E. S. I. Meats, Inc. v. Gulf Florida Terminal Co., 78-3017

• Decision Date: 20 March 1981
• Docket Number: No. 78-3017,78-3017
• Citation: 639 F.2d 1348
• Parties: E. S. I. MEATS, INC., Plaintiff-Appellee-Cross Appellant, v. GULF FLORIDA TERMINAL COMPANY & Continental Insurance Company, Defendants-Appellants-Cross Appellees. CREST IMPORTING CO., INC. & Insurance Company of North America, Plaintiffs-Appellees-Cross Appellants, v. GULF FLORIDA TERMINAL CO. & Continental Insurance Company, Defendants-Appellants-Cross Appellees. H. P. HOOD, INC. and Appalachian Insurance Company, Plaintiffs-Appellees, v. GULF FLORIDA TERMINAL CO. and Continental Insurance Company, Defendants-Appellants. BORDEN, INC., Plaintiff-Appellee-Cross Appellant, v. GULF FLORIDA TERMINAL CO. and Continental Insurance Company, Defendants-Appellants-Cross Appellees. RED CARPET INNS, INC., a Delaware Corporation et al., Plaintiffs-Appellees, v. GULF FLORIDA TERMINAL COMPANY et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1348

639 F.2d 1348

E. S. I. MEATS, INC., Plaintiff-Appellee-Cross Appellant, v. GULF FLORIDA TERMINAL COMPANY & Continental Insurance

Company, Defendants-Appellants-Cross Appellees.

CREST IMPORTING CO., INC. & Insurance Company of North

America, Plaintiffs-Appellees-Cross Appellants, v. GULF FLORIDA TERMINAL CO. & Continental Insurance Company,

Defendants-Appellants-Cross Appellees.

H. P. HOOD, INC. and Appalachian Insurance Company, Plaintiffs-Appellees, v. GULF FLORIDA TERMINAL CO. and Continental Insurance Company,

Defendants-Appellants.

BORDEN, INC., Plaintiff-Appellee-Cross Appellant, v. GULF FLORIDA TERMINAL CO. and Continental Insurance Company,

Defendants-Appellants-Cross Appellees.

RED CARPET INNS, INC., a Delaware Corporation et al., Plaintiffs-Appellees, v. GULF FLORIDA TERMINAL COMPANY et al., Defendants-Appellants.

No. 78-3017.

United States Court of Appeals Fifth Circuit.

March 20, 1981.

Carson & Guemmer, Gary W. Nicholson, Tampa, Fla., for Gulf Florida Terminal Co. and Continental Ins. Co.

Trenam, Simmons, Kemker, Scharf, Barkin, Frye & O'Neill, William C. Frye, Tampa, Fla., for E.S.I., Crest, H.P. Hood, Red Carpet and INA Appalachian Ins.

Holland & Knight, Paul D. Hardy, Julian Clarkson, Tampa, Fla., for Borden Inc.

Appeals from the United States District Court for the Middle District of Florida.

Before HENDERSON, POLITZ and WILLIAMS, Circuit Judges.

HENDERSON, Circuit Judge:

This is an appeal from judgments in five non-jury diversity cases consolidated pursuant to Rule 42(a), F.R.Civ.P. The litigation involves damage to perishable food caused primarily by the breakdown of an ammonia-based cooling system in a cold-storage warehouse. The central issue in dispute is the cause of the breakdown. Our review is complicated by the placement of the burden of proof in the liability stage of the trial. We affirm the findings on causation, but remand to the district court for a recomputation of damages.

The plaintiffs were customers of Gulf Florida Terminal Company, which operated a warehouse for the storage of frozen food in Tampa, Florida. ¹ The defendant regulated the temperature by running pressurized ammonia through a closed pipe-system. The warehouse had all necessary licenses, was operated by qualified engineers and had passed all required inspections. On September 29, 1974, the engineer on duty noticed that the flow of ammonia was irregular. He shut down the cooling system, after which he and another engineer discovered a massive ammonia leak. The defendant moved some goods, including those of the plaintiffs, to another warehouse to prevent thawing or spoilage. The plaintiffs filed these suits to recover damages resulting from ammonia contamination and the interruption of refrigeration.

The primary focus at the trial was the cause of the breakdown. The plaintiffs claim that the defendant was negligent in maintaining the refrigeration system. The defendant, on the other hand, contends that it was a case of industrial sabotage.

Metallurgical experts testified that the break was caused by a blow to the pipe, not by stress, fatigue or internal pressure. The outside surface of the broken pipe revealed tool and chisel marks. Just before the incident the defendant's vice-president, who was in charge of the warehouse, dismissed two long-time employees who soon thereafter went to work for a competitor. The defendant suggests that these disgruntled former employees returned and intentionally broke the pipe. To support this assertion it introduced evidence of incidents of vandalism occurring after the breakdown.

The plaintiffs surmised that a heavy piece of ice thawed because of the rising temperatures and fell from the ceiling striking the pipe and causing a fracture at its weakest point, i. e. the joint. (Several large pieces of ice were seen on the floor in the vicinity of the break.) The plaintiffs dispute the industrial sabotage contention of the defendant, theorizing that the tool marks on the outer surface of the pipe resulted from its removal for inspection and repair. They claim that the surface scratches were made when the pipe was warm, probably after it broke. The plaintiffs point out that it would have been difficult to chisel through the pipe in such close quarters, and that a trained refrigeration engineer would not have risked serious injury by intentionally cracking open a pipe carrying pressurized ammonia.

The parties agree that a warehouseman is not liable to his bailor for damage he could not have prevented by the exercise of reasonable care. Cf. Fla.Stat.Ann. § 677.7-204(1). ² Security at the warehouse was adequate, so the defendant would not have been liable for the consequences of an intruder's acts. On the other hand, the defendant seems to admit that a careful warehouseman would not have permitted accumulated ice to break the pipe. A threshold issue in this case concerns the allocation of the burden of proving the cause of the incident and, thus, whether the damage resulted from the defendant's failure to exercise due care.

"Burden of proof" usually means either (1) the burden of offering enough evidence to avoid summary judgment, and the order in which evidence is presented; or (2) the risk of non-persuasion, "in the sense that if (the decision maker), after all (is) said and done, remains in doubt" the party with the burden has failed to carry the issue. 9 Wigmore on Evidence § 2485 at 272; cf. Holloway v. McElroy, 632 F.2d 605, 641 n. 56 (5th Cir. 1980) (assigning burden of persuasion on defendant allows conviction when "exactly as likely as not" a defense is available). Florida has amended the Uniform Commercial Code to place the burden of establishing negligence on one side or the other according to the value of the bailor's claim. See Fla.Stat.Ann. § 677.7-403(1)(b) (1980 Supp.). ³ The Florida statute deals with the burden in the second sense; the bailor with damages of more than $10,000.00 bears the burden of proving negligence. ⁴ A bailor with less than $10,000.00 in damages establishes his prima facie case by showing delivery offfgoods to a warehouse and redelivery in damaged condition. The question of care only arises if the warehouseman raises it as an affirmative defense. A bailor suffering damage in excess of $10,000.00 can recover only if he shows that his bailee failed to exercise the required care.

In its answer to the complaint, Gulf Florida alleged, as an affirmative defense, that it had exercised "such care as a reasonably careful man would exercise under like circumstances" (quoting the standard of care mandated by Fla.Stat.Ann. § 677.7-204). It subsequently moved to delete this defense, insisting that § 677.7-403(1)(b) placed the burden of proving negligence on the plaintiffs since their individual claims exceeded $10,000.00. The district court denied leave to amend, concluding that the statute violates the equal protection guarantees of both the United States and Florida Constitutions. The court reasoned that a classification based on a bailor's wealth (more precisely on the value of his claim) bears no rational relationship to any permissible legislative purpose.

Since the ruling of the district court, the Supreme Court of Florida, in an interlocutory appeal of a case also arising out of the Gulf Florida warehouse breakdown, held the statute constitutional. Reserve Insurance Co. v. Gulf Florida Terminal Co., Fla., 386 So.2d 550 (1980).

Despite the difference in the opinions of the district court and the Supreme Court of Florida, we should not reach this constitutional controversy when it is not necessary to do so. E. g. Clay v. Sun Insurance Office, 363 U.S. 27, 80 S.Ct. 1222, 4 L.Ed.2d 1170 (1960). We are satisfied that the district court's decision on the constitutionality of § 677.7-403(1)(b) (1980 Supp.), right or wrong, did "not affect the substantial rights of the parties," so we do not, and indeed cannot, decide the question. F.R.Civ.P. 61.

If § 677.7-403 only dealt with the burden of producing some evidence of care, or lack thereof, the district court's decision would have had no effect in this case, where both sides concentrated on negligence. ⁵ Although the Florida statute speaks of the ultimate burden of proving negligence, the district court seems to have treated the issue as strictly procedural.

In holding the statute unconstitutional, the district court did not articulate its understanding of the consequence of shifting the burden; ⁶ it simply stated that discrimination on the basis of wealth is invalid. The timing of the order, however, suggests that the court was considering only the duty to come forward with some evidence and the order of presentation, not the risk of non-persuasion. (Viz., the issue was not raised during the trial of the case, but in response to a motion to amend the pleadings. ⁷)

The judge who declared the statute unconstitutional did not try the case. The trial judge seems to have considered the question to be irrelevant to the merits, stating as much several times. For example, at the close of the defendant's case-in-chief he said: "I tell you know, most of those statements of the appellate courts refer to the proposition of instructions to a jury.... How you leave the case to the jury.... But you have a nonjury case here. We have to try it on all the evidence." However, at one point the judge said that the defendant was "bound to exonerate" itself and show the damage was not its "fault," remarks which may be interpreted as placing the burden of proof on the defendant.

Had this been a jury trial, the charge of the court would have been a clear indication of who bore the ultimate burden of proving negligence. But this case was tried to a judge, so we do not have an instruction expressly placing the risk of non-persuasion. We do, however, have an extensive statement of the judge's findings of fact, which demonstrates that even the placement of the risk of non-persuasion (as opposed to the...