Key Bridge settlement: MD promised Dali shipowners cut of potential winnings against builder

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In its $2.25 billion settlement with the owner and manager of the ship that destroyed the Francis Scott Key Bridge, Maryland agreed to give those former adversaries a cut of potential winnings against the Dali’s builder.

The state committed to pursue a claim against Hyundai Heavy Industries and to pay the shipowners back part of any recovery. And the shipowners agreed that they’d try to resolve some of the roughly $2 billion in claims that other parties, such as the families of the six men who died in the collapse, have lodged against the state. 

Those commitments were among several other unreported terms of Maryland’s massive settlement with Grace Ocean Private Ltd. and Synergy Marine Group, obtained by The Daily Record via a public records request.

Key Bridge: Everything you need to know

Signed Thursday by Gov. Wes Moore, the settlement resolved the state’s claims against the shipowners ahead of a planned liability trial over the March 26, 2024, bridge collapse that shut down maritime traffic to and from the Port of Baltimore for months.

The start of that trial, which is set to begin June 1, is now in flux due to a criminal indictment the Department of Justice unsealed last week against Synergy and an employee of the maritime firm. The shipowner moved Monday to stay those proceedings due to the indictment, which they said would prejudice their ability to defend themselves and had a chilling effect on witnesses.

The state and the Justice Department have already settled out of the civil litigation. Announcing the state’s finalized settlement last week, Maryland Attorney General Anthony Brown said that his office would “continue to press our claims against the shipbuilder whose fault helped bring this bridge down,” proclaiming that “our pursuit of justice is not finished.”

Read Maryland’s $2.25B settlement with Dali shipowners

But the potential litigation against the shipbuilder, Hyundai, was also a key term of the state’s settlement agreement — and if the state recovers more than $50 million from it, the winnings must start flowing back to the shipowners it just settled with, per the document.

The state agreed to “pursue a claim for damages against Hyundai,” and if Hyundai settles or loses in court, the state agreed “to pay a portion of that gross recovery to the Vessel parties.” The first $50 million will go to the state, while anything above that will be split 50-50 with the shipowners, up until the shipowners have received their $2.25 billion back, according to the agreement.

A spokesperson for Brown said his office intends “to pursue claims against Hyundai Heavy Industries for its role in the Key Bridge collapse, and that process is underway” but could not confirm a filing date and declined to comment further. 

In a statement, Hyundai Heavy Industries said the shipowners’ multibillion-dollar settlement with the state “confirms that they understand that they bear responsibility for the tragic incident in the Baltimore Harbor.”

“Their capitulation reflects their awareness of their many failures – including serious misuse of the ship’s fuel supply systems in violation of class rules and poor maintenance and operation of the ship, which put their safety and the safety of others in jeopardy,” the firm said, adding that the indictment “confirms many of Synergy’s failures.”

“Even if a wire were to become loose over the course of a decade, Grace Ocean and Synergy should have detected that in a routine inspection and through normal maintenance,” the firm said.

The National Transportation Safety Board has attributed the series of events that led the Dali to crash into one of the Key Bridge’s support columns to a loose wire in the vessel’s switchboard. The shipowners have blamed Hyundai, which built the Dali in 2014, for improperly installing label banding that caused the wire to come loose.

Strikingly, the settlement does not appear to assign the shipowners’ own pending claim against Hyundai to the state, said Lindsey Brock, a maritime lawyer and shareholder at Florida-based Fowler White Burnett, P.A. who has been following the Key Bridge litigation. That leaves open the possibility of the shipowners winning their own award from Hyundai and also receiving a part of the state’s award on top of that.

Last year, Grace Ocean and Synergy sued the builder in the U.S. District Court for the Eastern District of Pennsylvania. But that case is potentially headed to an arbitrator over a 2021 settlement between Grace Ocean and Hyundai.

The families of the slain construction crew members and two workers who survived, as well as longshoremen and businesses with economic losses, have lodged claims against both the shipowners and the state. Those claimants sent notices to the Maryland state treasurer’s office last year alleging that the state failed to safeguard the bridge from ship strikes. The Daily Record brought those claims to light last week after obtaining the documents from another public records request.

The shipowners agreed that if they settle with those parties, they’ll “use their best efforts to obtain a full release of all claims those claimants may have against the state parties,” according to the agreement, which clarifies the intent is to “ensure that any such settlement fully extinguish all claims such claimant may have against” both the state and the shipowners.

That term is “a common clause,” Brock said, but one that “rarely achieves its objective.” Besides Baltimore City and County, most of the remaining parties in the litigation against the shipowners have claims against the state.

Although the state has received over a dozen notices of claims related to the collapse, no such lawsuits have been filed against Maryland yet. The state has not filed a civil action against Hyundai.

This story has been updated with quotes from Brown’s office and Brock.