Thomas O' Hagan v. M&T Marine Group, LLC

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 10-12013 ELEVENTH CIRCUIT
Non-Argument Calendar APRIL 19, 2011
________________________ JOHN LEY
CLERK
D.C. Docket No. 0:06-cv-61635-MGC

THOMAS O’HAGAN,
FRANCISCO ARROYO,

lllllllllllllllllllll Plaintiffs - Appellees,

versus

M&T MARINE GROUP, LLC,
in personam, a Luhrs vessel with Hull number LHRLC298J405,
a Lurhs vessel with Hull number LHRPP105F506,
a Lurhs vessel with Hull number LHRTC1131203
and a Cruise vessel with Hull number CRSNGA1314405,
their engines, equipment, boats, machinery, furnishing,
d.b.a. Northside Marine Sales,

lllllllllllllllllllllDefendant - Appellant.

________________________

Appeal from the United States District Court
for the Southern District of Florida
________________________

(April 19, 2011)
Before CARNES, BARKETT, and KRAVITCH, Circuit Judges.

PER CURIAM:

This case involves a claim for a salvage award brought in admiralty by

Thomas O’Hagan and Francisco Arroyo against M&T Marine Group, LLC.

O’Hagan and Arroyo sought an award for voluntary services they performed with

the help of three other individuals, which resulted in saving three of M&T’s yachts

from damage and possible loss during a severe South Florida storm.

I.

A.

On the morning that Hurricane Wilma blew through South Florida in

October 2005, O’Hagan and Arroyo, who both worked as boat maintenance and

repair subcontractors for M&T from time to time, were at their respective

residences, which overlooked the floating docks where M&T kept its yachts.

After seeing that the docks the yachts were moored to were sinking and pulling the

yachts under with them, O’Hagan and Arroyo ventured out to weather the violent

storm and cut the lines connecting the yachts to the floating docks. Joining them

in their efforts were two employees of Arroyo’s boat repair business, Alain

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Thelusma and Dillon Silver.1 In addition to cutting lines, the four of them

relocated the yachts to a nearby seawall, pumped out water that the yachts had

taken on, and took other steps necessary to preserve and secure the yachts. An

onlooker, Dave, whose last name is unknown, also assisted the four of them, but

only in untying the boats from the sinking floating docks. Thelusma and Silver

were both paid approximately $250 by Arroyo for their time that day as part of

their regular weekly wages.

B.

O’Hagan and Arroyo filed a complaint in admiralty on October 27, 2006,

seeking a salvage award from M&T. On February 28, 2007, after M&T had

answered the complaint, the district court administratively closed this case because

M&T had filed for bankruptcy. After O’Hagan and Arroyo obtained permission

from the bankruptcy court to pursue their salvage claims, the district court

reopened this case on April 24, 2009.

In an August 4, 2009 order, the district court scheduled trial for March 2010

and also set out various discovery deadlines, including O’Hagan and Arroyo’s

expert witness disclosure deadline of November 5, 2009 and a deadline for

1
Although the district court’s findings are unclear, the record shows that Thelusma and
Silver were employees of Arroyo and not O’Hagan.

3
completion of expert discovery by December 3, 2009. On November 2, 2009,

O’Hagan and Arroyo filed an expert witness list, which included the topics that the

expert would testify to, but failed to include an expert report. M&T filed a motion

to strike that expert from the witness list on November 16, 2009, and a motion for

enlargement of time to disclose its own expert if the district court should deny its

motion to strike.

On December 4, 2009, one day after discovery had closed, O’Hagan and

Arroyo responded to M&T’s motion to strike their expert, asserting that after

M&T’s motion was filed they had provided M&T with full answers to expert

interrogatories and a complete expert report.2 They also offered to cure any

prejudice from their delay, stating that they would not oppose any requests from

M&T to file its expert disclosures late or seeking leave to depose their expert.

M&T never took O’Hagan and Arroyo up on their offer.

On March 24, 2010, the morning of the first day of trial, the district court

denied M&T’s motion to strike O’Hagan and Arroyo’s salvage services expert.

The district court found that O’Hagan and Arroyo’s expert disclosure was not

timely, but it noted that O’Hagan and Arroyo represented that they had produced a

2
M&T argued in a reply to O’Hagan and Arroyo’s response that the expert report still
failed to meet the requirements of Federal Rule of Civil Procedure 26(a), but it never provided
the district court with the allegedly inadequate report.

4
detailed expert report and answers to expert interrogatories on or before December

4, 2009, and they had offered to waive any discovery deadlines to allow M&T to

disclose additional experts or depose their expert. While not condoning O’Hagan

and Arroyo’s disregard for the Federal Rules of Civil Procedure, the district court

found their untimeliness harmless.

After the order was issued, M&T moved for continuance at the outset of

trial, claiming that it needed time to get its own salvage services expert. The

district court denied that motion, stating that M&T “knew this case was going to

trial” and “knew [it] w[as] disputing what [O’Hagan and Arroyo] had to say in

regard to damages.” In denying that motion, however, the court gave M&T leave

to depose O’Hagan and Arroyo’s expert before he took the stand on the second

day of trial, March 26, 2010.

At trial, Arroyo and O’Hagan testified about the value of the yachts and the

repairs required after the storm had passed. Arroyo testified without objection that

the three yachts had prices of $700,000, $800,000, and $400,000 to $500,000

respectively, because “they ha[d] on a sticker with the price” at the time of the

salvage service. M&T did not rebut that evidence. Arroyo also testified without

objection that he and O’Hagan had to remove debris and clean the water off the

yachts, including cleaning the engine, the generator, and parts of the electrical

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system. He further testified that they changed out the fuel filters and starters in at

least one yacht the day after the hurricane, but it is not clear from the record

whether that work was required as a result of damage caused by the hurricane.

O’Hagan testified to the total cost of the repairs they made to the three

yachts on the day of the hurricane. It is not clear from the record whether the total

repair costs included changing out the fuel filters and starters on at least one of the

yachts the day after the hurricane. M&T did not rebut the evidence of the repairs

made or the cost of those repairs. After hearing all of the evidence presented in

the two-day trial, the district court issued its findings of fact and conclusions of

law on March 31, 2010.

The district court concluded that the post-salvage value of a vessel is

generally the fair market value of the property and that the burden is on the suing

salvors to prove it. But the district court noted that where there is no established

market value for a vessel, the use of the pre-casualty book values for the yachts

less the costs of any repairs needed after salvage is a permissible method for

calculating post-salvage, pre-repair value.3 Because neither party presented

3
Although this Court has not squarely addressed the question of proper post-salvage
valuation methods, a few district courts in this circuit have addressed the question, and their
decisions support the district court’s statement of the law in this case, which neither party
disputes. See Atlantis Marine Towing v. M/V Elizabeth, 346 F. Supp. 2d 1266, 1273–74 (S.D.
Fla. 2004); Ocean Servs. Towing and Salvage, Inc. v. Brown, 810 F. Supp. 2d 1258, 1263 (S.D.
Fla. 1993) (citing S.F. Bar Pilots v. Vessel Peacock, 733 F.2d 680, 682 (9th Cir. 1984), Nolan v.

6
evidence of the fair market value, the district court turned to the evidence

presented about the pre-casualty book values and post-salvage repairs. Based on

Arroyo’s testimony about the sticker prices, the court found that the yachts’ pre-

casualty book value was $1,950,000 and that the total cost of the post-salvage

repairs was $12,000.

The district court set the salvage award at $290,700—fifteen percent of the

$1,938,000 post-salvage value—plus prejudgment interest. The district court also

made explicit findings of fact that during the course of the salvage services

O’Hagan and Arroyo were “assisted by three (3) other individuals—Alain

Thelusma, Dillon Silver, and Dave (last name unknown)” and that Dave “assisted

with untying the boats from the sinking docks.” The district court nevertheless

concluded as a matter of law that the salvage award “should be divided equally

between” only O’Hagan and Arroyo. In deciding to split the total award between

only those two, the district court without citation to authority held as a matter of

law that Thelusma and Silver were not co-salvors because they “were employed by

[Arroyo], and [Arroyo] paid them for their time and efforts.” It further held that

Dave was not a co-salvor because “there has been no evidence presented as to the

A.H. Basse Rederiaktieselskab, 267 F.2d 584, 588–89 (3d Cir. 1959); Rand v. Lockwood, 16
F.2d 757, 759 (4th Cir. 1927)).

7
extent of the effort expended by [Dave], and I do not find mere allusions to his

presence during the salvage sufficient to include him as a co-salvor.”

After issuing its findings of fact and conclusions of law, the district court

entered judgment against M&T and awarded O’Hagan and Arroyo $290,700 plus

prejudgment interest. M&T has appealed that judgment, contending that the

district court failed to properly abate the salvage award to account for the non-

suing co-salvors; failed to properly calculate the post-salvage, pre-repair value of

the vessels; and abused its discretion by denying M&T’s request for a continuance

before trial.4 We address each contention in turn.

II.

In an admiralty bench trial, we review the district court’s factual findings

only for clear error, and we review de novo its conclusions of law. Dresdner Bank

AG v. M/V Olympia Voyager, 463 F.3d 1210, 1214 (11th Cir. 2006). M&T

contends that the district court misapplied the law of salvage to the facts of this

case by concluding that Thelusma, Silver, and Dave were not co-salvors. Because

4
M&T also contends that the district court incorrectly applied prejudgment interest to the
salvage award for the time period of M&T’s bankruptcy stay from February 28, 2007 though
April 24, 2009 while this admiralty lawsuit was administratively closed. But with ample
opportunity to do so, M&T did not raise this issue before the district court, and we thus decline to
consider it here. Access Now, Inc. v. Sw. Airlines Co., 385 F.3d 1324, 1331 (11th Cir. 2004)
(“This Court has repeatedly held that an issue not raised in the district court and raised for the
first time in an appeal will not be considered by this [C]ourt.” (quotation marks omitted)).

8
the district court did not account for those non-suing co-salvors in its award, M&T

argues that the court improperly apportioned their share of the salvage award to

O’Hagan and Arroyo when that share instead should have inured to the benefit of

M&T.5

The law of salvage requires the owner of a vessel that was in impending

peril to pay a reward to individuals, or salvors, for voluntary services rendered to

save the vessel from damage that would otherwise have resulted from the peril.

See The Blackwall, 77 U.S. (10 Wall.) 1, 12 (1869). Essentially, based on a

presumption that a prudent owner would want the ship to be saved, the law implies

a reward contract between the owner of the distressed ship and the salvor or co-

salvors who voluntarily save it. See Int’l Aircraft Recovery, L.L.C. v.

5
Although an affirmative defense in the nature of abatement was not included in M&T’s
answer, M&T has not waived it. The issue of “the value of any salvage services rendered by”
O’Hagan and Arroyo was raised by the parties in the joint pretrial stipulation. The specific issue
of abating the value of those services due to any co-salvor’s efforts was raised in M&T’s
proposed findings of fact and conclusions of law that were filed nearly a month before trial.
M&T also introduced without objection from O’Hagan and Arroyo some evidence at trial
regarding the non-suing co-salvors’ participation, and the district court made specific findings
and conclusions about the co-salvor issue in its findings of fact and conclusions of law. See
Pulliam v. Tallapoosa County Jail, 185 F.3d 1182, 1185 (11th Cir. 1999) (noting that “[r]equiring
a defendant to plead certain defenses affirmatively serves the important purpose of providing
notice to the plaintiff and the court” and finding that the pretrial order, while not directly and
specifically raising the affirmative defense, gave the plaintiff “fair notice of what the trial would
be about”).

Everyone had fair notice that the value of O’Hagan and Arroyo’s salvage services,
including any potential abatement of that value based on the efforts of any non-suing co-salvors,
would be at issue.

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Unidentified, Wrecked and Abandoned Aircraft, 218 F.3d 1255, 1261 (11th Cir.

2000); see also The Blackwall, 77 U.S. at 14 ( “Compensation as salvage is not

viewed by the admiralty courts merely as pay, on the principle of a quantum

meruit, . . . but as a reward given for perilous services, voluntarily rendered, and as

an inducement to seamen and others to embark in such undertakings to save life

and property.”) The law thus creates an incentive for people to take risks to save

ships that they are not obligated to save by imposing an obligation on the ship’s

owner to pay a reward for salvage services even if the owner would not have

wanted those services rendered. See id.

For the salvor’s services to be voluntarily rendered, the salvor “must be

under no official or legal duty to render the assistance.” In re American Oil, 417

F.2d 164, 167 (5th Cir. 1969).6 We have also stated that “a private salvor[]

renders voluntary assistance where no duty to help is owed the person or vessel in

distress.” Id. at 168. A duty owed by one salvor to another does not bar both

from making a salvage claim because “[t]he pre-existing duty which can disqualify

a salvor from recovering must run between the salvor and the owner of the vessel .

. . salvaged.” Id. at 169.

6
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), we
adopted as binding precedent all decisions of the former Fifth Circuit handed down before
October 1, 1981.

10
 It is also well settled that the services of everyone who participated in the

salvage operation must be considered regardless of whether all of the salvors are

before the district court, and the relative importance of their contribution must be

appraised before the salvage award is made. See The Blackwall, 77 U.S. at 12;

Legnos v. M/V Olga Jacob, 498 F.2d 666, 672 n.10 (5th Cir. 1974) (“Thus, on

remand the [c]ourt . . . must determine the total amount for salvage services

performed by all including the two [non-suing] groups and the claiming salvors

and then make an award to the claiming salvors in proportion to their own

contribution.”). It is also a “well-established rule of salvage law that, when one

co-salvor sues but others do not, the share of the award due to the nonsuing

co-salvors goes to the owner, not to the suing co-salvor.” Plataro Ltd., Inc. v.

Unidentified Remains of a Vessel, 695 F.2d 893, 903 (5th Cir. 1983); see also

J.M. Guffey Petroleum Co. v. Borison, 211 F. 594, 602 (5th Cir. 1914)

(“Nonprosecution of their claim by one set of salvors inures to the benefit of the

owners of the vessel, and not to that of other salvors who do prosecute their

claim.”). Thus, while the district court has discretion in deciding how big a share

of the salvage award each co-salvor gets, it may not give the shares of the

nonsuing co-salvors to the ones that brought suit. Those shares inure to the

benefit of the owner of the salvaged vessels.

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 In this case, along with O’Hagan and Arroyo, the district court explicitly

found that Thelusma and Silver helped to save the yachts from impending peril.

And the assistance they rendered was voluntary because they were not legally

obligated to M&T to render the services. Thelusma and Silver were working for

Arroyo in his boat repair and maintenance business, and neither Thelusma nor

Silver nor Arroyo, as their employer, had a pre-existing duty to preserve M&T’s

yachts. But as voluntary co-salvors who helped to save the yachts while under no

duty to M&T to do so, Thelusma and Silver were entitled to some share of the

award. Since they did not file claims, their shares of the award should have inured

to the benefit of M&T as the owner of the salvaged vessel. The district court erred

by not accounting for Thelusma or Silver in apportioning the salvage award to

O’Hagan and Arroyo.

Regarding Dave, the district court’s findings of fact and conclusions of law

conflict. The court found that he untied some lines, but concluded that the mere

allusion to his presence is not enough. A co-salvor “must merely have rendered

some beneficial service to the distressed vessel which contributed to its relief from

danger.” W. Coast Shipping Brokers Corp., M/V “Cebu I” v. Ferry

“Chuchequero”, 582 F.2d 959, 960 (5th Cir. 1978); Legnos, 498 F.2d at 672 (“So

long as the services are voluntary . . . , a bystander or interloper is eligible for

12
salvage award in proportion to the value of his contributory efforts.”). The district

court’s factual finding about Dave’s voluntary participation in untying some of the

lines that bound the yachts to the dock, which was essential to saving them,

conflicts with its legal conclusion that he was not a co-salvor. It was error not to

apportion some part of the award to Dave for his assistance in untying some lines,

and because Dave did not make a claim for his share, it was also error not to credit

his share of the award to M&T.

III.

M&T also contends that the district court incorrectly determined the post-

salvage, pre-repair value of the vessels. We do not “disturb a salvage award

unless it is based on erroneous principles or a misapprehension of the facts or is so

grossly excessive or inadequate as to be deemed an abuse of discretion.”

Compania Galeana, S.A. v. M/V Caribbean Mara, 565 F.2d 358, 360 (5th Cir.

1978). And as we have already noted, we review the district court’s findings of

fact only for clear error. Dresdner Bank AG, 463 F.3d at 1214.

The district court did not clearly err by accepting Arroyo’s competent

testimony, which was unrebutted, about the sticker prices as the pre-casualty book

value of the three yachts. If the repair work that consisted of replacing the starters

and fuel filters on at least one yacht the day after the hurricane did result from the

13
storm, however, the district court may have erred by not considering those repairs

in its calculation. Because the record is not clear about whether that repair work

was in fact included in the total repair costs or was the result of damage caused by

the hurricane, the district court did not clearly err in finding the total repair costs

to be $12,000.7

IV.

Finally, M&T argues that the district court erred in denying its motion for

continuance. We review the denial of a motion for continuance only for an abuse

of discretion, United States v. Valladares, 544 F.3d 1257, 1261 (11th Cir. 2008),

and it will not be overturned unless it is arbitrary or unreasonable. Quiet Tech.

DC-8, Inc. v. Hurel Dubois UK Ltd., 326 F.3d 1333, 1351 (11th Cir. 2003).

In this case, M&T was not ambushed on the eve of trial by O’Hagan and

Arroyo’s expert. Instead, it had notice on August 4, 2009 that the trial was set for

March 2010, had notice of the expert and what he would be testifying about from

O’Hagan and Arroyo’s expert list on November 2, 2009, had answers to expert

7
M&T also contends that the district court erred by not considering the $1,213,500
amount that was specified in O’Hagan and Arroyo’s proposed findings of fact and conclusions of
law and other pre-trial filings with the district court. M&T, however, had moved the court to
strike the factual basis for that amount—the Letters of Undertaking from M&T’s insurance
company—and the court granted that motion. That amount, which M&T moved the court to
strike before trial, was thus not admitted evidence that the district court could consider in making
its factual findings and conclusions of law.

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interrogatories and an expert report from O’Hagan and Arroyo by December 4,

2009, and had agreed to a joint pre-trial stipulation filed with the district court

about a month before trial, which listed the salvage services expert as an expert

witness who would testify at trial. Although discovery had technically closed on

December 3, 2009, O’Hagan and Arroyo offered to cure any prejudice by not

opposing any requests from M&T to file late expert disclosures or for leave to

depose O’Hagan and Arroyo’s expert. Instead of taking them up on their offer,

M&T chose to rely solely on its November 16, 2009 motion to strike the expert.

Disappointed with the outcome of that strategic choice when the district

court denied its motion to strike on the morning of trial, M&T asked for more

time. The district court denied the motion because M&T had notice of the expert

and had plenty of time before trial to get its own expert. To cure any undue

prejudice, the district court gave M&T the opportunity to depose O’Hagan and

Arroyo’s expert before he testified at trial. The district court’s denial of M&T’s

motion for continuance was not arbitrary, unreasonable, or an abuse of its

discretion.

V.

While we affirm in all other respects, we reverse the district court’s

judgment in part and remand this case for the limited purpose of properly

15
apportioning the salvage award among the suing and non-suing co-salvors.

Specifically, the district court should determine what share of the salvage award,

no matter how small, Dave would have been awarded if he had made a salvage

claim. The court should also determine Thelusma’s and Silver’s shares of the

salvage award, taking into account their roles in salvaging the yachts and the

compensation they received from Arroyo for that work. Any amount apportioned

to Thelusma, Silver, and Dave must be deducted from the total award to O’Hagan

and Arroyo and will thereby inure to the benefit of M&T.

AFFIRMED IN PART, REVERSED AND REMANDED IN PART.

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