Tokio Marine & Fire Ins. v. Flora MV

• Decision Date: 03 January 2001
• Docket Number: No. 99-30913,99-30913
• Citation: 235 F.3d 963
• Parties: (5th Cir. 2001) THE TOKIO MARINE & FIRE INSURANCE CO., LTD., ET AL. Plaintiff, v. FLORA MV, ET AL. Defendant. FORMOSA PLASTICS TANKER CORP. Plaintiff-Appellee, v. FLORA MV, HER ENGINES, TACKLE, APPAREL, ETC., IN REM; SEGESTA SHIPPING CO., LTD.; EFNAV CO. LTD., IN PERSONAM Defendant-Appellant. In the Matter of the complaint of FLORA MV, For Exoneration from or Limitation of Liability. SEGESTA SHIPPING CO., LTD.; EFNAV CO., LTD.; FLORA MV Petitioner-Appellant, v. FORMOSA PLASTICS TANKER CORP., Claimant-Appellee
• Court: U.S. Court of Appeals — Fifth Circuit

Page 963

235 F.3d 963 (5th Cir. 2001)

THE TOKIO MARINE & FIRE INSURANCE CO., LTD., ET AL. Plaintiff, v. FLORA MV, ET AL. Defendant.

FORMOSA PLASTICS TANKER CORP. Plaintiff-Appellee, v. FLORA MV, HER ENGINES, TACKLE, APPAREL, ETC., IN REM; SEGESTA SHIPPING CO., LTD.; EFNAV CO. LTD., IN PERSONAM Defendant-Appellant.

In the Matter of the complaint of FLORA MV, For Exoneration from or Limitation of Liability.

SEGESTA SHIPPING CO., LTD.; EFNAV CO., LTD.; FLORA MV Petitioner-Appellant, v. FORMOSA PLASTICS TANKER CORP., Claimant-Appellee.

No. 99-30913

IN THE UNITED STATES COURT OF APPEALS, FIFTH CIRCUIT

January 3, 2001

REVISED, JANUARY 18, 2001

Appeal from the United States District Court for the Eastern District of Louisiana.

Before KING, Chief Judge, WIENER, and CUDAHY,^* Circuit Judges.

CUDAHY, Circuit Judge:

On the evening of April 11, 1997, two vessels collided in the Gulf of Mexico. The chemical tanker M/V Formosa SIX ("Formosa Six") was heading outbound from the mouth of the Mississippi River, going south toward a voluntary fairway system located in an area called the Southwest Pass. The bulk carrier M/V Flora ("Flora") was heading in a northerly direction inbound. Despite the apparent expanses of available water, Flora managed to strike Formosa Six, damaging both vessels and causing Formosa Six's liquid chemical cargo, owned by Mitsubishi Corporation, to pour into the sea. The collision occurred south of a sea buoy located just south of the Southwest Pass.

In April 1997, Mitsubishi filed a claim in the Eastern District of Louisiana against Flora and Six interests¹ for the cargo lost and damaged. The owner of Formosa Six, Formosa Plastics Tanker Corporation, filed a separate action against Flora interests. Flora's owners (Segesta Shipping Company, Ltd.) and managers (EFNAV Company, Ltd.) filed a petition seeking exoneration from or limitation of liability. These cases were consolidated. Flora interests later filed a counterclaim in the consolidated case against Formosa, seeking recovery of damages sustained by Flora. Mitsubishi filed a motion for partial summary judgment against Flora interests in April 1998, and the district court granted that motion, finding that Flora was at fault in the collision and was therefore obliged to fund the cargo damage claim. Flora interests filed a motion for reconsideration which the court denied. The court bifurcated the liability and damage issues, and the liability trial was held in December 1998. The court issued an order in January 1999, finding Flora 80 percent responsible for the collision and Six 20 percent at fault. Flora again filed a motion for reconsideration, which the court denied. Following a stipulation on damages, the court entered a damages judgment in August 1999, awarding Formosa Six interests $3,343,179, plus interest and costs, and dismissing Flora's limitation action. The judgment also acknowledged settlement by the parties of the Mitsubishi claim by contributions of $220,000 from Formosa interests and $880,000 from Flora interests. Flora appeals and we affirm.

In this appeal, Flora argues that the district court erred as a matter of law in determining the proximate cause of the collision by failing to apply pertinent law. In the alternative, Flora contends that the district court's apportionment of fault was clearly erroneous. We address these arguments in turn.

I.

Flora contends that the district court erred as a matter of law by failing to apply several arguably applicable regulations. Collisions at sea are governed by internationally accepted regulations recognized by treaty; in the United States these are codified at 33 U.S.C. foll. § 1602 ("COLREGs"). In arguing that the district court failed to properly apply these regulations, Flora apparently hopes that this court will review the findings of the trial court de novo rather than under the appropriate clearly erroneous standard. Conclusions of law are, of course, reviewed de novo. See Phillips Petroleum Co. v. Best Oilfield Servs., 48 F.3d 913, 915 (5th Cir. 1995). When reviewing mixed questions of law and fact, this court should reverse only if the findings are based on a misunderstanding of the law or a clearly erroneous view of the facts. See Bose Corp. v. Consumer's Union of U.S., Inc., 466 U.S. 485, 501 (1984). Because the proper regulations were considered and applied, as we discuss below, we find that there was no misunderstanding of the law.

Flora's argument that the district court erred in its application of the relevant regulations is grounded in a rule for finding liability in collisions at sea -the Pennsylvania rule. Under the Pennsylvania rule, if a vessel involved in a collision was violating a statutory rule intended to prevent collisions, the burden shifts to the violating vessel to show that its fault could not have been a cause of the accident. See The Pennsylvania, 86 U.S. (19 Wall.) 125 (1874); see also Garner v. Cities Serv. Tankers Corp., 456 F.2d 476, 480 (5th Cir. 1972). The rule thus creates a presumption that one who violates a regulation intended to prevent collisions will be deemed responsible; but that presumption is rebuttable. See Otto Candies, Inc. v. M/V Madeline D., 721 F.2d 1034, 1036 (5th Cir. 1983). Further, as discussed below, the Pennsylvania rule applies only to violations of statutes that delineate a clear legal duty, not regulations that require judgment and assessment of a particular circumstance.

Specifying the rules that her adversary allegedly violated, Flora first contends that the trial court erred by failing to take into account Formosa Six's violation of COLREG Rule 5 in apportioning responsibility for the collision. COLREG Rule 5 provides:

Every vessel shall at all times maintain a proper look-out by sight and hearing as well as by all available means appropriate in the prevailing circumstances and conditions so as to make a full appraisal of the situation and of the risk of collision.

33 U.S.C. foll. § 1602. Flora is asking this court to find fault with the district court's failure to acknowledge that Six's lack of a look-out was "crucial," and the proximate cause of the accident. Because Flora is here taking issue with the district court's finding of fact, we review this aspect of the district court's decision for clear error. See Bose, 466 U.S. at 501.

The trial court found that Formosa Six had not complied with the cited regulation; that is not disputed. Thus, Flora's argument involves the district court's weighing of the evidence, not its application of the law. The court erred, Flora contends, by failing to impose the Pennsylvania burden. But the district court clearly did consider the predicate facts that constitute a violation of COLREG Rule 5. The district court also found that Formosa Six violated that regulation, and that such failure was a contributing cause of the collision. See Tokio Marine & Fire Ins. Co., Ltd. v. M/V FLORA, No. CIV. A. 97-1154, 1999 WL 14000, at *14 (E.D. La. Jan. 11). The court, in fact, found that this failure "was a contributory cause, though a relatively small one, of the collision." Id. at *14. Flora argues that this was an error of law, and then cites the importance of complying with Rule 5 as well as the importance of having a look-out on the Formosa Six at this critical juncture. The importance of the regulation does not change its application, nor does it impugn the finding of fact made by the district court. The dispute Flora has is with the district court's finding of fact that Formosa Six's failure to have a look-out was not as "crucial" a factor in the collision as Flora seeks to make it. However, neither Formosa Six nor the district court clearly indicated why this failure was not to be considered a more critical cause of the accident. But because this finding is reviewed only for clear error, and Flora has not demonstrated error of that sort, we find that the district court, in its considered judgment, properly weighed Formosa Six's violation of Rule 5 in determining the proximate cause of the collision.

Flora next argues that the district court failed to impose the "requirement" embodied in COLREG Rule 8(c) on Formosa Six. Rule 8(c) states:

If there is sufficient sea room, alteration of course alone may be the most effective action to avoid a close-quarters situation provided that it is made in good time, is substantial and does not result in another close-quarters situation.

33 U.S.C. foll. § 1602. To fail to refer to this provision of the rule explicitly in its findings of fact is certainly not clear error, let alone a mistake of law. First, the district court did consider Rule 8 in making its findings. The court recognized a duty under Rule 8 to take action to avoid collision, and that both Flora and Formosa Six had failed to fulfill this duty. See Tokio Marine & Fire, 1999 WL 14000, at *12. Second, the language of Rule 8(c) is suggestive, rather than mandatory. The Pennsylvania rule applies in cases in which a "precise and clearly defined duty" is mandated by the relevant statute, not when the statute "calls for the use of interpretation and judgment." Interstate Towing Co. v. Stissi, 717 F.2d 752, 756 (2d Cir. 1983). The provision of the rules at issue here falls within the latter category rather than the former. Thus, the burden did not have to shift to Formosa Six for a violation of Rule 8(c), and the court cannot have erred in not shifting more of the onus on Formosa Six for violating it. Indeed, the Pennsylvania rule was not even mentioned in Zim Israel Navigation Co., Ltd. v. Special Carriers, Inc., M/V, 611 F.Supp. 581 (E.D. La. 1985), a case in which one party was deemed to have violated Rule 8(c). The fact that the rule had been violated was considered in determining the cause of the collision, but no presumption of fault was invoked. It is evident that the district court did not err in its application of Rule 8, nor in its failure to mention Rule 8(c).

Flora...