The HONORABLE MICHAEL J. DAVIS, United States District Judge for *

the District of Minnesota, sitting by designation.

-1-

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

____________

No. 97-2512

____________

American Home Assurance Company, *

*

Plaintiff-Appellant *

*

v. *

*

L & L Marine Service, Inc., * Appeal from the United

* States District Court for

Defendant, * the Eastern District of

* Missouri.

Insurance Company of North America, *

*

Garnishee, *

*

American Steamship Owners Mutual *

Protection and Indemnity Association, *

Inc., *

*

Garnishee-Appellees. *

____________

Submitted: February 11, 1998

 Filed: August 11, 1998

____________

Before McMILLIAN and HANSEN, Circuit Judges, and DAVIS, District Judge. *
The Honorable George F. Gunn, Jr., late a United States District Judge for 1

the Eastern District of Missouri. 

-2-

____________

DAVIS, District Judge.

American Home Assurance Company appeals the judgment of the district court1

dismissing its writ of execution and summons of garnishment against American

Steamship Owners Mutual Protection. We affirm.

BACKGROUND

This case arises from the grounding of the tug Maya and the barge Apex Chicago

off the coast of Massachusetts. The facts of this case can be found as stated in the

underlying action, American Home Assurance Co. v. L&L Marine Service, 875 F.2d

1351, 1352 (8th Cir. 1989). In October 1981, the tug was towing the barge from

Carteret, New Jersey to Boston, Massachusetts, carrying a cargo of 1.76 million

gallons of gasoline owned by Apex Oil. Both the tug and barge were owned by Central

Barge & Boat Co., which chartered them to Apex R.E. & T. Inc. (“Apex Towing”), a

subsidiary of Apex Oil. Pursuant to an agreement with Apex Towing, L&L Marine

provided the crew to operate the tug Maya.

Despite warnings of inclement weather, the crew of the Maya continued for its

destination. Eventually, the tow cable broke but the crew of the Maya did not discover

that the barge had come adrift until 30 minutes later because of the intensity of the

storm. When the Maya went back to retrieve the barge, it was aground and leaking

gasoline through a gash in its hull. In attempting to pull the barge from the rocks, the

Maya backed into its bow thus further damaging the barge. The Maya eventually lost

control and was stranded with the barge. With the assistance of others, both the tug

and barge were eventually freed and the cargo of gasoline was transferred to another

barge for completion of the voyage. 875 F.2d at 1353.
-3-

Both Apex Towing and Apex Oil were insured for this voyage by

Plaintiff/Appellant American Home Assurance Co. (“American Home”), which

subsequently paid almost $200,000 in claims relating to the accident, including the

amount of gasoline lost in the accident, cleanup costs, the cost of repairing the barge,

and costs incurred in transferring the oil for completion of the voyage. As subrogee of

Apex Towing and Apex Oil, American Home filed suit against L&L Marine for the

allegedly negligent operation of the Maya by L&L Marine’s crew. In that underlying

suit, the district court found and this Court affirmed that the accident was caused

equally by the negligent navigation of the Maya by L&L Marine’s crew and by the

unseaworthy condition of the tug provided by Apex Towing. American Home was

ultimately awarded judgment for one-half of the sum of provable damages, which was

calculated to be $103,463.61. However, at the commencement of the suit, L&L Marine

was and remains insolvent.

To collect on its judgment awarded in the underlying action, American Home

subsequently brought a writ of execution and summons of garnishment against

Garnishees American Steamship Owners Mutual Protection and Indemnity Association

(“American Steamship”) and Insurance Company of North American (“INA”) as

insurers of L&L Marine under maritime protection and indemnity policies of insurance.

Fed. R. Civ. P. 69(a). In April 1997, the district court dismissed this action against

Defendants. Pursuant to admiralty jurisdiction, the district court applied federal choice

of law rules to determine which state’s substantive law governed the maritime contract

at issue. The district court concluded that New York law governed and the action

against American Steamship should be dismissed because New York law prohibits a

direct action against a marine insurer. Although the district court also dismissed the

action against INA, American Home appeals the dismissal of American Steamship only

and does not challenge the dismissal of INA on appeal.

DISCUSSION

This Court reviews a district court’s choice of law determination de novo.

Northwest Airlines v. Astraea Aviation Services, Inc., 111 F.3d 1386, 1392 (8th Cir.
-4-

1997); Horn v. B.A.S.S., 92 F.3d 609, 611 (8th Cir. 1996).

The parties do not dispute the district court’s determination that it had admiralty

jurisdiction over the case and that federal choice of law rules determine which state’s

substantive law should apply to the maritime contract. Aqua-Marine Constructors, Inc.

v. Banks, 110 F.3d 663, 670 (9th Cir. 1997), cert. denied, 118 S.Ct. 339 (1997).

Under federal choice of law rules, courts determine which state’s law applies to

maritime contracts by “ascertaining and valuing points of contact between the

transaction [giving rise to the cause of action] and the states or governments whose

competing laws are involved.” Advani Enterprises , Inc. v. Underwriters at Lloyds,

140 F.3d 157, 162 (2nd Cir. 1998) (quoting Lauritzen v. Larsen, 345 U.S. 571, 582

(1953)).

The parties agree that the “most significant relationship” test established in

Restatement (Second) of Conflict of Laws § 188 provides the modern analysis as to

which contacts should be taken into account. Advani Enterprises , Inc., 140 F.3d at

162; Aqua-Marine Constructors, Inc., 110 F.3d at 674. The sole dispute at issue in this

case is whether consideration of those factors mandates application of New York or

Missouri law. In relevant part, Restatement § 188 provides as follows: 

In the absence of an effective choice of law by the parties, the

contacts to be taken into account in applying the principles of § 6 to

determine the law applicable to an issue include:

(a) the place of contracting,

(b) the place of negotiation of the contract,

(c) the place of performance,

(d) the location of the subject matter of the contract, and

(e) the domicil, residence, nationality, place of incorporation and
-5-

place of business of the parties.

These contacts are to be evaluated according to their relative

importance with respect to the particular issue.

Restatement (Second) of Conflict of Laws § 188(2) (1971).

American Home, a New York corporation, seeks to recover its judgment against

L&L Marine, a Missouri corporation, from American Steamship, a New York

corporation and indemnity insurer of L&L Marine. Thus, the dispute in this action is

between American Home, a New York corporation, and American Steamship, also a

New York corporation.

American Home argues that consideration of the Restatement factors requires

application of Missouri law in this case. American Home asserts that both L&L Marine

and Apex Towing are Missouri residents for whose benefit the insurance contract at

issue was procured. However, because neither L & L Marine nor Apex Towing are

parties to the present action, we conclude that their place of residence is not significant

in our choice of law analysis.

 American Home further asserts that Missouri has the greater interest in applying

its law because of its significant interest in protecting its citizens, residents, and

corporations. American Home primarily relies on Aqua-Marine Constructors to

support its position. In that case, an Oregon resident and owner of a barge sued in

Oregon to recover under a performance bond and the court considered which state’s

law should apply. The court found that California, Oregon, Washington, and Costa

Rica all had significant contacts with the performance bond: the bond was issued by

a Costa Rican resident, the bond was executed in California, the party for whose

benefit the bond was executed was an Oregon resident, and the vessel covered by the

performance bond was to be redelivered in Washington. 110 F.3d at 674-75. 

The court concluded that Oregon had a considerably greater interest in the
-6-

application of its law because of its strong interest in the protection of its citizens

against the insolvency of a foreign insurer. In regards to the other locales, the court

noted that no citizen of Washington was a party to or beneficiary of the contract at

issue, California’s citizen elected not to defend himself and default judgment was

entered against him, and Costa Rica’s citizen never argued that the law of its state

should apply. Id.

However, Aqua-Marine is distinguishable from this case on the basis that in this

action, no Missouri resident is seeking to enforce its rights under the policy in this

case. Thus, application of Missouri law would not further the interests of that state.

American Home contends that the mere fact that L&L Marine is a party to the policy

at issue is sufficient to consider its state of residence in this Court’s choice of law

analysis. In support of such contention, American Home relies on Ahmed v. American

Steamship Owners Mutual Protection & Indemnity Association, 444 F.Supp. 569

(N.D.Cal. 1978). In Ahmed, injured seamen obtained default judgments against their

employers for personal injuries and subsequently sought recovery from the insurance

carrier of the employers. In that case, the employers and the insurer all resided in New

York and the contract at issue was negotiated and performed in New York. Thus,

contrary to American Home’s assertion, the residency of the insured was not a

significant factor in Ahmed. 

American Home argues that as subrogee of Apex Oil, it is entitled to enforce all

the rights of Apex Oil, including the protection of Missouri law. However, American

Home has failed to show that Apex Oil is entitled to the application of Missouri law in

this case. Even taking into account that Apex Oil is a Missouri resident, we conclude

that consideration of the Restatement factors weighs in favor of applying New York law

in this case.

Under the remaining Restatement factors, American Home does not dispute that

the place of contracting, negotiation, and performance of the contract were all in New
-7-

York. Furthermore, as the lower court noted, New York has a significant interest in

protecting its maritime insurance industry from third party contract claims. Although

Missouri has a similar interest in protecting its corporations, that interest is not

compelling in this case because there is no Missouri resident seeking to enforce the

terms of the policy.

Restatement (Second) of Conflict of Laws § 188(3) (1971) provides further

support for the district court’s determination that New York law governs this case.

Under that provision, if the contract at issue was negotiated in the same state as the

place of performance, the law of that state will usually apply. American Home does not

dispute that the contract was negotiated and to be performed in New York. Therefore,

section 188(3) provides that New York law should apply. 

American Home does not dispute that under New York law, it is barred from

bringing a direct action against American Steamship. Therefore, we affirm the order of

the district court dismissing the writ of execution and summons of garnishment against

American Steamship.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.