Henderson v. Arundel Corporation
1966 U.S. Dist. LEXIS 8048, 262 F. Supp. 152 (1966)
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Rule of Law:
A seaman may recover lost future wages from his employer if the vessel is damaged and the voyage terminated due to the employer's own negligence, but may not recover such wages from a third party whose negligence damaged the vessel, as this constitutes an impermissible claim for purely economic loss arising from unintentional interference with a contract.
Facts:
- Libellant Henderson and thirty-four other crew members were employed by The Arundel Corporation (Arundel) to work on its vessel, the Dredge Lyon.
- The crew's employment was for the duration of a specific contract Arundel had with the United States Corps of Engineers for dredging the Baltimore Harbor channel.
- On January 28, 1963, the Dredge Lyon collided with the M/S PRAHSU, a vessel owned and operated by Elder Dempster.
- The collision caused severe damage to the Dredge Lyon, requiring it to be taken out of service for repairs.
- As a result of the dredge being idle, Arundel laid off the entire crew.
- The crew members lost approximately six weeks of wages, maintenance, and overtime they would have earned had the dredging project continued.
Procedural Posture:
- Thirty-five crew members (libellants) filed libels (suits in admiralty) in the U.S. District Court for the District of Maryland against their employer, The Arundel Corporation, and the owner of the other vessel, Elder Dempster.
- Libellant Henderson's original libel was dismissed with leave to amend.
- Henderson's first amended libel against both respondents was also dismissed with leave to amend.
- Henderson subsequently filed a second amended libel against Arundel and a separate libel against Elder Dempster.
- The other crew members filed parallel libels against both Arundel and Elder Dempster.
- Both Arundel and Elder Dempster filed exceptions (similar to a motion to dismiss) to the libels against them, arguing they failed to state a claim upon which relief could be granted.
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Issue:
Does a seaman have a cause of action for lost future wages against (1) his employer when the vessel is damaged due to the employer's negligence, or (2) a third party when the vessel is damaged due to the third party's negligence, thereby preventing the seaman from completing his employment term?
Opinions:
Majority - Watkins, District Judge.
As to the employer, yes; as to the third party, no. A seaman has a cause of action against his employer for lost wages where the employer's negligence causes the wreck of a vessel, but a seaman does not have a cause of action against a third-party tortfeasor for negligent interference with his employment contract. Regarding the claim against the employer, Arundel, the court held that the libellants stated a valid cause of action. The general maritime 'Wreck Statute' (46 U.S.C. § 593), which typically terminates a seaman's right to wages upon the wreck of a vessel, does not apply when the wreck is caused by the fault or negligence of the vessel's owner. Under general contract principles, impossibility of performance caused by the promisor's own fault constitutes a breach of contract, making the promisor (Arundel) liable for resulting damages, including the crew's lost wages. This principle aligns with the admiralty tradition of protecting seamen. Regarding the claim against the third party, Elder Dempster, the court held that the libellants failed to state a valid cause of action. The court followed the established tort principle from Robins Dry Dock & Repair Co. v. Flint, which bars recovery for purely economic losses resulting from negligent but unintentional interference with a contractual relationship. The court explicitly rejected creating a 'special rule' for seamen that would make them an exception to this principle, stating that the fundamental principles of tort liability should apply equally to all types of employees, whether seamen or factory workers.
Analysis:
This decision reinforces the traditional tort doctrine established in Robins Dry Dock, which prevents recovery for purely economic losses resulting from negligent interference with contractual relations. It clarifies that while seamen are 'favorites of admiralty,' this special status does not extend to creating a new cause of action against third-party tortfeasors for lost wages. The case creates a critical distinction: an employer's negligence that prevents contract performance is a direct breach of contract, whereas a third party's negligence causing the same result is merely an indirect, non-recoverable economic harm. This precedent limits the scope of liability in maritime collisions, preventing a cascade of claims from parties who are economically harmed but not physically injured.
