Lampsis Navigation Ltd. v. Ortiz de Cortes

694 F.2d 934

• Court: Court of Appeals for the Second Circuit
• Decided: December 3, 1982
• Docket: No. 1118, Docket 81-7929
• Status: Published

Opinions

WINTER, Circuit Judge:

Eva Ortiz de Cortes (“Mrs. Lobaton”), widow and personal representative of her deceased husband, Jesus Maria Lobaton, appeals from an order of summary judgment dated September 1, 1978, entered by Judge Owen in the United States District Court for the Southern District of New York, dismissing her wrongful death claim under the Death on the High Seas Act, 46 U.S.C. § 761 et seq. (1976), and related maritime laws.

We affirm.

BACKGROUND

On December 11, 1975, the DROSIA, a vessel of Liberian registry owned by Lamp-sis Navigation, Ltd., capsized and sank off Cape Hatteras, North Carolina. Seventeen crew members were rescued, eight others are presumed lost at sea. Following the loss of the DROSIA, Lampsis’ insurer instructed a Mr. R.J. Pitman to pay the deceased seamen’s families their accrued wages and benefits and to make “ex gratia payments” (settlements) for loss of life to the seamen’s dependents. Pitman, together with a representative of Lampsis, one Paul Santiago,¹ attempted to locate the families of the deceased crewmen in their home countries of Honduras, Guatemala, El Salvador and Colombia.

In January, 1976, Pitman and Santiago met with Mrs. Lobaton, a Honduran native, at her home in Colombia to effect a settlement. Although both men were present at the first meeting, Pitman was required to depart for Ecuador before the settlement was concluded. Mrs. Lobaton contends that Santiago told her during the negotiations that she did not need to engage counsel because Lampsis was adequately protecting her interests. In settlement, Santiago paid Mrs. Lobaton her deceased husband’s accrued wages and an additional sum of $30,-000, in return for which she executed a release before a Notary Public.² Before signing the release, Santiago specifically asked Mrs. Lobaton whether she fully understood the meaning of the release, to which she replied that she did. The release, which she signed, was written in Spanish and states,

I have read this document carefully and the content has been explained to me for which reason I release and waive any possible rights of legal action in any jurisdiction for this fact.

After the release was signed and payment made, Santiago helped establish trust accounts for Mrs. Lobaton’s seven children and explained that the interest on those accounts could be used for the maintenance of the children without invading the principal.

On June 10, 1976, Lampsis initiated the instant action in the District Court for the Southern District of New York to obtain exoneration from or limitation of liability in accordance with Liberian Maritime Law and Rule F of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure. Service was made to all known claimants and notice was given in the New York Law Journal.

On July 30, 1976, Mrs. Lobaton filed an answer and a claim for compensatory damages of $750,000 as well as for punitive damages. Lampsis responded by raising the defenses of accord and satisfaction and release and by moving for summary judgment. In a memorandum dated September 1, 1978, Judge Owen granted the motion and Mrs. Lobaton appealed.

In this appeal, she advances three arguments: (i) a release by a relative of a seaman should be as closely scrutinized as a release executed by the seaman himself; (ii) summary judgment was improper because material issues of fact remain in dispute; and (iii) the release was based on a mutual mistake of fact, namely that Lobaton was not covered by the Greek Seamen’s Union Collective Agreement. We reject these claims.

DISCUSSION

Mrs. Lobaton contends that the release in the present case should be subject to the same judicial scrutiny as a release executed by a seaman and, because of this, Lampsis bears the burden of proving that the release was validly executed. Admiralty law provides special protection for seamen. They are treated as “wards” of the admiralty court, Garrett v. Moore-McCormack, Inc., 317 U.S. 239, 246, 63 S.Ct. 246, 251, 87 L.Ed. 239 (1942) (quoting Harden v. Gordon, 2 Mason 541, 11 F.C.A.S. 480 (No. 6047) (C.C.Me.1823)), owing to such factors as their “alleged propensity towards ‘rashness’ and ‘credulity,’ ” Capotorto v. Compania Sud Americana de Vapores, 541 F.2d 985, 987 (2d Cir.1976) (quoting Brown v. Lull, 4 Fed.Cas. 407, 409 (No. 2018) (C.C.D.Mass.1836)), “their nomadic nature and the perils they encounter at sea,” Harris v. Lykes Bros. Steamship Co., 375 F.Supp. 1155, 1157 (E.D.Tex.1974), and “[t]he particularly authoritarian relationship of shipowners and their representatives to seamen and the isolation of the latter from the legal, economic and psychological support of a landbased community.” Capotorto, 541 F.2d at 987. However, none of these factors apply to relatives of seamen who are members of the “landbased community” with ready access to the advice of friends and the guidance of counsel. Because the privileges accorded to seamen are personal and arise from the sailor’s own peculiar status, we have expressly refused to extend the strict scrutiny of seamen’s releases to non-seamen, in particular to longshoremen, Capotorto, 541 F.2d at 987. See Ying Shine Jyu Fen v. Sanko Risen (U.S.A.) Corp., 1977 AMC 1224, (S.D.N.Y.1977) (“no independent authority” for the proposition that seamen’s representatives’ releases “are subject to the same scrutiny as seamen’s releases.”) The Fifth Circuit appears to have adopted the contrary view. Lewis v. S.S. Baune, 534 F.2d 1115, 1123 (5th Cir.1976). Nevertheless, following Capotorto, we decline to extend the strict scrutiny rule relating to seamen’s releases to their relatives.

Mrs. Lobaton also contends that the District Court erred in granting summary judgment because disputed issues of fact material to her claims exist. We disagree. It is true that summary judgment may be granted only when “there is no genuine issue as to any material fact,” Fed.R.Civ.P. 56(c), but the factual claims raised by Mrs. Lobaton are not material to the issues at hand.

Her affidavit states, “the company representative said that they were looking out for my interest and that I did not need a lawyer.” Assuming that fact to be true for purposes of this motion, it is insufficient to prove that she was induced to forego the assistance of counsel during settlement negotiations and agreed, as a consequence, to an unfair settlement. First, a release and settlement executed by the relatives of a deceased seaman is not inherently unfair simply because it was concluded without the benefit of counsel. Second, Mrs. Lobaton nowhere states facts which show that she was the victim of overreaching, was somehow coerced into entering the agreement or was in any way incompetent. The settlement negotiations entailed several meetings, all of which took place in Mrs. Lobaton’s own home and in her native language, and she had more than adequate opportunity to reflect on the matter and to consult friends and advisors. Nor was the substance of the settlement unfair. Even assuming constant overtime and bonuses, which are in fact irregular increments to any income, Mr. Lobaton’s top salary was $8,800 a year, or $733 a month. It can be assumed that he would not send his full salary check to his wife but, rather, would retain some money for personal expenses while in port. Moreover, a settlement obtained by a lawyer would be reduced by the amount of his or her fee. At present interest rates, $30,000 will provide an income to Mrs. Lobaton of somewhat over one-third of her deceased husband’s highest monthly salary without invasion of the principal. While this amount is less than she would receive if totally successful in her litigation, it is not unfair in light of the uncertainty as to the outcome of that litigation. Should the shipowner prevail in its motion for exoneration, a result which is by no means improbable, its liability will be limited solely to the present value of the DROSIA, which is currently resting on the floor of the Atlantic, 40 miles off Cape Hatteras. Had Mrs. Lobaton not settled, exoneration would have left her with nothing. This explains, we believe, why many of the families of the other deceased seamen, several of whom acted on competent legal advice, settled for less than Mrs. Lobaton.³

Mrs. Lobaton’s final argument is that the release should be rescinded because it was based on a mutual mistake of fact. She contends that the parties did not realize that the Greek Seamen’s Collective Agreement governed her husband’s wage rate and that the misapprehension as to his proper wage affected the terms of the settlement and release. Judge Owen in fact denied Lampsis’ motion for summary judgment as to three other deceased members of the DROSIA’s crew on those grounds. In those cases, however, the wages actually paid the seamen were considerably less than those specified in the Greek Seamen’s Agreement. A settlement based on actual rather than contract wages might well have underestimated the earning potential of those deceased seamen. In Lobaton’s case, however, his actual wages were approximately what he would have been entitled to under the Greek Seamen’s Agreement, if not somewhat higher. Misapprehension concerning the applicability of the Agreement could not, therefore, have affected the settlement and is not grounds for rescission.

Affirmed.

1 . Both Pitman and Santiago, who had formerly practiced law in Cuba and was a Miami based investigator of maritime claims, were fluent in Spanish and English.

2 . In Colombia, a Notary is required to be a licensed attorney.

3 . For example, the mother and common law wife and two children of Saul Ortega Flores received a total of $20,000, with $4,000 going to the mother, who had counsel. Rolando Galdamez Nasser left only his father who settled for $16,000 on the advice of Efram Alcantera, Manager of the Honduran Steamship Company. Ramirez Ramos’ rather complicated family situation resulted in a $33,000 settlement on his seven (and possibly nine) dependents of whom five were his minor children with the aid of a local attorney. Óscar Vasquiz left his father and five siblings, all of whom were partly dependent upon him for support. The father consulted an attorney and settled for a $15,000 payment.