Moench v. Marquette Transp. Co. Gulf–Inland, L.L.C.

• Citation: 838 F.3d 586
• Decision Date: 29 September 2016
• Docket Number: No. 15-31105,15-31105
• Parties: George T. Moench, as Co–Trustee on behalf of George T. Moench Irrevocable Trust; Jennifer J. Aregood, as Co–Trustee on behalf of George T. Moench Irrevocable Trust, Plaintiffs–Appellees v. Marquette Transportation Company Gulf-Inland, L.L.C., In personam, Defendant–Appellant
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

838 F.3d 586

George T. Moench, as Co–Trustee on behalf of George T. Moench Irrevocable Trust; Jennifer J. Aregood, as Co–Trustee on behalf of George T. Moench Irrevocable Trust, Plaintiffs–Appellees

v.Marquette Transportation Company Gulf-Inland, L.L.C., In personam, Defendant–Appellant

No. 15-31105

United States Court of Appeals, Fifth Circuit.

Filed September 29, 2016

Chip G. Schoneberger, Daniel K. Calisher, Foster, Graham, Milstein & Calisher, L.L.P., Denver, CO, Henry St. Paul Provosty, Provosty & Gankendorff, L.L.C., New Orleans, LA, for Plaintiffs–Appellees.

Todd Gregory Crawford, Esq., John Steven Garner, Esq., John Anthony Scialdone, Esq., Michael James Thompson, Jr., Fowler Rodriguez Valdes–Fauli, Gulfport, MS, John Steven Garner, Esq., Scialdone Law Firm, P.L.L.C., New Orleans, LA, for Defendant–Appellant.

Before KING, SMITH, and COSTA, Circuit Judges.

KING, Circuit Judge:

A towing vessel owned and operated by Defendant–Appellant Marquette Transportation Co. Gulf–Inland, L.L.C., allided with a private vessel, the SES EKWATA, owned by the George T. Moench Irrevocable Trust. Plaintiffs–Appellees, trustees of the George T. Moench Irrevocable Trust, sued Marquette for damages. After a bench trial, the district court awarded damages and attorneys' fees against Marquette. Marquette appeals those awards, as well the district court's exclusion of certain expert testimony from trial. For the reasons that follow, we AFFIRM.

I. FACTUAL AND PROCEDURAL BACKGROUND

The SES EKWATA was a 116 foot-long, fiberglass-hulled vessel originally built for military and commercial use, but later converted for private use. In that conversion, the EKWATA was stripped of many components, essentially leaving a bare hull and 8,000 square feet of interior space. In 2005, Plaintiff–Appellee George T. Moench purchased the essentially bare hull of the EKWATA for $200,000.¹ Between 2005 and 2011, he spent $217,000 in materials and equipment to refurbish the vessel. Moench, along with a marine carpenter, also spent thousands of hours laboring on the EKWATA, where Moench lived several months each year.

In late May 2011, Moench moved the EKWATA to a fleeting facility along the Atchafalaya River to keep it safe during expected flooding. On June 10, 2011, the M/V SALVATION, a steel-hulled tug owned and operated by Defendant–Appellant Marquette Transportation Co. Gulf–Inland, L.L.C., which was towing two barges, allided² with the EKWATA while it was moored at the fleeting facility. Prior to the allision, the SALVATION's captain knew that the Atchafalaya River was experiencing historic water levels, which created the potential for extreme cross-currents and required him to exercise extreme caution. Yet he proceeded down the river without assistance from another tug, and upon arriving at a holding position in the river, left the controls for a cup of coffee while the on-duty deckhand—who was supposed to be on watch—was below deck. By the time the captain returned to the controls, the river's current had taken control of the SALVATION. After unsuccessfully attempting to regain control, the captain decided to allide with the EKWATA to avoid damaging the two barges in tow.

The allision between the steel-hulled SALVATION and fiberglass-hulled EKWATA severely damaged the EKWATA³ and caused it to take on water. After the allision, Moench attempted to determine the full extent of the damage by dry-docking the EKWATA; however, he was unable to find anyone willing to assume the liability of transporting the severely damaged vessel for inspection. The EKWATA was subsequently vandalized, which resulted in various materials and equipment Moench purchased being stolen.

Moench filed the instant suit on June 6, 2012, invoking the admiralty and maritime jurisdiction of the district court and asserting general maritime law negligence and unseaworthiness claims against Marquette. Moench claimed the EKWATA was a total (or constructive total) loss as a result of the allision and sought the pre-casualty value of the vessel.⁴ Up to and through trial, Marquette contested liability, despite the captain of the SALVATION admitting the facts outlined above. On the issue of damages, Moench testified at trial (without objection from Marquette) to the substantial financial investment he had made in the EKWATA. Moench and Marquette also elicited the testimony of experts at trial to assist the court on the issue of damages. Moench's expert testified that the pre-casualty value of the EKWATA was $850,000–$1.5 million. He also testified that the replacement cost, less depreciation, of the EKWATA was $5 million–$7.5 million. Marquette's first expert testified that the EKWATA was a constructive total loss as a result of the allision and that its pre-casualty value was $50,000. Marquette's second expert also testified that the EKWATA was a constructive total loss, concluding that repair costs would be “hundreds of thousands” of dollars while the EKWATA's pre-casualty value was $75,000–$100,000. The third expert presented by Marquette, Larry Strouse, was originally hired and designated by Moench. He testified that repair costs would be $285,000, but admitted this estimate was inconclusive of all damages from the allision because the EKWATA could not be dry-docked to fully assess the damage below the waterline. At trial, Marquette also sought to elicit testimony from Strouse that the pre-casualty value of the EKWATA was $120,000. The district court, however, concluded that he could not testify to that opinion because it was not expressed in his expert report.

After the bench trial, the district court found Marquette at fault. On the issue of damages, the district court, after considering all of the testimony, found that the EKWATA's pre-casualty value was $417,000 and that the cost of repairing the EKWATA would exceed that value. Based on these findings, the district court concluded that the EKWATA was a constructive total loss and awarded Moench $322,890, representing the pre-casualty value of the EKWATA, less the value of materials and equipment that Moench could have preserved following the allision.

The district court also found that Marquette's handling of the case was “an abuse of the process and bad faith” and expressed its “feel[ing]” that an award of reasonable attorneys' fees and costs to Moench was justified under those circumstances. Moench subsequently requested $323,138.90 in fees and costs based on Marquette's handling of the case, submitting detailed declarations and billing records to substantiate its request. Marquette responded that its handling of the case did not warrant sanction. Marquette also objected to the amount of fees and costs requested by Moench, principally asserting that it should be reduced as disproportionate to the amount involved and the results obtained. The district court agreed with this latter objection in part and reduced Moench's request by $27,702.81, awarding him $295,436.09. Marquette timely appealed.

II. DISCUSSION

Marquette asserts that the district court erred in (i) making its constructive total loss determination; (ii) refusing to allow Larry Strouse to opine on the EKWATA's pre-casualty value; and (iii) imposing attorneys' fees as a sanction for its handling of the case and awarding the amount of fees it did. We address each assertion in turn.

A. Constructive Total Loss Determination

Marquette asserts that the district court's pre-casualty valuation of the EKWATA and its finding that the costs of repair would exceed that valuation are not supported by the record, particularly the expert testimony introduced at trial. Thus, Marquette argues, the district court erred in concluding that the EKWATA was a constructive total loss and in awarding Moench damages on that basis.

We review the district court's constructive total loss determination for clear error. See Ryan Walsh Stevedoring Co. v. James Marine Servs., Inc ., 792 F.2d 489, 491 (5th Cir. 1986). A vessel is a total (or constructive total) loss when repair is not physically or economically feasible, such as when the cost of repairs exceeds the vessel's pre-casualty value. See Gaines Towing & Transp., Inc. v. Atlantia Tanker Corp. , 191 F.3d 633, 635 (5th Cir. 1999) ; see also Pillsbury Co. v. Midland Enters., Inc. , 715 F.Supp. 738, 763 (E.D. La. 1989). In the case of total (or constructive total) loss, the owner is entitled to recover the pre-casualty value of the vessel (i.e., the price which would result from the hypothetical fair negotiations between an owner willing to sell and a purchaser desiring to buy). See Standard Oil Co. of N.J. v. S. Pac. Co ., 268 U.S. 146, 155–56, 45 S.Ct. 465, 69 L.Ed. 890 (1925) ; see also Gaines Towing & Transp. , 191 F.3d at 635. When a vessel's pre-casualty value cannot be established by recent comparable sales, there is no precise rule or formula for valuation. See Standard Oil , 268 U.S. at 155–56, 45 S.Ct. 465. Instead, the district court “should consider any and all evidence before it” that bears on value. Greer v. United States , 505 F.2d 90, 93 (5th Cir. 1974). This includes evidence of the vessel's purchase price and the cost of any improvements to the vessel. Id . “[O]ther evidence such as replacement cost, depreciation, expert opinion and the amount of insurance” should also be considered to determine pre-casualty value. King Fisher Marine Servs., Inc. v. NP Sunbonnet , 724 F.2d 1181, 1185 (5th Cir. 1984) ; see also Carl Sawyer, Inc. v. Poor , 180 F.2d 962, 963 (5th Cir. 1950). The court must then make an “informed judgment.” Bloomfied S.S. Co. v. Brownsville Shrimp Exch ., 243 F.2d 869, 873 (5th Cir. 1957). In doing so, the court is not bound by any single piece of evidence, including the opinions or formulas elicited by the parties' experts.⁵ See Bloomfield , 243 F.2d at 873 (rejecting argument that district court was bound by vessel's purchase price, book value, or similar values reached by expert surveyor); see also Lukens v....