MULHERN v. Costello Marine Contracting Corp., third-party defendant-appellant. (2007)

In an action, inter alia, to recover damages for personal injuries, etc., the third-party defendant appeals from a judgment of the Supreme Court, Queens County (Spires, J.), dated November 29, 2005, which after, inter alia, a hearing and upon an order of the same court dated July 11, 2005, is in favor of the third-party plaintiff on its implied indemnification claim and against it in the principal sum of $2,023,599.54.

ORDERED that on the court's own motion, the notice of appeal from the order is deemed to be a premature notice of appeal from the judgment (see CPLR 5520 [c] );  and it further,

ORDERED that the judgment is reversed, on the law, with costs, the order dated July 11, 2005, is vacated, and the third-party complaint is dismissed.

The injured plaintiff was clearing debris from a beach when he was struck by a load of timber being hoisted by a barge-mounted crane.   At the time of the accident, the injured plaintiff was employed by the third-party defendant, Costello Marine Contracting Corp. (hereinafter Costello), which had been hired by the defendant third-party plaintiff, Manhasset Bay Yacht Club (hereinafter Manhasset), to perform work on a waterfront renovation project which included the construction of new piers.   The injured plaintiff and his wife subsequently commenced this action against Manhasset to recover damages for personal injuries, etc., based, inter alia, upon a violation of Labor Law § 241(6), and Manhasset commenced a third-party action against Costello for indemnification and contribution.   The third-party action sought indemnification from Costello on the theory that Costello had breached the warranty of workmanlike performance implied in maritime service contracts.   The injured plaintiff also instituted a direct action to recover damages against Costello predicated, among other things, upon violation of the Jones Act (46 USC App. § 688), and the actions were joined for trial.

During the ensuing liability trial, the Supreme Court instructed the jury that, as a matter of law, there was a maritime services contract between Manhasset and Costello, and that a warranty of workmanlike performance was implied in every such contract.   At the conclusion of the liability trial, the jury returned a verdict finding that the violation of several Industrial Code provisions relating to the safe operation of mobile cranes had been a substantial factor in causing the accident, and Manhasset was held liable to the plaintiffs pursuant to Labor Law § 241(6) based upon these violations.   The jury also found that the violation of the subject Industrial Code provisions constituted a breach of the warranty of workmanlike performance implied in maritime contracts, and on this basis the court awarded judgment in favor of Manhasset on its third-party claim for indemnification.   Costello was also found liable to the injured plaintiff in the separate Jones Act action.   Both Manhasset and Costello moved to set aside the verdict, and their motions were denied.   Shortly thereafter, Manhasset reached a settlement agreement with the plaintiffs on the issue of damages.   An interlocutory judgment in favor of the plaintiffs and against Manhasset on the issue of liability, and in favor of Manhasset and against Costello on its third-party cause of action for indemnification, was subsequently entered.

Under the circumstances of this case, we reject Manhasset's contention that the issue of indemnification is not before this court.

The implied right to contractual indemnification upon which Manhasset prevailed in its third-party action grew out of the relationship between shipowners, stevedoring companies, and the longshoremen who are employed by such companies.   In 1946 the United States Supreme Court held that longshoremen who were injured by a dangerous or defective condition aboard a vessel on which they were working could recover from the vessel's owner on the theory that the owner had breached its implied warranty of the seaworthiness of the ship (see Seas Shipping Co. v. Sieracki, 328 U.S. 85, 99-102, 66 S.Ct. 872, 90 L.Ed. 1099;  Lubrano v. Waterman Steamship Co., 175 F.3d 274, cert. denied 528 U.S. 933, 120 S.Ct. 334, 145 L.Ed.2d 260).   Under the seaworthiness doctrine, a shipowner has an absolute, nondelegable duty to provide a seaworthy ship, and is strictly liable for the breach of this duty (see Knight v. Alaska Trawl Fisheries, Inc., 154 F.3d 1042, 1044).   The United States Supreme Court subsequently held that the Longshore and Harbor Workers' Compensation Act (hereinafter the LHWCA) precluded shipowners who had been held strictly liable to an injured longshoreman under the seaworthiness doctrine from obtaining contribution from the stevedoring company which employed the worker (see Halcyon Lines v. Haenn Ship Ceiling & Refitting Corp., 342 U.S. 282, 72 S.Ct. 277, 96 L.Ed. 318).   These holdings placed shipowners in an “unenviable position” because “a longshoreman might be injured as a result of an unseaworthy condition caused wholly by the stevedore's negligence, and yet the shipowner, wholly without fault, could be held liable for the entire amount of compensatory damages” (Fairmont Shipping Corp. v. Chevron Intern. Oil Co., 511 F.2d 1252, 1255, cert. denied 423 U.S. 838, 96 S.Ct. 66, 46 L.Ed.2d 57).

In the landmark case of Ryan Stevedor. Co. v. Pan-Atlantic Steam. Corp., 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133, the United States Supreme Court fashioned a rule under which stevedores could be held accountable for their own negligence.   In Ryan, the Supreme Court implied a warranty of workmanlike performance into every contract between a stevedore and a shipowner, holding that a stevedore who contracts with a shipowner implicitly promises to perform its services completely and safely (see Ryan Stevedor. Co. v. Pan-Atlantic Steam. Corp., supra at 130-131, 76 S.Ct. 232;  Lubrano v. Waterman Steamship Co., supra at 275).   The Supreme Court also read the contract between the shipowner and stevedore to give the shipowner an implied right of indemnification against the stevedore for damages sustained as a result of a breach of this implied warranty (Ryan, supra at 130, 76 S.Ct. 232;  see Lubrano v. Waterman Steamship Co., supra at 275).

In 1972 Congress amended the LHWCA by adding § 905(b), which abolishes an injured longshoreman's right to recover against a shipowner under the strict liability theory of seaworthiness, and the stevedore-employer's corresponding obligation to indemnify the shipowner (see Marcinowski v. McCormack Boys Corp., 160 F.Supp.2d 708;  Matthews v. U.S., 150 F.Supp.2d 406).   However, it has been recognized that the 1972 amendments do not necessarily bar a non-shipowner from seeking Ryan indemnity from an employing stevedore or maritime contractor for breach of an implied warranty of workmanlike performance (see Lubrano v. Waterman Steamship Co., supra;  Zapico v. Bucyrus-Erie Co., 579 F.2d 714, 721-722;  see also Olsen v. James Miller Mar. Serv., Inc., 16 A.D.3d 169, 791 N.Y.S.2d 92;  Hartley v. City of New York, 228 A.D.2d 646, 646 N.Y.S.2d 351;  Pennisi v. Standard Fruit & S.S. Co., 206 A.D.2d 290, 614 N.Y.S.2d 519).

Although Ryan indemnity may be available to non-shipowners, Manhasset nevertheless has no right to prevail on an implied indemnification theory under federal maritime law unless its contract with Costello can be properly classified as one for maritime services.   Generally, a contract is considered to be maritime in nature, and subject to admiralty jurisdiction, when its principal objective is related to maritime commerce (see Norfolk Southern Railway Co. v. Kirby, 543 U.S. 14, 23, 125 S.Ct. 385, 160 L.Ed.2d 283;  Exxon Corp. v. Central Gulf Lines, Inc., 500 U.S. 603, 608, 111 S.Ct. 2071, 114 L.Ed.2d 649).   A maritime contract has also been defined as one “relating to a ship in its use as such, or to commerce or navigation on navigable waters, or to transportation by sea or maritime employment” (J.A.R., Inc. v. M/V Lady Lucille, 963 F.2d 96, 98;  BDL Intern. v. Sodetal USA, Inc., 377 F.Supp.2d 518).   Here, Manhasset failed to demonstrate that the subject waterfront improvement contract bore any relation to maritime commerce.   Moreover, there is no evidence that the subject contract related to a ship, navigation on navigable waters, or transportation by sea.   Under these circumstances, the trial court erred in determining that the subject contract was one for maritime services which includes an implied warranty of workmanlike performance and may serve as the basis for implied contractual indemnification under maritime law.   In the absence of such an implied right to contractual indemnification, the third-party complaint should have been dismissed.

In view of our determination that implied contractual indemnification is not available to Manhasset under federal maritime law, we do not reach Costello's remaining contentions.