A number of barges at United Bulk Terminal’s facility broke away, alliding with the M/V ALKMAN, Combo’s vessel, on the Mississippi River. When Combo sued United for the breakaway, United filed a third-party complaint against Carnival, alleging that Carnival’s cruise ship caused the breakaway by navigating too close to the fleeting facility under full speed. Judge Africk granted Carnival’s Motion for Partial Summary Judgment, ruling that the drifting vessels were presumptively at fault under THE LOUISIANA, the 1866 Supreme Court decision. After Carnival’s dismissal, United settled with Combo, but appealed Judge Africk’s dismissal of Carnival. Before the Court reached the issue of Carnival’s fault, it ruled on whether United’s settlement with Combo meant United could not pursue Combo under Ondimar.

Settling, then pursuing an at-fault third-party

In Ondimar Transportes Maritimos v. Beatty St. Props, Inc., 555 F.3d 184, 187 (5th Cir. 2009), the Fifth Circuit threw a wrench in many settlements when it ruled that one defendant cannot settle with the plaintiff, then proceed against a responsible party because it is assumed every party settles for its pro rata share of fault. For instance, if two barges collide and lose their cargo, the barge owner cannot settle with the cargo owner (likely its client), then pursue the other barge owner for negligence, even if the cargo owner has been compensated in full. In Combo Maritime, the Fifth Circuit made an exception to this harsh rule explicit: if the settling party obtains a release from the would-be plaintiff for the at-fault party, the settling party can pursue the at-fault party.

The Fifth Circuit ruled that because United settled with Combo and obtained a full release for Carnival, Ondimar did not prevent United from pursuing Carnival. Ondimar had left this question open, pointing out that under Texas law, even a release for the responsible party was not enough. In Ondimar, the fault-free plaintiff had been compensated in full, so could not pursue any other party. Nonetheless, the Fifth Circuit ruled this was still not enough. Now the open question is answered: if one defendant settles with a plaintiff and pursues an at-fault third-party, the defendant must get a release for the third-party from the plaintiff.

The Louisiana, The Oregon, and shifting presumptions

There were three presumptions at play in this case: first, a drifting vessel (United’s barges) are presumed at fault in an allision with a stationary vessel (THE LOUISIANA). Second, a vessel under power is presumed at fault in an allision (THE OREGON). Third, when a moving vessel passes a properly moored vessel and its wake causes damage to the moored vessel, the passing vessel is presumed at fault. After a lengthy and worthwhile discussion of the various presumptions and how they are rebutted, the Fifth Circuit concluded that the two presumptions in this case—first, that United’s breakaway barges were at fault for the allision with Combo’s vessel; and second, that Carnival’s passing cruise ship caused the breakaway—canceled one another out. The district court had concluded that United could not overcome the presumption that the allision was its fault, but the Court should have heard evidence regarding whether United properly moored its barges to determine whether Carnival was ultimately responsible for the breakaway. The Fifth Circuit remanded to the district court to determine the fault between Carnival and United.

This decision renders some clarity to Ondimar and takes some of the harshness out of that decision, which will encourage settlement.

Combo Maritime