Bunge Corporation v. Freeport Marine Repair Inc.

• Decision Date: 09 February 2001
• Docket Number: 9914019,11
• Parties: BUNGE CORPORATION, Ranger Insurance Co., Plaintiffs-Appellees, Cross-Appellants, v. FREEPORT MARINE REPAIR, INC., Defendant-Appellant, Cross-Appellee.United States Court of Appeals, Eleventh Circuit
• Court: U.S. Court of Appeals — Eleventh Circuit

BUNGE CORPORATION, Ranger Insurance Co., Plaintiffs-Appellees, Cross-Appellants v FREEPORT MARINE REPAIR, INC., Defendant-Appellant, Cross-Appellee

No. 99-14019

United States Court of Appeals, Eleventh Circuit.

January 30, 2001.

February 9, 2001.

Appeals from the United States District Court for the Northern District of Florida. (No. 97-00240-CV-LAC-3), Lacey A. Collier, Judge.

Before DUBINA and HULL, Circuit Judges, and HODGES^*, District Judge.

DUBINA, Circuit Judge:

This admiralty action concerns the definition of a "vessel" for purposes of applying burden shifting principles outlined in maritime case law. The appellant Freeport Marine Repair, Inc. ("Freeport") appeals the district court's $196,500.00 judgment against it after a ship owned by Freeport broke free from her moorings and damaged appellee Bunge Corporation's ("Bunge") grain loading facility. Bunge cross-appeals seeking a higher damage award. We affirm and remand.

I. FACTS

Freeport manufactured and owned a casino vessel ("Hull No. 40") that was in the final stages of construction at Freeport's facility at Four Mile Creek near Freeport, Florida. By October 3, 1995, funding for completion of the ship dried up resulting in a "vessel" not rigged for steering.¹ By early evening of the same day, Hurricane Opal was nearing Florida's panhandle at approximately 10 mph. Freeport was aware of the impending hurricane, but only made limited preparations because Freeport did not believe Opal would make landfall until October 5. Opal, however, accelerated from 10 to 21 mph, causing Freeport to work from 3:00 a.m. until 11:00 a.m. on October 4, in an attempt to secure Hull No. 40 from the on-coming storm. Both sides dispute the integrity of the preparations conducted by Freeport in anticipation of Hurricane Opal. The district court was unable to find, as a matter of fact, exactly how Hull No. 40 was moored because the cables that broke were not preserved and, thus, not in evidence.²

By 11:00 a.m., the weather worsened, and Freeport evacuated its employees. The parties dispute the severity of the weather at the time Hull No. 40 broke free from her moorings. The district court found that the storm approached the coast line with winds up to 150 mph, but by the time it reached Freeport, Hull No. 40 was only subjected to sustained winds between 85 mph and 103.5 mph. By 5:30 p.m., Hull No. 40 broke free from her moorings and drifted to the west bank of Four Mile Creek. While adrift, Hull No. 40 apparently struck and damaged a grain-loading conveyor facility owned by Bunge. The following day Hull No. 40 returned to Freeport's mooring facility under her own power. Bunge brought suit in federal district court seeking recovery of the damages it sustained as a result of Freeport's alleged negligence. The district court entered judgment against Freeport in the amount of $196,500.00.

Freeport appeals the $196,500.00 judgment against it, while Bunge cross-appeals, seeking an increase in the amount of damages awarded. The primary issue in this case concerns Freeport's defense that a ship/object must be a "vessel" in order for the burden shifting principles announced in The Louisiana, 70 (3 Wall.) U.S. 164, 173, 18 L.Ed. 85 (1866)(the "Louisiana Rule") to apply.

II. STANDARDS OF REVIEW

Whether Hull No. 40 was a "vessel" for purposes of the Louisiana Rule is a question of law which is reviewed de novo. Southern Natural Gas Co. v. Land, Cullman County, 197 F.3d 1368 (11th Cir.1999); American Dredging Co., v. Lambert, 153 F.3d 1292 (11th Cir.1998). The district court's findings regarding the severity of Hurricane Opal are findings of fact that must stand unless clearly erroneous. It is settled that the clearly erroneous standard of review applies in admiralty cases. McAllister v. United States, 348 U.S. 19, 20, 75 S.Ct. 6, 99 L.Ed. 20 (1954); Compania Anonima Venezolana De Navegacion v. Perez Export Company, 303 F.2d 692, 694 (5th Cir.1962).3 In reviewing damage awards, this court should reverse only if it finds the award to be clearly erroneous. Nakajima v. U.S., 965 F.2d 987, 990 (11th Cir.1992). This court should not reverse the district court's damage award simply because it may conclude that it would have computed damages differently. Hiatt v. U.S., 910 F.2d 737, 742 (11th Cir.1990).

III. DISCUSSION

A. The Louisiana Rule

We first address whether Hull No. 40 was a vessel such that it was subject to the Louisiana Rule. When a moving ship strikes and damages a stationary object, it is presumed that the moving ship is at fault. The Louisiana, 70 (3 Wall.) U.S. 164, 173, 18 L.Ed. 85 (1866); The Oregon, 158 U.S. 186, 192-93, 15 S.Ct. 804, 39 L.Ed. 943 (1895); Bunge Corp. v. M/V Furness Bridge, 558 F.2d 790, 794-95 (5th Cir.1977). This presumption operates to shift the burden of persuasion onto the moving ship. Delta Transload, Inc. v. MV Navios Commander, 818 F.2d 445, 449 (5th Cir.1987). The presumption derives from the common-sense observation that moving vessels do not usually collide with stationary objects unless the moving vessel is mishandled in some way. Id. It stems also from the observation that "any evidence of actual negligence, or the lack of it, is likely to be known only to the persons on board, who are in the best position to either keep damaging evidence hidden, or bring favorable evidence forward." United States v. Merchant Mariner's License No. 008075 (Joseph J. O'Connell), Decision of the Vice-Commandant No. 2465, p. 8 (1981). The presumption is universally described as "strong," id., and as one that places a "heavy burden" on the moving ship to overcome. Bunge Corp., 558 F.2d at 795.

This presumption of negligence may be rebutted by showing, by a preponderance of the evidence, either that the allision was the fault of the stationary object, that the moving vessel acted with reasonable care, or that the allision was an unavoidable accident. Bunge Corp., 558 F.2d at 795. The presumption operates not just against the ship, but against all parties who participated in the management of the vessel. Woods v. Department of Transp., 681 F.2d 988, 990 (5th Cir.1982).

Therefore, when the district court determined that Hull No. 40 fell within the purview of the Louisiana Rule, Freeport had the burden to overcome the presumption that it was negligent in causing damage to the Bunge facility. On appeal, Freeport argues that the Louisiana Rule applies only to vessels, that Hull No. 40 was not a vessel in admiralty, and that the district court, therefore, erroneously applied the Louisiana Rule to Freeport. Because we conclude Hull No. 40 constituted a vessel for purposes of admiralty tort jurisdiction, we hold that the district court correctly applied the Louisiana Rule to Hull No. 40. We need not address whether a ship/object must constitute a vessel as defined elsewhere in admiralty jurisprudence in order for the Louisiana Rule to apply.

Our analysis, then, begins with admiralty jurisdiction. Historically, admiralty tort jurisdiction depended solely upon the locality of the wrong. Executive Jet Aviation, Inc. v. City of Cleveland, 409 U.S. 249, 253, 93 S.Ct. 493, 34 L.Ed.2d 454 (1972) ("If the wrong occurred on navigable waters, the action [was] within admiralty jurisdiction; if the wrong occurred on land, it [was] not."). The Supreme Court, however, rejected the "purely mechanical application of the locality test," concluding that "the wrong [must also] bear a significant relationship to traditional maritime activity." Id. at 261, 268, 93 S.Ct. 493. This second prong is commonly termed "the nexus test." Id. Thus, we must consider the situs of the allision (locality test) as well as the relationship between the unmooring of a partially constructed ship and traditional maritime activity (nexus test) in order to determine admiralty jurisdiction.

We consider first whether Hull No. 40 passes the locality test. In The Plymouth, 70 U.S. (3 Wall.) 20, 36, 18 L.Ed. 125 (1866), the Supreme Court stated that "[e]very species of tort, however occurring, and whether on board a vessel or not, if upon the high seas or navigable waters, is of admiralty cognizance." To satisfy this test, the tort need only occur on navigable waters. See id. In this case, Hull No. 40 broke free from her moorings on the east side of Four Mile Creek, drifted across to the west side of Four Mile Creek where it struck the Bunge grain loading facility. The injury to Bunge's property clearly occurred on navigable waters and, thus, satisfies the locality test.

We next determine whether Hull No. 40's allision with the Bunge facility bears a significant relationship to traditional maritime activity. The nexus test presents two queries: (1) Did the incident have a "potentially disruptive impact" on maritime commerce? Sisson v. Ruby, 497 U.S. 358, 363, 110 S.Ct. 2892, 111 L.Ed.2d 292 (1990); and (2) does a "substantial relationship" exist "between the activity giving rise to the incident and traditional maritime activity?" Id. at 364, 110 S.Ct. 2892. As to the first query, "a court must assess the general features of the type of incident involved to determine whether such an incident is likely to disrupt commercial activity." Id. at 363, 110 S.Ct. 2892; Sea Vessel v. Reyes, 23 F.3d 345, 350 (11th Cir.1994). No actual disruption of maritime commerce need occur in order to satisfy this query, rather the law requires that we examine the "general features" of this type of incident. Id. Here, a partially constructed vessel broke free from her moorings and drifted unattended down Four Mile Creek, damaging property along side the waterway. Clearly, Hull No. 40 was not only a potential disruption to commercial activity, it was an actual disruption.

As to the second query of the nexus test, we must determine whether there was "a substantial relationship between the activity giving rise to the incident and traditional maritime activity." Sisson, 497 U.S. at 364, 110 S.Ct. 2892.4 The relevant...