1996 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

7-19-1996

O'Connell v. Interocean Mgt Corp

Precedential or Non-Precedential:

Docket 95-2062

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Recommended Citation

"O'Connell v. Interocean Mgt Corp" (1996). 1996 Decisions. Paper 107.

http://digitalcommons.law.villanova.edu/thirdcircuit_1996/107
 UNITED STATES COURT OF APPEALS 

 FOR THE THIRD CIRCUIT 

 

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 No. 95-2062 

 

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 WILLIAM G. O'CONNELL, III, 

 

 Appellant 

 

 v. 

 

 INTEROCEAN MANAGEMENT CORP. 

 

 ---------- 

 On Appeal from the United States District Court 

 for the Eastern District of Pennsylvania 

 (D.C. No. 94-cv-04121) 

 

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 Submitted Under Third Circuit LAR 34.1(a) 

 Monday, June 10, 1996 

 BEFORE: SLOVITER, Chief Judge, 

 COWEN and GARTH, Circuit Judges 

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 (Opinion filed July 19, 1996) 

 

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 William G. O'Connell, III 

 22 Wellington Avenue

 West Orange, New Jersey 07052 

 Pro Se Appellant 

 Frank W. Hunger 

 Assistant 

 Attorney General 

 Michael R. Stiles 

 United States Attorney 

 

 Damon C. Miller 

 U.S. Department of Justice 

 Torts Branch, Civil Division 

 P.O. Box 14271 

 Washington, D.C. 20044-4271 
 Attorneys for Appellee 

 Interocean Management Corp. 

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 OPINION OF THE COURT 

 

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GARTH, Circuit Judge: 

 William G. O'Connell, III appeals from the district 

court's order dismissing his complaint for lack of subject matter 

jurisdiction pursuant to Federal Rule of Civil Procedure 

12(b)(1). The primary issue on appeal, which is one of first 

impression in this circuit, is whether O'Connell's punitivedamage claim premised on an arbitrary and willful failure to pay 

maintenance and cure is barred by the exclusivity provision of 

the Suits in Admiralty Act ("SAA"), 46 U.S.C.  745. We hold 

that the SAA's exclusivity clause divested the district court of 

subject matter jurisdiction over O'Connell's punitive-damage 

claim, and we accordingly affirm. 

 I. 

 The complaint claimed subject matter jurisdiction under 

28 U.S.C.  1333, as a case of admiralty or maritime jurisdiction. We are vested with appellate jurisdiction over the 

district court's 12(b)(1) dismissal of the complaint pursuant to 

28 U.S.C.  1291. Our review of the district court's dismissal 

for lack of subject matter jurisdiction is plenary. Delaware 

Valley Citizens Council for Clean Air v. Davis, 932 F.2d 256, 264 

(3d Cir. 1991); York Bank & Trust Co. v. Federal Sav. & Loan Ins. 

Corp., 851 F.2d 637, 638 (3d Cir. 1988), cert. denied, 488 U.S. 

1005 (1989); Haydo v. Amerikohl Mining, Inc., 830 F.2d 494, 496 

(3d Cir. 1987). 

 II. 

 Plaintiff William O'Connell was employed as a merchant 

seaman aboard the M/V Gopher State, a vessel owned by the United 

States Maritime Administration ("MARAD") and operated by defendant Interocean Management Corporation ("IOMC"), as an agent for 

the United States. On July 19, 1991, onboard the Gopher State, 

O'Connell accidentally severed the tendon in his left little 

finger while operating a grinding wheel. 

 On July 24, 1991, O'Connell sought treatment at St. 

Barnabas Medical Center, located in New Jersey. Despite two 

surgical procedures and a skin graft, O'Connell will never regain 

full use of his little finger, which is permanently deformed. 

 In November 1991, O'Connell signed a release, pursuant 

to which IOMC agreed to pay O'Connell $17,500 (for lost wages) 
and all medical expenses incurred as a result of the injury 

sustained while onboard the Gopher State. IOMC delayed paying 

O'Connell's medical expenses, however, despite O'Connell's 

numerous phone calls and letters. In May 1994, a balance of 

$8,924.22 remained outstanding on O'Connell's medical bill from 

St. Barnabas. Although IOMC ultimately paid the outstanding 

medical bill, it did so only after O'Connell hired an attorney 

to sue for payment. 

 On July 5, 1994, O'Connell filed the instant action, 

alleging that IOMC was liable for punitive damages in that it had 

arbitrarily and capriciously delayed paying maintenance and cure. 

Among other motions, IOMC moved to dismiss pursuant to Federal 

Rule of Civil Procedure 12(b)(1), contending that 46 U.S.C.  745 

precludes a seaman's claim for maintenance and cure against a 

private operator of a vessel owned by the United States. The 

district court granted IOMC's motion to dismiss, concluding that 

all of O'Connell's claims are within the same subject matter as a 

claim for which the SAA provides a remedy and therefore within 

the exclusivity provision. District Court Opinion at 8. The 

instant appeal followed. 

 III. 

 Under general maritime law, a member of a ship's crew 

who was injured or became ill while serving onboard the vessel 

could recover "maintenance and cure" from the shipowner/employer. 

"The right to maintenance and cure is an ancient right given to 

seamen by the maritime law." Jordine v. Walling, 185 F.2d 662, 

665 (3d Cir. 1992). See generally Cox v. Dravo Corp., 517 F.2d 

620 (3d Cir.) (providing a detailed historical exegesis of the 

origin of "maintenance and cure"), cert. denied, 423 U.S. 1020 

(1975). 

 "Maintenance is the living allowance for a seaman while 

he is ashore recovering from injury or illness. Cure is payment 

of medical expenses incurred in treating the seaman's injury or 

illness." Barnes v. Andover Co., L.P., 900 F.2d 630, 633 (3d 

Cir. 1990) (citing Vaughan v. Atkinson, 369 U.S. 527, 531 (1962); 

Calmar S.S. Corp. v. Taylor, 303 U.S. 525, 528 (1938)). An 

employer's obligation to furnish maintenance and cure continues 

"until the seaman has reached the point of maximum cure, that is 

until the seaman is cured or his condition is diagnosed as 

permanent and incurable." Id. at 633-34. 

 The remedy of "maintenance and cure" is a contractual 

obligation, which is independent of the shipowner's negligence or 

even the seaman's own negligence: 

 [T]his obligation [of maintenance and cure] 

 has been recognized consistently as an 

 implied provision in contracts of marine 

 employment. [T]he liability . . . in no 

 sense is predicated on the fault or 

 negligence of the shipowner. . . . So broad 

 is the shipowner's obligation, that 

 negligence or acts short of culpable 

 misconduct on the seaman's part will not 

 relieve him of the responsibility. 
Aguilar v. Standard Oil Co., 318 U.S. 724, 730-31 (1943) 

(footnotes omitted). 

 If the shipowner unreasonably refuses to pay a marine 

employee's claim for maintenance and cure, the employee may 

recover consequential damages, including lost wages, pain and 

suffering, and attorneys' fees and costs. See Deisler v. 

McCormack Aggregates, Co., 54 F.3d 1074, 1084-85, 1087 (3d Cir. 

1995). See also Sims v. United States War Shipping Admin., 186 

F.2d 972, 973-74 (3d Cir.) ("We may regard it as settled law that 

if a man is injured or becomes ill while on a voyage, neglect to 

fulfill the duty to provide maintenance and cure may impose 

damages beyond mere cost of food and medicines.") (citing The 

Iroquois, 194 U.S. 240 (1904)), cert. denied, 342 U.S. 816 

(1951). 

 Although we have yet to address the issue directly, 

some courts have allowed recovery of punitive damages against 

private shipowners who were not agents of the United States and 

who, taking a "callous" or "recalcitrant" view of their 

obligations, "arbitrarily and willfully" refused to pay 

maintenance and cure. See Hines v. J.A. LaPorte, Inc., 820 F.2d 

1187 (11th Cir. 1987); Robinson v. Pocahontas, Inc., 477 F.2d 

1048 (1st Cir. 1973). The majority of courts, however, do not 

allow punitive damages, other than attorneys' fees, in those 

circumstances. See Guevara v. Maritime Overseas Corp., 59 F.3d 

1496, 1513 (5th Cir. 1995), cert. denied, 116 S. Ct. 706 (1996); 

Roy Al Boat Management Corp., 57 F.3d 1495, 1505 (9th Cir. 1995), 

cert. denied, 116 S. Ct. 708 (1996); Kraljic v. Berman Enters., 

Inc., 575 F.2d 412 (2d Cir. 1978). 

 IV. 

 As noted earlier, see supra note 1, O'Connell, in the 

instant action against IOMC, seeks compensatory damages, as well 

as punitive damages for IOMC's "arbitrary and willful" 

mishandling of his claim for maintenance and cure. O'Connell's 

claims, which are based on an injury sustained while employed as 

a crew member of a vessel owned by the United States (through 

MARAD), are governed by the Clarification Act, 50 U.S.C. app. 

 1291, which incorporates the Suits in Admiralty Act (SAA), 46 

U.S.C.  741-52. See McMahon v. United States, 342 U.S. 25, 26 

(1951); Gaynor v. Agwilines, Inc., 169 F.2d 612, 614-15 (3d Cir. 

1948), aff'd sub nom., Fink v. Shepard S.S. Co., 337 U.S. 810 

(1949). 

 The SAA and the Public Vessels Act ("PVA"), 46 U.S.C. 

 781-790, permit admiralty suits, including an action to 

enforce a seaman's entitlement to maintenance and cure, to be 

brought against the United States for causes of action arising 

out of the operation of vessels owned by, or operated for, the 

United States. Manuel v. United States, 50 F.3d 1253, 1255 (4th 

Cir. 1995). "Neither the SAA nor the PVA create causes of action 

against the United States. Instead, they act only as a waiver of 

the sovereign immunity of the United States in admiralty cases." 

Id. at 1255 n.1. 

 Section 745 of the SAA, the so-called exclusivity 
provision, precludes recovery against an agent of the United 

States operating a government-owned vessel on any claim for which 

the SAA or the PVA provides a remedy against the federal 

government. Specifically, the exclusivity clause provides 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.  745 

(emphasis added). 

 O'Connell argues that his claim charging an arbitrary 

and willful failure to pay maintenance and cure in a timely 

manner, which, in essence, is a claim seeking punitive damages, 

is distinct from the underlying claim for maintenance and cure. 

Because punitive damages cannot be recovered from the United 

States, see Manuel, 50 F.3d at 1254, O'Connell reasons that the 

SAA does not provide a "remedy" and therefore such punitivedamage claims do not fall within the purview of the exclusivity 

provision of section 745. 

 There is a split of authority among the district courts 

on this issue. Three district court have held that section 745 

does not preclude claims for arbitrary and willful failure to pay 

maintenance and cure. See Abogado v. International Marine 

Carriers, 890 F. Supp. 626, 632 (S.D. Tex. 1995) (holding that 

actions for willful and arbitrary denial of maintenance and cure 

"do not fall within the exclusivity clause of  745"); Henderson 

v. International Marine Carriers, 1990 A.M.C. 400, 402 (E.D. La. 

1989) ("[P]laintiff's claim for willful and arbitrary failure to 

pay maintenance and cure must focus against the one who stopped 

the payments . . . . [The] SAA does not provide a remedy for 

this claim; therefore, the SAA exclusivity provision does not 

apply . . . ."), aff'd mem., 921 F.2d 275 (5th Cir. 1990); 

Shields v. United States, 662 F. Supp. 187, 190 (M.D. Fla. 1987) 

("[S]uch arbitrary claims handling is an entirely different 

subject matter from the negligent conduct for which the SAA 

provides a remedy."). Several other district courts have reached 

the opposite conclusion. See Stewart v. United States, 903 F. 

Supp. 1540 (S.D. Ga. 1995); Smith v. Mar, Inc., 896 F. Supp. 75 

(D.R.I. 1995); Fratus v. United States, 859 F. Supp. 991 (E.D. 

Va. 1994); Manuel v. United States, 846 F. Supp. 478 (E.D. Va. 

1994), aff'd, 50 F.3d 1253 (4th Cir. 1995); Farnsworth v. SeaLand Serv., Inc., 1989 WL 20544 (E.D. La. March 7, 1989), aff'd 

mem., 896 F.2d 552 (5th Cir.), cert. denied, 498 U.S. 880 (1990). 

 To date, the only published court of appeals decision 

which addresses this issue is the Fourth Circuit's affirmance of 

Manuel. In Manuel, Michael Manuel, a crew member aboard the M/V 

Cape Florida, a vessel owned by the United States and operated by 

International Marine Carriers, Inc. ("IMC"), sustained back 

injuries while lifting a water cooler cover. 50 F.3d at 1254. 

IMC paid maintenance and cure until it found Manuel fit for duty 

approximately one month later. Id. Manuel alleged that he 

continued to experience back pain and required continuing medical 

care after his employer determined he was fit for duty. Id. The 

district court granted summary judgment in favor of IMC and 

denied Manuel's motion for leave to amend his complaint to state 
a claim for arbitrary and willful failure to pay maintenance and 

cure. Id. at 1254-55. 

 On appeal, Manuel made the same argument raised by 

O'Connell in the present case: a claim for arbitrary and willful 

failure to pay maintenance and cure when due does not fall within 

the exclusivity provision of the SAA because punitive damage 

claims do not lie against the United States. The Fourth Circuit, 

in Manuel, acknowledged that a seaman could not bring a claim for 

punitive damages against the United States, but nevertheless 

concluded that section 745 precluded Manuel's action for 

arbitrary and willful failure to pay maintenance cure, reasoning 

that "[p]unitive damages [remedy] is merely an additional remedy 

in the seaman's maintenance and cure action." Id. at 1260. 

 Manuel reviewed the Supreme Court precedents which 

ultimately gave rise to the 1950 Congressional amendment of 

section 745 of the SAA. The Manuel court then reasoned: The SAA 

requires a seaman to bring his action against the United States, 

and not its agent, to collect unpaid maintenance and cure. 

Because the subject matter of the seaman's claim is maintenance 

and cure, any arbitrary and willful failure to pay that claim 

must deal with and come within the same subject matter. Hence, 

it cannot be regarded as a cause of action separate from the 

simple failure to pay maintenance and cure benefits when due. 

Such punitive damages can be considered no more than an 

additional remedy within the seaman's maintenance and cure 

action. Thus the remedy provided by the SAA encompasses the 

seaman's remedy for arbitrary and willful failure to pay 

maintenance and cure benefits when due, and necessarily bars any 

such action against IOMC. 

 The Manuel court then went on to discuss the argument 

that the SAA does not provide a remedy for arbitrary and willful 

failure to pay maintenance and cure because the United States is 

not subject to punitive damages by reason of its sovereign 

immunity. The Manuel court explained: 

 [W]e reject [the] argument that the SAA does 

 not "provide a remedy" for the arbitrary and 

 willful failure to pay maintenance and cure. 

 Manuel argues that the only remedy for the

 arbitrary and willful failure to pay 

 maintenance and cure is punitive damages. 

 Because the SAA has not waived the United 

 States' sovereign immunity with respect to

 suits for punitive damages, Manuel argues 

 that the SAA does not provide a remedy for

 the arbitrary and willful failure to pay 

 maintenance and cure. We conclude that 

 Manuel's argument merely attempts to create a 

 cause of action out of the punitive damages 

 remedy. Manuel's action against IMC is one 

 to vindicate his entitlement to maintenance 

 and cure resulting from his injury aboard the 

 ship. In resolving his maintenance and cure 

 action against IMC, a court may grant 

 punitive damages if it concludes that the 
 maintenance and cure benefits were 

 arbitrarily and willfully withheld. The SAA, 

 however, allows Manuel to vindicate his 

 entitlement to maintenance and cure against 

 the United States, but the sovereign immunity 

 power of the United States limits his 

 remedies. Nonetheless, the SAA provides a

 remedy for Manuel's maintenance and cure 

 claim. Section 745 therefore bars Manuel's 

 action against IMC. 

Id. at 1260 n.6. 

 The reasoning of the Fourth Circuit in Manuel is 

persuasive, and we have no reluctance in following that rationale 

and disposition here. We agree that an action for arbitrary 

denial of maintenance and cure benefits when due arises "by 

reason of the same subject matter" as the available claim against 

the United States for maintenance and cure. We therefore hold 

that the exclusivity provision of the SAA bars O'Connell's claim 

for damages resulting from IOMC's arbitrary and willful failure 

to pay maintenance and cure when due. 

 V. 

 For the foregoing reasons, we will affirm the judgment 

of the district court, dated October 30, 1995, which dismissed 

O'Connell's complaint for lack of subject matter jurisdiction.