Societa Per Azioni De NavIGAzione Italia v. City of Los Angeles

• Decision Date: 24 May 1982
• Citation: 31 Cal.3d 446,645 P.2d 102,183 Cal.Rptr. 51
• Court: California Supreme Court
• Parties: , 645 P.2d 102, 1982 A.M.C. 2281 SOCIETA per AZIONI de NAVIGAZIONE ITALIA, Plaintiff and Appellant, v. CITY OF LOS ANGELES, Defendant and Appellant. L.A. 31387.

Page 51

183 Cal.Rptr. 51

31 Cal.3d 446, 645 P.2d 102, 1982 A.M.C. 2281

SOCIETA per AZIONI de NAVIGAZIONE ITALIA, Plaintiff and Appellant, v. CITY OF LOS ANGELES, Defendant and Appellant.

L.A. 31387.

Supreme Court of California,

In Bank.

May 24, 1982.

Rehearing Denied June 23, 1982.

Lillick, McHose & Charles and Francis J. MacLaughlin, Los Angeles, for plaintiff and appellant.

Burt Pines, City Atty., James H. Pearson and Jerome Montgomery, Sr., Asst. City Attys., and Raymond P. Bender, Deputy City Atty., for defendant and appellant.

BIRD, Chief Justice.

This maritime case presents a number of questions. (1) Which appellant must bear the ultimate liability for collision damage proximately caused by the negligence of a municipal harbor pilot? (2) May the City of Los Angeles (City) avoid liability by invoking the "borrowed servant" doctrine? (3) Are the sweeping immunity provisions of the City's port tariff valid and enforceable?

I.

Plaintiff, Societa per Azioni de Navigazione Italia (Shipowner), is the owner of the merchant vessel the M. V. Da Verrazano. Defendant City owns and operates the pilot station for Los Angeles Harbor. ¹

Shipowners customarily use a local pilot to guide ships through and within a harbor since these pilots are familiar with prevailing local conditions. The City maintains a staff of local pilots qualified to perform this service in the Port of Los Angeles. The City hires, fires, trains, supervises, and pays these pilots who are civil service employees. On request, the City will furnish one of its pilots to a ship. For this service, the City charges and collects a pilotage fee.

On July 30, 1974, the M. V. Da Verrazano arrived at the breakwater to Los Angeles Harbor. Through its local agent, the Shipowner arranged for the Los Angeles pilot station to provide a local pilot to guide the ship to its berth within the harbor. The station assigned Harold Peterson. On boarding the Da Verrazano, Peterson went to the bridge and began to give orders regarding the ship's navigation. The master or commander of the ship stood beside Peterson and relayed his orders to appropriate crew members. Peterson gave orders directly to an assisting tug over a walkie-talkie. Apparently, the master of the Da Verrazano gave only Peterson's orders to the crew. ²

Under Peterson's pilotage, the ship proceeded into the inner harbor. In order to reach its berth, the vessel was required to negotiate a 90-degree turn. Accordingly, Peterson gave orders intended to accomplish this maneuver. In the midst of the turn, however, the ship struck and damaged a wharf owned by the City and dock facilities owned by Union Oil Company. ³

Following the collision, a dispute arose between the parties over who was to bear financial responsibility for the damages. The City disclaimed all responsibility, relying on the pilotage provisions of Los Angeles Port Tariff No. 3 which was adopted pursuant to City ordinance and in effect at the time of the collision. (See L.A. City Ord. No. 138,969; L.A.C.C., § 139, subds. (b), (e), and (h).) ⁴

The pertinent section of Tariff No. 3 reads as follows. ⁵ "It is understood and agreed, and is the essence of the contract under which pilotage services are proffered and rendered, and are requested and accepted by the vessel [or] her owners [ ] that the services of the pilot are requested and accepted on the express understanding that such pilotage services are given, done, or performed solely in the pilot's capacity as the servant of the vessel and of her owners ... and the owners [ ] expressly covenant and agree [ ] not to assert any personal liability against the pilot or the City [ ] arising out of or connected with [ ] any damage, loss or expenses sustained by the vessel [or] her [ ] owners [ ] or by any third parties, even though resulting from [ ] negligence of the pilot .... [S]uch vessel and her owners [ ] further covenant and agree to indemnify and hold harmless the municipal pilot [and] the City [ ] in respect to any liability arising out of claims, suits or actions against the municipal pilot [or] the City [ ] by third parties, resulting from the [ ] negligence of the municipal pilot .... [p] The vessel and her owners [ ] further covenant and agree that all damages to municipally owned [ ] facilities caused, directly or indirectly, by the vessel shall be paid promptly upon demand."

The parties were unable to resolve their dispute over who was to pay for the damages. As a result, in March 1975, the Shipowner filed an action for declaratory relief for the purpose of determining both the validity of the City's tariff and the extent of each party's liability for the damages arising out of the collision. The City answered and in October 1975 filed a cross-complaint which sought a declaration of its rights under the tariff and compensation for the damage to its dock. In its answer, the Shipowner denied liability for the City's damages. The Shipowner also filed a cross-complaint which sought indemnification from the City for any liability assessed against it.

The trial court, on motion for partial summary judgment, applied state law and held the City's tariff invalid under the Tort Claims Act. (See Gov.Code, § 810 et seq.). The case went to trial on the issue of who was liable since the parties had stipulated to the amount of damage done to the City's dock and to Union Oil's facilities.

In September 1979, the trial court found that both the pilot and the ship's crew had been negligent. Seventy-five percent of the responsibility for the collision was assigned to the pilot and twenty-five percent to the ship's crew. The court found that the City alone was liable for the negligence of its pilot-employee, and that the Shipowner alone was liable for the negligence of the crew. The court also denied the Shipowner's claim against the City for indemnification. Subsequently, the Shipowner and the City together paid Union Oil the amount of its damages, ⁶ but reserved their rights against each other pending appeal.

Both parties appealed. The City contends that the Shipowner must bear financial responsibility for the negligence of the pilot because the tariff, or the common law "borrowed servant" doctrine so requires. ⁷ The Shipowner challenges only the denial of its indemnity claim against the City. ⁸

II.

The primary issue presented by this case is who must bear the ultimate liability for that portion of the collision damages attributable to the negligence of the pilot furnished by the City to the Shipowner. After declaring the City's tariff void and unenforceable, the trial court held the City liable for all pilot-caused damages sustained by Union Oil on a respondeat superior theory. As a result of this ruling, the City must cover its own pilot-caused damages. ⁹

The City contends that the trial court erred in finding it in any degree responsible for the negligence of its municipal pilot. According to the City, whether the question of liability is determined by reference to the terms of its port tariff or by reference to otherwise applicable principles of law, it is the Shipowner alone who must pay for the damages caused by the pilot.

In essence, the City's position is that the challenged provisions of its tariff do not alter the liabilities of the parties. If this contention were correct, this court would not have to consider separately the question as to the validity and enforceability of the tariff. Therefore, the first issue to be decided is who is vicariously liable for the negligence of the municipal pilot: the City, the Shipowner, or both. ¹⁰

There is a substantial body of federal maritime law concerning vicarious liability for pilot negligence. Its dominant theme is that in determining who is liable for the negligence of a pilot, courts are to apply the ordinary principles of the law of agency. Due regard is to be given to the peculiarities of maritime life. (See generally Gilmore & Black, supra, § 7-16, p. 520; id., § 9-9, p. 598, fn. 24; Griffin on Collision (1949) §§ 187-193, pp. 435-444; cf. United States v. Webb (1970) 397 U.S. 179, 90 S.Ct. 850, 25 L.Ed.2d 207.)

The federal courts have applied agency principles to determine whether a pilot's negligence can properly be imputed to shipowners (see, e.g., Homer Ramsdell Co. v. Comp. Gen. Trans. (1901) 182 U.S. 406, 21 S.Ct. 831, 45 L.Ed. 1155); to pilots' associations (see, e.g., Guy v. Donald (1906) 203 U.S. 399, 27 S.Ct. 63, 51 L.Ed. 245); and to municipalities or other governmental entities (see, e.g., Port of Seattle v. M/V Maria Rubicon (W.D.Wash.1975) 404 F.Supp. 302).

The law of agency has long recognized that a person generally the servant of one master can become the borrowed servant of another. (E.g., Denton v. Yazoo & M. V. R. Co. (1932) 284 U.S. 305, 52 S.Ct. 141, 76 L.Ed. 310; Marsh v. Tilley Steel Co. (1980) 26 Cal.3d 486, 492, 162 Cal.Rptr. 320, 606 P.2d 362; Rest.2d Agency, § 227.) If the borrowed servant commits a tort while carrying out the bidding of the borrower, vicarious liability attaches to the borrower and not to the general master. (E.g., Denton v. Yazoo & M. V. R. Co., supra, 284 U.S. at p. 308, 52 S.Ct. at p. 142; Marsh v. Tilley Steel Co., supra.)

Relying on these principles, the City contends that the sole master to whom liability can attach for the actions of its municipal pilot is the Shipowner, the borrowing master. This is an issue usually reserved for the trier of fact. (Marsh v. Tilley Steel Co., supra, 26 Cal.3d at p. 493, 162 Cal.Rptr. 320, 606 P.2d 362; Rest.2d Agency, § 227, com. a.) Here, however, the City asserts that undisputed facts establish as a matter of maritime law that its pilotage system is voluntary, and that its pilots become the borrowed servants of shipowners who elect to use its pilotage service.

Whether the City's pilotage system is voluntary or compulsory is significant because if pilotage is compulsory, a shipowner has no in personam liability for the actions...