Cape Fear, Inc. v. Martin

United States Court of Appeals
For the First Circuit

No. 02-1153

CAPE FEAR, INC.,

Petitioner, Appellant,

v.

DENNIS A. MARTIN AND SUSAN ALLEN,

Claimants, Appellees.

JAMES E. HALEY AND JOSEPH LEMIEUX,

Claimants.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Robert E. Keeton, U.S. District Judge]

Before

Selya, Circuit Judge,
Coffin, Senior Circuit Judge,
and Howard, Circuit Judge.

Thomas J. Muzyka with whom Robert E. Collins and Clinton &
Muzyka, P.C. were on brief for appellant.
Carolyn M. Latti with whom David F. Anderson, David J. Berg,
and Latti & Anderson LLP were on brief for appellees.

November 1, 2002
 COFFIN, Senior Circuit Judge. This case arises from the

sinking of a clamming vessel off the coast of New Bedford,

Massachusetts, causing the deaths of two crew members. Appellant,

the vessel's owner,1 filed a petition in admiralty seeking

exoneration or limitation of liability under the Limitation of

Liability Act ("the Limitation Act"), 46 U.S.C. app. §§ 181-196.

The district court rejected the petition and found that the vessel

was unseaworthy, leaving appellant fully exposed to pending damage

claims. We affirm.

I. Background

The F/V CAPE FEAR had been on a routine clamming trip out of

New Bedford, Massachusetts, in January 1999 when the vessel, fully

loaded with ocean quahogs, ran into trouble in stormy weather as it

headed back to port. The boat carried a crew of five: Captain

Steven Novack, Mate James Haley, and deckhands Steven Reeves, Paul

Martin, and Joseph Lemieux.2 As the boat approached New Bedford,

the waves washing up on deck were not receding as they usually did.

Novack ordered the crew members to don survival suits, and, a few

minutes later, ordered them to abandon ship. Novack and Reeves,

with their survival suits only partially on, slid down the

1
Appellant is Cape Fear, Inc., whose officers and owners are
Warren Alexander and his ex-wife.
2
Lemieux was the only crew member to testify in the district
court proceeding, and the description of what occurred on the day
of the sinking is therefore drawn entirely from his testimony.

-2-
starboard side hull as the vessel rolled to port, but Lemieux, with

his suit unzipped at the neck, was thrown into the water on the

port side of the now capsized vessel. Those three had last seen

Haley and Martin in the galley putting on their survival suits.

Lemieux testified that, once he was in the water, he heard

other crew members screaming. Lemieux's suit was filling up with

water because it was not fastened at the neck, but Haley soon

approached with a board and told Lemieux to grab onto it. Haley

and Lemieux then swam to Captain Novack, apparently the closest

other crew member. The three men heard Reeves crying for help, but

could not find him. After about ten minutes, Reeves' yelling

stopped.

Another clamming vessel, the F/V MISTY DAWN, approached and

rescued Novack, Haley and Lemieux. The MISTY DAWN unsuccessfully

searched for Martin and Reeves for thirty to forty-five minutes.

The next day, Martin's body was found floating off a beach on

Buzzard's Bay, where the boat sank. According to the testimony of

Officer Michael Camire of the State Environmental Police, Martin's

survival suit was on, but zipped only to his navel. His strobe

light was in the off position. Reeves' body was never found.

The cause of the vessel's sinking is the central dispute in

this case. The district court concluded that the CAPE FEAR, as it

began its return to port, "was unseaworthy because substantially

overloaded with clams in cages, a practice that had become common

-3-
. . . ." It found that the heavy load, which weighed the boat down

and risked its stability, was the primary reason the boat capsized

in the rough conditions it encountered on its last voyage. The

court ruled that the overloading rendered the boat unseaworthy, and

that appellant was strictly liable for damages resulting from that

condition. The court listed additional factors that contributed to

the boat's unseaworthiness, including problems with safety

equipment, but it did not rely on these in finding that the CAPE

FEAR was unseaworthy.

Appellant, however, argues that the CAPE FEAR sank because the

crew members on that particular day negligently failed to close a

hatch cover over one of the clam tanks, allowing water to build up

in the lower level of the vessel and undermining its stability. A

total of six clam tanks stood on the CAPE FEAR's lower deck. They

were arranged side-by-side, forward to aft, running from bow to

stern. The two most forward tanks were labeled as #1 port and

starboard, the two in the middle were #2 port and starboard, and

the last two were #3 port and starboard. Each tank had a separate

hatch cover that was attached to a set of rails and was moved into

place using a pulley system. A watertight longitudinal bulkhead

separated the starboard clam tanks from the port clam tanks, but

the transverse bulkheads separating the #1, #2 and #3 tanks on each

side were not watertight.

-4-
 Lemieux's undisputed testimony was that the #3 port side tank

cover was left open that day about three to five inches. There is

a dispute, however, concerning the reason for that opening.

Lemieux reported that the hatch cover was prevented from closing

completely by a problem with the rope that was used to pull the

cover into place. The rope had broken on other occasions, he

testified, and crew members would tie a knot in it until the line

could be spliced. The knot, however, would interfere with the

pulley system and leave the hatch cover partially open.3

Appellant, by contrast, maintained that the cover was left open

improperly by the crew members responsible for closing it,

unbeknownst to either Captain Novack, Mate Haley, or company

president Alexander. The opening created by the partially closed

cover was a "downflooding" point,4 and the district court concluded

3
Lemieux's testimony on how long the condition had existed
before the final trip appears somewhat inconsistent. When asked
"for how long had there been a knot in that rope, your best
estimate?" he answered: "Probably the two trips prior to this one
and the last trip." Several questions later, when asked whether he
had "observed the No. 3 port hatch open, as on this trip," he
answered: "There had been a few trips previous. Not the two trips
before, but there had been other trips at different times where
that has happened before . . . and they just tied a knot in it to
continue working." The difference in the responses may have been
simply a function of the different questions asked: while he
believed the knot that existed on the final trip had been present
for the vessel's two prior trips, he may have not actually seen the
knot on those trips, as he had on "other trips at different times."
Lemieux was a fill-in deckhand on the Cape Fear, and he worked
about half of the vessel's trips.
4
"Downflooding" refers to the progressive entry of water into
the hull, eventually resulting in flooding and loss of stability.

-5-
that it contributed to the vessel's unseaworthiness; as with the

safety equipment, however, the court did not rely on the hatch

cover to reach its unseaworthiness determination.

The evidence showed that another possible location for water

to accumulate and contribute to flooding was the space between the

#2 and #3 hatch covers on both the port and starboard sides. The

#3 hatch covers were about four inches below the #2 hatch covers,

and they slid beneath the #1 and #2 hatch covers on a separate set

of rails. Lemieux testified that, with the covers closed, about a

one-inch gap remained.5

Appellant filed its Petition for Exoneration from and/or

Limitation of Liability on June 17, 1999 and submitted an appraisal

reporting that the F/V CAPE FEAR had no value and no pending

freight.6 Under the Limitation Act, a vessel owner may seek to

According to testimony at trial, a "downflooding point" is an
opening on a vessel of at least 3.6 square inches that cannot be
closed and is thus not watertight, and which leads to a major
compartment below deck. An open pipe or open doorway are examples
of possible downflooding points.
5
Alexander, the vessel's owner, testified that the gap was
about one quarter inch, which would not be wide enough to qualify
as a downflooding point. The district court did not explicitly
address this factual conflict, but its finding of unseaworthiness
based on overloading makes it likely that the court credited
Lemieux's testimony and believed that water entered both sides of
the hull through this gap.
6
"Pending freight" is the total earnings anticipated for the
voyage, including charges for carriage of cargo and passengers.
Mediterranean Shipping Co. S.A. Geneva v. POL-Atlantic, 229 F.3d
397, 400 n.5 (2d Cir. 2000); Caribbean Sea Transport, Ltd. v.
Russo, 748 F.2d 622, 626 (11th Cir. 1984).

-6-
limit its liability for any maritime injury or loss to the value of

the vessel and its pending freight, provided that the owner lacks

privity or knowledge concerning the events that gave rise to the

damage. Lewis v. Lewis & Clark Marine, Inc., 531 U.S. 438, 453

(2001); Hellenic Inc. v. Bridgeline Gas Distribution LLC, 252 F.3d

391, 394 (5th Cir. 2001); Carr v. PMS Fishing Corp., 191 F.3d 1, 4

(lst Cir. 1999). In the process of seeking limited liability under

the statute, a vessel owner also may request exoneration, or freedom

from all liability. Lewis, 531 U.S. at 453.7

After hearing six days of testimony, the district court found

that appellant was entitled to neither exoneration nor limitation

of liability. It ruled initially that limitation was unavailable

because appellant failed to prove the value of the vessel, and then

went on to find liability based on unseaworthiness. Appellant

argues on appeal that the court's conclusion of liability was based

on clearly erroneous factual findings. It further asserts that,

even if the unseaworthiness determination is upheld, no liability

should result because it lacked privity or knowledge of any

7
The Limitation Act does not expressly extend to exoneration,
but courts often consider full immunity from liability along with
the limitation question. See generally Lewis, 531 U.S. at 453-54;
see also Riverway Harbor Service, St. Louis, Inc. v. Bridge & Crane
Inspection, Inc., 263 F.3d 786, 792 (8th Cir. 2001). In some
circumstances not relevant here, courts are obliged to respect a
claimant's choice to have the issue of exoneration decided in state
court. See Lewis, 531 U.S. at 451-55.

-7-
unseaworthy condition. Finally, appellant argues that, in the

absence of privity or knowledge, its liability was capped by the

value of the vessel after its sinking, and that that value was

adequately proven to be zero.

Our review of the record persuades us that the district court

did not commit clear error in its finding of unseaworthiness. As

we explain below, its rejection of limitation of liability also is,

on the state of this record, unassailable.

II. Discussion

A trial court's findings after a bench trial are reviewed

generously under a clear error standard, see Carr, 191 F.3d at 6,

and "[w]hen the proof supports plausible but competing inferences,

the trier's choice between them cannot be clearly erroneous," id.

at 7. With that standard in mind, we first consider the court's

conclusion that the CAPE FEAR was unseaworthy, which was the

foundation for its finding that appellant was fully liable in

damages to the claimants. We then turn to the limitation of

liability issue.

A. The CAPE FEAR's seaworthiness

A ship owner has an absolute duty to provide a seaworthy

vessel, and this duty extends beyond the physical integrity of the

vessel and its equipment to such other circumstances as the

procedures crew members are instructed to use for assigned tasks.

Underwriters at Lloyd's v. Labarca, 260 F.3d 3, 7 (lst Cir.

-8-
2001)(citing Vargas v. McNamara, 608 F.2d 15, 18 (lst Cir. 1979),

for the proposition that "a jury could conclude that the vessel was

unseaworthy due to the unsafe procedure crewm[e]n were directed to

employ for cleaning the engine room"). It is well established that

the seaworthiness of a vessel includes its capacity to carry its

intended cargo: "[i]f a vessel is loaded so heavily that she cannot

safely sail on the voyage contracted for, she is unseaworthy." 2A

Benedict on Admiralty § 67. See, e.g., The Silvia, 171 U.S. 462,

464 (1898) ("The test of seaworthiness is whether the vessel is

reasonably fit to carry the cargo which she has undertaken to

transport."); Mobil Shipping & Trans. Co. v. Wonshild Liquid

Carriers Ltd., 190 F.3d 64, 68-69 (2d Cir. 1999) (same); Petition

of Long, 439 F.2d 109, 113 (2d Cir. 1971) ("The overloading of the

SMITH VOYAGER made her an unseaworthy vessel.").

Appellant does not dispute that, if the CAPE FEAR were

routinely overloaded with clams, the court properly could find that

appellant breached its duty of seaworthiness. Rather, it maintains

that no such overloading occurred. Appellant relies heavily on the

expert testimony of David Folsom, a marine engineer and naval

architect, who opined that the vessel met Coast Guard stability

standards and was safe for its intended voyage when loaded, as

appellant contends it was, with 130 cages that were "topped off"

with extra clams to ensure a full load after the original contents

of the cages settled. Although the district court concluded that

-9-
the vessel carried 132 cages, appellant maintains there is no record

support for any amount over 130.

Putting aside the issue of 132 vs. 130 cages because it makes

no difference to our analysis, the record does not inevitably lead

to the conclusion that appellant wishes to draw. To analyze the

vessel's stability, Folsom needed to select a downflooding point.

As we understand his testimony and that of other experts who

testified during the proceedings, a standard stability analysis

considers whether the vessel is sufficiently stable to withstand

expected conditions, including bad weather, recognizing that the

downflooding location is a vulnerability.

For the specific stability analysis on which appellant relies,

Folsom used as a downflooding point a vent six-and-one-half feet

above the main deck that opened into the engine room. He

acknowledged, however, that this point would not actually be under

water unless the boat capsized. He further testified that if either

the open #3 port hatch cover or the one-inch gaps between the #2 and

#3 hatch covers were used as a downflooding point, the vessel loaded

with 130 full cages would fail the stability analysis.

Thus, the district court could have rejected Folsom's favorable

assessment of the boat's stability on the ground that he failed to

utilize more realistic points of flooding for that analysis. In

-10-
addition, a stability book8 prepared for the CAPE FEAR's owner by

another naval architect about two years before the accident stated

that the boat could safely operate with 120 cages and a "freeboard"

– the distance from the water line to the deck – of at least

eighteen inches. Lemieux testified that the freeboard on the return

trip appeared to be about ten inches. Although he admitted this was

an estimate and that the freeboard distance could vary with

particular waves, we cannot say that it would have been clear error

for the court to conclude that – whatever the precise number – the

freeboard was less than the minimum eighteen inches recommended.

And certainly a plausible inference is that the freeboard was

inadequate because the vessel was overloaded, and for that reason

was sitting too low in the water.

A finding of unseaworthiness based on overloading is further

supported, moreover, by evidence that the CAPE FEAR sank on an even

keel, indicating that the water was accumulating on both sides of

the vessel and not just on the port side with the open hatch cover.

Although the three to five inch gap that Lemieux attributed to the

knotted rope undoubtedly exacerbated the situation – and perhaps

accounted for the boat's eventual listing to port and capsizing in

that direction – the court reasonably could conclude that that gap

was not the primary problem. Because the bulkhead between the port

8
A stability book is designed to provide guidance to the
operating personnel about how to load a vessel safely.

-11-
and starboard tanks was watertight, the water that evidently was

entering on the starboard side could not have originated from the

opening in the port side hatch cover. The district court reasonably

could have concluded that the short freeboard at the vessel's stern

allowed water to enter the gap between the #2 and #3 hatch covers.

Conflicting testimony also was introduced on the other factors

cited by the district court as contributing to the boat's lack of

seaworthiness. We need not explore those factors, as the court's

ruling did not rest on them, but suffice it to say that we find no

clear error in its assessment that the CAPE FEAR's emergency

preparedness was less than ideal and that "certain problems with the

aft hold cover" contributed to the lack of seaworthiness by

"permitt[ing] water to enter the Cape Fear's hold much more easily

than if it had been shut."9

Our review thus demonstrates that the district court had ample

record support for its finding that the CAPE FEAR was rendered

unseaworthy by overloading. That the evidence also might support

a contrary finding is often the inevitable reality when cases

9
That the hatch was open was not a subject of debate; rather,
the parties' dispute centered on the reason for its partial
closure. Although the court did not elaborate, we think it a fair
assumption that its reference to "certain problems with the aft
hold cover" meant that it rejected appellant's suggestion that the
cover simply was left open negligently on that trip, instead
accepting Lemieux's testimony that a persistent knot in the rope
prevented the cover from closing.

-12-
present difficult factual questions; it is not, however, a basis for

reversal.10

B. Limitation of Liability

Even though a ship owner is strictly liable for damages

resulting from a vessel's unseaworthiness, see Labarca, 260 F.3d at

8 ("a finding of unseaworthiness is not affected by whether the

owner was or was not negligent or at fault"), the liability may be

limited to the value of the ship and its freight if the owner can

show it lacked both awareness of the unseaworthy condition and

privity with anyone who did have knowledge, 46 U.S.C. app. § 183(a).

The district court curtailed its discussion of the Limitation Act

because it found that appellant failed to prove the value of the

CAPE FEAR after the sinking, which is the relevant value under the

statute.

Appellant claims that the undisputed evidence is that the

vessel had no value, and it maintains that, had the court proceeded

10
In addition to proving unseaworthiness, an "injured seaman
must prove that the unseaworthy condition was the sole or proximate
cause of the injury sustained." Ferrara v. A. & V. Fishing, Inc.,
99 F.3d 449, 453 (lst Cir. 1996); see also Gifford v. American
Canadian Caribbean Line, Inc., 276 F.3d 80, 83 (lst Cir. 2002) (the
unseaworthy condition must be "a direct and substantial cause" of
the injury). Appellant contends that the court utilized an
incorrect and insufficient standard of causation when it found that
loading the boat with 132 cages made it "highly likely that the F/V
CAPE FEAR would sink." We reject this strained interpretation of
the court's language. We think it plain that the court found that
the overloading was the direct cause of the sinking. What it found
"highly likely" was that the overloading problem would trigger a
tragedy on that particular voyage, given the bad weather and rough
seas.

-13-
to the privity or knowledge issue, appellant would have been found

entitled to limitation of liability. With a valueless vessel,

limitation would eliminate liability entirely.

We decline to review the court's contested ruling on the

vessel's value because the record is undisputed and unequivocal in

revealing that appellant was aware of the overloading found by the

district court. See Benham v. Lenox Sav. Bank, 292 F.3d 46, 49 (lst

Cir. 2002) ("Though rare, an appellate court may make findings of

fact where the record permits only one resolution of the factual

issue."); see also United States v. Puerto Rico, 287 F.3d 212, 218

(lst Cir. 2002) ("[W]e . . . may affirm the judgment on any

independent ground that is apparent in the record.").

Although the parties at trial advanced contrary versions of

the conduct responsible for the sinking, with different implications

for the knowledge and responsibility of the vessel's owner, the

court's finding of the primacy of overloading defines the scope of

our inquiry as to privity or knowledge. And the testimony of Warren

Alexander, president and co-owner of Cape Fear, Inc., provides all

of the evidence that is necessary to support a finding of knowledge.

He testified that he commissioned the stability analysis of the CAPE

FEAR in which a naval architect, Koopman, identified 120 cages as

an appropriate load, with a minimum freeboard of eighteen inches.

Alexander further testified that, after some trials with different

numbers of cages, Captain Novack "felt comfortable" with 134, and

-14-
that the two men finally agreed on 130 as the regular load. They

did not further consult Koopman.

While Alexander and Novack may have felt that the stability

book was too conservative and could safely be disregarded, the CAPE

FEAR's ultimate demise, as found by the district court, proved their

assessment to be incorrect. Because Alexander, as appellant's

principal officer, affirmatively approved the 130-cage load to which

the district court properly attributed the vessel's unseaworthiness,

limitation of liability is unavailable.

Affirmed.

-15-