Ship owner can’t be sued in state over Boston Harbor crash
Massachusetts courts do not have personal jurisdiction over the Panama owner and Singapore operator of a container ship that damaged a MassPort terminal, a U.S. District Court judge has ruled.
The container ship Helsinki Bridge collided with and damaged the pier of the Black Falcon Terminal when the vessel came loose from its moorings after docking in the Boston Harbor in December 2017.
MassPort’s insurance carrier, plaintiff American Home Assurance, brought a subrogation action in Massachusetts federal court against the owner and operator of the container ship after paying the cost of repairing the pier.
The insurance carrier argued that the ship’s owner, Daisy Ship Holding S.A., and operator, K Line Ship Management (Singapore) PTE Ltd., were both subject to the court’s jurisdiction under the state’s long-arm statute, even though the Helsinki Bridge was under charter to a Japanese company at the time of the collision.
But Judge Patti B. Saris concluded that the plaintiff could not satisfy the “purposeful availment” prong of due process analysis for purposes of allowing the exercise of personal jurisdiction under the U.S. Constitution. Specifically with respect to the owner of the vessel, the judge cited the fact that the charter agreement gave the Japanese charterer exclusive control over the navigation of the Helsinki Bridge during the term of the agreement.
“The contract signed by DSH, which states that ‘the Owners have agreed to let and the Charterers have agreed to hire the Vessel,’ does not appear to contain any provision allowing DSH to exert control over the vessel’s destination or indicating in any way that the vessel was destined for Massachusetts,” Saris wrote. “DSH cannot be said to have voluntarily entered the Commonwealth.”
The 15-page decision is American Home Assurance Co. v. M/V One Helsinki f/k/a Helsinki Bridge, Lawyers Weekly No. 02-216-21.
‘Along for the ride’
Wellesley admiralty attorney Michael J. Rauworth said he was not surprised by the result in the case in light of the “common business arrangements” in the shipping industry. Rauworth likened the charter agreement at issue in American Home Assurance to a long-term lease.
“The charterer of the vessel was the one that decided to bring the vessel to Boston,” said Rauworth, who was not involved in the case. “The two entities that were dismissed — the owner of the ship and the ship’s managing firm — did not have any role in that choice. They were essentially along for the ride.”
Carolyn M. Latti, a plaintiffs’ side maritime injury lawyer, said questions over personal jurisdiction are fact-specific.
“It may be difficult to get jurisdiction over the owner of a vessel, particularly when there’s a charter agreement.”
“We see it in our cases on the personal injury side,” Latti said. “It may be difficult to get jurisdiction over the owner of a vessel, particularly when there’s a charter agreement. It’s going to depend on the terms of the agreement — what type of control the owner retains, if any, or whether the owner knows that the ship is specifically going to Massachusetts.”
But Gloucester maritime injury lawyer Joseph M. Orlando Jr. said that the plaintiff in American Home Assurance had a viable argument, particularly against K Line Ship Management, the operator of the ship.
“There’s a strong argument that specific personal jurisdiction through purposeful availment can be made,” Orlando said, noting that the governing standard is to view the facts in the light most favorable to the non-moving party.
Orlando pointed to the fact noted by Saris that K Line Ship Management-operated vessels had made at least 200 port of calls to the U.S.
“The court found that that was not frequent enough to show that KLSM could be feasibly hauled into court in the United States,” Orlando said. “Arguably, that’s [contrary to the standard of] viewing the facts in the light most favorable to the non-moving party. If it’s a close call like that, my belief is that [the court] should lean to attaching that specific personal jurisdiction through purposeful availment.”
Rauworth noted that the ruling does not necessarily mean the plaintiff will be left without a remedy. In order to avoid arrest of the vessel itself, Rauworth pointed out, security had been posted on behalf of the ship in the form of a $950,000 letter of undertaking.
“That fund stands as security such that if the plaintiff is successful in proving fault on the part of the ship or its people, then there will be a fund from which to collect the judgment,” Rauworth said. “Unlike the ship, the fund does not sail over the horizon.”
The plaintiff insurer is represented by Boston attorney John E. O’Brien. Defendants DSH and KLSM are represented by Thomas J. Muzyka of Boston. Neither attorney responded to a request for comment.
Boston Harbor mishap
According to court records, DSH is a Panama company and the registered owner of the Helsinki Bridge. In April 2012, DSH chartered the container ship to a Japanese corporation, KLB3287 Shipping S.A., through a “bareboat” chartering agreement. Under such an agreement, the charterer assumes exclusive possession, control command and navigation of the vessel for a specified period.
The agreement between DSH and KLB3287 was negotiated in Panama and Japan and governed by Japanese law.
At the same time, KLSM of Singapore entered into a vessel services agreement with KLB3287. That services agreement was negotiated in Panama and Singapore and also included a Japanese choice-of-law provision.
The services agreement specifically provided that KLSM would provide “suitably qualified Crew for the Vessel” and “competent personnel to supervise the maintenance and general efficiency of the Vessel.” The ship operator also agreed to train the crew and supervise its efficiency.
The Helsinki Bridge arrived in Boston Harbor on Dec. 5, 2017, and docked at the Conley Terminal. With high winds in the forecast, the container ship was secured to the dock by mooring lines handled by the employees of Boston Line, a co-defendant in the case.
The Boston Line employees docked the ship using five head lines on the bow of the ship secured to a single bollard, and two or three lines secured to other bollards along the dock.
In the early morning hours of Dec. 6, high winds arrived as forecast and the bollard attached to the five lines at the bow of the ship broke. The bow of the Helsinki Bridge drifted away from the pier, snapping the remaining mooring lines.
The ship then drifted into the nearby Black Falcon Terminal, causing extensive damage to the pier.
Plaintiff American Home Assurance indemnified MassPort for the damage pursuant to the terms of its insurance contract. The plaintiff then asserted claims in rem against the Helsinki Bridge and further claimed negligence on the part of the pilot who guided the container ship into port and the company that employed the dock workers charged with securing the vessel.
The owner of the ship, DSH, and the operator, KLSM, moved to dismiss the claims against them for lack of personal jurisdiction.
No purposeful availment
In addressing the defendants’ motion to dismiss, Saris first turned to whether DSH and KLSM were subject to the Massachusetts long-arm statute.
The plaintiff argued that both defendants were subject to G.L.c. 223A, §3(c), which provides for the exercise of long-arm jurisdiction over a party that “caus[ed] tortious injury by an act or omission” in the state.
Saris found that §3(c) applied to KLSM because “Plaintiff alleges that the KLSM crew was negligent in their use of the Conley Terminal and that they failed to adequately secure the ship in its berth and take adequate precautions in preparation for the wind conditions.”
The judge further found that the application of §3(c) to DSH was more “tenuous,” noting “DSH did not expressly contract to provide any services in Massachusetts because the Helsinki Bridge was supplied to the charterer overseas.”
But Saris concluded even if no provision of the Massachusetts long-arm statute applied, the court could still invoke jurisdiction over DSH by operation of Federal Rule of Civil Procedure 4(k)(2). The rule provides personal jurisdiction in cases brought under federal law — in this case admiralty law — where the defendant would not be subject to jurisdiction “in any state’s courts of general jurisdiction.”
THE ISSUE: Can Massachusetts courts exercise personal jurisdiction over the Panama owner and Singapore operator of a container ship that damaged a MassPort terminal after coming loose from its moorings in the Boston Harbor?
DECISION: No (U.S. District Court)
LAWYERS: John E. O’Brien of Robinson & Cole, Boston (plaintiff)
Thomas J Muzyka of Clinton & Muzyka, Boston (defendants Daisy Ship Holdings S.A. andK Line Ship Management (Singapore) PTE Ltd.)
While finding that the plaintiff could establish personal jurisdiction over the defendants in accordance with either the state’s long-arm statute or the federal rules, Saris said the plaintiff could not satisfy the requirements of due process.
Specifically, the judge determined that the evidence failed to show that DSH and KLSM purposefully availed themselves of the privilege of conducting activities in Massachusetts.
Saris observed that existing precedent suggested that whether the presence of the Helsinki Bridge and the KLSM crew in Massachusetts was voluntary and foreseeable depended in part on whether DSH and KLSM contracted with the charterer to enter the state.
“Here, Plaintiff has submitted no evidence that the agreements formed between DSH and KLSM specified that the vessel was bound for Massachusetts or the United States,” Saris wrote.
Again, the judge recognized that it was a closer question as to whether the plaintiff could show purposeful availment by KLSM given the operator’s frequent contacts with the U.S.
But Saris was unpersuaded by the argument based on the fact that KLSM-operated vessels made more than 200 port of calls in the U.S. during the 20 years preceding the Boston Harbor incident.
The judge wrote that the argument about the number of calls “does not address the underlying problem that the calls were presumably made at the direction of third-party charterers and cannot be considered voluntary.”