Delta S.S. Lines, Inc. v. Avondale Shipyards, Inc.

Citation747 F.2d 995
Decision Date03 December 1984
Docket NumberNo. 82-3625,82-3625
PartiesDELTA STEAMSHIP LINES, INC., Plaintiff-Appellant, v. AVONDALE SHIPYARDS, INC., et al., Defendants-Appellees.
CourtU.S. Court of Appeals — Fifth Circuit

Robert S. Reich, Edward S. Bagley, New Orleans, La., for plaintiff-appellant.

Curtis R. Boisfontaine, New Orleans, La., for DeLaval.

A.R. Christovich, Jr., C. Edgar Cloutier, New Orleans, La., for Zurn.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before CLARK, Chief Judge, BROWN, and HIGGINBOTHAM, Circuit Judges.

JOHN R. BROWN, Circuit Judge:

This appeal 1 requires this Court to make another trek through "[t]hat Serbonian Bog" 2 of damages in maritime cases. Before us are claims for detention damages, replacement costs, general average processing expenses, and attorneys' fees sought from DeLaval Turbine, Inc., Avondale Shipyards, Inc., and Zurn Industries, Inc. and the trial court's dismissal of Avondale Shipyards, Inc. Because we find that the trial court erred in its method of calculating detention damages and failed to award damages for cost of replacement of the couplings, we reverse as to DeLaval and Zurn. We affirm, however, the trial court's dismissal of Avondale, its denial of general average processing expenses and attorneys' fees.

Delta Strikes Out

Delta Steamship Lines, Inc. (Delta) operates liner services between ports in the Gulf of Mexico and South America and West Africa. The Gulf-West Africa trade is conducted through conventional vessels which carry break-bulk cargo, but the Gulf-South American routes are serviced by LASH 3 vessels which were constructed for Delta by Avondale Shipyards, Inc. (Avondale). On September 30, 1977 Delta's LASH vessel DELTA NORTE sailed from the Port of New Orleans bound for various South American ports. While en route on October 8, 1977, a low pressure, high speed flexible coupling in the vessel's main propulsion equipment failed and the vessel was disabled. The propulsion equipment was supplied to Avondale by DeLaval Turbine, Inc. (DeLaval), and the coupling was supplied to DeLaval by Zurn Industries, Inc. (Zurn).

The disabled DELTA NORTE was towed to Oranjestad, Aruba, and its cargo was transferred to the conventional-designed While the DELTA NORTE was undergoing repairs, Delta attempted to mitigate its losses and preserve its South American trade route by borrowing vessels from its West African routes 4 and using them in lieu of the DELTA NORTE in the South American trade. To complicate matters, however, during the detention of the DELTA NORTE the Port of New Orleans was subjected to a general strike on October 1, 1977, directed against all vessels and subsequently a selective strike directed against automated ships including LASH vessels which lasted until December 1, 1977. Attempts to avoid the strike led to further mitigation efforts on Delta's behalf.

vessel DELTA BRAZIL which completed delivery of the cargo to the original destinations in South America. Repairs on the DELTA NORTE were completed on March 22, 1978, and modifications were also conducted on the couplings on Delta's other LASH vessels, the DELTA MAR and the DELTA SUD pursuant to DeLaval's recommendation.

Delta brought suit against Avondale, DeLaval and Zurn, and during the liability phase of the trial the parties announced that all of Delta's claims against the defendants had been compromised except for the amount of damages recoverable by Delta from DeLaval and Zurn. On the eve of the damages trial the defendants stipulated that Delta was entitled to recover certain "hard damages" 5. The damage issues were tried to the court which dismissed Avondale and entered judgment that Delta recover the sum of $3,596,522.68 6 from DeLaval and Zurn. Disagreeing with the District Court on several matters, Delta appeals to this Court.

Delta LASHes Out

Delta contends that the District Court erred by (i) dismissing Avondale, (ii) excluding the testimony of its witness Arthur Munster 7, (iii) miscalculating lost profit on the casualty voyage, (iv) miscalculating detention damages for the DELTA NORTE, (v) failing to award detention damage for the changeout of the DELTA MAR and DELTA SUD couplings, (vi) failing to (i) Dismissal of Avondale

award damages associated with replacement of the DELTA MAR and DELTA SUD couplings, (vii) failing to award to Delta processing expenses associated with its declaration of general average and (viii) failing to award Delta attorneys' fees. We will address these points separately.

The first issue Delta raises is whether the trial court erred in dismissing Delta's claims against Avondale. During the liability phase of the trial the parties compromised 8 all issues except for the amount of damages recoverable by Delta from DeLaval and Zurn. Because there was no stipulation or determination of the liability of Avondale to Delta, the trial court concluded that the claims against Avondale should be dismissed. We agree. Delta failed to adduce any evidence at trial establishing liability on the part of Avondale, nor does the record reflect any stipulation of Avondale's liability. We hold that the trial court correctly concluded that the claim be dismissed.

(iii) Miscalculated Lost Profit on the Casualty Voyage

After the casualty on October 8, 1977, the DELTA NORTE was towed to Oranjestad, Aruba and the conventional break-bulk vessel, the DELTA BRAZIL, was dispatched in ballast from New Orleans on its voyage 46 to pick up the DELTA NORTE's cargo in Aruba and deliver it to the original ports of destination in South America. The DELTA BRAZIL returned with northbound cargo. Delta contends that it lost profits from the DELTA NORTE on the casualty voyage even though it collected freight for the cargo laden on that vessel and even though it charged second freight 9 for the same cargo to complete its delivery on the DELTA BRAZIL. Specifically, Delta urges that it is entitled to recover lost profit on the northbound leg of the voyage that the DELTA NORTE would have made except for the casualty.

The District Court determined that there was no evidence that the DELTA NORTE earned less money on the casualty voyage than it ordinarily would have earned on the voyage. 10 Initially we point In this matter, the District Court failed to take into consideration that each voyage was a round trip which also included loading cargo in South America for carriage and delivering at New Orleans. Rather than returning with cargo, the DELTA NORTE was brought back under tow without cargo and consequently Delta lost all profit attributable to the cargo it would have loaded in South America. Loss of profits or loss of the use of a vessel pending repair arising from a collision or a maritime casualty is a proper element of damages provided, however, profits are proved with reasonable certainty. The CONQUEROR, 166 U.S. 110, 125, 17 S.Ct. 510, 516, 41 L.Ed. 937, 944 (1897); The Steamboat POTOMAC v. Cannon, 105 U.S. 630, 631-32, 26 L.Ed. 1194 (1881); Bolivar County Gravel Co. v. Thomas Marine Co., 585 F.2d 1306, 1308 n. 2, 1979 A.M.C. 1806, 1808 n. 2 (5th Cir.1978); Skou v. United States, 478 F.2d 343, 345, 1973 A.M.C. 1482, 1484 (5th Cir.1973), modified, 526 F.2d 293 (5th Cir.1976).

                out that findings of fact by the trial court in admiralty cases are subject to the clearly erroneous rule.   McAllister v. United States, 348 U.S. 19, 20, 75 S.Ct. 6, 7, 99 L.Ed. 20 (1954);  F.R.Civ.P. 52(a).  However, when essentially based on an incorrect legal principle, Rule 52(a) clearly erroneous does not apply and we disregard any such possible findings.   Pullman-Standard v. Swint, 456 U.S. 273, 287, 102 S.Ct. 1781, 1789, 72 L.Ed.2d 66, 79 (1982);  Armco, Inc. v. Armco Burglar Alarm Co., Inc., 693 F.2d 1155, 1162 (5th Cir.1982);  City of New Orleans v. American Commercial Lines, Inc., 662 F.2d 1121, 1123 (5th Cir.1981)
                

To arrive at the correct figure for lost profit on the casualty voyage, we begin with the District Court's finding that the DELTA NORTE was earning an average profit per voyage of $655,180.50. 11 This finding was calculated by the District Court from the profits of three voyages immediately preceding the casualty and three voyages immediately following the DeLaval and Zurn contend on appeal that Delta failed to show any actual loss of cargo business for the northbound leg of the casualty voyage of the DELTA NORTE and thus are not entitled to lost profit. Defendants contend that Joseph Landry (Delta's witness) conceded that he had no knowledge of any specific lost cargo business for that voyage.

                casualty. 12   Delta's evidence at trial through the admitted and uncontradicted testimony of Arthur Munster showed a profit of $359,626.02 was made on the southbound cargo carried by DELTA NORTE. 13   The District Court determined in footnote 18 to finding of fact 32, see supra note 10, page 999, that Delta asserted in its post-trial submission that the DELTA NORTE earned profits of $359,626 on voyage No. 35 up to the time of the casualty, i.e. the southbound leg.  Although the court undertook to find that Delta did not cite any supporting evidence for that figure and there was none in the record the uncontrovertible fact is that Arthur Munster testified positively, with no objection, to a figure of a profit of $359,626.02 made on the southbound leg.  See trial transcript 175-76.  See note 13.  To arrive at the lost profit figure, the profit from the southbound leg ($359,626.02) is subtracted from the uncontested average profit per voyage ($655,180.50).  Therefore, Delta established lost profits on the northbound leg of casualty voyage in the amount of $295,554.48
                

Loss of profit arising from a maritime casualty may be awarded as long as it is proved with reasonable certainty. The CONQUEROR, 166 U.S. at 125, 17 S.Ct. at 516, 41 L.Ed. at 944. This usually involves a showing in commercial cases that the vessel "has been engaged, or was capable of being engaged...

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