Gic Services, L.L.C. v. Freightplus USA, Incorpora

Case: 15-30975 Document: 00514115796 Page: 1 Date Filed: 08/15/2017
Revised August 15, 2017
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
No. 15-30975
Fifth Circuit
FILED
August 8, 2017
GIC SERVICES, L.L.C., Lyle W. Cayce
Clerk
Plaintiff - Appellee,
v.
FREIGHTPLUS USA, INCORPORATED,
Defendant - Third Party Plaintiff - Appellant - Appellee,
INDUSTRIAL MARITIME CARRIERS, L.L.C.,
Third Party Defendant - Appellant - Appellee.
Appeals from the United States District Court
for the Eastern District of Louisiana
Before ELROD, SOUTHWICK, and GRAVES, Circuit Judges.
JENNIFER WALKER ELROD, Circuit Judge:
This case is about a tugboat and its voyage across the Atlantic from
Houston to Nigeria. Though the tugboat arrived safely in port, the parties
dispute whether it was discharged at the correct port. The party that arranged
for the tugboat’s transport wanted it discharged at Lagos, Nigeria; the ocean
carrier believed Warri, Nigeria to be the correct port of discharge, claiming it
was told so by an intermediary. Despite the parties’ efforts to secure discharge
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at Lagos, the ocean carrier was unable to do so and continued on to Warri. And
there the tugboat remained. Predictably, litigation ensued. After a bench trial,
the district court entered judgment, allocating the liabilities and associated
damages among the parties. On appeal, the ocean carrier and the intermediary
challenge various aspects of the judgment. We AFFIRM in part and REVERSE
in part.
I.
The plaintiff in this case, GIC Services, L.L.C. (GIC), contracted with
Freightplus USA, Inc. (Freightplus), the defendant/third-party plaintiff, to
arrange for the transport of a tugboat—the REBEL—to Nigeria. 1 Freightplus
does not own vessels capable of transporting the REBEL, so Freightplus
contracted with Yacht Path International, Inc. (Yacht Path) 2—a broker
specializing in the transportation of large water craft—who in turn contracted
with Industrial Maritime Carriers, L.L.C. (IMC) as the “vessel-operating
common carrier.” In the end, GIC agreed to pay Freightplus $111,000 for its
services, Freightplus agreed to pay Yacht Path $85,000, and Yacht Path agreed
to pay IMC $70,000. While GIC paid the amount it owed to Freightplus, and
Freightplus paid the amount owed to Yacht Path, Yacht Path did not remit the
amount owed to IMC.
In the course of making these arrangements, representatives from Yacht
Path spoke with representatives of IMC via telephone and communicated
information for IMC’s bill of lading, 3 including the desired port of discharge.
1 The REBEL is not owned by GIC, but is owned jointly by GIC Oil and Gas Services,
Ltd. (the parent company of GIC) and another entity.
2 Yacht Path is now in bankruptcy and is not a party to this appeal.
3 A bill of lading “records that a carrier has received goods from the party that wishes
to ship them, states the terms of carriage, and serves as evidence of the contract for carriage.”
Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp., 561 U.S. 89, 94 (2010) (quotation marks
omitted).
2
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Exactly what was communicated by Yacht Path is in dispute: IMC claims that
Yacht Path said that Warri was the port of discharge, while Freightplus claims
that Yacht Path identified Lagos as the port of discharge. IMC then issued a
“booking note,” which purported to specify the terms of its agreement with
Yacht Path. This “booking note,” which was sent to Yacht Path, lists Warri as
the port of discharge. Yacht Path issued its own booking note and bill of lading,
both of which list Lagos as the port of discharge. In late December, Freightplus
issued a “house bill of lading,” identifying Lagos as the port of discharge. The
next day, IMC issued a “non-negotiable” bill of lading and a cargo manifest,
both of which listed Warri as the port of discharge. 4 IMC asserts that its non-
negotiable bill of lading and cargo manifest were both sent to Yacht Path. At
no time prior to the REBEL’s departure from Houston did anyone notice or
acknowledge the discrepancy as to the port of discharge.
The REBEL departed Houston in late December. In early January, while
the REBEL was en route to Nigeria, communications occurred between Mr.
Branting of IMC and Mr. Cummings of Yacht Path through which it became
clear that there was confusion over the REBEL’s port of discharge. In mid-
January, representatives from Yacht Path, Freightplus, and GIC attempted to
find a way to discharge the REBEL at Lagos. However, the district court found
that a late-night e-mail on January 16 from a Yacht Path representative was
the first occasion in which “anyone at Yacht Path or IMC discussed the need
for changing the REBEL’s destination” from Warri to Lagos. Despite efforts to
rectify the situation, IMC was unable to discharge the REBEL at Lagos. While
various parties blame an inability to contact GIC’s agent in Nigeria at the
eleventh hour, the district court found that “manifest and customs documents”
4 This bill of lading was not a final bill of lading. It is marked “non-negotiable,” and so
it could not have been used to claim the cargo at the port of discharge.
3
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listing Warri as the port of discharge also contributed to IMC’s inability to
discharge the REBEL at Lagos.
The ocean carrier proceeded on to Warri and discharged the REBEL
there. Though GIC initially sought to obtain the REBEL’s release, it was
informed that the REBEL could not be released because IMC had not been paid
its freight. And so, the REBEL remained in Warri in the custody of a company
called Julius Berger.
GIC sued Freightplus, and Freightplus in turn brought a third-party
action against IMC. IMC counter-claimed against Freightplus and the REBEL
in rem to recover its unpaid freight. After a two-day bench trial, the district
court concluded that Freightplus was liable to GIC for $1,860,985 in damages
incurred as a result of the REBEL’s discharge in Warri. The district court then
determined that IMC was 30 percent at fault for GIC’s damages and so the
court required IMC to pay 30 percent of the judgment, as well as 30 percent of
Freightplus’s attorneys’ fees. Finally, the district court concluded that IMC
was entitled to recover $70,309.12, plus pre-judgment interest, from
Freightplus—the amount of IMC’s unpaid freight. The district court
subsequently amended its judgment to remove IMC’s obligation to pay 30
percent of Freightplus’s attorneys’ fees. 5 Freightplus and IMC both timely
appealed.
After briefing in this court was completed, Freightplus filed a “Motion
for Partial Dismissal of Appeal.” In this motion, Freightplus represented that
it and GIC have “reached a settlement” as to that part of the Second Amended
Judgment “relat[ing] to GIC Services and Freightplus.” Freightplus thus
5 This was the second time the district court amended its judgment. On the first
occasion, the district court did so to substitute the fixed-dollar amounts of pre-judgment
interest in the original judgment with percentage figures. The Second Amended Judgment
also adjusted the amount Freightplus owed to GIC to $1,811,385, plus pre-judgment interest.
4
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requested that we allow it to “dismiss its appeal.” A few days later, GIC filed a
“Notice of Satisfaction of Judgment” in the district court, indicating that “GIC
and Freightplus entered into a settlement agreement, resolving all claims
between them,” that “Freightplus has fulfilled the terms of the settlement
agreement” and so “[t]he judgment [ ] in favor of GIC and against Freightplus
is satisfied[.]” We granted Freightplus’s motion and dismissed its appeal “as to
those aspects of the Second Amended Judgment in favor of GIC Services,
L.L.C. and against Freightplus USA, Incorporated ONLY.” 6
II.
The parties raise a host of challenges to the judgment. IMC challenges:
(1) the requirement that it indemnify Freightplus for a portion of the damages
award; (2) the amount of damages awarded GIC; (3) the allocation of damages
between itself and Freightplus; and (4) the determination that it may not
exercise a lien against the REBEL in rem to recover its unpaid freight. Like
IMC, Freightplus objects to the allocation of damages between itself and IMC.
It also challenges the district court’s refusal to award it attorneys’ fees and the
requirement that it reimburse IMC for its unpaid freight. 7 We address each of
these in turn.
6 This dismissal includes Freightplus’s argument regarding whether the Carriage of
Goods by Sea Act, 46 U.S.C. § 1300 et seq. limits Freightplus’s liability to $500—along with
the attendant issue of unreasonable deviation. Likewise, the issue of Freightplus’s liability
to GIC, including the underlying finding that Freightplus is liable to GIC based on a theory
of estoppel, is no longer in this appeal.
7 In its brief, Freightplus argues that GIC lacks standing to recover damages because
GIC is not the real party in interest under Federal Rule of Civil Procedure 17(a)(1). IMC did
not develop this argument in its own briefing, and it cannot prevail on this argument in any
event as there is no indication it ever voiced this objection. See Fed. R. Civ. P. 17 (a)(3) (“The
court may not dismiss an action for failure to prosecute in the name of the real party in
interest until, after an objection, a reasonable time has been allowed for the real party in
interest to ratify, join, or be substituted into the action.”); see In re Signal Int’l, LLC, 579 F.3d
478, 487–88 (5th Cir. 2009).
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A.
We first consider whether IMC is liable to Freightplus under a theory of
tort indemnification for a portion of the judgment awarded to GIC.
Once a prominent feature of maritime law, maritime tort
indemnification is now available only in limited situations. Hardy v. Gulf Oil
Corp., 949 F.2d 826, 833 (5th Cir. 1992). One of these situations arises from a
“special relationship” between two entities. Cities Serv. Co. v. Lee-Vac, Ltd.,
761 F.2d 238, 240 (5th Cir. 1985) (citing Fed. Marine Terminals, Inc. v.
Burnside Shipping Co., 394 U.S. 404 (1969)); see also LCI Shipholdings, Inc. v.
Muller Weingarten AG, 153 F. App’x 929, 931 (5th Cir. 2005). Under this
theory, an entity will owe indemnity when its negligence is the cause of a loss
to its counterpart.
The parties agree with the district court 8 that a “special relationship”
exists between a “non-vessel operating common carrier” (NVOCC) 9 and a
“vessel-operating common carrier” (VOCC). 10 They disagree, however, with the
district court’s conclusion that: (1) Freightplus was operating as an NVOCC;
and (2) IMC was negligent and its negligence caused Freightplus’s injury.
While we are not aware of a decision of ours recognizing maritime tort
liability based on the relationship between a NVOCC and a VOCC, two of our
sister circuits appear to have done so. See SPM Corp. v. M/V Ming Moon, 22
8 In denying IMC’s motion to dismiss, the district court also decided that Freightplus
was entitled to indemnity based on a separate theory—one dependent on the “difference in
character of duty owed to GIC.” Neither party, however, mentions this latter theory in their
briefs, and it is not mentioned in the district court’s order either.
9 A “non-vessel-operating common carrier” is “a common carrier that—(A) does not
operate the vessels by which the ocean transportation is provided; and (B) is a shipper in its
relationship with an ocean common carrier.” See 46 U.S.C. § 40102(16).
10A “vessel-operating common carrier” is an ocean common carrier. 46 U.S.C.
§ 40102(17). A common carrier operates the vessel carrying the cargo. See 46 U.S.C.
§ 40102(6).
6
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F.3d 523, 526–27 (3d Cir. 1994); Ins. Co. of N. Am. v. M/V Ocean Lynx, 901
F.2d 934, 937, 941 (11th Cir. 1990). Seeing no reason to depart from these
decisions, and given the parties’ agreement on this question, we conclude that
the NVOCC/VOCC relationship may give rise to a claim for maritime tort
indemnity to the extent articulated in this opinion.
1.
The first question is whether Freightplus was operating as an NVOCC.
“Non-vessel operating common carrier” is a term defined by statute. See 46
U.S.C. § 40102(16). As such, we review the interpretation of that term de novo.
See AEL Asia Express (H.K.) Ltd. v. Am. Bankers Ins. Co. of Fla., 5 F. App’x
106, 107 (4th Cir. 2001). To the extent this question involves factual issues,
“[m]ixed questions of law and fact are also reviewed de novo.” Trinity Indus.,
Inc. v. United States, 757 F.3d 400, 407 (5th Cir. 2014); see also Prima U.S. Inc.
v. Panalpina, Inc., 223 F.3d 126, 129 (2d Cir. 2000) (reviewing de novo whether
party was an ocean freight forwarder as a mixed question of law and fact).
In the modern shipping industry, the shipment of goods by vessel from
the United States often involves a chain of multiple entities, each with defined
roles. One of these is the “non-vessel operating common carrier.” NVOCCs
operate as intermediaries between the shipper—the entity “seek[ing] to export
cargo”—and the ocean common carrier—the entity that “physically carr[ies]
the cargo on [its] vessel[ ].” Landstar Exp. Am., Inc. v. Fed. Maritime Comm’n,
569 F.3d 493, 494 (D.C. Cir. 2009). Under the Shipping Act of 1984, 46 U.S.C.
§ 40101 et seq., an NVOCC is defined as “a common carrier that (A) does not
operate the vessels by which the ocean transportation is provided; and (B) is a
shipper in its relationship with an ocean common carrier.” 46 U.S.C.
§ 40102(16). Typically, the NVOCC’s role is to “consolidate cargo from
numerous shippers into larger groups for shipment by an ocean carrier.”
Prima, 223 F.3d at 129; see also Ins. Co. of N. Am. v. S/S Am. Argosy, 732 F.2d
7
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299, 300–01 (2d Cir. 1984); All Pac. Trading, Inc. v. Vessel M/V Hanjin Yosu,
7 F.3d 1427, 1429–30 (9th Cir. 1993).
An NVOCC is therefore something of a hybrid: it is a common carrier 11
vis-à-vis the shipper, but it is itself a shipper vis-à-vis the ocean common
carrier. Ins. Co. of N. Am., 732 F.2d at 301; All Pac. Trading, 7 F.3d at 1429–
30. In its role as common carrier, an NVOCC issues a bill of lading to each
shipper, which memorializes the terms of their agreement. Prima, 223 F.3d at
129; see also Landstar, 569 F.3d at 495. Because of an NVOCC’s role as a
common carrier and the issuance of a bill of lading, the NVOCC is liable to the
shipper if “anything happens to the [cargo] during the voyage.” Prima, 223 F.3d
at 129; see also Landstar, 569 F.3d at 495. Further, in its role as a shipper, an
NVOCC receives a bill of lading from each VOCC. Landstar, 569 F.3d at 495;
All Pac., 7 F.3d at 1430. Typically, “NVOCCs receive compensation only from
the shipper.” Landstar, 569 F.3d at 495; see also Nat’l Customs Brokers &
Forwarders Ass’n of Am., Inc. v. United States, 883 F.2d 93, 101 (D.C. Cir. 1989)
(“The NVOCC is compensated only by the shipper.”).
11 Common Carrier means:
“a person that—(i) holds itself out to the general public to provide
transportation by water of passengers or cargo between the United States and
a foreign country for compensation; (ii) assumes responsibility for the
transportation from the port or point of receipt to the port or point of
destination; and (iii) uses, for all or part of that transportation, a vessel
operating on the high seas or the Great Lakes between a port in the United
States and a port in a foreign country; but (B) does not include a carrier
engaged in ocean transportation by ferry boat, ocean tramp, or chemical parcel-
tanker, or by vessel when primarily engaged in the carriage of perishable
agricultural commodities—(i) if the carrier and the owner of those commodities
are wholly-owned, directly or indirectly, by a person primarily engaged in the
marketing and distribution of those commodities; and (ii) only with respect to
the carriage of those commodities.
46 U.S.C. § 40102(6).
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The parties dispute whether Freightplus was operating as an NVOCC.
Yet while both parties discuss the statutory definition of an NVOCC, neither
party addresses the statutory definition of the term “shipper,” which appears
within the definition of NVOCC. See 46 U.S.C. § 40102(16) (NVOCC is a
“shipper in its relationship with an ocean common carrier” (emphasis added));
id. § 40102(22) (defining “shipper”). Because the parties have not disputed
whether Freightplus falls within the definition of “shipper,” we do not reach
this issue and instead decide whether Freightplus is an NVOCC based on the
arguments presented to us.
We conclude that Freightplus qualifies as an NVOCC because it shares
those characteristics typically associated with an NVOCC. First, Freightplus
issued a bill of lading, which listed Freightplus as the “carrier”—the role an
NVOCC plays vis-à-vis the ultimate shipper. Cf. Prima, 223 F.3d at 129
(NVOCC issues bill of lading to each shipper); Landstar, 569 F.3d at 495
(same). Second, the parties agree that Freightplus was paid exclusively by GIC,
also an indicator that Freightplus was acting as an NVOCC. 12 See Landstar,
569 F.3d at 495; Nat’l Customs Brokers, 883 F.2d at 101.
IMC argues that Freightplus was not operating as an NVOCC because
it is not a “shipper” vis-à-vis IMC as required by Section 40102. See 46 U.S.C.
§ 40102(16). It asserts two bases for this argument: First, it argues that
Freightplus is not a “shipper” because it is “not listed as a shipper on IMC’s
booking note, IMC’s bill[ ] of lading, or [its] cargo manifest.” Second, and
relatedly, it argues that Freightplus cannot be considered an NVOCC because
it did not “receive a bill of lading” from IMC, the VOCC.
12 There is no dispute that Freightplus is licensed to operate as an NVOCC, but it is
also licensed as a “freight forwarder.”
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To begin with, the validity of these arguments depends in large part on
whether Freightplus was a “shipper” within the meaning of Section
40102(22)—which, as noted, IMC has not addressed in its brief. Moreover,
while it is true that Freightplus is not listed as “shipper” on the relevant
documents and that it did not receive a bill of lading from IMC, an entity’s
status as an NVOCC (and as a shipper) depends on its function, not the labels
ascribed to it by third parties. See AEL Asia, 5 F. App’x at 111 (“When dealing
with NVOCCs, an intermediary’s conduct, and not what it [is] label[ed], will be
determinative of its status.” (emphasis added) (quotation marks omitted)); see
46 U.S.C. § 40102(16), (22) (definitions of “shipper” and NVOCC). And here, it
is clear that Freightplus possesses the characteristics typical of an NVOCC.
IMC argues that Freightplus was “at most a freight forwarder.” But an
examination of the services typically performed by a freight forwarder
undermines, rather than strengthens, IMC’s argument. Unlike an NVOCC, a
freight forwarder (1) does not issue a bill of lading, Prima, 223 F.3d at 129; and
(2) “receives compensation for its services both from its customer . . . and from
the ocean carrier.” Nat’l Customs Brokers, 883 F.2d at 95; Landstar, 569 F.3d
at 495. Neither is true of Freightplus. That Freightplus’s conduct differs from
that typical of a VOCC confirms our conclusion that it operated as an NVOCC.
2.
We next address the validity of the district court’s finding that IMC acted
negligently. In the maritime context, as in any other, “[q]uestion[s] of fault,
including determinations of negligence and causation, are factual issues, and
may not be set aside on appeal unless clearly erroneous.” In re Omega Protein,
Inc., 548 F.3d 361, 367 (5th Cir. 2008) (citing In re Mid-South Towing, 418 F.3d
526, 531 (5th Cir. 2005)). Where the “district court’s account of the evidence is
plausible in light of the record viewed in its entirety,” we will “not reverse . . .
even though convinced that had [we] been sitting as the trier of fact, [we] would
10
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have weighed the evidence differently.” Id. In this context, “‘[f]indings based
on the credibility of witnesses demand even greater deference.’” Id. (quoting
Tokio Marine & Fire Ins. Co., Ltd. v. FLORA MV, 235 F.3d 963, 970 (5th Cir.
2001)).
To establish maritime negligence, “a plaintiff must ‘demonstrate that
there was [1] a duty owed by the defendant to the plaintiff, [2] breach of that
duty, [3] injury sustained by the plaintiff, and [4] a causal connection between
the defendant’s conduct and the plaintiff’s injury.’” Canal Barge Co. v. Torco
Oil Co., 220 F.3d 370, 376 (5th Cir. 2000) (quoting In re Cooper/T. Smith, 929
F.2d 1073, 1077 (5th Cir. 1991) (alteration omitted)). The district court
concluded that IMC was negligent because its agent (Intermarine) had notice
that Lagos was the correct port of discharge for two weeks before the REBEL
arrived there but did not “take steps to ensure proper delivery at Lagos.” 13
IMC raises a single objection to the finding of negligence. Specifically,
IMC argues that it was contractually bound to deliver the REBEL to Warri,
and so it cannot be found negligent for delivering cargo to the contractually
agreed-upon port. Imposing liability under these circumstances, IMC argues,
would place it in a cross-current between: (1) complying with its contractual
obligations, but then facing tort-indemnity liability for refusing to change the
port of discharge; or (2) avoiding tort-indemnity liability by changing the port
of discharge, but then facing breach-of-contract liability for doing so.
This argument, however, sails right into the headwinds of the district
court’s findings. Despite IMC’s repeated insistence to the contrary, the district
court did find that IMC erroneously listed Warri as the port of discharge on its
various documents. In its opinion, the district court noted IMC’s argument that
13The district court also faulted IMC for its “lack of due care” in failing to preserve
the shipping instructions it received from Yacht Path.
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“it was told by Yacht Path that the REBEL’s final destination was Warri and
therefore fully performed its contractual duties.” 14 But the district court
concluded that “this argument is unsupported,” and that IMC had “mistakenly
record[ed] the REBEL’s port of discharge as Warri,” based on the fact that IMC
did not produce any evidence that Yacht Path informed IMC that Warri was to
be the port of discharge.
We cannot overturn this determination absent clear error. IMC admits
that it is unable to produce any documentation showing that Yacht Path
identified Warri as the port of discharge. It contends, however, that “there is
ample evidence in the record to prove that IMC followed its instructions when
it designated Warri as the discharge port.” IMC points to the testimony of Mr.
Branting and Mr. Jackson, whose testimonies support IMC’s account. IMC also
points to the fact that its bill of lading, cargo manifest, and booking note
identify Warri as the port of discharge, and to an e-mail from Mr. Cummings
at Yacht Path, which indicates that “[t]he small tug”—presumably the
REBEL—“is booked with my client at Warri.”
But the record also contains evidence pointing the other way. For
example, the deposition of Mr. Cummings—IMC’s point of contact at Yacht
Path—was introduced at trial, and he testified to identifying Lagos as the port
of discharge in his communications with IMC. We owe particular deference
where “credibility of witnesses” is at issue. See Omega Protein, 548 F.3d at 367.
Moreover, while the designation of Warri on IMC’s documents and the e-mail
from Mr. Cummings is evidence—perhaps even strong evidence—that Yacht
Path did identify Warri as the port of discharge, there is evidence cutting the
14This statement is found in the district court’s “Conclusions of Law,” rather than its
“Findings of Fact.” However, as the district court’s opinion notes: “To the extent that any
conclusion of law constitutes a finding of fact, the Court adopts it as such.”
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other way, including the Yacht Path booking note—issued five days before Mr.
Cummings’s e-mail—which designates Lagos as the port of discharge. The
existence of conflicting evidence is precisely the context in which we defer to
the district court’s factual findings. See id. (we will not reverse factual findings
“even though convinced that had [we] been sitting as the trier of fact, [we]
would have weighed the evidence differently”).
It follows from this conclusion that IMC’s objection to the district court’s
negligence finding must be rejected. Simply put, if IMC did not contract to
deliver the REBEL to Warri, then holding IMC liable for doing so does not
place it in the catch-22 it posits. 15 IMC offers no other objection to the district
court’s finding.
Accordingly, because the district court correctly determined that
Freightplus was operating as an NVOCC and because its conclusion that IMC
was negligent is not clearly erroneous, we uphold its determination that IMC
is liable to Freightplus. 16
B.
We next address the amount of damages awarded. The district court
determined that Freightplus was liable to GIC in the amount of $1,811,385.
15We note that IMC would not likely have found itself in such a dilemma if it had
discharged the REBEL at Lagos. After all, all parties were striving to secure the REBEL’s
discharge at Lagos once the error was discovered.
16 Freightplus argues alternatively that it is entitled to full indemnity because IMC
was “actively” negligent, while it was, at most, “passively” negligent. This argument is
foreclosed by our precedent, which has long since dispensed with the active/passive
negligence distinction. See Loose v. Offshore Nav., Inc., 670 F.2d 493, 500–02 (5th Cir. 1982)
(“[T]he concepts of active and passive negligence have no place in a liability system that
considers the facts of each case and assesses and apportions damages among joint tortfeasors
according to the degree of responsibility of each party.”); Seal Offshore, Inc. v. Am. Standard,
Inc., 736 F.2d 1078, 1082 (5th Cir. 1984) (“The concept of active and passive negligence is of
no aid . . . because as a footing for [implying] indemnification it is at best a redundancy within
a system of comparative fault.”); Hardy, 949 F.2d at 834 n.13 (“The Court [has] abandoned
the active/passive distinction . . . .”).
13
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IMC argues that the district court erred in calculating these damages in two
respects: First, it objects to the district court’s reliance on a particular trial
exhibit. Second, it argues that the district court did not account for GIC’s
failure to mitigate its damages.
We “review[ ] challenges to evidence admitted or excluded for abuse of
discretion.” EMJ Corp. v. Hudson Specialty Ins. Co., 833 F.3d 544, 551 (5th
Cir. 2016). We will reverse only if “the abuse of . . . discretion is clearly shown
from the record,” U.S. Bank Nat’l Ass’n v. Verizon Commc’ns, Inc., 761 F.3d
409, 430 (5th Cir. 2014), as revised (Sept. 2, 2014), and “if substantial prejudice
resulted from the error,” EMJ Corp., 833 F.3d at 551 (quotation marks
omitted). “Resolution of preliminary factual questions concerning the
admissibility of evidence are reviewed for clear error.” Meadaa v. K.A.P.
Enters., L.L.C., 756 F.3d 875, 880 (5th Cir. 2014). Further, we review the
district court’s determination of damages under a clearly erroneous standard.
Fed. Sav. & Loan Ins. Corp. v. Tex. Real Estate Counselors, Inc., 955 F.2d 261,
268 (5th Cir. 1992); see also Neal v. United States, 562 F.2d 338, 341 (5th Cir.
1977). This deferential standard of review extends to determining whether a
party failed to mitigate its damages. Marathon Pipe Line Co. v. M/V Sea Level
II, 806 F.2d 585, 592 (5th Cir. 1986). “The burden rests with the wrongdoer to
show that the victim of tortious conduct failed to mitigate damages” by
demonstrating “(1) that the injured party’s conduct after the accident was
unreasonable and (2) that the unreasonable conduct had the consequence of
aggravating the harm.” Id.
1.
For the bulk of the damages awarded, the district court relied solely on
Trial Exhibit 101—an invoice sent from Visfi Nigeria Ltd. to GIC Oil and Gas
Services Ltd., detailing the costs for “storing, securing, and releasing the
REBEL in Warri.” IMC argues that the district court was wrong to do so
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because: (1) the invoice was never authenticated and so it was never properly
admitted into evidence; and (2) it is not the “best evidence” of damages. By
contrast, the district court found that IMC stipulated to the authentication of
Exhibit 101.
Prior to trial, IMC objected to the admission of Exhibit 101 “under
Federal Rule of Evidence 901 and 902 because it has not been properly
authenticated.” The district court deferred on this objection because “[Exhibit
101] [could] be authenticated at trial by witness testimony.” At the same time,
and as was enshrined in the final pre-trial order, GIC indicated that it intended
to call “[a]ny witness needed to authenticate any documents that cannot be
agreed to by stipulation.”
At trial, GIC sought to introduce the testimony of Mr. Godwin Ebolo, the
director of GIC Oil and Gas Services, as an authenticating witness. Though
initially objecting, both Freightplus and IMC agreed to stipulate “[t]o the
extent [Mr. Ebolo was called] specifically for a Rule 901 authentication . . . .”
The relevant colloquy went as follows:
MR. BOONE [GIC counsel]: Your Honor, I’d like to call Mr. Godwin Ebolo
as my authentication federal witness.
MR. WALTERS [Freightplus counsel]: Your Honor, we would object to
this witness testifying. He was not listed in the pretrial order. To the
extent that he’s called specifically for a Rule 901 authentication, we will
stipulate, and I think - -
MR. WAGUESPACK [IMC counsel]: We’ll stipulate as well, Your Honor.
MR. BOONE: All right. And that’s all he was going to testify to, nothing
substantive, just to authenticate those documents that Freightplus and
IMC both objected to, which are the three contracts and the agency
agreement.
THE COURT: All right. So do we have a stipulation?
MR. WALTERS: Yes. As far as Freightplus, yes.
MR. WAGUESPACK: As far as IMC as well.
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THE COURT: Okay. Well, sir, you can go home. Oh, you still want to call
him?
MR. WALTERS: He’s been excused.
MR. BOONE: Oh, wait.
MR. WALTERS: We stipulated to authentication. There’s no - - if that’s
the only purpose he would be testifying.
MR BOONE: Yeah. He’s testifying for authentication.
MR. WALTERS: We’ve stipulated to authentication.
MR. BOONE: Oh, you have?
MR. WALTERS: Yes.
IMC contends that its counsel was not stipulating to the authentication
of Exhibit 101 since GIC’s counsel specifically limited the stipulation to “the
three contracts and the agency agreement.” However, as the district court
found in denying IMC’s Rule 59 motion on this issue, the qualifying language
from GIC’s counsel came after counsel for both Freightplus and IMC had
“proffered a blanket Rule 901 authentication stipulation for Godwin Ebolo’s
testimony.” Moreover, neither Freightplus’s nor IMC’s counsel attempted to
limit the scope of their unqualified statements agreeing to a stipulation or to
confirm that they intended their stipulation to be limited to the particular
documents mentioned by GIC’s counsel.
We recognize, as did the district court, that “each side could have been
more exact in what they were attempting to convey,” and that it is possible
that Freightplus and IMC did not intend to offer a blanket stipulation on
authentication. At the same time, our role is not to determine how we might
have come out on this issue in the first instance. See United States v. Mata,
624 F.3d 170, 173 (5th Cir. 2010), as revised (Nov. 15, 2010) (“A court of appeals
may not reverse a district court’s finding of fact based only on its belief that,
had it been sitting as the trier of fact, it would have weighed the evidence
differently and reached a different conclusion.”). Instead, we can only reverse
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the district court’s finding if “viewing the evidence in its entirety, [we are] left
with the definite and firm conviction that a mistake has been committed.”
Bertucci Contracting Corp. v. M/V ANTWERPEN, 465 F.3d 254, 258–59 (5th
Cir. 2006) (emphasis added). As is the case here, “[w]here there are two
permissible views of the evidence, the fact finder’s choice between them cannot
be clearly erroneous.” O’Malley v. U.S. Fid. & Guar. Co., 776 F.2d 494, 497 (5th
Cir. 1985) (quoting United States v. Yellow Cab Co., 338 U.S. 338, 342 (1949)).
Accordingly, we hold that the district court did not clearly err in finding that
Freightplus and IMC offered a blanket stipulation on authentication. 17
IMC claims that, even if Exhibit 101 was properly admitted, the damages
award is still clearly erroneous because other evidence in the record—namely,
a “provisional” invoice from Julius Berger (the company holding the REBEL in
Warri)—is much stronger evidence of “the actual amount of storage fees that
must be paid in order to obtain the release of the REBEL . . . .” 18 That invoice
calculates total charges at $151,169.08, while Exhibit 101 calculates them at
$1,460,200.
We disagree. By arguing that the district court should have given greater
weight to Exhibit 117 than to Exhibit 101, IMC is effectively asking us to
17 In any event, we conclude that the district court did not abuse its discretion in
relying on Exhibit 101 even if there was not a blanket stipulation as to authenticity. After
the May 12 colloquy, the parties agreed that GIC’s authenticating witness was excused; he
was no longer available to testify regarding authenticity. Moreover, the record appears to
show that, as a factual matter, Exhibit 101 was admitted into evidence and was in the district
court’s possession after trial. Accordingly, given that GIC’s authenticating witness was no
longer available and that Exhibit 101 appears to have been in evidence, we conclude that the
district court did not abuse its discretion in relying on Exhibit 101, regardless of whether
Freightplus or IMC offered a blanket stipulation on authenticity.
18 IMC also argues that newly discovered evidence that it presented after trial
supports its argument. This “new evidence” was presented to the district court in a Rule 60(b)
motion, and the district court denied that motion, concluding that IMC had not met the
stringent requirements for Rule 60(b) relief. IMC has not argued to us that the district court’s
Rule 60(b) ruling is incorrect, and so we will not consider IMC’s new evidence.
17
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reweigh the evidence. Again, we will not reverse the district court’s factual
findings “even though convinced that had [we] been sitting as the trier of fact,
[we] would have weighed the evidence differently.” Omega Protein, 548 F.3d at
367.
2.
IMC next argues that the district court did not account for GIC’s alleged
failure to mitigate its damages. IMC argues that this mitigation could have
occurred if GIC would have “post[ed] a bond as security for IMC’s freight claim
in order to obtain release of the REBEL from storage.”
The district court had before it testimony from Ms. Sogie Ebolo—the
managing director of GIC—who testified that she made an effort to secure a
bond for the REBEL but was unable to do so because she was told by her
attorney that IMC would not accept a bond issued from Nigeria and because
bond companies in the United States would not issue a bond for property
located in foreign territory. IMC counters with Mr. Jackson’s (IMC’s corporate
representative) testimony “that IMC was never asked about the possibility of
accepting a Nigerian bond.” At most, then, IMC has shown merely that there
is conflicting testimony on this issue. But where “there are two permissible
views of the evidence, the factfinder’s choice between them cannot be clearly
erroneous,” and “[f]indings based on the credibility of witnesses demand even
greater deference.” Omega Protein, 548 F.3d at 367 (quotation marks omitted).
C.
We now address the district court’s allocation of the damages between
Freightplus and IMC. The judgment requires IMC to reimburse Freightplus
for 30 percent of the damages award. Both Freightplus and IMC challenge this
determination. Freightplus contends that because it was entitled to indemnity,
the district court should have required IMC to reimburse it for 100 percent of
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the judgment. 19 For its part, IMC claims that because Freightplus is a majority
at fault, it is not entitled to any recovery.
1.
Ever since the Supreme Court’s decision in United States v. Reliable
Transfer Co., 421 U.S. 397 (1975), we have steadily cabined the availability of
tort indemnity and “eliminated virtually every variety of tort indemnity once
available under maritime law.” Hardy, 949 F.2d at 833 (“This Circuit
recognized . . . that comparative fault displaces the traditional concept of tort
[indemnity].”). In its place, we have adopted a “comparative fault” system
where “damages in most cases should be allocated according to the respective
fault of the liable tortfeasors.” Id. (“A comparative fault system . . . apportions
fault among joint tortfeasors in accordance with a precise determination, not
merely equal or all-or-none.” (quoting Loose, 670 F.2d at 501)). Full indemnity
is now reserved for those circumstances “where proportionate degrees of fault
cannot be measured and determined on a rational basis,” or where the party
claiming indemnity is one “on which the law imposes responsibility even
though [it] committed no negligent acts”—i.e., was not at fault. Id.
Our cases have consistently held that partial fault is incompatible with
full indemnity. In Seal Offshore, we reviewed a decision in which a third-party
defendant was required to pay full indemnification based on an “implied
indemnity theory” in maritime law, even though both parties were found at
fault. 736 F.2d at 1080, 1082. Recognizing that our precedent “establish[ed]
19 Freightplus argues in the alternative that the district court erred in concluding that
it was negligent. While the district court did not find Freightplus “negligent” per se, it did
find that the limitation of liability in the Carriage of Goods by Sea Act, 46 U.S.C. § 1300, et
seq., did not apply because Freightplus had effected an unreasonable deviation. The validity
of that issue, however, is not before us. As noted, this court previously entered an order
“dismiss[ing] . . . those aspects of the Second Amended Judgment in favor of [GIC] and
against [Freightplus] ONLY.” The unreasonable deviation issue was the basis for the
judgment against Freightplus and in GIC’s favor.
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that comparative fault principles apply in maritime cases involving both
negligence and strict liability,” we reversed the award of full indemnity
because damages “must be apportioned according to the relative fault” of the
defendant and third-party defendant. Id. at 1082. Likewise, in Loose, we
reversed an award of full indemnification where, as in Seal Offshore, the
indemnitee was found partially at fault. See Loose, 670 F.2d at 500–02
(reversing indemnitee award and instructing district court to “instruct the jury
to assess the relative degree of responsibility of each party for the plaintiff’s
injuries”); cf. Marathon Pipe Line Co. v. Drilling Rig ROWAN/ODESSA, 761
F.2d 229, 236 (5th Cir. 1985) (upholding award of full indemnity where the
“[a]ctual fault” rested with the indemnitor and so the indemnitor “may,
therefore, seek full indemnity”).
Our decision in Sea-Land Service, Inc. v. Crescent Towing & Salvage Co.,
42 F.3d 960 (5th Cir. 1995) is also informative. There, a defendant sued a third-
party defendant “for indemnification” for a judgment against it. Id. at 962. The
district court concluded that both were partially at fault and assessed damages
accordingly, but also awarded attorneys’ fees to the defendant. Id. The parties
disputed the availability of the attorneys’ fees award, with the outcome turning
on whether the award was based on a theory of indemnity (where attorneys’
fees may be awarded) or contribution (where they may not). Id. at 963. We held
that “[the defendant’s] partial fault preclude[d] full indemnification,” and so it
was “entitled to contribution (or partial indemnity) . . . and no more.” Id.
(“Indemnification was not awarded and [would not be] appropriate in th[e] case
because both [parties] were found to be at fault.”). 20 On this basis, we
disallowed attorneys’ fees. Id.
20 Scholarly sources also agree that “[t]ort indemnity is . . . limited to cases where a
non-negligent or vicariously liable tortfeasor is entitled to indemnity from a person who is
guilty of actual fault.” 1 Thomas J. Schoenbaum, Admiralty & Maritime Law § 5-19, at 340
20
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These precedents scuttle Freightplus’s claim for full indemnity.
Freightplus was undeniably found to be partially at fault, and that decision is
no longer being challenged by Freightplus. Moreover, while both parties
contest the district court’s findings of fault, neither party has suggested that
the “proportionate degrees of fault” in this case “cannot be measured and
determined on a rational basis.” Hardy, 949 F.2d at 833. Under our case law,
Freightplus may not recover full indemnity from IMC, but may (at most)
recover partial indemnity.
2.
Just as we reject Freightplus’s argument for full indemnity, we also
reject IMC’s argument that Freightplus is barred from even partial indemnity
because it was found to be a majority at fault. 21 In essence, IMC is urging us
to adopt a modified comparative fault rule, where damages are divvied out
proportionate to fault except where the party claiming indemnification is more
than 50 percent at fault.
We reject this argument for the same reasons just discussed. While our
cases have precluded full indemnity where the party seeking indemnification
is partially at fault, we have consistently permitted partially at-fault parties
to obtain partial recovery proportionate to the fault of the other parties. See
Loose, 670 F.2d at 495, 501–02; Seal Offshore, 736 F.2d at 1082. Thus, while a
partially at-fault indemnitee is not entitled to full indemnification, it may be
“entitled to a contribution (or partial indemnity).” Sea-Land, 42 F.3d at 963
(5th ed. 2011); see also 2 Thomas J. Schoenbaum, Admiralty & Maritime Law § 10-39, at 177
(3d ed. 2001) (“Indemnity is properly allowed only when the one seeking indemnity is not
guilty of any fault or breach of duty.”); 2 Benedict on Admiralty 1-67–71 (Matthew Bender
2013).
21 In its third-party complaint, Freightplus specified that it was seeking contribution
from IMC. Though its later pleadings focus on the indemnity issue, Freightplus still indicated
that it was seeking contribution.
21
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(emphasis added). We are not aware of any authority (and IMC has cited none)
indicating that the comparative fault approach we have adopted does not apply
when the party seeking indemnity was more at fault than the indemnifying
party. To the contrary, the “comparative fault system . . . apportions fault
among joint tortfeasors in accordance with a precise determination, not merely
equally or all-or-none.” Hardy, 949 F.2d at 833 (emphasis added). We see no
basis for charting a new course here.
The district court assigned 70 percent of the fault to Freightplus and 30
percent to IMC, and neither party has challenged the specific percentages
chosen. We therefore uphold the district court’s requirement that IMC
indemnify Freightplus for 30 percent of the judgment in GIC’s favor.
D.
Under the original judgment, the district court required IMC to pay 30
percent of Freightplus’s attorneys’ fees. However, in response to IMC’s Rule 59
motion, the district court amended its judgment to exclude this liability.
Freightplus has appealed the district court’s exclusion of the attorneys’ fees
award. The availability of attorneys’ fees—as opposed to the amount
awarded—is a question of law that we review de novo. See Hester v. Graham,
Bright & Smith, P.C., 289 F. App’x 35, 44 (5th Cir. 2008) (“Because the issue
of which party is entitled to attorneys’ fees is a legal issue, this court reviews
this award of attorneys’ fees de novo.”); see also Sea-Land, 42 F.3d at 963
(reviewing availability of attorneys’ fees without deference).
In Odd Bergs Tankrederi A/S v. S/T Gulfspray, 650 F.2d 652 (5th Cir.
1981), we observed that “courts have generally denied a right to contribution
for attorney’s fees and expenses incurred in defense of the action brought by
the injured party,” but have allowed recovery of attorneys’ fees in the
indemnification context. Id. at 653–54. The rationale for this distinction is that
in the indemnity context, the indemnitee’s liability “is normally the result of
22
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the act of the indemnitor, who bears the ultimate responsibility for the entire
loss.” Id. at 654. Attorneys’ fees are recoverable by the indemnitee in these
circumstances because “the indemnitee is required to defend [the] action by an
injured party because of the wrongdoing of the indemnitor.” Id. at 654
(emphasis added). By contrast, where the party seeking attorneys’ fees is
defending against charges of its own wrongdoing, “incurring expenses [on
attorneys’ fees] . . . would be necessary even if there were no other tortfeasors,”
and so they are “not recoverable in contribution from the other negligent
parties.” Id. at 653, 655; id. at 654 (recovery of attorneys’ fees not allowed
where party “would incur the same legal expenses whether or not other parties
were partly at fault for the loss”).
We applied these principles in Sea-Land. There, a defendant found liable
sought indemnification from a third party. Sea-Land, 42 F.3d at 962. The
district court allocated damages according to the parties’ fault, but also
awarded attorneys’ fees. Id. The party awarded attorneys’ fees claimed that
Odd Bergs’s rule did not apply because it “[was] not claiming recovery under a
contribution theory” but was rather seeking indemnification. Id. at 963
(emphasis added). We rejected this argument, holding instead that
indemnification “[was] not appropriate in [that] case because [both parties]
were found to be at fault,” and so the defendant was only “entitled to a
contribution (or partial indemnity). . . and no more.” Id.
There is no doubt that Freightplus’s claim against IMC was litigated
under a theory of indemnity. The critical question, however, is not whether the
theory of recovery is one of “indemnity” or “contribution”; it is whether the
justifications articulated in Odd Bergs and Sea-Land for allowing recovery of
attorneys’ fees in the typical indemnity context, and not in the contribution
context, are present. Here, they are not. Freightplus was not held liable to GIC
as a faultless party; the district court held Freightplus liable to GIC because of
23
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Freightplus’s “failure to ensure an accurate bill of lading,” and GIC’s
detrimental reliance on Freightplus’s misrepresentations. Thus, Freightplus’s
liability flows from its own conduct, and so the attorneys’ fees expended in that
defense “would be necessary even if” IMC were not involved. Odd Bergs, 650
F.2d at 653. Freightplus’s claim to attorneys’ fees is unmoored from the
justifications for allowing attorneys’ fee awards in the indemnity context.
We therefore agree with the district court’s determination that
Freightplus is not entitled to recover attorneys’ fees from IMC. 22
E.
GIC agreed to pay Freightplus $111,000 for its services. Of this amount,
Freightplus agreed to pay Yacht Path $85,000, and Yacht Path agreed to remit
$70,000 to IMC. Though GIC paid the amount it owed to Freightplus, and
Freightplus paid the amount it owed to Yacht Path, Yacht Path did not remit
the monies owed to IMC. The district court held that Freightplus was liable to
IMC for the unpaid freight and so awarded IMC $70,309.12, plus pre-judgment
interest. We review pure questions of law and mixed questions of law and fact
de novo. Trinity Indus., 757 F.3d at 407.
The district court relied on a variety of factors to conclude that
Freightplus, rather than GIC, is liable for IMC’s freight. Critically, Freightplus
22 Freightplus cites the Eleventh Circuit’s decision in Insurance Co. of N. Am. v. M/V
Ocean Lynx, 901 F.2d 934 (11th Cir. 1990) as establishing that “sole fault or liability on the
part of the indemnitor is not a prerequisite to an award of attorneys’ fees.” Ocean Lynx does
not support this rule because it does not appear that the indemnitee’s liability in that case
resulted from any “fault” or wrongdoing on its part. See Ocean Lynx, 901 F.2d at 941; see also
SPM Corp. v. M/V Ming Moon, 22 F.3d 523, 526–27 (3d Cir. 1994) (awarding indemnity
where there was “no allegation that the [NVOCC] did anything wrong” and its “liability arose
entirely from its contractual relationship with [the shipper] and was trigger by the [ocean
carrier’s] negligence”).
24
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does not argue on appeal that GIC is liable for IMC’s freight; Freightplus’s
argument is instead that IMC released it from liability for freight. 23
In Strachan Shipping Co. v. Dresser Indus., Inc., 701 F.2d 483 (5th Cir.
1983) 24 a shipper remitted payment to a freight forwarder, but the freight
forwarder did not remit the funds intended for the carrier. Id. at 484–85. The
district court found that the carrier had “extended credit” to the freight
forwarder, thus relieving the shipper of freight liability. Id. at 489. In
reversing, we held that the relevant question for determining whether a carrier
has released the shipper from freight liability is “not whether the carrier
extended credit to the forwarder, but whether the carrier[ ] intended to release
[the shipper] from its obligations and look solely to the forwarder for payment.”
Id. Whether such an intent for release exists “necessarily depends upon the
course of dealings of the particular parties, and must be judged from the
totality of the circumstances.” 25 Id.
Applying this approach, we concluded that the carrier did not intend to
release the shipper. While the carrier “initially directed its collection efforts to”
23 Freightplus does argue that because it is not listed as a “merchant” on IMC’s non-
negotiable bill of lading, it cannot be liable for IMC’s freight. However, Freightplus does not
develop this argument beyond a conclusory sentence, and so we do not consider it. United
States v. Bates, 850 F.3d 807, 811 n.2 (5th Cir. 2017) (“Because he has failed to adequately
develop this insufficiency argument, it is waived. ‘Failure of an appellant to properly argue
or present issues in an appellate brief renders those issues abandoned.’” (quoting United
States v. Beaumont, 972 F.2d 553, 563 (5th Cir. 1992))). In any event, we find this argument
questionable at best because the IMC non-negotiable bill of lading does not include space for
a “merchant” to be listed.
24 The district court distinguished Strachan in the process of concluding that GIC was
not liable for IMC’s freight, relying on the fact that the shipper in Strachan was liable under
a credit agreement. Strachan, 701 F.2d at 485–86.
25 This rule has been adopted by multiple other circuits. See Hawkspere Shipping Co.,
Ltd. v. Intamex, S.A., 330 F.3d 225, 238 (4th Cir. 2003) (“The shipper’s duty to pay freight is
not discharged, absent evidence that the [ocean] carrier has actually released the shipper
from its duty to pay . . . .”); Nat’l Shipping Co. of Saudi Arabia v. Omni Lines, Inc., 106 F.3d
1544, 1545–47 (11th Cir. 1997); Oak Harbor Freight Lines, Inc. v. Sears Roebuck & Co., 513
F.3d 949, 959 (9th Cir. 2008).
25
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the freight forwarder, this fact was “not conclusive.” Id. We also observed that
the designation “freight prepaid” on the bill of lading issued by the carrier to
the freight forwarder “indicat[ed] that [the carrier] did not intend to relieve
[the shipper] of its obligation[s].” Id.
Relying on Strachan, Freightplus points to several factors as showing
that IMC intended to release it from liability. First, Freightplus argues that
IMC’s practice of “providing service [to Yacht Path] without contemporaneous
receipt of payment is an extension of credit” indicative of an intent to seek
freight payment exclusively from Yacht Path. Second, the fact that IMC sought
to recover its freight from Yacht Path in the latter’s bankruptcy proceeding is,
Freightplus argues, also evidence of this intent. Third, Freightplus points to
the fact that IMC’s non-negotiable bill of lading is marked freight “prepaid,”
and argues further that IMC is estopped from recovering its freight from
Freightplus.
Strachan addressed how to determine whether the primary shipper—as
opposed to an intermediary—has been released from freight liability by an
ocean carrier. While Freightplus is not a shipper in this sense, both parties
operate under the assumption that Strachan’s framework also applies to
determine whether an ocean carrier has released an intermediary from freight
liability. We see no reason why Strachan’s approach for deciding whether an
ocean carrier has released an entity from liability should not apply when it is
an intermediary, rather than the primary shipper, being sued for unpaid
freight.
We conclude that IMC did not release Freightplus from liability for its
freight. First, even assuming that IMC’s alleged practice of providing service
to Yacht Path in other transactions without “contemporaneous receipt of
payment” is an extension of credit in the relevant sense (Freightplus cites no
authority indicating that it is), our decision in Strachan rejected the argument
26
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that an extension of credit is itself a sufficient indication of a carrier’s intent
to release a shipper from freight liability. Strachan, 701 F.2d at 489. There
must be some indication that the extension of credit was intended to serve as
a release of liability. There is no logical reason to conclude that IMC intended
to look to Yacht Path alone simply because IMC previously provided services
to Yacht Path without contemporaneous payment. See Strachan, 701 F.2d at
489–90 (finding no intent to release from liability despite extension of credit).
We also reject Freightplus’s second argument. In Strachan, we held that
a shipper was not relieved of freight liability to a carrier even though the
carrier had “initially directed its collection efforts to” the freight forwarder. Id.
at 489. Here also, the fact that IMC sought payment for freight from Yacht
Path in the bankruptcy proceeding is not sufficient to show an intent on IMC’s
part to release Freightplus. Id.
Last, we cannot divine an intent to release Freightplus from liability
solely because of the “freight prepaid” designation on IMC’s draft bill of lading.
Apart from simply stating the fact that IMC’s draft bill of lading listed freight
as prepaid, Freightplus provides no explanation for why this indicates an
intention by IMC to release Freightplus from liability. In Strachan, we did not
accept the simple fact of a “freight prepaid” designation as establishing an
intent to release, and we will not do so here. 26 Strachan, 701 F.2d at 489.
As we observed in Strachan, “there is no economically rational motive
for the carrier” to release entities from liability: “[t]he more parties that are
liable, the greater the assurance for the carrier that he will be paid.” 701 F.2d
at 490. Given this reality, we are loath to find release absent a clear indication
26 See also Nat’l Shipping Co., 106 F.3d at 1547 (finding fact issue as to intent to
release on facts nearly identical to Strachan); Hawksphere, 330 F.3d at 238 (adopting
Strachan’s rule).
27
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of the carrier’s intent. Accordingly, because Freightplus has not demonstrated
that IMC intended to release it from liability for the unpaid freight, we affirm
the district court’s judgment in this regard.
F.
While holding that Freightplus was liable to IMC for its unpaid freight,
the district court also determined that IMC could not recover its freight from
GIC by bringing an in rem action against the REBEL. Relying on out-of-circuit
precedent and “principles of equity,” the district court concluded that such
recovery would impermissibly subject GIC to double payment—the first
payment being its payment of $111,000 to Freightplus. We review legal issues
and mixed-questions of law and fact de novo and any underlying factual finding
for clear error. See Trinity Indus., 757 F.3d at 407.
“Under United States law, it has been settled for over a century that we
presume a maritime lien exists in favor of a shipowner on cargo for charges
incurred during the course of its carriage.” Arochem Corp. v. Wilomi, Inc., 962
F.2d 496, 499 (5th Cir. 1992); see The Bird of Paradise, 72 U.S. 545, 554 (1866));
see also 2 Benedict on Admiralty § 44 (Matthew/Bender 2013) (“[M]aritime law
permits an action in rem against the cargo itself . . . .”). Under this well-
established principle, IMC obtained a maritime lien against the REBEL in
rem. The district court recognized these principles but concluded that IMC
could not exercise a maritime lien against the REBEL in rem by relying on a
“well-reasoned consensus” that a shipper is relieved of liability for freight
where the shipper has (1) remitted payment for freight to an intermediary and
(2) where the ocean carrier’s bill of lading is marked freight prepaid.
We disagree. As already discussed, we articulated the standard for
determining whether a shipper has been released from freight liability by the
ocean carrier in Strachan. See 701 F.2d at 489–90. There we held that this
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inquiry must focus on the ocean carrier’s intent, which is determined from the
“totality of the circumstances.” Id. at 489.
The district court did not follow the course set by Strachan, though
recognizing that Strachan was “contrary” to the rule is applied. In Strachan,
we rejected the argument that a “freight prepaid” designation on a bill of lading
is necessarily sufficient. 701 F.2d at 489. Likewise, we made clear that the
carrier’s intent is paramount, and so we cannot discern anything about IMC’s
intent from GIC’s act of remitting payment to an intermediary. Cf. Strachan,
701 F.2d at 489. In short, neither of the district court’s reasons evidence an
intent by IMC to release its maritime lien against the REBEL.
We recognize that Strachan involved an action for freight against the
shipper itself, whereas here IMC seeks to recover against the REBEL in rem.
In both situations, however, the relevant question is whether the ocean carrier
took action to release a source liable for unpaid freight from liability. We see
no reason to apply a different standard for discerning a carrier’s intent to
release in the context of an in personam action than an in rem action. 27 We
therefore conclude that the district court erred in barring IMC’s maritime lien
against the REBEL in rem. 28
On appeal, GIC does not defend the district court’s rationale. It instead
argues that the REBEL is not subject to a maritime lien because “there must
exist privity of contract” between the cargo owner and the ocean carrier in
27 We do not suggest that in personam and in rem actions are to be treated identically
in all respects or that standards applicable to one type of action are necessarily applicable to
the other. Instead, we merely recognize that when it comes to discerning whether the carrier
effected a release of liability—whether in the context of an in personam or in rem action—
courts should look to whether the carrier intended such a release and should assess this
intent based on the totality of the circumstances.
It is true that a maritime lien can be waived. See 2 Benedict on Admiralty § 44
28
(Mathew Bender 2013). GIC has made no argument to this effect.
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order for a maritime lien to attach. For this, GIC relies on our decision in Lykes
Lines Ltd. v. M/V Bbc Sealand, 398 F.3d 319 (5th Cir. 2005).
GIC misreads Lykes. That decision acknowledged that “maritime law
recognizes a lien arising as a matter of law in favor of the vessel owner against
the cargo for charges including unpaid freight.” Lykes, 398 F.3d at 323. An
exception to this rule applies “when cargo is shipped under a charter,” in which
case “[the] lien only extends to cargo that is owned by the charterer.” Id.
(emphasis added). A “charter” is a maritime term for the contract arising
between the shipowner and the party leasing the ship to transport cargo. See
BLACK’S LAW DICTIONARY 285 (10th ed. 2009) (“charter” and “charterparty”).
But not all contracts for maritime transportation are charters. A charter “is a
specialized form of contract for the hire of an entire ship.” 2 Schoenbaum,
Admiralty & Maritime Law, § 11-1 (West 2001) (emphasis added). These are
contracts securing “private carriage,” as distinct from carriage by a “common
carrier” who “is available to carry cargo for all who agree to pay its charges.” 8
Benedict on Admiralty § 18.01 (Matthew/Bender 2013).
The REBEL was not shipped under a charter, and no party has argued
that it was. While Yacht Path arranged for the REBEL to be shipped upon
IMC’s vessel, it did not “hire [the] entire ship” or otherwise secure private
carriage for the REBEL. 2 Schoenbaum, Admiralty & Maritime Law, § 11-1; 8
Benedict on Admiralty § 18.01. Mr. Cummings of Yacht Path confirmed that
the REBEL was not shipped under a charter. Lykes has no bearing here.
Accordingly, we hold that the district court erred in barring IMC from
proceeding against the REBEL in rem. 29
Because we conclude that IMC has a right to exercise its maritime lien against the
29
REBEL in rem, we need not address the issue of IMC’s contractual lien against the REBEL.
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III.
We have come at long last to the end of our own voyage through the
assorted issues raised by this appeal and, save for one issue, we drop anchor
at the same destination as the district court. Accordingly, we REVERSE the
district court’s judgment disallowing IMC’s in rem action against the REBEL
and AFFIRM the judgment in all other respects.
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LESLIE H. SOUTHWICK, Circuit Judge, dissenting in part.
My disagreement with the majority concerns its analysis of the issue of
authentication of the invoice from Visifi Nigeria Limited. I do not believe there
was a stipulation. Accordingly, the exhibit on which most of the damage award
is based was never properly admitted into evidence.
There were two documents that allegedly provided evidence of the
REBEL’s storage costs. One was the Visifi invoice. The other was an invoice
from Julius Berger Services, the party storing the REBEL. The two documents
are quite different. The Visifi invoice lists “demurrage” fees at $1,400 per day,
totaling over $1 million by the end of January 2015. The Julius Berger invoice
lists “Tug storage” at $220 per day, totaling $120,120 as of March 25, 2015.
The Visifi invoice lists security fees, a national inland waterway fee,
impoundment fees, and overhauling fees, totaling over $400,000. The Julius
Berger invoice lists stevedoring fees, mooring fees, labor and documentation
fees, and taxes, totaling approximately $17,000. The Visifi invoice provides a
Lagos, Nigeria address. The Julius Berger invoice provides a Warri, Nigeria
address. The Visifi invoice lists a grand total of $1,460,200 as of the end of
January 2015. The Julius Berger invoice lists a grand total of $151,169.08 as
of April 13, 2015. The parties dispute whether these documents complement
one another or offer alternative calculations of storage-related costs.
The Julius Berger invoice was admitted without objection in the district
court. Before trial, GIC submitted the Julius Berger invoice to the court as “a
true and correct copy of its damages reflected in and to supplement [the Visifi
invoice].” During trial, GIC’s witness testified regarding the “demurrage”
charges it was incurring from Julius Berger. At the end of trial, GIC moved to
enter the Julius Berger invoice into evidence without objection, informing the
court that the invoice reflects “[t]he storage charges.”
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Freightplus and IMC consistently objected to the introduction of the
Visifi invoice in the district court, and that document was never discussed at
trial. Two months before trial, the parties objected to the Visifi invoice because
they alleged it was not produced during the discovery period, was not relevant,
and was not properly authenticated. The district court overruled most of the
objections, but it deferred on authentication because the document could “be
authenticated at trial by witness testimony.”
In a proposed pretrial order filed the week before trial, GIC listed the
exhibits it planned to introduce at trial. The list included the Visifi invoice and
four other exhibits that Freightplus and IMC objected to on grounds of
authentication: “Shell Petroleum Contract and all related documents, P.O. No:
4510244867,” “ZED Energy Contract and all related documents, ZED 1021012
PO No. ZED/GIC/13/VOL.11/09,” “Shell Petroleum Contract and all related
documents PO No. 4510330438: $1,047,000.00,” and the “GIC Agency
Authorization from GIC Oil and Gas Services, Ltd.” The proposed pretrial
order also listed Godwin Ebolo as a GIC witness, saying this about his proposed
testimony:
Mr. Ebolo will give testimony in his capacity as managing
director of GIC Oil and Gas Services, LTD regarding the
relationship between the two entities. His testimony is also
necessary to authenticate Shell Petroleum Contract and all related
documents, P.O. No: 4510244867, ZED Energy Contract and all
related documents, ZED 1021012 PO No. ZED/GIC/13/VOL.11/09,
Shell Petroleum Contract and all related documents PO No.
4510330438: $1,047,000.00, and GIC Agency Authorization from
GIC Oil and Gas Services, Ltd.
GIC did not explain in the proposed pretrial order how it would authenticate
the Visifi invoice. It did, however, note that it would call “[a]ny witness needed
to authenticate any documents that cannot be agreed to by stipulation.”
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The final pretrial order continued to list the Visifi invoice, the three
contracts, and the agency agreement as GIC exhibits. It also noted the
objections filed by Freightplus and IMC. The final pretrial order did not list
Godwin Ebolo as a GIC witness, but it continued to state GIC would call “[a]ny
witness needed to authenticate any documents that cannot be agreed to by
stipulation.”
At trial, GIC called Godwin Ebolo to testify. The following exchange took
place:
[GIC]: Your Honor, I’d like to call Mr. Godwin Ebolo as my
authentication federal witness.
[Freightplus]: Your Honor, we would object to this witness
testifying. He was not listed in the pretrial order. To the extent
that he’s called specifically for a Rule 901 authentication, we will
stipulate, and I think —
[IMC]: We’ll stipulate as well, Your Honor.
[GIC]: All right. And that’s all he was going to testify to, nothing
substantive, just to authenticate those documents that Freightplus
and IMC both objected to, which are the three contracts and the
agency agreement.
THE COURT: All right. So do we have a stipulation?
[Freightplus]: Yes. As far as Freightplus, yes.
[IMC]: As far as IMC as well.
THE COURT: Okay. Well, sir, you can go home. Oh, you still want
to call him?
[Freightplus]: He’s been excused.
[GIC]: Oh, wait.
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[Freightplus]: We stipulated to authentication. There’s no — if
that’s the only purpose he would be testifying.
[GIC]: Yeah. He’s testifying for authentication.
[Freightplus]: We’ve stipulated to authentication.
[GIC]: Oh, you have?
[Freightplus]: Yes.
[GIC]: Oh, all right. I’m sorry. I heard you wrong.
[Freightplus]: No.
[GIC]: Okay.
THE COURT: So you can go home.
Whether this stipulation extended to the Visifi invoice, or just “the three
contracts and the agency agreement,” is the central dispute.
After trial, the district court awarded over $1.8 million to GIC based
almost entirely on the Visifi invoice, which it relied on instead of the Julius
Berger invoice. Both Freightplus and IMC filed Rule 59(e) motions in which
they objected to the district court’s use of the Visifi invoice. They argued the
invoice was not properly authenticated and did not accurately represent the
REBEL’s storage charges, which were detailed in admitted invoices provided
by Julius Berger — the entity actually storing the REBEL.
The district court denied the Rule 59(e) motions. Pointing to the portion
of the trial transcript reproduced above, the court concluded that “counsel for
both Freightplus and IMC apparently proffered a blanket Rule 901
authentication stipulation for Godwin Ebolo’s testimony before GIC’s counsel
then responded regarding the documents to be authenticated.” The court
explained that it “fairly took the intent of counsel for Freightplus and IMC to
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be to stipulate as to authentication generally.” The court also rejected the
argument that it was clear and manifest error to find the Visifi document “a
more credible foundation for determining GIC’s damages” than the Julius
Berger invoice.
IMC later filed a Rule 60(b) motion notifying the court of new evidence
demonstrating that the Visifi invoice did not accurately reflect storage charges
for the REBEL. This new evidence was a document just like the original Julius
Berger invoice but updated to reflect current charges. The total demanded in
the invoice for release of the REBEL was just over $186,000. IMC argued this
document demonstrated that the Julius Berger invoice represented accurate
storage-related costs and suggested that GIC knew the invoice represented
accurate costs because Julius Berger was demanding payment from GIC. The
district court denied the motion.
Freightplus has settled with GIC, but IMC continues to argue that the
district court erred in awarding damages to GIC based on the Visifi invoice.
Whether the invoice was ever authenticated is the issue.
“Authentication is a condition precedent to the admission of evidence and
is satisfied when a party presents evidence sufficient ‘to support a finding that
the item is what the proponent claims.’” United States v. Barnes, 803 F.3d 209,
217 (5th Cir. 2015) (quoting FED. R. EVID. 901(a)). We review challenges to
evidentiary rulings for abuse of discretion. See EMJ Corp. v. Hudson Specialty
Ins. Co., 833 F.3d 544, 551 (5th Cir. 2016). “We only reverse if ‘substantial
prejudice’ resulted from the error.” Id. “Resolution of preliminary factual
questions concerning the admissibility of evidence are reviewed for clear
error.” Meadaa v. K.A.P. Enters., L.L.C., 756 F.3d 875, 880 (5th Cir. 2014).
“[A] finding is clearly erroneous ‘when although there is evidence to support it,
the reviewing court on the entire evidence is left with the definite and firm
conviction that a mistake has been committed.’” Fed. Sav. & Loan Ins. Corp.
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v. Texas Real Estate Counselors, Inc., 955 F.2d 261, 265 (5th Cir. 1992) (quoting
United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948)).
I find clear error. GIC, the party introducing the authentication witness,
clearly defined the scope of the stipulation to include “the three contracts and
the agency agreement.” The scope of the stipulation must have made sense to
the parties, because the proposed pretrial order that listed Godwin Ebolo as a
witness stated he would authenticate three contracts and one agency
agreement. The stipulation at trial did not mention the Visifi invoice.
The majority characterizes the transcript as showing that Freightplus
and IMC offered to stipulate before GIC interjected with “qualifying language.”
There is no indication, however, that the parties offered a “blanket stipulation.”
Looking at the context, the transcript makes clear that before Freightplus
could complete its sentence, IMC jumped in to say it would also stipulate, and
GIC immediately responded, “All right. And that’s all he was going to testify
to, nothing substantive, just to authenticate those documents that Freightplus
and IMC both objected to, which are the three contracts and the agency
agreement.” Only then — after GIC’s statement — did the district court ask
the parties, “So do we have a stipulation?” At that point, what was explicitly
before the court as an explanation of the stipulation, to which no one objected,
is that it applied to the three contracts and the agency agreement, not the Visifi
invoice.
The Visifi invoice is especially problematic because GIC wholly failed to
explain it in the district court, yet it alone supports the majority of the damages
awarded to GIC. As already noted, GIC introduced the Julius Berger invoice
to the court before trial as “a true and correct copy of its damages reflected in
and to supplement” the Visifi invoice. At trial, GIC’s witness testified about
“demurrage” charges from Julius Berger, not Visifi. At the end of the trial, it
was GIC who moved to introduce the Julius Berger invoice into evidence
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without objection, explaining to the court that the Julius Berger invoice
reflected “[t]he storage charges.” There is no dispute that Julius Berger stored
the REBEL. GIC provided no information at all about the Visifi invoice. Its
relevance remains obscure, to say the least, though the district court found it
relevant. As IMC points out, “there is no explanation anywhere in the record
of who Visifi Nigeria Limited is, why they are providing the document, and
from where the information contained within the document is obtained.”
In light of both the district court’s and my colleagues’ contrary view,
there must be reasonable doubt about what the stipulation covered despite my
sense there is none. Consequently, instead of simply holding that the Visifi
invoice never was authenticated and it is too late now, I would reverse and
remand to the district court for a hearing on the Visifi invoice that would allow
it to be authenticated if that can be done, and also a new decision as to its
relevance once someone explains what Visifi is.
I respectfully dissent on that issue.
38