The Rogak Report: 20 Aug 2007 ** Labor Law - Maritime Construction **
YACHT CLUB'S PIER CONSTRUCTION DEEMED NOT TO BE A "MARITIME CONTRACT", THUS NO IMPLIED INDEMNIFICATION
Mulhern v. Manhasset Bay Yacht Club
2007 NY Slip Op 06420 Decided on August 14, 2007 Appellate Division, Second Department Edited by Lawrence N. Rogak
In this personal injury action, the third-party defendant appealed from a judgment of the Supreme Court, Queens County in favor of the third-party plaintiff on its implied indemnification claim in the sum of $2,023,599.54. The Appellate Division reversed, and dismissed the third party complaint.
The plaintiff was clearing debris from a beach when he was struck by a load of timber being hoisted by a barge-mounted crane. At the time of the accident, the plaintiff was employed by the third-party defendant, Costello Marine Contracting Corp., which had been hired by the third-party plaintiff, Manhasset Bay Yacht Club, to perform work on a waterfront renovation project which included the construction of new piers. The plaintiff and his wife commenced this action against Manhasset based upon a violation of Labor Law § 241(6), and Manhasset commenced a third-party action against Costello for indemnification and contribution. The third-party action sought indemnification from Costello on the theory that Costello had breached the warranty of workmanlike performance implied in maritime service contracts. The plaintiff also instituted a direct action to recover damages against Costello predicated, among other things, upon violation of the Jones Act (46 USC § 688).
During the liability trial, the Supreme Court instructed the jury that, as a matter of law, there was a maritime services contract between Manhasset and Costello, and that a warranty of workmanlike performance was implied in every such contract. At the conclusion of the liability trial, the jury returned a verdict finding that the violation of several Industrial Code provisions relating to the safe operation of mobile cranes had been a substantial factor in causing the accident, and Manhasset was held liable to the plaintiffs pursuant to Labor Law § 241(6) based upon these violations. The jury also found that the violation of the subject Industrial Code provisions constituted a breach of the warranty of workmanlike performance implied in maritime contracts, and on this basis the court awarded judgment in favor of Manhasset on its third-party claim for indemnification. Costello was also found liable to the injured plaintiff in the separate Jones Act action. Both Manhasset and Costello moved to set aside the verdict, and their motions were denied.
Shortly thereafter, Manhasset reached a settlement agreement with the plaintiffs on the issue of damages. An interlocutory judgment in favor of the plaintiffs and against Manhasset on the issue of liability, and in favor of Manhasset and against Costello on its third-party cause of action for indemnification, was subsequently entered.
"Under the circumstances of this case," held the Appellate Division, "we reject Manhasset's contention that the issue of indemnification is not before this court."
"The implied right to contractual indemnification upon which Manhasset prevailed in its third-party action grew out of the relationship between shipowners, stevedoring companies, and the longshoremen who are employed by such companies. In 1946 the United States Supreme Court held that longshoremen who were injured by a dangerous or defective condition aboard a vessel on which they were working could recover from the vessel's owner on the theory that the owner had breached its implied warranty of the seaworthiness of the ship (see Seas Shipping Co. v Sieracki, 328 US 85, 99-102; Lubrano v Waterman Steamship Co., 175 F3d 274, cert denied 528 US 933). Under the seaworthiness doctrine, a shipowner has an absolute, nondelegable duty to provide a seaworthy ship, and is strictly liable for the breach of this duty (see Knight v Alaska Trawl Fisheries, Inc., 154 F3d 1042, 1044)."
"The United States Supreme Court subsequently held that the Longshore and Harbor Workers' Compensation Act (hereinafter the LHWCA) precluded shipowners who had been held strictly liable to an injured longshoreman under the seaworthiness doctrine from obtaining contribution from the stevedoring company which employed the worker (see Halcyon Lines v Haenn Ship Ceiling & Refitting Corp., 342 US 282). These holdings placed shipowners in an 'unenviable position' because 'a longshoreman might be injured as a result of an unseaworthy condition caused wholly by the stevedore's negligence, and yet the shipowner, wholly without fault, could be held liable for the entire amount of compensatory damages' (Fairmont Shipping Corp. v Chevron Intern. Oil Co., 511 F2d 1252, 1255, cert denied 423 US 838)."
"In the landmark case of Ryan Stevedor. Co. v Pan-Atlantic Steam. Corp. (350 US 124), the United States Supreme Court fashioned a rule under which stevedores could be held accountable for their own negligence. In Ryan, the Supreme Court implied a warranty of workmanlike performance into every contract between a stevedore and a shipowner, holding that a stevedore who contracts with a shipowner implicitly promises to perform its services completely and safely (see Ryan Stevedor. Co. v Pan-Atlantic Steam. Corp., supra at 130-131; Lubrano v Waterman Steamship Co., supra at 275). The Supreme Court also read the contract between the shipowner and stevedore to give the shipowner an implied right of indemnification against the stevedore for damages sustained as a result of a breach of this implied warranty (Ryan, supra at 130; see Lubrano v Waterman Steamship Co., supra at 275)."
"In 1972 Congress amended the LHWCA by adding § 905(b), which abolishes an injured longshoreman's right to recover against a shipowner under the strict liability theory of seaworthiness, and the stevedore-employer's corresponding obligation to indemnify the shipowner (see Marcinowski v McCormack Boys Corp., 160 F Supp 2d 708; Matthews v U.S., 150 F Supp 2d 406). However, it has been recognized that the 1972 amendments do not necessarily bar a non-shipowner from seeking Ryan indemnity from an employing stevedore or maritime contractor for breach of an implied warranty of workmanlike performance (see Lubrano v Waterman Steamship Co., supra; Zapico v Bucyrus-Erie Co., 579 F2d 714, 721-722; see also Olsen v James Miller Mar. Serv., Inc., 16 AD3d 169; Hartley v City of New York, 228 AD2d 646; Pennisi v Standard Fruit & S.S. Co., 206 AD2d 290)."
"Although Ryan indemnity may be available to non-shipowners, Manhasset nevertheless has no right to prevail on an implied indemnification theory under federal maritime law unless its contract with Costello can be properly classified as one for maritime services. Generally, a contract is considered to be maritime in nature, and subject to admiralty jurisdiction, when its principal objective is related to maritime commerce (see Norfolk Southern Railway Co. v Kirby, 543 US 14, 23; Exxon Corp. v Central Gulf Lines, Inc., 500 US 603, 608). A maritime contract has also been defined as one 'relating to a ship in its use as such, or to commerce or navigation on navigable waters, or to transportation by sea or maritime employment' (J.A.R., Inc. v M/V Lady Lucille, 963 F2d 96, 98; BDL Intern. v Sodetal USA, Inc., 377 F Supp 2d 518). Here, Manhasset failed to demonstrate that the subject waterfront improvement contract bore any relation to maritime commerce. Moreover, there is no evidence that the subject contract related to a ship, navigation on navigable waters, or transportation by sea. Under these circumstances, the trial court erred in determining that the subject contract was one for maritime services which includes an implied warranty of workmanlike performance and may serve as the basis for implied contractual indemnification under maritime law. In the absence of such an implied right to contractual indemnification, the third-party complaint should have been dismissed."
"In view of our determination that implied contractual indemnification is not available to Manhasset under federal maritime law, we do not reach Costello's remaining contentions."
Comment: I started my legal career as a maritime claims attorney, and I have to shake my head in wonder at the Second Department's conclusion that construction of a pier does not relate to ships or navigation. A pier is to ships what an airport is to planes, and therefore saying that pier construction does not relate to navigation is like saying that airport construction does not relate to aviation (except, perhaps, if a pier is constructed on a landlocked pond which is suitable only for fishing). And yet, here we have a unanimous Appellate Division ruling which will require permission from the Court of Appeals to even have a prayer of being overturned.