Source: https://casetext.com/case/bankers-trust-co-v-bethlehem-steel-corp
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Matched Legal Cases: ['§ 181', '§ 1292', '§ 1292', '§ 183', '§ 183', '§ 183', '§ 221', '§ 183']

Bankers Trust Co. v. Bethlehem Steel Corp, 761 F.2d 943 | Casetext
Bankers Trust Co. v. Bethlehem Steel Corp.
761 F.2d 943 (3d Cir. 1985)
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Bankers Trust Co.v.Bethlehem Steel Corp.
United States Court of Appeals, Third CircuitMay 13, 1985
James F. Young (argued), Thomas Fisher, III, Maurice J. Maley, Jr., Krusen, Evans Byrne, Philadelphia, Pa., for appellants and cross-appellees, Bankers Trust Co., Monsanto Co. and Keystone Shipping Co.
Benjamin F. Stahl, Jr., Edward V. Cattell, Jr. (argued), Stuart M. Goldstein, W. Stanley Sneath, Clark, Ladner, Fortenbaugh Young, Philadelphia, Pa., for appellees and cross-appellants, BP Oil, Inc. and Sohio Petroleum Co.
Before HUNTER, HIGGINBOTHAM, Circuit Judges, and DEBEVOISE, District Judge.
Presently before this court is a consolidated appeal (No. 84-1052) and cross-appeal (No. 84-1051) in a protracted admiralty proceeding for limitation of or exoneration from liability pursuant to the Limitation of Liability Act, 46 U.S.C. §§ 181-195 (1982), arising out of a disastrous vessel collision which occurred over ten years ago. The shipping interests and certain property damage claimants now seek review of a final order of the United States District Court for the Eastern District of Pennsylvania denying claimants' motion to vacate a prior order of the district court which, following a bifurcated trial on damages and entry of judgment in favor of the claimants, determined the rate and schedule for payment of pre- and post-judgment interest, set the value of the damaged vessel for purposes of establishing the amount of the limitation fund, and calculated the interest on the fund.
This is a case of admiralty and maritime jurisdiction and although the December 27, 1983 order appealed from is final insofar as it determines the rights and liabilities of the shipping interests and the property damage claimants, the appeal and cross-appeal are nevertheless interlocutory in nature because the rights and liabilities of all of the parties to this litigation have not been determined. Our determination that this is an interlocutory appeal warrants discussion because it impacts on certain theories raised by the property damage claimants. See Section III, B infra.
We have appellate jurisdiction to entertain this appeal and cross-appeal pursuant to 28 U.S.C. § 1292(a)(3) which provides for appellate review of "[i]nterlocutory decrees of . . . district courts . . . determining the rights and liabilities of the parties to admiralty cases in which appeals from final decrees are allowed. . . ." Section 1292(a)(3) does not require that all the rights and liabilities of all the parties be determined before the order is appealable. O'Donnell v. Latham, 525 F.2d 650 (5th Cir. 1976). It applies to any order which finally determines the liability of a party even if the order leaves unresolved an issue which may ultimately preclude recovery by a particular plaintiff. In re SS Tropic Breeze, 456 F.2d 137 (1st Cir. 1972). Our determination that this appeal is interlocutory in nature finds logical support in the lengthy record of this case.
The docket entries indicate that on August 25, 1978, the district court granted the shipping interests' Motion for Entry of a Pro Tanto Order without prejudice to the right of any other claimant to dispute the right of any settlement as a charge on the limitation fund. Appendix ("App.") at 35a. Since the entry of that order, no pro tanto claim has been filed by the shipowners. The district court has yet to rule on the extent of the shipping interests' pro tanto claim to the limitation fund or the pro rata share of the fund to be paid to the claimants. Furthermore, at the same time that the district court denied the property damage claimants' Motion to Vacate the District Court's July 5, 1983 Order, it also denied claimants' outstanding Motion to Set Time Limits for Filing Pro Tanto Claims, with leave to the claimants to renew the motion at a later date. App. at 98a. This procedural history, coupled with the fact that a petition to vacate the settlement of a maritime death claim is still pending, see Complaint of Bankers Trust Co. ( Chatterjee), 752 F.2d 874 (3d Cir. 1984), leads us to conclude that the order in issue is an interlocutory decree in admiralty within the ambit of 28 U.S.C. § 1292(a)(3).
Despite previous complicated appeals from both the liability and damages components of this bifurcated litigation, this action is once more before us and again we face the troublesome task of reversing the district court and remanding this matter for further proceedings. Yet, we hasten to note that we reverse not because we find that the district court incorrectly decided the damages issues raised on this appeal and cross-appeal but because we find that the judgment in the limitation of liability action has been entered prematurely. On remand, following our reversal of its original denial of limitation of liability, the district court apparently misconstrued the scope of the mandate set forth in Complaint of Bankers Trust Co., 651 F.2d 160 (3d Cir. 1981), and thus failed to make specific factual findings on several unresolved liability issues which, in our view, have a direct bearing on the propriety of limitation in this case.
See Complaint of Bankers Trust Co., 651 F.2d 160 (3d Cir. 1981) cert. denied, 455 U.S. 942, 102 S.Ct. 1436, 71 L.Ed.2d 653 (1982) (appeal from denial of limitation of liability); Complaint of Bankers Trust Co., 658 F.2d 103 (3d Cir. 1981) cert. denied, 456 U.S. 961, 102 S.Ct. 2038, 72 L.Ed.2d 485 (1982) (appeal from denial of prejudgment interest and rate of post-judgment interest award).
See notes 12 and 13, infra.
This limitation action, and hence these appeals, are the offshoots of the January 31, 1975 collision of the American chemical carrier S.S. EDGAR M. QUEENY ("QUEENY") and the Liberian steam tanker S.T. CORINTHOS ("CORINTHOS") on the Delaware River in Marcus Hook, Pennsylvania. The resulting explosion and fire contaminated the Delaware River, claimed 26 lives, damaged the QUEENY, destroyed the CORINTHOS, and caused numerous personal injuries and extensive property damage to the BP Oil, Inc. and Sohio Petroleum Company pier and refinery as well as to neighboring properties.
A series of proceedings were instituted relating to this horrendous accident, including sixty cases and 112 personal injury, property damage and other actions. All of the personal injury and wrongful death cases have been settled and dismissed except for one (Chatterjee) and all of the property damage cases have been resolved except the case at bar. A products liability action, filed against the designers and manufacturers of the damaged QUEENY, has been severed and stayed, pending resolution of the limitation actions. The property damage claimants' suit against the owners and operators of the destroyed CORINTHOS has also been severed. Because this court is intimately familiar with the facts and the procedural posture of this matter we will recite only those aspects salient to the issues at hand. The events leading up to the collision itself are not in dispute and are detailed in Complaint of Bankers Trust Co., 651 F.2d 160, 164-166 (3d Cir. 1981).
The owners and operators of the QUEENY, appellants/cross-appellees Bankers Trust Company (owner/trustee), Monsanto Company (chartered owner) and Keystone Shipping Company (chartered owner/operator) (collectively referred to as "Keystone") filed a petition for exoneration from or limitation of liability, in accordance with the Limitation of Liability Act, 46 U.S.C. § 183(a).
The liability of the owner of any vessel . . . for any . . . loss, or destruction by any person of any property, goods, or merchandise shipped or put on board of such vessel, or for any loss, damage, or injury by collision, or for any act, matter, or thing, loss, damage, or forfeiture, done, occasioned, or incurred, without the privity or knowledge of such owner or owners shall not, . . . exceed the amount or value of the interest of such owner in such vessel, and her freight then pending.
The issue of Keystone's right to limit liability was tried non-jury from July 18 through August 27, 1979. On February 19, 1980, the district court issued an opinion in the limitation action in which it held that Keystone was not entitled to limit liability. Complaint of Bankers Trust Co., 503 F. Supp. 337 (E.D.Pa. 1980). Keystone appealed. This court reversed on May 15, 1981 and remanded "for further proceedings consistent with this opinion". Complaint of Bankers Trust Co., 651 F.2d 160, 173, 175 (3d Cir. 1981). We are primarily concerned here with the district court's treatment of this action following our May 15, 1981 reversal and remand.
The district court docket entries reflect no further proceedings conducted in the limitation segment of this litigation. App. at 2a-99a.
At the conclusion of the damages trial on July 18, 1980, the district court entered judgment in favor of BP/Sohio in the amount of $16,188,531.00 as per the stipulation of the parties. However, the district court concluded that BP/Sohio was not entitled to pre-judgment interest. The court then applied the legal rate of interest in Pennsylvania to the post-judgment interest award. Complaint of Bankers Trust Co., 503 F. Supp. 350, 353 (E.D.Pa. 1980). BP/Sohio appealed. On August 13, 1980, then Chief Judge Seitz, speaking for this court, remanded for further proceedings specifically on the questions of when prejudgment interest should begin to run on the individual items of damages and the appropriate award of post-judgment interest. Matter of Bankers Trust Co., 658 F.2d 103, 112 (3d Cir. 1981).
BP/Sohio and Keystone entered into a stipulation authorizing the district court to enter judgment in BP/Sohio's favor. The parties concluded that the total of BP/Sohio's provable damages was $16,188,531.00, but the stipulation did not address the issues of pre-judgment interest, the interest rate as to either pre-judgment or post-judgment interest, or the award of costs. Complaint of Bankers Trust Co., 503 F. Supp. 350, 352 (E.D.Pa. 1980).
On remand, the district court issued a July 5, 1983 memorandum opinion and order in which it awarded pre-judgment interest to BP/Sohio and entered judgment in favor of BP/Sohio for post-judgment interest. The district court also set a value for the QUEENY at the time of collision at $19.05 million dollars. Petition of Bankers Trust Co., 569 F. Supp. 386, 393 (E.D.Pa. 1983).
Pre-judgment interest was awarded in the amount of $8,606,556.00. Post-judgment interest was awarded at a rate of 10% on $24,795,087, judgment plus pre-judgment interest.
During the 1979 limitation of liability trial, evidence was presented regarding the valuation of the QUEENY. App. at 100a-199a. The district court denied Keystone's right to limitation, therefore the question of valuation was not decided. Petition of Bankers Trust Co., 569 F. Supp. 386, 390 (E.D.Pa. 1980); 503 F. Supp. 337. On remand, the district court granted BP/Sohio's Motion to Reopen the Record and Compel Additional Discovery on the issue of the QUEENY's valuation and conducted an evidentiary hearing on December 13, 1982.
The district court found the limitation fund to be $18,013,697 by first reducing the sum of $19,050,000 by $1,305,804, the amount of repairs, and then by adding to the figure of $17,744,196 the pending freight of $269,501. 569 F. Supp. at 393.
(3) denied BP/Sohio's pending Motion to Set Time Limits for Filing Pro Tanto Claims. Appendix ("App") at 448a-451a.
Keystone appeals the district court's reaffirmation of its July 5th valuation determination. BP/Sohio cross-appeals, again asserting, inter alia, that the district court deviated from our mandate by failing to rule on outstanding limitation issues on remand. In reviewing the action of the district court, we address only the latter assignment of error.
On this appeal, Keystone avers: (a) the district court erred in disregarding the evidence presented at the 1979 trial on the theory that it comprised the only evidence of the market value of the QUEENY as reflected by contemporaneous sales; (b) the district court abused its discretion in reopening the record in December 1982 to admit evidence; (c) the district court erred in finding a value of the QUEENY premised on an averaging of the highest and lowest values presented by the evidence; and (d) the district court erred in finding a value which contradicts testimony that said value would render the vessel worthless.
For the reasons expressed in note 12, supra, we do not reach the merits of BP/Sohio's point of contention that, as to damages, the district court improperly applied inadequate interest on the limitation fund.
The operative statute provides that a shipowner's liability shall be limited to the "value of the interest of the vessel and her freight" for any act which occurs "without the privity or knowledge" of the owner. 46 U.S.C. § 183(a). The right to seek exoneration from or limitation of liability in accordance with 46 U.S.C. § 183 places upon the shipowner the affirmative duty to establish that the damage caused by the vessel was occasioned without the shipowner's privity or knowledge.
A limitation action against a shipowner differs from an ordinary lawsuit against a shipowner in two respects. "First, it introduces the issue of limitation of liability, a special form of relief or affirmative defense asserted by the shipowner. Second, the proceeding is initiated by the shipowner rather than the claimant actually seeking recovery." Staring, Limitation Practice and Procedure, 53 Tulane L.R. 1134, 1173 (1979).
The burden of proof in an action seeking exoneration from or limitation of liability is divided. The claimant must prove that the destruction or loss was proximately caused by negligence on the vessel. Once negligence has been shown to be the cause, the burden then shifts to the shipowner to demonstrate that he comes within the statutory exemption because there was neither design, neglect, privity, nor knowledge on his part. Coryell v. Phipps, 317 U.S. 406, 409, 63 S.Ct. 291, 292, 87 L.Ed. 363 (1943); Farrell Lines, Inc. v. Jones, 530 F.2d 7 (5th Cir. 1976); Waterman S.S. Corp. v. Gay Cottons, 414 F.2d 724 (9th Cir. 1969). In re G.B.R.M.S. Caldas, 350 F. Supp. 566 (E.D.Pa. 1972) aff'd 485 F.2d 679 (3rd Cir. 1973). Thus, on the issue of liability, the property damage claimants have the burden of proof while on the issue of limitation, the shipping interests have the burden of proof.
(3) The continued pressure of Monsanto and Keystone to cut costs, which resulted in the failure to use the bridge control and premature relief of the bow detail without posting an anchor detail.
Mindful that "[t]he claimants in this case . . . have argued and presented voluminous testimony and exhibits to the effect that other acts and/or conditions of which the QUEENY interests had knowledge or were privy to contributed to the accident", id., the district court went on to hold:
The district court did make a finding that the collision was attributable primarily to the pilot's and the captain's negligence in executing a 180° turn, but that the collision was also caused in part by the failure of the shipping interests to correct a defective astern guardian valve and turbine. It found that this defective condition rendered the QUEENY unseaworthy.
Complaint of Bankers Trust Co., 651 F.2d at 167 (emphasis added). In reversing, we held: " the separate and distinct events relied on by the trial court are, as a matter of law, not significant enough to support a ruling that Keystone had knowledge or privity of either the acts of negligence on board the QUEENY, or her purported unseaworthiness." Id. at 173 (emphasis added). We simply reiterated in a footnote, with no elaboration, the other contributing causes asserted by BP/Sohio in the lower court. Id. at 169 n. 11. In our mandate, we directed that the case be remanded "to the trial court for further proceedings consistent with this opinion." Id. at 175.
It is axiomatic that on remand for further proceedings after decision by an appellate court, the trial court must proceed in accordance with the mandate and the law of the case as established on appeal. Briggs v. Pennsylvania R. Co., 334 U.S. 304, 306, 68 S.Ct. 1039, 1040, 92 L.Ed. 1403 (1948); Seese v. Volkswagenwerk, A.G., 679 F.2d 336, 337 (3d Cir. 1982); Noel v. United Aircraft Corp., 359 F.2d 671, 674 (3d Cir. 1966); Matter of Beverly Hills Bancorp, 752 F.2d 1334, 1337 (9th Cir. 1984); Stevens v. F/V Bonnie Doon, 731 F.2d 1433, 1435 (9th Cir. 1984).
"Where the reviewing court in its mandate prescribes that the court shall proceed in accordance with the opinion of the reviewing court, such pronouncement operates to make the opinion a part of the mandate as completely as though the opinion had been set out at length." Noel, 359 F.2d at 674. In the absence of specific directions, the question as to what further proceedings can be had consistent with the opinion of the appellate court must be determined from the nature of the case and the pertinent statutory provisions. The mandate and the opinion must be considered together in their entirety with particular reference to the issues considered. United States v. Iriarte, 166 F.2d 800, 803 (1st Cir. 1948), cert. denied, 335 U.S. 816, 69 S.Ct. 36, 93 L.Ed. 371 (1948). From the proposition that a trial court must adhere to the decision and mandate of an appellate court there follows the long-settled corollary that upon remand, it may consider, as a matter of first impression, those issues not expressly or implicitly disposed of by the appellate decision. Quern v. Jordan, 440 U.S. 332, 347 n. 18, 99 S.Ct. 1139 1148 n. 18, 59 L.Ed. 358 (1979); Sprague v. Ticonic National Bank, 307 U.S. 161, 168, 59 S.Ct. 777, 780, 83 L.Ed. 1184 (1939); United States ex rel. Johnson, 531 F.2d 169, 172 (3d Cir. 1976); Piambino, 757 F.2d at 1120; Stevens, 731 F.2d at 1435; Beltran v. Myers, 701 F.2d 91, 93 (9th Cir. 1983) cert. denied sub. nom. Rank v. Beltran, 462 U.S. 1134, 103 S.Ct. 3115, 77 L.Ed.2d 1369 (1983); United States v. Cirami, 563 F.2d 26, 33 (2d Cir. 1977) on remand 92 F.R.D. 483. A trial court is thereby free to make any order or direction in further progress of the case, not inconsistent with the decision of the appellate court, as to any question not settled by the decision.
App. at 450a. In arriving at this conclusion, the district court relied upon our above-quoted statement that "the separate and distinct events relied on by the trial court are . . . not significant enough to support a ruling [of] knowledge or privity . . . ." Complaint of Bankers Trust Co., 651 F.2d at 173. We believe, however, that the district court did not construe this language in light of the opinion in its entirety. Consequently, it acted inconsistently with the letter and spirit of our mandate.
Inasmuch as the traditional function of an appellate court is merely to apply the law to the findings of fact made below, we reviewed only those factual findings specifically made by the district court — namely, that the defective astern guardian valve and the defective astern turbine contributed to the collision. We indicated that "[t]o hold Keystone privy . . . the evidence must show that some individual at the management level of Keystone had, or should have had, knowledge of the QUEENY's damaged astern guardian value." Complaint of Bankers Trust Co., 651 F.2d at 169 (emphasis added). We did not consider, explicitly or otherwise, the other alleged causes raised at trial by BP/Sohio because the district court had expressly declined to make findings on those issues.
Therefore, our determination that certain events relating to those defects were not, either individually or in combination significant enough to place the vessel owner on notice of negligence or unseaworthiness, does not ipso facto mean that the other contributing causes alleged by BP/Sohio, but undecided below or on appeal, were equally insufficient, as a matter of law, to preclude limitation of liability. Simply stated, we reversed the district court's denial of the petition for limitation of liability because the evidence was insufficient to sustain a finding of privity or knowledge of the deficient astern guardian valve. Therefore, our May 1980 reversal of the district court's denial of liability did not conclusively grant limitation as to all questions raised below. We thus conclude that BP/Sohio is correct in its charge that the district court acted inconsistently with our mandate by failing to rule on material issues of privity and knowledge.
The district court based its original conclusion of privity and knowledge of the defective condition on problems with a sticking guardian astern valve on the QUEENY's maiden voyage, the failure to examine the RPM logger tapes which monitor the revolutions per minute of the engine, problems with debris in the steamline of the sister vessel, and the captain's indication that he felt a crash astern test would damage the propulsion system. 651 F.2d at 169-173.
BP/Sohio urged at the 1979 limitation of liability trial and again on the Motion for Action that Keystone should not be entitled to limit its liability because it allegedly failed to have an anchor watch. According to BP/Sohio, the QUEENY's master chose to ignore the QUEENY management's explicit instructions to post an anchor detail in congested waters and that the failure to post an anchor watch was a contributing cause of the collision. It is Keystone's position that the posting of anchor watch and the use and control of tugs are activities traditionally entrusted to the discretion of the ship's master. Therefore, even if negligence was proved, it is outside the privity and knowledge of the vessel owner. According to Keystone, the lower court was correct in assuming that this "weaker ground" for finding privity was implicitly overruled by our holding that the management of Keystone lacked privity and knowledge of the defective astern guardian valve and turbine. We disagree.
BP/Sohio argues that the failure to have such anchor watch standing by, ready to drop anchor, in waters well frequented by vessel traffic, is a violation of 33 U.S.C. § 221 (1982), which invokes the "PENNSYLVANIA Rule." THE PENNSYLVANIA, 86 U.S. 125, 22 L.Ed. 148 (1873). This rule places the burden on the shipowner to prove that the failure to have an adequate anchor watch could not have contributed to the casualty. Motion of BP/Sohio for Action Consistent with the Court of Appeals' Mandate on Remand at 5-12.
As we established on the prior appeal, corporate shipowners are held liable for the acts or knowledge of managing officers or supervisory employees. . . Usually, however, they will not be held liable for the actions of crew members in the navigation or operation of the ship at sea.
Although the district court acknowledged this argument below, it made no findings of fact on this issue. Moreover, this court also paraphrased the argument without further comment:
(2) Keystone's decision to give the captain the discretion to ignore company instructions to require an anchor watch to manuever in congested waters — a decision that made it impossible to drop the anchors (which might have prevented the collision).
In reversing the lower court, we overturned the denial of Keystone's limitation as to the property damage claimants on the basis that the QUEENY management did not have the requisite privity and knowledge of the astern machinery defects. BP/Sohio contends that the privity and knowledge of the master with respect to the tug and anchor watch should eliminate Keystone's pro tanto credit for settlement payments to personal injury and death claimants. If limitation is granted as against the property damage claimants on the anchor watch theory, we believe that the question of limitation under 46 U.S.C. § 183(e), relating to personal injury and death claimants, becomes a relevant issue which the district court should also address.
BP/Sohio also asserts that this issue need not be reached if this court deems the district court's order of December 28, 1983 final.
Throughout this litigation, Bankers Trust, Monsanto, and Keystone have been treated as a single party with identical interests. In our amendment of our July 24, 1981 order, we clarified that our reversal of the district court was not directed solely to Keystone Company, but that our holding of lack of privity or knowledge with respect to the defective astern guardian valve and turbine applied to all three petitioners. We also believe that this collective treatment should continue on remand for the sake of consistency. Therefore, any findings to be made by the district court on remand of the unresolved issues of the alleged failure to post an anchor watch and the alleged privity and knowledge of the master in dismissing the tug and anchor watch should take this into account.
. . . it is now here ordered and adjudged by this court that the judgment of the said district court, entered February 20, 1980, be, and the same is hereby reversed with respect to its denial of the petition for limitation of liability to Bankers Trust Company, Monsanto Company and Keystone Shipping Company . . . and the cause remanded for further proceedings . . .
. . . . . * * * * * *
503 F. Supp. at 342. (emphasis added)