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Maritime Law – Indemnity and Contribution In 2000 And Beyond

| Aug 14, 2000 | Admiralty and Maritime

The 1999 decision in Lubrano v. Waterman Steamship Co., 1999 AMC 1709 (2d Cir.), is another step by the federal courts to limit the application of one of the most famous and effective judge-created remedies in U.S. admiralty and maritime law — the shifting of loss under the Ryan implied warranty of workmanlike performance.

Indemnity is an all or nothing remedy under which the indemnified party is reimbursed 100% of any loss and/or expense it incurred. Contribution is a remedy that distributes a loss and/or expense among those at fault on either a pro rata or comparative fault basis.

Since 1956, any discussion of indemnity under maritime law necessarily involved the Ryan warranty of workmanlike performance. See Ryan Stevedoring Co. v. Pan-Atlantic S.S. Corp., 350 U.S. 124, 1956 AMC 9 (1956). Shipowners were able to obtain indemnity and recover their fees and expenses in defending the underlying claim based on a breach of an implied warranty of workmanlike performance contained in the agreement between shipowners and their service providers, such as stevedores.

The Ryan implied warranty was so effective that there was little development or application of the doctrine of contribution among joint tortfeasors under maritime law.

All of this began to change in 1972 when Congress passed the amendments to the Longshore and Harbor Workers Compensation Act. The Ryan implied warranty was eliminated where the underlying suit was by a longshore employee and the shipowner sought indemnity from a stevedore-employer covered under the Longshore Act.

The Second Circuit’s decision Lubrano shows that the courts are cutting back on the application of Ryan implied warranty even in situations where the shipowner seeks indemnity from a service provider that was not the employer of the person bringing the underlying claim against the shipowner.

In Lubrano, the Waterman Steamship Co.(the shipowner) was sued for negligence by Lubrano (the longshoremen) who was hit by a piece of ice that fell from a crane. Lubrano’s stevedore-employer had rented the crane from another company. Waterman defeated Lubrano’s claim and paid him nothing, but Waterman sought to recover from the company that rented the crane Waterman’s attorney’s fees and expenses in defending the claim by Lubrano. The shipowner invoked the Ryan implied warranty of workmanlike performance, but the district court denied Waterman any recovery. The Second Circuit affirmed.

With the courts cutting back on indemnity under a theory of an implied warranty of workmanlike performance, shipowners may turn to other recognized legal principles to shift or share losses or expenses they incur as a result of activities involving service providers to the vessel, like stevedoring, crane operations, etc. Indemnity can be obtained as a result of an express agreement in the service contract, or as a result of restitution (an equitable doctrine that compares the negligence of those involved and grants indemnity to one whose negligence is only passive or secondary).

Likewise, shipowners may invoke the principle of contribution to share any liability losses or expenses they incur. Two years after the amendments to the Longshore Act that eliminated Ryan indemnity against a covered stevedore, the Supreme Court announced clearly that maritime law permits contribution among joint tortfeasors. Cooper Stevedoring Co. v. Fritz Kopke, Inc., 417 U.S. 106, 1974 AMC 537 (1974). Contribution can be apportioned based on the comparative fault of the involved parties. See United States v. Reliable Transfer Co., 421 U.S. 397, 1975 AMC 541 91975).

Admiralty and maritime law goes back to the millennium before the Roman Empire, to the infant and earliest forms of commerce along the Mediterranean, to the Rhodian Law and Justinian’s Digest. Just the development of indemnity and contribution principles over the past 25 years in the United States shows the continued vitality of maritime law. Decisions, such as Lubrano, signal that this development will continue into the next millennium!

For background on this topic, see Indemnity and Contribution Under Maritime Law, 55 Tulane Law Review 1165. A copy can be obtained upon request to Gorman & Williams.