Nissan Motor Corp. v. MARYLAND SHIPBUILDING, ETC.

• Decision Date: 03 August 1982
• Docket Number: Civ. No. H-80-3027.
• Citation: 544 F. Supp. 1104
• Parties: NISSAN MOTOR CORPORATION IN U. S. A. and Nissan Motor Corporation in U. S. A. t/o/u and t/u/o Tokio Marine Management, Inc., Plaintiffs, v. MARYLAND SHIPBUILDING AND DRYDOCK COMPANY, Defendant.
• Court: U.S. District Court — District of Maryland

544 F. Supp. 1104

NISSAN MOTOR CORPORATION IN U. S. A. and Nissan Motor Corporation in U. S. A. t/o/u and t/u/o Tokio Marine Management, Inc., Plaintiffs, v. MARYLAND SHIPBUILDING AND DRYDOCK COMPANY, Defendant.

Civ. No. H-80-3027.

United States District Court, D. Maryland.

August 3, 1982.

COPYRIGHT MATERIAL OMITTED

Richard J. Magid, William F. Ryan, Jr. and Whiteford, Taylor, Preston, Trimble & Johnston, Baltimore, Md., for plaintiffs.

William R. Dorsey, III, Bruce E. Alexander and Semmes, Bowen & Semmes, Baltimore, Md., for defendant.

ALEXANDER HARVEY, II, District Judge:

This admiralty case raises questions concerning the rights and obligations of two adjoining owners of business properties located in an industrial area of the Port of Baltimore. The principal plaintiff, Nissan Motor Corporation in U.S.A. (hereinafter "Nissan"),¹ is here asserting that activities conducted at defendant's shipyard have caused substantial damage to plaintiff's business operations.

Nissan imports and stores on its property new Datsun automobiles and trucks. Maryland Shipbuilding & Drydock Company (hereinafter "Maryland Shipbuilding"), the defendant, operates a ship repair and drydock facility on piers and property adjacent to Nissan's facility. The complaint, as amended, alleges that smoke and spray paint emanating from defendant's property have damaged Nissan's new vehicles. Nissan is here seeking substantial damages and a permanent injunction. Admiralty jurisdiction exists because the offending emissions have come from vessels located on navigable waters and docked at defendant's piers.

I

History of the litigation

Pretrial proceedings in this case have been extensive. The original complaint, which was filed on November 25, 1980, alleged damage to Nissan's cars and trucks caused by spray paint from painting operations conducted at defendant's shipyard. Following a hearing the same day that the complaint was filed, Judge Miller of this Court entered a Temporary Restraining Order prohibiting defendant from conducting painting operations at its shipyard. With the consent of counsel, the Temporary Restraining Order was extended until the Court could rule on Nissan's motion for a preliminary injunction, which likewise sought to prohibit only defendant's painting operations.

Following an evidentiary hearing, this Court, in an oral opinion rendered on February 27, 1981, denied plaintiffs' motion for a preliminary injunction and dissolved the Temporary Restraining Order previously entered. This Court ruled that Nissan had not met its burden of proving irreparable damage and that plaintiffs had an adequate remedy at law to recover for any damage that might have been sustained by vehicles which had allegedly been sprayed by paint emanating from defendant's shipyard. The Court concluded that if there were future spray paint damage to Nissan's vehicles, the damages could be readily ascertained and proved at the trial of the case. Although plaintiffs had sought to prove four spray painting incidents occurring during 1980, the Court found that plaintiff had not shown that defendant was responsible for two of the incidents. The Court further found that any damage caused by the other two incidents was minimal and noted that Nissan had shipped the supposedly damaged vehicles to its dealers without notifying them of any damage and without correcting the alleged damage. Accordingly, the Court concluded that there had been no showing of any continuing trespass and of any continuing damage to Nissan's vehicles which would support the entry of a preliminary injunction.

Thereafter, plaintiffs amended their complaint to add new claims based on damage to Nissan's vehicles caused by smoke emanating from defendant's shipyard. It was alleged that soot and ash discharged from smokestacks of vessels located at defendant's shipyard damaged the exterior painted surface of Nissan's vehicles. A renewed motion for a Temporary Restraining Order was then filed. Following a hearing which did not involve the taking of testimony, the Court, in an oral opinion rendered on September 18, 1981, granted in part and denied in part plaintiffs' renewed motion for a Temporary Restraining Order. The Court indicated that the Temporary Restraining Order which it had decided to enter was intended to do no more than maintain the status quo with as little harm as possible to each side until the case could be brought in for trial. The Court rejected plaintiffs' request that the Temporary Restraining Order require that defendant prohibit vessels from discharging smoke when their boilers were fired up in preparation for their leaving the shipyard. Maryland Shipbuilding had raised substantial questions concerning its liability for emissions caused by third parties located on its property, and the Court indicated that these and other questions would be addressed and decided when plaintiffs' renewed motion for a preliminary injunction came on for hearing.

In the Temporary Restraining Order entered on September 18, 1981 to maintain the status quo, defendant was required to promptly notify all vessels located at its shipyard that the discharge of soot, ash and pollutants from their smokestacks might cause harm to vehicles located on adjoining property, and that such vessels might then be held responsible for any damage caused through discharge. Further provisions of the Order required (1) that defendant notify vessels at its shipyard to obtain permission from personnel of defendant before operating engines or boilers of a vessel in a fashion which might result in the discharge of smoke; (2) that defendant should give notice to counsel for plaintiffs at least four hours before any such operation of engines or boilers; and (3) that defendant should present to the Court and to counsel for plaintiffs a proposed plan for minimizing the discharge of smoke from the smokestacks of vessels at defendant's shipyard.² The Order of September 18, 1981 was to remain effective until the Court ruled on plaintiffs' renewed motion for a preliminary injunction.³

On October 15, 1981, plaintiffs filed a third motion for a Temporary Restraining Order, based on allegations of new smoke damage incidents. Following a conference with counsel, the Court, on October 16, 1981, denied this third motion for a Temporary Restraining Order.

Extensive discovery was then undertaken by the parties, a final pretrial conference was held, and a Pretrial Order was filed on May 25, 1982. The parties have agreed that, pursuant to Rule 65, F.R.Civ.P., the trial of this action on the merits would be consolidated with the trial on plaintiffs' renewed motion for a preliminary injunction. It has further been agreed that the trial of the case should be bifurcated. Liability for permanent injunctive relief and for damages would be tried first. Depending upon the results of that initial trial, the amount of any damages to be awarded would be decided at a later trial.

One of the significant preliminary questions presented in this litigation was whether the Court would be hearing this case under its admiralty jurisdiction or under diversity jurisdiction. Plaintiffs' original complaint asserted that its claims were admiralty claims under Rule 9(h), F.R.Civ.P.⁴ Contending that admiralty jurisdiction did not exist, defendant timely requested a jury trial. In a Memorandum and Order entered on May 28, 1982 after discovery had been completed, the Court ruled that admiralty jurisdiction as to all of plaintiffs' claims exists here under the Admiralty Jurisdiction Act, 46 U.S.C. § 740. The Court concluded that any paint damage sustained by Nissan's vehicles had been caused by spray painting operations conducted from a floating crane barge owned by defendant or by spray painting performed on vessels located on navigable waters. The Court further ruled that claims for smoke damage were based on emissions of soot and ash by vessels located in navigable waters and berthed at defendant's piers.

Pursuant to this ruling of May 28, 1982, the case came on for trial before the Court sitting without a jury. Numerous witnesses testified and many exhibits were admitted in evidence. Findings of fact and conclusions of law, pursuant to Rule 52(a), F.R. Civ.P., are contained in this opinion, whether or not expressly so characterized.

II

The background facts

Nissan is a major importer of automotive vehicles into the United States. Using its own vessels, it lands vehicles at various ports, stores them and then distributes them to retail dealers in its various regions. In the mid-1970's, Nissan, which was then using Portsmouth, Virginia for the importation of its vehicles into the Middle Atlantic area, indicated an interest in securing a facility in the Port of Baltimore. Learning of this interest, the Maryland Port Administration (the "MPA") surveyed various possible sites for such a facility. Eventually, certain property owned by Weyerhaeuser Lumber Company was located immediately adjacent to Maryland Shipbuilding's shipyard property. Following various negotiations among the parties, MPA leased the property from Weyerhaeuser and sublet it to Nissan for a five-year period commencing in January 1978. In early February 1978, Nissan commenced its operations.

When vehicles are unloaded from Nissan's vessels, they are stored on three lots located on the property, the main lot (which is immediately adjacent to the Maryland Shipbuilding property), the so-called "ball park lot" and the so-called "Swift lot." Various repair and other work is performed on the vehicles before they are shipped to dealers. Some 7,000 to 8,000 vehicles are shipped each month, with the average stay of a vehicle being from a few days to two weeks. Thus, some 90,000 to 92,000 vehicles per year move through the Nissan facility in Baltimore.

Maryland Shipbuilding has operated its ship repair and drydock facility on piers and property adjacent to the Nissan property for over...