repairs for hull and machinery; providing spare parts, maintenance and repairs for communication and navigation equipment; arranging for United States Coast Guard and classification society (American Bureau of Shipping) technical surveys; and communicating with Chesapeake and the vessels' time charterers.
Gleneagle's managerial role was autonomous. At the beginning of each month it requested and received funds from Chesapeake to meet budgeted expenses. The accounts were reconciled and trial balances stated at the end of each month. Gleneagle's accounts for Chesapeake were audited by the latter's certified public accountants at the end of each fiscal year.
These arrangements were in effect when the SURF CITY suffered the casualty in suit in February 1990.
I agree with Gleneagle that the Management Agreement in effect at the time of the casualty cannot be distinguished from that involved in In re Petition of United States, 259 2d 608 (3rd Cir. 1958), which contained comparable if not identical provisions. The Third Circuit reasoned that so broad a range of managerial responsibility "partakes of the nature of both charterer and owner pro hac vice, either status being sufficient to bring the contractor within the statute." Id. at 610. The Third Circuit also stressed the managing agent's potential liability stemming from its conduct, and the public policy underlying the limitation of liability statute. The court said of Mathiasen, the manager of the colliding vessel in Petition of United States:
Mathiasen was the employer of the personnel whose alleged negligence in part at least is asserted as the cause of the collision. Also it had the obligation of procuring "* * * all personnel necessary to fill the complement of each tanker" and to man, equip and supply the Mission [the colliding vessel]. From that obligation it must follow that if the ship was unseaworthy, because she was not fully and properly manned, equipped and supplied, as charged, responsibility may well be ascribed to Mathiasen. A prime purpose of the limitation acts has been to promote the employment of vessels in commerce and the encouragement of persons engaged in the business of navigation. American Car & Foundry Co. v. Brassert, 1933, 289 U.S. 261, 263, 53 S. Ct. 618, 77 L. Ed. 1162; Moore v. American Transportation Co., 1860, 65 U.S. 1, 24 How. 1, 39, 16 L. Ed. 674. Mathiasen in this collision, as to third parties, had virtually the responsibility of the record owner. Under the theory and purpose of the statute Mathiasen should be afforded the same kind of protection against the possibility of the crushing loss which might arise as is given said owner. Id. at 610-11
The fact that the vessel owner reimbursed Mathiasen "for its operational expense" did not deprive the manager of its right to limit liability, 259 F.2d at 609-10; nor does Chesapeake's obligation to reimburse Gleneagle have that effect in the case at bar.
I am unaware of any Second Circuit authority contrary to Petition of United States and the parties cite none. Its reasoning is persuasive.
The Third Circuit in Petition of United States construed Mathiasen's role under the contract as partaking "of the nature of both charterer and owner pro hac vice" and found it unnecessary to choose between the two, since either status justified the petition for limitation of liability. That two-pronged analysis may not be available in the case at bar. P 2(b) of the original Management Agreement expressed the understanding of the parties as follows:
It is understood and agreed that this Agreement is not and shall not be construed to be a demise or bareboat charter. The Managers shall be technical managers only whose authority to act shall be limited to that authority granted herein.
Addendum No. 1 provided at P 3:
The second sentence of Section 2(b) of the Agreement is hereby amended to read as follows:
"The Managers' authority to act shall be limited to the authority granted herein."
It is therefore open to claimant to argue that the parties continued in their refusal to characterize the Management Agreement as a charter, thereby depriving Gleneagle of the opportunity to invoke 46 U.S.C. § 186. The argument contra is that Gleneagle's expanded procurement responsibilities under the addendum bring the case within § 186. See the district court's opinion in Petition of United States, 155 F. Supp. 714, 717 (D.Del. 1957), quoted by the Third Circuit at 259 F.2d 608. I need not resolve the issue because in any event Gleneagle, just like Mathiasen in Petition of United States, "had virtually the responsibility of the record owner," and accordingly qualifies under 46 U.S.C. § 183.
Accordingly the motion of claimant Washington to dismiss Gleneagle's complaint for exoneration from or limitation of liability is denied.
It is SO ORDERED.
Dated: New York, New York
October 6, 1992
CHARLES S. HAIGHT, JR.
UNITED STATES DISTRICT JUDGE