Cement Div., Nat. Gypsum Co. v. City of Milwaukee

• Citation: 915 F.2d 1154
• Decision Date: 21 November 1990
• Docket Number: No. 89-2631,89-2631
• Parties: CEMENT DIVISION, NATIONAL GYPSUM COMPANY, Reed & Brown, Incorporated, New York Marine Managers, Incorporated, et al., Plaintiffs-Appellants, v. CITY OF MILWAUKEE, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 1154

915 F.2d 1154

1991 A.M.C. 1002

CEMENT DIVISION, NATIONAL GYPSUM COMPANY, Reed & Brown Incorporated, New York Marine Managers Incorporated, et al., Plaintiffs-Appellants, v. CITY OF MILWAUKEE, Defendant-Appellee.

No. 89-2631.

United States Court of Appeals Seventh Circuit.

Argued April 13, 1990.

Decided Oct. 16, 1990.

Rehearing and Rehearing En Banc

Denied Nov. 21, 1990.

Theodore C. Robinson, Ray, Robinson, Hanninen & Carle, Chicago, Ill., Harney B. Stover, Davis & Kuelthau, Milwaukee, Wis., David G. Davies, Ray, Robinson, Hanninen & Carle, Cleveland, Ohio, for plaintiffs-appellants.

Grant F. Langley, Rudolph M. Konrad, Office of the City Attorney, Milwaukee, Wis., for defendant-appellee.

Before CUDAHY, POSNER and FLAUM, Circuit Judges.

CUDAHY, Circuit Judge.

In a heavy storm on Christmas Eve of 1979, the SS EM FORD, a self-unloading bulk cement carrier loaded with 5,700 tons of bulk cement, tore loose from its moorings, battered against the headwall of its berth and eventually sank to the bottom of the Milwaukee Harbor. Following this disaster, the FORD's owner, the Cement Division of the National Gypsum Company, along with the hull and cargo insurers of the ship, [referred to collectively as "National Gypsum"] sued the City of Milwaukee in admiralty. National Gypsum claimed that the City had breached its obligations as a wharfinger by assigning the FORD to a slip it knew to be unsafe in heavy winds and by negligently failing to warn National Gypsum of the hidden dangers in the berthing slip it assigned to the FORD. National Gypsum sought over $6,500,000 in compensatory damages. The City of Milwaukee denied fault and alleged contributory negligence on the part of National Gypsum, seeking to recover $250,000 for damage caused to its dockwall and other property by the FORD's battering during the Christmas Eve storm.

After a motion by the City, the district court disqualified National Gypsum's original attorney and his law firm because of potential conflicts. At a bifurcated trial on the issue of liability, the district court found National Gypsum to be 96% negligent and the City to be 4% negligent. This interlocutory appeal in admiralty followed under 28 U.S.C. section 1292(a)(3). Damages are to be determined later. We reverse the district court's allocation of fault and find that we lack jurisdiction, at this time, to review the district court's disqualification order.

I. FACTS

Our tale begins on November 15, 1979, when National Gypsum's Fleet Captain, Eugene P. Stafford, telephoned Stanley Blawas, an Assistant Dock Superintendent of the Milwaukee Harbor, requesting a winter lay-up berth for the FORD. Assistant Dock Superintendent Blawas offered the FORD a berth at Terminal No. 4 in South Slip No. 3 in Milwaukee's outer harbor. Captain Stafford inquired about the safety of the slip before accepting the berth, but was assured by Blawas that the berth was safe.

Before it had a chance to berth at Terminal No. 4, National Gypsum changed the FORD's winter mooring orders. Instead of mooring at Terminal No. 4 in the outer harbor, the FORD was ordered to wait in the harbor for its sister ship and then dock at National Gypsum's own terminal in Milwaukee's inner harbor. After being apprised of the change in the FORD's plans, Assistant Dock Superintendent Blawas offered to let the FORD tie up temporarily at Terminal Pier No. 1 in South Slip No. 1 in the outer harbor while the FORD was waiting for its sister ship. Before accepting the offer of South Slip No. 1, Patrick Gallagher, captain of the FORD, asked Blawas about the depth of the water in the slip and about the availability of electric power. He did not ask about the safety of South Slip No. 1.

After accepting the berth, Captain Gallagher consulted the 1979 United States Coast Pilot to see what it had to say about the harbor. This maritime source contained no warnings of hazardous wave surges in Milwaukee's outer harbor, but did note that the breakwater in the harbor could be obscured during heavy waves. From 1912 to 1966 (some 13 years before the sinking of the FORD), one of the appellants, the Great Lakes Protective Association, published the winter mooring regulations of the United States Salvage Association in its annual reports. These regulations provided that winter mooring would not be approved in Milwaukee's outer harbor because of the danger of wave surges from northeasterly winds. The district court found that National Gypsum was aware of these mooring regulations. In addition, Marine surveyor William Wade testified that he had informed National Gypsum in December of 1979 that ships berthed in Milwaukee's outer harbor were subject to heavy surges during storms with strong northeasterly winds. National Gypsum denies that it received this warning. The district court found otherwise.

The FORD's captain, although quite experienced, had never seen or apparently heard of dangerous wave surges in Milwaukee's outer harbor. The district court thought that the possibility of wave surges could have been predicted from the construction of the berth and from the captain's previous experience mooring in other harbors. It is clear from previous claims and from records of wave heights kept by the City, however, that the City had actual knowledge that mooring in the outer harbor--especially in South Slip No. 1--was unsafe during heavy storms. Despite this knowledge, the City failed to warn either the crew of the FORD or National Gypsum of any possible danger to the FORD.

Before long, National Gypsum was to change the FORD's orders for the last time. National Gypsum commanded the FORD, which was already berthed in South Slip No. 1, to remain in Milwaukee over the Christmas holiday and then make one more cement delivery before mooring at Milwaukee for the winter. The FORD's winter mooring lines were put out to secure the ship while the crew was on vacation.

At a meeting on the FORD on the morning of December 22, 1979, Captain Gallagher informed Assistant Dock Superintendent Blawas that the ship would be laying up for the holiday and that most of the crew would be gone until December 26th or 27th, but that a skeleton crew would be left aboard the FORD during the interim. Blawas warned Captain Gallagher that waves in the outer harbor could "get a little rough" if a storm came up. By "rough," Blawas testified that he meant waves of two to four feet. (Blawas conceded, however, that it was possible he had actually undercut this warning by specifying waves of one to two feet. Appellant's Appendix at 152-53.) Later that same day, Captain Gallagher discharged all but five of the crew for the holidays. In accordance with National Gypsum's practice while in port and with the City's practice on holidays, no one was assigned to watch the weather. And no one had the key to the ship's radio or telephone. Captain Gallagher expected the remaining crew to use a nearby pay phone in case of an emergency. An independent company was retained on call to provide extra manpower and materials as needed.

By December 24, 1979, a heavy storm had developed. Waves of up to 15 feet crashed into South Slip No. 1. At approximately 1 p.m. on that day, one of the FORD's remaining crew members realized that the FORD was from 10 to 15 feet off the dock at the stern and that the FORD was in danger. The crew called for help. The Coast Guard was contacted (but no one was available to render assistance because of the holiday). In addition, tugboats came out to assist the FORD on three different occasions, to no avail. The tugboats were unable to help the FORD because they could not communicate with it and because it had no pilot on board. Because of the severe waves, the FORD tore loose from its moorings, started pounding against the headwall of the dock, became dangerous to those trying to save it and was eventually abandoned. The FORD ultimately sank.

National Gypsum brought suit against the City of Milwaukee, claiming that the City had breached its obligations as a wharfinger by assigning the FORD to a slip it knew to be unsafe in heavy winds and by negligently failing to warn National Gypsum of the hidden dangers in the berthing slip it assigned to the FORD. National Gypsum asked for over $6,500,000 in compensatory damages. The City of Milwaukee denied fault and alleged contributory negligence on the part of National Gypsum, seeking to recover $250,000 for damage caused to its dockwall and other property by the FORD's battering during the Christmas Eve storm.

After a motion by the City, the district court disqualified National Gypsum's original attorney and his law firm because of potential conflicts. After the liability phase of a bifurcated trial, the district court found that National Gypsum was negligent and at fault: for laying up the FORD at South Slip No. 1, for failing to employ or retain a standby master or pilot and crew members aboard who could navigate the vessel, for failing to maintain ship-to-shore radio-telephone communications and for failing to monitor the weather. The district court found the City negligent and at fault: for allowing the vessel to temporarily lay up at South Slip No. 1, for failing to warn the ship that wind and wave conditions could develop which would endanger the vessel and the City's dockwall and for failing to order that the ship remain manned or move off the berth. The district court also found that the City had breached a wharfinger's implied warranty of offering safe berths. The court apportioned 96% of the fault to National Gypsum and 4% to the City, a ruling which essentially left both parties to bear their own losses.

On appeal, National Gypsum argues essentially that: (1) the district court erred in not finding the City 50% at fault because the City's actions constituted either wanton negligence or negligence greater than 4%; and (2) that the district court's ruling disqualifying National Gypsum's original attorney and his...