Marine Solution Services, Inc. v. Horton
Horton served as the president and chief executive officer of Marine Solution Services ("MSS"). The company owned Barge 204 which was currently located at Pickworth Dock. Due to a transfer of ownership at the dock the barge had to be moved. Horton contacted Steve Adams, the skipper of the tug Solution and employee of MSS, and informed him of the need to tow Barge 204 and that Horton would assist him in the task. While preparing the barge to be towed, the crew of the Solution secured a tow line to the barge but did not pass it through the Panama chocks, large U-shaped pipes that prevent the lines from coming loose as the barge turns, on the barge. While in tow, Horton noticed a collision would occur if the Solution did not head further offshore. Horton ran to the forward part of the barge, and signaled Adams. Adams gave the engines full power which caused the towline to jerk taut and snap across the deck which smashed Horton legs against the weather wall. As a result, Horton suffered compound fractures in his legs. These fractures caused nerve, vascular and muscular damage which required his legs to be reconstructed and continue to chronically pain Horton.
Horton filed two lawsuits. Both defendants filed motions for summary judgment. Adams argued that as a seaman Horton is unable to bring a claim against a fellow employee, and in the case that he is found not to be a seaman his exclusive remedies exist under the Longshore and Harbor Workers' Compensation Act (LHWCA). MSS sought summary judgment on the basis that Horton was not a seaman and therefore cannot pursue his claims under the Jones Act, the doctrine of unseaworthiness, or maintenance and cure. The company also argued that Horton's claim for common law negligence is prohibited because his exclusive remedy is the Alaska Workers Compensation Act (AWCA). The Superior Court granted Adams' motion but denied the rest. At trial, a jury found Horton to be a seaman and recovered $186,000 in cure, $175,00 for past damages, and $1,155,00 for future damages. The trial court modified these awards and both parties appealed.Should a close corporation be able to be sued by one a shareholder owning 49% of the company? Did Horton qualify as a seaman? Should the court have applied the Pennsylvania rule?
: In addressing the issue of whether Horton could sue MSS, the court began by explaining that as an Alaskan corporation, MSS can sue and be sued in its corporate name. MSS argues that because Horton was in complete control of MSS he is effectively suing his alter ego, and further, that an individual who is an owner of a vessel cannot sue himself to recover for maritime tort remedies. However, MSS can point to no case law that supports the differentiation of closely held maritime corporations and land-based corporations. As such, the corporate entity is only disregarded when the separate personalities of the corporation and the individual no longer exist. To determine whether this has occurred, courts consider whether there has been a commingling of funds, undercapitalization, and failure to observe corporate formalities. Here, the Alaskan Supreme Court found no facts supporting the notion that Horton used MSS as an alter ego and as such rejected MSS's argument that Horton was suing his alter ego.
The court then addressed the issue of whether Horton qualified as a seaman. MSS argues that Horton was not an employee of MSS and therefore cannot bring a Jones Act or unseaworthiness claim. The court identified the key issue here being whether Horton was an employee of MSS because at the time of his injury he was serving as a deckhand subordinate to Captain Adams, which clearly qualifies him as a seaman. In Cosmopolitan Shipping Co. v. McAllister, 377 U.S. 783 (1949), the Supreme Court set forth three questions to determine whether a person is considered an employee: 1) Whose orders controlled the master and crew? 2) Whose money paid their wages? 3) Who hired the crew? When reviewing the record through these questions the Alaskan Supreme Court found that Horton was an employee of MSS. At the time of injury he was a deckhand and subordinate of Captain Adams, MSS had the authority to discharge Horton, and that majority shareholder considered Horton an employee.
Next, the court addressed the application of the Pennsylvania Rule to the present case. The Pennsylvania Rule provides that if a vessel is in violation of a statutory duty intended to prevent collisions at the time of an accident, the burden of proof shifts to that vessel to show that the violation could not have been the cause of the accident. MSS argues that the rule does not apply to Jones Act personal injury cases. However, the Alaska Supreme Court rejected this position citing to several circuits that the Pennsylvania Rule was reformulated to apply to any statutory violator that is a party to a maritime accident and there is a conceivable connection between the violation and the injury.
Here, MSS violated two safety regulations. The first violation was having Captain Adams pilot a 123 ton vessel when he was only licensed to operate vessels up to 100 tons. The second violation was the failure to post a look-out. The court quickly dismissed the first violation because MSS failed to raise the argument at trial; and as a result the argument was waived. In regards to the second violation, MSS contends that since no collision occurred in Horton's injury that the lookout regulation is not relevant to the present case and should not have been presented to the jury. The court rejected this argument because the record showed that Horton's injury came as a result of Captain Adams attempting to avoid a collision with a moored barge and therefore the failure to post a lookout reasonably could have led to the series of events causing Horton's injury.The Pennsylvania Rule provides that if a vessel is in violation of a statutory duty intended to prevent collisions at the time of an accident, the burden of proof shifts to that vessel to show that the violation could not have been the cause of the collision.
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