Source: http://www.admiraltylawguide.com/circt/5thadams.html
Timestamp: 2018-12-17 04:33:47
Document Index: 198369826

Matched Legal Cases: ['§ 3522', '§ 802', '§ 150', '§ 150', '§ 158', '§ 157', '§ 157', '§ 1292', '§ 2101', '§ 150']

Adams v. Unione Mediterranea di Sicurta (5th Cir. 2000)
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
UNIONE MEDITERRANEA DI SICURTA; ET AL
AMERICAN EAGLE MARINE, INC
Defendant - Appellee - Appellant -
Cross Appellant - Cross Appellee
AK STEEL CORPORATION, formerly know as, Armco Steel Company, L P
Defendant - Appellee - Cross Appellant
UMS GENERALI MARINE S.P.A., formerly known as Union Mediterranea Di Sicurta'
Defendant - Appellant - Cross Appellee
BRITAMCO UNDERWRITERS, INC
Before JONES, DUHÉ, and WIENER, Circuit Judges.
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 Eagle voluntarily undertook salvage of the steel.
In the initial declaratory relief action, the district court 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.
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) 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 eighty-twenty 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 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.
I. Personal Jurisdiction over UMS
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 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.
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 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)
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 jurisdiction defenses. Id.
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 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 whether the sunken cargo comes within the law of salvage or the law of finds.(11) One commentator has noted that "[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.
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:
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."
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 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)
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, 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 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 jurisdiction are met, we must apply federal admiralty and maritime laws and not state law.
2. Ohio Voidable Title Doctrine
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
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 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.
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 was abandoned. Significantly, the letter did not provide that the cargo was abandoned to the underwriters or anyone else.
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 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)
4. The sunken tug
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).
1. The district court earlier had granted the Plaintiffs' motion to compel substitution of real party in interest. This motion 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.
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.
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.
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.
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.
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.
10. The 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.
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. 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.
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.
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.
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.
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.