Opinion ID: 487734
Heading Depth: 1
Heading Rank: 4

Heading: Limitation of Liability and Joint and Several Liability

Text: 20 Both Niagara and Joia argue that the district court erred in limiting Jo-Ja's liability pursuant to 46 U.S.C. Sec. 183. After the jury verdict, and upon motion of Jo-Ja, the court limited Jo-Ja's liability to the stipulated value of the vessel, CHIPPY, to be $50,000.00. The court then entered judgment against Niagara for $292,000.00 and against Jo-Ja for $50,000.00, for a total judgment of $342,000.00, stating that but for the limitation, judgment would be entered jointly and severally against both defendants for $342,000.00. The plaintiff was to bare the brunt of his 5% negligence, or, $18,000.00. Thus, while the jury assessed 30% fault on Niagara, that court adjudged the defendant approximately 81% liable; on the other hand, Jo-Ja, which was adjudged to have incurred 65% negligence, must pay a maximum of only 19% of the judgment. 21 But for the limitation of liability, the parties would be jointly and severally liable in the amount of $342,000.00 on the three counts. The issue of whether the district court should or should not have limited Jo-Ja's liability presents a second, more compelling issue. That is, whether the dollar value of the judgment against Niagara should exceed its proportionate share of fault. Niagara argues this court should adopt the proportionate fault rule, and abolish joint and several liability in this context. Because Niagara's ultimate liability depends upon our resolution of the limitation of liability issue, we will first resolve the issue of limitation of liability. 22 The Limitation of Liability Act of 1851, 46 U.S.C. Sec. 183(a), provides that in the event of an accident done, occasioned, or incurred, without the privity or knowledge of the vessel owner, the liability of the owner shall not exceed the value of the vessel. To determine the entitlement to limitation, the court must find what acts of negligence caused the accident. Second, the court must determine whether the vessel owner had knowledge or privity of those acts, in order to grant or deny limitation. Farrell Lines, Inc. v. Jones, 530 F.2d 7, 10 (5th Cir.1976), reh'g denied, 532 F.2d 1375 (5th Cir.1976). In the context of the corporate shipowner, as we have here, the privity and knowledge scrutiny focuses not only on what the corporate owner knows, but also on what the corporate owner should have known. Tittle v. Aldacosta, 544 F.2d 752 (5th Cir.1977), reh'g denied, 546 F.2d 906 (5th Cir.1977); Gilmore and Black, The Law of Admiralty 886 (2d ed. 1975). 23 The district court found that Thomas, the owner of the water boat CHIPPY, was unaware of the operator's negligence in pumping the water into the hydraulic oil tank, and that Thomas was not on board the CHIPPY when the pumping occurred. That analysis is not sufficient to determine the issue, for 24 An owner cannot close its eyes to what prudent inspection would reveal. An owner must avail itself of whatever means of knowledge are reasonably necessary to prevent conditions likely to cause losses. If lack of actual knowledge were enough, imbecility, real or assumed, on the part of owners would be at a premium. 25 Waterman S.S. Co. v. Gay Cottons, 414 F.2d 724, 732 (9th Cir.1969), quoting The Argent, 1940 A.M.C. 508, 509 (S.D.N.Y.1915). 26 Rather, the court must determine whether the shipowner had knowledge of the acts of negligence or conditions of unseaworthiness. Farrell, 530 F.2d at 10. Undoubtedly, Thomas, as well as high managerial personnel, Clifford Davignon, the managing agent of the waterboat, knew of the pumping accident well before Joia suffered his injuries. Mahoney called Davignon and told him of the accident. Davignon contacted Thomas at approximately 7:00 a.m. and told him of the accident. Thomas informed Davignon to clean up the mess the best way he could. Davignon posted no warning signs, failed to inform Joia or others of the accident, and returned to the engine deck some three hours later, after Joia had injured himself. 27 This is not a case where the vessel is at sea and the owner is unaware of emergencies, thus having to rely on his master. Instead, the vessel was docked, and the owner, as well as management, was within calling distance for any eventuality. It was Thomas who gave the directions to make the vessel seaworthy. Merely because Thomas did not watch the pumping accident, does not prevent him from having privity or knowledge of the circumstances which made the vessel unseaworthy. As the above facts clearly show, Thomas was aware of the accident very shortly after it occurred. Because of this lack of due diligence, the dangerous condition remained to the peril of others, including Joia. 28 [W]here the circumstances are such that the owners or managing agents have a duty to act to see that the vessel is made seaworthy, a neglect or failure to take such action will require denial of limitation. Mere instructions to subordinate employees will not suffice to give the owner the benefit of the limitation act. 29 States S.S. Co. v. United States, 259 F.2d 458, 472 (9th Cir.1957), cert. denied, 358 U.S. 933, 79 S.Ct. 316, 3 L.Ed.2d 305 (1959). The Supreme Court discussed the privity or knowledge of a boat owner in an analogous situation in Spencer Kellogg and Sons, Inc. v. Hicks, 285 U.S. 502, 52 S.Ct. 450, 76 L.Ed. 903 (1932). Spencer Kellogg operated a factory on the New Jersey side of the Hudson River. It owned a launch which it used to ferry employees to and from New York City across the Hudson. The launch was not seaworthy when ice was in the river, and so the owner had instructed the manager of the factory, Stover, to not allow the launch to be used when ice was in the river. Stover so instructed the launch operator. Despite this instruction, on a day when there was ice in the river the launch was used, which resulted in an accident wherein lives were lost. The owner of the launch, Spencer Kellogg, sought to limit its liability, claiming it had no knowledge or privity with the negligent acts of the launch operator. The Supreme Court rejected this argument and found that the launch owner could properly be charged with knowledge or privity. The Court observed: 30 The argument is that as the boat was seaworthy when there was no ice and instructions had been given to a competent master not to run her through ice, the owner did its full duty and cannot be held responsible as having privity or knowledge of a violation by the master of these explicit instructions. Cases such as La Brougogne, 210 U.S. 95, 28 S.Ct. 664, 52 L.Ed. 973, which involved the master's failure to obey rules and instructions when on the high seas and disaster attributable to such fault, are cited. But there is a vast difference between the cases relied on and the instant one. The launch was used for ferriage over a distance of about a mile and a third. She was known to be unseaworthy and unfit if there was ice in the river. There is no analogy between such a situation and that presented in the cited cases where the emergency must be met by the master alone. In these there is no opportunity of consultation or cooperation or of bringing the proposed action of the master to the owner's knowledge. The latter must rely upon the master's obeying rules and using reasonable judgment. The conditions on the morning in question could have been ascertained by Stover, if he had used reasonable diligence, and we think the evidence is adequate to support the finding that the negligence which caused the disaster was with his, and therefore with the owner's privity or knowledge. 31 Spencer Kellogg, 285 U.S. 511-12, 52 S.Ct. at 453. Cf. Napoli v. [Transpacific Carriers Corp. and Universal Cargo Carriers, Inc.] Hellenic Lines, Ltd., 536 F.2d 505 (2d Cir.1976). Under the circumstances of this case, Jo-Ja is held to have privity and knowledge as a matter of law and is therefore not entitled to limit its liability. 32 As noted above, Niagara contends that the judgment entered against it should not exceed the proportionate degree of fault assessed by the jury. The jury did not assess three separate proportionate values of fault on each count. Rather, it placed one set of fault values against the parties for all three counts. 33 Niagara argues that liability should be entered not jointly and severally, but on the basis of responsibility. We understand its concern. Had we ruled that Jo-Ja was entitled to limit its liability, it would have faced a judgment of $292,000.00, an amount substantially greater than its proportionate share of liability assessed by the jury, 30%, or $108,000.00. He argues, therefore, that this court should abolish or limit joint and several liability. His argument, however, must fail because the two bodies of law governing this case, maritime law and state common law of negligence, both provide that the defendants in this litigation are jointly and severally liable for the plaintiff's losses. 34 a. Massachusetts Common Law 35 Under joint and several liability, the plaintiff is entitled to collect only the amount of the judgment, although he may recover any part or all of the judgment from one or more of the tortfeasors. The effect of joint and several liability is that each defendant is liable for the entire amount of damages to the plaintiff. Generally, the joint tortfeasor who pays more than his pro rata share of the judgment has a right of contribution over against the other joint tortfeasors for the excess. 36 Under Massachusetts law, joint tortfeasors are jointly and severally liable for a plaintiff's damages. Feneff v. Boston & Maine R.R., 196 Mass. 575, 82 N.E. 705 (1907). If two or more wrongdoers negligently contribute to the personal injury of another by their several acts, which operate concurrently so that in effect the damages suffered are rendered inseparable, they are jointly and severally liable. Feneff, 196 Mass. at 581, 82 N.E. at 707. When two or more defendants are held jointly and severally liable, the amount of the judgment is the same against all joint tortfeasors. Delfino v. Torosian, 354 Mass. 395, 237 N.E.2d 694 (1968). Under Massachusetts statutory law, a joint tortfeasor who pays more than his pro rata share of the judgment has an action for contribution against the other joint tortfeasors. Mass. Gen. L. ch. 231B. However, proportionate share of liability is determined not upon the relative degrees of fault, but by the number of joint tortfeasors involved. MacLachlan v. Brotherhood Oil Corp., 10 Mass.App. 811, 404 N.E.2d 1272 (1980). 37 b. The Law Under the Jones Act and General Maritime Law 38 Joia argues that under the Jones Act and the general maritime law, joint tortfeasors are jointly and severally liable for a seamen's personal injuries, regardless of the defendants' degrees of fault. Edmonds v. Compagnie Generale Transatlantique, 443 U.S. 256, 99 S.Ct. 2753, 61 L.Ed.2d 521 (1979); Cooper Stevedoring Co. Inc. v. Fritz Kopke, Inc., 417 U.S. 106, 94 S.Ct. 2174, 40 L.Ed.2d 694 (1974). Niagara, on the other hand, contends that admiralty law has long recognized a proportionate fault rule, United States v. Reliable Transfer Co., 421 U.S. 397, 95 S.Ct. 1708, 44 L.Ed.2d 251 (1975); Leger v. Drilling Well Control, Inc., 592 F.2d 1246 (5th Cir.1979), or that, in the alternative, this court should recognize a proportionate fault rule in maritime cases involving personal injuries to seamen. We examine these contentions in light of the existing law. 39 In Reliable Transfer, the Supreme Court overruled the mutual fault rule established in The Schooner Catharine v. Dickinson, 58 U.S. (17 How.) 170, 15 L.Ed. 233 (1855), and substituted a rule requiring that liability for damages be allocated when possible in proportion to the relative fault of each party. The mutual fault or equal contribution rule, which was the law in admiralty collision cases for over a century prior, required that property damage be equally divided whenever two or more parties were at fault, regardless of the relative degrees of fault. 40 In abolishing the rule, the Court noted that every major maritime nation had since discarded it and replaced it with the rule of comparative fault. Reliable Transfer, 421 U.S. at 397-98, 95 S.Ct. at 1708-09. The divided damages rule rested on the assumption that it provided rough justice, because a determination of fault was difficult to measure. The Court stated that the rule was no longer viable in those instances where a determination of fault could be made in a particular collision, but that there are occasions when degrees of fault cannot be calculated. A comparative negligence rule, moreover, would induce vessel owners to be more careful and deter them from harmful conduct that would result in greater liability. The Court's holding was clear: 41 We hold that when two or more parties have contributed by their fault to cause property damage in a maritime collision or stranding, liability for such damage is to be allocated among the parties proportionately to the comparative degree of their fault, and that liability for such damages is to be allocated equally only when the parties are equally at fault or when it is not possible fairly to measure the comparative degree of their fault. 42 Reliable Transfer, 421 U.S. at 411, 95 S.Ct. at 1715-16. The Court's holding was limited to collision cases involving property damage. Furthermore, there was no indication that the comparative fault rule should apply to a situation other than a maritime collision or stranding. 43 In Leger v. Drilling Well Control, Inc., 592 F.2d 1246 (5th Cir.1979), the Fifth Circuit extended the proportionate fault rule of Reliable Transfer to a noncollision personal injury case involving a seaman, stating that [t]he reasoning of Reliable Transfer loses none of its cogeny in the context of a non-collision personal injury case. 592 F.2d at 1249. In Leger, an injured seaman brought suit against the defendants, under the Jones Act and under general maritime law. After two trials, the jury assigned comparative fault percentages against the parties, and awarded the seaman damages for his personal injuries. The award of damages came after the plaintiff settled with two of the three defendants. In fact, the two defendants settled for damages higher than their proportionate fault as assessed by the jury. As it then existed, if the nonsettling defendant paid damages proportionate to his fault, the plaintiff would recover an amount higher than the jury award. He therefore sought on appeal to reduce his damages to an amount lower than his comparative fault. He was seeking in effect, a dollar-for-dollar credit of the amounts the plaintiff received in settlement. The Fifth Circuit rejected this argument, and held that the nonsettling defendant must pay his portion of the total damages of the jury award proportionate to his percentage of negligence. Leger, 592 F.2d at 1248-50. In so holding, the court based its decision on Reliable Transfer and Cooper Stevedoring Co. v. Kopke, 417 U.S. 106, 94 S.Ct. 2174, 40 L.Ed.2d 694 (1974), which allowed contribution in noncollision maritime cases, but left open the issue of division of damages. Furthermore, the Leger court saw this approach as encouraging settlements. Neither did the seaman enjoy a double recovery. Instead, it considered the plaintiff to have received a favorable settlement. We decline to take this approach for the following reasons. 44 We believe that Edmonds v. Compagnie Generale Transatlantique, 443 U.S. 256, 99 S.Ct. 2753, 61 L.Ed.2d 521 (1979), thought not controlling, states the admiralty rule applicable here. The plaintiff, a longshoreman, while employed by a stevedore, was injured while working on a vessel. He recovered statutory benefits from his employer under the Longshoreman's and Harbor Workers' Compensation Act, 33 U.S.C. Sec. 901 et seq. (Act). He later brought a direct action in negligence against the shipowner pursuant to Sec. 905(b) of the Act. The jury found the shipowner 20% negligent, the stevedore-employer 70% negligent, and the plaintiff 10% negligent. Upon entering judgment, in accordance with maritime law, the district court ruled that the shipowner was liable for all the damages not due to the plaintiff's own negligence. In other words, though the shipowner was 20% negligent, it was liable for the employer's negligence for a total of 90% of Edmond's damages. The Fourth Circuit reversed, holding that 1972 amendments to the Act required the imposition of a proportionate fault rule whereby the shipowner was liable only for the share of damages assignable to its fault. The Supreme Court reversed the appeals court, holding that the 1972 amendments did not alter the traditional maritime rule that, in a longshoreman's suit against a shipowner, while the award may be reduced by the plaintiff's negligence, the shipowner is responsible to the longshoreman for the remainder of the award, even if the negligence of the stevedores contributed to the injury. Edmonds, 443 U.S. at 272, 99 S.Ct. at 2762. The Court stated that Congress intended the 1972 amendments to eliminate both the shipowner's warranty of seaworthiness to the longshoreman and the stevedore's warranty of workmanlike service to the shipowner. Edmonds, 443 U.S. at 263, 99 S.Ct. at 2757-58. In dealing with the mixture of a statutory and judge-made loss allocating mechanism, the Court stated that this maritime rule applicable to a longshoreman's tort action is consonant with the common law rule. 45 This ... rule is in accord with the common law, which allows an injured party to sue a tortfeasor for the full amount of damages for an indivisible injury that the tortfeasor's negligence was a substantial factor in causing, even if the concurrent negligence of others contributed to the incident. 46 443 U.S. at 261, 99 S.Ct. at 2756-57. Manifestly, while the narrow holding of Edmonds does not govern a seaman's action, the rule applied there is the same as the rule applicable here. 3 47 The Court recognized the inequitable burden the shipowner must shoulder, but held a stronger distaste for the unfairness a proportionate fault system would create against the longshoreman in light of the remedial purpose of the Act. 443 U.S. at 271, 99 S.Ct. at 2762. The loss allocating mechanism employed in Edmonds and the 1972 amendments are intended to compensate an injured longshoreman as fully as possible for the damages suffered. 48 We agree with the decision in Ebanks v. Great Lakes Dredge & Dock Co., 688 F.2d 716 (11th Cir.1982), cert. denied, 460 U.S. 1083, 103 S.Ct. 1774, 76 L.Ed.2d 346 (1983), which held that in a maritime negligence action, it was error for the trial court to submit to the jury special interrogatories to determine the comparative degrees of fault between a defendant and a non-party. Ebanks, 688 F.2d at 722. The court relied on the Edmonds decision in holding that since the plaintiff may receive against either of several joint tortfeasors, the comparative degrees of fault is irrelevant. Id. Furthermore, a paying defendant has a right of contribution against a non-paying entity that may be decided in a different proceeding. Id. 49 The joint and several loss allocating mechanism which serves to provide an injured seaman his full judgment is consonant with the policy behind the Jones Act, to provide protection to seamen who are victims of negligence. Cosmopolitan Shipping Co. v. McAllister, 337 U.S. 783, 69 S.Ct. 1317, 93 L.Ed. 1692 (1949); see also Bennet v. Perini Corp., 510 F.2d 114, 117 (1st Cir.1975) (Jones Act is to be construed remedially). The policy underlying the remedial nature of the Jones Act and the general maritime law necessitates our adherence to the joint and several rule. The rationale behind Reliable Transfer, which involved property damages, and a seaman's action, which involves personal injury, are not the same. The comparative fault rule of Reliable Transfer is designed to achieve a fair assessment of damages against each party according to their degrees fault and to deter harmful conduct of vessels. That rationale loses its strength in a seaman's tort action. If comparative fault were the rule, an injured seaman might have to bear damages higher than his degree of fault, for example in a case where a tortfeasor is insolvent and/or he or another tortfeasor has limited his liability according to the limitation act. Assuming in this case that Jo-Ja were entitled to limited liability, it would be liable for $50,000.00 in damages, and Niagara would be liable for $100,000.00 in damages. On a $360,000.00 judgment, Joia would bear $202,000.00 in damages, or 51% of the jury award, where he was only 5% at fault. 50 While the result we reach today may seem inequitable to a defendant, including Niagara, ultimately, in a contribution proceeding, it will be liable according to its degree of fault. Contribution between joint tortfeasors in admiralty is according to comparative fault. Maritime Overseas Corp. v. Northeast Petroleum Indus., 706 F.2d 349, 355 (1st Cir.1983). Therefore, in this case if Niagara were to pay a disproportionate share of the judgment, it could seek contribution against Jo-Ja, and no inequities would result to either party. Admittedly, assuming again that Jo-Ja successfully limited liability, under the joint and several rule, Niagara would bear a larger, disproportionate share of the damages. But the Supreme Court made clear in Edmonds that the seamen should not suffer this inequity. 51 Under the Court of Appeal's proportionate fault rule, however, there will be many circumstances when the longshoreman will not be able to recover in any way the full amount of his damages determined in his suit against the vessel. If, for example his damages are at least twice the benefits paid or payable under the Act and the ship is less than 50% at fault, the total of his statutory benefits plus the reduced recovery from the ship will not equal his total damages. 52 443 U.S. at 270, 99 S.Ct. at 2761. Moreover, the Court stated that in the Longshoremen's and Labor Worker's Compensation Act, Congress did not intend to place the burden of the inequity on the Longshoreman, whom the Act seeks to protect. Id. at 270, 99 S.Ct. at 2761. Likewise, we do not find that Congress in enacting the Jones Act intended to place this similar burden on an injured seaman. 53 Niagara argues that this court should, in any event, follow the trend towards the adoption of comparative negligence. While we decline this invitation, the comparative negligence system has its merits in a case where one tortfeasor incurs minimal negligence, and the other tortfeasors are insolvent, enjoy limited liability, or are otherwise protected by operation of law, or in instances where the plaintiff incurs substantial contributory negligence. However, the decision whether to continue this trend is more properly before a legislature. 54 We hold that defendants Niagara and Jo-Ja are jointly and severally liable to plaintiff in the amount of $342,000.00 and that plaintiff bears the loss of $18,000.00, representing 5% negligence assigned by the jury. 55