Northern Ins. Co. of N.Y. v. Point Judith Marina

• Decision Date: 27 August 2009
• Docket Number: No. 08-2156.,No. 08-2246.,08-2156.,08-2246.
• Citation: 579 F.3d 61
• Parties: NORTHERN INSURANCE COMPANY OF NEW YORK; Nicholas Picchione, Plaintiffs-Appellants/Cross-Appellees, v. POINT JUDITH MARINA, LLC, Defendant-Appellee/Cross-Appellant, Albin Manufacturing, Inc., Standish Boatyard, Inc., Defendants.
• Court: U.S. Court of Appeals — First Circuit

579 F.3d 61

NORTHERN INSURANCE COMPANY OF NEW YORK; Nicholas Picchione, Plaintiffs-Appellants/Cross-Appellees, v. POINT JUDITH MARINA, LLC, Defendant-Appellee/Cross-Appellant, Albin Manufacturing, Inc., Standish Boatyard, Inc., Defendants.

No. 08-2156.

No. 08-2246.

United States Court of Appeals, First Circuit.

Heard June 1, 2009.

Decided August 27, 2009.

Frederick A. Lovejoy, with whom Lovejoy & Associates, was on brief for appellants/cross-appellees.

Michael J. Rauworth, with whom Carl E. Fumarola and Cetrulo & Capone LLP, were on brief for appellee/cross-appellant.

Before LYNCH, Chief Judge, TORRUELLA, Circuit Judge, and EBEL,^* Senior Circuit Judge.

TORRUELLA, Circuit Judge.

After a bench trial, the district court entered judgment for defendant Point Judith Marina ("PJM") on claims for damages by plaintiff Nicholas Picchione and subrogee-plaintiff Northern Insurance Company of New York ("Northern"). The claims arose as a result of the sudden sinking of a recreational boat ("Eveready") owned by Northern's insured, Picchione. The district court also rejected PJM's counterclaim against Picchione for attorney's fees based on a slip rental agreement between Picchione and PJM. Each of these parties appeals the unfavorable aspects of the judgment. After careful review, we affirm in all respects.

I. Background

Picchione bought Eveready in 1996 from Standish Boatyard, Inc. ("Standish"). Eveready is a 35-foot vessel made by Albin Manufacturing, Inc. ("Albin"). It is undisputed that, as purchased, the vessel's exhaust hoses ran through the hull over a plywood bulkhead without any chafing gear or strain relief. And the engine room's bilge pumps did not include antisiphon loops or check valves, features which would prevent or limit backflow of water through the exhaust. These precautions are recommended by the American Boat & Yacht Council ("ABYC"). As detailed below, plaintiffs assert that these alleged design deficiencies led to Eveready's sinking.

Picchione docked his boat at PJM. PJM also undertook to store the boat on land in the winter, commission it in the spring, and decommission it in the fall. In the course of these activities, PJM conducted repairs on some of the boat's components. Nonetheless, in a finding at issue on this appeal, the district court concluded that "aside from work that [PJM] contracts to perform specifically, it does not provide general preventative maintenance or care for the vessels in the Marina."

During the 2004-2005 off-season, Picchione hired "Dan," an independent mechanic, to work on Eveready's engines. Then, on April 21, 2005, PJM moved the vessel to its slip. PJM employee Joseph Stroker worked on commissioning Eveready on Friday, April 22, 2005.¹ PJM refused to work on the engine as part of the commissioning because of Dan's work. PJM also refused to conduct a sea-test of Eveready until Dan tested the engines. But Stroker did examine the bilge pumps. He noticed six to eight inches of water in the bilge, which he pumped out. After pumping, he noted that the engine room bilge would not stop running. He then turned off what he insists was the engine room bilge pump by switching one of three switches to the off position. Consistent with his notes made at the time, Stroker testified that he left the automatic bilge pump switch on and that he tested to make sure a bilge would activate.

Picchione visited the boat on April 21, 22, and 23 to stock the vessel. Picchione testified that he checked the automatic bilge switch on April 22 and that it was on. He further testified that he did not recall checking it or the water in the bilges on April 23. The district court found this testimony inconsistent with his deposition, where he testified that he always checked the bilges for water, and would have done so on Saturday, April 23. He also said at deposition that he would have left the automatic bilge switch turned on.

No evidence showed that anyone else boarded Eveready after Picchione, though Picchione admitted that his friends occasionally boarded the boat without checking with him first. On the evening of Sunday, April 24, another marina-goer did not notice anything wrong with Eveready as she sat in her slip. That individual awoke the next morning to see the vessel gone and replaced by a spreading oil slick. By that afternoon, Eveready was hauled from the bottom and inspected. During an inspection that day, the harbormaster noticed the bilge pump switches were all in the off position. At a joint survey conducted on May 3, with experts representing both sides, a small steady stream of water was observed running down the starboard interior hull in the engine compartment. The source of the leak could not be determined at the time. The vessel was reconditioned and re-hauled in October 2007. At that time, no water was observed entering. During reconditioning, when the fuel tanks were removed, a cut was found in the bottom side of the starboard exhaust hose. Evidence showed that the cut would not have been visible without removing the fuel tanks and disassembling the exhaust system. Northern theorizes that the cut was caused by the lack of anti-chafing gear at the point where the hoses passed through the hull.

Northern, through its expert, posits that water entered the vessel through this leak. PJM took the position that the hole could not have caused the leaking. The district court did not resolve this dispute, but concluded that whatever the source of the initial leak, water began to accumulate in the bilge and the vessel sank in the water until the exhaust portal became submerged,² causing significant back-flooding, which led to the boat's sinking. Expert testimony established that one working bilge pump would have prevented this chain of events.

After Northern paid money to Picchione under an insurance policy between the two of them, these two parties filed a complaint against PJM, Standish, and Albin.³ The complaint invoked the district court's admiralty jurisdiction, 28 U.S.C. § 1333(1), and, as amended,⁴ asserted claims against PJM for failure to warn, breach of the warranty of workmanlike service, "breach of contract/negligence," and "bailment." PJM filed a counter-claim for indemnification against Picchione, based on the language of their slip rental agreement. That agreement provides, in relevant part:

18. Tenant hereby covenants, warrants, and agrees to indemnify and hold Marina harmless from any loss or injury, including death, to any person, including the Tenant, arising out of any incident occurring on or about the Tenant's vessel, a vessel of any patron of the Marina, or on the premises of the Marina.

PJM essentially contends that it suffered attorneys fees as a result of the sinking and that Picchione should provide indemnification for this "loss." PJM has not contended on appeal that this provision bars plaintiffs' claims against it.

The case proceeded to a five-day bench trial. The district court grouped plaintiffs' claims into two categories: those arising out of PJM's failure to detect the cause of the initial leak, and those arising out of PJM's alleged responsibility for turning off the automatic bilge pump. As to the first group, the district court held plaintiffs' tort claims barred by the economic loss doctrine. It further found no evidence of a specific contract for "inspection, general maintenance, and repair of all the vessel's component parts" and no evidence "to support the proposition that such alleged defects should have been discovered and corrected as part of the general warranty of workmanlike performance." The district court deemed the ABYC recommendations non-binding and found that PJM never agreed to perform preventative maintenance.

As to the claims related to the bilge pump, the district court first concluded it would not apply a presumption against PJM based on bailment law since PJM did not have exclusive control of the vessel. The district court then concluded that someone had turned off the automatic switch, but that the court "simply cannot conclude with any certainty who turned off the automatic bilge pump switch, and when." The court concluded that Northern had not met its burden to show that PJM's agent, Stroker, was responsible. Specifically, the court relied on Picchione's admission at deposition that he would have checked when he was on the boat on Saturday that the automatic pump was on. Given that, the court could not find by a preponderance that Stroker turned the automatic pump off on Friday.

As to PJM's counterclaim, the district court reasoned that the contract pertained only to the slip rental and not to allegations of negligence in the performance of other service contracts. Accordingly, judgment entered for PJM on plaintiffs' claims and for Picchione on PJM's counterclaims. Each side appeals.

II. Discussion

"Where, as here, the district court conducts a bench trial and serves as the factfinder, its determinations of negligence, proximate cause, and similar issues are entitled to considerable deference." Jackson v. United States, 156 F.3d 230, 232 (1st Cir.1998). Specifically, such review is for clear error. Id. "Thus, a trial court's factual determinations will be set aside only if, after careful evaluation of the evidence, we are left with an abiding conviction that those determinations and findings are simply wrong." Id. at 232-33 (internal quotation marks omitted). "On clear-error review, we cannot second-guess the trier's choices among those competing inferences even if, had we been sitting as triers of the facts, we might have arrived at a different set of judgments." Id. at 233; see also Anderson v. Bessemer City, 470 U.S. 564, 574, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985) ("Where there are two permissible views of the evidence, the factfinder's choice between them cannot be clearly erroneous."). Nonetheless, we review questions of law de novo. LPP Mortg., Ltd. v. Sugarman, 565 F.3d 28, 31 (1st Cir.2009).

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