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October 22, 1980

Ronald MOTTA, Plaintiff,

The opinion of the court was delivered by: TENNEY

This case constitutes yet another episode in the enduring struggle to correctly interpret and apply problematic provisions of the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C. §§ 901 et seq. (hereinafter referred to as LHWCA or the Act). The question raised here is whether an insurance company to which a longshoreman's personal injury claim has automatically been assigned because the longshoreman failed to institute suit within six months of receiving his compensation award, see id. § 933(b), can effectively ratify the longshoreman's commencement of a damages action against the shipowner notwithstanding the plaintiff's prior relinquishment of his right to sue. Upon reviewing recent Supreme Court and Second Circuit decisions concerning LHWCA actions and the scope of recovery, as well as the relevant policy concerns, the Court concludes that the insurance company's ratification is an adequate defense to the defendant shipping company's claim that the suit was not instituted by the "real party in interest." Fed.R.Civ.P. 17(a). *fn1"


On January 12, 1974, the plaintiff Ronald Motta, a longshoreman employed by the Northeast Stevedoring Company ("Northeast"), was injured while working aboard the S/S Ocean Harmonia, a vessel owned and controlled by defendant Resource Shipping & Enterprises Company ("Resource"). Motta filed a claim under LHWCA with the Office of Workmen's Compensation Programs and a formal order was issued on April 16, 1975 granting the plaintiff the sum of $ 8,199.03. This action was commenced on November 23, 1976, more than six months after acceptance of the compensation award. The defendant thus contended that the suit was barred by section 33(b) of the Act which provides that:

Acceptance of such compensation under an award in a compensation order filed by the deputy commissioner or Board shall operate as an assignment to the employer of all right of the person entitled to compensation to recover damages against such third person unless such person shall commence an action against such third person within six months after such award.

 33 U.S.C. § 933(b). Relying on Czaplicki v. Hoegh Silvercloud, 351 U.S. 525, 76 S. Ct. 946, 100 L. Ed. 1387 (1956) and its progeny, the plaintiff countered that the alleged assignment could be enforced only if the defendant proved that there was "no conflict of interest" between the longshoreman plaintiff and his employer, the stevedore. *fn2" Before these conflicting claims were resolved, the Court, at counsel's request, decided to delay consideration of the case until after the Second Circuit decided the case of Rodriguez v. Compass Shipping Co., 617 F.2d 955 (2d Cir. 1980), cert. granted, 449 U.S. 818, 101 S. Ct. 69, 66 L. Ed. 2d 20 (1981). See Letter to the Court from Joseph T. Stearns, dated May 16, 1979. Rodriguez was decided on March 19, 1980. The court of appeals held that a longshoreman's LHWCA claim was automatically assigned to his employer six months after compensation was awarded even though the award was made in a "settlement agreement" and no formal compensation order was filed. Id. at 958-59. In the course of discussing the shipowner's defense that the longshoreman could not institute an action because his claim had been assigned to his employer, the Second Circuit stated:

The defense raised by the defendants, that plaintiff is not the real party in interest, may always be invoked pursuant to F.R.Civ.P. 17(a), which provides that every action shall be prosecuted in the name of the real party in interest. Without this defense a defendant might be exposed to multiple suits based on the same claim.... A person, such as the employer here, to whom a claim has been assigned under § 33(b), is the real party in interest.... Assuming the assignment here to be valid, the right to sue is exclusively that of the employer, which has not joined in the action or ratified its commencement even though it has had a reasonable time to do so. The defense of assignment therefore is properly asserted as a procedural matter by the defendants.

 Id. at 958 (citations omitted) (emphasis added). Seizing on the underscored portion of the Second Circuit's statement, Motta procured a letter from Northeast's insurance company asserting that it ratified the plaintiff's commencement of this suit. This letter read as follows:

We were the Longshoremen's Act Insurer of Northeast Stevedoring Co., Inc., the employer of plaintiff-claimant on January 12, 1974, the date he was injured while working aboard a Resource Shipping Enterprises Co. vessel.
We have your letter dated March 28, 1980.
We hereby ratify plaintiff-claimant's commencement and continuance of his action against Resource Shipping Enterprises Company to recover damages for the personal injuries he sustained as a consequence of the accident.
If our ratification is sufficient to preserve to plaintiff-claimant ownership of the cause of action, we shall, of course, not institute a separate action against Resource Shipping, and we will be bound by any judgment which may be rendered in said action insofar as it determines liability, or lack thereof, for the accident, and the damages recoverable, if any. We understand also that we would be bound by any release executed by the plaintiff-claimant with our approval. Our lien and credit rights are, however, to attach to the proceeds of any recovery by way of judgment of settlement and are not in any way hereby released or relinquished.

 Letter to Irving Kernis, Esq. from Raymond Green, Supervising Attorney, The State Insurance Fund, dated May 6, 1980, annexed to Affidavit of Irving Kernis, Esq., sworn to May 9, 1980 ("Kernis Aff.").

 In response to this letter, counsel for Resource submitted a lengthy memorandum arguing that ratification was ineffective in this case for the following reasons: (1) the plaintiff had no cause of action because all his rights were assigned prior to the commencement of the suit and thus the "purported ratification" is a "nullity, since the original action was improperly brought in plaintiff's name in the first instance" Federal Rule of Civil Procedure ("Rule") 17(a) requires that an action be brought in the "name of the real party in interest" and this requirement can properly be ignored only in extraordinary circumstances not present here; (3) the insurance company's cause of action is materially different than the cause of action that is available to a longshoreman for six months from the time the compensation award is accepted; (4) there is, or may be, a defense available to the defendant in an action brought by the insurance company that would not otherwise be available in a suit instituted in the longshoreman's name. Defendant's Memorandum of Law in Support of a Motion to Dismiss Because the Plaintiff Was Not the Real Party In Interest ("Defendant's Memorandum") at 8-9. The plaintiff, apparently content to rely on the insurance company's ratification letter, never bothered to respond to this memorandum or the arguments made therein.


 As quoted above, the Rodriguez court stated that after assignment, "the right to sue is exclusively that of the employer, which has not joined in the action or ratified its commencement even though it has had a reasonable time to do so." 617 F.2d at 958. While this assertion suggests that the Second Circuit would approve of ratification in LHWCA cases, the Court cannot rely solely on this statement in resolving this issue. The ratification question was not before the court of appeals and Judge Mansfield's observation was not critical to that decision. See Kastigar v. United States, 406 U.S. 441, 445-46, 92 S. Ct. 1653, 1656, 32 L. Ed. 2d 212 (1972) (language unnecessary to Court's decision is not binding authority). The Second Circuit has indicated that "a distinction should be drawn between "obiter dictum,' which constitutes an aside or an unnecessary extension of comments, and considered or "judicial dictum' where (a court) ... is providing a construction of a statute to guide the future conduct of inferior courts." United States v. Bell, 524 F.2d 202, 206 (2d Cir. 1975). Statements falling in the latter category are considered "not binding ... (but) must be given considerable weight and can not be ignored in the resolution of (a) close question." Id.; see Boyd v. Henderson, 555 F.2d 56, 60 n.5 (2d Cir. 1977). Regardless of whether the Rodriguez ratification statement is viewed as "obiter" or "judicial" dictum, this Court adopts the view espoused by Chief Justice Marshall that

general expressions, in every opinion, are to be taken in connection with the case in which those expressions are used. If they go beyond the case, they may be respected, but ought not to control the judgment in a subsequent suit, when the very point is presented for decision.

 Cohens v. Virginia, 19 U.S. (6 Wheat.) 264, 398, 5 L. Ed. 257 (1821) (referring to dicta appearing in Marbury v. Madison, 5 U.S. (1 Cranch) 137, 2 L. Ed. 60 (1803)). Accordingly, giving due respect to the Second Circuit's reference to ratification in Rodriguez, this Court now turns to ...

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