UNITED STATES COURT OF APPEALS

For the Fifth Circuit

No. 98-30875 

STEVEN HENRY ADAMS, for Himself and as Representative of Certain

Underwriters at Lloyd's; INDEMNITY MARINE ASSURANCE COMPANY LTD;

THE YORKSHIRE INSURANCE COMPANY LIMITED; COMMERCIAL UNION ASSURANCE

COMPANY PLC; PHOENIX ASSURANCE PLC; CORNHILL INSURANCE PLC; NORWICH

UNION FIRE INSURANCE SOCIETY LTD; MARITIME INSURANCE COMPANY LTD;

THE NORTHERN ASSURANCE CO, LTD; SKANDIA UK INSURANCE PLC; OCEAN

MARINE INSURANCE COMPANY; FOLKSAM INTERNATIONAL INSURANCE COMPANY

(U.K.) LTD; SCOTTISH LION INSURANCE COMPANY LTD; WURTTEMBERGISCHE

FEUERVERSICHERUNG AG; SPHERE DRAKE INSURANCE PLC; DAI-TOKYO

INSURANCE COMPANY (U.K.) LTD

Plaintiffs - Appellees - Appellants - 

Cross Appellants - Cross Appellees

VERSUS

UNIONE MEDITERRANEA DI SICURTA; ET AL

Defendants

AMERICAN EAGLE MARINE, INC

Defendant - Appellee - Appellant - 

Cross Appellant - Cross Appellee

VERSUS

AK STEEL CORPORATION, formerly know as, Armco Steel Company, L P

Defendant - Appellee - Cross Appellant
2

VERSUS

UMS GENERALI MARINE S.P.A., formerly known as Union Mediterranea

Di Sicurta'

Defendant - Appellant - Cross Appellee

VERSUS

BRITAMCO UNDERWRITERS, INC

Defendant - Appellee - Appellant - 

Cross Appellant - Cross Appellee

Appeals from the United States District Court

For the Eastern District of Louisiana

August 14, 2000

Before JONES, DUHÉ, and WIENER, Circuit Judges.

DUHÉ, Circuit Judge: 

This appeal involves two causes of action arising out of the

sinking of a cargo of 158 steel slabs in the Mississippi River.

The first cause of action is a dispute between two insurers of the

cargo, Steve Henry Adams, et. al. (“the Plaintiffs”) and U.M.S.

Generali Marine S.P.A. (“UMS”), over whether the non-paying coinsurer (UMS) should be required to contribute to the payment of

loss. The second action is a claim by the Plaintiffs for

conversion of the cargo against a voluntary salvor, American Eagle

Marine, Inc. (“American Eagle”), and the subsequent purchaser of
3

the salvaged cargo, A.K. Steel Corp. (“A.K. Steel”).

Regarding the dispute between the insurers, we conclude that

UMS did not waive its personal jurisdiction defense, and we reverse

and remand for the district court to determine jurisdiction. We do

not decide the other issues UMS and the Plaintiffs raise on appeal

against each other. As to the conversion dispute, we affirm on all

grounds except one. We reverse and vacate the district court's

determination that American Eagle's general liability insurance

policy with Britamco Underwriters, Inc. (“Britamco”) provided

coverage for American Eagle's negligent conversion. We do not

decide whether UMS may subrogate against American Eagle and A.K.

Steel. 

BACKGROUND

I. Factual Background

While en route from New Orleans to Cincinnati, Canal Barge

Company (“Canal Barge”) barges CBX 207 and 214 sank in the

Mississippi River. This case involves a dispute over the 158 slabs

of steel cargo carried to the riverbed aboard those two barges.

A.K. Steel of Middletown, Ohio, had originally agreed to purchase

the steel slabs from Duferco, S.A (“Duferco”), a Swiss Company.

The Plaintiffs and UMS concurrently insured the cargo under

open marine cargo policies. Duferco had an open cargo policy with

UMS, an Italian insurance company, which was written and issued in

Italy and delivered to Duferco in Switzerland. Canal Barge had an
4

open cargo/shippers’ interest insurance policy with the Plaintiffs,

on which Duferco was named as an additional insured.

After the accident, Duferco made a claim with UMS. Duferco,

through its agent, the Italian Claims Agency (“ICA”), awarded a

salvage contract to American Eagle to raise the cargo. The

contract provided that it could be canceled with notice and that

American Eagle did not have to perform salvage until the river

gauge at Vicksburg fell below 20 feet, the depth at which salvage

could be prudently performed. UMS advanced to Duferco $191,000 in

sue-and-labor costs for the salvage effort. In March 1994, UMS

denied the claim primarily because Duferco failed to warrant proper

loading of the cargo. In the meantime, A.K. Steel (the original

intended purchaser) confirmed that it did not own the cargo and

assigned any and all of its rights to Duferco.

The salvage contract remained in effect until July 6, 1994,

when ICA wrote American Eagle advising that Duferco was canceling

the contract. In the letter, an ICA representative wrote that the

cargo “had been abandoned.” The parties greatly dispute the

meaning of this letter and the circumstances surrounding it. From

July 6, 1994 until it mobilized its voluntary effort near the end

of January 1995, American Eagle did not salvage the steel, although

the river gauges suggested that the months of September, October

and November of 1994, presented optimum times for salvage because

of the low water depths. On February 18, 1995, with the river

gauge just below the minimum depth for prudent operations, American
5

Eagle voluntarily undertook salvage of the steel. 

American Eagle did not negotiate with potential buyers for the

steel before commencing the salvage operation. While it made some

attempt to discover the chemical composition of the steel, it

abandoned those efforts, thereby lowering the potential market

value for the steel. American Eagle first contacted A.K. Steel on

January 7, 1995. A.K. Steel offered to purchase what it described

as the “Duferco Steel, that had sunk in the Mississippi.” American

Eagle was unaware that A.K. Steel was the original intended

purchaser of the steel. A.K. Steel did not advise the Plaintiffs

or other interested parties of its negotiations with American Eagle

to purchase the steel. 

In negotiations, American Eagle refused to warrant title to

the steel as insisted by A.K. Steel. During the salvage operation,

American Eagle also refused to sell the steel to another buyer

because this purchaser demanded that American Eagle warrant title.

Instead, it would only warrant abandonment for salvage, a demand to

which A.K. Steel eventually acceded. On March 8, 1995, American

Eagle sold all its rights in the cargo retrieved to A.K. Steel. In

the purchase agreement, American Eagle sold to A.K. Steel its

“rights, and possession in salvage and title rights, if any.”

Salvage operations commenced on February 21, 1995, and

continued through April 26, 1995. American Eagle successfully

salvaged 127 steel slabs, relinquishing them to A.K. Steel as they

were placed aboard barges in the river. Pursuant to their
6

contract, A.K. Steel paid American Eagle $525,424.32. The

Plaintiffs did not assert an ownership interest in the steel until

after the salvage operation was completed.

The Plaintiffs were made aware of the salvage operation in

April 1995 by Canal Barge’s counsel, who advised Plaintiffs'

counsel that Douglas Adams of American Eagle had inquired about

salvaging the cargo. When the Plaintiffs advised American Eagle

and A.K. Steel that the cargo was theirs and that the salvage

should cease, they both refused. American Eagle and A.K. Steel

initially argued that they owned the steel. Later American Eagle

and A.K. Steel asserted defenses based on the laws of salvage.

II. Procedural History

The Plaintiffs brought this case originally as an action for

declaratory relief to ascertain the proper party to pay the

constructive total loss of cargo under the insurance policy they

issued to Canal Barge. They also sought to determined whether UMS,

which also issued Duferco a similar policy insuring the same cargo,

was obligated to contribute to the payment. Plaintiffs named as

defendants Ilva, the manufacturer of the steel; Duferco; Canal

Barge; UMS; and Duferco Steel, Inc., an American sister company to

Duferco. The court voluntarily dismissed Ilva, Duferco, Duferco

Steel, Inc., Canal Barge and A.K. Steel from this initial action at

various times. The Plaintiffs later made A.K. Steel a co-defendant

in the action for conversion of the steel.

In the initial declaratory relief action, the district court
1 The district court earlier had granted the Plaintiffs' motion

to compel substitution of real party in interest. This motion

7

held that Duferco was entitled to recover its loss from either

Plaintiffs or UMS. Since Duferco made demands on the Plaintiffs

first, the Plaintiffs were obliged to pay Duferco before seeking

contribution from UMS. Pursuant to this ruling, the Plaintiffs

paid Duferco $986,352.41 in exchange for an assignment of Duferco's

rights, if any, against UMS. Plaintiffs refused Duferco’s claim

for payment of approximately $191,000 in sue and labor expenses

(specifically, investigation expenses, survey costs, and attorney’s

fees) advanced by UMS during the preliminary loss investigation.

The district court voluntarily dismissed A.K. Steel, which had

relinquished any claim it may have had, from the suit prior to

payment of the Duferco claim.

The Plaintiffs then discovered the salvage effort and demanded

that American Eagle and A.K. Steel return the cargo or pay its

value. When American Eagle and A.K. Steel refused, the Plaintiffs

filed an amended declaratory judgment action, which asserted a

claim to recover the value of the steel from American Eagle and

A.K. Steel. UMS then filed a cross-claim against A.K. Steel and

American Eagle. 

At trial on the amended declaratory action, it was determined

that although UMS had initially agreed to pay Duferco’s claim, UMS

denied coverage after learning Canal Barge had additional coverage.

The district court rejected every coverage defense raised by UMS.1
requested the district court to make UMS an involuntary Plaintiff

in Duferco’s cross-claim against Canal Barge.

2 The district court and the parties treat both American Eagle

and A.K. Steel as salvors. For this reason, we likewise do so in

certain portions of our opinion.

3 During the course of this litigation, American Eagle filed for

bankruptcy. The court then ordered an automatic stay. The court

lifted the stay and substituted Britamco as the real party in

interest.

8

In rejecting these defenses, the district court found that UMS was

obliged under its policy with Duferco to contribute to the loss in

proportion to the amount its coverage bore to the total amount of

insurance (80 percent of the loss). The district court awarded the

Plaintiffs $789,081.93 against UMS or 80 percent of $986,352.41. 

In the conversion action, the district court found that

American Eagle and A.K. Steel had, albeit in good faith,

negligently converted the steel.2 The court held that the

Plaintiffs had not abandoned the cargo. The court awarded

$190,975.68 for the conversion, which it divided on an eightytwenty basis between UMS ($152,780.55) and Plaintiffs ($38,195.13).

The district court entered judgment against American Eagle and A.K.

Steel in favor of UMS and the Plaintiffs for these amounts.

Finally, the court held that American Eagle’s liability for

negligent conversion was covered by its general liability insurance

policy with Britamco.3

In calculating the judgment, the district court determined

that the cargo’s value, after applying a 20 percent discount based
4 The district court reached this amount by reducing the per net

ton of the steel from $300 to $240 and then presumably multiplying

that figure by the tonnage of the salvaged steel.

9

on the unavailability of the steel’s chemistries to Plaintiffs, was

$716,400.4 The court then offset the value of the sunken steel by

$525,424.32, American Eagle’s salvage expenses. The district court

held that American Eagle’s and A.K. Steel’s right to assert a

salvage claim against the Plaintiffs had lapsed with the passage of

the two-year prescriptive period, but the right could nonetheless

be asserted as an affirmative defense. The $190,975.68 is then the

difference between the discounted value of the cargo and the

salvage expense.

No party is happy with the district court rulings. On appeal,

UMS has dropped all coverage defenses. UMS appeals the district

court rulings concerning personal jurisdiction over it, venue, and

the allocation of the loss between insurers. The Plaintiffs

contend that UMS should be barred from receiving any money judgment

from A.K. Steel and American Eagle until it pays them its pro-rata

share of the constructive loss. Plaintiffs also argue that the

district court abused its discretion in not allowing them to

recover attorney’s fees and expenses from UMS.

Regarding the conversion litigation, American Eagle and A.K.

Steel appeal the district court’s finding of negligent conversion,

arguing that the cargo was abandoned. American Eagle also appeals

the district court’s ruling on negligent conversion, arguing that
10

it only transferred its possessory interest and salvage claim to

A.K. Steel. In addition, A.K. Steel appeals the district court’s

holdings that it was not protected by the voidable title doctrine,

that UMS could subrogate against it, and the court’s exercise of

subject matter jurisdiction. Plaintiffs cross-appeal the district

court’s ruling that American Eagle and A.K. Steel could assert the

right to a salvage claim as an affirmative defense, its ruling that

they acted in good faith, and its calculating the steel's value and

the salvage award. Finally, American Eagle’s insurer, Britamco,

alleges that the district court erred in concluding that its policy

covered American Eagle’s negligent conversion. 

DISCUSSION

I. Personal Jurisdiction over UMS

We review de novo the district court's determination that its

exercise of personal jurisdiction over a non-resident defendant is

proper when the relevant facts are not in dispute. Wilson v. Belin,

20 F.3d 644, 647-48 (5th Cir. 1994). When a nonresident defendant

timely questions a federal district court's jurisdiction over it,

the plaintiff bears the burden of establishing jurisdiction. Id.

at 648; Travelers Indem. Co. v. Calvert Fire Ins. Co., 798 F.2d 826,

831 (5th Cir. 1986). In determining personal jurisdiction, a court

is not restricted to a review of the plaintiff's pleadings. It may

resolve a jurisdictional issue by receiving affidavits,

interrogatories, depositions, oral testimony, or any recognized form
11

of discovery. Jobe v. ATR Marketing, Inc., 87 F.3d 751, 753 (5th

Cir. 1996).

In admiralty cases, a federal court may exercise personal

jurisdiction over a foreign defendant, such as UMS, when (1)

Louisiana could have acquired personal jurisdiction over the

defendant on the same cause of action; and (2) the exercise of

jurisdiction comports with the Due Process Clause of the Fourteenth

Amendment. Asarco, Inc. v. Glenara, Ltd., 912 F.2d 784, 786 (5th

Cir. 1990). In this case, these two inquiries merge into one

because Louisiana's long-arm statute permits jurisdiction

coterminous with the scope of the Due Process Clause. Id. See La.

Rev. Stat. Ann. § 13:3201 (West 1991).

Additionally, a defendant may waive its personal jurisdiction

defense, thereby consenting to jurisdiction. See Travelers Indem.

Co., 798 F.2d at 834. (“Clearly parties can waive lack of personal

jurisdiction.”). Usually a party waives personal jurisdiction by

failing to raise the issue when filing a responsive pleading or

making a general appearance. Fed R. Civ. P. 12(h). In rarer

circumstances, a defendant may waive personal jurisdiction if it

authorized another to appear or act on its behalf in court.

Reynolds v. International Amateur Athletic Fed'n, 23 F.3d 1110, 1121

(6th Cir. 1994)(citing Federal Deposit Ins. Corp. v. Oaklawn Apts.,

959 F.2d 170, 175 (10th Cir. 1992)).

The district court concluded that UMS waived personal
5 The court denied UMS' motion to dismiss for lack of

jurisdiction and later denied UMS' motion to reconsider and order

seeking certification pursuant to 28 U.S.C. § 1292(b). The court

denied UMS' motion to reconsider for the same reasons stated in its

earlier order. 

12

jurisdiction because it authorized Duferco to appear on its behalf.5

The court first determined that the legal representations of UMS and

Duferco were intimately intertwined. The court examined Statements

for Professional Services Rendered submitted by various law firms

involved in this litigation. The court found that those documents

indicated that at the time Duferco filed its answer to the

Plaintiffs' complaint, the same attorneys represented UMS and

Duferco. In addition, UMS paid Duferco's legal bills during 1994

and 1995; and a law firm representing Duferco had represented UMS

on other occasions.

The Court also concluded that not only was the legal

representation intertwined, but the claims were as well:

UMS' attempt to shield itself from the jurisdiction of this

court by relying on Duferco's ostensible obligation to

reimburse them is disingenuous, at best. Indeed, UMS

continually argues that Duferco must reimburse them for the

fees expended during the salvage attempt. However, Duferco

has paid UMS nothing despite that the loss occurred over two

years ago. Nor has the Court been given any proof that UMS

has instituted suit against Duferco in Italy for this money.

The court found that UMS attempted to insulate itself from the

court's jurisdiction by hiding behind Duferco. “Duferco is truly

acting for UMS. Thus, this Court finds that UMS has waived its

personal jurisdiction defense through the actions of Duferco.”

Citing Reynolds, 23 F.3d at 1121. Because of this finding, it was
6 The Plaintiffs contend that this deposition only reinforces

the district court conclusion. The director testified that he did

not regard the expenses to be owed by Duferco. Instead, he

expected full recovery of its losses and expenses from UMS.

13

unnecessary for the court to consider whether it had specific or

general personal jurisdiction over UMS.

On appeal, UMS raises some legitimate questions regarding the

district court's findings regarding the relationship between UMS and

Duferco. As to the court's determination that UMS had not sought

reimbursement for the sue-and-labor costs from Duferco for nearly

two years, UMS contends that such action was not necessary because

UMS already had a less formal but equally effective means to enforce

Duferco's obligation to pay. A Duferco director testified in a

deposition that on July 3, 1995 UMS entered a debit of $191,000 on

Duferco's open account.6 (R. at 3689-3691). This amount was

subtracted from a total premium refund of $574,342, which was paid

to Duferco when the accounting for the 1993-1994 policy year was

completed. (See UMS Bench Book of Exhibits 16).

UMS also claims that the District Court misapplied Reynolds in

holding that UMS authorized Duferco's actions. In Reynolds, the

Sixth Circuit reversed the lower court's holding that the

International Amateur Athletic Federation (“IAAF”) had waived its

jurisdictional defenses by reason of a Federation member's

intervention in a lawsuit filed against the IAAF by a disgruntled

athlete. The Sixth Circuit determined that the member was carrying

out a statutory duty when it intervened, and noted that there was
7 Plaintiffs contend that this argument rings hollow in light

of UMS' failure for nearly two years to attempt to recover the

expenses from Duferco in an Italian forum.

14

no evidence indicating the IAAF authorized the member to do so.

Reynolds, 23 F.3d at 1121. To some extent, this case is similar to

Reynolds. Duferco had an obligation under Italian law to reimburse

the expenses to UMS. Italian Civil Code, Article 2041 (Mario

Betramo, et. al., trans.) (1991) (“General cause of action for

unjust enrichment. A person who has enriched himself without cause

at the expense of another shall, to the extent of the enrichment,

indemnify the other for his correlative financial loss.”)7

UMS makes a strong showing that it has been reimbursed, but we

are still left with undisputed evidence that the legal

representations of UMS and Duferco were intimately intertwined. UMS

contends that even this evidence does not amount to consent to

personal jurisdiction.

Cases dealing with this factual scenario are few and far

between. Travelers Indem. Co., 798 F.2d at 832-35, involved a

dispute over defendant insurer London Club's indemnity obligations

arising from a maritime collision. In the suit, counsel selected

by London Club had consented, on behalf of the shipowner, to

transfer the case to Louisiana. The Plaintiffs argued that this

consent amounted to a waiver of London Club's personal jurisdiction

defenses in federal court in Louisiana. We held that the consent

to transfer did not result in London Club's waiver of its personal
15

jurisdiction defenses. Id. 

One federal district court has rejected the contention that a

foreign defendant waives jurisdiction when it has a controlling

interest in ongoing litigation in the United States. Complaint of

Kreta Shipping, S.A., No. 96 Civ. 1137, 1998 WL 173167 (S.D.N.Y.

Jan. 29, 1998), arose out of the abandonment of the M/V AMPHION,

which resulted in damage to a cargo of steel laden on board. Kreta,

the owner of the vessel, commenced a limitation action in federal

court seeking exoneration from or limitation of liability with

respect to losses connected with the AMPHION's voyage.

Kreta had hired Astron Maritime Company to provide management

services for the vessel in accordance with a standard managing and

agency agreement, which was signed and negotiated in Greece.

Claimants in the limitation proceeding filed actions in federal

court against Astron, which sought to dismiss these claims for lack

of personal jurisdiction. The claimants did not contend that any

of the facts presented to the district court subjected Astron to

personal jurisdiction. Rather, they took the position that

jurisdiction came from Astron's conduct in the Kreta Shipping

litigation. They specifically alleged that Astron, rather than

Kreta, made the decision to file the limitation action and had

“power over litigation conferred by the ship management contract.”

Id. at *3.

The district court rejected this theory and concluded that

Astron did not consent to personal jurisdiction through its
8 Id. at *7 (internal citations omitted). The direct action

statute in Louisiana is not a legislative assertion of jurisdiction

over insurance companies. McKeithen v. M/T FROSTA, 435 F. Supp.

584, 586 n.6 (E.D. La. 1977).

9 The Plaintiffs argue that the factual circumstances in Kreta

Shipping are critically different from those in this case because

the shipping agent in Kreta Shipping was not attempting to assert

a cause of action for funds owed to the agent. Whereas, UMS was

asserting its claim disguised as Duferco. The Plaintiffs, however,

do not dispute the central holding of Kreta Shipping. Moreover,

based on the analysis above, it is impossible to discern what

motives, if any, UMS had as to the funds in question.

16

involvement in the Kreta Shipping litigation.

The fact that Astron may be the party ultimately liable and

that Astron may have directed the decision-making behind this

lawsuit does not result in Astron having consented to the

Court's jurisdiction. These facts make Astron no different

than the typical maritime (or other) insurer - an insurer will

often be the party ultimately financially liable, may provide

for the insured's legal representation and legal strategy, and

often effectively controls the conduct of the lawsuit.

Insurers do not, however, consent to personal jurisdiction

through such activities (absent state “direct action” or

similar insurance legislation).8

The district court's reasoning in Kreta Shipping is compelling;

in particular the court's recognition that insurers often must take

an active role in an insured's legal problems.9 UMS has continually

argued that it is accepted industry custom world-wide for an insurer

to retain the same attorneys to act for itself and its insured when

investigating loss. While UMS' actions may be somewhat suspect, the

evidence does not support a finding that UMS has relied on these

tactics to insulate itself from jurisdiction of the district court.

The evidence equally supports a finding that UMS acted like any

other insurer would when its insured faces legal liability. In
10The parties submitted motions to the court addressing the

personal jurisdiction/minimal contacts inquiry and the district

court conducted a hearing, but ruled only on the waiver issue. 

17

addition, our standard of review places the burden on the plaintiff,

and not the defendant, to support finding personal jurisdiction.

See also C. Wright & A. Miller, Federal Practice and Procedure §

3522 at 60 (1984) (“It is a principle of first importance that the

federal courts are courts of limited jurisdiction.”). 

For these reasons, we conclude that UMS did not waive its

personal jurisdiction defenses and we reverse the district court.

Because of its decision on waiver, the district court did not decide

whether it had specific or general jurisdiction over UMS.10 Since

the parties dispute whether the district court has jurisdiction over

UMS, we remand the case for a further determination of jurisdiction.

Because jurisdiction over UMS is unresolved, we do not address the

other issues the Plaintiffs and UMS raise on appeal: The Plaintiffs

claim attempting to block UMS from receiving its money judgment and

their claim seeking attorney's fees and expenses from UMS; and UMS

claims of improper venue and improper allocation of loss between

insurers. We also do not address whether UMS may subrogate against

American Eagle and A.K. Steel. 

II. Salvage and Title Dispute

A. Abandonment of the Cargo

We review findings of fact for clear error and legal
11 A.K. Steel argues that the trial court incorrectly determined

that it had admiralty jurisdiction over the title issue and state

law should apply because the steel slabs were abandoned and

embedded in the river bed. It contends that this case does not

come within the jurisdiction of federal courts under the Abandoned

Shipwrecks Act. In California v. Deep Sea Research Inc., 118 S.Ct.

1464, 1473 (1998), the Supreme Court held that the Eleventh

Amendment does not bar federal jurisdiction to adjudicate the

status of a wreck under the Abandoned Shipwrecks Act, 43 U.S.C. §§

2101-2106. In addition, the Abandoned Shipwrecks Act does not

govern this case. As a rule, claims arising out of salvage

operations are within the admiralty jurisdiction of federal courts.

18

conclusions de novo. Ivy v. Jones, 192 F.3d 514, 516 (5th Cir.

1999). Under the clearly erroneous standard, we look first to

whether there is substantial evidence supporting the findings. We

will not set aside the district court's factual findings when they

are supported by substantial evidence, unless, after a review of the

record as a whole, we are left with the unyielding belief that a

mistake has been made. Anderson v. Bessemer City, 470 U.S. 564, 573

(1985).

The district court held that the Plaintiffs had title to the

salvaged steel. The court determined that the law of salvage

applied to this case, rather than the law of finds. Therefore, A.K.

Steel did not possess title to the salvaged steel, which it acquired

from American Eagle. On appeal, American Eagle and A.K. Steel

contend that title to the cargo was abandoned pursuant to the law

of finds, therefore, American Eagle and subsequently A.K. Steel

should be considered the rightful titleholders. 

We review whether the sunken cargo comes within the law of

salvage or the law of finds.11 One commentator has noted that
Treasure Salvors, Inc. v. The Unidentified Wrecked and Abandoned

Sailing Vessel, 640 F.2d 560, 566 (5th Cir. 1981).

12 “When articles are lost at sea the title of the owner in them

remains, even if they are found floating on the surface or after

being cast upon the shore. Should a vessel be abandoned without

hope of recovery or return, the right of property still remains in

her owner.” Benedict on Admiralty § 150 at 11-1.

19

“[t]here appears to be no clear line of demarcation between property

that is 'salvaged' and 'finds.'” Frank L. Maraist, Admiralty in a

Nut Shell 130 (West 3d ed. 1996). Generally speaking, “[m]arine

salvage occurs when marine property is successfully saved by a

volunteer from marine peril. By performing a voluntary and

successful act, the salvor obtains a maritime lien on the salved

property, which he can enforce in rem in an admiralty court.”

Martin J. Norris, Benedict on Admiralty § 802[A] at 8-4 (1998).

The owner of the distressed goods on navigable waters does not

lose title even though the property may become the subject of

salvage services. Id. § 150 at 11-1.12 “The salvor obtains a right

of possession; he does not acquire ownership or title to the salved

property.” Id. § 150 at 11-1 to 11-2. The maritime lien allows the

salvor to secure compensation for his voluntary services. “All that

the salvor can do is to enforce his lien by making his claim to an

award. He thus has a lien and he has the right of possession. He

also has the duty of properly caring for the property while it is

in his possession.” Id. at 11-2.

A find, on the other hand, differs from salvage in that the

property has either been abandoned (as further defined below) or
20

never owned by any person. The property belongs to the finder.

Benedict on Admiralty notes:

The common law of finds treats property that is abandoned as

returned to the state of nature and thus equivalent to

property, such as fish or ocean plants, with no prior owner.

. . . Admiralty favors the law of salvage over the law of

finds because salvage law's aims, assumptions, and rules are

more consonant with the needs of maritime activity and because

salvage law encourages less competitive and secretive forms of

conduct than finds law. . . . [A] finding that title to such

property has been lost requires strong proof, such as the

owner's express declaration abandoning title.” Id. § 158 at

11-16 (quoting Hener v United States, 525 F. Supp. 350 (S. D.

N. Y. 1981) (emphasis added)).

Several courts favor salvage instead of finds, and have

applied the law of finds only when supported by strong evidence.

The Fifth Circuit has noted that even when a vessel is abandoned the

original owner is not divested of title “except in extraordinary

cases. . . where the property has been lost or abandoned for a very

long period.” Treasure Salvors, Inc. v. The Unidentified Wrecked

and Abandoned Sailing Vessel, 640 F.2d 560, 567 (5th Cir. 1981). 

The more important question, however, is what must an owner do

to affirmatively release title to the property - forever abandoning

it under the law of finds. As the Fourth Circuit has noted there

are only a handful of cases applying the law of finds. These cases

fit into two categories. “First, there are cases where owners have

expressly and publically abandoned their property. In the second

type of case, items are recovered from ancient shipwrecks and no

owner appears in court to claim them.” Columbus-America Discovery

Group v. Atlantic Mutual Ins. Co., 974 F.2d 450, 461 (4th Cir. 1992)
21

(internal citations omitted). In the first context, a party may

show abandonment only by a clear and unmistakable affirmative act

indicating a purpose to repudiate ownership. Id. A federal

district court has said that abandonment under the law of finds must

be proven by “clear and convincing evidence,” such as the owner's

express declaration abandoning title. Falgout Brothers, Inc. v. S/V

Pangaea, 966 F. Supp. 1143, 1145 (S.D. Ala. 1997) (citing ColumbusAmerica Discovery Group, 974 F.2d at 461) (emphasis added).

Therefore, we must apply the law of salvage unless American

Eagle and A.K. Steel demonstrate through clear and convincing

evidence that the owner of the steel, Duferco or later the

Plaintiffs, made an express declaration abandoning title. We now

review the pertinent facts.

On July 6, 1994, ICA Representative Victor Bruzzone (Duferco's

agent) wrote a letter to American Eagle stating, “[w]ith reference

to the aforementioned salvage contract and in conformity with

paragraph 6, we are instructed by Duferco, S.A., to cancel said

contract of salvage as cargo has been abandoned.” Duferco then

sent a letter on July 28, 1994 to Canal Barge saying:

We hereby advise you and your cargo underwriters that the

'steel slabs' in question have been abandoned by us. It has

been our understanding for some time that you and

representatives of your cargo underwriters were aware that the

salvage of the cargo in question was impossible due to river

conditions, and that the cost of possible salvage operations

would exceed the possible market value for the steel commodity

in question. We immediately request that you put your cargo

underwriters on formal notice of our abandonment of the cargo.
22

Both sides dispute the meaning of these letters. Bruzzone

testified that he was instructed to cancel the salvage contract so

that Duferco could declare the cargo a constructive total loss.

Bruzzone said that Duferco had not told him they were “abandoning”

the cargo; rather Bruzzone picked up the term “abandon” from a

Duferco attorney. Bruzzone claimed the purpose of the letter was

to cancel the salvage contract. American Eagle contends that

Plaintiffs' witness Michael Garin testified that the Plaintiffs

considered Duferco's abandonment to be a total abandonment to the

world, and the Plaintiffs had no intent of salvaging the cargo or

asserting ownership until it did so in April 1995.

Based on the above letters the district court concluded that

Duferco had abandoned the cargo on July 28, 1994. The Plaintiffs

refused to accept the abandonment in August 1994. Then, in response

to the court's declaratory judgment ruling, the Plaintiffs made a

partial payment to Duferco in the amount of $986,352.41 in exchange

for an assignment of Duferco's rights, if any, against UMS. On

February 1, 1995, Plaintiffs and Duferco executed an Assignment and

Subrogation Receipt in return for payment on the claim. The

Assignment and Subrogation Receipt provided that, “[the Plaintiffs]

are entitled at [their] option to take over [Duferco's] interest in

whatever may remain of goods, it being understood that delivery to

[the Plaintiffs] of the document of title relating to goods shall

not be construed as an exercise of such option.”

Based on this agreement, the court concluded that Plaintiffs
13 A.K. Steel notes that the Plaintiffs failure to accept the

abandonment in August 1994 resulted in titled not passing to them.

See Jones Towing, Inc. v. United States, 277 F. Supp. 839, 849 (E.

D. La. 1967). Nevertheless, this argument does not defeat the

presumption that Duferco retained title. 

23

had title to the steel. It held that, even though the Plaintiffs

initially rejected the abandonment, they subsequently obtained title

to the cargo pursuant to the Assignment and Subrogation Receipt.

The court found that there was no “clear and convincing” proof

presented at trial that the Plaintiffs expressly abandoned title.

On appeal, American Eagle and A.K. Steel focus on the district

court's finding that the Assignment and Subrogation Receipt

transferred title to the Plaintiffs. A.K. Steel argues that because

Duferco abandoned the steel in July 1994 it no longer had ownership

rights which it could transfer to the Plaintiffs on February 1,

1995.13 Both A.K. Steel and American Eagle note that the Assignment

only gave the Plaintiffs an option to take control of the sunken

steel. However, the Plaintiffs did not attempt to exercise the

option until it learned of the salvage in late April 1995. 

Even though the transfer of title from Duferco to the

Plaintiffs is not entirely clear, we agree with the district court

that there is no clear and convincing evidence that Duferco

expressly abandoned title to the cargo before the Assignment to the

Plaintiffs. The district court did not commit clear error in its

factual findings that Duferco maintained title to the cargo until

the Plaintiffs entered into the Assignment and Subrogation Receipt
14 We find no basis for A.K. Steel's claim that under choice of

law rules the Plaintiffs' assertion of title should be governed by

the laws of the United Kingdom.

24

with Duferco. We agree that A.K. Steel did not receive title to the

steel slabs when it purchased the salvaged cargo from American

Eagle.14

B. Conversion by American Eagle and A.K. Steel

The district court concluded that American Eagle and A.K. Steel

were liable for negligent conversion of the cargo because they

exercised control by sale, purchase and consumption of the steel.

These acts totally interfered with the Plaintiffs' right to the

steel. American Eagle argues that it should not be held liable for

conversion because it had the right to transfer its possessory right

and salvage interest to A.K. Steel. Again, we review the district

court's findings of fact for clear error and legal conclusions de

novo. 

American Eagle correctly states that through a successful

salvage effort it obtained a right of possession in the steel. To

support this proposition, American Eagle suggests that “[o]ne so

appropriating abandoned property, or any third person whom he may

allow to take it, has a right to the property superior even to that

of the former owner, and may hold it against him.” Wiggins v. 1100

Tons, More or Less, of Italian Marble, 186 F. Supp. 452, 456 (E.D.

Va. 1960). American Eagle concludes that it had the right to

transfer its possessory right and salvage interest to A.K. Steel,
25

which it did on April 26, 1995. 

The district court properly concluded that American Eagle and

A.K. Steel committed negligent conversion. As already noted, the

Plaintiffs maintained ownership and title over the steel under the

law of salvage. The law of salvage prescribes how American Eagle

must act as salvor of the Plaintiffs' steel. “Salvage law specifies

the circumstances under which a party may be said to have acquired,

not title, but the right to take possession of property (e.g.,

vessels, equipment, and cargo) for the purposes of saving it from

destruction, damage, or loss, and to retain it until proper

compensation has been paid.” Columbus-America Discovery Group, 974

F.2d at 460 (quoting Benedict on Admiralty § 158 at 11-15 to 11-

16.). 

While American Eagle had a right of possession, it did not

become the owner of the salved property by virtue of its services

and could not transfer title to it. American Eagle “merely has a

maritime lien granted by the general maritime law to ensure that

[its] reward for saving property will be satisfied out of the

property saved.” Benedict on Admiralty § 157 at 11-13. Therefore,

the district court's conclusion that American Eagle and A.K. Steel

were liable for negligent conversion is correct. American Eagle and

A.K. Steel had the duty to protect the salved property for the owner

and the right to assert a claim against it for the cost of the
15 American Eagle's citation to Wiggins, 186 F. Supp. at 456, is

unpersuasive as that case concerned property whose owners had

abandoned title. In this case, the court properly found that the

cargo was only abandoned for salvage purposes.

26

salvage.15

C. Issues Raised by A.K. Steel on Appeal

1. Choice of law regarding the contract

A.K. Steel argues that the trial court erred by failing to

perform an adequate choice of law analysis to determine what law

should govern the contract between American Eagle and A.K. Steel.

A.K. Steel asserts that Ohio law should govern because Louisiana

conflicts of law analysis requires that a contractual choice of law

provision be given effect unless there is statutory or

jurisprudential law to the contrary. Delhomme Industries, Inc. v.

Houston Beechcraft, Inc., 669 F.2d 1049, 1058 (5th Cir. 1982)

(quoting Associated Press v. Toledo Investors, 389 So.2d 752, 754

(La. App. 3d Cir. 1980)). It contends that as a purchaser of

salvaged goods, and not the salvor, maritime law should not apply.

We review choice of law questions de novo. Woodfield v.

Bowman, 193 F.3d 354, 358 (5th Cir. 1999). Claims arising out of

salvage operations are clearly within the admiralty jurisdiction of

the federal courts. Treasure Salvors, Inc., 640 F.2d at 566. We

have noted that “[d]isputes concerning the surveillance and sale

of cargo are subject to being treated in admiralty.” Coastal

(Bermuda) Ltd. v. E.W. Saybolt & Co. Inc., 761 F.2d 198, 202 n.4

(5th Cir. 1985). Therefore, since the criteria for admiralty
27

jurisdiction are met, we must apply federal admiralty and maritime

laws and not state law. 

2. Ohio Voidable Title Doctrine

A.K. Steel argues that the district court erred when it held

that A.K. Steel had no claim or defense pursuant to the Ohio

voidable title doctrine. However, because admiralty jurisdiction

includes issues related to the sale of cargo, we apply federal

admiralty law and not the Ohio voidable title doctrine in reviewing

American Eagle's sale of the cargo to A.K. Steel.

Even if Ohio law did apply, A.K. Steel does not make a valid

claim. The district court found that pursuant to a purchase order,

American Eagle sold its possession and salvage interests to A.K.

Steel and only warranted documentation of abandonment by owners to

underwriters. The court said “American Eagle neither possessed nor

transferred nor warranted title to the salvaged slabs to A.K.

Steel.” 

The court then noted that the Ohio Voidable Title Doctrine

could not apply in this case. The statute provides that: “A

purchaser of goods acquires all title which his transferor had or

had power to transfer. . . . A person with voidable title has power

to transfer good title to a good faith purchaser for value.” Ohio

Rev. Code § 1302.44(A). Because American Eagle did not purport to

transfer title of any kind, the court found the statute to be

inapplicable.

We review the court's factual findings under a clearly
28

erroneous standard and its legal conclusions de novo. American

Eagle never had title to the salvaged steel. Therefore, it could

neither transfer nor warrant title to A.K. Steel. In addition,

American Eagle never purported to transfer title. American Eagle's

agreement with A.K. Steel transferred rights, interest, and

possession of slabs retrieved to A.K. Steel, including “rights, and

possession in salvage and title rights, if any.” The agreement

included a warranty which provided “that the slabs have been

abandoned for salvage by the owners/underwriters.” Under the terms

of this agreement, A.K. Steel should have expected to possess the

steel but not receive title to it. Therefore, we agree that the

voidable title doctrine is inapplicable.

3. Breach of warranty

A.K. Steel next argues that American Eagle breached its

expressed warranty with A.K. Steel. A.K. Steel says that American

Eagle warranted that the owners/underwriters had abandoned title to

the steel allowing it to transfer full title to A.K. Steel, when in

fact the steel had only been abandoned for salvage, thus American

Eagle could not transfer title. A.K. Steel contends that under Ohio

law a purchaser that relies on the express warranty of a seller of

goods and suffers injury may sue to recover damages for breach of

express warranty. Plastic Moldings Corp. v. Park Sherman Co., 606

F.2d 117 (6th Cir. 1979). Again, because this issue involves the

sale of marine cargo, we must apply federal admiralty law and not

state law.
29

Even if state law did apply, we conclude that there was no

breach of warranty. First, American Eagle stated in its purchase

order that it was selling “possession in salvage and title rights,

if any” and that the “slabs had been abandoned for salvage.” In

addition, American Eagle refused to sell the steel to a buyer that

demanded warranty of title, even though that buyer offered to pay

more for the steel. Because American Eagle did not purport to

transfer anything but the rights it had “if any,” it likewise did

not expressly warrant to A.K. Steel that it was transferring title.

Moreover, A.K. Steel, as the original purchaser, knew that the steel

belonged to Duferco. Therefore, American Eagle cannot be liable for

breach of warranty.

D. Issues Raised by Plaintiffs on Appeal

1. The salvage claim

The Plaintiffs first argue that the district court erred in

finding that American Eagle and A.K. Steel possessed a valid salvage

claim. With this valid claim, the district court subsequently

granted American Eagle and A.K. Steel an award for salvaging the

steel slabs, which was offset by the conversion judgment.

Plaintiffs contend that American Eagle and A.K. Steel performed

neither of the requirements to establish the right to a claim. They

neither filed for a salvage lien nor returned the cargo to the

owners. Since they failed to preserve the right to a claim, the

right never existed. 

The Plaintiffs do not dispute the court's finding that an
30

initial salvage claim existed. A salvage claim exists when there

is: (1) a maritime peril to the property; (2) voluntary service by

the salvor; and (3) the salvage effort is successful in whole or in

part. Schoenbaum, Admiralty and Maritime Law § 16-1 at 324.

However, Plaintiffs correctly point out that the two defendants

failed to preserve the right to the salvage claim within the twoyear statute of limitations period.

Although the statute of limitations period for filing a salvage

claim had passed, the district court concluded that A.K. Steel and

American Eagle were entitled to assert a salvage claim as an

affirmative defense and as a basis for recoupment in response to

Plaintiffs' claim to quiet title. Citing Basic Boats, Inc. v.

United States, 311 F. Supp. 596, 597 (E.D. Va. 1970), the court

noted that “there is ample authority to the effect that the

counterclaim should be treated as an affirmative defense by way of

recoupment, and this is true even though as an affirmative cause of

action it may be barred by limitation.”

Plaintiffs argue that the district court misapplied Basic Boats

because in that case the U.S. Navy defended against a damage claim

with the shield of an expired salvage claim because it preserved the

salvage right by returning the vessel to its owners. American Eagle

and A.K. Steel, however, did not return the salvaged property to its

owners. 

We conclude that the court did not err in relying on Basic

Boats. Although the two defendants did not preserve a salvage claim
31

in the traditional manner, they did properly assert such a right as

an affirmative defense and recoupment to Plaintiffs' claims. We

must now determine whether or not A.K. Steel and American Eagle

should receive a salvage award for their efforts. This question

turns on a determination whether or not they acted in good or bad

faith during the salvage and subsequent transfer of the steel. 

2. Did American Eagle and A.K. Steel act in good faith?

A salvor has an obligation to bring aided property to a safe

place for the eventual return to the owner. A salvor may not keep

the salved property and, if she did so, would become liable for

conversion. Benedict on Admiralty § 157 at 11-13. Justice Story

noted that “[i]n cases of salvage, the party founds himself upon a

meritorious service, and upon the implied understanding, that he

brings before the court, for its final award, all the property saved

with the entire good faith; and he asks a compensation for the

restitution of the uninjured, and unembezzled by him.” The Boston,

3. F.Cas. 932, 937 (1833).

A salvor obviously will not receive an award if he loses the

property or acts in bad faith. But it is not entirely clear what

constitutes bad faith. Storey noted that embezzlement by salvors

must be punished by forfeiture of the salvage claim. Id. More

recently this Circuit has said that admiralty courts must be

vigilant in protecting mariners from unscrupulous and dishonest

salvors. “[T]he law cannot tolerate salvors [sic] dishonesty,

corruption, fraud, falsehood, either in rendering service, or in
32

their proceedings to recover the salvage.” Jackson Marine Corp. v.

Blue Fox, 845 F.2d 1307, 1309 (5th Cir. 1988) (citing Church v.

Seventeen Hundred and Twelve Dollars, 5 F.Cas. 669 (S.D. Fla.

1853)). In addition, a salvor forfeits any award where he is guilty

of gross negligence, looting or spoilage of the salved property.

Admiralty and Maritime Law 16-4 at 329. 

Based in part on these legal standards the district court found

no bad faith on the part of American Eagle or A.K. Steel for

salvaging and transferring the steel:

First, [Douglas] Adams' testimony confirms that he knew that

the salvaged steel had been abandoned by Duferco in July 1994.

Adams knew that if he salvaged the steel he could claim a

possessory right of salvage only since he did not own the

steel. Adams specifically chose the one purchaser who agreed

to this term, namely that American Eagle only warrant

abandonment of the cargo but not warrant title. Adams

accepted a significantly lower bid in order to obtain this

term because the higher bidder insisted on warranty of title,

which Adams knew he could not do. Likewise, A.K. Steel

purchased the salvaged steel without warranty of title,

assuming the risk that its title to the steel could be

challenged by plaintiffs.

The Court is critically aware that the cargo would not have

been salvaged but for the efforts of American Eagle and the

American Eagle would not have bothered to salvage the cargo

were it unable to line up an acceptable purchaser in advance

of its efforts. American Eagle successfully salvaged 128

slabs of steel, and did so in good faith, notwithstanding

American Eagle's failure to halt delivery of the salvaged

steel to plaintiffs on April 27, 1995, upon their assertion of

ownership. A.K. Steel purchased the salvaged steel in good

faith without warranty of title and immediately consumed the

steel into production.

The Court finds no 'bad faith' on either American Eagle or

A.K. Steel based on their unresponsiveness to plaintiffs'

demand that sale, delivery and consumption of the salvaged

steel should halt at the instant it asserted its ownership

interest. The letter of July 6, 1994, stated that the cargo
33

was abandoned. Significantly, the letter did not provide that

the cargo was abandoned to the underwriters or anyone else.

The Plaintiffs argue that the court erred in these conclusions.

Plaintiffs reiterate many of their earlier arguments against

American Eagle and A.K. Steel, which Plaintiffs suggest all point

to bad faith. First, American Eagle attempted to sell the steel

even though it knew it did not have title. American Eagle and A.K.

Steel were both knowledgeable salvors and should have known that the

cargo belonged to someone else. They bought and sold property that

was not theirs even after the Plaintiffs wrote them insisting that

they cease salvaging the cargo. Finally, the district court

concluded that American Eagle and A.K. Steel were liable for

negligent conversion. These acts, the Plaintiffs argue, all point

to bad faith.

We review the district court's factual findings for clear

error. The record reveals that American Eagle and A.K. Steel may

not have acted entirely in good faith. Perhaps, they did not act

in good faith when they ignored the Plaintiffs' request that they

halt the sale, delivery and consumption of the salvaged steel.

Nevertheless, the district court did not commit clear error in

determining that American Eagle and A.K. Steel did not act in bad

faith nor commit gross negligence, embezzlement, fraud, or

corruption. Until the April 1995 letter from the Plaintiffs asking

them to cease the sale of the cargo, the only other communication

regarding the cargo stated that it had been “abandoned.” As
16 This figure is based on a $300 per net tonnage for the steel

multiplied by the total tonnage of the steel. The district court

reduced this figure by 20 percent to $240, thereby arriving at the

$716,400 value.

34

discussed above, the purpose of ICA's abandonment letter was not

crystal clear. American Eagle had some basis to believe it could

salvage the steel and at least transfer a possessory interest.

Consequently, A.K. Steel could expect to receive a possessory

interest in the steel. American Eagle knew that it did not have

title to the steel and never attempted to transfer title. We agree

with the district court that American Eagle and A.K. Steel acted

negligently but their behavior did not rise to bad faith under the

law.

3. The 20 percent discount

The district court reduced the cargo's value by 20 percent

because the steel was salvaged, which would cause concern about

possible damage from submergence, and because American Eagle did not

have the steel's chemistries. The Plaintiffs contend that it was

clearly erroneous for the district court to apply this discount, and

this court should reverse and amend the judgment to reflect the

steel's true value of $895,000.16 

The court applied this discount based on the testimony of

Plaintiffs' value expert George Hynson. He testified that if the

chemistries of the steel were unavailable the price could be reduced

by 5 to 20 percent. Hynson testified that the discount was based

on the seller not possessing the composition chemistries of the
35

steel, which placed the seller at a disadvantage in negotiations to

sell the cargo. However, Plaintiffs argue that they had the

chemistries to the steel.

The district court reduced the spot market price of the steel

not only because a purchaser would not have the chemistries; but in

addition, because a purchaser would be concerned about the possible

damage from submergence or salvage. This is a realistic concern.

Therefore, we conclude that the court did not commit clear error in

reducing the price of the steel.

4. The sunken tug

Plaintiffs also argue that the district court committed clear

error in not permitting testimony on whether the salvage claim

should be reduced by the cost of an additional salvage recovery

during the salvage operation. The court refused to permit the

Plaintiffs to cross-examine Douglas Adams on the additional $66,000

salvage award he received for raising a tug sunk during the salvage

operation. Plaintiffs argue that this amount should be deducted

from the court's salvage award of $525,424.32 in order to mitigate

damages. We conclude that the court did not err. The Plaintiffs

and American Eagle stipulated to a dollar amount for salvage

services. This stipulated amount controls.

E. Coverage Under Britamco's Insurance Policy

Britamco argues that the district court erred as a matter of

law in holding that the general liability insurance policy issued

by Britamco to American Eagle covered American Eagle's negligent
36

conversion. The court concluded that the policy's exclusion from

coverage for “property damage expected or intended from the

standpoint of the insured” did not apply to American Eagle. The

court said that there was no evidence that American Eagle intended

to deprive the Plaintiffs of their property. Subsequently, the

court entered a judgment for the Plaintiffs against Britamco.

We review a district court's interpretation of an insurance

policy de novo. FDIC v. Mijalis, 15 F.3d 1314, 1319 (5th Cir.

1994). We interpret the provisions in this insurance policy under

Louisiana law since the contract was delivered in Louisiana. The

extent of coverage is determined by the words of the policy. We

construe the policy's words and phrases using their plain, ordinary

and generally prevailing meaning, unless the words have acquired a

technical meaning. When the language is clear, the agreement must

be enforced as written. Reynolds v. Select Properties, Ltd., 634

So.2d 1180, 1183 (La. 1994). 

The policy's coverage provision states, “[i]nsurers agree to

pay those sums that the Insured becomes legally obligated to pay as

damages because of . . . 'property damage' to which this insurance

applies. . . . The . . . 'property damage' must be caused by an

'occurrence.'” (Emphasis added). The policy defines 'occurrence'

as: “an accident including continuous or repeated exposure to

substantially the same general conditions, which first take place

during the policy period.” (Emphasis added). 
37

We look first to see if the events constituting conversion are

within the coverage clause of this policy. Only if they are, do we

consider the exclusionary provisions. We note that to have coverage

the conversion of the steel must be an occurrence and to be an

occurrence under this policy it must be an accident.

Black's Law Dictionary 15 (6th ed. 1990) defines an accident

as “a fortuitous circumstance, event, or happening; an event

happening without any human agency, or if happening wholly or partly

through human agency, an event which under the circumstances is

unusual and unexpected by the person to whom it happens . . . .“

As a salvor, American Eagle had the right to possess the steel and

the duty to either return the steel to the Plaintiffs or file a

salvage lien to obtain compensation. American Eagle did not do

that. Instead, American Eagle intentionally transferred possession

of the steel to A.K. Steel, who subsequently consumed the steel.

This transfer, purchase and consumption negligently interfered with

the Plaintiffs' ownership of the steel. Therefore, American Eagle

and A.K. Steel committed negligent conversion.

This act was not an accident or a fortuitous event. American

Eagle's and A.K. Steel's interference constituted more than an

accidental or unexpected event. A reasonable person would not

transfer, purchase and consume the steel without regard for the true

owner's interest. Given the facts of this case, we conclude that

American Eagle's and A.K. Steel's negligent conversion was not an

accident, and thus is not covered by Britamco's insurance policy.
38

 

A.K. Steel contends that we should interpret American Eagle's

negligent conversion pursuant to the policy's first exclusion to

coverage, which provides that insurance does not apply to “'Property

Damage' expected or intended from the standpoint of the insured.”

(Emphasis added). A.K. Steel notes that under some Louisiana law

an occurrence clause includes intentional acts when the results of

the acts are unintended or unexpected. The Alert Centre, Inc. v.

Alarm Protective Services, Inc., 967 F.2d 161, 164 (5th Cir. 1992).

Therefore, it argues, the policy covers American Eagle's unintended

negligent conversion. This argument is unpersuasive. First,

because we concluded that negligent conversion was not an occurrence

under the policy's coverage section, there is no need to apply the

policy's exclusions. There is no coverage in the first place.

Second, A.K. Steel cites case law which concerns policies having a

broader definition of occurrence than Britamco's policy. See Id.;

Auster Oil & Gas, Inc. v. Stream, 891 F.2d 570, 580 (5th Cir. 1990).

We reverse the district court and find no coverage under the

Britamco policy. We therefore vacate the Plaintiffs' judgment

against Britamco. 

CONCLUSION

For the foregoing reasons, we affirm in part, reverse and

remand in part, and reverse and vacate in part.
39