Cruises - Carnival Ship Seized in Galveston....

From Boomberg:
(Quote): A Carnival Corp. (CCL) cruise ship was ordered held in a Texas port by a U.S. judge in a $10 million lawsuit filed by the family of a German tourist who died aboard the Costa Concordia shipwreck off the Italian coast.
An arrest warrant was issued yesterday for the MS Carnival Triumph, a 2,758-passenger cruise liner based in Galveston, Texas, that is owned by the same company that owns the Costa Concordia, according to the lawsuit also filed yesterday in federal court in Galveston by the family of Siglinde Stumpf. The Triumph provides year-round service from the Houston area to multiple ports in the Caribbean and Mexico, according to Carnival’s website.
“The court finds that the conditions for an attachment of defendants’ joint and collective property within this district, mainly the MS Carnival Triumph, appear to exist upon an admiralty and maritime claim,” U.S. Magistrate Judge John Froeschner of Galveston said in the warrant.
The Carnival Triumph will be allowed to unload passengers and cargo and move between berths within the port until a “prompt hearing” can be scheduled, at which “the plaintiff shall be required to show why the attachment and garnishment should not be vacated,” according to the order.
A representative of Miami-based Carnival, the world’s largest cruise-ship operator, didn’t immediately return phone and e-mail messages after regular business hours yesterday seeking comment on the court order. The Triumph was scheduled to sail today for a five-day cruise to Yucatan and Cozumel, according to a Carnival website.
At least 25 people died after the Costa Concordia ran aground off Italy in January.
The case is Kai Stumpf v. Carnival plc, 3:12-cv-00099, U.S. District Court, Southern District of Texas (Galveston).(Quote)

Well, here's a new and likely unexpected legal wrinkle, with the weekend, no chance for a hearing, and a "lost" cruise with the potential of several thousand hard-to-deny claims for compensation facing Carnival.....

This is a big travel news story, and potential for Omni, Mods.

They arrest personal property in Texas??!!

The theory is called in rem jurisdiction. The same theory is used by the federal government in criminal forfeiture actions. You acquire jurisdiction by suing the asset which lies in your jurisdiction. This is a common maritime practice.

Carnival is ordinarily allowed to post a bond equal to the price of the cruise ship and the res (property) will be released. The problem is that Carnival probably doesn't own the ship. The engines (like an aircraft are probably leased), the ship builder has a note on the boat, and Carnival has probably pledged the ship as collateral on various notes. (This common place). I'm not sure whether an in rem action would defeat these secured interests or not. In federal forfeiture law (which is maritime based), it does trump secured filing interests much of the time. It really doesn't matter, the seizure will probably force Carnival to deposit are large pile of cash or promissory notes into the custody of the US Courts to get their ship back.

Cruise Ships are usually registered in Panama, the Bahamas, or Libreria and engage in the legal fiction that they are not subject to US jurisdiction. They do this to avoid labor requirements, tax law, and to a lightly lesser extent tort and liability laws. (That is also why their cruises have at least one non-US stop in all they cruise runs, e.g. (a Pacific coast cruise always includes one Mexican or Canadian city)). The attorney suing them knows this and has taken this move to force them to the table.

I find this legal move by cruise ship companies troubling. When one of their ships get attacked by pirates or is seized by hostile nations. Then they claim they are really American and ask for US help. I think they should be reduced to appealing to the Panamian, Bahamian, or Librerian navies.

I expect that Carnival will offer some form of compensation to their customers for this inconvenience, but as I recall the terms and conditions of their agreement actually exclude this liability as well. This clause is lifted from a Norweigan Cruises (A Bahamian Company despite its name) contract:

"(a) Risk of Travel: The Guest admits and acknowledges that travel by ocean-going vessel occasionally presents risks and circumstances that may be beyond the ability of the Carrier to reasonably control or mitigate. The Guest's understanding includes all risks of travel, transportation, and handling of Guests and baggage. The Guest therefore assumes the risk of and releases the Carrier from any injury, loss, or damage whatsoever arising from, caused by, or in the judgment of the Carrier or Master rendered necessary or advisable by reason of: any act of God or public enemies; force majeure; arrest; restraints of governments or their departments or under color of law; piracy; war; revolution; extortion; terrorist actions or threats; hijacking; bombing; threatened or actual rebellion, insurrection, or civil strife; fire, explosion, collision, stranding or grounding; weather conditions; docking or anchoring difficulty; congestion; perils of the sea, rivers, canals, locks or other waters; perils of navigation of any kind; lack of water or passageway in canals; theft; accident to or from machinery, boilers, or latent defects (even though existing at embarkation or commencement of voyages); barratry; desertion or revolt of the crew; seizure of ship by legal process; strike, lockout or labor disturbance (regardless whether such strike, lockout or labor disturbance results from a dispute between the Carrier and its employees or any other parties); or from losses of any kind beyond the Carrier's control. Under any such circumstances the voyage may be altered, shortened, lengthened, or cancelled in whole or part without liability to the Carrier for a refund or otherwise."

If Carnival wants to be jerks about it, they could simply tell the guests we are sorry, but it is not out fault. We were prepared to give you the cruise but those evil meanie lawyers screwed you out of your vacation. Take the issue up with them and have a nice life.

The pedal hits the metal when one of their ships get attacked by pirates or is seized by hostile nations. Then they claim they are really American and ask for US help. I think they should be reduced to appealing to the Panamian, Bahamian, or Librerian navies.

Better yet, the navy of some landlocked country like Mongolia.

This will be very upsetting for all those people booked on thecruise who have taken time off work and paid airfares etc to get on this cruise. It seems you are punishing people who have no reason to be punished. Crazy and sad.

Mongolia doesn't have an ocean going ship registry, but Luxembourg does. :D We have no Navy though.

The theory is called in rem jurisdiction. .

1. Thanks Stu. I know the theory. I was mocking the journalist's use of arrest as a synonym for seize.

2. if Carnival is adequately insured, why does the Texas judge order a seizure while the case is pending?

Sounds like Carnival posted bail, or whatever terms you legal guys like to use LOL.

Insanity. A German manages to get a ship seized in the US? Only a US court would be this insane. Hey... lets ignore international salvage rules and give a half billion dollars back to Spain too...

From the victims lawyer

Eaves said in a telephone interview earlier today that the Triumph could be freed from the seizure order if the cruise line agreed to post a $10 million security bond in the German tourist’s lawsuit. Details of the resolution, which was reached about 30 minutes before departure time, are confidential, Eaves said in an e-mailed statement.

I can understand this if Carnival Corp had lost the lawsuit case and wasn't paying the plaintiff, or if they were a flight risk and a judge thought it likely that they would lose the case, but when the case hasn't even been heard they can lose their property just like that?

The theory from maritime law is that the asset would otherwise sail beyond the jurisdiction of the Court. Whether there should be some due process is another issue. Carnival is rich enough to pay the judgment and has sufficient US connections that they would not try to ignore the judgment.

What happens if the Defendant was a Venezualan company and if you let the asset leave port you'd have to try to get Venezula to enforce a US judgment? The US has moved back and forth on the level of due process required before assets are seized. The German passenger had to make some showing of merit to obtain the order. The US judge probably issued a "show cause" order which said that Carnival had to show up in ten days or so and demonstrate why the order should continue.

Close your eyes and imagine being the plaintiff with a shakey defendant with minimal ties to the US. You'd want the order. Now again close your eyes and think about the gun being pointed at your head when a highly valuable asset is being "held hostage." Like many things in life, there are two sides to the story.

As to the theory for US jurisdiction, we'd need to know alot more. Remember how the victims of Bopal got fleaced after the US sent the Union Carbide suit back to India.

1. Thanks Stu. I know the theory. I was mocking the journalist's use of arrest as a synonym for seize.

2. if Carnival is adequately insured, why does the Texas judge order a seizure while the case is pending?

The journalist was using the term correctly. Seizing the ship under maritime law is correctly referred to as arresting the ship.

. Hey... lets ignore international salvage rules and give a half billion dollars back to Spain too...

Isn't that what happened a couple of months ago?

http://paul-barford.blogspot.com/2012/02/salvaged-treasure-headed-back-to-spain.html

Apparently, Carnival didn't think (or plan) that the US magistrate (not quite a federal judge) would accede to the plaintiffs' demand to secure their rights, "Playing Chicken" as it were. Faced by the potential cancellation of the cruise, Carnival's lawyers arranged to post a bond equal to the potential "value' of the law suit. I'm surprised that they could pull it off in a Saturday time frame, and likely had to pay a bit above conventional rates (plusa hefty legal bill) to secure a bond on Saturday.

Would other Carnival brands likely be affected?

More from the very talkative lawyer

Eaves said he filed Stumpf’s lawsuit in Galveston to target the Triumph, which he said has “the same inadequate safety standards as the Costa Concordia, exactly the same.’’

“We’ve not been able to get Carnival’s attention, so this is our shot over the bow to let them know we’re serious about changing the law and maritime standards,” Eaves said. “We want a uniform set of safety standards, and we won’t stop until we get it.”

Would other Carnival brands likely be affected?

From my very limited understanding of the cruise critic "lawyers" postings yesterday, there is a shell corporation called Utopia Cruises that actually owns the Triumph, and it had something to do with Utopia's relationship to Costa that made the Triumph the target in this. The lawsuit is against Carnival Corp and Utopia Cruises. I do remember a post a few years ago on CC that showed each Holland America ship was owned by a separate company, so it wouldn't surprised me that almost all of Carnival Corp's ships are their own separate entity. Since all those companies are presumably owned by Carnival Corp, I'm not sure how that affects things like this.

let the cruise co pay for the capitan that sunk the ship when he drove it off coarse....give her 10 million she asks....her died family should get all they need....the company has insurance for this...sell 2 of there ships and give all the money to people lost from accident that could and should have never happened.... period... sometimes lawyers are good for something...

Cruise Ships are usually registered in Panama, the Bahamas, or Libreria and engage in the legal fiction that they are not subject to US jurisdiction. They do this to avoid labor requirements, tax law, and to a lightly lesser extent tort and liability laws. (That is also why their cruises have at least one non-US stop in all they cruise runs, e.g. (a Pacific coast cruise always includes one Mexican or Canadian city)). The attorney suing them knows this and has taken this move to force them to the table.

I find this legal move by cruise ship companies troubling. When one of their ships get attacked by pirates or is seized by hostile nations. Then they claim they are really American and ask for US help. I think they should be reduced to appealing to the Panamian, Bahamian, or Librerian navies.

It's typical--they want the benefits of US oversight without the costs. Micky Arison didn't get where he is today without being very clever.

And about the cruise contract--I've read one once. Absolutely ridiculous. Absolves the cruise line of any and all responsibility for anything that might happen, and you sign away all rights you might have as a passenger. So I realized, like everything else nowadays it becomes a matter of how good a lawyer you can afford.