Don't Be Late
By Marilyn Raia
Pacific Maritime Magazine
When a new maritime matter comes into the law office, among the first things to be done is determining what the applicable statute of limitations is. A wrong assumption can lead to significant adverse consequences for the client as well as for the lawyer.
Each state and territory has its own set of statutes of limitation for different types of cases. For example, one state may allow a four year time period for suing on a cause of action for breach of a written contract (California) and another state may allow a six year period for the same type of case (Washington). The time for filing a lawsuit in a maritime case often differs from the time allowed by state law and can be a trap for the unwary.
Statutory and Contractual Time Periods for Filing Suit
The time for filing suit on certain maritime claims is governed by federal statutes. For example, a seaman has three years from the date of an injury to file suit against his employer pursuant to 46 U.S.C. § 30106; a salvor has two years to bring an action for compensation for salvage services pursuant to 46 U.S.C § 80107 (c); and a cargo owner has one year to file suit against a carrier for cargo loss or damage pursuant to the note following 46 U.S.C. § 30701.
Parties to a maritime contract are allowed to agree on the time period for filing suit based on a breach of that contract. That time period may be shorter than the time period provided by state law for a breach of contract suit. For example, a policy of marine insurance may validly require suits for breach thereof to be filed within one year of the breach even though the state law where the policy was issued might allow several years for a breach of contract suit to be filed.
The Basics of the Doctrine of Laches
Unless specifically provided otherwise by statute or contract, the time for filing suit in a maritime case is governed by the equitable doctrine of laches. Under the doctrine, a party has a "reasonable" time to pursue a legal right. An unreasonable delay in pursuing a legal right will prevent the right from being enforced if the delay has prejudiced the opposing party. Whether the delay in pursuing a legal right was reasonable is determined by the equities of each case, that is, whether it would be inequitable to allow a party to enforce a claim in light of that party's delay in pursuing it.
In determining whether the doctrine of laches can be a successful defense to a suit, courts often use the analogous state law suit time periods as guidelines. Some courts hold if a maritime lawsuit is filed before the expiration of the time allowed by state law for filing such a lawsuit, it is presumed to have been brought within a reasonable time and to have not caused prejudice. The party opposing the lawsuit then has the burden of proving, based on the totality of the circumstances, that the lawsuit was unreasonably delayed and the delay caused prejudice. On the other hand, if a maritime lawsuit is brought after the expiration of the time allowed by state law for filing such a lawsuit, it is presumed to have been unreasonably delayed and caused prejudice. The party filing the lawsuit then has the burden of proving the lawsuit was filed in a reasonable period of time and no prejudice resulted.
The Doctrine of Laches Bars a Lawsuit
First Mississippi Corporation v. Fielder Towing Co., Inc. 472 F. Supp 631 (N.D. Miss. 1979) involved a barge owned by First Mississippi that was loaded with cargo on May 23, 1973. The barge was placed in tow of the tug Harriet Ann on June 1, 1973 in the Lower Mississippi River. On June 6, 1973, it was later placed in tow of the tug Jennifer Cummins, a tug owned by Fielder. The next day, the tug Jennifer Cummins dropped the loaded barge at a location where it was picked up by the tug Salle Estelle. The Salle Estelle delivered the barge to the final destination on June 8, 1973.
When the barge's hatches were opened, the cargo inside was found to be wet and damaged. The barge was also found to be damaged. Notice of the incident was not immediately given to Fielder which was later found to have been responsible for the damage. On June 13, 1973, Fielder sent a statement for the towage of the barge to First Mississippi. The statement identified the tug Jennifer Cummins as having provided the tow. The statement was paid nine days later.
Although First Mississippi knew who owned the tug Jennifer Cummins, its first notice to Fielder of a claim for damage to the barge and cargo was given on August 28, 1974, or more than one year after the damage was discovered. Suit was filed on May 13, 1975 after settlement discussions were unsuccessful. The district court held the damage to the barge and cargo was caused by the negligence of Fielder's tug Jennifer Cummins. It also held Fielder would be adjudged liable unless First Mississippi's suit was barred by the doctrine of laches. Fielder contended it was prejudiced by First Mississippi's unreasonable delay in pursuing its claim.
The district court held First Mississippi's delay in notifying Fielder of the claim was inexcusable. In the alternative, the court found: 1) First Mississippi could have obtained the identity of the tug that towed its barge and cargo by the exercise of reasonable diligence; or 2) First Mississippi had actual knowledge of the involved tug from Fielder's invoice which it paid. The district court also held First Mississippi had a duty to promptly put Fielder on notice of the damage so that Fielder could participate in the damage survey and investigate the facts.
Finally, the district court held the First Mississippi's delay in notifying Fielder of the incident prejudiced Fielder. It noted the tug Jennifer Cummins was sold five months after the incident, and six or seven months later suffered a fire in the wheelhouse which destroyed the logbook and other documents, the remains of which were discarded by the new owner. As a consequence, the logbook and the other documents that contained the history of the subject tow were not available for trial. Further, Fielder tried to find the crewmembers who operated the tug on the voyage in question. Only two could be located and only one of them could remember the voyage. The district judge concluded the delayed claim notification seriously impaired Fielder's investigation and defense of the lawsuit, and held the lawsuit barred by the doctrine of laches.
The Doctrine of Laches Does Not Bar a Lawsuit
The doctrine of laches may not be raised as a defense to a lawsuit brought by the federal government. United States v. Arrow Transportation Company 658 F.2d 392 (5th Cir. 1981) is on point. In 1949, the barge W-222 sank in the Tennessee River while in tow of the tug Atco which was being operated by Arrow. Both the Tennessee Valley Authority and the US Coast Guard knew of the sinking incident shortly after it occurred. They conducted an investigation and prepared reports. The wreck was not marked and there was no demand to the responsible parties to raise it. The US Corps of Engineers was not made aware of the sinking at the time it occurred.
In 1972, or 23 years after the sinking, the Tennessee Valley Authority told the US Corps of Engineers about the wreck as part of a routine inventory of vessels on the Tennessee River. On January 30, 1973, the US Corps of Engineers sent a request to Arrow for the removal of the wreck. Arrow did not comply with the request. The US Corps of Engineers undertook the removal of the wreck and completed the work on January 8, 1975 or 26 years after the sinking at a cost of $32,727.90.
The United States sued Arrow on May 12, 1977, or more than 28 years after the sinking, to recover the cost of removing the wreck. The sinking was alleged to have been caused by Arrow's sole negligence. Arrow denied negligence and contended the government's lawsuit was barred by the doctrine of laches because of an unreasonable delay in the filing of the lawsuit. The district court entered judgment in Arrow's favor finding the government's suit was barred by the doctrine of laches. The government appealed. The Fifth Circuit reversed. It characterized the district court's effort to achieve an equitable result under the circumstances of a 28 year delay in filing suit as "noteworthy." Nonetheless, it held the doctrine of laches could not be used as a defense against the United States when enforcing a public right.
Some federal statutes provide a time period for filing suit to enforce certain maritime rights. Some maritime contracts provide a time for filing suit for breach thereof. In the absence of a statute or contractual provision, the time for filing suit on a maritime cause of action is governed by the doctrine of laches. Under the doctrine, a suit must be filed in a reasonable period of time. If there is an unreasonable delay which prejudices the opposing party, the suit will be barred.