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John W. Stone Oil Distributor, L.L.C. v. Penn Maritime, Inc.

United States District Court, E.D. Louisiana

November 16, 2018

JOHN W. STONE OIL DISTRIBUTOR, L.L.C., et al.
v.
PENN MARITIME, INC., et. al.

         SECTION: M (5)

          ORDER & REASONS

          BARRY W. ASHE UNITED STATES DISTRICT JUDGE.

         Before the Court is a Motion for Partial Summary Judgment[1] filed by defendant, Penn Maritime, Inc. (“Penn”), seeking dismissal of the cross-claim filed by co-defendant Bisso Towboat Co., Inc. (“Bisso”) for contractual defense and indemnity. Bisso opposed the motion.[2] Penn filed a reply in support of the motion, [3] to which Bisso responded with a surreply in opposition to the motion.[4] Having considered the parties' memoranda and the applicable law, the Court issues this Order & Reasons.

         I. BACKGROUND

         This litigation arises out of a January 15, 2016 maritime accident that occurred on the Mississippi River. However, the relevant facts concerning the business relationship between Bisso and Penn, which is a wholly-owned subsidiary of Kirby Offshore Marine (“Kirby”) (collectively, “Kirby/Penn”), predate the accident.

         In 2013, Charles Ferrer (“Ferrer”) of Kirby/Penn contacted Scott Slatten (“Slatten”), Bisso's president, to request a meeting to discuss the companies' entering into a business relationship whereby Bisso would provide towing services to Kirby/Penn's articulated-tug-and- barge units (“ATBs”) operating on the Mississippi River.[5] On May 8, 2013, Slatten met with Ferrer at Kirby's office in Houston, Texas, to discuss rates and terms, including Bisso's standard terms and conditions, also known as its “Tariff”[6] Slatten states in his affidavit that the rates set forth in the Tariff are a starting point for negotiations, and those rates apply in the absence of another negotiated agreement.[7] Slatten and Ferrer negotiated a rate of $550 per hour.[8] On May 10, 2013, Bisso's tugs began assisting Kirby/Penn's ATBs on the relevant portion of the Mississippi River, and Bisso has been Kirby/Penn's exclusive provider of tug services in that area ever since.[9]

         On February 11, 2014, Slatten again met with Ferrer at Kirby's office in Houston to discuss the general business relationship between the companies.[10] Thereafter, on June 14, 2014, Ferrer agreed by email to a rate increase to $825 per hour for Bisso tugs working with Kirby/Penn's ATBs on the Empire/Ostrica stretch of the Mississippi River, while the rate remained $550 per hour for other areas of the river.[11] Slatten and Ferrer had another meeting on September 23, 2014, to discuss the business relationship between the companies.[12]

         On February 26, 2015, Slatten sent an email to Bisso's customers, including Kirby/Penn through Ferrer and William Block (“Block”), who also worked for Kirby, advising them that Bisso would soon send a new Tariff with increased rates.[13] Slatten followed up on March 19, 2015, by sending an email to Kirby/Penn, again through Ferrer and Block, and Bisso's other customers, informing them of an approaching rate increase and Bisso's new Tariff, which were set to become effective on April 1, 2015.[14] A copy of the Tariff, along with the incorporated Towage Contract and Rates, Terms and Conditions (collectively, “Tariff/Towage Contract”) was attached to the email.[15] Penn does not dispute that Kirby/Penn received a copy of the Tariff/Towage Contract. The Tariff/Towage Contract contained, among others, the following Terms and Conditions:

These “Terms and Conditions” shall apply to all ship assist towing, escort towing and general towing or tug services on the Mississippi River for which no other express written contract signed by Bisso, or any applicable Tariff of a terminal or elevator facility in favor of Bisso exists. The ordering of any services provided by Bisso or the acceptance of any services provided by Bisso or on behalf of Bisso, constitutes acceptance to all of the “Terms and Conditions” and provisions stated herein and posted on Bisso Towboat's website www.bissotwoing.com at the time such services are ordered, verbally requested, or performed. Updates to theses “Terms and Conditions” may be made from time to time by posting updates to www.bissotowning.com.
The person or entity requesting or ordering the tug services warrants that it has full authority to bind the vessel to be assisted, and its Owners and Operators (and charterers, if any) or the Owner, to the Rates, Terms and Conditions and all provisions contained in this Tariff/Towage Contract, and shall indemnify, defend and hold harmless Bisso … from and against all costs, expenses, liabilities and damages of any nature whatsoever, including reasonable attorney's fees and costs, incurred and sustained in defending against any such liability or in enforcing this paragraph in consequence of such person or entity lacking such authority.
… (3) Bisso … shall not be liable for any losses or damages of any nature whatsoever, injury, or death sustained by any person or entity arising out of or occurring while such services are being rendered or incident thereto, so long as the assisting tugs follow and carry out the orders and directions of the master and/or pilot of the assisted vessel, unless such losses or damages are proven to have been caused solely by the willful failure of the assisting tug's captain or crew members to carry out such directions and orders of the assisted vessel, and (4) Owners and the assisted vessel, its owners, operators, charterers and insurers shall defend, indemnify and hold harmless Bisso … from and against any and all claims, demands, suits, costs, expenses, liabilities and damages of any nature whatsoever (including reasonable attorney's fees and costs incurred by Bisso) and from any cause whatsoever, including negligence of the assisting tug, its captains and crew members, except to the extent such losses or damages are caused solely by the willful failure of the assisting tug's captain or crew members to carry out the directions and orders of the assisted vessel as provided in subpart (3), resulting from or connected with damage, injury or death of any person or entity (including third parties), arising out of or occurring while such tug services are being rendered.[16]

         The Tariff/Towage Contract provides spaces for both Bisso and the customer to sign.[17] Neither Bisso nor Kirby/Penn signed the document.[18] Penn contends that it never agreed to the Terms and Conditions of Bisso's Tariff/Towage Contract.[19]

         After he sent the March 19, 2015 email, Slatten negotiated rates with Bisso's customers, using the Tariff as a starting point.[20] Slatten states in his affidavit, and he testified at his deposition, that he met with Ferrer on May 5, 2015, and gave him a copy of Bisso's new Tariff/Towage Contract.[21] According to Slatten, Ferrer acknowledged that he had already received the documents via email.[22] Slatten contends that, at that meeting, Ferrer agreed to increase the rate to $600 per hour, but requested that the new rate not go into effect until June 1, 2015.[23] At his deposition, Slatten testified that he and Ferrer did not specifically discuss the Terms and Conditions of the Tariff/Towage Contract; thus, Ferrer never expressly agreed to nor expressly disavowed such Terms and Conditions.[24]

         Slatten further states in his affidavit that he met with Ferrer and Block on October 13, 2015, in Houston, and neither of them expressed any concern about the Tariff/Towage Contract.[25] Bisso and Kirby/Penn's business relationship continues to this day, with Bisso providing assistance to Kirby/Penn's vessels approximately 50 times per month.[26]

         On January 15, 2016, during the existence of Bisso and Kirby/Penn's business relationship, the M/V Lucia and T/B Caribbean, which were both owned and operated by Penn, were mated as an articulated-tug-and-barge unit (“ATB Lucia/Caribbean”), and operating on the Mississippi River.[27] The ATB Lucia/Caribbean needed to turn around from an upriver direction at approximately mile 96.6 in order to proceed downriver to its destination.[28] Federal pilot Al Kostner boarded the M/V Lucia, and Bisso was contacted to provide a vessel to assist with the maneuver.[29] The M/V William S, a towboat that was owned and operated by Bisso, arrived at the scene.[30] The William S's mate, Tony Cutrer (“Cutrer”), was at the helm of the vessel while it assisted the ATB Lucia/Caribbean with the turnaround.[31] During the maneuver, the bow of the T/B Caribbean allided with a barge that was moored to a dock owned by plaintiff John W. Stone Oil Distributor, L.L.C. (“JWS Oil”).[32]

         On May 15, 2017, JWS Oil and its insurers (collectively, “Plaintiffs”) filed Civil Action No. 17-4942 against Penn and Bisso, in personam, and the vessels, in rem, alleging claims under the general maritime law for negligence and unseaworthiness, and seeking compensation for the property damage JWS Oil sustained as a result of the allision.[33] On June 9, 2017, JWS Oil, on behalf of itself and its underwriters, filed Civil Action No. 17-5700 against Penn, Bisso, and Kirby Corporation (“Kirby Corp.”), [34] in personam, and the vessels, in rem, alleging claims under the general maritime law for negligence and unseaworthiness, and seeking compensation for the property damage JWS Oil sustained, and for amounts JWS Oil and its insurers expended to mitigate potential pollution, all as a result of the allision.[35] The lawsuits were consolidated because they concern claims arising from the same maritime accident.[36]

         Thereafter, Bisso answered both complaints and filed cross-claims against Penn and Kirby Corp. for defense and indemnity pursuant to the Terms and Conditions of the Tariff/Towage Contract.[37] Penn answered Bisso's cross-claim, denying the existence of the contract and that it was obligated to defend and indemnify Bisso against Plaintiffs' claims.[38]

         Penn filed a cross-claim against Bisso alleging that the allision was solely the fault of the William S, because its crew willfully failed to follow the directions of the M/V Lucia's captain.[39]Penn also alleges that Bisso owes it indemnity and/or contribution under the general maritime law because Bisso was at fault for any damages Plaintiffs may have sustained as a result of the accident.[40] Further, Penn asserts a claim against Bisso for damages to the ATB Lucia/Caribbean.[41]

         II. PENDING MOTION

         Penn filed the instant motion for partial summary judgment seeking dismissal of Bisso's cross-claim against it for contractual defense and indemnity.[42] Penn argues that it did not ratify the Tariff/Towage Contract that contains the defense-and-indemnity provision; the defense-and- indemnity provision is voided due to Bisso's failure to follow the instructions of the captain of the M/V Lucia during the maneuver that led to the allision; and the defense-and-indemnity provision is void under the “Bisso rule” announced by the Supreme Court in Bisso v. Inland Waterways Corp., 349 U.S. 85 (1955).[43]

         III. LAW & ANALYSIS

         a. Summary Judgment Standard

         Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing Fed.R.Civ.P. 56(c)). “Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which the party will bear the burden of proof at trial.” Id. A party moving for summary judgment bears the initial burden of demonstrating the basis for summary judgment and identifying those portions of the record, discovery, and any affidavits supporting the conclusion that there is no genuine issue of material fact. Id. at 323. If the moving party meets that burden, then the nonmoving party must use evidence cognizable under Rule 56 to demonstrate the existence of a genuine issue of material fact. Id. at 324.

         A genuine issue of material fact exists if a reasonable jury could return a verdict for the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1996). The substantive law identifies which facts are material. Id. Material facts are not genuinely disputed when a rational trier of fact could not find for the nonmoving party upon a review of the record taken as a whole. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Equal Emp't Opportunity Comm'n v. Simbaki, Ltd., 767 F.3d 475, 481 (5th Cir. 2014). “[U]nsubstantiated assertions, ” “conclusory allegations, ” and merely colorable factual bases are insufficient to defeat a motion for summary judgment. See Anderson, 477 U.S. at 249-50; Hopper v. Frank, 16 F.3d 92, 97 (5th Cir. 1994). In ruling on a summary judgment motion, a court may not resolve credibility issues or weigh evidence. See Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398-99 (5th Cir. 2008). Furthermore, a court must assess the evidence, review the facts, and draw any appropriate inferences based on the evidence in the light most favorable to the party opposing summary judgment. See Tolan v. Cotton, 572 U.S. 650, __, 134 S.Ct. 1861, 1866 (2014); Daniels v. City of Arlington, 246 F.3d 500, 502 (5th Cir. 2001). Yet, a court only draws reasonable inferences in favor of the nonmovant “when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts.” Little Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (citing Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888 (1990)). Nor must the court consider uncited evidence in the record. Fed.R.Civ.P. 56(c)(3).

         After the movant demonstrates the absence of a genuine dispute, the nonmovant must articulate specific facts and point to supporting, competent evidence that may be presented in a form admissible at trial. See Lynch Props., Inc. v. Potomac Ins. Co. of Ill., 140 F.3d 622, 625 (5th Cir. 1998); Fed.R.Civ.P. 56(c)(1)(A) & (c)(2). Such facts must create more than “some metaphysical doubt as to the material facts.” Matsushita, 475 U.S. at 586. When the nonmovant will bear the burden of proof at trial on the dispositive issue, the moving party may simply point to insufficient admissible evidence to establish an essential element of the nonmovant's claim in order to satisfy its summary judgment burden. See Celotex, 477 U.S. at 322-25; Fed.R.Civ.P. 56(c)(B). Unless there is a genuine issue for trial that could support a judgment in favor of the nonmovant, summary judgment must be granted. See Little, 37 F.3d at 1075-76.

         b. The “Bisso Rule”[44]

         Penn argues that the indemnity provision in the Tariff/Towage Contract is void as a matter of public policy pursuant to the “Bisso rule.”[45] In Bisso v. Inland Waterways Corp., 349 U.S. 85 (1955), the Supreme Court considered “whether a towboat may validly contract against all liability for its own negligent towage.” Id. at 85 (emphasis added). The Bisso towboat involved in that case, the Cairo, was in the Mississippi River towing an oil barge that “had no motive power, steering apparatus, officers or crew, [and] its movements [were] being completely controlled by the Cairo” Id. at 86. The Cairo collided with a bridge pier and sank as a result of negligent towage on the part of those operating the Cairo. Id. Bisso's towage contract contained clauses that relieved Bisso “from liability for its negligence.” Id. The Supreme Court held that towers cannot “contract wholly to escape liability for their own negligent towing.” Id. at 94. The purpose of the rule is “(1) to discourage negligence by making wrongdoers pay damages, and (2) to protect those in need of goods and services from being overreached by others who have power to drive hard bargains[, ]” because “vessels in American ports [need to] be able to obtain towage free of monopolistic compulsions ” Id. at 91.

         In applying the “Bisso rule, ” the Fifth Circuit considers whether the exculpatory clause at issue shelters a party “from all liability, ” as did the clause at issue in Bisso, and invalidates those that do. Int'l Shipbreaking Ltd. LLC v. Smith, 44 Fed.Appx. 653, at *4 (5th Cir. June 11, 2002) (emphasis in original). On the other hand, the Fifth Circuit upholds exculpatory provisions in which a party retains “sufficient exposure to liability to deter negligence.” Id. (citing Todd Shipyards Corp. v. Turbine Serv. Inc., 674 F.2d 401, 410 (5th Cir. 1982) (upholding red letter clause limiting defendant's liability for negligence and breach of contract to $300, 000)).

         The exculpatory clause in Bisso's current Tariff/Towage Contract does not attempt to insulate Bisso from all liability for its own negligence. To the contrary, it states that Bisso is relieved from liability only if a Bisso captain and crew are following the orders of the master and/or pilot of the vessel being assisted by the tug, and that Bisso is not relieved from liability if the losses or damages are caused solely by the Bisso captain's or crew members' willful failure to carry out the directions or orders of the assisted vessel's master and/or pilot.[46] Thus, the exculpatory clause protects Bisso if its captain and crew are following orders given by personnel on the assisted tug (i.e., not making the decisions for themselves), and places liability back on Bisso if its captain or crew willfully fails to follow those orders and causes an accident. In the case at bar, Bisso was not the dominate party because the captain of Penn's vessel was giving the orders for Bisso's crew to follow. Indeed, there is a dispute about whether Cutrer willfully failed to follow the orders given by the captain of the Penn vessel, and whether that alleged failure caused the allision.

         Further, on the record before the Court, it appears that the towage contract was not adhesionary and the parties had equal bargaining power. Slatten stated in his affidavit that there are other towing operators on the relevant stretch of the Mississippi River, and Kirby/Penn is free to use the services of these other companies.[47] Moreover, Kirby/Penn's bargaining power is evidenced by the fact that it negotiated a lower rate for Bisso's services for this job than the standard rate stated on the Tariff[48]

         The facts of this case are markedly different than the scenario that existed in Bisso. There, the towboat was towing an unmanned barge and the Supreme Court found that the contract was adhesionary. Here, the Bisso towboat was assisting a vessel that was moving on its own power, and was taking orders from the captain of that vessel. Further, the contract here is not adhesionary because the parties had equal bargaining power and Kirby/Penn had the choice of other services. Therefore, the “Bisso rule” is ...


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