Westinghouse Credit Corp. v. M/V New Orleans , 39 F.3d 553 ( 1994 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 91-4697
WESTINGHOUSE CREDIT CORP.,
Plaintiff, Third Party
Plaintiff,
versus
M/V NEW ORLEANS, her engines, tackle,
apparel, etc., in rem, ET AL.,
Defendants,
KENNER MARINE & MACHINERY, INC., ET AL.,
Defendants-Appellees,
POWER SYSTEMS DIESEL, INC., and
VENER MARINE, LTD.,
Defendants, Third Party
Plaintiffs-Appellees
versus
DOUGLAS MARINE SERVICE, INC.,
Third Party Defendant,
versus
ATLAS ASSURANCE CO.,
JNT FLEET, INC.,
Third Party Defendants-
Appellants.
Appeals from the United States District Court
for the Western District of Louisiana
(November 23, 1994)
Before REYNALDO G. GARZA, HIGGINBOTHAM, and DeMOSS, Circuit Judges.
DeMoss, Circuit Judge:
I.
Kenner Marine & Machinery, Inc. agreed to sell the dredge NEW
ORLEANS to Willie C. Starling, Sr. and Starling Enterprises, Inc.
Westinghouse Credit Corp. financed $600,000 of the purchase price
and secured its loan with a preferred ship mortgage. Westinghouse
agreed with Kenner Marine that, if Starling defaulted, Westinghouse
would foreclose on the NEW ORLEANS and purchase the dredge at a
federal marshal's sale. Kenner Marine agreed to repurchase the
dredge from Westinghouse for the balance owed by Starling to
Westinghouse plus costs expended by Westinghouse in connection with
the sale.
Starling defaulted. Westinghouse sued to enforce its lien on
the NEW ORLEANS. The court ordered the dredge seized and placed in
custody. Douglas Marine Service, Inc. became consent custodian of
the NEW ORLEANS, and in September 1985, J.N.T. Fleet, Inc. towed
the dredge from Intracoastal City, Louisiana to the Douglas Marine
facility near Baldwin, Louisiana. The NEW ORLEANS sustained water
damage both while being towed and later during the lengthy storage
at the Douglas Marine facility.
Westinghouse purchased the NEW ORLEANS at the marshal's sale.
When Westinghouse demanded that Kenner Marine repurchase the dredge
pursuant to the prior agreement, Kenner Marine refused.
Westinghouse sued Kenner Marine for specific performance of the
agreement to repurchase the NEW ORLEANS, or, in the alternative,
for payment of damages.
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After settlement of the consolidated lien and repurchase
cases, only J.N.T. and its insurer, Atlas Assurance Co., remained
as defendants in the litigation. Kenner Marine, Power Systems
Diesel, Inc., and Vener Marine, Ltd., the latter two companies
having furnished labor and materials for repair of the dredge,
received an assignment of rights and sued J.N.T. and Atlas for
negligence in towing.
The district court found J.N.T. and Atlas liable for $206,320
in damages and refused to credit J.N.T. and Atlas for the amount
already paid by the settling parties. J.N.T. and Atlas appeal. We
affirm.
II.
Prior to trial, Atlas moved to dismiss, claiming that the
ocean marine insurance policy issued to J.N.T. was not a proper
subject for direct action in Louisiana. See LA. REV. STAT. ANN.
§§ 22:611 (marine insurance exemption) & 22:655 (direct action
statute) (West 1978 & Supp. 1992). By recent decision of the
Louisiana Supreme Court and this Court, the Louisiana statute
exempting marine insurance from application of some provisions of
the Louisiana Insurance Code does not limit an injured party's
ability to maintain a direct action against an insurer under the
Louisiana Direct Action statute. Grubbs v. Gulf Int'l Marine,
Inc., 13 F.3d 168 (5th Cir. 1993); Grubbs v. Gulf Int'l Marine,
Inc., 625 So. 2d 495, 502-04 (La. 1993). Therefore, Atlas was not
entitled to dismissal on this ground, and we affirm the district
court's denial of that motion.
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III.
J.N.T. and Atlas argue that the $206,320 judgment rendered
against them should have been reduced to reflect a pro tanto
(dollar-for-dollar) credit for settlement funds paid by Douglas
Marine and the hull insurers for damages during storage. It is
true that this Court had developed a settlement credit rule which
requires full credit for amounts received in settlement from joint
tortfeasors. E.g., Rollins v. Cenac Towing Co., 938 F.2d 599 (5th
Cir. 1990), cert. denied, 112 S. Ct. 1242 (1992); Hernandez v. M/V
Rajaan, 841 F.2d 582 (5th Cir.), cert. denied, 488 U.S. 981 (1988).
The U.S. Supreme Court, however, recently repudiated the pro tanto
settlement approach in admiralty cases, adopting in its place a
proportionate share rule. McDermott, Inc. v. AmClyde, 114 S. Ct.
1461 (1994). Under the proportionate share approach, the finder of
fact must determine the total damages from all joint causes and the
proportion of each tortfeasor's share of joint liability. Although
principles of joint and several liability survive, a nonsettling
defendant cannot initially be assessed any amount of damages larger
than his proportionate share of all damages as determined by his
proportionate share of all liability. Thus, under AmClyde, the
nonsettling defendant is no longer entitled to a "credit" based on
prior settlements. Rather, under AmClyde, it is the plaintiff who
takes the risk of either a poor settlement or a favorable
settlement with other defendants. However, the proportionate share
rule, like its predecessor the pro tanto rule, applies only to
cases in which there has been a settlement by a joint tortfeasor.
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See generally, Id. (when plaintiff settles with joint tortfeasors,
nonsettling defendant is entitled to credit for damages
attributable to conduct of settling defendant); RESTATEMENT (SECOND)
OF TORTS §§ 433A & 879. Thus, J.N.T. and Atlas are not entitled to
call for the proportionate share rule in this case unless (1) they
are joint tortfeasors with the settling defendants, and (2) the
court determined damages based on the conduct of both J.N.T. and
the settling defendants.
J.N.T. and Atlas claim that the required joint tortfeasor
relationship does exist, because the damage at the dock masked any
damage from the trip, erasing any basis for apportioning liability
and making the two injuries indivisible. Kenner Marine and Power
Systems, on the other hand, argue that this case involves two
separate torts, one by J.N.T. during towage and one by Douglas
Marine at the dock during storage. We agree with Kenner Marine and
Power Systems. This is not a case in which there were two
casualties closely related in time such that damage from one is
indivisible from the other. J.N.T.'s tug, the MISS NORMA, picked
up the dredge NEW ORLEANS at Intracoastal City in the late evening
hours of September 18, 1985 and dropped her off in the early
morning hours of September 20 at the Douglas Marine facility in
Baldwin. During the voyage, the bow of the NEW ORLEANS apparently
took on water as a result of being incorrectly pushed bow first
rather than stern first by the MISS NORMA. The master on board
the tug testified regarding how much water he saw in the hull of
the dredge NEW ORLEANS during the tow. Several witnesses testified
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concerning the condition of the dredge prior to the tow and the
extent of damages immediately after the tow. Bradley, an
experienced Kenner Marine dredge field technician, based his
testimony on an inspection conducted September 20th, before the NEW
ORLEANS had even been fully docked at Douglas Marine. If that were
not enough, Webster, an experienced marine surveyor, visited the
dredge NEW ORLEANS on November 16, shortly after the towing, and
documented with pictures and reports the extensive damage caused by
the near sinking while the vessel was under tow. The list of items
damaged, which he prepared contemporaneously, became the basis for
the damages awarded by the trial court. There was no allegation
and no testimony in the record indicating that any of the damage
alleged to have occurred at Douglas Marine occurred between
September 20, when the dredge arrived, and November 16, when
Webster conducted his survey.
Approximately one year after arrival of the dredge on Douglas
Marine, when Kenner Marine sent a technician to retrieve an
equipment manual from the NEW ORLEANS, it discovered that the
dredge had taken on water several times while stored at Douglas
Marine. As a result, Webster surveyed the vessel again in
September 1986, taking pictures and producing a detailed report.
The photos taken by Webster in November 1985 and September
1986, along with his reports and the corroborating testimony,
confirm that what we have here is two separate torts resulting in
two different harms -- one occurring over a period of two days as
a result of negligent towage of the vessel and one occurring over
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a subsequent period of one year as a result of negligence in the
care and custody of the vessel during storage. Because the
essential relationship of joint tortfeasors does not exist between
J.N.T. and Atlas on the one hand and the settling defendants on the
other hand, J.N.T. is not entitled to any settlement credit.
Additionally, a nonsettling defendant is not entitled to a
settlement credit unless it has been held liable for damages
attributable to the conduct of the settling tortfeasor. The
district court did not hold J.N.T. and Atlas liable for damages
sustained while the NEW ORLEANS was stored at Douglas Marine. At
trial, the court repeatedly limited the evidence to damage
sustained during towing, asking each witness to confirm that the
damages discussed related only to that incident. The court
subtracted certain amounts from the alleged damages, including
$30,000 for damage to tools and equipment based on evidence that
these items were dry and not water damaged immediately after the
tow. Significantly, at a post-trial hearing the court recollected
that it had found "only the damages occasioned by J.N.T. and
Atlas."
It is true that Webster's original 1985 estimate of the
monetary damages to the NEW ORLEANS was significantly lower than
both his revised estimate and the damages actually awarded.
However, it is also true that his 1986 estimate, conducted after
subsequent water damage at Douglas Marine, is much higher than the
damages actually awarded. Webster testified that the list of items
damaged and costs for repair tendered as evidence in this action
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included only items damaged as a result of the negligent towage
which he discovered in his November 1985 survey. The items he
included on his list were independently substantiated as being
items damaged during the tow by both the master of the tug and the
Kenner field service technician who inspected the vessel on the day
it arrived at Douglas marine.
We find that the trial court made an implicit, if not
explicit, finding that this case involved two separate torts which
caused two distinct harms and tried the case accordingly. Based on
our review of the briefs and the record, we agree that J.N.T. was
not a joint tortfeasor with the settling defendants with respect to
the casualty tried, and that no joint damages were awarded by the
trial court. Because we believe that the trial court correctly
refused to credit J.N.T. and Atlas for the amount paid in
settlement of the damages incurred while the vessel was stored at
Douglas Marine, we affirm.
IV.
Although the court did not modify its judgment by assigning
settlement credit, the court did reduce the award based on the
$10,000 deductible contained in J.N.T.'s insurance policy. Kenner
Marine and Power Systems do not contest the validity of this
provision or its legal effect; they maintain that J.N.T. waived
this claim by presenting it only after trial. Kenner Marine and
Power Systems, however, cannot appeal this issue because they have
not filed a notice of appeal. In addition, J.N.T. could not have
waived the deductible argument because the deductible had been
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stipulated into evidence. Because the insurance policy had already
been brought into evidence, and Kenner Marine and Power Systems had
not alleged that the deductible clause was inapplicable, the court
did not err in granting a remittitur in the amount of the
deductible.
The decision of the district court is AFFIRMED.
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