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Maritime Update: Summary Judgment Standard and the Scindia Duty Under 905(B) to Disclose Latent Defects on Turnover

Bill Schwartz - 

On December 18, 2017, the Fifth Circuit Court of Appeals overturned a district court decision on summary judgment and remanded in the case of Manson Gulf LLC v Modern American Recycling Service, Inc. The case was one of a determination of liability of a vessel owner to its contractors under the three duties of 905(B).

The Facts:

Manson Gulf is in the business of decommissioning oil-drilling platforms in the Gulf of Mexico. In 2015, Manson acquired one such platform from Freeport-McMoRan Oil & Gas. Manson extracted the 50-foot-tall, four-legged platform and placed the structure on a chartered barge. To lift the structure, Manson ordered four holes cut in the platform’s grating, adjacent to each of the support legs. Rigging chains could then be passed through the holes and around the legs to take hold of the platform. Each hole was approximately two feet by two feet. Manson left the holes uncovered and unmarked.

Modern American Recycling Service (MARS) is in the business of dismantling steel structures and selling the metal for scrap. MARS agreed to purchase and scrap the BA A-23-A platform, and Manson delivered the structure to MARS’ dock, located on Bayou Black, Louisiana. In June 2015, a Manson project engineer, Dustin Clement, warned MARS of oil in the platform’s pipes, but not of the unmarked holes. Afterwards, Clement left MARS’ dock and no Manson personnel remained. Jeff Smith was a MARS foreman who boarded the platform (still atop the barge) to locate the presence of oil. After Smith investigated for ten minutes, J.J. LaFleur joined Smith aboard the platform to lend a hand. LaFleur was an independent contractor, employed by MARS to take inventories, do inspections and perform other miscellaneous tasks. As Smith and LaFleur walked across the platform, they discussed the presence of oil and looked at the pipes that ran overhead. While turning, LeFleur stepped through an unmarked hole and fell 50 feet to the barge’s deck where he died from his injuries.

The Litigation:

Manson filed a complaint seeking exoneration or limitation from liability. MARS answered the complaint and asserted various claims and defenses. Meanwhile, LaFleur’s surviving spouse filed claims for damages against Manson and MARS, alleging negligence under both maritime and Louisiana law. Manson and MARS then moved for summary judgment and the district court granted both parties’ motions. The District Court found neither Manson nor MARS liable under § 905 of the Longshore and Harbor Workers’ Compensation Act (LHWCA). The LaFleur claimants appealed only from the summary judgment with respect to Manson.

The Decision:

Section 905(b) of the LHWCA governs the present suit and supplies the relevant tort-based duties owed by vessel owners to longshoremen/contractors. The  Supreme Court clarified in Scindia that vessel-owner liability sounded only in negligence. To that end, Scindia articulated three “narrow duties” owed by the vessel owner: “(1) a turnover duty, (2) a duty to exercise reasonable care in the areas of the ship under the active control of the vessel, and (3) a duty to intervene.” The turnover duty encompasses two distinct-but-related obligations. First, the vessel owner “owes a duty to exercise ordinary care under the circumstances to turn over the ship and its equipment in such condition that an expert stevedore can carry on stevedoring operations with reasonable safety.” And second, the vessel owner “owes a duty to warn the stevedore of latent or hidden dangers which are known to the vessel owner or should have been known to it.” Id. However, a vessel owner need not warn of “dangers which are either: (1) open and obvious, or (2) dangers a reasonably competent stevedore should anticipate encountering.”

The parties framed the turnover duty in terms of the duty-to-warn component, several elements of which are undisputed. First, the hole was, needless to say, a “danger.” Therefore, the validity of the LaFleur claimants’ “turnover-duty” claim hinged on whether the hole was hidden or was instead: (1) open and obvious, or (2) a danger “a reasonably competent stevedore” should have anticipated. The district court concluded the hole was both open and obvious and to be anticipated by a competent stevedore, and on that basis, granted summary judgment for Manson. However, while some evidence in the record supported that finding, record evidence also provided a contrasting account, supporting instead the notion that the hole was a hidden hazard, one a contractor would not anticipate.

By adopting one side of the story, but neglecting the contrary account, the court, in essence, found one version more credible than the other. Summary judgment forbids credibility determinations on a cold summary-judgment record. While judicial efficiency is a “noble goal,” this material factual dispute required that the matter go to the jury. The case was therefore remanded back for trial on the merits.

The full copy of the decision can be found here.

If you have any questions regarding this maritime matter, please contact Bill Schwartz at (504) 569-2900 or wschwartz@bhbmlaw.com.


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