Justia Contracts Opinion Summaries

In this dispute between a boat owner and his insurance company, the First Circuit affirmed the judgment of the district court in favor of the insurer, holding that the district court properly applied the doctrine of uberrimae fidei in this case.When Defendant applied for an insurance policy for his yacht from an entity later acquired by Plaintiff he failed to disclose that he had grounded a forty-foot yacht in Puerto Rico. Plaintiff later sought a declaratory judgment voiding the policy on the grounds that Defendant had failed to honor his duty of utmost good faith, known as uberrimae fidei in maritime law, in acquiring the policy and had therefore breached the warranty of truthfulness contained in the policy. The district court concluded that Plaintiff was entitled to void the policy. The First Circuit affirmed, holding that the district court correctly concluded that the uberrimae fidei doctrine entitled Plaintiff to a declaration that the policy was void. View "QBE Seguros v. Morales-Vazquez" on Justia Law

Siemens shipped two electrical transformers from Germany to Kentucky. K+N arranged the shipping, retaining Blue Anchor Line. Blue Anchor issued a bill of lading, in which Siemens agreed not to sue downstream Blue Anchor subcontractors for any problems arising out of the transport from Germany to Kentucky. K+N subcontracted with K-Line to complete the ocean leg of the transportation. Siemens contracted with another K+N entity, K+N Inc., to complete the land leg of the trip from Baltimore to Ghent. K+N Inc. contacted Progressive, a rail logistics coordinator, to identify a rail carrier. They settled on CSX. During the rail leg from Maryland to Kentucky, one transformer was damaged, allegedly costing Siemens $1,500,000 to fix.Progressive sued CSX, seeking to limit its liability for these costs. Siemens sued CSX, seeking recovery for the damage to the transformer. The actions were consolidated in the Kentucky federal district court, which granted CSX summary judgment because the rail carrier qualified as a subcontractor under the Blue Anchor bill and could invoke its liability-shielding provisions. The Sixth Circuit affirmed. A maritime contract, like the Blue Anchor bill of lading, may set the liability rules for an entire trip, including any land-leg part of the trip, and it may exempt downstream subcontractors, regardless of the method of payment. The Blue Anchor contract states that it covers “Multimodal Transport.” It makes no difference that the downstream carrier was not in privity of contract with Siemens. View "Progressive Rail Inc. v. CSX Transportation, Inc." on Justia Law

CARCO sub-chartered an oil tanker from tanker operator Star, which had chartered it from Frescati. During the tanker’s journey, an abandoned ship anchor punctured the tanker’s hull, causing 264,000 gallons of heavy crude oil to spill into the Delaware River. The 1990 Oil Pollution Act, 33 U.S.C. 2702(a), required Frescati, the vessel’s owner, to cover the cleanup costs. Frescati’s liability was limited to $45 million. The federal Oil Spill Liability Trust Fund reimbursed Frescati for an additional $88 million in cleanup costs.Frescati and the government sued, claiming that CARCO had breached a clause in the subcharter agreement that obligated CARCO to select a berth that would allow the vessel to come and go “always safely afloat,” and that obligation amounted to a warranty regarding the safety of the selected berth. Finding that Frescati was an implied third-party beneficiary of the safe-berth clause, the Third Circuit held that the clause embodied an express warranty of safety.The Supreme Court affirmed. The safe-berth clause's unqualified plain language establishes an absolute warranty of safety. That the clause does not expressly invoke the term “warranty” does not alter the charterer’s duty, which is not subject to qualifications or conditions. Under contract law, an obligor is strictly liable for a breach of contract, regardless of fault or diligence. While parties are free to contract for limitations on liability, these parties did not. A limitation on the charterer’s liability for losses due to “perils of the seas,” does not apply nor does a clause requiring Star to obtain oil-pollution insurance relieve CARCO of liability. View "CITGO Asphalt Refining Co. v. Frescati Shipping Co." on Justia Law

Geico Marine filed suit seeking a declaration that a navigational limit in the policy with defendant that required the vessel to be north of Cape Hatteras, North Carolina, during hurricane season barred coverage. The district court ruled against Geico Marine and declared that the policy covered the loss.The Eleventh Circuit reversed and remanded, holding that the navigational limit barred coverage. In this case, the policy was not ambiguous about whether it contained a navigational limit when the loss occurred, and the plain language of the policy contained a navigational limit. Because the navigational limit was dispositive where the vessel suffered damage while outside the covered navigational area, the court need not address the breach of a duty of uberrimae fidei. View "Geico Marine Insurance Co. v. Shackleford" on Justia Law

After plaintiff, an employee of Centaur, was injured while offloading a generator from a crew boat to a barge, he filed suit against the owner and operator of the boat (River Ventures) and Centaur for vessel negligence under general maritime law and the Jones Act. River Ventures cross-claimed against Centaur for contractual indemnity, and the district court granted summary judgment to Centaur.The Fifth Circuit reversed, holding that the district court misapplied In re Larry Doiron, Inc., 879 F.3d 568 (5th Cir.) (en banc), cert. denied, 138 S. Ct. 2033 (2018), and erroneously concluded that the Dock Contract at issue was non-maritime. The court held that Doiron's two-part test applied as written to all mixed-services contracts: in order to be maritime, a contract must be for services to facilitate activity on navigable waters and must provide, or the parties must expect, that a vessel will play a substantial role in the completion of the contract. Applying the Doiron test, the court held that the Dock Contract at issue required services to be performed to facilitate the loading, offloading, and transportation of coal and petroleum coke via vessels on navigable waters. Furthermore, Doiron's second prong was satisfied where the Dock Contract made clear that the parties expected DB-582 to play a significant role in the completion of the work. Accordingly, the court remanded for further proceedings. View "Barrios v. Centaur, LLC" on Justia Law

Dimond was hired by a Chinese manufacturer to “rig, dismantle, wash, and pack,” and ship used automotive assembly-line equipment to China. Dimond, which lacked experience in international shipment, hired BDP. Dimond asserted that BDP did not disclose that it was not a licensed Ocean Transport Intermediary by the Federal Maritime Commission. In May 2011, BDP informed Dimond that it had obtained a ship and sent a booking note to Dimond. Between May and October 2011, Dimond dismantled and weighed the equipment and prepared a “preliminary" packing list. BDP allegedly provided the preliminary packing list when it obtained quotes from third-party contractors to load the Equipment. In October 2011, BDP notified Dimond that the ship was no longer available. Dimond asserted that BDP “without Dimond’s knowledge, consent or approval” hired Logitrans to perform BDP’s freight forwarding duties. BDP and Logitrans hired a ship. As a result of many ensuing difficulties, Dimond became involved in multiple lawsuits, including suits with its Chinese customer and the stevedores. Dimond sued BDP in July 2013 but never served BDP with the complaint. When the summons expired, the district court dismissed without prejudice. In August 2017, Dimond filed a Motion to Amend and Praecipe for Issuance of Amended Summons for its 2013 suit. The Sixth Circuit affirmed the denial of the motion. The suit was not timely filed within the one-year statute of limitations set forth in the Carriage of Goods by Sea Act. View "Dimond Rigging Co. v. BDP International, Inc." on Justia Law

In 2014, Vesuvius and ACBL entered into a shipping contract to transport olivine sand from New Orleans to Vesuvius’s Wurtland, Kentucky facility by river barge. The January 2015 shipment arrived at the discharge port on February 20. Vesuvius’s employees inspected the cargo, found it damaged by excess moisture, and notified ACBL. ACBL arranged for a surveyor to perform an inspection that same day. The surveyor found no structural defect in the barge and concluded that the sand was wet when it was loaded. In transit, some of that water evaporated, condensed on the overhead portion of the cargo space, and dripped back onto the sand. The surveyor filed his report with ACBL on February 23. ACBL promptly contacted Vesuvius to disclaim any liability. On February 1, 2017, Vesuvius filed suit. The Seventh Circuit affirmed dismissal of the case. The contract contained a clear limitations provision requiring the parties to bring disputes within four months of an incident. Standing on its own, the limitations provision might be ambiguous, but read in context with the rest of the contract, there is no question that Vesuvius was required to file suit no later than four months after it discovered the damage. View "Vesuvius USA, Corp. v. American Commercial Lines, LLC" on Justia Law

A Himalaya Clause that protects downstream carriers from suit by a cargo owner does not, in and of itself, limit the cargo owner's ability to receive the recovery to which it is entitled. After Royal SMIT's transformers were damaged during shipment from the Netherlands to Louisiana, Royal SMIT and its insurers filed suit against the carriers with whom the intermediary had contracted. The Fifth Circuit affirmed the district court's grant of summary judgment for the carriers, holding that the through bill of lading’s Himalaya Clause protected downstream carriers from being sued by Royal. The court rejected Royal's claims that there was a material issue of fact as to whether the parties agreed to be bound by the Himalaya Clause and held that Royal failed to articulate a basis for overriding the clear terms of the through bill of lading. View "Royal SMIT Transformers BV v. Onego Shipping & Chartering, BV" on Justia Law

A maritime lien may be asserted by an entity when that entity contracts with a vessel's owner, charterer, or other statutorily-authorized person for the provision of necessaries and the necessaries are supplied pursuant to that agreement even if by another party. This appeal arose from competing maritime lien claims arising from the delivery of fuel to a vessel between the assignee of a maritime fuel contract supplier and the physical supplier. The district court denied both maritime liens sua sponte and entered summary judgment for the vessel. At issue was which parties were entitled to the maritime lien under the Commercial Instruments and Maritime Liens Act (CIMLA), 46 U.S.C. 31301 et seq.The Second Circuit held that an entity such as O.W. Denmark, which agreed to supply necessaries and then contracts with one or more intermediaries to supply them, can itself be deemed to have "provided" necessaries under CIMLA. Therefore, ING, as O.W. Denmark's purported assignee, was entitled to assert a maritime lien against the vessel because O.W. Denmark could assert such a lien. The court also held that an unsecured entity such as CEPSA was not entitled to a maritime lien for the bunkers it supplied, or in the alternative, a recovery based upon equitable principles. Finally, the district court erred when it sua sponte granted summary judgment for the vessel. Accordingly, the court affirmed in part, vacated in part, and remanded for further proceedings. View "ING Bank N.V. v. M/V TEMARA" on Justia Law

Plaintiff filed suit seeking enforcement of an English judgment against defendant for failure to tender payment under a freight-derivative contract and asserted admiralty jurisdiction under 28 U.S.C. 1333(1). The Second Circuit vacated the district court's holding that admiralty jurisdiction did not exist. The court held that, considering plaintiff's identity as a shipping business together with the substance of the agreement, the agreement's principal objective was to further plaintiff's shipping business. Therefore, the court held that the agreement was a maritime contract subject to federal‐court jurisdiction under section 1333(1). The court remanded for further proceedings. View "d'Amico Dry Ltd. v. Primera Maritime (Hellas) Ltd." on Justia Law