Koch Refining Co. v. Jennifer L. Boudreau M/V

United States Court of Appeals,

Fifth Circuit.

No. 94-30509.

KOCH REFINING COMPANY, Plaintiff,

v.

JENNIFER L. BOUDREAUX MV, her engines, boiler, etc., in rem., et
al., Defendants.

In re in the Matter of JENNIFER L. BOUDREAUX MV and Ocean Towing
Service, Inc., as owners of the MV Jennifer L. Boudreaux praying
for exoneration from and/or limitation of liability: Ocean Towing
Service, Inc., Appellant-Cross-Appellee,

and

G & B Marine, Inc., Third-Party-Defendant-Appellant, Cross-
Appellee,

v.

CONTINENTAL INS., CO., 5801 Associates, Ltd., and Ocean Transport
Corp., Claimants-Appellees-Cross-Appellants.

In re in the Matter of OCEAN TRANSPORT CORPORATION, as owner pro
hac vice of the barge Ocean Transporter praying for exoneration
from or limitation of liability: Ocean Transport Corp., et al.,
Third-Party-Plaintiffs,

Ocean Transport Corp., Third-Party-Plaintiff-Appellee, Cross-
Appellant,

v.

G & B MARINE, INC., et al., Third-Party-Defendants-Appellants,
Cross-Appellees,

5801 ASSOCIATES, LTD., et al., Plaintiffs,

v.

CONTINENTAL INSURANCE COMPANY, Defendant.

June 25, 1996.

Appeals from the United States District Court for the Eastern
District of Louisiana.

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Before POLITZ, Chief Judge, and JONES and BENAVIDES, Circuit
Judges.

EDITH H. JONES, Circuit Judge:

This case arises out of the 1987 sinking of a barge, the T/B

OCEAN TRANSPORTER ("the barge"), while in the tow of the M/V

JENNIFER L. BOUDREAUX ("the tug"). After a bench trial, the

district court found the tug 2/3 liable and the barge 1/3 liable,

and awarded the barge's owners $2.67 million. Both parties now

appeal the judgment. Two issues seem to us most worthy of

discussion: the court's decision to disqualify Richard Vinas as an

expert witness, and the denial of prejudgment interest. Upon

consideration of these issues and the others raised by the parties,

however, we affirm.

I. BACKGROUND

The barge was owned by 5801 Associates, Ltd. ("5801"). It had

been constructed in 1979 and was extended in 1980 by the addition

of a notch extension to its stern. In 1986, 5801 bareboat

chartered the barge to Ocean Transport Corporation ("OTC"). In

1987, OTC procured a charter from Koch Chemical Corporation

("Koch") to transport paraxylene from Corpus Christi, Texas to

Wilmington, North Carolina. OTC hired Ocean Towing Services, Inc.

("Ocean Towing") to tow the barge to Wilmington. Ocean Towing owns

the tug and is an affiliate of G & B Marine Service, Inc. ("G & B")

(G & B and Ocean Towing are collectively referred to as "the tug

interests").

On November 24, 1987, the JENNIFER L. BOUDREAUX left Corpus

Christi with the barge in tow. She was initially under orders to

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rendezvous off Galveston, Texas with another tug, the AMERICAN

PATRIOT, so this second tug could tow the barge to Wilmington.

However, the AMERICAN PATRIOT developed engine problems, and Todd

Lyons, the secretary/treasurer and comptroller of G & B, determined

that the JENNIFER L. BOUDREAUX could make the entire voyage. At

that time, he directed the JENNIFER L. BOUDREAUX to proceed to

Wilmington and to stop for fuel in Miami, Florida. Lyons later

determined the Miami stop was not necessary, and instructed the tug

to proceed directly to Wilmington and to follow a course in the

Gulf Stream to save time and fuel.

Neither the tug's captain or crew had ever been in the

Atlantic north of Jacksonville, Florida. The only chart on board

showed the coastline from Brownsville, Texas to Charleston, South

Carolina. It did not depict their final destination of Wilmington

and did not detail ports along the East coast. Although detailed

charts were available en route, the crew did not attempt to obtain

them.

On December 3rd, the tug received several gale warnings, due

to an approaching cold front, from the National Weather Service.

Winds of 30-40 knots and seas of 8-14 feet were forecast for the

following afternoon and evening. The tug reported them to Lyons.

He advised the tug that the weather system would move away from it,

and directed it to remain on course in the Gulf Stream. Later that

evening, weather conditions began to deteriorate as the gale

approached. Despite the steadily worsening weather, the tug

reduced its speed but continued in the Gulf Stream. The tug

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received several more gale warnings that night.

The next day, December 4th, the tug encountered, exactly as

forecasted, winds of 25 to 35 knots and seas of 12 to 14 feet with

occasional 20 foot swells. The weather conditions in the Gulf

Stream were significantly worse than those closer to shore. On

December 3rd and 4th, the maximum seas halfway between the Gulf

Stream and the shore were 10 feet. Within ten miles of the shore,

the seas reached a maximum of 4 feet.

During the storm, the barge was constantly splashed with water

and rolled from side to side. It frequently plowed beneath 20 foot

swells. The barge's deck and raised trunk were continually covered

with water from approximately noon on December 3rd to 8:00 p.m. on

December 4th.

At that time, the tug was hit by a series of large waves and

the tow line snapped. The crew attempted to retrieve the barge,

but could not because the tug's shackle, which connected the tow

line to the barge's bridge, had broken. For about an hour, the

barge rolled from side to side as it was pounded by waves.

Gradually, it began to sink, and finally sank completely around

midnight on December 6th. The barge was then in waters 200 fathoms

deep and was 120 miles from shore. Neither the barge nor its cargo

has been recovered.

The expected lawsuits were filed: 5801 and OTC sued the

barge's insurer, Continental Insurance Company ("Continental");

the cargo owner Koch sued Ocean Towing and G & B; Ocean Towing and

G & B sued for limitation of liability; and OTC, 5801, and

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Continental sued for limitation of liability (Continental, 5801,

and OTC are collectively referred to as "the barge interests").

The cases were consolidated.

Koch settled its claims before trial. In May 1993, 5801, OTC,

and Continental also settled their dispute and agreed to assert a

joint claim for the barge's loss, leaving two (consolidated) cases

for trial. The barge interests were suing the tug interests for

negligent towing, seeking to recover for the barge's loss. In

turn, the tug interests were suing for limitation of liability and

to recover towage fees and related expenses.

After the bench trial in September 1993, the district court

found the tug interests to be 2/3 at fault and the barge interests

to be 1/3 at fault for the barge's sinking. It awarded the barge

interests $2.67 million, but denied pre-judgment interest on the

award. The district court denied the tug interests' claims for

limitation of liability and towage fees.

Both parties timely appealed and cross-appealed the judgment.

The tug interests argue the district court 1) abused its discretion

in disqualifying expert witness Richard Vinas; 2) abused its

discretion in permitting expert Norman Antrainer to testify about

the barge's value; 3) erred in finding the tug breached its duties

of seaworthiness and care; 4) erred in denying their petition for

limitation of liability; and 5) erred in denying towage fees. The

barge interests argue the district court 1) clearly erred in

finding the barge unseaworthy; and 2) abused its discretion in

denying pre-judgment interest.

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 II. DISCUSSION

A. Disqualification of Richard Vinas

The tug interests contend the district court erred in

disqualifying expert witness Richard Vinas.1 Vinas had originally

been retained as an expert by Continental in its insurance dispute

with 5801 and OTC. Continental paid him approximately $8000,

received two detailed written reports of his opinions, and listed

him as a "will call" expert for the scheduled August 1990 trial

date. This date was suspended. It is not clear when Continental

released him.2 At trial three years later, Vinas remained listed

as a "will call" expert by the barge interests, although they

rested without calling him.

On September 23, 1993, the barge interests discovered that the

tug interests had made ex parte contacts with Vinas and had

apparently retained him in August 1993. The following day, the

barge interests moved to disqualify Vinas as a witness and to

sanction the tug interests for their actions. The district court

heard argument, and, after reviewing memoranda from both sides,

disqualified Vinas. It concluded Continental had retained Vinas,

had provided him with confidential information, and "[had] not

1
Additionally, the tug interests' brief alleges the district
court improperly did not allow them to arrange ex parte meetings
with expert witnesses A.J. Herkes, Norman Antrainer, and Ed
Shearer. We do not address this issue because it was not
developed on appeal.
2
Continental contends it discharged Vinas in May 1993, after
the insurance dispute with 5801 and OTC was settled. The tug
interests contend Continental discharged him in the summer of
1990.

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release[d] Vinas to use the information he had compiled and

received in his work on the case." The tug interests appeal

Vinas's disqualification.

Federal courts have the inherent power to disqualify experts,

Campbell Ind. v. M/V GEMINI, 619 F.2d 24, 27 (9th Cir.1980),

although cases that grant disqualification are rare, English

Feedlot, Inc. v. Norden Lab., Inc., 833 F.Supp. 1498, 1501

(D.Col.1993). Initially, we point out that this is not a case in

which the expert switched sides. If that were the case, "no one

would seriously contend that a court should permit a consultant to

serve as one party's expert where it is undisputed that the

consultant was previously retained as an expert by the adverse

party in the same litigation and had received confidential

information from the adverse party pursuant to the earlier

retention. This is a clear case for disqualification." Wang Lab.,

Inc. v. Toshiba Corp., 762 F.Supp. 1246, 1248 (E.D.Va.1991)

(citations omitted). However, in the instant case, it was

Continental that switched sides, not Vinas. Continental had

retained Vinas to be an expert in its insurance coverage dispute

with 5801 and OTC. After the dispute was settled, Continental

changed its position and joined 5801's and OTC's side against the

tug interests.

In disqualification cases other than those in which the

expert clearly switched sides, lower courts have rejected a

"bright-line" rule and have adopted the following test:

First, was it objectively reasonable for the first party
who claims to have retained the expert to conclude that a

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 confidential relationship existed?

Second, was any confidential or privileged information
disclosed by the first party to the expert?

Mayer v. Dell, 139 F.R.D. 1, 3 (D.D.C.1991) (reviewing cases). See

also Palmer v. Ozbek, 144 F.R.D. 66, 67 (D.Md.1992). Only if the

answers to both questions are affirmative should the witness be

disqualified. Mayer, 139 F.R.D. at 3. Many lower courts have

considered a third element: the public interest in allowing or not

allowing an expert to testify. E.g., English Feedlot, 833 F.Supp.

at 1504-5; Great Lakes Dredge & Dock Co. v. Harnischfeger Corp.,

734 F.Supp. 334, 336-37 (N.D.Ill.1990).

The party seeking disqualification bears the burden of

proving these elements. Cordy v. Sherwin-Williams Co., 156 F.R.D.

575, 580 (D.N.J.1994). We review the district court's decision for

an abuse of discretion. English Feedlot, 833 F.Supp. at 1501-2.

Initially, a court must determine whether the retaining party

and the expert had "a relationship which permitted [the retaining

party] reasonably to expect that any communication ... would be

maintained in confidence by [the expert]." In re Ambassador Group,

Inc. Litigation, 879 F.Supp. 237, 243 (E.D.N.Y.1994). Lower courts

have found such a relationship to exist when "the record supports

a longstanding series of interactions, which have more likely than

not coalesced to create a basic understanding of [the retaining

party's] modus operandi, patterns of operations, decision-making

process, and the like." Marvin Lumber Co. v. Norton, 113 F.R.D.

588, 591 (D.Minn.1986). See also Wang Lab., 762 F.Supp. at 1249,

n. 4 (collecting cases); Cordy, 156 F.R.D. at 581. By contrast,

8
when "the expert met but once with counsel, was not retained, was

not supplied with specific data relevant to the case, and was not

requested to perform any services, [ ] reviewing court[s] [have]

found that the evidence supports the finding that the meeting was

a type of informal consultation rather than the commencement of a

long-term relationship." Mayer, 139 F.R.D. at 3-4 (internal

quotations and citations omitted). See also Wang Lab., 762 F.Supp.

at 1249, n. 5 (collecting cases); Nikkal Ind., Inc. v. Salton, 689

F.Supp. 187, 190 (S.D.N.Y.1988).

In the instant case, the district court did not clearly err in

finding that Continental had a reasonable expectation of

confidentiality with Vinas and that such expectation continued

after Vinas was "discharged" by Continental. Their relationship is

more aptly described as a "long-standing series of interactions"

than an initial consultation. Continental paid Vinas $8000 and had

received several written reports from him.

The court must next determine whether Vinas received, or had

reasonable access to, confidential information. Such information

would include "discussion of the [retaining party's] strategies in

the litigation, the kinds of experts [the party] expected to

retain, [the party's] views of the strengths and weaknesses of each

side, the role of each of the [party's] witnesses to be hired, and

anticipated defenses." Mayer, 139 F.R.D. at 4. However, purely

technical information is not confidential. Nikkal Ind., 689

F.Supp. at 191-92.

Continental contends its counsel "spent considerable time with

9
Mr. Vinas explaining his entire theory of the case as well as trial

tactics for the 1990 trial." It also contends the counsel

"furnished Mr. Vinas with documents that had been generated in

preparation for the trial of this matter and participated in the

formulation of graphics by Mr. Vinas." The tug interests asserted

that Vinas's knowledge was limited to technical information about

the barge's condition. The district court found Vinas did receive

confidential information. Given the competing arguments, this

finding is not clearly erroneous.

The tug interests contend that Continental abandoned any claim

to confidentiality after designating Vinas as a "will call" witness

whose report was circulated among the parties in 1990. The tug

interests believe they could have dispelled any notion that

Continental divulged confidential information to Vinas had the

court allowed an evidentiary hearing on the disqualification

motion. In some situations, a hearing may be required, but this

was not one of them. The substance of Vinas's report clearly

revealed that, had he not been a "will call" witness, it would have

embodied confidential disclosures. But although he was originally

designated a "will call" witness, it should have become clear by

May 1993, when Continental switched sides, that Continental no

longer desired to put into evidence his report on the cause of the

sinking. During the three-year hiatus from 1990 to 1993, moreover,

no party had an incentive to pursue Vinas's testimony, so his

designation as a "will call" witness became immaterial. The tug

interests could have deposed Vinas at any time, of course. All of

10
these facts were sufficiently evident to the trial court to render

an evidentiary hearing superfluous, especially in the late stages

of trial.

Lower courts have also "balance[d] the competing policy

objectives in determining expert disqualification." English

Feedlot, 833 F.Supp. at 1504. "The policy objectives favoring

disqualification include preventing conflicts of interest and

maintaining the integrity of the judicial process." Id.

"The main policy objectives militating against

disqualification are ensuring that parties have access to expert

witnesses who possess specialized knowledge and allowing experts to

pursue their professional calling." English Feedlot, 833 F.Supp.

at 1504-5. "Courts have also expressed concern that if experts are

too easily subjected to disqualification, unscrupulous attorneys

and clients may attempt to create an inexpensive relationship with

potentially harmful experts solely to keep them from the opposing

party." Id. at 1505. Accordingly, courts have considered whether

another expert is available and whether the opposing party had time

to hire him or her before trial. E.g., Wyatt v. Hanan, 871 F.Supp.

415, 422 (M.D.Ala.1994); Cordy, 156 F.R.D. at 582.

In this case, the district court noted that the tug interests

could have secured their own naval architect in June 1990, over

three years before trial. While the tug interests suggest that

Continental manipulated the pretrial witness list to "keep him

away" from them, the tug interests did not even allege in response

to the disqualification motion that they certainly intended to call

11
Vinas. The contention of dependency on his testimony rings

somewhat hollow in light of that coyness.

Moreover, we are troubled that the tug interests did not

directly notify their opponents before trial that they would be

calling Vinas to testify. Instead, counsel for the tug interests

made several ex parte contacts with Vinas and apparently employed

him as their consultant in August 1993, but the barge interests

only accidentally learned of this arrangement after their side had

rested.

We conclude the district court did not abuse its discretion in

disqualifying Vinas under this very limited and specific factual

scenario.

B. Denial of Pre-Judgment Interest

The barge interests contend the district court abused its

discretion in denying pre-judgment interest on their $2.67 million

award. The district court gave two reasons for its denial: 1) the

fact that both parties were at fault for the barge's sinking; and

2) the extraordinary delays in the trial due to the insurance

dispute among the barge interests and the reassignment of the case

from Judge Collins to Judge Heebe. Weighing against the denial of

prejudgment interest, the court also noted the $2.67 million award

was not substantially less than the amount sought by the barge

interests.

In maritime cases, an award of pre-judgment interest is the

rule rather than the exception. Orduna S.A. v. Zen-Noh Grain

Corp., 913 F.2d 1149, 1157 (5th Cir.1990). "Despite admiralty's

12
traditional hospitality to pre-judgment interest, however, such an

award has never been automatic." City of Milwaukee v. National

Gypsum Co., --- U.S. ----, ----, 115 S.Ct. 2091, 2096, 132 L.Ed.2d

148 (1995). The Supreme Court has explained that "the allowance of

interest on damages is not an absolute right. Whether it ought or

ought not to be allowed depends upon the circumstances of each

case, and rests very much in the discretion of the tribunal which

has to pass upon the subject, whether it be a court or a jury."

Id. (internal quotations and citations omitted). Nevertheless, a

court has the discretion to deny pre-judgment interest "only when

there are "peculiar circumstances' that would make it inequitable

for the losing party to be forced to pay pre-judgment interest."

Noritake Co. v. M/V Hellenic Champion, 627 F.2d 724, 728 (5th

Cir.1980) (footnote omitted). See also Milwaukee, --- U.S. at ----

, 115 S.Ct. at 2095 (summarizing circuit courts). We review the

district court's finding of peculiar circumstances for clear error,

and its denial of pre-judgment interest based on those

circumstances for an abuse of discretion. Orduna, 913 F.2d at

1157.

The district court's first reason for denying pre-judgment

interest was that both parties were at fault for the barge's

sinking. Contrary to the argument made by the tug interests, the

Supreme Court decisively rejected this rationale in City of

Milwaukee v. National Gypsum, supra, holding that "neither a good

faith dispute over liability nor the existence of mutual fault

justifies the denial of pre-judgment interest." 115 S.Ct. at 2097.

13
The Court explained that the plaintiff's award had already been

reduced because of its contributory negligence. Accordingly, "[to]

deny[ ] pre-judgment interest on the basis of mutual fault would

seem to penalize a party twice for the same mistake." Id.

(internal citations and quotations omitted).

In passing, however, the Supreme Court endorsed in part the

district court's second reason for denying prejudgment interests,

i.e. the extraordinary delay in reaching trial. See City of

Milwaukee, --- U.S. at ----, 115 S.Ct. at 2096 (plaintiff's delay

in prosecuting a suit is an obvious "peculiar circumstance".) The

various parties filed their lawsuits in December 1987. The cases

were consolidated and initially set for trial on January 8, 1990.

This trial was cancelled because an attorney was ill. The trial

was rescheduled for August 13, 1990, but was recessed after one day

because of the FBI's criminal investigation of the presiding judge.

The trial was then set for May 13, 1991. However, on May 6, 1991,

the district court granted 5801's and OTC's motion for summary

judgment against Continental. The case was stayed for almost two

years while Continental appealed. In February 1993, the Fifth

Circuit affirmed the judgment, and, in May 1993, the barge

interests settled their insurance dispute. Meanwhile, the case had

been reassigned to Judge Heebe. Trial finally began in September

1993, and judgment was entered in August 1994—71/2 years after the

tug interests had filed suit.

While it is true that trial delays do not generally

constitute a peculiar circumstance, Socony Mobil Oil Co., Inc. v.

14
Texas Coastal and Int'l., Inc., 559 F.2d 1008, 1014 (5th Cir.1977),

the series of delays that bedeviled this case was an exception to

the rule. In In re P & E Boat Rentals, Inc., 872 F.2d 642, 655

(5th Cir.1989), the Fifth Circuit affirmed the denial of

pre-judgment interest in a case in which two trial dates had been

upset because the district court was hearing the 20 week criminal

trial of the Governor of Louisiana. The district court found the

resulting delay, which was attributable to neither party, to be a

peculiar circumstance that, together with other circumstances,

justified denying pre-judgment interest.

In the instant case, trial was delayed for two years because

of the insurance dispute among the barge interests; neither of the

tug interests was a party to that suit. Trial was delayed an

additional nine months because of the criminal investigation of the

presiding judge. Overall, three trial dates were upset, and trial

did not occur until 31/2 years after the first trial date. The

district court did not clearly err in finding that these delays

constituted a peculiar circumstance.

We conclude that the district court did not abuse its

discretion in denying prejudgment interest.

C. Other Issues

The district court authored a long, meticulous opinion

embodying his findings and conclusions. From their opposing

perspectives, the parties have challenged numerous legal and

factual aspects of his analysis. The issues they raise were

summarized at the outset of this opinion, and we have considered

15
each of them in light of oral argument, the briefs, and the record.

Having done so, it is clear that this case was hard-fought among

skilled and experienced counsel before an attentive judge. We are

not persuaded that the court clearly erred in his fact findings,

committed reversible errors of law or reversibly abused his

discretion.

CONCLUSION

For these reasons, the judgment of the trial court is

AFFIRMED.

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