Central State Transit & Leasing Corp. v. Jones Boat Yard, Inc.

CENTRAL STATE TRANSIT & LEASING CORPORATION, Plaintiff-Appellant, Cross-Appellee,

v.

JONES BOAT YARD, INCORPORATED, Defendant-Cross-Claimant, Cross-Defendant, Appellee,
Cross-Appellant.

No. 98-5511.

United States Court of Appeals,

Eleventh Circuit.

March 20, 2000.

Appeals from the United States District Court for the Southern District of Florida. (No. 92-10158-CV-
DTKH), Federico A. Moreno, Judge.

Before BLACK and HULL, Circuit Judges, and GOODWIN*, Senior Circuit Judge.

BLACK, Circuit Judge:

Appellant Central State Transit & Leasing Corporation appeals the amount of damages awarded to

it in the district court's judgment against Appellee Jones Boat Yard. Appellant claims the district court erred

in failing to award loss of use damages and in limiting Appellee's liability to its percentage of fault. On cross

appeal, Appellee asserts that the district court was clearly erroneous in finding that Appellee was grossly

negligent. We conclude the district court did not err.

I. BACKGROUND

Appellee Jones Boat Yard is engaged in the business of berthing and repairing vessels on the Miami

River. On November 22, 1988, Appellee contracted to purchase a floating dry dock from Conrad Industries

(Conrad), a Louisiana corporation. Conrad constructed the dry dock and delivered it to Appellee on April

13, 1989. Between May 22, 1989, and April 26, 1990, Appellee used the floating dry dock four separate

times to berth four different ships. On all four occasions, although none of the vessels were damaged, "the

dry dock exhibited serious listing and instability, and [on] at least one of these instances ..." a vessel

*
Honorable Alfred T. Goodwin, Senior U.S. Circuit Judge for the Ninth Circuit, sitting by designation.
experienced a listing of up to 15 degrees. After each of these incidents, Appellee contacted Conrad, who told

Appellee that the listing problem was the result of operator error.

On December 22, 1989, Appellant authorized William Hinsch, the Captain of Appellant's ship, the

BLACKHAWK, to execute a work order with Appellee for use of its drydock. The BLACKHAWK is

documented by the United States Coast Guard as a purely private pleasure vessel and has never been

chartered by Appellant. The work order provided that Appellee would have no liability for damage to the

vessel unless caused by its "gross negligence." In addition, the work order limited Appellee's aggregate

liability to $300,000.

On May 15, 1990, Appellee towed the BLACKHAWK into the floating drydock. Captain Hinsch

refused to allow Appellee to attach the steel cables from the dock directly to the vessel, and instead required

that the steel cables be attached to the vessel's nylon rope lines. Appellant released Appellee from any

liability for damage caused by using the nylon rope lines.

There is a dispute as to how the accident occurred. One witness, Calvin Kreidt, stated that the vessel

"listed a little to the starboard side," and then slowly listed back to port. As the drydock started listing to port,

Kreidt heard one of the starboard ropes "go 'pop'."1 Prior to the "pop," Kreidt stated that the vessel did not

shift inside the drydock, nor did any of the keel blocks inside the dock move. As the vessel moved to port,

Kreidt stated that he could see the keel block being kicked out from underneath the vessel.

Arthur Sargent, an expert retained by Appellant, gave a slightly different account of the accident.

According to Sargent, as the drydock listed, the bilge blocks moved away from the vessel, allowing the keel

of the vessel to rotate and fall off its keel blocks. This movement placed an unusual strain on the nylon ropes,

causing them to snap and break. Sargent claimed that the vessel fell off the blocks because the blocks were

unsatisfactory and also stated that the bilge blocks dropped out of position because they were not secured

properly with locks. Sargent also determined that the dry dock was not designed or constructed properly by

1
The district court specifically found that the utilization of the nylon ropes was "in no way responsible for
the damage accrued" to the vessel.

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Conrad. According to Sargent, if the dry dock had been designed properly by Conrad, the accident would

not have happened.

Appellant brought suit against Appellee and Conrad seeking money damages for injury to Appellant's

vessel, the BLACKHAWK. Appellant asserted that both Appellee and Conrad were "negligent, grossly

negligent, and showed wilful, reckless, and wanton disregard of" Appellant's property. Appellant settled its

claim against Conrad for $150,000 and dismissed with prejudice its claim against Conrad. Appellee and

Conrad dismissed without prejudice their cross claims against each other for contribution and indemnity.

Thereafter, the trial proceeded solely against Appellee.

The district court found that Appellee and Conrad were both "negligent and that their negligence

operated in concert to cause injury to" Appellant in the amount of $125,000. The district court attributed 75%

of the damage to Conrad and 25% of the damage to Appellee. The district court agreed that Conrad had

constructed and designed the dry dock poorly, finding that

[t]he dry dock had been improperly designed and constructed by Conrad so that as it rose in the water
and approached upon the water surface, that is on its pontoon deck, it listed from one side to the
other, thus the dry dock was unstable and unsuitable for the purpose it had been intended and for
which it was constructed.

The district court also found that Appellee had performed its work with "gross negligence" and accordingly

directed Appellee to pay $31,250 (25% of $125,000). Specifically, the Court found that Appellee was grossly

negligent given the four prior experiences in which Appellee saw that the drydock was unstable and unsafe.

The district court determined, however, that Appellant was not entitled to any "loss of use" damages for the

time the BLACKHAWK was being repaired.

On appeal, Appellant claims the district court erred in denying loss of use damages. Appellant also

argues the district court erred by apportioning the fault among Appellee and Conrad. Finally, on cross appeal,

Appellee maintains the district court's finding that Appellee's conduct was grossly negligent is clearly

erroneous.

II. DISCUSSION

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 We review the district court's findings of fact for clear error and review its conclusions of law de

novo. See American Dredging Co. v. Lambert, 153 F.3d 1292, 1295 (11th Cir.1998).

A. Loss of Use Damages

The seminal case regarding damages for loss of use of a pleasure boat is The Conqueror, 166 U.S.

110, 17 S.Ct. 510, 41 L.Ed. 937 (1897). In The Conqueror, the Supreme Court stated that the law is well

settled that "the loss of profits or of the use of a vessel pending repairs, or other detention, arising from a

collision or other maritime tort, and commonly spoken of as 'demurrage,' is a proper element of damage."

The Conqueror, 166 U.S. at 125, 17 S.Ct. at 516. The Court noted that "[i]t is equally well settled, however,

that demurrage will only be allowed when profits have actually been, or may be reasonably supposed to have

been, lost, and the amount of such profits is proven with reasonable certainty." Id. The Court then

emphasized that

[i]t is not the mere fact that a vessel is detained that entitles the owner to demurrage. There must be
a pecuniary loss, or at least a reasonable certainty of pecuniary loss, and not a mere inconvenience
arising from an inability to use the vessel for the purpose of pleasure.... In other words, there must
be a loss of profits in its commercial sense.

Id. at 133, 17 S.Ct. at 519.

More recently, we have recognized the continuing validity of the general rule set forth in The

Conqueror. See Ove Skou v. United States, 478 F.2d 343, 345 (5th Cir.1973) (citing with approval The

Conqueror )2; Bolivar County Gravel Co. v. Thomas Marine Co., 585 F.2d 1306, 1308 n. 2 (5th Cir.1978)

(same); The Wolsum, 14 F.2d 371, 377 (5th Cir.1926) (same). In Ove Skou, we specifically held that

"[d]emurrage 'will only be allowed when profits have actually been, or may be reasonably supposed to have

been, lost, and the amount of such profits is proved with reasonable certainty.' " Ove Skou, 478 F.2d at 345

(quoting The Conqueror, 166 U.S. at 125, 17 S.Ct. at 516). In addition, several other circuits have recognized

the continuing validity of The Conqueror's rule for loss of use damages. See Dow Chemical Co. v. The M/V

2
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc), this Court adopted as
binding precedent all decisions of the former Fifth Circuit handed down prior to close of business on
September 30, 1981.

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Roberta Tabor, 815 F.2d 1037, 1042 (5th Cir.1987) (citing with approval the general rule from The

Conqueror ); Snavely v. Lang, 592 F.2d 296, 299 (6th Cir.1979) (noting that "the Court is constrained to

view The Conqueror as retaining its full vitality"); Oppen v. Aetna Ins. Co., 485 F.2d 252, 257 (9th Cir.1973)

(citing The Conqueror as support for the assertion that "loss of use of a private pleasure boat is not a

compensable item of damages").

We therefore must apply the Supreme Court's holding in The Conqueror to the facts of this case.3

Appellant thus is entitled to receive loss of use damages only if able to prove, with reasonable certainty, that

profits had actually been, or may reasonably be supposed to have been, lost. Appellant, however, failed to

meet this burden at trial. In fact, the district court specifically found that the corporations that used the

BLACKHAWK for business purposes continued to pay fees to Appellant while the vessel was under repair.

Because Appellant did not prove, with reasonable certainty, that profits had actually been or may reasonably

supposed to have been lost, we affirm the district court's denial of loss of use damages.

B. Apportionment of Damages

The district court, citing McDermott, Inc. v. AmClyde, 511 U.S. 202, 210, 217, 114 S.Ct. 1461, 1466,

1470, 128 L.Ed.2d 148 (1994), held that Appellee was liable only for 25%, or its proportionate share, of the

total damages. In McDermott, the Supreme Court held that when one joint tortfeasor has settled, the

nonsettling joint tortfeasor's liability should be assessed on the basis of that tortfeasor's proportionate share.

See McDermott, 511 U.S at 217, 114 S.Ct. at 1469.

On appeal, Appellant argues the district court did not have the authority to limit Appellee's liability

to its proportionate share because Appellee was not a joint tortfeasor. Appellant asserts that because

Appellant's claim against Appellee is in contract while the claim against Conrad was in tort, Appellee cannot

3
Two district courts have suggested that Brooklyn Eastern District Terminal v. United States, 287 U.S.
170, 53 S.Ct. 103, 77 L.Ed. 240 (1932), partly overrules The Conqueror. See Finkel v. Challenger Marine
Corp., 316 F.Supp. 549 (S.D.Fla.1970); Nordasilla Corp. v. Norfolk Shipbuilding, 1982 A.M.C. 99
(E.D.Va.1981). We disagree and conclude we are bound by The Conqueror for purposes of deciding this
case. See also Snavely, 592 F.2d at 298-99.

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be a joint torteasor. We nevertheless conclude the proportionate share rule applies to this case because

Appellee and Conrad "operated in concert" to cause a single injury to Appellant. See Jovovich v. Desco

Marine, Inc., 809 F.2d 1529, 1530 (11th Cir.1987) (holding that nonsettling party benefits from proportionate

share rule for "all theories of maritime liability apportionment"); see also United States v. Reliable Transfer

Co., 421 U.S. 397, 408, 95 S.Ct. 1708, 1715-16, --- L.Ed.2d ---- (1975) (stating "when two or more parties

have contributed by their fault to cause property damage in a maritime collision or stranding, liability for such

damage is to be allocated among the parties proportionately to the comparative degree of fault ...").

C. Appellee's Gross Negligence

To hold a party liable for gross negligence, the district court must find that the defendant had

knowledge of the existence of circumstances which constitutes a "clear and present danger" and yet still

undertakes "a conscious, voluntary act or omission ... which is likely to result in injury." Sullivan v. Streeter,

485 So.2d 893, 895 (Fla. 4th Dist.Ct.App.1986) (citations omitted). On cross-appeal, Appellee claims the

district court erred in finding Appellee was grossly negligent.

Based upon our review of the record, we conclude the district court's finding of gross negligence was

not clearly erroneous. The evidence shows that Appellee knew that the dry dock had exhibited potentially

serious defects on four separate occasions prior to the accident involving the BLACKHAWK. Given these

facts, the district court did not clearly err in finding that Appellee had knowledge of the existence of

circumstances which constituted a clear and present danger and yet still undertook a voluntary act which was

likely to, and did, cause injury.

III. CONCLUSION

The district court did not err in concluding Appellant was not entitled to loss of use damages and in

limiting Appellee's liability to its proportionate share of the total damages. In addition, the district court did

not err in finding Appellee grossly negligent.

AFFIRMED.

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