Westinghouse Credit Corp. v. M/V New Orleans

39 F.3d 553, 1994 WL 658864
CourtCourt of Appeals for the Fifth Circuit
DecidedNovember 22, 1994
Docket91-04697
StatusPublished
Cited by8 cases

This text of 39 F.3d 553 (Westinghouse Credit Corp. v. M/V New Orleans) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Westinghouse Credit Corp. v. M/V New Orleans, 39 F.3d 553, 1994 WL 658864 (5th Cir. 1994).

Opinion

DeMOSS, Circuit Judge:

I.

Kenner Marine & Machinery, Inc. agreed to sell the dredge NEW ORLEANS to Willie C. Starling, Sr. and Starling Enterprises, Inc. Westinghouse Credit Corp. financed $600,000 of the purchase price and secured its loan with a preferred ship mortgage. Westinghouse agreed with Kenner Marine that, if Starling defaulted, Westinghouse would foreclose on the NEW ORLEANS and purchase the dredge at a federal marshal’s sale. Kenner Marine agreed to repurchase the dredge from Westinghouse for the balance owed by Starling to Westinghouse plus costs expended by Westinghouse in connection with the sale.

Starling defaulted. Westinghouse sued to enforce its lien on the NEW ORLEANS. The court ordered the dredge seized and placed in custody. Douglas Marine Service, Inc. became consent custodian of the NEW ORLEANS, and in September 1985, J.N.T. Fleet, Inc. towed the dredge from Intraeoas-tal City, Louisiana to the Douglas Marine facility near Baldwin, Louisiana. The NEW ORLEANS sustained water damage both while being towed and later during the lengthy storage at the Douglas Marine facility.

Westinghouse purchased the NEW ORLEANS at the marshal’s sale. When Westinghouse demanded that Kenner Marine repurchase the dredge pursuant to the prior agreement, Kenner Marine refused. Westinghouse sued Kenner Marine for specific performance of the agreement to repurchase the NEW ORLEANS, or, in the alternative, for payment of damages.

After settlement of the consolidated lien and repurchase cases, only J.N.T. and its insurer, Atlas Assurance Co., remained as defendants in the litigation. Kenner Marine, Power Systems Diesel, Inc., and Vener Marine, Ltd., the latter two companies having furnished labor and materials for repair of the dredge, received an assignment of rights and sued J.N.T. and Atlas for negligence in towing.

The district court found J.N.T. and Atlas liable for $206,320 in damages and refused to credit J.N.T. and Atlas for the amount already paid by the settling parties. J.N.T. and Atlas appeal. We affirm.

II.

Prior to trial, Atlas moved to dismiss, claiming that the ocean marine insurance policy issued to J.N.T. was not a proper subject for direct action in Louisiana. See La.Rev.Stat.Ann. §§ 22:611 (marine insurance exemption) & 22:655 (direct action statute) (West 1978 & Supp.1992). By recent decision of the Louisiana Supreme Court and this Court, the Louisiana statute exempting marine insurance from application of some provisions of the Louisiana Insurance Code does not limit an injured party’s ability to maintain a direct action against an insurer under the Louisiana Direct Action statute. Grubbs v. Gulf Int’l Marine, Inc., 13 F.3d 168 (5th Cir.1994); Grubbs v. Gulf Int’l Marine, Inc., 625 So.2d 495, 502-04 (La.1993). Therefore, Atlas was not entitled to dismissal on this ground, and we affirm the district court’s denial of that motion.

III.

J.N.T. and Atlas argue that the $206,-320 judgment rendered against them should have been reduced to reflect a pro tanto (dollar-for-dollar) credit for settlement funds paid by Douglas Marine and the hull insurers for damages during storage. It is true that this Court had developed a settlement credit rule which requires full credit for amounts received in settlement from joint tortfeasors. E.g., Rollins v. Cenac Towing Co., 938 F.2d 599 (5th Cir.1991), cert. denied, — U.S. —, 112 S.Ct. 1242, 117 L.Ed.2d 474 (1992); Hernandez v. M/V Rajaan, 841 F.2d 582 (5th Cir.), cert. denied, 488 U.S. 981, 109 S.Ct. 530, 102 L.Ed.2d 562 (1988). The U.S. Supreme Court, however, recently repudiated the pro tanto settlement approach in admiralty cases, adopting in its place a proportionate share rule. McDermott, Inc. v. Am-Clyde, — U.S. —, 114 S.Ct. 1461, 128 *555 L.Ed.2d 148 (1994). Under the proportionate share approach, the finder of fact must determine the total damages from all joint causes and the proportion of each tortfea-sor’s share of joint liability. Although principles of joint and several liability survive, a nonsettling defendant cannot initially be assessed any amount of damages larger than his proportionate share of all damages as determined by his proportionate share of all liability. Thus, under AmClyde, the nonset-tling defendant is no longer entitled to a “credit” based on prior settlements. Rather, under AmClyde, it is the plaintiff who takes the risk of either a poor settlement or a favorable settlement with other defendants. However, the proportionate share rule, like its predecessor the pro tanto rule, applies only to cases in which there has been a settlement by a joint tortfeasor. See id. (when plaintiff settles with joint tortfeasors, nonsettling defendant is entitled to credit for damages attributable to conduct of settling defendant); Restatement (Second) of ToRts §§ 433A & 879. Thus, J.N.T. and Atlas are not entitled to call for the proportionate share rule in this case unless (1) they are joint tortfeasors with the settling defendants, and (2) the court determined damages based on the conduct of both J.N.T. and the settling defendants.

J.N.T. and Atlas claim that the required joint tortfeasor relationship does exist, because the damage at the dock masked any damage from the trip, erasing any basis for apportioning liability and making the two injuries indivisible. Kenner Marine and Power Systems, on the other hand, argue that this case involves two separate torts, one by J.N.T. during towage and one by Douglas Marine at the dock during storage. We agree with Kenner Marine and Power Systems. This is not a case in which there were two casualties closely related in time such that damage from one is indivisible from the other. J.N.T.’s tug, the MISS NORMA, picked up the dredge NEW ORLEANS at Intracoastal City in the late evening hour's of September 18, 1985 and dropped her off in the early morning hours of September 20 at the Douglas Marine facility in Baldwin. During the voyage, the bow of the NEW ORLEANS apparently took on water as a result of being incorrectly pushed bow first rather than stern first by the MISS NORMA. The master on board the tug testified regarding how much water he saw in the hull of the dredge NEW ORLEANS during the tow. Several witnesses testified concerning the condition of the dredge prior to the tow and the extent of damages immediately after the tow. Bradley, an experienced Kenner Marine dredge field technician, based his testimony on an inspection conducted September 20th, before the NEW ORLEANS had even been fully docked at Douglas Marine. If that were not enough, Webster, an experienced marine surveyor, visited the dredge NEW ORLEANS on November 16, shortly after the towing, and documented with pictures and reports the extensive damage caused by the near sinking while the vessel was under tow. The list of items damaged, which he prepared contemporaneously, became the basis for the damages awarded by the trial court.

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39 F.3d 553, 1994 WL 658864, Counsel Stack Legal Research, https://law.counselstack.com/opinion/westinghouse-credit-corp-v-mv-new-orleans-ca5-1994.