Matheny v. Tennessee Valley Authority

• Decision Date: 19 February 2009
• Docket Number: No. 08-5127.,08-5127.
• Citation: 557 F.3d 311
• Parties: Becky MATHENY, Individually and as Surviving Spouse of Ronald Matheny, Deceased, Plaintiff-Appellee, v. TENNESSEE VALLEY AUTHORITY, Defendant/Third-Party Plaintiff/Counter Defendant-Appellant, Johnna Lawrence; Thomas Lawrence, Third-Party Defendants/Counter Plaintiffs-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

557 F.3d 311

Becky MATHENY, Individually and as Surviving Spouse of Ronald Matheny, Deceased, Plaintiff-Appellee, v. TENNESSEE VALLEY AUTHORITY, Defendant/Third-Party Plaintiff/Counter Defendant-Appellant Johnna Lawrence; Thomas Lawrence, Third-Party Defendants/Counter Plaintiffs-Appellees.

No. 08-5127.

United States Court of Appeals, Sixth Circuit.

Argued: January 23, 2009.

Decided and Filed: February 19, 2009.

ARGUED: Edwin Warren Small, Office of the General Counsel, Tennessee Valley Authority, Knoxville, Tennessee, for Appellant. Philip N. Elbert, Neal & Harwell, Nashville, Tennessee, Mark McClure Mizell, Law Office, Franklin, Tennessee, for Appellee. ON BRIEF: Edwin Warren Small, Jared E. Mitchem, Thomas A. Robins, Office of the General Counsel, Tennessee Valley Authority, Knoxville, Tennessee, for Appellant. Philip N. Elbert, W. David Bridgers, Neal & Harwell, Nashville, Tennessee, Mark McClure Mizell, Law Office, Franklin, Tennessee, Jonathan R. Perry, The Perry Firm, Franklin, Tennessee, for Appellee.

Before SUHRHEINRICH, GRIFFIN, and KETHLEDGE; Circuit Judges.

OPINION

SUHRHEINRICH, Circuit Judge.

This is an admiralty action arising out of a collision in which the wake of the Defendant-Appellant Tennessee Valley Authority (TVA) tugboat Patricia H capsized a small fishing boat. Plaintiff Ronald Matheny, a passenger in the fishing boat, died as a result. After a bench trial, the district court concluded that Matheny's death was caused by the negligent operation of the tugboat and that the TVA was not entitled to limitation of liability under the Limitation of Liability Act, 46 U.S.C.A. § 30505 (West 2007), because the captain's actions were within the privity or knowledge of TVA. The TVA appeals. We REVERSE in part and REMAND for further proceedings.

I. Background

A. Facts

The facts, issues, and relevant law are all adequately presented in the district court's fifty-seven page opinion and supplemental opinion following a bench trial and are very briefly summarized here. See Matheny v. TVA, 523 F.Supp.2d 697 (M.D.Tenn.2007), modified in part by Matheny v. TVA, 247 F.R.D. 541 (M.D.Tenn.2007).

TVA operates the Cumberland Fossil Plant (CFP), a coal-fired electric power generating plant, on the south bank of the Cumberland River at river mile 103 in Stewart County, Tennessee. See TVA Act of 1933, 16 U.S.C. §§ 831-831ee (2000 & Supp. V 2005). In the 1970s, TVA excavated a second channel and created an island approximately 6,000 feet long between the two channels. TVA has a coal barge unloader and barge mooring cells along the south side of the old channel. Since the early 1970s, various towing companies have delivered tows of barges loaded with coal to barge mooring areas in the old channel, and TVA has used TVA tugboats to move the barges to the unloader and then back to the mooring areas for pickup by the towing companies.

The Patricia H is one of the TVA tugboats used to move barges at CFP. At the time of the accident, it was worth $420,000.

The TVA is aware that the old channel is used for recreational fishing by various types and sizes of boats. At approximately 5:30 p.m. on June 5, 2005, Third-Party Defendant/Counter-Plaintiff-Appellee Thomas Lawrence went fishing with his cousin, Matheny, in Lawrence's fourteen foot Phantom fiberglass boat in the old channel of the Cumberland River near CFP. Lawrence had fished there numerous times before.

At 7:00 p.m., Captain Ralls and his crew started their shift on the Patricia H. Shortly after 7:00 p.m., Captain Ralls piloted the Patricia H from the unloader downstream to pick up a loaded coal barge. As the Patricia H traveled from the unloader downstream "lightboat" (without a barge), it passed the Phantom boat without incident. As the Patricia H traveled back upstream to the unloader with a loaded barge, it passed the Phantom boat again without incident. However, at approximately 7:50 p.m., when the Patricia H came back downstream again to obtain another loaded barge, its wake swamped the Phantom boat. Both men were thrown overboard. The crew of the Patricia H were able to save Lawrence, but Matheny drowned.

Captain Ralls's immediate supervisor was David Duke, the coal haul foreman at CFP. Duke was responsible for ensuring that CFP employees obeyed safety rules. 523 F.Supp.2d at 710. Duke testified that TVA has no yearly training program specifically for tugboat operators, that "TVA does not train the pilots in the `Rules of the Road' except through informal `on river' training," and that "there was no specific policy regarding the speed of tugboats, but that there was an expectation that the tugboats would be operated as slowly as possible around fishing boats." Id. Duke also testified that he was not aware of any prior incidents concerning Captain Ralls. Id. at 711.

Matheny was 49 years old when he died. Matheny suffered from coronary artery atherosclerosis and had a heart attack on September 27, 2004. 523 F.Supp.2d at 728. He had a life expectancy of eight years. 247 F.R.D. at 543. He was not employed at the time of his death, but acted as primary caretaker for his granddaughter. He was drawing a disability pension from the Tennessee Department of Corrections and had applied for disability benefits from the Social Security Administration.

Mr. and Mrs. Matheny had been married since 1974 and lived for many years in middle Tennessee. The couple had three adult children—Elan (31 years old at the time of trial), Christina (29 years old at the time of trial), and Stephanie (25 years old at the time of trial). One of Christina's children, Chloe, lived with Mr. and Mrs. Matheny, and they provided for her care. The district court found that Matheny had "a very close relationship with his children and his wife." 523 F.Supp.2d at 730.

B. The District Court's Ruling

The district court found that Captain Ralls was an experienced tugboat captain,¹ and that he "proved himself, up to the time of the accident, to be a perfectly competent captain." Id. at 722. However, the district court also found, and TVA concedes, "that Captain Ralls violated Rules 2(b) and 6 of the Inland Rules of Navigation by operating the Patricia H at an excessive speed when it passed the fishing boat," id. at 714, and "that Captain Ralls's creation of an excessive wake was 100% responsible for the capsize of the fishing boat and the death of Mr. Matheny." Id. at 712.

The district court held that the Limitation Act did not apply to limit TVA's liability to the value of the Patricia H ($420,000) "because TVA had privity or knowledge of the risks posed by Captain Ralls['s] negligent operation of the Patricia H at an excessive speed." Id. at 721. "As a separate basis for liability" without limitation, the district court found that TVA negligently supervised Captain Ralls, "by failing to specifically instruct him to maintain a low speed or a low wake in the presence of small fishing vessels." Id. at 725. On the other hand, the district court found that TVA did not commit negligent entrustment: "Although the court finds that Captain Ralls was negligent in this specific instance, it finds no basis to question his overall competency as a tugboat captain. Accordingly, TVA did not commit negligent entrustment." Id. at 726.

The district court awarded Becky Matheny, as surviving spouse of Matheny, a total of $3,324,352, which represented $124,352 for lost future earnings and household services, and $3.2 million for consortium losses of Mrs. Matheny and Matheny's three adult children. See 247 F.R.D. at 543. The $124,352 figure represented the present value of Mr. Matheny's disability pension assuming a life expectancy of eight years, or $45,861, and the present value of his household services for eight years, or $78,491. Id. The $3.2 million represented $100,000 a year times eight years for each of his four family members. Id.

Thomas Lawrence and his wife were awarded a total of $238,685 based on Lawrence's injuries. See 523 F.Supp.2d at 730.

II. Analysis

Factual findings from a bench trial are reviewed for clear error. In re Cleveland Tankers, 67 F.3d 1200, 1205 (6th Cir.1995); Fed.R.Civ.P. 52(a)(6). Questions of law are reviewed de novo. Pearce v. United States, 261 F.3d 643, 647 (6th Cir.2001).

A. Limitation of Liability

The Limitation of Liability Act states in relevant part as follows: "[T]he liability of the owner of a vessel for any claim ... or liability described in subsection (b) shall not exceed the value of the vessel and pending freight." 46 U.S.C.A. § 30505(a) (West 2007).² Subsection (b) states in relevant part that "claims ... and liabilities subject to limitation under subsection (a) are those arising from ... any loss, damage, or injury by collision, or any act ... done, occasioned, or incurred, without the privity or knowledge of the owner." Id. § 30505(b); see Kellogg & Sons v. Hicks (The Linseed King), 285 U.S. 502, 510, 52 S.Ct. 450, 76 L.Ed. 903 (1932). The Act "alters the normal rules of vicarious liability" by limiting the ship owner's liability for any injuries caused by the negligence of the captain or crew to the value of the ship unless the owner himself had "privity or knowledge" of the negligent acts. In re City of New York, 522 F.3d 279, 283 (2d Cir.2008) (internal citations omitted).

Limitation of liability involves two inquiries: (1) negligence or unseaworthiness, and (2) knowledge or privity of the vessel owner. See In re Muer, 146 F.3d 410, 415 (6th Cir.1998); Cleveland Tankers, 67 F.3d at 1203. The burden of proving negligence is on the claimant; the burden of proving lack of privity or knowledge of the negligence is on the owner. Muer, 146 F.3d at 416; Cleveland Tankers, 67 F.3d at 1203.

TVA concedes on appeal that it is liable for Captain Ralls's negligence, but claims that it is entitled to limitation of liability because it had no privity or knowledge of Ralls's negligent act. Thus, the only issue is whether TVA had privity or knowledge of...