in Fraticelli, stated,

"Since both actions, that which is brought against the insured as well as the one which is filed against the insurance company, have the same origin and since both depend on the same evidence, there is no justification to establish different periods of prescription." Ruiz Millan v. Maryland Casualty Co., No. R-72-43 (P.R. Mar. 13, 1973).

We think the rationale of both Fraticelli and Maryland Casualty require that when the underlying tort is a federal maritime tort, the timeliness of the direct action be determined by the doctrine of laches. Had plaintiff originally chosen to sue Continental, or both Sea-Land and Continental together, the timeliness of his action against Continental should plainly be measured by the same standard as that against Sea-Land. Any other result would be inconsistent with the purpose of the direct action statute, which is to allow rights against the insurer generally co-extensive with a third-party's rights against the insured. As the Maryland Casualty court said, "There is no justification to establish different periods of prescription." While for land-based torts, the one year statute of limitations applies to the direct action, for federal maritime torts the laches standard will apply.

We are not sure where this holding will leave the plaintiff ultimately, although at the moment it requires us to remand. "The existence of laches is a question primarily addressed to the discretion of the trial court. . . ." Gardner, supra at 30 of 342 U.S., at 13 of 72 S.Ct. Upon remand, the district court will be faced with deciding whether laches is a bar. Although not conclusive, Puerto Rico's one year tort statute of limitations will be relevant to the district court's ruling.³ Czaplicki v. The Hoegh Silvercloud, 351 U.S. 525, 533, 76 S.Ct. 946, 100 L.Ed. 1387 (1956). Plaintiff's failure to file suit until after expiration of the analogous one year period creates an inference that the delay has been both inexcusable and prejudicial. Cities Service Oil Co. v. Puerto Rico Lighterage Co., 305 F.2d 170 (1st Cir. 1962); Oroz v. American Lines Ltd., 259 F.2d 636 (2d Cir. 1958), cert. denied, 359 U.S. 908, 79 S.Ct. 584, 3 L.Ed.2d 572 (1959).

Aside from the legal presumption created by the running of the analogous local statute, plaintiff may face a formidable challenge as eight years have passed between the occurrence of the accident and the bringing of this suit. Parties are not ordinarily permitted to litigate claims seriatim. Continental, whose lawyers defended Sea-Land and Beauregard throughout the original litigation, is now confronted with a suit which could have been resolved earlier in consolidated proceedings. Although we do not decide the question, Continental would seem to be prejudiced by the increased expense of these protracted proceedings, and it may be difficult to prepare a defense and locate witnesses so many years after the accident.

Moreover, on the record before us, plaintiff's delay is arguably inexcusable. In the main, his claim is identical to that first brought in 1964 against Sea-Land.⁴ The difficulties of recovery by an insured employee under maritime law were well known in Puerto Rico at the time of the accident. See Fonseca v. Prann, 282 F.2d 153 (1st Cir. 1960), cert. denied, 365 U.S. 860, 81 S.Ct. 826, 5 L.Ed.2d 822 (1961). To the extent the present case is a further ingenious attempt to avoid these impediments, the need for ingenuity was no less apparent in 1963 than now. That plaintiff may not fully have appreciated his legal posture until 1971 is not a justifiable excuse. Morales v. Moore-McCormack Lines, Inc., 208 F.2d 218 (5th Cir. 19...