Vargas v. American Export Lines, Inc.

• Decision Date: 12 March 1985
• Citation: 486 N.Y.S.2d 196,107 A.D.2d 349
• Court: New York Supreme Court — Appellate Division
• Parties: , 1986 A.M.C. 805 Jose VARGAS, Plaintiff, v. AMERICAN EXPORT LINES, INC., Defendant. AMERICAN EXPORT LINES, INC., Third-Party Plaintiff, v. UNIVERSAL MARITIME SERVICE CORP., Third-Party Defendant. UNIVERSAL MARITIME SERVICE CORP., Fourth-Party Plaintiff-Respondent, v. PORTWIDE CARGO SECURING CO., Fourth-Party Defendant, and A & G Maintenance Corp., Fourth-Party Defendant-Appellant.

Page 196

486 N.Y.S.2d 196

107 A.D.2d 349, 1986 A.M.C. 805

Jose VARGAS, Plaintiff, v. AMERICAN EXPORT LINES, INC., Defendant.

AMERICAN EXPORT LINES, INC., Third-Party Plaintiff, v. UNIVERSAL MARITIME SERVICE CORP., Third-Party Defendant.

UNIVERSAL MARITIME SERVICE CORP., Fourth-Party Plaintiff-Respondent, v. PORTWIDE CARGO SECURING CO., Fourth-Party Defendant, and A & G Maintenance Corp., Fourth-Party Defendant-Appellant.

Supreme Court, Appellate Division,

First Department.

March 12, 1985.

Dennis Drucker, New York City, of counsel (Raymond C. Green and Leonard M. Schnitzer, New York City, with him on the brief; Raymond C. Green, New York City, attorney), for fourth-party defendant-appellant.

Charles L. Bach, Jr., New York City, of counsel (Bruce F. Gilpatrick, New York City, with him on the brief; Heidell, Pittoni & Moran, P.C., New York City, attorneys), for fourth-party plaintiff-respondent.

Before SULLIVAN, J.P., and ASCH, MILONAS and KASSAL, JJ.

KASSAL, Justice.

The issue on the appeal is the construction to be accorded to the "Exclusiveness of liability" provisions of the Longshoremen's and Harbor Workers' Compensation Act ("LHWCA"), 33 U.S.C. § 905(a) and (b), in terms of whether the fourth party complaint states a valid cause of action for indemnity against plaintiff's employer, which had paid compensation benefits. Special Term denied the motion to dismiss, pursuant to CPLR 3211(a)(7), holding that while the statute barred a claim over by a vessel against a compensation-paying employer, it did not preclude the assertion of a claim over by a nonvessel, such as the fourth party plaintiff stevedore. We disagree and, accordingly, reverse and dismiss the fourth party complaint as against the employer.

Plaintiff was injured on September 10, 1977, while working as a lasher aboard the vessel S.S. Admiral William Callaghan. At the time, plaintiff was employed by the fourth party defendant, A & G Maintenance Corp. As a result of the injuries, he obtained compensation benefits from his employer under LHWCA and, thereafter, commenced this action against the owner of the vessel, American Export Lines, Inc., alleging that the injury resulted from the negligence of the vessel in providing improper equipment. Plaintiff was injured while he was in the process of lashing a tank when a turnbuckle snapped, striking his knee. The owner of the vessel impleaded third party defendant Universal Maritime Service Corporation, which had been performing stevedore work on the ship. American claimed in the third party action that the injury resulted from Universal's failure to properly supervise the work. Universal, in turn, commenced a fourth party action against plaintiff's employer, alleging it was entitled to indemnity by reason of the failure of A & G to provide its employee with a safe place to work and breach of warranty. A & G thereupon moved to dismiss the fourth party action, contending that the fourth party action was barred by the exclusiveness of liability provisions in the Longshoremen's and Harbor Workers' Compensation Act (33 U.S.C. § 905[a] and [b] ).

The action was instituted in state court, pursuant to the grant of concurrent jurisdiction under the "saving to suitors" clause of the Judiciary Act (28 U.S.C. § 1333), and, concededly, is governed by Federal maritime law, not New York Law (Garrett v. Moore-McCormack Co., 317 U.S. 239, 245, 63 S.Ct. 246, 250, 87 L.Ed. 239; Alvez v. American Export Lines, 46 N.Y.2d 634, 638, 415 N.Y.S.2d 979, 389 N.E.2d 461; Celeste v. Prudential-Grace Lines, 35 N.Y.2d 60, 62-63, 358 N.Y.S.2d 729, 315 N.E.2d 782). It is undisputed that the injury was sustained during the course of maritime employment, as defined in 33 U.S.C. § 902 and, therefore, plaintiff was entitled to and did receive workers' compensation benefits pursuant to the LHWCA. Under the terms of the Act, the employer's statutory liability to its employee for compensation benefits is "exclusive and in place of all other liability of such employer to the employee" (33 U.S.C. § 905[a] ). LHWCA section 905(a), (b), entitled "Exclusiveness of liability," provides as follows:

"(a) The liability of an employer prescribed in section 904 of this title shall be exclusive and in place of all other liability of such employer to the employee, his legal representative, husband or wife, parents, dependents, next of kin, and anyone otherwise entitled to recover damages from such employer at law or in admiralty on account of such injury or death, except that if an employer fails to secure payment of compensation as required by this chapter, an injured employee, or his legal representative in case death results from the injury, may elect to claim compensation under the chapter, or to maintain an action at law or in admiralty for damages on account of such injury or death. * * *

"(b) In the event of injury to a person covered under this chapter caused by the negligence of a vessel, then such person, or anyone otherwise entitled to recover damages by reason thereof, may bring an action against such vessel as a third party in accordance with the provisions of section 933 of this title, and the employer shall not be liable to the vessel for such damages directly or indirectly and any agreements or warranties to the contrary shall be void. * * * The liability of the vessel under this subsection shall not be based upon the warranty of seaworthiness or a breach thereof at the time the injury occurred. The remedy provided in this subsection shall be exclusive of all other remedies against the vessel except remedies available under this chapter." (emphasis added)

Subdivision (b) of section 905 was added to the statute by amendment in 1972 (Pub.L. 92-576). Prior to the 1972 Amendment, then section 905 [the present subdivision (a) ] was held to preclude a third party claim for contribution or indemnity against a compensation-paying employer, except where based upon an express agreement for indemnity. (See Halcyon Lines v. Haenn Ship Ceiling & Refitting Corp., 342 U.S. 282, 72 S.Ct. 277, 96 L.Ed. 318; Cooper Stevedoring Co. v. Kopke, Inc., 417 U.S. 106, 94 S.Ct. 2174, 40 L.Ed.2d 694; Kenny v. Bacolo, 61 N.Y.2d 642, 472 N.Y.S.2d 78, 460 N.E.2d 219). In Ryan Stevedoring Co. v. Pan-Atlantic Corp., 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133, the Supreme Court held that a shipowner who had been found liable without fault based upon the doctrine of unseaworthiness, could assert a claim for indemnity against a stevedore employer based upon an alleged breach of an express or implied warranty of workmanlike performance. Even in the absence of an express agreement of indemnity, it was concluded that the shipowner could interpose a claim for indemnity founded upon a warranty of workmanlike service to perform properly and safely, a warranty implied in the relationship between the stevedore and the shipowner "comparable to a manufacturer's warranty of the soundness of its manufactured product." (350 U.S. at 133-134, 76 S.Ct. at 237). The exclusiveness of liability provision of 33 U.S.C. § 905 was avoided on an analysis that any recovery over was premised upon an independent contract right and, therefore, was not "on account of" the injury to the employee (see discussion in Zapico v. Bucyrus-Erie Co., 579 F.2d 714, 720).

The 1972 Amendment, adding section 905(b), effected a radical change in the statutory scheme by abolishing the longshoreman's right to proceed against the vessel on an unseaworthiness theory, limiting the shipowner's liability to negligence and abolishing any right of the vessel to seek indemnity against the employer, "directly or indirectly." Clearly, the intent of the Amendment was to overrule the effect of the United States Supreme Court decisions, like Ryan Co. v. Pan-Atlantic Corp., supra, which made an employer circuitously liable for injuries sustained by an employee by permitting the employee to proceed against the vessel for unseaworthiness and the vessel to claim over for indemnity against the employer who had paid compensation benefits under the Act. The Supreme Court observed in Scindia Steam Navigation Co. v. De Los Santos, 451 U.S. 156, 165, 101 S.Ct. 1614, 1621, 68 L.Ed.2d 1 "The 1972 Amendments, particularly by adding § 905(b), radically changed this scheme of things. The compensation payments due the longshoreman from the stevedore for injuries incurred in the course of his employment were substantially increased; the longshoreman's right to recover for unseaworthiness was abolished; his right to recover from the shipowner for negligence was preserved in § 905(b), which provided a statutory negligence action against the ship; and the stevedore's obligation to indemnify the shipowner if the latter was held liable to the longshoreman was abolished."

It is clear that the quid pro quo for the abolition of the employer's obligation to indemnify the shipowner was the elimination of the vessel's absolute liability for unseaworthiness. The courts which have considered the issue have concluded that the statute does not operate to bar indemnity claims by nonvessels against maritime employers (Zapico v. Bucyrus-Erie Co., supra, 579 F.2d at 721; Pippen v. Shell Oil Co., 661 F.2d 378). In Zapico, Zapico and Millan were longshoremen employed by Atlantic Container Line, a stevedore. Zapico was killed and Millan injured in an accident aboard the S.S. Atlantic Causeway, a vessel owned by Cunard Steamship Co., during the course of loading a hydrocrane manufactured by Bucyrus-Erie. In the action against the manufacturer of the crane, Bucyrus (a nonvessel), asserted a third party claim against the employer, Atlantic Container. The employer contended that it was immune from any such third party suit since, as a compensation-paying employer, it had no liability under 33 U.S.C. § 905(a) and (b). The Second Circuit Court of Appeals, for other reasons not relevant here, dismissed the third party complaint. However, in an opinion by...