Thyssen, Inc. v. Nobility Mv

• Decision Date: 10 August 2005
• Docket Number: No. 04-30453.,No. 04-30418.,04-30418.,04-30453.
• Citation: 421 F.3d 295
• Parties: THYSSEN, INC., Plaintiff-Appellant, v. NOBILITY MV, etc., et al., Defendants, National Union Fire Insurance Company of Louisiana, Fenice Maritime Ltd., Defendants-Appellees. Thyssen, Inc., Plaintiff-Appellant, v. NOBILITY MV, etc., et al., Defendants, Fenice Maritime Ltd., Claimant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

421 F.3d 295

THYSSEN, INC., Plaintiff-Appellant, v. NOBILITY MV, etc., et al., Defendants, National Union Fire Insurance Company of Louisiana, Fenice Maritime Ltd., Defendants-Appellees.

Thyssen, Inc., Plaintiff-Appellant, v. NOBILITY MV, etc., et al., Defendants, Fenice Maritime Ltd., Claimant-Appellee.

No. 04-30418.

No. 04-30453.

United States Court of Appeals, Fifth Circuit.

August 10, 2005.

COPYRIGHT MATERIAL OMITTED

Christopher E. Carey (argued), Montgomery, Barnett, Brown, Read, Hammond & Mintz, New Orleans, LA, for Thyssen, Inc.

Anne Derbes Keller (argued), George M. Gilly, Phelps Dunbar, New Orleans, LA, for Nat. Union Fire Ins. Co. of Louisiana.

Kevin Jacob LaVie (argued), Terriberry, Carroll & Yancey, New Orleans, LA, for Fenice Maritime Ltd.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before BARKSDALE, DeMOSS and PRADO, Circuit Judges.

DeMOSS, Circuit Judge:

Plaintiff-Appellant Thyssen, Inc. ("Thyssen") appeals both from the district court's order granting Defendant-Appellee National Union Fire Insurance Co. of Louisiana's ("National Union") motion for involuntary dismissal and from the court's judgment in favor of Defendant-Appellee Fenice Maritime Ltd. ("Fenice"). For the following reasons, we AFFIRM.

BACKGROUND

This case involves the carriage of 243 cold-rolled steel coils (the "coils" or the "cargo") aboard Fenice's vessel, the MV NOBILITY (the "NOBILITY"). Thyssen purchased the coils for resale to its customer CP Louisiana. The NOBILITY left Rio de Janeiro, Brazil, in February 2001 and arrived in New Orleans, Louisiana, in April 2001. The cargo was carried under bills of lading CPERNO105RINO007 and CPERNO105RINO008.

Fenice time chartered¹ the vessel to Clipper Bulk Shipping, Ltd. and/or Bossclip, Ltd., which in turn voyage chartered² the ship to CSC Cayman Ltd., the manufacturer of the coils. The voyage charter was dated February 19, 2001, and was specifically incorporated into the bills of lading. The terms of carriage for Thyssen's cargo were "Free In Out Stowed."³ The NOBILITY carried other cargo, including tin plates for discharge in New Orleans on behalf of another cargo shipper; the terms of carriage for the tin plates were "Free In Stowed Liner Out."⁴

Pennant Shipping ("Pennant"), Fenice's New Orleans agent, selected the Chalmette Slip as the NOBILITY's discharge wharf and contacted Stafford & Stillwell Stevedoring, Inc. ("S & S") to discharge the cargo. Thyssen was notified of the discharge location and that S & S would perform the discharge; Thyssen received a rate and terms quotation from S & S which it accepted. Shortly after the vessel arrived in New Orleans on or about April 6, 2001, the cargo was examined while it was still stowed aboard the NOBILITY. Condensation and rust scale were noted, and Thyssen originally lodged a possible water damage claim with the NOBILITY. During subsequent, follow-up surveys to examine the coils for possible rust damage, all attending surveyors noted handling damages due to the negligence of the discharging stevedore, S & S. CP Louisiana rejected the coils.

Thyssen filed suit in rem against the NOBILITY on April 9, 2001, in district court and simultaneously moved to arrest the vessel. The vessel was arrested and then released pursuant to bond filed by Fenice, which also filed a claim to the vessel and undertook its defense. Fenice filed an answer on December 5, 2001.

On January 8, 2002, Thyssen filed its first supplemental and amended complaint, adding S & S as an additional defendant. Fenice filed a cross-claim against S & S on February 22, 2002. S & S failed to respond to service, so the summons and complaint were reissued on July 3, 2002. S & S continued to fail to appear; Thyssen moved for a default against S & S on August 29, 2002; and the clerk entered the default on September 5, 2002.

On May 29, 2003, Thyssen moved for a default judgment against S & S. The district court scheduled Thyssen's motion for default judgment against S & S for hearing on June 17, 2003. At the hearing, Thyssen submitted testimony from its surveyor, Stan Janak ("Janak"), plus exhibits. S & S was not represented by counsel at the hearing. The court granted Thyssen's motion and rendered a default judgment against S & S for damages in the amount of $160,696.28.

Immediately prior to the hearing, the parties deposed the president of S & S, Tony Stafford ("Stafford"), and learned the identity of S & S's insurance broker, USI Gulf Coast, Inc. ("USI Gulf"). Thyssen ultimately learned that S & S was insured by National Union under a comprehensive marine liability policy. The insurance policy obligated S & S to provide National Union timely notice of any occurrences and claims against S & S that could potentially be covered by the policy.

On June 26, 2003, Thyssen presented its damages claim to USI Gulf, which in turn faxed the claim to National Union on July 17, 2003. National Union advised that it intended to deny coverage based on late notice. On August 19, 2003, Thyssen filed for leave to file its second supplemental and amended complaint to name National Union as a defendant pursuant to the Louisiana Direct Action Statute ("LDAS"), LA.REV.STAT. ANN. § 22:655.⁵ The district court continued the trial on August 29, 2003.

National Union answered Thyssen's original and amended complaints on October 28, 2003. Fenice filed a summary judgment motion on January 13, 2004, which Thyssen opposed; the motion was reserved for trial on the merits. National Union filed a summary judgment motion on February 9, 2004, which both Thyssen and Fenice opposed; this motion was denied. On March 2, 2004, Fenice filed a motion to dismiss its cross-claim against S & S with prejudice.

The case proceeded to bench trial on March 22-23, 2004. The district court granted National Union's motion for involuntary dismissal at the close of Thyssen's case, finding that National Union was prejudiced by the late notice. Thyssen and Fenice filed post-trial memoranda on April 2, 2004. On April 23, 2004, the district court ruled from the bench and dismissed Thyssen's claim against Fenice. The court concluded Fenice was exonerated from responsibility for the damage under the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C.App. § 1300 et seq. Alternatively, the court concluded even if the Harter Act, 46 U.S.C.App. § 190 et seq., applied, Fenice was exonerated. Thyssen timely appealed, and the appeals were consolidated.

DISCUSSION

The district court's factual findings are subject to review for clear error. Folger Coffee Co. v. Olivebank, 201 F.3d 632, 635 (5th Cir.2000); Sabah Shipyard Sdn. Bhd. v. M/V HARBEL TAPPER, 178 F.3d 400, 404 (5th Cir.1999). "In admiralty cases tried by the district court without a jury, we review the district court's legal conclusions de novo." Sabah Shipyard, 178 F.3d at 404.

Whether the district court erred in granting National Union's motion for involuntary dismissal.

In West v. Monroe Bakery, 217 La. 189, 46 So.2d 122 (1950), the Louisiana Supreme Court held that where an injured third person is not at fault, he does not lose his right or cause of action under the LDAS where the insured breached a notice provision in the policy with its insurer. Id. at 129-130. The West court stated, after explaining the difficulties often faced by injured third parties, which rarely have knowledge of the insurer of the negligent party, in providing notice to the insurer: "It is not desirable that [the third party] should be divested of such action, and that result should not obtain except in a very clear case. This is not such a case." Id. at 130 (emphasis added). "The West court did not address this issue, but it did by implication recognize that if the insurer showed prejudice to an adequate level, it could escape liability." Auster Oil & Gas, Inc. v. Stream, 891 F.2d 570, 579 (5th Cir.1990).

In Pomares v. Kansas City Southern Railway Co., 474 So.2d 976 (La.Ct.App.1985), the Fifth Circuit Court of Appeal of Louisiana relied on West to reject the insurer's argument that it could escape liability to a third party under the LDAS because it did not receive notice of the suit until the third party attempted to execute the judgment by garnishment against the policy. 474 So.2d at 978. The Pomares court held that "the jurisprudence dealing with such notice provisions establishes that an insurer may not raise the nonprejudicial failure of the insured to give proper notice of suit as a defense to valid claims by a third party." Id. (citing, amongst others, West) (emphasis added). Because the insurer "neither alleged nor show[ed] any prejudice resulting to it by the lack of notice," the Pomares court found the insurer could not deny coverage based on late notice. Id. The court noted in particular that the insured "was represented by counsel during the tort suit" brought by the injured third party. Id.

This Court has interpreted Louisiana law on late notice in the context of the LDAS, "as presented in both Pomares and West," to mean that "the insurer can defend successfully against the third party only if it can demonstrate prejudice from the insured's failure to comply with the policies' notice provisions." Auster Oil, 891 F.2d at 579 (emphasis added). We restated this standard in Jackson v. Transportation Leasing Co., 893 F.2d 794 (5th Cir.1990)(per curiam):

[W]here through the Louisiana Direct Action statute, La. Rev.Stat.Ann. 22:655, an injured third party directly sues the insurer, the third party does not lose his cause of action due to the insured's breach of the notice provisions of the policy. The insurer can defend successfully against the third party only if it can demonstrate prejudice from the insured's failure to comply with the policy's notice provisions.

Id. at 795-96 (citing Auster Oil, 891 F.2d at 576, West and Pomares) (emphasis added).⁶ In Auster Oil, we noted that "denial of the opportunity to litigate is obviously...