IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 98-31205
AMERICAN RIVER TRANS. CO., ET AL.,
Plaintiffs,
v.
KAVO KALIAKRA SS, ET AL.,
Defendants,
KAVO KALIAKRA SS, her engines, tackle, appurtenances, etc., in
rem;
UNITED KINGDOM MUTUAL STEAMSHIP ASSURANCE ASSOCIATION (BERMUDA)
LTD., in personam,
Defendants - Appellees,
v.
COMPASS CONDO CORP.,
Appellants.
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In Re: In the Matter of the Complaint of AROSITA SHIPPING CO.,
LTD., as owner of the M/V Kavo Kaliakra for exoneration from or
limitation of liability
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AROSITA SHIPPING CO. LTD., as owner of the M/V Kavo Kaliakra;
GROMAR SHIPPING CO., LTD., as owners of the M/V Kavo Kaliakra;
GOURDOMICHALIS MARITIME SA, as owners of the M/V Kavo Kaliakra,
Petitioners - Appellees,
v.
COMPASS CONDO CORP., ET AL.,
Claimants,
COMPASS CONDO CORP.,
Claimant - Appellant.
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HORACE NICHOLAS,
Plaintiff,
v.
KAVO KALIAKRA SS, ET AL.,
Defendants,
KAVO KALIAKRA SS, her engines, tackle, appurtenances, etc., in rem;
AROSITA SHIPPING CO., LTD.,
Defendants - Appellees,
v.
COMPASS CONDO CORP.,
Appellants.
Appeal from the United States District Court
for the Eastern District of Louisiana
March 8, 2000
Before POLITZ, JOHN R. GIBSON,* and HIGGINBOTHAM, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
In this admiralty action, we apply again the principles of
Robins Dry Dock & Repair Co. v. Flint.1 Compass Corporation
appeals the dismissal of its claims for economic damages arising
from the allision of the M/V KAVO KALIAKRA with barges owned by the
American River Transportation Company. We AFFIRM the district
court’s dismissal of Compass’s claims for economic damages.
I
On March 30, 1992, employees of the appellant, Compass Condo
Corporation, were engaged as barge washers on a floating barge dock
at the Tulane Fleeting Facility. The floating dock was owned by
the American River Transportation Company (ARTCO), and Compass’s
employees were cleaning ARTCO barges. At some point, the M/V KAVO
*
Circuit Judge of the Eighth Circuit, sitting by designation.
1
275 U.S. 303 (1927).
2
KALIAKRA allided with the ARTCO barges, harming Compass’s employees
and its equipment. The employees received workers compensation
awards under the Longshoreman and Harbor Workers Compensation Act
for their personal injuries. Allegedly, as a result of the
numerous workers compensation claims, Compass’s workers
compensation premiums increased.
ARTCO filed suit against the owners and operators of the
vessel and their insurer. The district court held the defendants
liable for the allision, but dismissed Compass’s economic damage
claims for increased workers compensation premiums. This appeal
ensued.
II
In Robins Dry Dock the Supreme Court held that a steamship
charterer could not recover economic damages when the steamship he
chartered was rendered useless to him for a period of days after
the defendant negligently broke the propeller.2 The charterer had
no property interest in the ship when it was harmed, but instead
merely had a contract with the ship’s owners.3 The Court noted the
general rule that “a tort to the person or property of one man does
not make the tort-feasor liable to another merely because the
injured person was under a contract with that other unknown to the
doer of the wrong.”4 In similar cases, this circuit consistently
2
Id. at 307-08.
3
Id. at 308-09.
4
Id. at 309.
3
applies the Robins Dry Dock rule to bar recovery for economic
damages in negligence that are unconnected to an injury to a
property interest.5
In this case, Compass’s employees were injured by the
negligence of the M/V KALIAKRA. As a result of the accident,
Compass’s employees filed numerous workers compensation claims,
which were paid by Compass’s insurer. In turn, the M/V KALIAKRA’s
owners and insurers paid Compass’s insurer 100% of the value of the
workers compensation claims, which meant that Compass’s insurer
endured no loss. Compass apparently changed insurance carriers and
pays a higher premium. It blames its new higher premiums on the
claims filed by Compass’s employees after the allision.
Assuming that Compass’s higher premiums did result in some
finite sense from the M/V KALIAKRA’s negligence, Compass’s claims
are barred under our general rule. These economic damages are
traceable only to the personal injuries of Compass’s employees, but
Compass has no property interest in its employees in any relevant
sense. Compass did have a property interest in a few thousand
dollars worth of equipment which fell overboard during the
accident, but Compass’s claimed economic damages are unrelated to
the loss of that equipment.
Compass argues that the rule is old and eroding. This
reliance on the age of the rule in resistance to its application is
5
See State of Louisiana ex rel Guste v. M/V Testbank, 752 F.2d 1019, 1023-24,
1026-27 (5th Cir. 1985) (en banc).
4
not persuasive. Its age rather attests to its utility. And we are
otherwise unpersuaded of its erosion.
First, Compass argues that employers have been allowed to
recover from defendants any compensation payments the employer made
to its employees after an accident.6 However, such recovery is a
form of indemnification, in which the defendant pays the employer
the sums paid to the employees by the employer for damage caused by
the defendant. The employer’s recovery rests on the employee’s
personal injury.
In this case, Compass bore none of the costs of the
compensation awards to its employees. Compass’s insurer paid those
claims and was in turn fully reimbursed by the defendants. Perhaps
Compass’s insurance rates should not have been raised by its new
insurer in a situation in which the predecessor insurer had no
loss, but that is a bone Compass must pick with its new insurer and
not the defendants. It is precisely the type of remote economic
injury rippling at a distant point from the liability event and
unanchored by concrete injury to property that we have consistently
disallowed.
Second, Compass contends that some courts have allowed the
recovery of increased insurance premiums which resulted after an
insurer was forced to compensate victims of a defendant’s
negligence, citing Ledex, Inc. v. Healthbath Corp.7 In Ledex,
however, the Ohio Supreme Court merely held that a particular state
6
See, e.g., Adams v. Texaco, 640 F.2d 618 (5th Cir. 1981).
7
461 N.E.2d 1299 (Ohio 1984).
5
statute, which purported to void all agreements to indemnify
employers against payment of compensation to workers, did not bar
an employer from seeking to recover increased workers compensation
premiums resulting from injuries suffered by its employees at the
hands of a third party.8 Ledex did not hold that such damages were
compensable, but only that they were not barred by a particular
statute.9
In sum, we remain unpersuaded of the need to revise the
longstanding admiralty rule that economic damages are not
recoverable in negligence untethered to an injury to a property
interest. As this circuit explained in Akron Corp. v. M/T
Cantigny:10 “The rule’s purpose is to prevent limitless liability
for negligence and the filing of law suits of a highly speculative
nature.”11 This case is just another example of the type of
speculative and potentially unbounded liability the rule aims to
preclude.
AFFIRMED.
8
See id. at 1304.
9
See id. at 1303. Compass also cites Tiger Well Service, Inc., 343 So.2d 1158
(La. App. 3d Cir. 1977), for the proposition that increased insurance premiums
may be recovered as economic damages. However, in Tiger Well, the plaintiff
suffered property damage and was only allowed to recover economic damages to the
degree that they flowed from the claim of property damages. See id. at 1158.
Thus, the court in Tiger Well did not oppose the rule at issue here.
10
706 F.2d 151 (5th Cir. 1983).
11
Id. at 152.
6