Photo of Raúl Chacón

Raúl is a partner in MG+M’s Miami office and is the Chair of the firm's Maritime Practice Group. His practice focuses on a variety of litigation areas, including maritime, personal injury, products liability, premises liability, and commercial litigation. He has extensive experience as national and local counsel on marine products liability matters and has represented clients from jurisdictions as far north as Canada and throughout the Continental U.S., Hawaii, the Caribbean and South America. He has tried numerous cases to verdict in the state and federal courts of Florida. He is regularly appointed to act as national and local counsel by insurance companies on admiralty and maritime matters.

On March 30, 2020, the United States Supreme Court issued a decision that can impact the way Charter Party Agreements are negotiated. Particularly, given the present COVID-19 orders that purport to limit whether vessels can enter certain ports, orders that appear to change on a daily basis, this decision should serve notice to those negotiating Charter Party Agreements.

CITGO Asphalt Refining Company, et al. v. Frescati Shipping Company, Ltd., et al. No. 18-565 (March 30, 2020) resolves the interpretation of a “safe berth” clause in a shipping contract. In a 7-2 ruling, the Court held that a “safe berth” clause establishes a warranty of safety, thereby imposing liability for an unsafe berth regardless of a party’s diligence in selecting the berth. See Id at 1.

The facts of the case date back to 2004 when CITGO and related companies contracted with Frescati Shipping Co. for the shipment of crude oil from Venezuela to New Jersey. Frescati, the operator and owner of the oil tanker M/T Athos I, had chartered the tanker to Star Tankers. The oil tanker was then sub-chartered by Star Tankers to CITGO Asphalt Refining Company and others (collectively CARCO). Shortly before reaching her destination, M/T Athos I allided with an anchor in the Delaware River from an abandoned ship, puncturing the hull of the oil tanker and causing 264,000 gallons of crude oil to spill into the river. As the owner of the oil tanker, Frescati was required pursuant to the Oil Pollution Act (“OPA 90”) to clean up the spill and pay all associated costs. The total cost of the cleanup was $133 million. Under OPA 90, Frescati’s liability was limited to $45 million. As such, the Oil Spill Liability Trust Fund reimbursed Frescati for the additional $88 million. Frescati and the Federal Government sued CARCO alleging that CARCO had breached the “safe berth” clause in the subcharter agreement between CARCO and Star Tankers. The “safe berth” clause in the subcharter agreement provided as follows:

“SAFE BERTHING – SHIFTING. The vessel shall load and discharge at any safe place or wharf, or alongside vessels or lighters reachable on her arrival, which shall be designated and procured by the Charterer, provided the Vessel can proceed thereto, lie at, and depart therefrom always safely afloat, any lighterage being at the expense, risk and peril of the Charterer.” Id at 18.

Frescati as an intended third-party beneficiary of the subcharter agreement, and the United States alleged that the clause obligated CARCO to choose a berth that was safe and that would allow the oil tanker “to come and go ‘always safely afloat.’” Id. at 1. The Third Circuit agreed with Frescati and the United States and held that the “safe berth” clause embodied an express warranty of safety “made without regard to the amount of diligence taken by the charterer.” Id at 4. With that said, the Third Circuit found that CARCO was liable for breaching the warranty. Id at 5.

The Supreme Court granted certiorari to resolve
Continue Reading “Safe Berth” Clause Requires More than Due Diligence

A unique feature of maritime law in the United States is the Limitation of Shipowners’ Liability Act (“Limitation Act”), which provides vessel owners with a federal right to limit their liability for damage or injury following a maritime accident. 46 U.S.C. 30505. The Limitation Act is a powerful tool for maritime defense attorneys. It provides a procedure to enjoin all pending suits and to compel them to be filed in a limitation proceeding so that liability may be determined and limited to the post loss value of the shipowner’s vessel and the amount related to services performed by the vessel (i.e. carriage of cargo). This is especially powerful when the vessel has suffered significant damage due to a casualty; thus significantly reducing its post loss value and creating a substantial financial limitation against potential claims. However, timing is everything and turns on the notice provided to the shipowner.

To be afforded protection under the Limitation Act, the shipowner must bring a limitation action in federal court within six months of receiving notice of a claim. Once the shipowner meets the six-month statutory deadline, all related lawsuits pending against the shipowner shall cease and a limitation fund is created. Thereafter, all claimants are required to pursue their claims in the limitation proceeding.

Earlier this year, the Eleventh Circuit in Orion Marine Construction, Inc. v. Dawson, No. 17-11961 (11th Cir. 2019) issued a much-anticipated ruling addressing the scope of the notice provisions under the Limitation Act. The case involves a limitation action filed by Orion after a number of local residents filed complaints alleging damage to their properties. Orion used barges to drive concrete piles into the bay floor to rebuild a bridge pursuant to a contract with the Florida Department of Transportation (FDOT) and the local residents claimed that their homes were damaged by the vibrations caused by such activities. Originally, between 2012 and 2014 only nine local residents brought complaints against either Orion, FDOT or Orion’s third-party administrator, FARA Insurance. There were eventually 247 claims made against Orion, however, for purposes of analysis and the timing requirement, the court focused on the original nine claims. Those nine claims were made before November 11, 2014, and more importantly for purposes of the court’s analysis, unlike the other claims, these were made more than six months before Orion filed suit on May 11, 2015. Of those nine, two of the original complainants, the Dawsons, moved to dismiss Orion’s limitation action for untimeliness arguing that because Orion had received “written notice of a claim” but had not brought a limitation action “within 6 months after a claimant gives the owner written notice of a claim,” the action was time barred as per §30511(a). Orion responded that it did not receive proper notice under the Act because the complaints were (1) not in writing and, (2) they failed to reveal a “reasonable possibility” that the claims would exceed the aggregate value of the barges used during the project. The District Court subsequently dismissed the motion without prejudice.
Continue Reading “Close, But Still No Cigar”: Timing is Everything When Seeking Limitation or Exoneration Under the Limitation of Shipowners’ Liability Act

On June 24, 2019, the United States Supreme Court issued a much-anticipated decision in Dutra Group v. Batterton, No. 18-266 (June 24, 2019). The decision settles and resolves a longstanding circuit split on whether a seaman has the right to recover punitive damages under a claim of unseaworthiness. In a 6-3 ruling, the Court held that a plaintiff may not recover punitive damages on a claim of unseaworthiness. See Id at 2.

In Dutra, the Plaintiff, Christopher Batterton (“Batterton”) filed a personal injury action alleging that, while working on a scow near Newport Beach, California which was owned by Dutra Group, he was injured when his hand was caught between a bulkhead and a hatch that blew open as a result of unventilated air accumulating and pressurizing within the component. Id at 9. Batterton sued Dutra and asserted a variety of claims, including negligence, unseaworthiness, maintenance and cure, and unearned wages. Id. He sought to recover general and punitive damages. Dutra moved to strike Batterton’s claim for punitive damages, arguing that they are not available on claims for unseaworthiness. Id. The District Court denied Dutra’s motion, 2014 WL 12538172 (CD Cal., Dec. 15, 2014), but agreed to certify an interlocutory appeal on the question, 2015 WL 13752889 (CD Cal., Feb. 6, 2015). Id. The United States Court of Appeals for the Ninth Circuit affirmed and held that punitive damages are available for seaworthiness. Dutra Group v. Batterton, 880 F. 3d 1089, 1096 (CA9 2018). The United States Supreme Court granted certiorari to resolve the division between the circuits.
Continue Reading Miles v. Apex Marine Lives: U.S. Supreme Court Rejects Punitive Damages for Claims of Unseaworthiness