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Del v. Prudential Lines Inc.

decided: January 21, 1982.

ANGELO DEL RE, PLAINTIFF-APPELLEE,
v.
PRUDENTIAL LINES, INC., DEFENDANT-APPELLANT



Appeal from an order of the Southern District of New York, Leonard B. Sand, Judge, denying a motion by a shipowner to dismiss a longshoreman's negligence action against it on the ground that the action was time barred by § 33(b) of the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C. § 933(b). The district court certified for appeal the question of whether under Rule 17(a), F.R.Civ.P., an employer may ratify the commencement of an action brought by the employee in his own name and on his own behalf after the statutory period of limitations within which the employee might sue has passed and thereby prevent dismissal of the action on the ground that it is time barred.

Before Lumbard, Mansfield and Newman, Circuit Judges.

Author: Mansfield

This is another in a series of cases*fn1 in which we have been required to interpret the statutory scheme Congress established to compensate longshoremen and certain other maritime workers for work-related injuries. Section 33(b) of the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C. § 933(b) (the "Act"), provides that "all right" that a longshoreman has to sue a negligent third party (usually a shipowner) for personal injury damages is automatically assigned to his employer unless the longshoreman commences an action against the third party within six months after he accepts compensation under an award in a compensation order of the Benefits Review Board.*fn2

Prudential Lines, Inc. ("Prudential"), a shipowner, appeals from an order of the Southern District of New York, Leonard B. Sand, Judge, denying its motion to dismiss an action for damages for personal injuries by Angelo Del Re, a longshoreman, against it on the ground that the action is barred by § 33(b)"s six-month time bar. The district court certified for appeal pursuant to 28 U.S.C. § 1292(b) the question of whether under Rule 17(a), F.R.Civ.P., an employer may prevent dismissal under § 33(b) by "ratifying" the employee's commencement of an action in his own name and on his own behalf after the statutory period limiting his right to sue has passed. Because Rule 17(a) in no way permits the circumvention of what we believe to be § 33(b)"s absolute bar to suits by a longshoreman more than six months after he receives an award in a compensation order, we reverse.

Del Re was injured on March 7, 1975, while working for Northeast Stevedores, Inc. on a ship owned by Prudential. As a result of this accident Del Re was unable to work for 29 weeks and suffered permanent injury to his right arm and both of his legs. Northeast's insurance carrier, The State Insurance Fund, paid Del Re interim compensation during the period he was unable to work. On February 25, 1977, the Deputy Commissioner, Second Compensation District, of the U.S. Department of Labor approved an award of $13,935.58 and filed an award in a compensation order.

On October 17, 1977, Del Re commenced a personal injury negligence action against Prudential in the Supreme Court of New York. Prudential did not respond in any way to the suit, but Del Re did not seek a default judgment. On April 28, 1980, he commenced the instant federal action in the Southern District of New York. His action was brought in his own name, seeking damages on his own behalf for injuries in the course of his employment as a longshoreman on March 7, 1975, aboard Prudential's ship S.S. Santa Barbara.

Prudential immediately moved to dismiss the action on grounds of laches and failure to bring the suit within six months after Del Re's receipt of the award under the Department of Labor compensation order, as required by § 33(b). Since Prudential was unable at that time to show when the award in the compensation order was filed or when the settlement was agreed to by the parties, Judge Sand on January 30, 1981, denied the motion without prejudice to renewal. He further decided that the laches issue could best be decided after a trial. After the judge indicated that Del Re should elect within 15 days whether he wished to seek a default judgment in the state court proceeding or to litigate in federal court, the parties filed a stipulation discontinuing the state court action.

After obtaining a copy of the compensation order, which was dated February 25, 1977, Prudential renewed its motion to dismiss, relying on the facts that the state court action was commenced on October 17, 1977, and the federal court action was commenced on April 28, 1980, both more than six months after the compensation award was filed. Del Re responded to the motion by obtaining a letter from Northeast's insurance carrier, The State Insurance Fund (which as subrogee of Northeast pursuant to 33 U.S.C. § 933(h) was the sole possessor of the right to sue Prudential for Del Re's injuries) purporting to "ratify" the commencement of "his" action in his own behalf. Del Re argued that under Rule 17(a), F.R.Civ.P., The State Insurance Fund, the real party in interest, cured the admitted defect in the suit by ratifying his commencement of it, even though it was commenced on his own behalf. In an opinion dated June 18, 1981, Judge Sand agreed, denying Prudential's motion to dismiss but stating:

"We are by no means unmindful of the paradox which results: the insurer cannot institute an action in its own name because the statute of limitations bars such a proceeding; the longshoreman cannot maintain an action in his own name because more than six months have elapsed since receipt of the compensation award; although neither the insurer nor the longshoreman, proceeding alone, can maintain the action, the consequence of the longshoreman having brought an action within the period of the statute of limitations in conjunction with the ratification by the insurer, permits the action to be resuscitated under F.R.Civ.P. 17(a)."*fn3

Prudential then applied to have the question certified to this court pursuant to 28 U.S.C. § 1292(b), which Judge Sand granted on July 7, 1981. We granted leave to appeal on August 11, 1981.

Discussion

Section 33(b) of the Act states in no uncertain terms that, unless an injured longshoreman brings suit against a third party within six months after receiving an award in a compensation order, all his rights against the third party are automatically assigned to his employer;*fn4 a longshoreman has no right thereafter to sue the third party. As the Supreme Court noted in Rodriguez v. Compass Shipping Co. Ltd., 451 U.S. 596, 101 S. Ct. 1945, 1957-58, 68 L. Ed. 2d 472, 487-88 (1981), the Longshoremen's and Harbor Workers' Compensation Act reflects a balancing of the conflicting interests of longshoremen, stevedore-employers, and shipowners. Congress' enactment in 1959 of the six-month rule benefited the injured longshoreman by allowing him time, after learning how much compensation he would receive from his employer, to decide whether to bring suit against the shipowner. Prior thereto the longshoreman's right to sue was terminated immediately upon receipt of the award. Rodriguez v. Compass Shipping Co. Ltd., supra, -- - U.S. at -- , 101 S. Ct. at 1950, 68 L. Ed. 2d at 480; Bloomer v. Liberty Mutual Ins. Co., 445 U.S. 74, 100 S. Ct. 925, 63 L. Ed. 2d 215 (1980). But the six-month provision, while according the longshoreman a fixed period of time within which to make up his mind on whether to sue, also forces him to make his decision with reasonable promptness, thereby benefiting the shipowner, who desires a prompt resolution of all claims, and the stevedore-employer, who does not want to be delayed unduly in deciding whether himself to sue the shipowner for damages. Under the Act a successful recovery by the stevedore-employer would be applied toward reimbursement of any compensation payments made by it or its subrogated insurance carrier to the longshoreman and toward a reasonable attorney's fee, with 20% of any remaining balance being retained by the stevedore-employer and 80% paid to the longshoreman, 33 U.S.C. § 33(e).

Thus § 33(b)"s six-month rule represents a balancing of interests. Various provisions of the Act, while apparently unrelated, represent legislative trade-offs between the interests of these three concerned parties. Accordingly, we must tread warily when interpreting the Act and "adhere closely to what Congress has written." Rodriguez v. Compass Shipping Co. Ltd., supra, -- - U.S. at -- , 101 S. Ct. at 1957, 68 L. Ed. 2d at 488.

In Rodriguez v. Compass Shipping Co. Ltd., 617 F.2d 955 (2d Cir. 1980), aff'd, 451 U.S. 596, 101 S. Ct. 1945, 68 L. Ed. 2d 472 (1981), we considered whether, in spite of the clear language of § 33(b), a longshoreman might be able to bring suit after the six-month period had passed. Rodriguez argued that his employer's failure to sue indicated a conflict of interest between him and it and that as a matter of public policy the right to sue, when the stevedore-employer refuses to pursue it, should be reassigned as a matter of law to the longshoreman, relying upon Czaplicki v. The Hoegh Silvercloud, 351 U.S. 525, 76 S. Ct. 946, 100 L. Ed. 1387 (1956). We rejected that argument, noting that Czaplicki involved a real conflict of interest: the employer's insurer, which by subrogation had acquired the employer's exclusive right to sue, was also the insurer of the shipowner's contractor, who faced liability as a defendant and as an indemnitor of the shipowner. Thus in Czaplicki the party holding the right to sue would have been suing itself if it had exercised that right. Moreover, at the time Czaplicki was decided, a shipowner could seek indemnity from an employer-stevedore for any damages it was required to pay to the employee, with the result that the employer might ultimately have to pay any damages that might be awarded. Thus, even without the "same insurer" conflict of interest, a ...


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