Opinion ID: 6111925
Heading Depth: 2
Heading Rank: 2

Heading: Limitations of Liability

Text: The Aris T Interests, Elizabeth Interests, Loretta Interest, and the excess insurers for the Loretta Interest all claim the right to limit their respective liability to the value of their vessels, plus pending freight at the conclusion of the voyage. The district court found that the Aris T Interests are able to do so but that the others could not. There are two distinct ways the owner of a vessel involved in an accident can limit its liability to the value of the vessel and its freight. First, the Limitation of Liability Act, 46 U.S.C. §§ 30501, et seq., provides for such limitation in certain situations. The Loretta Interest and the Elizabeth Interests claim their liability should be limited under the Act, an argument addressed in Part II.B.1 below. Second, when the negligence of a vessel is attributable solely to a compulsory pilot, the vessel is only liable in rem, 16 Case: 20-30019 Document: 00516177053 Page: 17 Date Filed: 01/24/2022 No. 20-30019 effectively limiting the owner’s liability to the same extent as the Limitation of Liability Act. See Probo II London v. Isla Santay MV, 92 F.3d 361, 365 (5th Cir. 1996). The Aris T Interests assert their liability should be limited in this way, as the district court found. This is addressed in Part II.B.2 below.
The Limitation of Liability Act provides that “the liability of the owner of a vessel for any claim, debt, or liability” “arising from . . . any act, matter, or thing, loss, damage, or forfeiture, done, occasioned, or incurred, without the privity or knowledge of the owner” “shall not exceed the value of the vessel and pending freight.” 46 U.S.C. § 30505(a)–(b). In short, “[u]nder the Act, a party is entitled to limitation only if it is ‘without privity or knowledge’ of the cause of the loss.” In re Hellenic Inc., 252 F.3d 391, 394 (5th Cir. 2001) (emphasis added) (quoting Brunet v. United Gas Pipeline Co., 15 F.3d 500, 504 (5th Cir. 1994)). Furthermore, “if the vessel’s negligence or unseaworthiness is the proximate cause of the claimant’s loss, the [ship owner] must prove it had no privity or knowledge of the unseaworthy conditions or negligent acts.” Trico Marine Assets Inc. v. Diamond B Marine Servs. Inc., 332 F.3d 779, 789 (5th Cir. 2003). “[K]nowledge, when the shipowner is a corporation, is judged not only by what the corporation’s managing officers actually knew, but also by what they should have known.” Id. at 789–90. That is, if the unseaworthy “condition could have been discovered through the exercise of reasonable diligence,” a corporate owner is deemed to have knowledge of it and cannot limit its liability. In re Omega Protein, Inc., 548 F.3d 361, 371 (5th Cir. 2008) (quoting Brister v. A.W.I., Inc., 946 F.2d 350, 356 (5th Cir. 1991)). Importantly, the owner must have privity or knowledge of the “acts of negligence or conditions of unseaworthiness [that] caused the accident.” Farrell Lines Inc. v. Jones, 530 F.2d 7, 10 (5th Cir. 1976) (emphasis added). 17 Case: 20-30019 Document: 00516177053 Page: 18 Date Filed: 01/24/2022 No. 20-30019 The owner’s knowledge of acts of negligence or conditions of unseaworthiness that did not cause the accident does not prevent the owner from limiting liability. See id.; see also In re Omega Protein, 548 F.3d at 369– 70 (finding that the owner’s failure to train its employees on a navigation system did not mean they could not limit liability when the failure to use the navigation system did not cause the accident). Similarly, the owner’s knowledge of acts that actually caused the accident, but were not acts of negligence or conditions of unseaworthiness, does not prevent the owner from limiting liability. See Farrell Lines Inc., 530 F.2d at 10. A vessel can be rendered unseaworthy by having either insufficient equipment or an insufficiently competent and trained crew. See Jackson v. OMI Corp., 245 F.3d 525, 527 (5th Cir. 2001). Thus, the privity or knowledge standard “obliges the owner to select a competent master.” In re Omega Protein, 548 F.3d at 374. It also requires the owner to properly train the master and crew. See Trico Marine Assets, 332 F.3d at 790 (finding knowledge when the “captain was improperly trained”). It does not, however, render the owner liable for “mere ‘mistakes of navigation’ by an otherwise competent crew.” In re Omega Protein, 548 F.3d at 371 (quoting Brister, 946 F.2d at 356). This is because “when the owner is so far removed from the vessel that he can exert no control over the master’s actions, he should not be taxed with the master’s negligence.” Cont’l Oil Co. v. Bonanza Corp., 706 F.2d 1365, 1377 n.15 (5th Cir. 1983) (en banc). Therefore, when the cause of the allision was the crew’s errors, the owner’s ability to limit its liability turns on whether the crew was incompetent, which the owner should have known, or whether the crew made mere mistakes of navigation, which the owner could not have known about. A captain’s record and years of experience are relevant to this inquiry. See Kristie Leigh Enters. v. Am. Com. Lines, 72 F.3d 479, 482 (5th Cir. 1996). Also relevant is the owner’s knowledge of how well trained the captain is. See 18 Case: 20-30019 Document: 00516177053 Page: 19 Date Filed: 01/24/2022 No. 20-30019 Trico Marine Assets, 332 F.3d at 790. Finally, all of these questions—the cause of the accident, the owner’s privity or knowledge, and the crew’s competence—are fact-specific, and therefore subject to clear-error review. See In re Omega Protein, 548 F.3d at 361. The district court found that the Elizabeth Interests could not limit their liability because they themselves were negligent in: (1) hiring an incompetent master without doing a proper background check; (2) failing to properly train Captain Christiansen in how to use the Rose Point navigation system; and (3) approving Captain Christiansen’s decision to maneuver into the Bayou Fleet without an assist tug. Further, the court found that the Loretta Interest could not limit its liability because it was negligent in (1) sending the Loretta out with an inadequate face-wire system, and (2) not enforcing its cell-phone policy. The district court found that the Aris T owners could limit their liability. In challenging this ruling, the Elizabeth Interests contend that the district court’s finding that Captain Christiansen was incompetent was error. They point out that the Coast Guard did not cite Captain Christiansen for the incident, but the Coast Guard did cite Captain Sanamo and Pilot Leone. Moreover, Captain Christiansen had years of experience navigating the Hahnville Bar, and his prior suspensions were twenty years before this incident and not at all relevant to evaluating his competence here. Given all this, the Elizabeth Interests contend that Captain Christiansen’s errors were mere mistakes of navigation that the Elizabeth’s owners could not have known of, and not incompetence they should have known about before hiring him. We agree that the district court erred in finding Captain Christiansen incompetent. Nevertheless, the district court provided two other grounds for not limiting the Elizabeth Interests’ liability: the Elizabeth Interests failed to 19 Case: 20-30019 Document: 00516177053 Page: 20 Date Filed: 01/24/2022 No. 20-30019 provide Captain Christiansen with training on the Rose Point navigation system—which resulted in Captain Christiansen’s not using all available means to maintain a proper lookout—and the Elizabeth Interests’ general manager approved the down-streaming maneuver without a tugboat assist that was employed by Captain Christiansen during the allision sequence. The Elizabeth Interests thus had “privity or knowledge” of the conditions that contributed to the Aris T’s allision. 46 U.S.C. § 30505(b). We affirm on these grounds. The Loretta Interest, Cenac, contends the district court erred in finding that Cenac could not limit its liability. Cenac argues that the factors the district court held that Cenac had knowledge of—the faulty face-wire system and Captain Sanamo’s talking on his cell phone—were not causes of the accident. Cenac posits that the face wire parting could not have been a cause of the accident because, according to Cenac, the parting did not occur until after the Loretta was mostly past the Aris T. Cenac points to Captain Sanamo’s testimony as to when he believed it broke, as well as to some expert testimony that the Loretta could not have maneuvered as it did if the face wire had broken earlier. Cenac also posits that Captain Sanamo’s cell phone call with his girlfriend during the accident was not a cause of the accident because it did not distract him. According to Cenac, though the line was open, Captain Sanamo was not actively talking with his girlfriend and was adequately focused on the task at hand, as evidenced by his active communication with Pilot Leone on the radio. Thus, because Cenac believes these factors were not causes of the accident, Cenac contends that those issues do not preclude it from limiting its liability. 20 Case: 20-30019 Document: 00516177053 Page: 21 Date Filed: 01/24/2022 No. 20-30019 We affirm the district court because the district court’s finding of causality with respect to these issues was not clearly erroneous. 11 It was not error for the district court to discount Captain Sanamo’s testimony about the face wire, and instead credit other expert testimony and evidence (e.g., radar and video footage) that it broke earlier, and thus was a cause of the allision. Moreover, it was not error for the district court to conclude that the cell phone was a distraction and a cause of the allision, especially in light of the fact that the Coast Guard sanctioned Captain Sanamo for it. Thus, we affirm the district court’s ruling that the Limitation of Liability Act does not allow the Elizabeth Interests or the Loretta Interest to limit liability in this case.
The district court determined that the Aris T could limit its liability using the “compulsory pilot” defense. “[T]he ‘compulsory pilot defense,’ can be traced back to” as early as the nineteenth century. Probo II London, 92 F.3d at 365. Under it, “the vessel itself is liable in rem for a maritime collision caused by the fault of its compulsory pilot; if the pilot alone was at fault, the shipowner will not be liable in personam; however, if the negligence of the master or crew contributed to the collision, then in addition to the vessel’s liability in rem the shipowner also will face in personam liability.” Id. The negligence of a vessel’s master can contribute to an allision either through actions or omissions. Generally, the “master is entitled to assume that the pilot is an expert on local conditions and practices,” and defers to his command. Avondale Indus., Inc. v. Int’l Marine Carriers, Inc., 15 F.3d 489, 493 (5th Cir. 1994). But the master may not “regard the presence of a duly- 11 Because we affirm the district court’s ruling that Cenac may not limit its liability, we dismiss as moot Cenac’s excess insurers’ challenge. 21 Case: 20-30019 Document: 00516177053 Page: 22 Date Filed: 01/24/2022 No. 20-30019 licensed pilot in compulsory pilot waters as freeing him from every obligation to attend to the safety of the vessel.” The Oregon, 158 U.S. 186, 195 (1895). Instead, if “it becomes manifest that the pilot is steering the vessel into danger,” the master is negligent if he does not timely intervene. Avondale, 15 F.3d at 493. This responsibility to intervene places a duty on the ship’s master to maintain an “adequate level of information” about the ship’s navigation. Id. The Elizabeth Interests and the Loretta Interest contend the district court erred in allowing the Aris T to limit its liability because the negligence contributing to the allision can be attributed to more than just Pilot Leone’s decisions. First, they argue that Captain Baltas, the Aris T’s master, agreed with Pilot Leone’s decisions and therefore the crew’s negligence contributed to the allision. Second, they contend that the shipowner’s failure to equip the Aris T with a functional ECDIS system was negligent and contributed to the accident. Third, they contend that the shipowner offered no training to its bridge officers on the Inland Rules of Navigation. We affirm the district court’s ruling that the Aris T can limit its liability. Captain Baltas was monitoring the situation, and he was entitled to trust Pilot Leone’s greater expertise on the spacing in the Hahnville Bar. Moreover, the Aris T was adequately equipped; the ECDIS system was not mandatory at the time, and Pilot Leone had the same navigation system as the Elizabeth and the Loretta. Finally, Pilot Leone had adequate knowledge of the Inland Rules of Navigation; the point of having compulsory pilots for areas with specific navigational rules is to compensate for the crew’s lack of knowledge in that area. We conclude that the Aris T’s negligence was attributable solely to the compulsory pilot, Pilot Leone, and therefore, the Aris T is only liable in rem. 22 Case: 20-30019 Document: 00516177053 Page: 23 Date Filed: 01/24/2022 No. 20-30019