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Blake v. Excel Environmental

filed: January 14, 1997.

ROBERT E. BLAKE INC., DBA GENERAL ENGINEERING AND MACHINE WORKS, THIRD-PARTY-PLAINTIFF-APPELLANT,
v.
EXCEL ENVIRONMENTAL, THIRD-PARTY-DEFENDANT-APPELLEE.



Appeals from the United States District Court for the Northern District of California. D.C. No. CV-92-04779-VRW. Vaughn R. Walker, District Judge, Presiding.

Before: Cynthia Holcomb Hall and Melvin Brunetti, Circuit Judges, and Charles R. Weiner,*fn* District Judge. Opinion by Judge Brunetti.

Author: Brunetti

BRUNETTI, Circuit Judge:

In the fall of 1990, the United States hired Robert E. Blake, Inc., d/b/a General Engineering & Machine Works ("Blake"), to repair and activate the S.S. Cape Bover which at that time was part of the United States Ready Reserve Fleet and was in storage at the Oakland Army Base. Blake, as general contractor, subcontracted Excel Environmental, Inc. ("Excel"), for asbestos abatement, carpentry, painting, and insulation repair services. On December 15, Excel employee John J. Pollock was injured while working aboard the Cape Bover. Pollock filed suit against Blake which in turn sought indemnification by Excel in a third party complaint. Blake relies on an indemnification clause contained on the back of an unsigned purchaser order which Blake issued to Excel prior to Excel's performance.

The Cape Bover had been out of service for several years as of 1990. Upon inclusion in the ready reserve fleet, a number of steps are taken to protect the ships. For example, hatches and other exterior openings are sealed to protect against the weather and dehumidification, cathodic protection, and fire and flooding alarm systems are installed. When vessels in the Ready Reserve Fleet are reactivated they must successfully complete sea trial and pass a United States Coast Guard inspection. One of Blake's employees described the Cape Bover as a "dead ship" at the time the contract was formed.

In November of 1990, Excel approached Blake and offered to perform the insulation repair work. On December 4, 1990, Blake was instructed to begin reactivation of the Cape Bover. Blake then proceeded to hire subcontractors, awarding the insulation project to Excel. On or about December 8, the ship successfully engaged in sea trials. The accident occurred on December 15, 1990. The parties agree that Pollock initially received benefits under the California Workers' Compensation Act, Cal. Lab. Code § 3200 et seq. (West 1989), for about nine months, and then subsequently received higher benefits under the Longshore & Harbor Workers Compensation Act, 33 U.S.C. § 903 (1986).

The district court ruled that the contract was governed not by admiralty law but by state law because the Cape Bover was a dead ship at the time Excel and Blake reached agreement. Applying Cal. Lab. Code § 3864, an anti-indemnification statute which requires an executed written agreement, the district court concluded that Blake's third party complaint was barred and granted summary judgment to Excel. The court also awarded attorneys' fees pursuant to a provision in the purchase order and California law.

Blake appeals both the summary judgment order and the award of attorneys' fees. It argues that summary judgment was inappropriate because the contract was governed by admiralty law, not California law, and it argues the award of attorneys' fees was improper because they were not awarded in the summary judgment order. We review grants of summary judgment de novo. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir. 1995).

I.

"A contract is within admiralty jurisdiction if its subject matter is maritime." Royal Ins. Co. of America v. Pier 39 Ltd., 738 F.2d 1035, 1036 (9th Cir. 1984). "A generalized test is not very useful in deciding actual cases because many contracts with a pronounced maritime flavor have been held not within the jurisdiction." Id. It is generally agreed, however, that a contract to repair a ship is governed by admiralty law while a contract to build a ship is not. Id. Contracts for services to a vessel laid up and withdrawn from navigation, i.e. a "dead ship", are also not governed by admiralty law. Goodman v. 1973 26 Foot Trojan Vessel, 859 F.2d 71, 73 (8th Cir. 1988); Keene Corp. v. United States, 700 F.2d 836, 844 (2d Cir. 1983); Murray v. Schwartz, 175 F.2d 72, 72-73 (2d Cir. 1949); Frank B. Hall & Co. v. S.S. Seafreeze Atlantic, 423 F. Supp. 1205, 1208 (S.D.N.Y. 1976); G. Gilmore and C. Black, The Law of Admiralty 26 (2d ed. 1975). See also Dean v. United States, 418 F.2d 1236, 1237 (9th Cir. 1969) (discussing dead ship doctrine in the context of the warranty of seaworthiness). It is the health of the ship at the time the contract is formed that is determinative. Goodman, 859 F.2d at 73.

The Cape Bover was a dead ship at the time Excel and Blake formed their contract. See American Eastern Dev. Corp. v. Everglades Marina, 608 F.2d 123, 125 (5th Cir. 1979); Seafreeze, 423 F. Supp. at 1208-09. Because the Cape Bover had been stored for "several years" and had been deactivated, the vessel was withdrawn from navigation and thus admiralty jurisdiction as well. See, e.g., Murray, 175 F.2d at 73; Seafreeze, 423 F. Supp. at 1208. At the time the contract was formed, the ship was still withdrawn and thus the contract and the reactivation work were outside admiralty law. See Goodman, 859 F.2d at 73 (status of ship at time of contract formation is determinative). As the factual history of the Cape Bover is not disputed, summary judgment was appropriate. Warren, 58 F.3d at 441 (summary judgment appropriate when there are no genuine issues of material fact).

In Murray, a former United States Maritime Commission ship laid idle for several years. 175 F.2d at 72, rev'g Murray v. The Meteor, 78 F. Supp. 637, 638 (E.D.N.Y. 1948). In 1947 it was purchased from the government and towed to New York City. The Second Circuit held that the ship was still dead because her pumps were deactivated, her engine was inoperable, and she lacked proper documentation. 175 F.2d at 72. In Everglades, the Fifth Circuit reasoned that in assessing whether a ship has been withdrawn from navigation, it considers the ship's pattern of use. 608 F.2d at 125. Noting that dry-storage at a marina allowed easy access to the water, the court concluded that the storage did not amount to a withdrawal from navigation. 608 F.2d at 124-25.

In Seafreeze, a commercial fishing vessel was decommissioned after seven voyages and remained berthed in the same port for between two years and five years. 423 F. Supp. at 1206. The court concluded that as the ship had been indefinitely withdrawn from navigation, admiralty law did not govern the contractual claim. Id. at 1208. It emphasized the lack of activity for more than four years as well as the lack of prospects that the ship would return to commerce. Id. at 1209.

A ship that has been unused for several years and has been mothballed such that it needs to successfully complete sea trials and pass a Coast Guard inspection falls under the umbrella of the dead ship doctrine. Like the vessel in Seafreeze, the Cape Bover was inactive for several years and was indefinitely withdrawn from navigation. 423 F. Supp. at 1206. As a ship in the Ready Reserve Fleet, its hatches and other opening were sealed for protection against weatherization, a dehumidification system was installed, and most importantly the ship lay dormant. This pattern of use is clearly inconsistent with regular maritime activity. See Everglades, ...


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