Houston Fleeting Services LLC v. M/V YANGZE, her engines, tackle, apparel, bunkers, etc., in rem et al

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
IN RE: THE COMPLAINT AND
PETITION OF HOUSTON
FLEETING SERVICES LLC, AS
OWNER OF THE VESSEL, M/V
MISS PEGGY, ITS ENGINE,
TACKLES, ETC., IN THE CAUSE
OF EXONERATION FROM OR
LIMITATION OF LIABILITY
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§
§
Case No. 4:24-CV-02705 c/w 4:24-
CV-2855; 4:24-CV-02739; and 4:24-
CV-02759
JUDGE PALERMO’S
REPORT AND RECOMMENDATION1
Before the Court is Petitioner Houston Fleeting Services, LLC’s (“HFS”)
motion for summary judgment, seeking dismissal of Petitioner Ladon Shipping Pte.
Ltd.’s 	limitation 	of liability 	proceeding 	related 	to 	the 	collision 	of the 	M/V
YANGZE 7 with the M/V MISS PEGGY on July 19, 2024. ECF No. 167. HFS
argues that because the YANGZE 7 violated Inland Rule 5—33 C.F.R. § 83.05—
the Pennsylvania Rule’s presumption applies and as a result, exoneration and
limitation are unavailable to Ladon. ECF No. 167 at 13. Ladon responds that HFS’s
argument hinges on alleged violations of Ladon’s Ship Operation Manual (“SOM”)
and not violations of Inland Rule 5, so the Pennsylvania Rule is inapplicable and
further, this evidentiary presumption should not be applied to a fulsome evidentiary
1 The district judge to whom this case is assigned referred this case for all pretrial proceedings.
Order of Referral, ECF No. 16.
United States District Court
Southern District of Texas
ENTERED
July 03, 2026
Nathan Ochsner, Clerk
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record. ECF No. 168.2 Finding the Pennsylvania Rule should not be applied at this
stage of proceedings, the Court recommends that HFS’s motion for summary
judgment be denied and this case proceed to trial. ECF No. 167.
I. 	BACKGROUND
On July 19, 2024, in the Houston Ship Channel, the M/V YANGZE 7, a bulk
carrier, transited inbound while the MISS PEGGY, a tug boat, also transited inbound
in front of the YANGZE 7. The YANGZE 7 collided with the MISS PEGGY, which
capsized and sunk. As a result of the collision, a seaman working on the MISS
PEGGY died and other crew members were injured. Ladon, owner of the M/V
YANGZE 7, and HFS, owner of the M/V MISS PEGGY, filed suit for exoneration
from or limitation of liability. Claimants have pending claims.
On the date of the incident, the YANGZE 7 was required to comply with the
policies and procedures published in the SOM, which included various lookout
requirements. See, e.g. ECF No. 167-1 at 6 (“When approaching anchorage areas
and port limits, Master, and at least a Deck Officer, a helmsman and a look-out shall
be present on the bridge and one Deck Officer together with Bosun and/or Carpenter
shall be stationed at the bow.”); 9–13 (“Every ship shall at all times maintain a proper
look-out by sight and hearing as well as by all available means appropriate in the
prevailing circumstances and conditions so as to make a full appraisal of the situation
2 HFS also filed a reply. ECF No. 169.
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and avoid the risk of collision, stranding and other hazards to navigation. . . .”), 16–
17 (bridge manning plan examples), 25–26 (“The look-out shall be stationed at the
Bridge wings.”). The YANGZE 7 Captain signed the Pilotage Checklist for Arrival
to Houston on July 19, 2024, which contained the checked-off item: “Bridge
appropriately manned to: Maintain a proper look-out.” ECF No. 167-1 at 29–40.
HFS has moved for summary judgment against Ladon, arguing that Ladon’s
limitation action should be dismissed because Ladon’s failure to follow the SOM’s
lookout requirements violated Inland Rule 5, and so applying the Pennsylvania
Rule’s presumption, this violation was a contributing cause to the incident and made
within Ladon’s privity and knowledge. In support of the motion, HFS attaches:
(1) Declaration of Elizabeth A. Strunk; (2) the SOM; (3) the YANGZE 7’s arrival
checklists; (4) excerpts from the YANGZE 7’s Deck Logbook; (5) Ladon’s Answers
to HFS’s First Interrogatories; (6) excerpts from YANGZE 7 Captain Tao Liu’s
deposition, in which Liu invokes the Fifth Amendment; (7) excerpts from the Eighth
Edition of Farwell’s Rules of the Nautical Road by Craig H. Allen. ECF No. 167-1.
Ladon responded that HFS failed to establish its privity or knowledge or
establish that a single alleged SOM violation amounts to a Rule 5 violation,
improperly invoked the Pennsylvania Rule at on a fulsome evidentiary record, and
erroneously relied on the invocation of the Fifth Amendment to fill evidentiary gaps.
ECF No. 168. In support of its arguments, Ladon attaches: (1) excerpts from the
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deposition of the MISS PEGGY’s Captain, Mark Doyle, ECF No. 168-1; and (2) the
transcript of the Court’s July 26, 2024 hearing addressing HFS’s motion to expedite
depositions, ECF No. 168-2.
II. 	THE SUMMARY JUDGMENT STANDARD.
Summary judgment is appropriate “if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” F ED. R. CIV. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S.
317, 322 (1986). “The moving party ‘always bears the initial responsibility of
informing the district court of the basis for its motion’ and identifying the record
evidence that ‘it believes demonstrate[s] the absence of a genuine issue of material
fact.’” Trevino v. Allstate Vehicle & Prop. Ins. Co., No. 7:24-CV-00297, 2025 WL
2781742, at *2 (S.D. Tex. Sept. 30, 2025) (quoting Celotex Corp., 477 U.S. at 323).
“[I]f the movant bears the burden of proof on an issue . . . , he must establish
beyond peradventure all of the essential elements of the [claim or affirmative]
defense to warrant judgment in his favor.” S&B INFRASTRUCTURE, LTD., v.
FLUOR FEDERAL PETROLEUM OPERATIONS, LLC, No. 3:25-CV-00011, 2026
WL 501581, at *3 (S.D. Tex. Feb. 5, 2026) (quoting Access Mediquip L.L.C. v.
UnitedHealthcare Ins. Co., 662 F.3d 376, 378 (5th Cir. 2011)). “Where the movant
does not bear the burden of proof, his burden is satisfied by showing that the other
party has a ‘failure of proof on an essential element of its claim [or affirmative
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defense].’” Id. (quoting Joseph ex rel. Est. of Joseph v. Bartlett, 981 F.3d 319, 329
(5th Cir. 2020)). “A party makes this showing by introducing evidence or by
‘pointing out . . . an absence of evidence to support the nonmoving party’s case.’”
Id. (quoting Celotex Corp., 477 U.S. at 325). “If the [movant] succeeds on that
showing, the burden shifts to the [nonmovant] to demonstrate that there is a genuine
issue of material fact and that the evidence favoring the [nonmovant] permits a jury
verdict in the [nonmovant]’s favor.” Id. (quoting Joseph, 981 F.3d at 329). Summary
judgment evidence “must be viewed in the light most favorable to the non-moving
party, and reasonable inferences must be drawn in that party’s favor.” Warren v.
Fed. Nat’l Mortgage Ass’n, 932 F.3d 378, 383 (5th Cir. 2019).
III. 	HFS’S 	MOTION 	FOR 	SUMMARY 	JUDGMENT 	SHOULD 	BE
DENIED.
“The Limitation of Liability Act generally limits a vessel owner’s liability to
the value of the vessel, post casualty, plus any pending freight. The limit is removed,
however, if the negligence or unseaworthiness that caused the damage was within
the ‘privity or knowledge’ of the owner.” Matter of Dredge Big Bear, 525 F.
Supp. 3d 731, 737–38 (M.D. La. 2021) (quoting In re Oil Spill by Oil Rig Deepwater
Horizon in Gulf of Mexico, on Apr. 20, 2010, 21 F. Supp. 3d 657, 752–53 (E.D. La.
2014)). Typically, “claimants bear the initial burden of proving that their injuries
arose as a result of the owner’s negligence or the vessel’s unseaworthiness. Once
this burden is met, the burden shifts to the owner to prove a lack of ‘privity or
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knowledge’ of a negligent act or unseaworthy condition.” Id. at 738 (quoting
Deepwater Horizon, 21 F. Supp. 3d at 753).
“‘[N]egligence is an actionable wrong under general maritime law,’ and the
elements of that tort are ‘essentially the same as land-based negligence under the
common law.” Marflet Marine, S. A. v. Everest Spirit Holding, LLC, No. 2:23-CV-
00262, 2025 WL 4089351, at *6 (S.D. Tex. Oct. 24, 2025), adopted, No. 2:23-CV-
00262, 2026 WL 747182 (S.D. Tex. Mar. 17, 2026) (quoting In re Great Lakes
Dredge & Dock Co., 624 F.3d 201, 211 (5th Cir. 2010) (citing Withhart v. Otto
Candies, L.L.C., 431 F.3d 840, 842 (5th Cir. 2005))). “To establish negligence under
general maritime law there must be a[:] (1) duty; (2) breach of duty; (3) proximate
cause; and (4) damages. Id. (quoting Great Lakes Dredge & Dock, 624 F.3d at 211).
HFS argues that the YANGZE 7 violated Rule 5, and because Rule 5 is
designed 	to 	avoid 	collisions, 	the 	YANGZE 	7’s 	violation 	gives 	rise 	to 	the
Pennsylvania Rule’s presumption that the YANGZE 7’s fault was a contributory
cause of the collision. ECF No. 167 at 18. HFS continues that because this violation
was within Ladon’s privity or knowledge, Ladon is not entitled to exoneration or
limitation of liability.
A. 	The Pennsylvania Rule’s Presumption is Inapplicable.
Admiralty courts have developed “a series of presumptions and burden-
shifting principles that apply to issues that arise within the maritime jurisdiction.”
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SRK Holdings, Inc. v. S. Towing Co., No. 3:20-CV-00110, 2021 WL 5587635, at *3
(S.D. Tex. Nov. 30, 2021), adopted, No. 3:20-CV-00110, 2022 WL 393573 (S.D.
Tex. Feb. 9, 2022) (citing Archer Daniels Midland, Co. v. M/T Am. Liberty, 545 F.
Supp. 3d 390, 403 (E.D. La. June 25, 2021)). “In cases involving a maritime collision
or allision with resulting damage, the Pennsylvania Rule instructs that a party who
violated a statutory rule intended to prevent the maritime accident is presumed to
have caused the accident.” Marflet Marine, 2025 WL 4089351, at * (citing M/V
Admiral Bulker v. United Bulk Terminals Davant, 397 F.Supp.3d 826, 837 (E.D. La.
2019) (citing Pennzoil Producing Co. v. Offshore Express, Inc., 943 F.2d 1465, 1472
(5th Cir. 1991) and Candies Towing Co. v. M/V B & C Eserman, 673 F.2d 91, 93
(5th Cir. 1982) (The Pennsylvania Rule “constitutes an evidentiary rule reversing
the burden of proof”)); see also SRK Holdings, 2021 WL 5587635, at *3 (“The
Pennsylvania rule is a ‘burden-shifting presumption for causation when a vessel “at
the time of a collision is in actual violation of a statutory rule intended to prevent
collisions.”’”) (quoting Mike Hooks Dredging Co., Inc. v. Marquette Transp. Gulf-
Inland, L.L.C., 716 F.3d 886, 891 (5th Cir. 2013) (quoting The Pennsylvania, 86
U.S. 125, 136 (1873))).
The ship bears the burden of “showing not merely that her fault might not
have been one of the causes, or that it probably was not, but that it could not have
been.” Marflet Marine, 2025 WL 4089351, at *8 (quoting Archer Daniels Midland,
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Co. v. M/T Am. Liberty, 545 F. Supp. 3d 390, 403 (citing The Pennsylvania, 86 U.S.
at 136)). “The Pennsylvania 	Rule concerns the burden of proof for showing
causation; it does not determine ultimate liability for damages.” Id. (quoting Impala
Terminals Burnside LLC v. Marquette Transp. Co., LLC, No. 19-12584, 2021 WL
1123566, at *6 (E.D. La. Mar. 24, 2021) (“It places on the statutory violator the
burden of showing that the violation could not have caused the accident.”)). The
Pennsylvania Rule “creates a presumption that one who violates a regulation
intended to prevent collisions will be deemed responsible.” Id. (quoting Tokio
Marine & Fire Ins. Co., Ltd. V. Flora MV, 235 F.3d 963, 966 (5th Cir. 2001) (“[T]he
Pennsylvania Rule applies only to violations of statutes that delineate a clear legal
duty, 	not 	regulations 	that 	require 	judgment 	and 	assessment 	of 	a 	particular
circumstance.”)); 	Reed v. Maersk Line, Ltd., No. 3:19-CV-00238, 2021 WL
1845162, at *4–5 (S.D. Tex. May 7, 2021) (“The rule thus creates a presumption
that one who violates a regulation intended to prevent collisions will be deemed
responsible.”) (quoting Mike Hooks Dredging Co., 716 F.3d at 891). But, the
presumption is rebuttable and “applies only to violations of statutes that delineate a
clear legal duty.” SRK Holdings, 2021 WL 5587635, at *3 (quoting Tokio Marine,
235 F.3d at 966).
Rule 5 requires vessels to “at all times maintain a proper look-out by sight and
hearing as well as by all available means appropriate in the prevailing circumstances
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and conditions . . . to make a full appraisal of the situation and of the risk of the
collision.” 33 C.F.R. § 83.05. HFS argues that YANGZE 7 violated Rule 5 by failing
to follow its SOM because “the Captain did not post a deck officer on the bow of the
vessel and did not post a designated look-out on the bridge,” even though he “signed
off on a checklist . . . that a look-out was posted on the bridge, when he knew that
additional crewmembers to stand as look-outs were not in fact present on the bridge
or bow.” ECF No. 167 at 17. HFS explains that “there is no doubt that the YANGZE
7 was in violation of Rule 5” because: “(a) if the YANGZE 7 had seen the MISS
PEGGY 	the 	VHF 	ship-to-ship 	radio 	recordings 	would 	have 	contained
communications from the YANGZE 7 to arrange an overtaking of the MISS
PEGGY, and, (b) the voice recordings from the YANGZE 7’s bridge similarly would
have contained discussions or awareness of any vessel traffic in the Houston Ship
Channel—including the location and existence of the MISS PEGGY,” and as the
overtaking vessel, the YANGZE 7 was required to “keep out of the way of the vessel
being overtaken, the MISS PEGGY,” but did not. ECF No. 167 at 16–17 (cleaned
up).
Ladon responds that HFS fails to demonstrate how a SOM violation equates
to a violation of Rule 5 and therefore, the Pennsylvania Rule’s presumption does not
apply. ECF No. 168 at 3, 14. Ladon argues “[c]ompliance with Rule 5 is a factual[ly]
intensive inquiry requiring among other things, an analysis of ‘the prevailing
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circumstances and conditions’ including traffic density, the waterway, and the
availability and proper utilization of electronic aids. HFS cannot shortcut that inquiry
by substituting the Y7’s SOM for Rule 5 itself.” ECF No. 168 at 17. Ladon explains
that the YANGZE 7’s SOM is a product of its compliance with the ISM Code, “a
regulatory and administrative compliance framework and does not establish liability
for an alleged violation.” ECF No. 168 at 14, 15. Ladon asserts that HFS cannot
point to a SOM violation as a Rule 5 violation because: neither the ISM Code nor
the SOM enlarge or add to a vessel’s duty of reasonable care; the Pennsylvania Rule
only applies to statutory violations and the SOM is not a statute; and “[v]essel
owners should not be penalized for adopting and implementing safety systems that
go beyond minimum legal requirements.” ECF No. 168 at 14–17.
“Vessels ‘must have constant and vigilant look-outs stationed in proper places
on the vessel[ ] and charged with the duty for which look-outs are required.’” Matter
of Odfjell Chem. Tankers AS, No. 3:20-CV-12, 2023 WL 12254063, at *8 (S.D. Tex.
Jan. 24, 2023) (quoting Chamberlain v. Ward, 62 U.S. 548, 570 (1858)). “Lookouts
must be ‘persons of suitable experience, properly stationed on the vessel, and
actually and vigilantly employed in the performance of the duty.’” Id. (quoting
Chamberlain, 62 U.S. at 570).
Whether a vessel violated Rule 5 is largely dependent on the prevailing
circumstances and conditions. See 33 C.F.R. § 83.05 (“at all times maintain a proper
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look-out by sight and hearing as well as by all available means appropriate in the
prevailing circumstances and conditions . . . to make a full appraisal of the situation
and of the risk of the collision.”); see Odfjell Chem. Tankers AS, 2023 WL
12254063, at *6, 8 (rejecting argument that posting a lookout on the bow who moved
away from the bow briefly to protect his hearing from vessel’s foghorn blasts
amounted to Rule 5 violation where vessel also had virtual monitoring, but finding
violation where other vessel did not have either a virtual lookout or lookout posted,
failed to respond radio hails and danger signals) (collecting cases where other courts
have found lookout conduct insufficient to satisfy Rule 5);3 Reed v. Maersk Line,
Ltd., 649 F. Supp. 3d 428, 446–47 (S.D. Tex. 2023) (no violation of Rule 5 where
“evidence show[ed] that the Maersk Idaho had a lookout posted on June 7,” and
Captain testified that he, another captain, and the lookout discussed a sailboat that
came close to the Maersk Idaho prior to incident, leading the Maersk Idaho to blow
her danger signal as a warning.”).
Rather than describe fully what constituted maintaining an appropriate
lookout under the prevailing circumstances and conditions during the incident, HFS
3 Chamberlain, 62 U.S. at 571 (a lookout’s view was obstructed by lights, rigging, or the vessel’s
spar); Cliffs-Neddrill Turnkey Int’l-Oranjestad v. M/T Rich Duke, 947 F.2d 83, 89 (3d Cir. 1991)
(the man assigned a bridgewatch did not know he was supposed to keep a lookout); Mar. &
Mercantile Int’l L.L.C. v. United States, No. 02-CV-1446 (KMK), 2007 WL 690094, at *21
(S.D.N.Y. Feb. 28, 2007) (the lookout was stationed in a wheelhouse 12 feet from the bow and
managing other responsibilities); In re G&G Shipping Co., 767 F. Supp. 398, 408 (D.P.R. 1991)
(the lookout was allowed to leave the bridge for half an hour as a close-quarters situation was
developing).
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simply point to two violations of the SOM connected to the YANGZE 7’s lookout
requirements 	without 	tying 	them 	to 	Rule 	5’s 	requirements. 	HFS 	has 	not
demonstrated that violating the SOM’s requirements to designate a lookout on the
bridgewing and post a deck officer on the bow equates to a violation of Rule 5’s
requirement to maintain a proper look-out under the specific circumstances present
during the incident. The interrogatory answers referred to in HFS’s motion indicate
that during the incident, the Master, Second Officer, and an A/B were located on the
bridge and assisted navigating the vessel.4 ECF No. 167-1 at 49–51. The Bosun was
also on duty, located at the bow, and serving as a lookout. ECF No. 167-1 at 49–51.5
Nine other crewmen were on duty, but the interrogatory answers or other summary
judgment evidence do not indicate where or what these individuals were doing
during the incident. ECF No. 167-1 at 49–51.
HFS fails to explain how posting a lookout on the bow, but not also on the
bridgewing6 violates Rule 5. HFS similarly fails to explain how having a Bosun and
not a deck officer serve as lookout on the bow amounted to failing to maintain a
proper lookout under Rule 5. HFS does not discuss the circumstances or conditions
4 It is unclear whether their assistance was to serve as lookout or not, but even assuming they did
not serve as lookout, HFS has not sufficiently articulated a Rule 5 violation.
5 HFS takes issue with the fact that the Bosun is not a deck officer. They have not otherwise argued
that the Bosun was an insufficient lookout. See ECF No. 167.
6 It is unclear from the interrogatory answers if any of the three crewmen on the bridge were not
located on the bridgewing and assisting navigation by serving as lookout. See ECF No. 167-1 at
49–51.
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during the incident, much less how under such conditions, the absence of a deck
officer as lookout on the bow and crewmember as lookout on the bridgewing
amounted to failing to maintain a sufficient lookout during the incident. In sum, HFS
failed to connect how these SOM violations also equate to a failure to maintain a
proper lookout under Rule 5.
This is insufficient to establish a violation of Rule 5 sufficient for the Court to
presume the YANGZE 7’s contributory cause. Rather, the record demonstrates that
there is a genuine issue of material fact as to whether the YANGZE 7 violated
Rule 5’s lookout requirements. Because HFS did not demonstrate that YANGZE 7
violated Rule 5, the Pennsylvania Rule’s presumption does not apply. See Pabtex,
Inc. v. Marquette Transp. Co., LLC, No. 1:16-CV-143, 2017 WL 6887053, at *5, 7
(E.D. Tex. Dec. 19, 2017), adopted, No. 1:16-CV-143, 2018 WL 356309 (E.D. Tex.
Jan. 9, 2018) (refusing to apply the 	Pennsylvania 	Rule’s presumption where
evidence sufficiently created a genuine issue of material fact as to Rule 5 violation—
record showed testimony that crewman radioed the Comanche and his own crew to
advise as to visibility and whether the vessel was moving, attempted to move his
vessel into a safer place, and relied on his charts and radar to assess the position of
the Randy Eckstein as he approached the Dock and took on tow).
Ladon also argues that the Pennsylvania Rule’s presumption is superfluous
because the evidentiary record is fully developed and the presumption applies to
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both vessels as the MISS PEGGY’s Captain also failed to maintain a proper look-
out by never looking astern, using radar, monitoring AIS, or using the RosePoint
electronic chart system. ECF No. 168 at 4, 17–18. “[W]ith the record now developed,
the Pennsylvania Rule’s evidentiary presumption has run its course.” ECF No. 168
at 18 (internal quotation marks omitted). HFS argues that Ladon cannot make this
argument in a response and should have filed its own motion for summary judgment.
ECF No. 169 at 1–2.7
Indeed, “evidentiary presumptions . . . are designed to fill a vacuum,” and so
the Pennsylvania Rule is inapplicable where the parties “have introduced evidence
to dispel the mysteries that gave rise to the presumptions.” Marflet Marine, 2025
WL 4089351, at *8 (quoting Parish v. Lafarge N. America, Inc., No. 11-2350, 2016
WL 5390381, at *4 (E.D. La. Sept. 27, 2016); (citing M/V Admiral Bulker, 397
F.Supp.3d at 837). “With the presence of evidence in the record, ‘the need for
presumptions evaporates.’” 	Id. 	(quoting 	Lafarge N. America, Inc., 2016 WL
5390381, at *4; (citing Slatten LLC v. Royal Caribbean Cruises, Ltd., No. 13-673,
2014 WL 5500701, at *4 (E.D. La. Oct. 30, 2014)); see also Impala Terminals
Burnside LLC, 2021 WL 1123566, at *7 (“Because these evidentiary presumptions
7 The Court disagrees. Ladon does not raise the issue of HFS’s potential liability to seek summary
judgment relief, but instead to demonstrate that application of the Pennsylvania Rule to the current
record is inappropriate—rather that rely on a presumption, these issues should be decided after a
bench trial where both Ladon and HFS present competing evidence.
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are rendered superfluous on a fulsome record, the Court finds it is inappropriate to
apply 	them 	here. 	And 	because 	genuine 	issues 	of 	material 	fact 	concerning
comparative negligence and causation are evident, partial summary judgment is not
warranted.”).
Here, the briefing demonstrates that “[b]oth parties possess and intend to
introduce evidence relevant to fault and causation . . . [and] the record appears to
contain sufficient evidence from both parties concerning causation and fault, thus
rendering [the] presumption[] under . . . the Pennsylvania Rule unnecessary.”
Marflet Marine, 2025 WL 4089351, at *8 (“Buckeye’s Motion be denied as liability,
fault-apportionment, causation and damages are more appropriately considered after
a bench trial where both sides submit competing evidence relevant to fault and
causation rendering indulging presumptions unnecessary.”) (cleaned up) (quoting
Lafarge N. America, Inc., 2016 WL 5390381, at *5) (Finding the application of these
Rules would be “superfluous” where there is an “abundance of relevant evidence
currently in the record,” noting “courts in this Circuit have previously refused to
apply such presumptions when there is relevant evidence in the record.”)); SRK
Holdings, 2021 WL 5587635, at *4 (“I am extremely reluctant to decide the outcome
of an admiralty case based solely on rebuttable presumptions, especially when, as
here, a substantial evidentiary record exists.”) (citing Reed, 2021 WL 1845162, at
*5). A “singular focus on evidentiary presumptions elevates form over substance
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[and] common sense.” Id. (quoting Impala Terminals Burnside LLC, 2021 WL
1123566, at *9).
In the instant case, there are genuine issues of material fact as to whether
Petitioners were negligent and caused injury to Claimants—these are issues that
should be decided after both Petitioners have a full and fair opportunity to present
witnesses and evidence at a bench trial. See SRK Holdings, 2021 WL 5587635, at *4.
Summary judgment should not be granted on this issue. See Reed, 2021 WL
1845162, at *5 (“Instead of determining at this stage of the proceedings whether a
rebuttable presumption should apply, the more reasoned approach would be to give
both parties a full opportunity to present witnesses and evidence at trial. Once that
takes place, the Court will be in a much better position to judge what presumptions,
if any, are appropriate. This approach is consistent with how many courts across the
country handle motions requesting the application of the Pennsylvania rule before
trial.”) (citing M/V Admiral Bulker, 397 F. Supp. 3d at 837 (“declin[ing] to apply the
presumptions in resolving 	the motions for summary 	judgment”); 	McLean 	v.
Carnival Corp., No. 12-24295-CIV, 2013 WL 1024257, at *5 (S.D. Fla. Mar. 14,
2013) (application of the Pennsylvania rule “is more properly considered at a later
stage of the proceedings”); Scouten v. NCL (Bahamas) Ltd., No. 08-21485-CIV-
MORENO, 2009 WL 10692716, at *2 (S.D. Fla. Mar. 4, 2009) (application of the
Pennsylvania rule before trial is premature)).
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B. 	There is a Genuine Issue of Material Fact Concerning Ladon’s
Privity and/or Knowledge.
“Especially for purposes of considering a motion for summary judgment, it is
important to emphasize that ‘the question of whether [a vessel owner] lacked privity
or knowledge, and thus may limit its liability, is fact-specific. . .” and “‘must turn on
the facts of the individual case.’” Matter of Dredge Big Bear, 525 F. Supp. 3d at 738
(quoting In re Omega Protein, Inc., 548 F.3d 361, 372 (5th Cir. 2008); ADM Int’l
SARL v. River Ventures, LLC, 441 F. Supp. 3d 364, 381 (E.D.La. 2020)). “Privity or
knowledge exists where the owner has actual knowledge or could have and should
have obtained the necessary information by reasonable inquiry or inspection. . . . a
‘reasonable man’ test.” In re Int’l Marine, LLC, 614 F.Supp.2d 733, 740 (E.D.La.
2009). HFS relies upon 46 U.S.C. § 30524(e) to establish Ladon’s privity and/or
knowledge: “[i]n a claim for personal injury or death, the privity or knowledge of
the master or the owner’s superintendent or managing agent, at or before the
beginning of each voyage, is imputed to the owner.” 46 U.S.C. § 30524(e).
HFS argues that “Ladon had privity and knowledge, through the master, of
the YANGZE 7’s negligent act of failing to maintain a proper look-out in accordance
with the Inland Navigational Rules and the SOM leading to the collision with the
MISS PEGGY.” ECF No. 167 at 14.8 HFS argues that the “[t]he owners and
8 HFS explains that because the YANGZE 7’s deck logbook listed the day before the incident as
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operators of the YANGZE 7 knew or should have known that the bridge and bow
were not properly manned to maintain a proper look-out” because the arrival
checklist demonstrates that the Captain knew additional look-outs should have been,
but were not posted and the Captain’s invocation of the Fifth Amendment during his
deposition gives rise to an adverse inference that the YANGZE 7 had insufficient
crew to maintain a proper look-out. ECF No. 167 at 20, 21.
Ladon responds that HFS fails to establish Ladon’s privity or knowledge of
any negligent acts because there is no evidence of what Ladon’s managing agents
actually knew or should have known and HFS instead “asks the Court to infer the
rest from the [YANGZE 7] crewmembers’ Fifth Amendment invocations,” but any
adverse inference from invoking the Fifth Amendment, which the witnesses did in
fear of HFS’s representation that the Coast Guard was considering a criminal
referral,9 cannot fill evidentiary gaps. ECF No. 168 at 3, 12–13.
“‘[T]he Fifth Amendment does not forbid adverse inferences against parties
to civil actions when they refuse to testify in response to probative evidence offered
Voyage No. 2456 and the day of the incident as Voyage 2457, “on the morning of the Incident,
the YANGZE 7 began a new voyage,” and therefore, the Captain’s knowledge is imputed to
Ladon—“[a]long with the YANGZE 7’s navigational checklists, and risk assessment forms
completed prior to the YANGZE 7’s transit in the HSC, the Captain knew at the inception of the
voyage—just mere hours before the Incident—that a proper lookout was not being maintained
aboard the YANGZE 7.” ECF No. 169 at 8.
9 HFS objects to any insinuation that it mentioned a possible criminal referral from the Coast Guard
to provoke the witnesses to invoke their Fifth Amendment right and then use their invocation as
means to procure an adverse inference. ECF No. 169. To be clear, the Court does not find that
HFS’s mention of potential criminal charges was strategic or unfounded.
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against them.’” Parker v. State Farm Mut. Ins. Co., No. 3:23-CV-00139, 2024 WL
1855426, at *2 (S.D. Tex. Apr. 29, 2024) (quoting Hinojosa v. Butler, 547 F.3d 285,
291 (5th Cir. 2008) (quoting Baxter v. Palmigiano, 425 U.S. 308, 318 (1976))). But,
“[t]he assertion of the [Fifth Amendment] privilege, particularly on the advice of
counsel, is an ambiguous response . . . .” A.F. by & through J.F. v. St. Tammany Par.
Sch. Bd., No. CV 23-7426, 2025 WL 1220805, at *4 (E.D. La. Apr. 28, 2025)
(quoting Farace v. Indep. Fire Ins. Co., 699 F.2d 204, 210–11 (5th Cir. 1983)); see
also In re Enron Corp. Sec., Derivative & Erisa Litig., 762 F. Supp. 2d 942, 962
(S.D. Tex. 2010). “The fact that a witness invokes the Fifth Amendment may be
probative of the conduct and intentions of that witness.” Fed. Land Bank Ass’n of S.
Alabama, FLCA v. H&H Worldwide Fin. Serv., Inc., No. CV H-07-2832, 2009 WL
10693621, at *6 (S.D. Tex. Mar. 19, 2009), aff’d sub nom. Fed. Land Bank Ass’n of
S. Alabama, FLCA v. H & H Worldwide Fin. Serv., Inc., 354 F. App’x 85 (5th Cir.
2009) (citing In re Powers, 261 F App’x 719, 723 (5th Cir. 2008)).
The Fifth Circuit has “limited the value of the negative inference by
recognizing that a party seeking summary judgment cannot rely solely on the other
party’s exercise of his fifth amendment rights.” In re Enron, 762 F. Supp. 2d at 962
(quoting State Farm Life Ins. v. Gutterman, 896 F.2d 116, 119 n. 3 (5th Cir. 1990)
(citing United States v. White, 589 F.2d 1283, 1287 (5th Cir.1979) (“[A] grant of
summary judgment merely because of the invocation of the fifth amendment would
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unduly penalize the employment of the privilege.”))); see also Sec. & Exch. Comm’n
v. Blackburn, 431 F. Supp. 3d 774, 813 (E.D. La. 2019), aff’d, 15 F.4th 676 (5th Cir.
2021) (“While an adverse inference may be recognized at the summary judgment
stage, the movant may not rely solely on the other party’s exercise of his Fifth
Amendment rights to carry its burden.”) (citing Gutterman, 896 F.2d at 119 n.3).
Importantly, “[w]hile an adverse inference may be drawn in a civil case when
a party asserts his Fifth Amendment privilege, the trier of fact is not required to draw
a negative inference.” In re Enron, 762 F. Supp. 2d at 962 (citing Baxter, 425 U.S.
at 318 (“[T]he Fifth Amendment does not forbid adverse inferences against parties
to civil actions when they refuse to testify in response to probative evidence offered
against them.”); (citing Daniels v. Pipefitters’ Ass’n Local Union No. 597, 983 F.2d
800, 802 (7th Cir. 1992) (“The inference is permissible, but not required.”);
8 Wright, Miller and Marcus, Federal Practice & Procedure § 2018 n. 63 (3d ed.
2004)).
Here, the Court will not draw an adverse inference on the basis of the crew’s
invocation of their Fifth Amendment rights. At several points in the emergency
hearing before the Court, counsel for HFS asserted that “the Coast Guard made it
clear . . . that there is the possibility of a criminal referral in this matter.” ECF No.
39 at 12:10–13, 20:17–19, 21:1–7. Ladon explains that their foreign crewmen
invoked the right on advice of independent criminal counsel in light of the potential
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criminal investigation, which the Court finds reasonable under the circumstances.
Furthermore, the Court’s order following the hearing stated that “the depositions are
for the purpose of perpetuating evidence and shall not prejudice any party’s right to
seek a more complete deposition of any of the deponents later,” ECF No. 41 at 3,
but there is no indication that HFS sought to take the Captain’s deposition at a later
date when the threat of criminal liability dissipated.10
Without drawing an adverse inference, there is insufficient evidence before
the Court demonstrating the Captain’s knowledge under § 30524(e). HFS proffers
documentary evidence in support of their argument that the Captain knew or should
have known that the bridgewing and bow were not properly manned to maintain a
proper lookout: pages from YANGZE 7’s SOM listing these lookout requirements
and checkmark next to “ Bridge appropriately manned to: maintain a proper lookout”
on the arrival checklist. ECF No. 167 at 20 (citing ECF No. 167-1 at 6, 26, 28).
Looking at the pages of arrival checklists, ECF No. 167-1 at 28–40, there is no
indication whether the Captain’s checkmark next to “maintain a proper lookout” was
reasonable under the circumstances, the result of a misunderstanding, an intentional
falsehood, or a scrivener’s error. A checkmark does not give the Court sufficient
insight into the Captain’s privity or knowledge before or at the beginning of the
10 To be clear, should the witness continue to invoke his Fifth Amendment right at trial now that
no criminal investigation remains, then Judge Eskridge may find differently, but on the current
record, the Court declines to draw a negative inference.
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voyage.11 Summary judgment is not appropriate on this issue. A question of fact
remains as to whether Ladon had privity or knowledge.
IV. 	CONCLUSION
The Court RECOMMENDS that HFS’s motion for summary judgment be
DENIED. ECF No. 167.
The 	Parties 	have 	fourteen 	days 	from 	service 	of 	this 	Report 	and
Recommendation to file written objections. 28 U.S.C. § 636(b)(1)(C); F ED. R.
C IV . P. 72(b). Failure to file timely objections will preclude review of factual
findings or legal conclusions, except for plain error. Quinn v. Guerrero, 863 F.3d
353, 358 (5th Cir. 2017).
Signed at Houston, Texas, on July 3, 2026.
Dena Hanovice Palermo
United States Magistrate Judge
11 As noted above, “[i]n a claim for personal injury or death, the privity or knowledge of the master
or the owner’s superintendent or managing agent, at or before the beginning of each voyage, is
imputed to the owner.” As an aside, the Court is unconvinced that the two logbook entries with
different voyage numbers from one day apart and relied upon by HFS for the first time in its reply,
establish that this period of time marked the beginning of a voyage, as contemplated by § 30524(e).
Even so, that record does not demonstrate a genuine issue of material fact as to whether the Captain
had knowledge of the negligent acts at the beginning of the voyage.
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