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Stone v. International Marine Carriers, Inc. (6/21/96), 918 P 2d 551
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NOTICE: This opinion is subject to correction before publication in
the Pacific Reporter. Readers are requested to bring errors to the
attention of the Clerk of the Appellate Courts, 303 K Street,
Anchorage, Alaska 99501; (907) 264-0607; Fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
THOMAS STONE, )
) Supreme Court Nos. S-6261/6262
Appellant/ )
Cross-Appellee, ) Superior Court No.
) 3AN-92-8322 CI
v. )
) O P I N I O N
INTERNATIONAL MARINE )
CARRIERS, INC., ) [No. 4358 - June 21, 1996]
)
Appellee/ )
Cross-Appellant.)
_______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Peter Michalski, Judge.
Appearances: John R. Fitzgerald, Tugman &
Clark, Anchorage for Appellant/Cross-Appellee.
Michael T. Stehle, Bogle & Gates, Anchorage,
for Appellee/Cross-Appellant.
Before: Rabinowitz, Matthews, Compton, and
Eastaugh, Justices. [Moore, Chief Justice,
not participating.]
RABINOWITZ, Justice.
I. INTRODUCTION
This appeal requires us to determine whether the Suits in
Admiralty Act (SAA), 46 U.S.C. sec.sec. 741-52, or the Public
Vessels Act (PVA), 46 U.S.C. sec.sec. 781-90, precludes an injured
seaman's claims against a private contractor for willful failure to
pay maintenance and cure. This appeal also involves the superior
court's rulings on several motions relating to discovery and
discovery sanctions.
II. FACTS AND PROCEEDINGS
Thomas Stone was hired by International Marine Carriers,
Inc. (IMC) to work as an able-bodied seaman aboard the U.S.N.S.
SEALIFT ANTARCTIC. Stone alleges that he was injured while casting
off from the Port of Anchorage on November 1, 1990. On November
19, when the ship docked in San Francisco, he was taken to a doctor
who determined that he was unfit for duty due to a knee injury.
On or about December 14, 1990, Stone was hired by Crowley
Caribbean Transport (Crowley) to work as an able-bodied seaman
aboard the M/V SENATOR. (EN1) Stone allegedly injured his back on
January 26, 1991. He left the vessel on January 29 and began
receiving maintenance and cure from Crowley. The injuries Stone
sustained aboard the SENATOR may have been related to the injuries
he sustained aboard the ANTARCTIC.
On February 4, 1991, Stone contacted Raymond Douglas,
IMC's manager of marine personnel and marine insurance, to inquire
about maintenance payments for November 19 through December 14,
1990. A protracted dispute ensued regarding the money that Stone
believed was owed to him. Stone alleges that Douglas repeatedly
ignored and lied to him in an effort to avoid responsibility for
Stone's maintenance and cure. He also claims that as a result of
IMC's "callous refusal"to pay his maintenance and cure, he had a
nervous breakdown for which he has received extensive treatment.
Stone filed a complaint against IMC and Crowley on
September 11, 1991. As against IMC, Stone's complaint included
claims for negligence under the Jones Act, unseaworthiness,
maintenance and cure, punitive damages, and failure to pay
maintenance and cure.
On September 16, IMC wrote to Stone's counsel stating
that under the Suits in Admiralty Act (SAA), 46 U.S.C. sec.sec.
741-52, and the Public Vessels Act (PVA), 46 U.S.C. sec.sec. 781-
90, the United States rather than IMC is the proper defendant in
Stone's suit. IMC requested Stone's counsel to voluntarily dismiss
the action. Stone's counsel acknowledged receipt of the letter but
declined to dismiss the suit against IMC.
IMC then filed a motion to dismiss. IMC provided
documentation that the U.S.N.S. SEALIFT ANTARCTIC was owned by the
United States and that under the SAA and PVA Stone's exclusive
remedy was to sue the government. (EN2) Stone filed a partial
opposition to IMC's motion, agreeing to dismiss his claims against
IMC for negligence under the Jones Act, unseaworthiness, and
maintenance and cure. However, Stone argued that his claims for
compensatory and punitive damages arising out of IMC's willful
failure to pay maintenance and cure remained valid.
Thereafter, Stone filed a motion for summary judgment on
his claims for compensatory and punitive damages arising out of
IMC's failure to pay maintenance and cure. IMC filed an opposition
and cross-motion for summary judgment.
The superior court granted IMC's Motion to Dismiss and/or
for Summary Judgment. In addition, the superior court granted
IMC's motion to stay discovery, denied Stone's motion for
sanctions, and denied Stone's motion to compel. IMC then moved for
full attorney's fees, arguing that Stone and his attorney failed to
consider the law before filing the complaint and engaged in a
pattern of burdensome and harassing litigation practices. The
superior court denied this motion and awarded IMC only 20 percent
of its attorney's fees. Stone appeals, and IMC cross-appeals.
III. DISCUSSION
A. Standard of Review
This is an appeal from the superior court's grant of
IMC's motion to dismiss or for summary judgment. Where matters
outside the pleadings are presented to and not excluded by the
court in resolving a motion to dismiss, such motion will be treated
as one for summary judgment. (EN3) When reviewing a grant of
summary judgment, this court must determine "whether there are any
genuine issues of material fact and, if not, whether the moving
party is entitled to judgment [as a matter of law] on the
established facts." Zeilinger v. Sohio Alaska Petroleum Co., 823
P.2d 653, 656 n.6 (Alaska 1992). Determining whether IMC is
entitled to judgment as a matter of law requires this court to
interpret provisions of the Suits in Admiralty Act. We exercise
independent judgment when the interpretation and application of a
statute is at issue. Deal v. Kearney, 851 P.2d 1353, 1356 n.4
(Alaska 1993).
This appeal also involves the superior court's rulings on
Stone's motion to compel further discovery, Stone's motion for
sanctions, IMC's motion for a stay of discovery, and IMC's motion
for attorney's fees. We review such rulings for an abuse of
discretion. R.E. v. State, 878 P.2d 1341, 1345 (Alaska 1994)
(motion to compel); Crook v. Mortenson-Neal, 727 P.2d 297, 306
(Alaska 1986) (motion for attorney's fees); Hart v. Wolff, 489 P.2d
114, 118 (Alaska 1971) (motion for sanctions). Abuse of discretion
will be found where this court is left with a definite and firm
conviction, after reviewing the whole record, that the trial court
erred in its ruling. First Nat'l Bank v. Office of Public
Advocacy, 902 P.2d 330, 334 (Alaska 1995).
B. The Exclusivity Clause of the Suits in Admiralty Act
The primary question presented by this appeal is whether
the exclusivity clause of the Suits in Admiralty Act precludes an
injured seaman from proceeding against the private operator of a
government vessel on a theory of willful failure to pay maintenance
and cure. (EN4) The clause in question, 46 U.S.C. sec. 745,
provides in pertinent part that
where a remedy is provided by this chapter it
shall hereafter be exclusive of any other
action by reason of the same subject matter
against the agent or employee of the United
States . . . whose act or omission gave rise
to the claim . . . .
By voluntarily dismissing his claim for maintenance and
cure against IMC, Stone has seemingly acknowledged that the SAA
designates the United States as the proper party to sue on his
claim for maintenance and cure. There can be little question that
this is correct. (EN5)
Stone, however, is not now suing IMC for unpaid
maintenance and cure, but rather for damages resulting from IMC's
willful failure to pay that maintenance and cure. He characterizes
this claim as one which "seeks recovery for a tort committed by the
claims department and/or Ray Douglas of IMC, and not for a tort
committed on board a vessel operated for the United States." Thus,
we must decide whether this claim for damages resulting from a
willful failure to pay maintenance and cure also is precluded by
the SAA.
Several federal courts have recently addressed this
question and reached conflicting results. At least four district
courts and one court of appeals have held that a claim for willful
failure to pay maintenance and cure against a private contractor is
precluded by section 745. Manuel v. United States, 50 F.3d 1253
(4th Cir. 1995); Stewart v. United States, 903 F. Supp. 1540 (S.D.
Ga. 1995); Smith, 896 F. Supp. at 75; Fratus v. United States, 859
F. Supp. 991 (E.D. Va. 1994); Farnsworth v. Sea-Land Serv., 1989 WL
20544 (E.D. La. 1989), aff'd, 896 F.2d 552 (5th Cir. 1990), cert.
denied, 498 U.S. 880 (1990). Three other district courts have
concluded that such claims are not precluded. Abogado, 890 F.
Supp. at 626; Henderson v. International Marine Carriers, 1990
A.M.C. 400 (E.D. La. 1990), aff'd, 921 F.2d 275 (5th Cir. 1990);
Shields, 662 F. Supp. at 187.
In light of these conflicting results, we undertake an
independent analysis of the effect of the SAA on claims against
private contractors for willful failure to pay maintenance and
cure. It must be noted that this appeal raises the possibility
that there are cognizable maritime claims which a seaman can not
bring against the United States because they are beyond the scope
of the SAA but which the SAA nonetheless precludes him from
bringing against the government's agent. To whatever extent this
might be the case, the rights of seamen employed on government
vessels are diminished in relation to seamen employed on private
vessels, and otherwise actionable misconduct by the government's
agents is effectively immunized. The Fourth Circuit candidly
acknowledged this:
We recognize that our decision creates the
harsh result that Manuel [the injured seaman]
will not be able to recover punitive damages
even if he can show that IMC arbitrarily and
willfully withheld his maintenance and cure
benefits. As a consequence, private operators
managing ships owned by the United States can
arbitrarily and willfully refuse to pay an
injured seaman's maintenance and cure without
suffering any penalty.
Manuel, 50 F.3d at 1260. The Fourth Circuit concluded, however,
that "sec. 745 clearly dictates this result,"adding that "[i]f
Congress considers this situation to be unfair, it can correct the
problem . . . ." Id.
The content of the claim which Stone calls "tortious
failure to pay maintenance and cure"has been described as follows:
The negligent failure to pay maintenance
and cure is tortious conduct that makes the
employer responsible for any aggravation of
the injury suffered by the seaman. In
addition, an employer's willful and arbitrary
failure to pay maintenance and cure renders
the employer liable for (1) attorneys' fees
and (2) punitive damages.
1 Thomas J. Schoenbaum, Admiralty and Maritime Law sec. 6-34, at
366-67 (2d ed. 1994). (EN6) As this description illustrates,
there are three fundamental damages components to the claim of
tortious failure to pay maintenance and cure: (1) compensatory
damages for any aggravation of injuries caused by the failure to
pay, (2) punitive damages, and (3) attorney's fees.
We now turn to the preliminary question of whether, and
to what extent, the SAA affords a remedy for willful failure to
provide maintenance and cure. Since section 745 clearly precludes
suit against IMC on all claims for which the SAA provides the same
remedy against the United States, this question is potentially
dispositive.
Based on the language of the statute, the scope of the
SAA seems quite comprehensive. The SAA authorizes in personam suit
against the United States "[i]n cases where if such vessel were
privately owned or operated . . . a proceeding in admiralty could
be maintained . . . ." 46 U.S.C. sec. 742. It has been observed
that, under the SAA, "[f]or the most part the United States is
liable in admiralty to the same extent as a private entity."(EN7)
As mentioned above, admiralty claims for maintenance and cure fall
within the scope of this section.
From the facts in this record, it appears that IMC
administers maintenance and cure claims, for which the government
is ultimately answerable, in its capacity as an agent for the
United States. Given this fact, we fail to see any reason why the
government could not be held liable for IMC's shortcomings in this
respect under agency principles as they are embodied in 46 U.S.C.
section 742. Insofar as Stone's claim seeks compensatory or
aggravation damages flowing from IMC's willful failure to pay
maintenance and cure, section 742 appears to allow him to proceed
against the United States. (EN8)
With respect to the punitive damages component of the
claim, the analysis is more difficult. Although punitive damages
were traditionally available in suits against a private employer
for willful failure to pay maintenance and cure, Weason v.
Harville, 706 P.2d 306, 310 (Alaska 1985); Holmes v. J. Ray
McDermott & Co., 734 F.2d 1110 (5th Cir. 1984), the SAA does not
authorize punitive damages against the United States. Abogado, 890
F. Supp. at 631-32. This discrepancy is generally the locus of
dispute among the earlier cases. Some courts have held that since
this remedy is unavailable under the SAA, there is no reason that
the exclusivity clause of that statute should bar a party from
proceeding against the culpable agent of the government. See,
e.g., Abogado, 890 F. Supp. at 632-634. Other courts have held
that since the remedy arises from the same subject matter as a
general claim for maintenance and cure, it is precluded by
section 745. See, e.g., Manuel, 50 F.3d at 1259.
Since we conclude that punitive damages are no longer
available against any party for a claim of willful failure to pay
maintenance and cure, we need not resolve this dispute. The Fifth
Circuit Court of Appeals, sitting en banc, recently concluded that
subsequent to Miles v. Apex Marine Corp., 498 U.S. 19 (1990),
"punitive damages should no longer be available in cases of willful
nonpayment of maintenance and cure under the general maritime law."
Guevara v. Maritime Overseas Corp., 59 F.3d 1496, 1513 (5th Cir.
1995), cert. denied, 116 S. Ct. 706 (1996). The Ninth Circuit, in
Glynn v. Roy Al Boat Corp., 57 F.3d 1495, 1505 (9th Cir. 1995),
cert. denied, 116 S. Ct. 708 (1996), reached the same conclusion.
These rulings were predicated on the fact that the
personal injury aspect of a failure to provide maintenance and cure
"overlaps with the personal injury coverage of the Jones Act."
Guevara, 59 F.3d at 1511. The Miles Court observed, in the context
of rejecting a claim for loss of society, that "[m]aritime tort law
is now dominated by federal statute, and we are not free to expand
remedies at will simply because it might work to the benefit of
seamen and those dependent upon them." Miles, 498 U.S. at 36. The
Fifth and Ninth Circuits both held that allowing the recovery of
punitive damages in a maintenance and cure case would be
inconsistent with the principles set forth in Miles. We agree.
The fact that punitive damages are no longer available in
cases for tortious or willful failure to pay maintenance and cure
under the general maritime law renders moot the question of whether
section 745 precludes Stone from seeking punitive damages against
IMC. Even if IMC were not an agent of the government, punitive
damages would be unavailable.
This leaves us only with the third component of a willful
failure to pay maintenance and cure claim: attorney's fees. Both
the Fifth and Ninth Circuits have held that although punitive
damages are no longer available in these cases subsequent to Miles,
attorney's fees remain available when the proper showing of
egregious fault is made. Guevara, 59 F.3d at 1513; Glynn, 57 F.3d
at 1505. However, as a federal district court has noted,
Although attorney's fees may be awarded where
a shipowner's failure to provide maintenance
and cure is shown to be arbitrary,
recalcitrant or unreasonable, Kopczynski v.
The Jacqueline, 742 F.2d 555, 559 (9th Cir.
1984) [cert. denied, 471 U.S. 1136 (1985)],
counsel fees may not be awarded against the
United States in the absence of specific
statutory authority. See Alyeska Pipeline
Service Co. v. Wilderness Society, 421 U.S.
240, 267-268 (1975).
Baily v. United States, 1993 WL 87813 (N.D. Cal. 1993).
There is consequently a discrepancy between the remedies
available to injured seamen employed on private vessels and those
employed on government vessels with respect only to attorney's fee
awards. Since they are not authorized by the SAA, attorney's fees
are not available to seamen whose claims are against the United
States. However, suits under the SAA are hardly unique in this
respect. In most contexts, attorney's fees are not available
against the United States. This does not mean, however, that Stone
may maintain an action against IMC for attorney's fees. SAA
provides a remedy for compensatory damages suffered as a result of
willful failure to pay maintenance and cure. The fact that that
remedy does not encompass attorney's fees does not make the SAA
remedy any less exclusive under the terms of section 745.
In light of the foregoing analysis, we conclude that the
only remedy that section 745 precludes Stone from seeking is his
attorney's fees. He is authorized under the SAA to seek
compensatory damages against the United States for injuries that he
may have suffered as a result of its agent's willful refusal to pay
maintenance and cure, and he would have no punitive damages remedy
even if he were permitted to sue IMC directly. Consequently, in
this context, the scope of claims precluded by section 745 does not
exceed to any significant extent the scope of claims sustainable
against the United States under the SAA.
Our understanding of the scope of the SAA and of the
Supreme Court's holding in Miles leads us to conclude that the
critical dimensions of recovery on a claim of willful failure to
pay maintenance and cure are now effectively the same against the
government as they are against a private employer. As such, we
need not endorse a reading of the exclusivity section which
significantly diminishes the rights of seamen injured on board
government vessels. Since the same type of recovery could have
been had against the United States on the claim raised by Stone as
could be had against its agent, the SAA designates the United
States as the only proper defendant.
C. Motions Rulings
Having determined that dismissal of Stone's claims
against IMC was appropriate under these circumstances, we turn to
his procedural complaints. Stone first argues that by not allowing
him an opportunity to depose Ray Douglas or to oppose IMC's cross-
motion for summary judgment despite a grant of a Civil Rule 56(f)
extension of time, "the court based its ruling on an incomplete
picture of the facts of this case." Stone also complains that the
superior court abused its discretion by failing to grant his motion
to compel and by granting IMC's motion to stay discovery.
In view of our conclusion that IMC was not, as a matter
of law, the proper defendant to proceed against on these claims, it
was not necessary for Stone to have an opportunity to perfect his
factual allegations against IMC. Consequently, any error by the
superior court in failing to properly facilitate development of the
factual record in this case was harmless.
D. Sanctions
Stone moved for sanctions against IMC for failing to
produce Douglas and a Civil Rule 30(b)(5) designee for depositions,
and IMC in turn moved for full attorney's fees against Stone
pursuant to Civil Rule 82(b)(3). (EN9) The superior court denied
Stone's motion for sanctions and awarded IMC only twenty percent of
its attorney's fees, or $6,707.80.
In light of the very short notice that IMC was given
regarding the deposition -- Stone's deposition notices were sent
out on February 18 and 22 for depositions scheduled on February 25
-- and the fact that IMC had filed a motion to stay discovery under
Civil Rule 26(c) on February 16, we conclude that it was not an
abuse of discretion for the superior court to deny the motion for
sanctions against IMC. (EN10)
With respect to the attorney's fee award, we note that
there is a substantial body of law supporting precisely the
position that Stone has taken in this litigation. We have
previously held that an award of full fees is "manifestly
unreasonable"in the absence of vexatious conduct by the losing
party. State v. University of Alaska, 624 P.2d 807, 817 (Alaska
1981). The record of this case reveals that Stone was simply
vigorously litigating an unresolved question. Under these
circumstances, it was not an abuse of the superior court's
discretion to deny IMC's motion for full attorney's fees.
IV. CONCLUSION
Since, with the exception of attorney's fees, the SAA
allows essentially the same remedies on a claim for willful failure
to pay maintenance and cure against the United States as would
theoretically be available against its private agent, section 745
precludes suit against IMC on this claim. The superior court did
not abuse its discretion by refusing to facilitate unnecessary
factual development of the record in denying Stone's motions to
compel and for discovery sanctions. Further, the superior court
did not err in granting IMC's motion to stay discovery and in
denying IMC's motion for full attorney's fees.
The judgment of the superior court is AFFIRMED.
ENDNOTES:
1. Crowley was a defendant in the case below. Stone sued Crowley
under traditional maritime law for injuries allegedly sustained
aboard the M/V SENATOR in January 1991. Stone and Crowley settled
the claim which was then dismissed with prejudice.
2. The statute of limitations under the SAA and PVA is two years.
46 U.S.C. sec. 745. Thus, the period of limitations expired on or
about November 1, 1992. However, the statute had not expired when
IMC informed Stone that the proper defendant was the United States.
3. Alaska R. Civ. P. 12(b); Adkins v. Nabors Alaska Drilling, 609
P.2d 15, 21 (Alaska 1980).
4. "Because the PVA [Public Vessels Act] incorporates the
provisions of the SAA, including the exclusivity provision, see 46
U.S.C. sec. 782, the Court need not decide at this time whether
this case falls under the PVA or SAA." Shields v. United States,
662 F. Supp. 187, 188 n.1 (M.D. Fla. 1987).
5. See 46 U.S.C. sec. 742; Manuel v. United States, 50 F.3d 1253,
1259 (4th Cir. 1995) ("The SAA allows a seaman to bring an
admiralty action against the United States to collect his unpaid
maintenance and cure."); Abogado v. International Marine Carriers,
890 F. Supp. 626, 630 (S.D. Tex. 1995) ("sec. 745 [of the SAA]
clearly allows seamen to assert claims for maintenance and cure
against the government"). Since the SAA provides a remedy against
the United States for unpaid maintenance and cure, section 745 bars
any claim against IMC for these funds. Smith v. MAR, Inc., 896 F.
Supp 75, 76 (D.R.I. 1995); Cruz v. Marine Transp. Lines, 634 F.
Supp 107 (D.N.J.), aff'd, 806 F.2d 252 (3d Cir. 1986), cert.
denied, 481 U.S. 1048 (1987).
6. In Picou v. American Offshore Fleet, Inc., 576 F.2d 585, 587
(5th Cir. 1978), the court said:
[A]s stated in [Cortes v. Baltimore Insular
Line, 287 U.S. 367 (1932)] . . ., if the
failure to give maintenance or cure has caused
or aggravated an illness, the seaman has his
right of action for the injury thus done to
him, "the recovery in such circumstances
including not only necessary expenses, but
also compensation for the hurt[.]"
7. 2 Schoenbaum sec. 20-1, at 445.
8. On the point of who may ultimately bear the burden in such an
action, IMC suggests that certain provisions in its contract with
the United States might conceivably allow the government to seek
indemnity from IMC.
9. Civil Rule 82(b)(2) provides that in a case resolved without
trial, the court shall award the prevailing party twenty percent of
its actual attorney's fees. However, under Civil Rule 82(b)(3),
the court may depart from the twenty percent formula if it
determines that a variation is warranted after consideration of
various factors including "the reasonableness of the claims and
defenses pursued by each side"and "vexatious or bad faith
conduct." Alaska R. Civ. P. 82(b)(3)(F), (G).
10. Civil Rule 37(d) provides that the failure of a party to
attend its own deposition will not be excused, and sanctions may be
imposed by the court, "unless the party failing to act has applied
for a protective order as provided for by Rule 26(c)."
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