Koch Refining Co. v. Jennifer L. Boudreau M/V , 85 F.3d 1178 ( 1996 )

United States Court of Appeals,
Fifth Circuit.
No. 94-30509.
KOCH REFINING COMPANY, Plaintiff,
v.
JENNIFER L. BOUDREAUX MV, her engines, boiler, etc., in rem., et
al., Defendants.
In re in the Matter of JENNIFER L. BOUDREAUX MV and Ocean Towing
Service, Inc., as owners of the MV Jennifer L. Boudreaux praying
for exoneration from and/or limitation of liability: Ocean Towing
Service, Inc., Appellant-Cross-Appellee,
and
G & B Marine, Inc., Third-Party-Defendant-Appellant, Cross-
Appellee,
v.
CONTINENTAL INS., CO., 5801 Associates, Ltd., and Ocean Transport
Corp., Claimants-Appellees-Cross-Appellants.
In re in the Matter of OCEAN TRANSPORT CORPORATION, as owner pro
hac vice of the barge Ocean Transporter praying for exoneration
from or limitation of liability: Ocean Transport Corp., et al.,
Third-Party-Plaintiffs,
Ocean Transport Corp., Third-Party-Plaintiff-Appellee, Cross-
Appellant,
v.
G & B MARINE, INC., et al., Third-Party-Defendants-Appellants,
Cross-Appellees,
5801 ASSOCIATES, LTD., et al., Plaintiffs,
v.
CONTINENTAL INSURANCE COMPANY, Defendant.
June 25, 1996.
Appeals from the United States District Court for the Eastern
District of Louisiana.
1
Before POLITZ, Chief Judge, and JONES and BENAVIDES, Circuit
Judges.
EDITH H. JONES, Circuit Judge:
This case arises out of the 1987 sinking of a barge, the T/B
OCEAN TRANSPORTER ("the barge"), while in the tow of the M/V
JENNIFER L. BOUDREAUX ("the tug"). After a bench trial, the
district court found the tug 2/3 liable and the barge 1/3 liable,
and awarded the barge's owners $2.67 million. Both parties now
appeal the judgment. Two issues seem to us most worthy of
discussion: the court's decision to disqualify Richard Vinas as an
expert witness, and the denial of prejudgment interest. Upon
consideration of these issues and the others raised by the parties,
however, we affirm.
I. BACKGROUND
The barge was owned by 5801 Associates, Ltd. ("5801"). It had
been constructed in 1979 and was extended in 1980 by the addition
of a notch extension to its stern. In 1986, 5801 bareboat
chartered the barge to Ocean Transport Corporation ("OTC"). In
1987, OTC procured a charter from Koch Chemical Corporation
("Koch") to transport paraxylene from Corpus Christi, Texas to
Wilmington, North Carolina. OTC hired Ocean Towing Services, Inc.
("Ocean Towing") to tow the barge to Wilmington. Ocean Towing owns
the tug and is an affiliate of G & B Marine Service, Inc. ("G & B")
(G & B and Ocean Towing are collectively referred to as "the tug
interests").
On November 24, 1987, the JENNIFER L. BOUDREAUX left Corpus
Christi with the barge in tow. She was initially under orders to
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rendezvous off Galveston, Texas with another tug, the AMERICAN
PATRIOT, so this second tug could tow the barge to Wilmington.
However, the AMERICAN PATRIOT developed engine problems, and Todd
Lyons, the secretary/treasurer and comptroller of G & B, determined
that the JENNIFER L. BOUDREAUX could make the entire voyage. At
that time, he directed the JENNIFER L. BOUDREAUX to proceed to
Wilmington and to stop for fuel in Miami, Florida. Lyons later
determined the Miami stop was not necessary, and instructed the tug
to proceed directly to Wilmington and to follow a course in the
Gulf Stream to save time and fuel.
Neither the tug's captain or crew had ever been in the
Atlantic north of Jacksonville, Florida. The only chart on board
showed the coastline from Brownsville, Texas to Charleston, South
Carolina. It did not depict their final destination of Wilmington
and did not detail ports along the East coast. Although detailed
charts were available en route, the crew did not attempt to obtain
them.
On December 3rd, the tug received several gale warnings, due
to an approaching cold front, from the National Weather Service.
Winds of 30-40 knots and seas of 8-14 feet were forecast for the
following afternoon and evening. The tug reported them to Lyons.
He advised the tug that the weather system would move away from it,
and directed it to remain on course in the Gulf Stream. Later that
evening, weather conditions began to deteriorate as the gale
approached. Despite the steadily worsening weather, the tug
reduced its speed but continued in the Gulf Stream. The tug
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received several more gale warnings that night.
The next day, December 4th, the tug encountered, exactly as
forecasted, winds of 25 to 35 knots and seas of 12 to 14 feet with
occasional 20 foot swells. The weather conditions in the Gulf
Stream were significantly worse than those closer to shore. On
December 3rd and 4th, the maximum seas halfway between the Gulf
Stream and the shore were 10 feet. Within ten miles of the shore,
the seas reached a maximum of 4 feet.
During the storm, the barge was constantly splashed with water
and rolled from side to side. It frequently plowed beneath 20 foot
swells. The barge's deck and raised trunk were continually covered
with water from approximately noon on December 3rd to 8:00 p.m. on
December 4th.
At that time, the tug was hit by a series of large waves and
the tow line snapped. The crew attempted to retrieve the barge,
but could not because the tug's shackle, which connected the tow
line to the barge's bridge, had broken. For about an hour, the
barge rolled from side to side as it was pounded by waves.
Gradually, it began to sink, and finally sank completely around
midnight on December 6th. The barge was then in waters 200 fathoms
deep and was 120 miles from shore. Neither the barge nor its cargo
has been recovered.
The expected lawsuits were filed: 5801 and OTC sued the
barge's insurer, Continental Insurance Company ("Continental");
the cargo owner Koch sued Ocean Towing and G & B; Ocean Towing and
G & B sued for limitation of liability; and OTC, 5801, and
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Continental sued for limitation of liability (Continental, 5801,
and OTC are collectively referred to as "the barge interests").
The cases were consolidated.
Koch settled its claims before trial. In May 1993, 5801, OTC,
and Continental also settled their dispute and agreed to assert a
joint claim for the barge's loss, leaving two (consolidated) cases
for trial. The barge interests were suing the tug interests for
negligent towing, seeking to recover for the barge's loss. In
turn, the tug interests were suing for limitation of liability and
to recover towage fees and related expenses.
After the bench trial in September 1993, the district court
found the tug interests to be 2/3 at fault and the barge interests
to be 1/3 at fault for the barge's sinking. It awarded the barge
interests $2.67 million, but denied pre-judgment interest on the
award. The district court denied the tug interests' claims for
limitation of liability and towage fees.
Both parties timely appealed and cross-appealed the judgment.
The tug interests argue the district court 1) abused its discretion
in disqualifying expert witness Richard Vinas; 2) abused its
discretion in permitting expert Norman Antrainer to testify about
the barge's value; 3) erred in finding the tug breached its duties
of seaworthiness and care; 4) erred in denying their petition for
limitation of liability; and 5) erred in denying towage fees. The
barge interests argue the district court 1) clearly erred in
finding the barge unseaworthy; and 2) abused its discretion in
denying pre-judgment interest.
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II. DISCUSSION
A. Disqualification of Richard Vinas
The tug interests contend the district court erred in
disqualifying expert witness Richard Vinas.1 Vinas had originally
been retained as an expert by Continental in its insurance dispute
with 5801 and OTC. Continental paid him approximately $8000,
received two detailed written reports of his opinions, and listed
him as a "will call" expert for the scheduled August 1990 trial
date. This date was suspended. It is not clear when Continental
released him.2 At trial three years later, Vinas remained listed
as a "will call" expert by the barge interests, although they
rested without calling him.
On September 23, 1993, the barge interests discovered that the
tug interests had made ex parte contacts with Vinas and had
apparently retained him in August 1993. The following day, the
barge interests moved to disqualify Vinas as a witness and to
sanction the tug interests for their actions. The district court
heard argument, and, after reviewing memoranda from both sides,
disqualified Vinas. It concluded Continental had retained Vinas,
had provided him with confidential information, and "[had] not
1
Additionally, the tug interests' brief alleges the district
court improperly did not allow them to arrange ex parte meetings
with expert witnesses A.J. Herkes, Norman Antrainer, and Ed
Shearer. We do not address this issue because it was not
developed on appeal.
2
Continental contends it discharged Vinas in May 1993, after
the insurance dispute with 5801 and OTC was settled. The tug
interests contend Continental discharged him in the summer of
1990.
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release[d] Vinas to use the information he had compiled and
received in his work on the case." The tug interests appeal
Vinas's disqualification.
Federal courts have the inherent power to disqualify experts,
Campbell Ind. v. M/V GEMINI, 619 F.2d 24, 27 (9th Cir.1980),
although cases that grant disqualification are rare, English
Feedlot, Inc. v. Norden Lab., Inc., 833 F.Supp. 1498, 1501
(D.Col.1993). Initially, we point out that this is not a case in
which the expert switched sides. If that were the case, "no one
would seriously contend that a court should permit a consultant to
serve as one party's expert where it is undisputed that the
consultant was previously retained as an expert by the adverse
party in the same litigation and had received confidential
information from the adverse party pursuant to the earlier
retention. This is a clear case for disqualification." Wang Lab.,
Inc. v. Toshiba Corp., 762 F.Supp. 1246, 1248 (E.D.Va.1991)
(citations omitted). However, in the instant case, it was
Continental that switched sides, not Vinas. Continental had
retained Vinas to be an expert in its insurance coverage dispute
with 5801 and OTC. After the dispute was settled, Continental
changed its position and joined 5801's and OTC's side against the
tug interests.
In disqualification cases other than those in which the
expert clearly switched sides, lower courts have rejected a
"bright-line" rule and have adopted the following test:
First, was it objectively reasonable for the first party
who claims to have retained the expert to conclude that a
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confidential relationship existed?
Second, was any confidential or privileged information
disclosed by the first party to the expert?
Mayer v. Dell, 139 F.R.D. 1, 3 (D.D.C.1991) (reviewing cases). See
also Palmer v. Ozbek, 144 F.R.D. 66, 67 (D.Md.1992). Only if the
answers to both questions are affirmative should the witness be
disqualified. Mayer, 139 F.R.D. at 3. Many lower courts have
considered a third element: the public interest in allowing or not
allowing an expert to testify. E.g., English Feedlot, 833 F.Supp.
at 1504-5; Great Lakes Dredge & Dock Co. v. Harnischfeger Corp.,
734 F.Supp. 334, 336-37 (N.D.Ill.1990).
The party seeking disqualification bears the burden of
proving these elements. Cordy v. Sherwin-Williams Co., 156 F.R.D.
575, 580 (D.N.J.1994). We review the district court's decision for
an abuse of discretion. English Feedlot, 833 F.Supp. at 1501-2.
Initially, a court must determine whether the retaining party
and the expert had "a relationship which permitted [the retaining
party] reasonably to expect that any communication ... would be
maintained in confidence by [the expert]." In re Ambassador Group,
Inc. Litigation, 879 F.Supp. 237, 243 (E.D.N.Y.1994). Lower courts
have found such a relationship to exist when "the record supports
a longstanding series of interactions, which have more likely than
not coalesced to create a basic understanding of [the retaining
party's] modus operandi, patterns of operations, decision-making
process, and the like." Marvin Lumber Co. v. Norton, 113 F.R.D.
588, 591 (D.Minn.1986). See also Wang Lab., 762 F.Supp. at 1249,
n. 4 (collecting cases); Cordy, 156 F.R.D. at 581. By contrast,
8
when "the expert met but once with counsel, was not retained, was
not supplied with specific data relevant to the case, and was not
requested to perform any services, [ ] reviewing court[s] [have]
found that the evidence supports the finding that the meeting was
a type of informal consultation rather than the commencement of a
long-term relationship." Mayer, 139 F.R.D. at 3-4 (internal
quotations and citations omitted). See also Wang Lab., 762 F.Supp.
at 1249, n. 5 (collecting cases); Nikkal Ind., Inc. v. Salton, 689
F.Supp. 187, 190 (S.D.N.Y.1988).
In the instant case, the district court did not clearly err in
finding that Continental had a reasonable expectation of
confidentiality with Vinas and that such expectation continued
after Vinas was "discharged" by Continental. Their relationship is
more aptly described as a "long-standing series of interactions"
than an initial consultation. Continental paid Vinas $8000 and had
received several written reports from him.
The court must next determine whether Vinas received, or had
reasonable access to, confidential information. Such information
would include "discussion of the [retaining party's] strategies in
the litigation, the kinds of experts [the party] expected to
retain, [the party's] views of the strengths and weaknesses of each
side, the role of each of the [party's] witnesses to be hired, and
anticipated defenses." Mayer, 139 F.R.D. at 4. However, purely
technical information is not confidential. Nikkal Ind., 689
F.Supp. at 191-92.
Continental contends its counsel "spent considerable time with
9
Mr. Vinas explaining his entire theory of the case as well as trial
tactics for the 1990 trial." It also contends the counsel
"furnished Mr. Vinas with documents that had been generated in
preparation for the trial of this matter and participated in the
formulation of graphics by Mr. Vinas." The tug interests asserted
that Vinas's knowledge was limited to technical information about
the barge's condition. The district court found Vinas did receive
confidential information. Given the competing arguments, this
finding is not clearly erroneous.
The tug interests contend that Continental abandoned any claim
to confidentiality after designating Vinas as a "will call" witness
whose report was circulated among the parties in 1990. The tug
interests believe they could have dispelled any notion that
Continental divulged confidential information to Vinas had the
court allowed an evidentiary hearing on the disqualification
motion. In some situations, a hearing may be required, but this
was not one of them. The substance of Vinas's report clearly
revealed that, had he not been a "will call" witness, it would have
embodied confidential disclosures. But although he was originally
designated a "will call" witness, it should have become clear by
May 1993, when Continental switched sides, that Continental no
longer desired to put into evidence his report on the cause of the
sinking. During the three-year hiatus from 1990 to 1993, moreover,
no party had an incentive to pursue Vinas's testimony, so his
designation as a "will call" witness became immaterial. The tug
interests could have deposed Vinas at any time, of course. All of
10
these facts were sufficiently evident to the trial court to render
an evidentiary hearing superfluous, especially in the late stages
of trial.
Lower courts have also "balance[d] the competing policy
objectives in determining expert disqualification." English
Feedlot, 833 F.Supp. at 1504. "The policy objectives favoring
disqualification include preventing conflicts of interest and
maintaining the integrity of the judicial process." Id."The main policy objectives militating against
disqualification are ensuring that parties have access to expert
witnesses who possess specialized knowledge and allowing experts to
pursue their professional calling." English Feedlot, 833 F.Supp.
at 1504-5. "Courts have also expressed concern that if experts are
too easily subjected to disqualification, unscrupulous attorneys
and clients may attempt to create an inexpensive relationship with
potentially harmful experts solely to keep them from the opposing
party." Id. at 1505. Accordingly, courts have considered whether
another expert is available and whether the opposing party had time
to hire him or her before trial. E.g., Wyatt v. Hanan, 871 F.Supp.
415, 422 (M.D.Ala.1994); Cordy, 156 F.R.D. at 582.
In this case, the district court noted that the tug interests
could have secured their own naval architect in June 1990, over
three years before trial. While the tug interests suggest that
Continental manipulated the pretrial witness list to "keep him
away" from them, the tug interests did not even allege in response
to the disqualification motion that they certainly intended to call
11
Vinas. The contention of dependency on his testimony rings
somewhat hollow in light of that coyness.
Moreover, we are troubled that the tug interests did not
directly notify their opponents before trial that they would be
calling Vinas to testify. Instead, counsel for the tug interests
made several ex parte contacts with Vinas and apparently employed
him as their consultant in August 1993, but the barge interests
only accidentally learned of this arrangement after their side had
rested.
We conclude the district court did not abuse its discretion in
disqualifying Vinas under this very limited and specific factual
scenario.
B. Denial of Pre-Judgment Interest
The barge interests contend the district court abused its
discretion in denying pre-judgment interest on their $2.67 million
award. The district court gave two reasons for its denial: 1) the
fact that both parties were at fault for the barge's sinking; and
2) the extraordinary delays in the trial due to the insurance
dispute among the barge interests and the reassignment of the case
from Judge Collins to Judge Heebe. Weighing against the denial of
prejudgment interest, the court also noted the $2.67 million award
was not substantially less than the amount sought by the barge
interests.
In maritime cases, an award of pre-judgment interest is the
rule rather than the exception. Orduna S.A. v. Zen-Noh Grain
Corp., 913 F.2d 1149, 1157 (5th Cir.1990). "Despite admiralty's
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traditional hospitality to pre-judgment interest, however, such an
award has never been automatic." City of Milwaukee v. National
Gypsum Co., --- U.S. ----, ----, 115 S.Ct. 2091, 2096, 132 L.Ed.2d
148 (1995). The Supreme Court has explained that "the allowance of
interest on damages is not an absolute right. Whether it ought or
ought not to be allowed depends upon the circumstances of each
case, and rests very much in the discretion of the tribunal which
has to pass upon the subject, whether it be a court or a jury."
Id. (internal quotations and citations omitted). Nevertheless, a
court has the discretion to deny pre-judgment interest "only when
there are "peculiar circumstances' that would make it inequitable
for the losing party to be forced to pay pre-judgment interest."
Noritake Co. v. M/V Hellenic Champion, 627 F.2d 724, 728 (5th
Cir.1980) (footnote omitted). See also Milwaukee, --- U.S. at ----
, 115 S.Ct. at 2095 (summarizing circuit courts). We review the
district court's finding of peculiar circumstances for clear error,
and its denial of pre-judgment interest based on those
circumstances for an abuse of discretion. Orduna, 913 F.2d at
1157.
The district court's first reason for denying pre-judgment
interest was that both parties were at fault for the barge's
sinking. Contrary to the argument made by the tug interests, the
Supreme Court decisively rejected this rationale in City of
Milwaukee v. National Gypsum, supra, holding that "neither a good
faith dispute over liability nor the existence of mutual fault
justifies the denial of pre-judgment interest." 115 S.Ct. at 2097.
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The Court explained that the plaintiff's award had already been
reduced because of its contributory negligence. Accordingly, "[to]
deny[ ] pre-judgment interest on the basis of mutual fault would
seem to penalize a party twice for the same mistake." Id.(internal citations and quotations omitted).
In passing, however, the Supreme Court endorsed in part the
district court's second reason for denying prejudgment interests,
i.e. the extraordinary delay in reaching trial. See City of
Milwaukee, --- U.S. at ----, 115 S.Ct. at 2096 (plaintiff's delay
in prosecuting a suit is an obvious "peculiar circumstance".) The
various parties filed their lawsuits in December 1987. The cases
were consolidated and initially set for trial on January 8, 1990.
This trial was cancelled because an attorney was ill. The trial
was rescheduled for August 13, 1990, but was recessed after one day
because of the FBI's criminal investigation of the presiding judge.
The trial was then set for May 13, 1991. However, on May 6, 1991,
the district court granted 5801's and OTC's motion for summary
judgment against Continental. The case was stayed for almost two
years while Continental appealed. In February 1993, the Fifth
Circuit affirmed the judgment, and, in May 1993, the barge
interests settled their insurance dispute. Meanwhile, the case had
been reassigned to Judge Heebe. Trial finally began in September
1993, and judgment was entered in August 1994—71/2 years after the
tug interests had filed suit.
While it is true that trial delays do not generally
constitute a peculiar circumstance, Socony Mobil Oil Co., Inc. v.
14
Texas Coastal and Int'l., Inc., 559 F.2d 1008, 1014 (5th Cir.1977),
the series of delays that bedeviled this case was an exception to
the rule. In In re P & E Boat Rentals, Inc., 872 F.2d 642, 655
(5th Cir.1989), the Fifth Circuit affirmed the denial of
pre-judgment interest in a case in which two trial dates had been
upset because the district court was hearing the 20 week criminal
trial of the Governor of Louisiana. The district court found the
resulting delay, which was attributable to neither party, to be a
peculiar circumstance that, together with other circumstances,
justified denying pre-judgment interest.
In the instant case, trial was delayed for two years because
of the insurance dispute among the barge interests; neither of the
tug interests was a party to that suit. Trial was delayed an
additional nine months because of the criminal investigation of the
presiding judge. Overall, three trial dates were upset, and trial
did not occur until 31/2 years after the first trial date. The
district court did not clearly err in finding that these delays
constituted a peculiar circumstance.
We conclude that the district court did not abuse its
discretion in denying prejudgment interest.
C. Other Issues
The district court authored a long, meticulous opinion
embodying his findings and conclusions. From their opposing
perspectives, the parties have challenged numerous legal and
factual aspects of his analysis. The issues they raise were
summarized at the outset of this opinion, and we have considered
15
each of them in light of oral argument, the briefs, and the record.
Having done so, it is clear that this case was hard-fought among
skilled and experienced counsel before an attentive judge. We are
not persuaded that the court clearly erred in his fact findings,
committed reversible errors of law or reversibly abused his
discretion.
CONCLUSION
For these reasons, the judgment of the trial court is
AFFIRMED.
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