Gaines Towing & Transportation, Inc. v. Atlantia Tanker Corp.

UNITED STATES COURT OF APPEALS
For the Fifth Circuit

No. 98-20283

GAINES TOWING AND TRANSPORTATION INCORPORATED,

Plaintiff-Appellee-Cross-Appellant,

v.

ATLANTIA TANKER CORPORATION; ET AL,

Defendants,

ATLANTIA TANKER CORPORATION;
NORTH AMERICAN SHIP AGENCIES;
GENERAL SHIP SERVICE INCORPORATED,

Defendants-Appellants-Cross-Appellees.

Appeals from the United States District Court
For the Southern District of Texas
October 19, 1999

Before REAVLEY, HIGGINBOTHAM, and DENNIS, Circuit Judges.
PER CURIAM:

Atlantia Tanker Corporation, North American Ship Agencies, and General Ship

Services, Inc., appeal from the district court’s determination that the M/T ATLANTIA, a

tanker, was solely at fault for damages sustained by the M/V PATRICIA, a tug owned

by Gaines Towing and Transportation, Inc. (Gaines Towing). The M/V PATRICIA

moored at a dock on the Houston Ship Channel to unload a shipment of sand. After

securing the barge and tug, the captain contacted the Coast Guard to obtain a slow bell

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broadcast, which is a request that passing vessels significantly reduce their speed. The

M/T ATLANTIA reduced its speed to 6.3 knots in response to the slow bell.

Nonetheless, when the tanker passed the M/V PATRICIA it created a wall of water three

to four feet high which caused the tug to surge back and forth. The M/V PATRICIA

struck the rear retaining wall of the berth and sustained extensive damages as a result

of the surge incident. Gaines Towing filed suit against the M/T ATLANTIA, in rem, and

North American Ship Agencies and General Ship Services, in personam, to recover the

cost of repairing the tug and lost profits.

The district court found that the M/V PATRICIA was properly moored at the time
of the surge incident and that the M/T ATLANTIA proceeded through the channel at the

minimum speed necessary to maintain control over its steerage. The district court then

concluded that the M/T ATLANTIA should have taken additional precautions given that

it knew the configuration of the berth, had been forewarned about other traffic and chose

to proceed without the benefit of tug boats. After concluding that the M/V PATRICIA

prevailed on the liability claim, the district court awarded $198,868 for damages and

$15,000 for lost profits.

Both parties agree that the district court did not have in rem jurisdiction over the

M/T ATLANTIA. Therefore, we reverse and set aside the in rem judgment against the
M/T ATLANTIA.

After reviewing the record and considering the parties’ written and oral

arguments, we affirm the district court’s rulings on the issue of liability for essentially the

same reasons stated by the district court in its memorandum opinion. See Gaines

Towing & Transportation, Inc. v. Atlantia Tanker Corp., No. 96-2339 (S.D. Tex. Feb. 2,

1998). However, the district court’s award of damages and lost profits appears to have

been based on errors of law and possibly on clearly erroneous findings of fact as well.

The proper measure of damages in a tort action “‘is to place the injured person

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as nearly as possible in the condition he would have occupied if the wrong had not

occurred.’” Pizani v. M/V Cotton Blossom, 669 F.2d 1084, 1088 (5th Cir. 1982) (quoting

Freeport Sulphur Co. v. S/S Hermosa, 526 F.2d 300, 304 (5th Cir.1976)). As corollaries

to this general rule, a defendant cannot be held liable for damages that he has not been

shown to have caused, or for the cost of repairs that enhance the value of the damaged

property compared with its pretort condition. Id.

When a vessel is damaged in a collision or other marine casualty, the amount of

recovery depends on whether it is deemed a total (or constructive total) loss or whether

its partial damage justifies repair. See 2 Thomas J. Schoenbaum, Admiralty and
Maritime Law §14-6, at 278 (1994). A vessel is considered a constructive total loss

when the damage is repairable but the cost of repairs exceeds the fair market value of

the vessel immediately before the casualty. See Ryan Walsh Stevedoring Co. v. James

Marine Services, Inc., 792 F.2d 489, 491 (5th Cir. 1986). In such a case repair is not

economically practicable, and the market value of the vessel is the ceiling of recovery.

See Pizani, 669 F.2d at 1088; O’Brien Bros v. The Helen B. Moran, 160 F.2d 502, 505

(2d Cir. 1947). Damages for loss of use may not be awarded when the vessel is a

constructive total loss. Ryan Walsh Stevedoring, 792 F.2d at 491. When a damaged

vessel is not a total loss, the owner is entitled to recover the reasonable cost of repairs
necessary to restore it to its precasualty condition. See The Tug June S v. Bordagain

Shipping Co., 418 F.2d 306, 307 (5th Cir. 1969) (citing The Baltimore, 75 U.S. 377

(1869)).

The district court, in its memorandum opinion, remarked that “the damages may

have exceeded the value of the vessel and, therefore, loss of income is essentially out

of the question.” (Emphasis added). Nevertheless, the district court awarded the

plaintiff both damages for the cost of repairs to the M/V Patricia in the amount of

$198,868 and “lost income” in the amount of $15,000 “because the time expended

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completing repairs was excessive, in light of the damages.” Thus, the district court

erred as a matter of law in failing to make a clear determination of whether the damages

exceeded the value of the vessel and in failing to apply consistently the appropriate

legal principles required by that determination. If the vessel was a constructive total

loss, the court should have awarded damages in an amount equal to the pre-collision

market value of the vessel, as determined by the court, and should not have awarded

any damages for loss of use of the vessel. On the other hand, if the damaged vessel

was not a total loss, the court should have awarded the owner the reasonable cost of

repairs necessary to restore it to its precasualty condition and actual profits lost during
the detention necessary to make repairs.

Accordingly, the district court’s determination of damage and award of recovery

will be vacated, and the case will be remanded to the district court. On remand, the

district court shall decide whether the damage to the vessel rendered it a constructive

total loss or whether the repair of its partial damage is economically practicable. Based

on that decision, the district court should proceed to award damages in accordance with

the relevant foregoing total or partial loss principles. We do not suggest how the district

court should decide the question of total or partial loss.

We point out, however, sources of several possible clearly erroneous findings of
fact upon which the district court may have relied that should be more carefully analyzed

and explained in the court’s memorandum opinion and findings upon remand: (1)

Neither the 1988 nor the 1993 survey valuing the vessel at $70,000 and $236,000,

respectively, standing alone, is a reliable indication of precasualty market value of the

vessel, because it did not take into consideration the condition of the tug’s hull below

the waterline or reflect post-survey depreciation; (2) The evidence indicates that the

owner of the vessel caused a duplication of repair work without justification or

explanation; (3) A survey performed two years before the casualty indicated that the

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damage to the starboard aft corner of the vessel preexisted the surge casualty; (4)

There does not appear to be any evidence that the propeller sustained damage due to

an impact severe enough to have damaged the vessel’s gears; (5) Plaintiff’s own expert

testified that the reasonable cost of repair of damage caused by the casualty was

$172,000, rather than the $198,000 listed in the invoices introduced by the plaintiff.

For the reasons assigned, the district court’s in rem judgment against the M/T

ATLANTIA in favor of Gaines Towing is REVERSED for lack of in rem jurisdiction; the

district court’s judgment on the issue of in personam liability is AFFIRMED; the district

court’s award of damages is VACATED, and the cause is REMANDED for further
proceedings to determine the proper amount of damages to be awarded consistent with

this opinion.

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