### FILED U.S. COURT OF APPEALS ELEVENTH CIRCUIT APRIL 30, 2003 THOMAS K. KAHN CLERK

* Honorable Richard W. Goldberg, Judge, United States Court of International Trade, sitting by designation. [PUBLISH]

IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH

CIRCUIT

_______________________ No. 01-15127

_______________________ D.C. Docket No. 98-01276-C V-DLG MERRILL STEVENS DRY DOCK CO., Plaintiff-Counter-DefendantAppellant-Cross-Appellee,

versus M/V YEOCOMICO II, her engines, tackl e, apparel, equipment, etc., in rem and YII SHIPPI NG COMP ANY, LTD ., in p erson am, Defendants-Counter ClaimantsAppellees-Cross-

Appellants.

_______________________ Appeals from

the United States D

istrict Court for t

he Southern District

of Florida

_______________________ (April 30, 2003) Before WILSON and FAY, Circuit Judges, and GO LDBERG * , Judge.2

GOLDBERG, Judge: Merrill Ste vens Dry Dock ( “Merrill Stev ens”) appe als the dis trict cour t’s Order Re: Pending Motions (August 1, 2001) (hereinafter “ Findings II ”), which reversed, in part, the district court’s Findings of Fact and Conclusions of Law (December 6, 2000) (hereinafter “ Findings I ”). At issue is a W ork Order and Ship Repair Contract (

the “Contract

”) between Merr

ill Stevens and YII

Shipping Company (“YII Shipping”) for repairs t o the M/V Yeocomico II (the “Ship”). The district court fo und that Paragraphs 5 and 6 of the Contract were ambiguous. Thus, the term

s of the Contract w

ere interpreted a

gainst Merrill Ste

vens, the drafter. Merrill Stevens also appeals the Findings I award of $55,441.49 to YII Shipping for fire da

mage to the Ship

caused by Merr

ill Stevens. Merr

ill Stevens also appeals the aw

ard of $64,865.92 in d

amages for los s of use of the Ship w hile the fire damage was repaired. YII Shipping cross- appeals, arguing tha t the district court e

rred by not awarding YII Sh

ipping lost profits of $3 43,939.00. Second , YII Shipping cont

ests the district court’ s award to Merril l Stevens of pre-j udgment interes t of 18 percent under the Contract’s te rms.3

For the reasons that follow, we reverse the district court and find that Paragraphs 5 and 6 of th e Contract are not ambig uous; affi rm the distri ct court’s award of dam

ages to YII Shipping

for the fire dam

age to the Ship; aff

irm the award for loss of u

se of the Ship during th

e Ship’s fire da

mage repairs ; affirm the district court’s denial of damages to YII Shipping for future lost profits; and affirm the district court’ s determinatio n to award Merril

l Stevens pre-jud

gment interest

of 18 percent. I. BACKGROUND YII Shipping, a B ahamian cargo shipping company

, contracted wit

h Merrill Stevens for repairs of its Ship, M/V Yeocomico II. The Ship traveled between Port Dania, Florida and various ports in the Bahamas. The repairs were necessary in or

der to bring the Ship i

nto compliance w

ith United States C oast Guard Regulations, without which the Ship could not enter the United States. YII Shipping, by and t

hrough its president L

isbon Higgs, retain

ed the services of R

oy MacKeen of Baha

mas Marine In

ternational, Inc.

Higgs instructed Ma

cKeen to “do what it ta kes” to bri ng the Shi p into compl iance with the Coast Gu ard’s regulations. Some time after Merrill Stevens began repair work on the Ship, MacK een signed the Contract, which listed the repair work to be done. On the reverse side,2 Although YII Shipping claimed t

hat MacKeen lac

ked authority

to sign the Contra

ct, it is uncontested that neither Higgs nor any other repre sentative of YII Shipping informed MacKe en or M erril l Ste vens o f MacK een's l ack of autho rity to sign t he Con tract on beh alf of YII Shipping. YII Shipping also claimed that MacKeen lacke d equal bargaining power in the formation of the Contract with Merrill Stevens. However, MacKeen testified that he had been conducting business in the ship repair industry for over forty years, and had signed similar work repair contrac

ts in the past with Me

rrill Stevens, and

with his own clients w

hen he previously owned a shipyard. 4 the Contract contained the exculpatory clauses, Paragraphs 5 and 6, that are at issue in this case. 2 The exculpatory clauses state the f

ollowing: Paragraph 5. CO

NTRACTOR un

dertakes to perfor

m the Servicin

g and haul and launch of the vessel, provide berthage, wharfage, towage, and other

services and faci

lities only upon cond

ition that it shall not be liable, directly or indirectly, in tort or contract except as expressly war

ranted, or otherw

ise to OWNER

, the vessel, its charterers, unde

rwriters, or a

ny of their agen

ts, servants or em

ployees, or pers ons to whom they ma y be resp onsib le, for a ny perso nal inj ury, death, or dam

age to the vessel, i

ts cargo, equipm

ent or movable stores , or for a ny conse quence s there of, unl ess suc h perso nal inj ury, death or pr operty damage, e tc. is cause d by CONTRACTOR’s negligence, whic

h negligence shall not be presumed but m ust be affirmatively established. In no event, including the negligence and/or gross negligence and/or breach of contract, includin g express warranties, of

CONTRACTO

R, shall CONTR

ACTOR’s aggr

egate liability to all s

uch parties in inter

est for personal inj ury, death, o r damage sustaine

d by them, o

r any other ty

pe of damage e

xceed the sum of $1,000,00 0, and in no event shal l CONTRACTO

R be liable to any extent to the vessel, OWNE R, charterers a

nd/or underwriter

s, for the cost of defending

any claim

s asserted by thi

rd parties, includi

ng attorney’s f

ees, whether suc

h actions shall be com

menced by i

ts employees or others. No cla im for dam

ages for negligence

or otherwise shall be valid unless such clai m is presented t

o CONTRACTO

R within sixty (6 0) days after delivery of the vessel or completion of the

Servicing, whic

hever first occur

s. All limita

tions on CONTRACTOR’s liability which are contained in this Work3 As was conceded by YII Shipping's Counsel at oral argument, YII Shipping c ould have but did not requ est perm iss ion fro m th e U. S. C oas t Gu ard t o tr avel to a new repa ir c omp any. Rather, it continued the Contract with Merrill Stevens through the completion of the necessary repair work.

5 Order shall rem

ain in full force a

nd effect followi

ng delivery of the vessel to OWNER. Paragraph 6. In n

o event shall CONT

RACTOR be liable to any person for incidenta

l or consequential da

mages, for a

ny breach of contract or for any negligence on the part of CONTRACTOR which might have given rise th ereto. Some time after the Contract was sig ned and the repair work commenced, a fire was caused b

y two Merrill Stevens workers w hile they were

performing welding work. T

he fire damag

ed the Ship’s accommodation h ouses. In its Findings I , the district cour t determined th

at the fire was a

proximate res

ult of Merrill Stevens’ negligence. As a result of the fire

an additional eight w

eeks to repair t he damage to the a ccommodat ion ho uses wa s neces sary. 3 During the period of repair f

or the fire dam

age the Ship was out of service. W hile out of service, YII S

hipping claimed t

hat it had lost certa

in shipping routes to competitors tha

t it could not reclaim

when the repairs w

ere complete

d. Merrill Stevens commenced this action on June 5, 1998, claiming that YII Shipping failed to pay

the balance for the

repair work, an

d sued for prejudgm

ent interest of 18 percent, as provided by the Contract. They also claimed that6

Paragraphs 5 and 6 of

the Contract prec

luded YII Shipping’ s recovery for incident al or conse quential damages. YII Sh ipping cl aimed that th e Contract ’s

terms were

void since Merrill S

tevens breached the

Contract by negl

igently setting fire to the Ship. A

dditionally, YI

I Shipping claim

ed that Paragraphs

5 and 6 of the Contract were a

mbiguous and, thus , unenforceable.Therefore, Y II Shipping counter-sued for th

e fire damage

to the Ship, lost prof

its sustained while th

e Ship underwent an additi

onal eight weeks of r

epair, and lost prof

its sustained after

the Ship returned to serv ice. In its Findings I , the district cour t found that the fire

was caused by M

errill Stevens’ negligen

ce and as a proxim

ate result of the f

ire, the Ship had to

undergo an additional eig ht weeks of repair for th e damaged accommodation houses. Finding Paragraphs 5 and 6 unambiguous, the district court a

warded YII Ship

ping $55,441.49 in dam

ages for the fire damage, and $6 4,865.92 in dama

ges resulting from the loss of

use of the Ship during t

he eight weeks of r

epairs. The district court

denied YII Shipping ’s claim for lost profits after the Ship returned to service fo r failure to prove the lost profits to a “reason able certainty.” Merrill Stevens w

as awarded prej udgment interes t of 18 percent, as

specified by the contract. Both par ties moved for reconside ration and amendment.7

Upon reconsiderati

on, the district cour

t issued its Findings II , which reversed, in par

t, its Findings Iby finding Paragraphs 5 and 6 of the Contract ambiguous. Accordingly, the d istrict court deter

mined that Par

agraphs 5 and 6 would be read again

st the drafter, M

errill Stevens. The district court affirmed the December 6 O

rder awarding Me

rrill Stevens prej udgment interes t of 18 percent. Both parties appeal ed to this Court. There are four issues on appeal: (1) whether the contr

act was unambiguous and thus enforceable , (2) whether the district court err

ed in awarding YI

I Shipping damages for th

e fire damage

and damages for

loss of use of the ship d

uring the eight weeks of repair, (3) whether the district court erroneously failed to award YII Shipping damages

for lost profits af

ter the Ship was ba

ck in service, and (4) whether the distri

ct court erred by

awarding Merril

l Stevens prejudgm

ent interest of 18 percent. This Cou rt has jurisdiction pursuant to 28 U.S.C. §1 292. II. STANDARD OF REVIEW This Court review

s de novo the question of whethe r the written contr

act is ambiguous, the di strict court’s conclusions of law and its application of the law to the facts. Da Cunha v. Standard Fire Ins. Company/Aetna Flood Ins. Program , 129 F.3d 581, 584 (11th

Cir.1997 ); United States v. Thomas , 62 F.3d 1332, 13368

(11th Cir. 1995). W

e review any f

actual findings under

a clear error st

andard. Godfr ey v. Be llSou th Tel ecoms , 89 F.3d 755, 757 (11 th Cir. 1996). III. DISCUSSION A. Ambiguity of

Paragraphs 5 and 6 The first issue on a

ppeal is whether the

limited liabilit

y clauses, Pa

ragraphs 5 and 6, of the Contract, are unambiguous, and thus enforceable. A limited liability clause

is enforceable if

it satisfies a three-step test set for th in Diesel “Repower” I

nc. v. Islander I

nvestments Ltd. , 271 F.3d 1318, 1324 (11th Cir. 2001). First, the

limited liabilit

y clause mu

st “clearly

and unequivocally

indicate the parties’ inte

ntion.” Second, “

the limitation m

ust not absolve the rep airer of all liability and must still provide a deterrent to negligence.” Id . Third, the par ties to the contract must have “equal bargaining power.” Id

. Plaintiffs ma

ke no allegations wit

h merit as to the

second and third steps of the Islander

test. The second p art of the test is ea sily satisfied si

nce Merrill Stevens had a liabili

ty risk of up to $1, 000,000 for its potenti al negligence. T

his Court has held that a risk of liability for as little as $300, 000 is a sufficient deterrent of neglig ence. See Alcoa Steam ship Co. v. Charle s Ferran and Co. , 3834 Decisions rendered by the former Fifth Circuit prior to October 1, 1981 we re adopted as binding precedent by the Eleventh Circuit. See Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981).

5 MacKeen testified that he had been conducting business in the ship repair industry for over forty years, an d had signed simila

r work repair c

ontracts in the pa

st with Merrill Steve

ns, and with his own clients when he previously owned a shipya rd. 9 F.2d 46, 55 (5th

Cir. 1967). 4 With respect to the thi rd part of t he test, Mac Keen’s testimony at trial indicates that he was a businessman with bargaining power equal to that of Merrill S

tevens. 5 Therefore, the Court must only further address th

e first step of the test to det

ermine wheth

er Paragraphs 5 a

nd 6 are unambigu

ous and thus enforceable. “The initial qu

estion whether a contract is or is not am biguous is itself one of law” for the court to d etermine. Maccaferri Gabions, Inc. v. Dynateria Inc. , 91 F. 3d 1431, 1439 (11th

Cir. 1996). In making that determination, “‘ a contractual provision should not be construed as being in conflict with another unless no other reasonable interpretation is possible.’” Id . at 1440 (quoting United States v. Johnson Controls, Inc. , 713 F.2d 541, 1555 (Fed. Cir. 1983)). See also Johnson Controls v. Cedar R

apids , 713 F.2d 370, 374 (8th Cir. 1983) (“If two clauses of a contract appear t

o be in conflict, the

preferred inter

pretation is the one t

hat gives a ‘harmonious i

nterpretation’ t

o the clauses.”).Therefore, “ an ambiguity

is not10

invariably present when a contract requires interpretation.” Fireman’s Fund Ins. Co. v. Tropical

Shipping & Constr. C o. , 254 F.3d 987, 1004 ( 11th Cir. 2001). Accordingly, this Court finds that Paragraphs 5 and 6 of the Contract are unambiguous since th ere exists a reasonabl e construction th at renders the two paragraphs consiste

nt. Paragraph 5 a

cknowledges Merri

ll Stevens’ liabi

lity for incidental or consequential damages caused by Merrill Stevens’ negligence where the negligence is af

firmatively

established. Par

agraph 5 lists the people to whom its contents are dir

ected, specific ally the “o

wner, the vessel , its charterer s, underwriters, or

any of their age

nts, servants or em

ployees, or per

sons to whom they may be responsible... .” Additionally , Paragraph 5 lim

its Merrill Steven

s’ risk of liability to $1 ,000,000. Paragraph 6, on the

other hand, direct

s a limitation of

Merrill Stevens’ liability for inc

idental or consequent

ial damages to “

any person,” a

term of reference whic

h is first introduced in Paragraph 6 and ne ver mentioned in Paragraph 5. Thus, this Court interprets the term of reference, “ any person,” as used in Paragraph 6, to mean any person other than th ose listed in Paragra ph 5. In Michel v. Merrill

Stevens Dry Dock Co. , 554 So.2d 593 (Fla. 3d DCA 1989), the court hel

d an exculpatory

clause of a repair

contract ambi

guous. In the first sentence of t

he clause the contra

ctor was absolved of

liability to the ow

ner for11

ordinary neg ligence. Th e next sent ence, howev er, acknowl edged the c ontractor ’s potential aggregate

liability to the ow

ner for ordinary

negligence. Sente

nces one and two of the exculp atory clause w ere therefore i

n direct conflict. Paragraphs 5 and 6 in this case are

easily distinguish

able from the s

ingle exculpatory

clause in Michel since each paragr aph directs its lim

itation of liability

to a different grou

p of people. Unlike the exculpatory clause in Michel , Paragraphs 5 and 6 can reasonably be r

endered consistent.Therefore, th ey are unam

biguous and enforceable. See Maccaferri Gabions, Inc. , 91 F. 3d at 1440. Accordi ngly, Paragraph 5 of the Contract entitles Y II Shipping to recove

r incidental or consequential dam

ages resulting from

Merrill Stevens’ negligence up to the su m of $1,000,000. B. Fire Damages and Loss of Use Damages Merrill Stevens’ second argument on appeal is that the district court improperly

awarded YII S

hipping damages f

or fire dama

ge to the Ship and for loss of use of the Ship during the eight weeks of repair. The district court found that the damage to the

Ship’s accom

modation houses w

as a result of Merr

ill Stevens’ negligence. Further, as a result of the fire, YII Shipping incurred expenses6 The fire damages, $55,441.49, awarded by the district cour t included costs incurred by YII Shippi

ng for the cre

w’s lodging an

d food, paym

ent for which YI

I Shipping wa

s contractually obligated. It also included the costs of docking the Ship at Port Dania while the Ship’s accommodation houses were repaired, and the costs for renting replacement ships. Findings I at 14, 21. 12 amounting to $55,4

41.49. 6 The district court also found that during t

he eight weeks the Ship was out of service for repair, YII Shipping’s loss of use totaled $64,865.92. Merrill Stevens does not dispute the d istrict court’s factual findings. Merrill Stevens contends only that P aragraphs 5 and 6 of t he Contract precl

ude YII Shipping’s recovery for fi re damages and loss of use damages. We disagree. As aforemen

tioned, Paragrap

hs 5 and 6 are unam

biguous and allow YII

Shipping to recover incident

al or consequential d

amages caused

by Merrill Ste

vens’ negligen ce up to $1 ,000,000. Thus, the Co ntract doe s not bar YII Shipping ’s recovery of fire damages and loss of use damages. In the alternative , Merrill Steven s argues that the economic loss doctr ine prevents recovery of tort damages where an exculpatory clause of the c ontract precludes it. Since Paragraphs 5 and 6 of the Contract do not

preclude recover

y of incidental and conseq

uential damage s, this Court only looks to the term

s of the contract to determ

ine the damages

to which YII Shipp

ing is entitled. Thu

s, Merrill Stevens’ alternative argument is without merit. Therefore , we affirm the district7 Such "extrinsic factors" include fluctuations in the weather and market changes. See

Miller Industries v. Caterpillar Tractor Co. , 733 F.2d 813, 822 (11th Cir. 1984). The district court held that YI

I Shipping' s expert failed to ta ke any of th

ese other possible

causes for prof

it loss into consideration. 13 court’s award of fire dama ges of $55,441.49, a

nd loss of use dama

ges of $64,865.92. C. Lost Profits On cross-appeal,

YII Shipping argue s that the district co urt erred by f

ailing to award lost profits from July 1998 through December 1999, the time per iod after the vessel returned

to service. The

district court conc

luded that YII Ship

ping failed to show these

lost profits to a “

reasonable certa

inty,” because

YII Shipping failed to consider “

any extrinsic f

actors” that m

ay have also im

pacted its profits during this time pe

riod. 7 The court distinguished the evidence presented by YII Shipping from the

evidence presente

d in Miller Industries v.

Caterpillar Tr

actor Co. , 733 F.2d 813 (11th Cir. 1984) (awarding lost fishing profits to plaintifffishermen wh

en defendant-engine

manufacture

r negligently fa

iled to correct a defective engine in

stalled on plaintiff’ s fish-boat). In Miller , plaintiffs based their estimation of lost profits on the profits of three other comparable vessels that were in service during their vessel’s downtime. By doing so, plaintiffs met their burden of proof since the “comparison vessels were subject to the same f actors, such as inclement weather, that would have affected the [plaintiff’s vessel] had it been14

able to fish.” Id . at 822. In this ca se, however, Y

II Shipping based its calculations of lost profits on their

performance

from the previ

ous year, 1997. Thus, the district court held t

hat YII Shipping’ s failure to consider extrinsic factors

made its calculations ins ufficient to satisf y the standard of “reasonable c ertainty.” Therefore, the

court denied YII S

hipping damages f

or lost profits from

July 1998 through December 1999. The Court reviews the district court’s account of the evidence under a clear error standard, and must affir m the district court’s determ ination so long as it is “plausible in light of the record viewed in its entirety.” Conagra Inc. v. Inland River Towing Co. , 252 F.3d 979, 983 (8th Cir. 2001) (quoting Anderson v. City of Bessemer City, N.C. , 470 U.S. 564, 573-74 (1 985)). We find no clear

error in the distri

ct court’s application of the reasona ble certainty stan

dard to the evidence

presented. The d

istrict court’s f

inding of insufficiency of the evidence pre sented on the issue of l ost profits between

the period of July 1998 and December 1999 is plausible. Th

us, we must af

firm the district court’s denial of dama ges for lost profits f

or the period in questi

on. D. Prejudgment

Interest The final issue on a

ppeal is whether the

trial court erre

d by awarding Me

rrill Stevens prejudgment interest of 18 percent, the contractually agreed upon rate.15

While YII Ship

ping acknowledges Me

rrill Stevens’ r

ight to pre-judgm

ent interest, it claims that t

he district court shou

ld have based the aw

ard of pre-judgm

ent interest on prevailing maritime rates, rather than the contractual rate. YI I Shipping bases this ar

gument on the groun

ds that the alleged a

mbiguity of Parag raphs 5 and 6 rende red th e Cont ract, inclu ding its in teres t rate term, unenforceable. S ince this Court finds t hat the Contract is u

nambiguous and enforceable, YII Shippin g remains bound by the Cont ract’s terms. See Islander , 271 F.3d at 1324. Ev

en if this Court found Paragraphs 5 and 6 am biguous, the unambiguous and ind ependent terms remain enforceab le. See Vanston v. Connecticut Gener

al Life Ins. Co. , 482 F.2d 337, 342 (5 th Cir. 1973) (“If a contract is severa

ble — that is, suscep

tible of division and ap

portionment, ha

ving two or more pa

rts not necessarily

dependent on each othe

r — the fact that one obligation is un enforceable does no t prevent a recovery as to th e other.”). In the alternative, YII Shipping argues that Merrill Stevens’ negligence constituted a breac

h of contract, wh

ich nullified the Cont

ract terms. This argument lacks

merit. As no

ted by the distric

t court: ‘A materi al breach [of a contract] does not a utomatically

and ipso facto end a contract. I

t merely g

ives the injured pa

rty the right to e

nd the agreement...If he elec ts instead to continue t

he contract, the obligations of both parties remain in force and the injured party may retain onl y a claim for damage s for parti al breach.’16

Findings II at 10 (quoting Dunkin’ Donuts of America, Inc. v. Minerva, Inc. , 956 F.2d 1566, 1571 (11th

Cir. 1992)). We agree with the district court th at “it is factu

ally clear tha

t [YII Shipping] chose to utilize [Me

rrill Stevens] t

o complete the contract.” Both the record and oral argument support this finding. In fact, YII Shipping conceded in oral argument that Y

II Shipping could have

but failed to reques

t the U.S. Coast Guard’s permission to use a d ifferent repair company after the fi re. Thus, we conclude that YII Shipping elected to continue the Contract with Merrill Ste

vens, and it remain ed bound b y its terms. Acco rdingly, we af firm the dist rict court ’s award of prejud

gment interest

of 18 percent. IV. CONCLUSION For the foregoing re

asons, we REVE

RSE the district court’s determ ination on the issue of ambiguity. We find that Paragraphs 5 and 6 of the Contract are unambiguous. We AFFIRM the district court’s judgment on the issues of dam ages and prejudgment interest

.