Johnson & Towers Baltimore, Inc. v. Vessel Hunter, Civ. No. N-91-77.

• Decision Date: 04 December 1992
• Docket Number: Civ. No. N-91-77.
• Citation: 824 F. Supp. 562
• Court: U.S. District Court — District of Maryland
• Parties: JOHNSON & TOWERS BALTIMORE, INC., Plaintiff/Counter Defendant, v. VESSEL "HUNTER" and Clayton Katski, Defendants/Counter Plaintiffs, and New Hampshire Insurance Group, Third Party Defendant.

824 F. Supp. 562

JOHNSON & TOWERS BALTIMORE, INC., Plaintiff/Counter Defendant, v. VESSEL "HUNTER" and Clayton Katski, Defendants/Counter Plaintiffs and New Hampshire Insurance Group, Third Party Defendant.

Civ. No. N-91-77.

United States District Court, D. Maryland.

December 4, 1992.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Edward Hartman, III, Annapolis, MD, for third party plaintiff.

Steven R. Migdal, Esq., Annapolis, MD, for third party defendant.

MEMORANDUM

NORTHROP, Senior District Judge.

Pending before the Court are two motions: 1) New Hampshire Insurance Group's ("NHIG") Motion for a New Trial and Amendment of Judgment; 2) a petition for attorney's fees and costs filed by Clayton O. Katski ("Katski") at the Court's request. Both motions are opposed. A hearing on these motions was conducted on October 20, 1992. For the reasons stated herein, NHIG's motion for a New Trial and Amendment of Judgment will be denied, while Katski's Petition for attorney's fees and costs will be granted subject to the Clerk of the Court's determination of allowable costs under Rule 54(d).¹

I. Background

Plaintiff Johnson & Towers Baltimore, Inc. ("Johnson & Towers") brought suit in admiralty to collect payment for work performed in June and July of 1990 on Katski's yacht, the vessel "Hunter." The Hunter is a 1970, 53-foot, Sport Fisherman.

In June of 1990, Defendant contacted Johnson & Towers and requested that they investigate and repair the cause of some smoking in the Hunter's starboard engine. An investigation of the problem revealed that pieces of engine insulation which wrap around the exhaust riser were being ingested into the engines, thereby causing the engine smoke and damage. Both engines needed extensive repairs. There is no dispute that the ingestion of the engine insulation caused the engine problems.

Katski was advised of the problem and he authorized Johnson & Towers to perform all necessary repair work on both the port and starboard engines. Between June 4, 1990 and July 5, 1990, Plaintiff performed the repair work requested and authorized by Katski. On July 25, 1990, Johnson & Towers submitted an invoice in the amount of $27,469.25 to Katski for the repairs performed on the Hunter.

Shortly after Katski authorized the repairs to the engines, Defendant submitted the claim to his insurer, NHIG. NHIG sent a marine surveyor, Mr. C. Robert Skord ("Skord"), to determine the cause, nature and extent of damage to Katski's yacht. Skord claimed that the engine damage from the exhaust insulation arose from a type of damage that was not covered under Katski's yacht insurance policy. Under the policy's terms, damage due to gradual deterioration or normal wear and tear was not covered, and NHIG claimed the engine damage was due to a gradual deterioration of insulation around the engine's exhaust.

Katski disagreed. Katski claimed that the damage to the exhaust resulted from physical trauma. Katski maintained that such damage was covered by the insurance policy and, therefore, NHIG was liable for the repair costs.

Defendant brought a third-party claim against his insurance company alleging that the insurance policy covered these repairs and arguing that NHIG was responsible for all costs resulting from the instant dispute between Katski and Johnson & Towers. These costs include: 1) Katski's legal expenses associated with bringing the third party claim against NHIG; 2) Katski's legal expenses in defending against Johnson & Towers' claim against him and his counter-claim against Plaintiff; 3) the repair invoice amount, and 4) Johnson & Towers' claim for interest, costs and legal fees assessed against Katski pursuant to his finance agreement with Plaintiff.

The Court conducted a four-day non-jury trial on March 19, 20, 24 and 25, 1992. At the close of trial, this Court made the following findings of fact and legal conclusions. First, that Johnson & Towers did not cause the damage to the vessel Hunter. Katski failed to prove by a preponderance of the evidence that Plaintiff's work on the vessel was negligent, or was the cause of the engine damage. Second, Katski had a valid contract with Plaintiff. Katski's credit-finance agreement, signed invoice, and his oral authorization of the repairs formed the basis of his obligation to the Plaintiff. Katski was, therefore, liable to Plaintiff.

In a subsequent Memorandum Opinion setting forth additional the findings of fact and conclusions of law for the remaining issues, the Court found that the damage to the Hunter was a loss covered by his insurance policy with NHIG. Johnson & Towers Baltimore Inc. v. Vessel "Hunter" et al. 802 F.Supp. 1343 (D.Md.1992). As the damage to Katski's engines was a covered loss, this Court found NHIG liable to Katski for the cost of the repairs, Katski's legal expenses in both defending against the Johnson & Towers action against him and in bringing his third party claim against NHIG. Id. The Court also found NHIG liable for any of Katski's costs that claimable under Rule 54(d) that were associated with both Johnson & Towers' action against him, as well as costs in the maintenance of his third party claim. Id. The Court denied Katski's request for recovering the Johnson & Towers service charges and attorney's fees were assessed against him. Id.

Third Party Defendant, NHIG, now moves for a new trial and to amend the judgment to exclude the legal expenses and court costs assessed against it.

II. NHIG's Motion for a New Trial

In a motion for a new trial, the district court can exercise its discretion to grant a new trial if the verdict, even though supported by enough evidence to defeat the motion for judgment as a matter of law, is against the weight of the evidence. Fed. R.Civ.P. 59. Taylor v. Home Insurance Co., 777 F.2d 849, 855 (4th Cir.1985). Unlike a judgment as a matter of law, a district court may weigh and assess the credibility of witnesses in ruling on a motion for a new trial. Id.; Wyatt v. Interstate and Ocean Transport Company, 623 F.2d 888, 891-92 (4th Cir.1980). Indeed, the district court has a duty to order a new trial in order to prevent an injustice. 11 C. Wright and A. Miller, Federal Practice and Procedure § 2805 at 38 (1973).

In this case, NHIG avers two separate grounds for granting a new trial. First, NHIG contends that Katski's claim and the Court's judgment went beyond the pleadings. Second, NHIG claims that the judgment goes against the weight of the evidence and is predicated upon a misinterpretation of the policy. These contentions will be considered seriatim.

NHIG argues that the only negligence alleged by Katski in his Third Party Complaint was that of Johnson and Towers. Because the Court found that the Hunter's damage was due to negligent repairs performed by a repair shop other than by Johnson & Towers, NHIG claims it was prejudiced by what it characterizes as an unfair and surprising Court conclusion.

NHIG's assertions that it was unfairly surprised are simply insupportable. See Twigg v. Norton Co., 894 F.2d 672, 674-75 (4th Cir.1990) (to warrant a new trial, movant must show reasonably genuine surprise, which necessarily was inconsistent with substantial justice, and resulted in actual prejudice). NHIG's argument that it was surprised by the Court's judgment is undermined by its own response to Katski's action. In both its pleadings, and in testimony presented by it at trial, NHIG seems to have anticipated Katski's charges against it. Cf. Twigg, 894 F.2d at 674 (movant demonstrated surprise in part where pleadings, interrogatories and direct testimony stated different theory of liability than that raised on cross examination of plaintiff). NHIG's answer to the Third Party Claim does not specifically address Katski's allegations of negligence, but rather contains only a general denial that there is any "coverage for subject loss."² Answer to Third-Party Complaint (Paper No. 31).

Additionally, at trial, NHIG seems to have anticipated that another's repair efforts might be responsible for the repair work negligence that Katski contended caused the engine damage. Skord, NHIG's expert witness, went to great lengths to demonstrate that the Hunter's damage was due to events not covered by the policy. Skord's testimony was not predicated upon only showing that Johnson & Towers was not negligent, but rather that the damage was also due to events outside policy coverage, i.e., gradual wear and tear or deterioration of the engine insulation lagging.³ Cf. Twigg, 894 F.2d at 674.

NHIG's assertions of unfairness are equally insupportable. Rule 8 requires only a short and plain statement of the case. See Fed.R.Civ.P. 8; see also Twigg, 894 F.2d at 675. Katski met this burden. The Third Party Complaint clearly alleges that NHIG failed to pay for a loss covered by the insurance policy. Neither Katski's third party claim, nor NHIG's Answer to that claim, limit, in any way, the allegations of negligence to that only of Johnson & Towers. Indeed, Katski's third party claim states only that the damage to his yacht's engines is covered under his policy with NHIG.⁴ Although Katski denied liability to Johnson & Towers based upon Plaintiff's alleged negligence, Katski did not state in the Third Party Claim that Plaintiff's negligence was the only basis for the insurance policy coverage.

If NHIG required more information to frame an answer it could have so moved. See Fed.R.Civ.P. 12(e). The end of a trial is not an appropriate time for NHIG to make a motion for a new trial that is in reality a motion for a more definite statement.

Simply because NHIG now claims, after its loss at trial, that it did not anticipate that the negligence that caused the damage was due to other repair people is not reason enough to grant a new trial. NHIG wrote the insurance policy. Presumably, it knew, or should have known, what types of damage were and were not covered by the policy. NHIG, knew or should have known, of these...