Volkswagen of America, Inc. v. Robertson

• Decision Date: 09 September 1983
• Docket Number: No. 81-3472,81-3472
• Citation: 713 F.2d 1151
• Parties: VOLKSWAGEN OF AMERICA, INC., Plaintiffs-Appellees, v. Willard E. ROBERTSON, etc., et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1151

713 F.2d 1151

VOLKSWAGEN OF AMERICA, INC., Plaintiffs-Appellees, v. Willard E. ROBERTSON, etc., et al., Defendants-Appellants.

No. 81-3472.

United States Court of Appeals, Fifth Circuit.

Sept. 9, 1983.

Rehearing Denied Nov. 8, 1983.

Deutsch, Kerrigan & Stiles, Malcolm W. Monroe, Howard J. Ettinger, New Orleans, La., for defendants-appellants.

Roger M. Denton, Metairie, La., for plaintiffs-appellees.

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

Before GARZA, REAVLEY and GARWOOD, Circuit Judges.

GARWOOD, Circuit Judge:

This is an appeal from a Louisiana diversity judgment rendered against appellant Willard E. Robertson ("Robertson") and his wholly owned Louisiana corporation, appellant Willard E. Robertson Corporation, for flood and sewage damage caused to 368 cars owned by appellee Volkswagen of America, Inc. ("Volkswagen"), a New Jersey corporation, while the cars were stored at Higgins Terminal Yard ("Higgins" or the "yard"), a 45-acre tract of land owned individually by Robertson, and in the custody and control of Compact Car Carriers ("CCC"), a division of Willard E. Robertson Corporation. The principal issues on appeal are (1) whether the district court erred in rendering an interlocutory summary judgment against Robertson holding him liable for the damage to the cars based upon his status as the owner-lessor of Higgins; (2) whether the district court erred in holding, after a nonjury trial, that CCC was liable for the damage as a compensated depositary; and (3) whether the district court erred in assessing against Robertson and his corporation the entire amount of damages caused to the cars as a consequence of the flood.

Although the district court correctly held that Robertson and his corporation were jointly liable for the flood and sewage damage, we hold that the basis for the damages award is unclear, and that certain parts of the award are unsupported by sufficient evidence. The district court's judgment is therefore reversed and remanded for a new trial on the damages issue only.

I. FACTS

A. HIGGINS AND THE LEVEE

On July 22, 1964, Robertson purchased Higgins from Higgins Industries, Inc. for $1,400,000. This property is located in New Orleans, Louisiana. The east boundary of Higgins adjoins the west bank of Michoud Canal. A hurricane protection levee protects Higgins from this canal. The Michoud Assembly Facility of the National Aeronautics and Space Administration ("NASA") is located on the land immediately south of Higgins, and a sewage treatment plant owned by the Sewerage and Water Board of New Orleans (the "Sewerage Board") is located on the land immediately north of Higgins. The west boundary of Higgins adjoins the Gentilly Highway.

At the time Higgins was purchased by Robertson, he was, through his corporation, engaged in the business of importing and selling foreign cars. Beginning in 1965 In 1971, the Board of Levee Commissioners of the Orleans Levee District (the "Levee Board"), which maintains the hurricane protection levees in the New Orleans area, including the one adjoining Higgins, decided to have the levees and floodwalls in the eastern New Orleans area improved. As part of this improvement program, a new levee for the Michoud Canal was constructed during 1971 by the Army Corps of Engineers. This new levee was forty feet farther inland than the old one and was also higher. ²

Robertson used Higgins as a site for storing part of his inventory of imported cars. ¹

Before the new levee was built, two gravity-flow, flap-gate culverts had drained the rainwater from Higgins into the Michoud Canal. According to Robertson, these culverts had worked well, and Higgins had never flooded in spite of two hurricanes. The Levee Board, however, did not plan to have these culverts put back into the new levee, since Robertson's representatives had previously told the Levee Board that Robertson planned to install drainage pumps to drain Higgins. Although it is unclear from the record, it appears that while the new levee was being constructed, Higgins was flooded during Hurricane Edith, which occurred in the late summer of 1971. On September 29, 1971, Robertson wrote a letter to Mr. John P. McNamara of the Levee Board which stated, in part, as follows:

"You referred to a meeting some time ago which included Mr. Blackwell in which the possibility of locating a pumping station was discussed. This pumping station is part of a long range plan which depends upon full utilization of the entire tract. Full utilization of this land cannot be realized until certain other projects in the vicinity are completed, for example, the dredging of the Michoud Canal, etc. During this interim period the gravity drainage of this property is satisfactory.

"In view of the above, it is requested that this gravity drainage system be reinstalled to avoid any further damage."

On October 7, 1971, Mr. McNamara responded, as follows, to Robertson's letter:

"I acknowledge receipt of your letter of September 29, 1971 in regard to the flooding of your property on the West Bank of the Michoud Canal resulting from the heavy rain which accompanied Hurricane Edith.

"During the past years your Mr. L.G. Blackwell had indicated in various meetings with our Mr. Willoz and members of the Corps of Engineers' staff that your firm was planning to install a pumping station on your property to handle the run off water from rains. It was the consensus of opinion of the people who met with Mr. Blackwell that the pumping station was to be built in the not too distant future from the date of the January 17, 1969 meeting and not as part of a long range project.

"Based on this assumption the contract for the new levee and floodwall called for the removal of the culverts.

"On November 23, 1970 we furnished you copies of Plan File No. H-4-25160, Drawings 1 thru 19 which are the construction drawings for this work. The removal of the culverts are shown on Drawings 6 and 7. We asked you at this time to review these plans and forward us your comments. Since we did not receive any objections from you we assumed that the proposed work met with your approval and the drainage would be handled by your pumping station.

"However, since we are now advised that your pumping station is part of a long range project we will make a study to determine the best method of draining the area.

"I would like to point out at this time that gravity flow thru culverts with flap gates only provide drainage when the tide in Michoud Canal is lower than the level of the water in the area being drained.

"If during a hurricane we experience a high tide and a heavy rainfall, the area behind the levee will be subject to flooding from rain water if gravity flow culverts are utilized for draining the area.

"We will attempt to remedy the present situation as soon as possible." (Emphasis added.)

Flap-gate culverts, similar to those which previously provided drainage at Higgins, were subsequently reinstalled. Each culvert consists of a 42-inch corrugated metal pipe with two gates or protective flaps. One of the flaps automatically closes when the tide in the canal reaches the level which would otherwise cause water from the canal to flow back through the culvert onto the protected side of the levee. The second flap is a "positive protective gate" that is manually operated, and which is required to be installed by the regulations of the Department of the Army, Office of the Chief of Engineers.

It was the standard operating procedure of the Levee Board to manually close the positive protective gates in its system of levees whenever the City of New Orleans was threatened by a hurricane and high tides were expected. ³ In a pretrial discovery deposition, Robertson testified that he knew that if there were a threatened hurricane, the positive protective gates would be closed, because otherwise it would be anticipated that the water in the canal might rise, flow back through the culverts, and flood the protected property.

B. HIGGINS AND VOLKSWAGEN

On June 4, 1974, Robertson leased Higgins to Volkswagen to be used as a storage site for cars imported into the United States before they were sent on for distribution to dealers. Article 4.1 of the Robertson-Volkswagen lease agreement provided as follows:

"Tenant will, at Tenant's own expense, maintain, protect and preserve the Premises in good, clean, well-painted order and condition and make all repairs to the Premises, as and when needed, including, for example, all structural repairs. All repairs will be equal in quality to the original work and will be completed in a workmanlike manner."

On the same day, CCC entered into a car hauling agreement with Volkswagen, whereby CCC undertook to transport and deliver Volkswagen, Porsche, and Audi cars imported through the Port of New Orleans and sold to franchise dealers throughout Louisiana, Alabama, Mississippi, and Western Tennessee. As part of this agreement, CCC also agreed to perform the following additional services for Volkswagen:

"(a) Receipting for and verifying vehicles imported by VWoA through the said port.

"(b) Transporting vehicles to the storage area known as the 'Higgins Property' for storage.

"(c) Storing vehicles.

"(d) Inspecting vehicles for marine damage.

"(e) Preparing marine damage reports and claims.

"(f) Baying and loading vehicles for delivery."

Although Higgins was leased to Volkswagen, Robertson's corporation was in control of the site. ⁴ As cars were delivered to Higgins, the employees of CCC would determine

                where to park them on the yard.   By September 6, 1974, about 4,200 cars--Volkswagens, Porsches, and Audis--were stored at Higgins. 5
                

C. THE HURRICANE

During the weekend of September 6-8, 1974, the New Orleans area was threatened by Hurricane Carmen. On Friday night, September 6, a Robertson employee, Joseph R. Boyd, was notified that a sewer line underneath Higgins had broken in two places and was...