Filed: Nov. 04, 2005
Latest Update: Feb. 21, 2020
Summary: United States Court of Appeals Fifth Circuit F I L E D IN THE UNITED STATES COURT OF APPEALS November 4, 2005 FOR THE FIFTH CIRCUIT Charles R. Fulbruge III Clerk No. 04-30937 LCI SHIPHOLDINGS, INC., for itself and as the successor-in-interest to FOREST LINES, INC., Plaintiff-Counter Defendant-Appellant, versus MULLER WEINGARTEN AG, ET AL., Defendants, FRACHT FWO AG, Defendant-Counter Claimant-Apellee Appeal from the United States District Court for the Eastern District of Louisiana USDC No. 2:03
Summary: United States Court of Appeals Fifth Circuit F I L E D IN THE UNITED STATES COURT OF APPEALS November 4, 2005 FOR THE FIFTH CIRCUIT Charles R. Fulbruge III Clerk No. 04-30937 LCI SHIPHOLDINGS, INC., for itself and as the successor-in-interest to FOREST LINES, INC., Plaintiff-Counter Defendant-Appellant, versus MULLER WEINGARTEN AG, ET AL., Defendants, FRACHT FWO AG, Defendant-Counter Claimant-Apellee Appeal from the United States District Court for the Eastern District of Louisiana USDC No. 2:03-..
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United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
November 4, 2005
FOR THE FIFTH CIRCUIT Charles R. Fulbruge III
Clerk
No. 04-30937
LCI SHIPHOLDINGS, INC., for itself and
as the successor-in-interest to FOREST LINES, INC.,
Plaintiff-Counter Defendant-Appellant,
versus
MULLER WEINGARTEN AG, ET AL.,
Defendants,
FRACHT FWO AG,
Defendant-Counter Claimant-Apellee
Appeal from the United States District Court for
the Eastern District of Louisiana
USDC No. 2:03-CV-1396-C
_________________________________________________________
Before REAVLEY, HIGGINBOTHAM and GARZA, Circuit Judges.
PER CURIAM:*
We must consider whether a freight forwarder, who is found liable to an
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should
not be published and is not precedent except under the limited circumstances set forth in
5TH CIR. R. 47.5.4.
1
insurance company in a German court, and satisfies that judgment, has a tort
indemnity claim under general maritime law against a carrier. The district court did
not directly address this issue, but assumed that the freight forwarder had a tort
indemnity claim. Holding that under the facts of this case, the freight forwarder
does not have a tort indemnity claim under general maritime law, we reverse and
remand with instructions.
I.
Muller Weingarten AG (“Muller”) contracted to sell press lines to General
Motors (“GM”). Fracht FWO AG (“Fracht”), a German freight forwarder,1
contracted with Muller to arrange for the shipment and transportation of Muller’s
press lines to GM. Fracht booked passage for the shipment to the United States
with Forest Lines, Inc. (“Forest Lines”), predecessor-in-interest to LCI
Shipholdings, Inc. (“LCI”),2 through Forest Lines’ booking agent, Herfurth & Co.
Shipping GmBH (“Herfurth”). Herfurth issued a datafreight receipt naming Muller
as shipper and Forest Lines as carrier for the presses, which were damaged in
transit.
1
A freight forwarder “arranges for, coordinates, and facilitates cargo
transport, but does not itself transport cargo.” Norfolk S. Ry. Co. v. Kirby, 125
S. Ct. 385, 390 (2004).
2
The carrier is interchangeably referred to as “Forest Lines” or “LCI.”
2
Allianz Versicherungs AG (“Allianz”), an insurance company, provided
coverage to Muller for the cargo damage and paid the claim. As subrogee of
Muller, Allianz sued Fracht in German court, which found, after a trial, that Fracht
was a fixed cost freight forwarder under its contract with Muller, and thus, liable to
Allianz to the same extent as the actual carrier.3 Thereafter, Fracht settled with
Allianz.
Fracht brought the instant suit seeking indemnity against LCI for the amount
it paid Allianz to settle the claim. Fracht claimed that after it satisfied the German
court judgment by paying Allianz, it became vested with two separate and distinct
causes of action: (1) a subrogation claim, and (2) a tort indemnity claim. Fracht
admits that its subrogation claim is subject to the package limitation of the Carriage
of Goods by Sea Act (COGSA), 46 U.S.C. § 1304(5) as set forth in the datafreight
receipt between LCI and Muller. This is so because the subrogee (Fracht) does not
obtain redress in its own right but only as successor to the rights of the subrogor
(Allianz and Muller). In re Admiral Towing & Barge Co., 767 F.2d 243, 250 (5th
3
The status of “fixed cost freight forwarder” is unique to German law and is
not recognized in the United States. Under German law, the fixed cost freight
forwarder performs services at a fixed rate, rather than for a percentage commission
of the freight charged by the actual carrier. German law attributes to the fixed cost
freight forwarder the liabilities of a carrier, rendering the fixed cost freight forwarder
liable whenever the actual carrier would be liable.
3
Cir. 1985). Therefore, Fracht can obtain no greater rights than Allianz and Muller
had, and LCI would be able to invoke the COGSA package limitation against
Allianz and Muller. Id.
However, Fracht argues that its tort indemnity claim is not subject to the
COGSA package limitation. LCI argues that Fracht’s causes of action are identical
and derive from the same source—legal subrogation of Allianz and Muller. Further,
LCI contends that Fracht does not have a separate and independent tort indemnity
claim under general maritime law. In granting Fracht’s motion for summary
judgment and denying LCI’s motion for summary judgment, the district court held
that LCI could not limit its liability under the COGSA package limitation and its
datafreight receipt against Fracht’s tort indemnity claim. However, before the
district court could resolve this issue, it was required to first determine whether
Fracht had a tort indemnity claim under general maritime law. It did not do so, but
assumed that Fracht had a tort indemnity claim under general maritime law. We
begin with that issue.
II.
The availability of common law indemnity under general maritime law is
limited. This Court has outlined three ways in which a valid tort indemnity claim
may arise: (1) when there is an indemnitor and indemnitee relation and consequent
4
duty owed; (2) when there is a significant difference in the indemnitor and
indemnitee’s degree of conduct; and (3) when there is a difference in the character
of the duties owed by the two to the injured party. Cities Serv. Co. v. Lee-Vac,
Ltd., 761 F.2d 238, 240 (5th Cir. 1985) (citing W. PROSSER, THE LAW OF TORTS §
51 (4th ed. 1971)). In addition, in limited circumstances, this Court has recognized
a tort indemnity claim based on the warranty of workmanlike performance
("WWLP") implied in maritime contracts under Ryan Stevedoring Co., Inc. v.
Pan-Atlantic S.S. Corp., 350 U.S. 124,
76 S. Ct. 232,
100 L. Ed. 133 (1956). Fracht
claims that the first and third types of tort indemnity, along with an implied WWLP
are present in this case. We will address each in turn.
A.
The first type of tort indemnity recognized in Cities Service Co. occurs when
there is an indemnitor and indemnitee relation and consequent duty owed. The
Supreme Court illustrated this example in Federal Marine Terminals, Inc. v.
Burnside Shipping Co., Ltd., 394 U.S. 404,
89 S. Ct. 1144,
22 L. Ed. 2d 371 (1969).
In Burnside, a stevedoring company brought an indemnity action against a
shipowner to recover compensation that the stevedore was required to pay to the
widow of a longshoreman injured by shipowner’s negligence. The Court held that
federal maritime law imposes on the shipowner a duty of care to longshoremen, and
5
thus, the shipowner’s breach of its duty gave rise to a cause of action by the
stevedore to recover payments made by the stevedore because of the shipowner’s
negligence. Id. at 416-17. In essence, the stevedoring company and the shipowner
had a special relationship and, therefore, the shipowner owed the stevedoring
company a duty of care not to injure any of its longshoremen.
The instant case does not involve a shipowner and stevedore, rather a
shipowner and a freight forwarder, and further, there is no special relationship (or
consequential duty owed therefrom) between Forest Lines, the shipowner and
carrier, and Fracht, the freight forwarder, that can be compared to the shipowner’s
relationship with and duty owed to a stevedoring company. To the contrary, the
damages claimed in this case arise from damage to Muller’s cargo, and any duty
breached by Forest Lines that could have caused the damage was a duty to Muller,
the shipper, not to Fracht, the freight forwarder. Accordingly, Burnside does not
provide a basis for finding tort indemnity in the present case.
B.
The third type of tort indemnity recognized in Cities Service Co. occurs when
there is a difference in the character of duty owed to an injured third party. This is
illustrated by Savoie v. LaFourche Boat Rentals, Inc., 627 F.2d 722, 723-24 (5th
Cir. 1980), wherein this Court held that where a seaman’s employer is required to
6
make maintenance and cure payment to an innocent seaman, because the employer
is bound to do so by the special duty imposed upon it by admiralty law when an
innocent seaman is injured by a third party,4 the otherwise innocent employer is
entitled to indemnification from the negligent third party.
We find that Fracht’s attempt to fit itself under the this type of tort indemnity
is misguided. Tort indemnity based on the indemnitee’s special duty owed to the
injured party is not proper in this case. The payment for which Fracht seeks
indemnification does not arise out of some special duty it owed to Muller.
C.
Finally, Fracht argues that LCI owed it indemnity based upon a claimed
breach of the WWLP. To the extend that WWLP as recognized in Ryan
Stevedoring Co. still exists in this Circuit, it has been questioned, if not wholly
displaced, as the appropriate model for indemnification of cargo damage. Rockwell
Int’l Corp. v. M/V Incotrans Spirit, 998 F.2d 316, 319 (5th Cir. 1993) (“We
4
“A seaman's right to maintenance and cure is implied in the employment
contract between seaman and shipowner. It ‘in no sense is predicated on the fault
or negligence of the shipowner.’ Thus, an owner of a vessel is almost automatically
liable [for maintenance and cure].” Brister v. A.W.I., Inc., 946 F.2d 350, 360 (5th
Cir. 1991) (quoting Aguilar v. Standard Oil Co. of New Jersey,
318 U.S. 724, 730,
63 S. Ct. 930, 934,
87 L. Ed. 1107 (1943)) (internal citations omitted).
7
recognize that Ryan indemnification continues to exist, but are reluctant to expand it
beyond the personal injury/seaworthiness context from which it arose.”) (citation
omitted); Bosnor, S.A. de C.V. v. Tug L.A. Barrios, 796 F.2d 776, 785-86 (5th Cir.
1986) (doubting continued vitality of the Ryan approach outside the personal injury
context); Bass v. Phoenix Seadrill/78, Ltd.,
749 F.2d 1154, 1167 (5th Cir. 1985)
(same); Gator Marine Serv. Towing, Inc. v. J. Ray McDermott & Co.,
651 F.2d
1096, 1100 (5th Cir. 1981) (same). Because this case is outside the personal
injury/seaworthiness context, we find no basis for the application of the theory of
breach of a WWLP.
III.
It follows that the facts of the present case do not provide any basis for a tort
indemnity claim. Fracht’s only cause of action is for subrogation, which is subject
to the COGSA package limitation. The district court’s grant of Fracht’s motion for
summary judgment is reversed and this case is remanded with instructions to limit
LCI’s liability to Fracht in accordance with the COGSA package limitation.
REVERSED and REMANDED.
8
