Servis v. Hiller Systems Inc.

• Decision Date: 16 May 1995
• Docket Number: 94-2103,Nos. 94-1979,s. 94-1979
• Citation: 54 F.3d 203
• Parties: Isabella SERVIS, Administratrix of the Estate of Peter Thomas Humphrey, Plaintiff-Appellant, v. HILLER SYSTEMS INCORPORATED; Jason B. Nuss; Wayne Francis Muth; Edward Speary, III, Defendants-Appellees. NORFOLK SHIPBUILDING & DRYDOCK CORPORATION, Defendant & Third Party Plaintiff-Appellee, Valcon Sales and Services, Incorporated, Defendant, v. UNITED STATES of America, Third Party Defendant. Michael G. Miller, Executor; Sadie R. Richardson, Administratrix, c.t.a., of the Estate of William B. Turek, Amici Curiae. Isabella SERVIS, Administratrix of the Estate of Peter Thomas Humphrey, Plaintiff, v. HILLER SYSTEMS INCORPORATED; Jason B. Nuss; Wayne Francis Muth; Edward Speary, III, Defendants-Appellees. NORFOLK SHIPBUILDING & DRYDOCK CORPORATION, Defendant & Third Party Plaintiff-Appellee, Sadie R. Richardson, Administratrix, c.t.a., of the Estate of William B. Turek, Amicus Curiae, and Valcon Sales and Services, Incorporated, Defendant, v. UNITED STATES of America, Third Party Defendant-Appellant. Michael G. Miller, Executor of the Estate of William B. Turek, Amicus Curiae.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 203

54 F.3d 203

1995 A.M.C. 2477

Isabella SERVIS, Administratrix of the Estate of Peter

Thomas Humphrey, Plaintiff-Appellant, v. HILLER SYSTEMS INCORPORATED; Jason B. Nuss; Wayne Francis

Muth; Edward Speary, III, Defendants-Appellees.

NORFOLK SHIPBUILDING & DRYDOCK CORPORATION, Defendant & Third Party Plaintiff-Appellee, Valcon Sales and Services, Incorporated, Defendant, v. UNITED STATES of America, Third Party Defendant.

Michael G. Miller, Executor; Sadie R. Richardson,

Administratrix, c.t.a., of the Estate of William

B. Turek, Amici Curiae.

Isabella SERVIS, Administratrix of the Estate of Peter

Thomas Humphrey, Plaintiff, v. HILLER SYSTEMS INCORPORATED; Jason B. Nuss; Wayne Francis

Muth; Edward Speary, III, Defendants-Appellees.

NORFOLK SHIPBUILDING & DRYDOCK CORPORATION, Defendant &

Third Party Plaintiff-Appellee,

Sadie R. Richardson, Administratrix, c.t.a., of the Estate

of William B. Turek, Amicus Curiae, and Valcon Sales and Services, Incorporated, Defendant, v. UNITED STATES of America, Third Party Defendant-Appellant.

Michael G. Miller, Executor of the Estate of William B.

Turek, Amicus Curiae.

Nos. 94-1979, 94-2103.

United States Court of Appeals Fourth Circuit.

Argued April 4, 1995.

Decided May 16, 1995.

ARGUED: Stephen Charles Swain, Clark & Stant, P.C., Virginia Beach, VA, for appellant Servis; David Vernon Hutchinson, Torts Branch, Civ. Div., U.S. Dept. of Justice, Washington, DC, for appellant U.S. Peter Andreas Cotorceanu, Knicely & Cotorceanu, P.C., Williamsburg, VA, for amici curiae. Guilford D. Ware, Crenshaw, Ware & Martin, P.L.C., Norfolk, VA, for appellees. ON BRIEF: Frances W. Russell, Clark & Stant, P.C., Virginia Beach, VA, for appellant Servis; Frank W. Hunger, Asst. Atty. Gen., Helen F. Fahey, U.S. Atty. and Matthew A. Connelly, Torts Branch, Civ. Div., U.S. Dept. of Justice, Washington, DC, for appellant U.S. James J. Knicely, Knicely & Cotorceanu, P.C., Williamsburg, VA, for amici curiae. James L. Chapman, IV, Martha M. Poindexter and Donald C. Schultz, Crenshaw, Ware & Martin, P.L.C., Norfolk, VA, for appellees.

Before WIDENER and WILKINSON, Circuit Judges, and CHAPMAN, Senior Circuit Judge.

Reversed and remanded by published opinion. Judge WILKINSON wrote the opinion, in which Judge WIDENER and Senior Judge CHAPMAN joined.

OPINION

WILKINSON, Circuit Judge:

Appellant Isabella Servis brought suit in Virginia state court against several contractors and subcontractors engaged to perform maintenance and repair tasks aboard a United States vessel, the M/V CAPE DIAMOND. Servis alleged that appellees' negligence resulted in the death of Peter Thomas Humphrey, who was working aboard the vessel. Appellees removed the action to federal district court, arguing that Servis' suit stated a claim under the Suits in Admiralty Act ("SAA"), 46 U.S.C. App. Secs. 741-752, and the Public Vessels Act ("PVA"), 46 U.S.C. App. Secs. 781-790. The district court agreed, holding that appellees should be considered agents of the United States for purposes of the SAA's "exclusivity provision," 46 U.S.C. App. Sec. 745, and that Servis' exclusive remedy was therefore against the United States in federal court. Servis v. Hiller Sys., Inc., 858 F.Supp. 590, 599-600 (E.D.Va.1994). We think the conclusion that appellees were "agents," however, overlooks general principles of agency law, the text of the statute itself, and the potentially vast liability such a reading could impose on the United States. Accordingly, we reverse the judgment of the district court and remand for further proceedings consistent with this opinion.

I.

A.

The United States owns the M/V CAPE DIAMOND, a "roll on/roll off" cargo ship, through the United States Maritime Administration ("MARAD"), an agency of the Department of Transportation. The CAPE DIAMOND is part of a fleet of vessels known as the Ready Reserve Force ("RRF"). MARAD bears primary responsibility for maintaining the RRF. In order to accomplish this objective, MARAD contracts with private companies to maintain and operate the vessels.

At the time of the accident underlying this litigation, the CAPE DIAMOND was being operated for MARAD under a "Ship Manager's Agreement" by Marine Transport Lines, Inc. ("MTL"), a private corporation. Under the Agreement, MTL was designated "Ship Manager" for the CAPE DIAMOND and other RRF vessels. The Agreement also referred to MTL as a "general agent" and described itself as a "general agency agreement." Pursuant to the Agreement, MTL consented to provide management, operational, and technical support for RRF vessels.

As Ship Manager, MTL engaged contractors to carry out certain of its responsibilities. The government agreed to reimburse MTL for the approved fees and expenses of such contractors. MTL in turn agreed to exercise due diligence in selecting contractors and to terminate any contractor not satisfactory to the government upon receiving written notification.

In May of 1992, MTL contracted with Norfolk Shipbuilding and Drydock Company ("Norshipco") to "deactivate" the CAPE DIAMOND. ¹ In October, Norshipco in turn subcontracted some of the work on the CAPE DIAMOND to Hiller Systems, Inc. Specifically, Hiller was engaged to inspect the ship's carbon dioxide (CO sub2 ) fire suppression system. As part of a "condition report" later submitted to Norshipco, Hiller reported that there were leaks in the aft CO sub2 tank valve and recommended repair or replacement of the valve.

By purchase order dated December 3, 1992, Norshipco authorized Hiller to proceed with repairs to the CO sub2 system. On December 15, 1992, Hiller removed several valves, including the aft tank main shut-off valve, and sent them to Valcon Sales and Services Inc. for inspection, testing, and repair. In late December, Valcon tested the valves and returned them to Hiller. ² In early January 1993, Hiller employees reinstalled the valves.

On March 1, 1993, Michael Ford, a representative of MTL, hired Hiller to test the fire suppression system and certify it to the Coast Guard. The parties entered a separate agreement: rather than acting as a subcontractor to Norshipco, on this occasion Hiller was retained directly by MTL. Ultimately, MTL ratified Hiller's work on the fire suppression system via a confirmation purchase order.

The CAPE DIAMOND's fire suppression system was scheduled to be tested and certified on March 3, 1993. Hiller employees conducted the test, which requires a release of carbon dioxide in various areas of the ship to ensure that timing devices, system valves, dispersement nozzles, and alarms operate properly. The Hiller employees chose to test the system in the engine room first. They did not, however, order an evacuation of the engine room or otherwise ensure that no one was present in that area.

Hiller's employees planned to conduct a "puff test" by releasing a small amount of carbon dioxide into the engine room to activate the timing devices, system valves, and alarms. Because the aft tank main cut-off valve was not completely closed during the test, however, a massive amount of CO sub2 flooded the engine room. Humphrey, an electrical technician employed by a non-party to this suit, was working in the CAPE DIAMOND's engine room. Both Humphrey and a Coast Guard Marine Safety Inspector were asphyxiated by the CO sub2 released during the test.

B.

As administratrix of Humphrey's estate, Servis filed suit in the Circuit Court for the City of Norfolk, naming as defendants Norshipco, Valcon, Hiller, and various Hiller employees. She alleged that the defendants were negligent in their performance of the CO sub2 test. The complaint did not, however, name the United States, MARAD, or the prime contractor, MTL.

In February, Norshipco removed the action to federal district court, contending that the SAA and PVA provide an exclusive federal forum for Servis' claims. Section 745 of the SAA, the "exclusivity provision," declares that "where a remedy is provided by [the SAA] it shall hereafter be exclusive of any other action by reason of the same subject matter against the agent or employee of the United States ... whose act or omission gave rise to the claim." 46 U.S.C. App. Sec. 745. The PVA incorporates the SAA's exclusivity provision. 46 U.S.C. App. Sec. 782.

Subsequent to removal, all defendants filed motions to dismiss, arguing that Servis' sole remedy was against the United States under Sec. 745. Servis in turn filed a motion to remand to state court based upon the "saving to suitors" clause of 28 U.S.C. Sec. 1333 and Romero v. International Terminal Operating Co., 358 U.S. 354, 371-72, 79 S.Ct. 468, 479-80, 3 L.Ed.2d 368 (1959). The district court determined that appellees were agents of the United States for purposes of the SAA's exclusivity provision. Servis, 858 F.Supp. at 599, 600. The court therefore denied Servis' motion to remand. Servis and the United States appeal.

II.

Section 1333, the statute establishing the admiralty jurisdiction of the federal courts, provides in relevant part:

The district courts shall have original jurisdiction, exclusive of the courts of the States, of:

(1) Any civil case of admiralty or maritime jurisdiction, saving to suitors in all cases all other remedies to which they are otherwise entitled.

Section 1333's "saving to suitors" clause preserves a maritime suitor's election to pursue common-law remedies in state court. The Supreme Court has determined that such a claim brought pursuant to the saving to suitors clause in state court should not be removable on the ground of general federal question jurisdiction. See Romero, 358 U.S. at 371-72, 79 S.Ct. at 479-80. Admiralty and maritime cases may, however, be removable to federal court when there exists some independent basis for federal jurisdiction, such as diversity of citizenship, see, e.g., In re Dutile, 935 F.2d 61, 63 (5th Cir.1991), or when federal jurisdiction is independently established by a federal maritime statute. See Thomas J....