NEW ORLEANS — The U.S. Court of Appeals for the 5th Circuit has ruled to reverse a district court’s judgment preventing Industrial Maritime Carriers’ in rem action toward an ocean carrier and otherwise affirm the judgment.
The case revolved around New Orleans-based carrier Industrial Maritime Carriers (IMC), which was attempting to recover a tugboat from Freightplus USA Inc. The plaintiff, GIC Services LLC, contracted Freightplus to arrange for the oceanic transfer of the tugboat Rebel to a port in Lagos, Nigeria. Freightplus was incapable of pursuing this request, so the company made arrangements with Yacht Path International to secure transportation. Yacht Path then proceeded to broker a deal with IMC to make the company the vessel-operating common carrier. GIC agreed to pay Freightplus $111,000, Freightplus agreed to pay Yacht Path $85,000, and Yacht Path agreed to pay IMC $70,000. The conflicts arose, however, when Yacht Path didn’t compensate IMC.
While talks over compensation were taking place between IMC and Yacht Path, the Rebel's destination was confused. IMC claims Yacht Path said the Rebel would be docked in Warri, Nigeria, and Freightplus says Yacht Path told it the tugboat would be discharged in Lagos.
Communication between the companies bore little fruit though Rebel's transit. Unable to discharge Rebel in Lagos, IMC proceeded to guide the ship to Warri. Through its channels, GIC attempted to retrieve the Rebel but failed when it became clear that Industrial Maritime Carriers had not paid for its cargo. Legal action then came into play.
GIC filed a suit against Freightplus, and Freightplus involved a third party claim against IMC, which counter-claimed against Rebel and Freightplus in rem. The district court ruled that Freightplus owed $1,860,985 to GIC for the ineffective discharge. The court also decided that IMC was 30 percent responsible for GIC damages, which called for GIC to pay 30 percent of the judgment and 30 percent of Freightplus’ attorney's fees. The district court also allowed IMC to recover $70,309.12 from Freightplus for the unpaid cargo.
Martin J. Davies, Admiralty Law Institute Professor of Maritime Law and director at the Tulane Maritime Law Center, told the Louisiana Record that this case was basically a matter of a "misunderstanding indicating that people weren't paying attention when they did the booking."
“It's very surprising that the case got litigated in the first place, like actually went to court," Davies said. "And it's even more surprising that it went on appeal."
Although the issues that created the case seem somewhat simplistic, Davies suggested that since the matter is unique, it likely won't make any difference in future maritime cases.
“The total amount of award money is $70,000, and it's not usually the case that people take those sums of money all the way to court," Davies said. "Often when you see cases fought for a relatively small amount of money, there is often a point of principle lurking in the background that someone wants to establish a precedence for. I can't see that in this case either because it's such an unusual circumstance.”