Oglebay Norton Co. v. CSX Corp., s. 85-3069

• Decision Date: 14 April 1986
• Docket Number: Nos. 85-3069,85-3093,s. 85-3069
• Citation: 788 F.2d 361
• Parties: OGLEBAY NORTON COMPANY, Plaintiff-Appellant, Cross-Appellee, v. CSX CORPORATION, Defendant-Appellee, Cross-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 361

788 F.2d 361

1987 A.M.C. 71

OGLEBAY NORTON COMPANY, Plaintiff-Appellant, Cross-Appellee, v. CSX CORPORATION, Defendant-Appellee, Cross-Appellant.

Nos. 85-3069, 85-3093.

United States Court of Appeals, Sixth Circuit.

Argued Jan. 30, 1986.

Decided April 14, 1986.

Richard C. Binzley and Harold W. Henderson argued, Thompson, Hine & Flory, Cleveland, Ohio, for Oglebay Norton Co.

Robert M. Anspach and Peter R. Silverman, argued, Toledo, Ohio, for CSX Corp.

Before KENNEDY and CONTIE, Circuit Judges, and GIBSON, District Judge. ^*

CONTIE, Circuit Judge.

This is a maritime action concerning liability for the death of a seaman. Oglebay Norton Company appeals from the magistrate's judgment, arguing that the magistrate erred as a matter of law in denying its claim for indemnity based on the defendant's breach of an implied warranty of workmanlike service; and, in the alternative, Oglebay argues that the magistrate's allocation of fault under a theory of contribution was clearly erroneous. Oglebay also argues that the magistrate abused his discretion in denying prejudgment interest and for failing to provide a rationale for his denial. The defendant, Chesapeake and Ohio Railway Company (C & O), ¹ argues on cross-appeal that the magistrate erred in amending C & O's judgment to permit Oglebay recovery under a theory of contribution. For the reasons set forth below, we hold that Oglebay is entitled to indemnity as a matter of law as well as prejudgment interest. Accordingly, the issue of contribution need not be addressed.

I.

On April 4, 1980, a violent storm passed through the Toledo-Oregon, Ohio region and caused a power outage at C & O's docks located in Oregon, Ohio. The steamer Sylvania, a 572-feet self-unloading carrier owned by Oglebay, was headed toward the C & O docks from Monroe, Michigan when the storm hit at about 5:00 p.m. Prior to the storm, Oglebay had received instructions from C & O to dock at the No. 3 coal dock. Attempts by Sylvania to contact C & O by radio after the storm were unsuccessful.

To reach the C & O docks, it was necessary to proceed down the Maumee Channel. ² The Sylvania had been navigating the Maumee Channel for about one and one half hours when it received instructions from the C & O, via the Coast Guard, at about 7:30 p.m. to dock at the No. 2 coal dock rather than the No. 3 coal dock.

Shortly thereafter, Captain Scott on the Sylvania observed that there were no lights at the C & O docks. The Sylvania entered the No. 2 coal dock slip at about 7:40 p.m. with her lights on. Although it was dusk, it was not yet completely dark. The C & O was expecting her, and was aware of the approximate arrival time. The C & O's electricians had been unable to restore power to the dock and the dock was not equipped with an emergency lighting system. The only lights provided, therefore, were the lights on the steamer Sylvania.

The No. 2 coal dock has a two-tier concrete design. The upper tier is the main dock. The lower tier is only three feet wide, and is approximately three feet below the upper tier. There are no ladders or hand rails between the two tiers. The mooring spiles are on the lower level, requiring a seaman to step from the upper to the lower tier to moor the vessel. From the lower tier, the concrete dock drops straight down into the water. When a vessel docks, it is flush with the wall since the entire face of the dock is concrete. It is not equipped with fenders or similar items to keep the boat away from the wall, ladders to enable a person to climb out, or recesses to enable a person to swim under the dock. Since this wharf is equipped with a coal unloading machine, coal would often accumulate on the dock.

When the Sylvania docked, there was considerable coal spillage since the C & O employees had not swept the dock of coal. Further, the dock and coal remained wet and slippery from the storm. The C & O did not provide illumination for the boat, despite the opportunity to do so and the availability of flashlights and car lights. The dock had about 20 crew members on hand who were apparently not occupied because of the power failure.

As the Sylvania pulled up to the dock, two seamen, Ralph Beckman and Orville Hill, were lowered from the vessel to the upper tier of the dock. Captain Scott did not request the assistance of the C & O dock hands, and they did not volunteer assistance. Beckman was in charge of the forward mooring cables which he carried at the same speed as the moving vessel for approximately 60 feet before he had to step to the lower level. He was not carrying a flashlight, but the boat's floodlight had been lighting his way. However, as the boat drew in closer to the dock, the lower level of the pier was darkened by a shadow, and no one was manning the floodlight in order to change its angle to light Beckman's way. As this was transpiring, there was no assistance from the C & O dock hands; Captain Scott did not request assistance, and none was volunteered.

Beckman was directed by another deck hand, Hosko, to attach the cable to a particular dock spile on the lower tier. Hosko testified that he and Beckman were able to identify spiles despite the inadequate lighting. As Beckman stepped to the lower level he slipped or tripped and fell into the water between the concrete dock face and the vessel. Hosko yelled a warning, but Captain Scott was unable to reverse the ship's direction despite the use of bow thrusters and the attempted use of safety blocks. Beckman was crushed between the boat and the dock and was killed instantly.

Beckman's personal representative brought a wrongful death claim against Oglebay under the Jones Act, 46 U.S.C. Sec. 688. Oglebay tendered the defense of this claim to the C & O, but the C & O rejected the tender. The claim was settled for $50,000, and Oglebay incurred $9,857.40 in attorneys' fees in the process. ³ Thereafter, Oglebay instituted this action against C & O to recover the expenses. In its complaint Oglebay sought indemnity or contribution over against C & O but litigated its claim to the court only on the indemnification theory.

The case was referred to a magistrate. The parties consented to having the magistrate enter a binding judgment with direct appeal to the court of appeals. The magistrate first ruled, on September 28, 1984, that maritime rather than state law controlled the case, relying on Sims v. Chesapeake & Ohio Railway Co., 520 F.2d 556 (6th Cir.1975). The magistrate found that an "implied warranty of workmanlike performance" runs from a wharfinger to a shipowner which allows a shipowner to seek indemnification, and that this warranty had been breached by the C & O. The magistrate held, however, that indemnification was inappropriate because Captain Scott was negligent in failing to provide adequate lighting or to anchor elsewhere until lighting was furnished, thereby proximately causing Beckman's death. He concluded that Scott was aware of the coal dock's dangers and was in a better position to avoid the injury than the wharfinger and his actions "precluded recovery" under the theory of indemnification. Since Oglebay had not argued its theory of contribution, the magistrate concluded that it was inappropriate to decide that issue.

Pursuant to Fed.R.Civ.P. 52(b) and 54(c) Oglebay moved to amend the judgment to include an award of contribution. The C & O opposed this motion, arguing that Oglebay had abandoned this claim and that the C & O would be prejudiced by the magistrate's consideration of it. The magistrate, however, ruled on December 14, 1984 that Oglebay had not abandoned its contribution claim, and that the C & O would not be prejudiced since no additional facts or evidentiary matters could, or would, have been offered by the C & O. He concluded that both parties were at fault and that applying a contribution theory would reduce the possibility of danger to other seamen. The magistrate held that Captain Scott was 75 percent to blame because he "was in charge, and it was he who should have foreseen danger and acted, either by commanding his own men, seeking assistance from the defendant's employees, or declining to dock." The C & O was held to be 25 percent at fault since its employees had not "lent a hand." The total award was $12,500, which did not include interest, costs or attorneys' fees.

II.

A.

In Ryan Stevedoring Co. v. Pan-Atlantic Steamship Corp., 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133 (1956), the Supreme Court held that a stevedoring company, pursuant to a contract with the shipowner, had an implied warranty of workmanlike service to properly and safely stow cargo. ⁴ By the stevedore's failure to satisfy this warranty, the shipowner had a right to indemnification from the stevedoring company for loss resulting therefrom. ⁵ Since suing on the warranty is a contract action, the "concepts of primary and secondary or active and passive" negligence are irrelevant. Id. at 133, 76 S.Ct. at 237. Even though recovery may turn on the company's standard of performance, the action remains a contract, not tort, action. Id. at 133-34, 76 S.Ct. at 237. Further, the "shipowner's failure to discover and correct the contractor's own breach of warranty" is not a defense to indemnification. Id. at 134-35, 76 S.Ct. at 237-38.

In later cases, the Court has held that the warranty of workmanlike service can be breached and indemnity awarded even if the contractor has not acted negligently when furnishing latently defective equipment. Italia Societa per Azioni di Navigazione v. Oregon Stevedoring Co., 376 U.S. 315, 84 S.Ct. 748, 11 L.Ed.2d 732 (1964). Since the stevedoring company provided the necessary equipment and had control over the loading and unloading of the ship and the supervision of such operations, the Court in Italia Societa noted that the stevedoring company "was in a far better position than the shipowner to avoid the accident." Id. at 323, 84 S.Ct. at 753. The Court stated that:

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