Case Name: Kuzma D. TESVICH v. 3-A'S TOWING CO.; Consolidated With Sinajka FARAC, M.J. Farac, Jr., and Beatrice Farac v. 3-A'S TOWING CO., et al.
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 1989-07-13
Citations: 547 So. 2d 1106
Docket Number: Nos. CA-8849, CA-8850
Parties: Kuzma D. TESVICH v. 3-A’S TOWING CO. Consolidated With Sinajka FARAC, M.J. Farac, Jr., and Beatrice Farac v. 3-A’S TOWING CO., et al.
Judges: Before SCHOTT, C.J., and BARRY, KLEES, CIACCIO and WILLIAMS, JJ.
Reporter: Southern Reporter, Second Series
Volume: 547
Pages: 1106–1136

Head Matter:
Kuzma D. TESVICH v. 3-A’S TOWING CO. Consolidated With Sinajka FARAC, M.J. Farac, Jr., and Beatrice Farac v. 3-A’S TOWING CO., et al.
Nos. CA-8849, CA-8850.
Court of Appeal of Louisiana, Fourth Circuit.
July 13, 1989.
Rehearings Denied Sept. 12, 1989.
David J. Hebert, Marrero, and Anthony D. Ragusa, Jr., Port Sulphur, for Sinajka Farae, Jr., Beatrice Farac and Kuzma Tes-vich.
Norman C. Sullivan, Jr., Randall C. Coleman, III, New Orleans, and J.Y. Gilmore, Jr., New Orleans, for John Hebert Barder, Individually and on Behalf of Certain Underwriters at Lloyd’s and other British Companies.
Before SCHOTT, C.J., and BARRY, KLEES, CIACCIO and WILLIAMS, JJ.

Opinion:
SCHOTT, Chief Judge.
Plaintiffs are oyster fishermen who hold leases from the state for oyster production on 378 acres of water bottoms in Bay La-naux in Plaquemines Parish. On September 25, 1980, the tugboat, John XXIII, entered the bay with a barge in tow and became grounded after traversing the bay. Later, the tugboat's owner dispatched a second tugboat, the Nora Adams, to free the first tug. Plaintiffs claimed damages to their leases and loss of profits from the actions of the two tugboats. Defendants are certain underwriters at Lloyds who insured the vessels. The trial court found that both vessels destroyed the oyster beds and awarded judgments to the plaintiffs against the underwriters totaling $4,724,-601.00. ($1,791,368 for Sinajka and Beatrice Farac, $684,622.50 for M.J. Farac, Jr., $1,502,910.50 for Beatrice Farac, and $745,-700 for Kuzma Tesvich) The underwriters have appealed. The principal issues concern the quantum of damages and the extent of insurance coverage.
There is no question but that the John XXIII caused damage to plaintiffs' oyster beds. There is some question whether some additional damage was done by the Nora Adams. The primary question is the extent of the damage. Shortly after the incident, plaintiffs filed a complaint with the Louisiana Department of Wildlife & Fisheries who dispatched biologist Robert E. Ancelet to investigate the matter. He testified that 116 acres were directly damaged when the vessel or vessels traversed the oyster beds. He based this conclusion on gouges, depressions, trenches, and mounds he found in and around the leases. He also found evidence of some damage outside of the directly affected area from sediment which was plowed and spread over the bay by the vessel(s).
Plaintiffs, Tesvich and M.J. Farac, Jr., both testified that the entire 378 acres of oyster beds in the bay were ruined. Tes-vich put it quite simply, "because the bottom is so soft, it can't support no oysters." Farac stated that he and his family have planted seed oysters on the leases since the damage was done and the oysters became buried under the sediment. He said they abandoned the area because it would not pay to work the leases for oysters unless the bottom was rebuilt.
In June, 1985 Dr. Edwin Cake, a marine biologist, investigated the oyster situation in the bay at the request of the plaintiffs. He concluded that the entire bay had been rendered unsuitable for commercial oyster production because of the damage caused by the offending vessel(s). He based his conclusion on samples he took showing fine sediment spread throughout the bay except around the perimeter and the absence of live oysters throughout the bay except on elevated reefs. He recommended that the entire bay bottom be covered with shells in order to provide a suitable surface for oysters to grow and reproduce. Thus, he supported the conclusion that the entire 378 acres which were under lease to the plaintiffs would have to be repaired.
The underwriters produced a biologist who testified that the damage was not nearly as extensive. Based on his investigation in October, 1980 he concluded that only 61 acres were directly damaged and he disputed Dr. Cake's theory that there was any damage to the leases beyond the paths of the vessel(s).
In extensive reasons for judgment the trial court found that the entire area leased to plaintiffs was rendered unsuitable for oyster production and that plaintiffs were entitled to restoration or reconstruction of the entire 378 acres. Restoration would consist of spreading shells on the leased water bottoms to the extent of fifty cubic yards of shells per acre at a cost of $16.59 per yard. The court awarded reconstruction amounts to each plaintiff (for purposes of discussion plaintiffs Sinajka and Beatrice Farac in their joint claim will be sometimes referred to as a single plaintiff) based on the formula of the number of acres leased times fifty times $16.59 with this result:
S & B Farac 144 acres X 829.50 = $119,448.00
M.J. Farac 55 acres x 829.50 = 45,622.50
Beatrice Farac 119 acres x 829.50 = 98,710.50
Kuzma Tesvich 60 acres X 829.50 = 49,770.00
The trial court also found that the plaintiffs were entitled to profits they would lose for ten years from the time the damage was inflicted to their leases. The court based this conclusion on finding that once the oyster beds were reconstructed commercial production could not resume until three years later and on a holding that plaintiffs were already entitled to seven years of lost profits by the time of the trial in 1987 because the defendants had failed to "mitigate" their damages by paying for the reconstruction as soon as the damage occurred. The court found that these oyster beds would yield one hundred sacks of oysters per acre per year and awarded lost profits for each year based on the formula: Number of acres x 100 sacks X price per sack.
In this court the underwriters strenuously dispute the conclusions that all 378 acres were destroyed for oyster production and required reconstruction, that plaintiffs are entitled to any lost profits beyond two years, and that plaintiffs are entitled to recover the price of the oysters (for lost profits computation) without regard to the expenses incurred in bringing the oysters to market.
We have reviewed the judgment of the trial court in the light of those fundamental principles which provide that factual findings and conclusions of the trial court will not be disturbed in the absence of manifest error and an award for damage by the trial court will not be disturbed unless it constitutes an abuse of the great discretion vested in the trial court for this purpose. We have also applied the principle that a conclusion on the appellate level that an award is excessive will supply a basis of reducing the award only to the highest level or limit of the trial court's discretion. Thus, in analyzing the present judgment we have resolved to leave intact as many of the trial court's conclusions as the record supports, but we have nevertheless concluded that substantial modifications and reductions in the judgment are warranted.
The court's conclusion that the entire leased area was damaged and requires reconstruction is essentially a factual one based upon the combined testimony of the plaintiffs and of Ancelet and Cake. As to the plaintiffs it was the function of the trial court to assess their credibility. That there was some damage from outside of the area directly invaded by the vessel(s) is supported by Ancelet's testimony. In attacking Cake's conclusion that the entire bottom of the bay had to be repaired to make the entire bay suitable for commercial production defendants argue that he didn't take enough samples and that the presence of some live oysters in the samples he took disproved his theory. But Cake testified that the live, marketable oysters were found for the most part only around the perimeter of the bay and on high points of reef.
He explained that the more practical solution was to reshell the entire bottom rather than to stake out the tops of the old reef and to determine where to spread new shells. He stated, "In my estimation, the sediments that were moved about in that bay were sufficient to interfere with oyster culture throughout the bay except for the very margins of the bay." He insisted that the entire leased area should be reshelled. Dr. Cake based his conclusions on a legitimate investigation and he explained it logically and clearly. His testimony confirmed what the plaintiff said and was consistent with Aneelet's. Even though the defendants' expert disputed Cake's conclusions and offered good reasons for his position the trial court resolved this conflict in Cake's favor. On the appellate level we accept this resolution.
There is no real dispute as to the cost of such a restoration. The evidence established that the work would consist of spreading fifty cubic yards of shells per acre and the cost would be $16.59 per yard. Consequently, the plaintiffs are entitled to recover $829.50 per acre for reconstruction as the trial court awarded.
We have concluded that the awards for loss of profits are excessive. They are based upon an error of law which led the trial court to award ten years of lost profits. Furthermore, they are factually erroneous because they do not comport with the testimony of plaintiffs themselves that they never did and never would fish the full potential of oyster production from these leases in a given year or in successive years. Finally, the awards are inconsistent with this court's expressions in Skansi v. Signal Petroleum, 375 So.2d 965 (La.App. 4th Cir.1979).
In awarding plaintiffs ten years of lost profits, the trial judge reasoned that plaintiffs already lost seven years of production by the time of the judgment and would lose an additional three years from the time the repair work was done. He spoke of the defendants' duty to "mitigate" their damages by making the repairs pending this litigation. The law does not support such a result. Defendants disputed plaintiffs' claim and they were entitled to do so. Until the court would hold that they were liable for this restoration cost and the judgment became final the defendants were under no obligation to pay this amount. It is plaintiffs who were required to mitigate their damages by doing the repair work and restoring full oyster production as soon as possible. This is why they are entitled to interest on the restoration cost from date of judicial demand. Since the evidence fairly establishes that the beds would not yield a full harvest until three years after the beds were restored plaintiffs are entitled to the loss of production for only three years, 1981-1983.
In computing lost profits for these years the trial judge made these findings: ".... that the average yearly harvest per acre in the Bay Lanaux area was one hundred (100) sacks per acre for each Lease" and "that the value of a sack of oysters for the year 1981 was $8.00_[and]_for the year 1982 through 1984 the value of a sack of oysters was $10.00." For each plaintiff he multiplied the total acres leased times the 100 sacks times the price and awarded the product for each year.
The flaw in this reasoning is the manifestly erroneous finding that they would harvest the full potential each year. This finding is negated by the testimony of the plaintiffs themselves. Tesvich and M.J. Farac, Jr. both analogized oyster fishing to raising crops on a farm. They spoke of rotating their beds and made it clear that they do not harvest a bed's full potential in successive years. Tesvich testified that he owned his two leases containing a total of sixty acres in the bay since 1978 but had not harvested the first oyster from there even though oysters were available. He stated that he harvested his oysters in 1978 from some state leases and in 1980 from a lease of 48 acres he held on Meyers Canal. He said that he intended to harvest oysters from his Bay Lanaux leases in March 1981 but could not because of the damage inflicted to the beds in September, 1980. Fa-rac testified that he and his family had 5000 acres of oyster leases and it was impossible for them to work all of these beds so that they rotated their beds every two or three years.
In addition, Farac testified that his family harvested 20,000 to 25,000 sacks of oysters in each of the years 1978 and 1979 and that sixty percent of their production came from Bay Lanaux or from 12,000 to 15,000 sacks. They held 318 acres of leases in the bay so that they had the potential of harvesting 31,800 sacks in each of these years based on the given figure of 100 sacks per year. Thus, the Faraes harvested a maximum of 47% of the potential in each of two years before the tort.
In discussing the measure of recovery for damaged oyster beds where the plaintiffs had access to undamaged beds this court held that income from undamaged property would not "in and of itself relieve the tortfeasors from paying plaintiff's full loss of use of the asset they damaged, unless it appears that both properties, if undamaged, more likely than not would not have produced profits during this period." Skansi at p. 968. Since the evidence clearly preponderates to the effect that neither Tesvich nor the Faraes would have harvested the full potential for all three years the judgment of the trial court allowing full recovery is clearly wrong and constitutes an abuse of discretion.
For the Faraes, the measure of recovery is 47% of their potential, based on the testimony of M.J. Farac, Jr. For Tesvich, we accept his testimony as the trial court did that he was going to work his leases in Bay Lanaux for the first time in 1981 and allow him full recovery for that year. However, based upon his and M.J. Farac's testimony we disallow recovery for 1982 and allow full recovery for 1983.
The trial court computed loss of production by the price at which the oysters could be sold without any deduction for the expense of harvesting them. This conclusion is clearly wrong. There was little dispute that the price plaintiffs could have gotten for oysters in 1981 was $8 per sack and in 1982 and 1983, $10 per sack. There was a sharp conflict over the cost of harvesting the oysters. One of the plaintiffs offered testimony that his costs were as high as $5 per sack in some locations, but he testified that the accessibility of Bay Lanaux made the cost as little as $1.50 per sack. Defendants offered the testimony of an accountant to show that production expenses approached 90% of the price based on an analysis of the expenses reported on income tax returns for the operation of the oyster boats. From this and other conflicting testimony we have concluded that the cost of harvesting oysters from these particular leases from 1981-1983 would have been $3 per sack.
Accordingly, we have concluded that each plaintiff is entitled to the amounts set forth below for lost profits. Lost profits are based on 100 sacks per acre per year and the amounts of $5 and $7 per sack are based upon the price of $8 per sack in 1981 and $10 per sack in 1982 and 1983 less expenses of $3 per sack.
The Faracs' recovery is limited to 47% for each year and Tesvich's recovery is limited to 1981 and 1983. Hence:
SINAJKA and BEATRICE FARAC:
1981 144 acres X 100 x .47 x $5 = $ 33,840.00
1982 144 acres x 100 x .47 x 7 = 47,376.00
1983 144 acres x 100 x .47 x 7 = 47,376.00
Total of Lost Profits $128,592.00
M.J. FARAC, JR.:
1981 55 acres x 100 x$5 x .47 = $ 12,925.00
1982 55 acres x 100 x 7 x .47 = 18,095.00
1983 55 acres X 100 X 7 X .47 = 18,095.00
Total of Lost Profits $ 49,115.00
BEATRICE FARAC:
1981 119 acres x 100 x$5 x .47 = $ 27,965.00
1982 119 acres X 100 X 7 X .47 = 39,151.00
1983 119 acres X 100 X 7 X .47 = 39,151,00
Total of Lost Profits $106,267.00
KUZMA D. TESVICH:
1981 60 acres x 100 x $5 = $ 30,000.00
1933 60 acres x 100 x 7 = 42,000.00
Total of Lost Profits $ 72,000.00
The underwriters have raised a number of insurance questions which must be addressed. The first requires an interpretation of the policy which limits recovery to $500,000 for each occurrence. The trial court found that there were eight occurrences because there were four plaintiffs and each vessel contributed damage to all of the leases. We are satisfied that virtually all the damage was done by the John XXIII so that if all claims constituted a single occurrence the liability of the defendants would be limited to $500,000 instead of the $669,525 of damages we award to the plaintiffs. However, we have concluded on the basis of Lombard v. Sewerage and Water Board of New Orleans, 284 So.2d 905 (La.1973) that the claim of each plaintiff with respect to his or her leases constitutes a separate occurrence.
The trial court denied the underwriters the right to limit their liability to the value of the vessel and freight then pending pursuant to 46 U.S.C.App. Section 183 because the defendants failed to prove 1) the value of the vessel at the time of the incident; 2) that the owners of the vessel were without privity or knowledge of the actions of the vessel; and 3) that the defense was not barred by laches. The underwriters contest these findings. After reviewing the evidence, we find the underwriters are not entitled to limit their liability because they failed to prove the value of the freight then pending, one of the elements of the 46 U.S.C.App. Section 183 defense. This holding obviates any discussions about privity or laches.
Defendants proffered the testimony of a marine surveyor, James Latham, who had valued the John XXIII on August 6, 1980 at $150,000.00. Additionally, he testified that at the time of the accident, two months after his appraisal, the value of the vessel would not have changed. Defendants also proffered the testimony of Harold Adams, the vice-president of the vessel's owner. He testified that his company paid $900.00 for the John XXIII to make the two day voyage from Venice, Louisiana to Lake Washington, but he did not testify nor did any other witness testify as to the value of the freight then pending. As the 46 U.S.C.App. Section 183 defense requires that the party attempting to limit their liability prove both the value of the vessel and the freight then pending, the underwriters' failure to prove this element precludes the defense.
Defendants claim the trial court erred in holding the individual underwriters liable, in solido, to plaintiffs. Rather, defendants claim each underwriter's liability should be limited to that portion of the loss subscribed to by the individual underwriter. This position is correct. Prior to July 1, 1988, Louisiana's insurance code permitted individual underwriters at Lloyd's to limit their liability to the proportionate part of the loss fixed in the contract of insurance. LSA-R.S. 22:499, as amended and reenacted by Acts 1958, No. 125. Therefore, the liability of each underwriter will be limited to the portion of the loss to which he subscribed.
The underwriters contend that the trial court's award of interest from date of judicial demand is improper because the plaintiffs delayed the prosecution of the case and the damages were not ascertainable until trial. LSA-R.S. 13:4203 provides that interest in tort cases runs from the date of judicial demand. Therefore, this argument has no merit.
The underwriter's final specification is that the trial court erred in setting the amount of Dr. Cake's expert witness fees at $3,000.00 because it was six times the amount set for the other expert witnesses who testified at trial. Fixing compensation of expert witnesses is, by statute, the right of the trial judge, LSA-R.S. 13:3666. To alter an award of expert witness fees, an appellate court must find that the trial judge abused the great discretion accorded to him in such matters. Wetzka v. Big Three Industries, Inc., 409 So.2d 393 (La. App. 4th Cir.1982). Thus, even though Dr. Cake's fee is considerably higher than the fees set for the other expert witnesses who testified at trial, based upon Dr. Cake's credentials and his preparation for trial, we cannot conclude the trial court abused its much discretion in fixing the fee. Oshinski v. Central Nat. Ins. Co. of Omaha, 432 So.2d 929 (La.App. 4th Cir.1983), writ den., 440 So.2d 148 (La.1983).
Accordingly, the judgment appealed from is amended to reduce the awards to the following amounts:
In favor of Sinajka and Beatrice Farac: $248,040.00
M.J. Farac, Jr. 94,737.50
Beatrice Farac 204,977.50
Kuzma D. Tesvich 121,770.00
The judgment is further amended to delete several and solidary liability among the underwriters and to limit their individual liability to that portion of the liability subscribed to by each underwriter.
In all other respects the judgment appealed from is affirmed.
AMENDED; AFFIRMED.
Barry, J., dissents in part.
Williams, J., concurs in part and dissents in part.