Emerson G.M. Diesel, Inc. v. Alaskan Enterprise
| Decision Date | 11 May 1984 |
| Docket Number | H,Nos. 83-3502,No. 595760,83-3503,595760,s. 83-3502 |
| Parties | , 39 Fed.R.Serv.2d 281 EMERSON G.M. DIESEL, INC., Plaintiff, v. ALASKAN ENTERPRISE, Officialer Engines, Tackle, Apparel, Furniture and Equipment, In Rem; Offshore Fisheries, Inc., a Washington corporation; Miller Industries, Inc., a Washington corporation; and Francis L. Miller, In Personam, Defendants/Third-Party Plaintiffs Appellees, v. GENERAL MOTORS CORPORATION, Third-Party Defendant, and Twin Disc, Inc., Third-Party Defendant/Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Arthur D. McGarry, Oles, Morrison, Rinker, Stanislaw & Ashbaugh, Seattle, Wash., for third-party defendant/appellee.
Jay H. Zulauf, Matthew Cohen, Mundt, MacGregor, Happel, Falconer, Zulauf & Hall, Seattle, Wash., for defendants/third-party plaintiffs appellees.
On Appeal from the United States District Court for the Western District of Washington.
Before WRIGHT, PREGERSON, and FERGUSON, Circuit Judges.
Twin Disc, the manufacturer of components used in diesel engines, appeals from a $254,047.06 judgment entered against it in favor of the Alaskan Enterprise, a fishing vessel. A ruptured hose on a reduction gear manufactured by Twin Disc caused the gear unit to overheat, disabling the Alaskan Enterprise's port engine while the vessel was sailing in the Bering Sea. The district court held Twin Disc strictly liable for the Alaskan Enterprise's repair costs and lost profits. We affirm.
Twin Disc supplied a reduction gear unit that was incorporated in a diesel engine installed on the Alaskan Enterprise, a 150 foot, steel-hulled fishing vessel. An essential component of the reduction gear was a hose that carried lubricating oil between the manifold and oil pump of the gear unit. Twin Disc did not manufacture the hose, but selected it, and installed it on the reduction gear unit. The district court found that Twin Disc had not stress-tested the hose. The district court also found that Twin Disc's reduction gear unit was designed to accommodate a temperature sensor, which could be plugged into a system that would warn the crew when the gear unit was overheating. Twin Disc did not install the temperature sensor on the reduction gear, but shipped it separately for later installation. The court found that Twin Disc did not provide clear and adequate instructions regarding the installation of the temperature sensor, and as a result, the device was never installed on the Alaskan Enterprise.
In 1978, during a fishing trip in Alaskan waters, the reduction gear hose ruptured. Oil drained out of the system. The gear overheated and became immobilized, disabling the port engine. The vessel was only two hours out of Kodiak when the hose ruptured, and was able to return to port on one engine. Because of the reduction gear's failure, the Alaskan Enterprise was out of service for a sixteen-day period at the height of the 1978 king crab season, one of the most successful in Alaskan crab industry history.
The reduction gear unit was repaired and the Alaskan Enterprise operated without incident until the spring of 1980, when mechanics during routine maintenance discovered a crack in the metal casing of the reduction gear. The district court found that the cracked casing was a result of the 1978 overheating incident. The casing had to be replaced, resulting in more repair bills.
Emerson G.M. Diesel, the company doing the repair work, brought suit in admiralty to foreclose a lien on the vessel because the Alaskan Enterprise, for reasons not clear from the record, failed to pay the repair bill. The Alaskan Enterprise then brought a third-party claim against Twin Disc for indemnity. The main action was settled prior to trial, leaving the third-party claim. The Alaskan Enterprise elected to proceed in admiralty and, over Twin Disc's objection, a court trial was held.
The district court found Twin Disc strictly liable and awarded the Alaskan Enterprise damages for both repairs and lost fishing profits. Twin Disc appeals, contending (1) that the district court erred in denying a jury trial; (2) that the district court erred in holding that the Alaskan Enterprise could recover for purely economic losses--e.g., the cost of repairs and lost profits; and (3) that the district court's finding of fact that Twin Disc supplied the defective hose was clearly erroneous. The Alaskan Enterprise cross-appeals, contending that the district court should have found Twin Disc liable on negligence and breach of warranty theories as well as under the doctrine of strict liability in tort. We address these contentions in order.
The Alaskan Enterprise originally labelled its third-party claim against Twin Disc as one "in admiralty and at law," and demanded a jury trial. 1 Later, the Alaskan Enterprise decided to proceed without a jury in admiralty, 2 and so informed the district court orally at the pre-trial conference. Several days later, the Alaskan Enterprise filed a formal waiver of jury demand, stating explicitly that it was proceeding in admiralty. Twin Disc objected to the waiver and argued that the Alaskan Enterprise could not waive a jury without Twin Disc's consent. The case was tried to the court over Twin Disc's objection. Twin Disc now contends that the district court erred in denying a jury trial. We find the argument without merit and conclude that the Alaskan Enterprise properly elected to try the case in admiralty.
The procedure followed by the Alaskan Enterprise in withdrawing its jury demand complied with Rules 9(h) and 15, Fed.R.Civ.P. When a claim is cognizable either at law or in admiralty, the pleader may elect to proceed in admiralty, without a jury, by filing an identifying statement under Rule 9(h). The election need not be made in the original pleading. Rule 9(h) provides that a pleading may be amended to add or withdraw such an identifying statement in accordance with Rule 15. Rule 15 provides that a party may amend its pleading once as a matter of course before a responsive pleading is served (or if a responsive pleading is not required, within 20 days after service) or by leave of court or by written consent of the adverse party. Rule 15 provides further that leave to amend shall be freely given where justice so requires.
Twin Disc argues, however, that Rule 38(d) Fed.R.Civ.P.--which provides that "[a] demand for trial by jury ... may not be withdrawn without the consent of the parties"--prohibits the Alaskan Enterprise from withdrawing its jury demand without Twin Disc's consent. Twin Disc relies on a Fifth Circuit decision, Johnson v. Penrod Drilling Company, 469 F.2d 897, 903 (5th Cir.1972), reh'g granted, 478 F.2d 1208 (5th Cir.1973), reh'g, 510 F.2d 234 (5th Cir.), cert. denied, 423 U.S. 839, 96 S.Ct. 69, 46 L.Ed.2d 58 (1975), overruled on other grounds, Culver v. Slater Boat Co., 688 F.2d 280, 283 (5th Cir.1982). In Johnson, the Fifth Circuit held that injured seamen who asserted both diversity jurisdiction and Jones Act jurisdiction could not, through the device of amending their complaint to state admiralty and maritime claims, effectively withdraw their demand for a jury trial without obtaining the defendant's consent.
We considered this same issue in McCrary v. Seatrain Lines, Inc., 469 F.2d 666 (9th Cir.1972) and came to the opposite conclusion. In McCrary, a shipowner filed a third-party complaint for indemnity against a stevedoring company. At the pre-trial conference, the district judge determined that the shipowner's indemnity claim lay solely in admiralty, and therefore rejected the shipowner's proffered Rule 9(h) amendment as redundant. On appeal, we held that the indemnity action did not lie solely in admiralty, but that the district court's denial of a jury trial was proper nonetheless, because the court should have accepted the 9(h) amendment and allowed the action to proceed in admiralty without a jury. We flatly rejected the stevedoring company's argument that the court could not permit an amendment which would eliminate a jury trial without the stevedore's consent. We said:
A shipowner has the right, if exercised by a timely designation, to assert through Rule 9(h) recourse to traditional admiralty practice and thus to obviate the jury trial on the third-party claim.
In this case, the shipowner made a timely effort to amend and the net result of the procedure followed was the same as if the motion and amendment had been allowed.
We find that under McCrary, the Alaskan Enterprise could amend its third- party complaint under Rule 9(h) and proceed in admiralty without Twin Disc's consent. In the instant case, the designation of the third-party action as an admiralty matter was made at the pre-trial conference, which was when the designation held permissible in McCrary was made. 3 Under Rule 15, the district court's decision to allow the amendment was within its discretion, and we do not think that discretion was abused. Twin Disc had no right to a jury trial under admiralty law. It cannot claim surprise, because the claim was designated as both in admiralty and at law from the very beginning, and indeed the claim had to proceed in admiralty until complete diversity was achieved. Twin Disc does not argue that it was forced to develop its case differently, or call different witnesses. See Fruin-Colnon Corp. v. M.G. Transport Service, 79 F.R.D. 674, 677 (S.D.Ill.1978) ().
In short, the situation here is almost identical to the situation in McCrary where we expressly held that the plaintiff could avoid a jury trial by electing to proceed in admiralty. Twin Disc's argument that denial of a jury trial requires reversal...
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