In re American Milling Co.

• Decision Date: 09 January 2001
• Docket Number: No. 4:98CV575SNL.,4:98CV575SNL.
• Court: U.S. District Court — Eastern District of Missouri
• Parties: In re In the Matter of the Complaints of the AMERICAN MILLING COMPANY, Unlimited, H & H Marine, Inc., and American Milling, L.P., a limited partnership, and Winterville Marine Services, Inc., for exoneration from or limitation of liability, Petitioners.

125 F.Supp.2d 981

In re In the Matter of the Complaints of the AMERICAN MILLING COMPANY, Unlimited, H & H Marine, Inc., and American Milling, L.P., a limited partnership, and Winterville Marine Services, Inc., for exoneration from or limitation of liability, Petitioners.

No. 4:98CV575SNL.

United States District Court, E.D. Missouri, Eastern Division.

January 9, 2001.

Alan K. Goldstein, John R. Halpern, Gary T. Sacks, Daryl F. Sohn, Goldstein and Price, L.C., St. Louis, MO, Thomas P. Germeroth, Gray and Ritter, St. Louis, MO, for the Amercan Milling Co., Unlimited, H&B Marine, Inc., American Milling LP.

John S. Farmer, Suzanne L. Montgomery, Thompson Coburn, St. Louis, MO, William R. Bay, Raymond L. Massey, Michael D. O'Keefe, Sr., Thompson Coburn, St. Louis, MO, for President Riverboat Casinos, Inc.

MEMORANDUM

LIMBAUGH, Senior District Judge.

This matter is before the Court on Claimant President Casinos' motion to compel petitioner American Milling to increase security funds and to deposit proceeds of vessel sale into court (# 845), filed April 2, 1999. Responsive pleadings have been filed. On July 30 and August 27, 1999 an extensive due appraisement hearing was held before this Court regarding the value of American Milling's interest in the M/V ANNE HOLLY on April 4, 1998 pursuant to Rule F(7) of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure. Following the completion of this hearing, the parties were granted additional time to submit post-hearing briefs. Such briefs have now been filed and the matter is ready for disposition.

On April 4, 1998 the M/V Anne Holly was involved in a collision with the President Casino on the Admiral while the vessel was moored in the Mississippi River. On April 6, 1998 American Milling, as "owners" of the M/V Anne Holly filed a Complaint for Exoneration from, or Limitation of, Liability, pursuant to 46 U.S.C.App. § 186, regarding this accident. Along with its Complaint, American Milling filed an "Ad Interim Stipulation" purportedly pursuant to supplemental Admiralty Rule F(1) which it believes provides security for the benefit of the numerous claimants involved in this consolidated action. The Ad Interim Stipulation provides that American Milling and its surety St. Paul Fire and Marine Insurance Co. undertake to pay into the court the sum of $1.25 million, as the fair market value of the M/V Anne Holly, "within (10) days after the entry of an Order appraising the amount or value of Plaintiffs' interest in said vessel and her pending freight or will file in this proceeding a bond or stipulation of value therefor, which shall stand as security for all claims in said Limitation proceeding ..." Document # 5, filed April 6, 1998.

On February 3, 1999, approximately ten (10) months after the accident involving the President Casinos, the M/V Anne Holly was sold for $2.2 million. It is no longer moored within the continental United States.

President Casinos contends that the Ad Interim Stipulation does not qualify as one of the three approved forms of security under Rule F(1). It further contends that the recent sale of the M/V Anne Holly for $2.2 million represents the fair market value of the vessel. Thus, it requests that the Court make a "due appraisement" of the vessel, pursuant to Rule F(7), and order American Milling to post cash or a bond as security for $2.2 million as the limitation fund.

American Milling suggests that President Casinos has not properly challenged the form or amount of the security already posted for the limitation fund. It further argues that the amount of the fund must equal the fair market value of the vessel immediately following the casualty, not ten (10) months later. It argues that an "ad interim stipulation" is the widely accepted form of security in limitation proceedings, and that this stipulation for $1.25 million is valid and should remain in effect and force.

Having now conducted a "due appraisement" hearing, the dispute as to the validity of the "ad interim stipulation" is moot. However, it is the regular practice of the courts of the Eastern District of Missouri, Eastern Division to allow the party seeking limitation to file an "ad interim stipulation" until such time the Court either conducts a "due appraisement" hearing or otherwise sets the value of the vessel in question. This Court finds that the "ad interim stipulation" qualifies as "approved security" pursuant to Rule F(1). However, once this Court makes its ultimate determination with regard to the value of the M/V ANNE HOLLY, it will be necessary for petitioner American Milling to deposit into the Court Registry either cash equaling the value of its interest in the vessel (as found by this Court) or post a corporate security bond in the amount of the value of its interest in the M/V ANNE HOLLY.

After careful consideration of all objections to exhibits or testimony taken with the case, all said objections are hereby overruled, and all exhibits and/or testimony offered into evidence at trial are received into evidence. This Court, having now considered the pleadings, the testimony of witnesses, documents in evidence, and filed discovery responses, and being fully advised in the premises, hereby makes the following findings of fact and conclusions of law as required by Rule 52, Federal Rules of Civil Procedure.

FINDINGS OF FACT

Petitioner American Milling was, during the relevant time-period, the owner of record of the towboat M/V ANNE HOLLY. On April 4, 1998 the M/V ANNE HOLLY was involved in an incident involving the collision of one or more of the barges in its tow with the President Casino on the Admiral while the Admiral was moored in the Mississippi River¹. On April 6, 1998 American Milling filed a Complaint for Exoneration from, or Limitation of, Liability pursuant to 46 U.S.C.App. § 186 (Limitation of Liability Act) regarding this accident. With this complaint, it filed an affidavit of value attesting that the value of its interest in the M/V ANNE HOLLY was $1.25 million.

The M/V ANNE HOLLY is a 5600 hp open-wheel river inland towboat built in 1973 by Mississippi Marine. At the time of the accident it was approximately twenty-five (25) years old with an average overall useful life expectance of forty (40) years. It had been in continuous operation with average upkeep, including a "repowering" (removal of main propulsion engines and replaced with new ones). At the time of the accident, no major structural changes had been made to it since it was first built.

The M/V ANNE HOLLY had been appraised three (3) times prior to the accident of April 4, 1998. Pete Merrill, a marine broker for over thirty-five (35) years, had been familiar with the M/V ANNE HOLLY since its maiden voyage. On behalf of American Milling, he appraised the vessel for insurance purposes. In March 1995, he set its appraised value at $800,000.00; in February 1996, he set its appraised value at $800,000.00; and in February 1997, he set its appraised value at $1.1 million. On April 5, 1998 (the day after the accident) he set the M/V ANNE HOLLY's appraised value at $1.25 million. At the time of the accident, American Milling had insured the M/V ANNE HOLLY for $1.1 million based upon Merrill's February 1997 appraisement.

Although the M/V ANNE HOLLY was in continuous operation, American Milling was not opposed to selling it for the "right price". In 1997 and 1998, its asking price for the M/V ANNE HOLLY was $2.2 million.²

Following the April 4, 1998 accident, the M/V ANNE HOLLY was dry-docked while its future was contemplated. In September 1998, one or more South American entities became interested in purchasing the M/V ANNE HOLLY. Large river inland towboats were of interest to South American buyers because of increasing large soybean and corn crops. Typically, South American buyers begin looking for towboats from September to February for the next harvest season (March to September). American Milling was firm in its asking price of $2.2 million for the M/V ANNE HOLLY. In September 1998, Claudio del Bene (representing Fluviomar S.A.) made a firm offer to buy the M/V ANNE HOLLY for $2.2 million. On November 16, 1998 he and American Milling entered into a "option to buy contract" and Mr. Bene tendered $200,000.00 as consideration for the option contract. On February 2, 1999 the purchase of the M/V ANNE HOLLY was closed for the selling price of $2.2 million. Following its sale, the M/V ANNE HOLLY was delivered to its new owner and presumably is presently navigating the inland river system of South America.

Several towboats ranging in horsepower from 4300 hp. to 6000 hp. were sold during the time-period of 1995-1999. The M/V E. GENE FOURNACE, a 5600 hp. towboat built in 1977, sold in March 1995 for $1.8 million. The M/V WILLIAM GRAYSON, a 6000 hp towboat sold in June 1995 for $2.5 million. The M/V JUDY S, a 4300 hp. towboat built in 1966, sold in March 1998 for $1.1 million. The M/V DEBORAH VALENTINE, a 4300 hp. towboat built in 1963, sold in July 1998 for $1.2 million. The M/V DICK HARBISON, a 4800 hp. towboat built in 1971, sold in December 1998 for $2.2. million. The M/V ANNE HOLLY, a 5600 hp. towboat built in 1973, sold in February 1999³ for $2.2 million. Finally, the M/V OLINDA C, a 5600 hp. towboat built in 1967, sold in June 1999 for $2 million.

As stated before, at the time of the accident, the M/V ANNE HOLLY was a 25 year old working towboat in satisfactory working condition with a reasonable overall useful life expectancy of 40 years. Thus, this Court finds that she had a remaining useful life of fifteen (15) years based upon the drydock survey and opinion of William Manley. There was no dispute that the replacement cost of the M/V ANNE HOLLY as of April 1998 would have been $6 million less $200,000.00 salvage scrap value, giving the M/V ANNE HOLLY a present replacement cost of $5.8 million. Furthermore, there was no dispute that the...