author: CHARLES SCHWARTZ, Jr., District Judge.

text:
    ALAMO BARGE LINES, INC. v. RIM MARITIME CO., LTD. et al. RIM MARITIME, K.K. v. ALAMO BARGE LINES, INC., et al.
    Civ. A. Nos. 83-2861, 83-2871.
    United States District Court, E.D. Louisiana.
    Nov. 5, 1984.

      W.J. Larzelere, Jr., New Orleans, La., for Alamo Barge Lines and Marine Equipment Co.
    J. Dwight LeBlanc, Jr., New Orleans, La., for Rim Maritime, K.K.

      Gary A. Hemphill, New Orleans, La., for intervenor Teh-Hu Cargocean Management Co.
    William W. Westerfield, III, New Orleans, La., for intervenor Marathon Petroleum Co.
    Lisa Devereaux Leach, New Orleans, La., for intervenor, Panama Transworld Leasing, SA.
   CHARLES SCHWARTZ, Jr., District Judge.

This matter came on for non-jury trial on August 27 and 28, 1984, and after close of evidence, and the filing of post-trial memoranda by the parties, the Court took the matter under submission for further consideration. Now, after review of the record in this matter, the evidence adduced at trial, the memoranda of counsel, and the applicable law, the Court rules as follows.

To the extent that any of the following findings of fact constitute conclusions of law, they are adopted as such, and to the extent that any of the conclusions of law constitute findings of fact, they are so adopted.

FINDINGS OF FACT

From the evidence and stipulations adduced at trial, the Court finds that Plaintiffs, Alamo Barge Lines, Inc. and Marine Equipment Co. (hereinafter “Alamo”) are foreign corporations and are the respective operator and owner of the M/V PHILIP ARTHUR and the Barges ALAMO 7, 9, and 10.

The M/T NORCHEM (“NORCHEM”) is a small ocean-going chemical tank ship of conventional design, measuring 350 feet' long and 7,339 gross tons. It is of Japanese registry, had a Japanese crew, and is owned by defendant, Rim Maritime, K.K., a Japanese company.

1. The Allision

This matter stems from a maritime allision in the Mississippi River in the Baton Rouge area on June 6, 1983. On June 6, 1983, the NORCHEM arrived at the Baton Rouge general anchorage at approximately 0700 on June 6, 1983. Her compulsory pilot, Martin Gould, Jr., brought her to anchor in the upper portion of the Baton Rouge general anchorage, which lies along the west side of the Mississippi River between Miles 225.8 and 227.3, where the river is approximately 1400 feet wide. The NORCHEM was brought to anchor at approximately 0830 and was anchored astern of a 419-foot general cargo ship named ARBOREOUS, and upriver of a small cargo ship named NEPTUNE VOLANS.

The NORCHEM remained in place at anchor for about two hours, but at about 10:30 her captain and officers noted the ship to be dragging anchor downriver towards the NEPTUNE VOLANS, anchored downstream. The captain placed the ship’s engines ahead to attempt to ease the strain, but the NORCHEM continued to drag. The captain, through charterer’s agent, called for a pilot to re-anchor the ship.

The NORCHEM was re-anchored by Pilot Thomas Doyle at 13:12. After the anchors were secured, Pilot Doyle departed the ship (about 14:00). The NORCHEM’S second mate Kenji Ono (“Ono”) plotted the new position of the NORCHEM by radar and gyro repeater from the bridge of the ship. Ono marked the location of the ship’s bridge by a circled dot on U.S. Department of Commerce Chart No. 11370 (“ONO # 2”). The bow of the NORCHEM extended 80 meters upriver of the circled dot. The vessel remained anchored in this position until struck later by the 690-foot flotilla of the M/V PHILIP ARTHUR.

The ship’s new position placed it outside the designated anchorage area for Baton Rouge, Louisiana. The designated anchorage is shown on United States Department of Commerce Chart 11370 covering the Mississippi River, New Orleans to Baton Rouge, Louisiana. The upriver limit of the General Anchorage at Mile 227.3 is approximately one statute mile below the exit from the forebay of the Port Allen Lock. The NORCHEM’S position placed it less than one-half statute mile from the Port Allen Lock.

On June 6, 1983, the PHILIP ARTHUR pushing her three-barge tow entered the Port Allen Lock, located on the west bank of the river and above the anchored NOR-CHEM. James Talbert, relief captain of the PHILIP ARTHUR, was in the pilot house. The lock master of the Port Allen Lock told Talbert that the river “was running.” He also advised Talbert of the height of the Baton Rouge gauge, 43.7 feet. Talbert had never entered the river from the Port Allen Lock when the river stage was this high and did not know what was the speed of current in the river.

Later that afternoon, the PHILIP ARTHUR and her three-barge tow were released from the Port Allen Lock and were preparing to enter the river and proceed downriver to the Marathon Petroleum Dock. Before entering the river, Captain Talbert, checked with the United States Coast Guard VTS monitor for vessel traffic in the area and was told that the river was clear of traffic.

Talbert planned to bring the M/V PHILIP ARTHUR and tow out into the river by steering to his left as the tow exited the lock. He then planned to “drive” the tow out away from the west bank (i.e., head toward the east bank) before turning it downriver, so as to pass to the east, or starboard, side of the anchored ships. Talbert, however, did not properly execute this maneuver. Instead, Captain Talbert used a “hard left” rudder immediately after leaving the lock forebay; this caused the tug and tow to lose headway in its attempt to cross the river causing the flotilla to fall down with the current before crossing the river, forcing the flotilla to strike the port anchor chain of the anchored NORCHEM.

After striking the port anchor chain of the NORCHEM, the PHILIP ARTHUR filled with water and heeled to starboard. At 15:23, the remaining wires attaching her to the ALAMO 7 parted, and the tug rolled completely over to starboard and became awash. At this time, the port anchor chain of the NORCHEM, on which the PHILIP ARTHUR was apparently still caught, parted, and the PHILIP ARTHUR sank. The PHILIP ARTHUR has never been recovered.

This striking of the NORCHEM’s port anchor chain by the PHILIP ARTHUR flotilla caused the NORCHEM to begin to drag downriver towards the ARBOREOUS. The NORCHEM came against the starboard side of the ARBOREOUS, with the barges ALAMO 9 and ALAMO 7 between these two ships. Minor damage resulted to the ARBOREOUS when the NORCHEM made minor contact with the starboard side of that vessel after dragging her remaining starboard anchor. These barges eventually worked free of the two ships without loss of any of the volatile naptha cargo. The Barge ALAMO 10, either as a result of the initial collision or subsequent collisions with nearby barge fleets, suffered some damage and the loss of approximately 1273 barrels of naptha cargo, which fortunately did not ignite. The anchored NEPTUNE VOLANS was also damaged when struck by these drifting barges.

As a result of the allision, the NOR-CHEM incurred temporary repairs, anchor replacement costs, and permanent repair costs, as well as loss of vessel use and incidental expenses during the repairs and replacement. The value of these damages has been stipulated to be $107,608. The PHILIP ARTHUR was sunk and is a total loss. The Barge ALAMO 10 sustained $45,000 in damages. The value of the lost cargo, consigned to Marathon Petroleum Company, has been stipulated to be $43,-307.80. Panama Transworld Leasing, S.A. and Teh-Hu Cargocean Management Co., Ltd., Hong Kong, respective owners of the NEPTUNE VOLANS and the ARBOREOUS have sustained damages of $25,000 and $2,979 as a result of the accident.

In determining liability for the allision, the Court finds that the pre-allision position of the NORCHEM, outside the General Anchorage, embarrassed the PHILIP ARTHUR’S navigation. The same highwater and strong current conditions that presented problems for the NORCHEM in the general anchorage also presented problems for tugs and tows exiting the Port Allen Lock. In light of those conditions, the NORCHEM’s mid-channel anchorage, with its extending bow anchor chain, constituted an obstruction to the navigation of river traffic exiting the Port Allen Lock and proceeding downriver. Further, the NOR-CHEM failed to notify the Port Captain, VTS, and/or personnel at the Port Allen Lock of its position, outside of the designated anchorage for Baton Rouge.

The pre-allision position of the NOR-CHEM was such that pilot Talbert could not have seen the NORCHEM until he was well out of the forebay of the Port Allen Lock. The Court does not find the testimony of Mr. Frederick Denham to the contrary credible, and notes that no such line of vision appears from an examination of the photos taken from the NORCHEM’s bridge during the accident.

Additionally, the Court finds that The 900-horse power PHILIP ARTHUR was underpowered for the task at hand, and could not adequately navigate in the high water and current conditions that existed on the day of the accident. Given those conditions, and the vessel’s inadequate power, the PHILIP ARTHUR’S captain and/or pilot should have requested and utilized helper boats to enter the river.

II. The valuation of the PHILIP ARTHUR

Evidence relating to valuation of the PHILIP ARTHUR at the time of its loss indicated that comparable sales of boats similar to the PHILIP ARTHUR sell anywhere from $140,000 to $395,000, with pushboat “for sale” listings ranging from $170,000 to $550,000. The market for pushboats can not accurately be ascertained at the date of the vessel’s loss and accordingly, therefore, its valuation must be determined with reference to the additional factors. Relevant to this inquiry are: the sums spent to repair and refit the vessel in 1979 ($349,000) and 1977 ($634,-000), as well as the vessel’s condition, and the depreciated residual value of the PHILIP ARTHUR on June 6, 1983 ($348,292.71). At the date of the accident, the vessel was insured for $500,000, and estimated replacement costs were put between $360,000 and $400,000.

III. The Cargo Claim

Evidence was also presented with regard to the terms and conditions of the carriage of the naptha lost as a result of this allision. Mr. Dave Deeter of Marathon Petroleum Company (“Marathon”) and Mr. Mike Malloy of Alamo Barge Lines (“Alamo”) negotiated the terms of transport for the cargo of naptha carried on the barges ALAMO 7, 9, 10 and pushed by the PHILIP ARTHUR on the day of this allision. Similar to their previous dealings over the proceeding two years, the parties negotiated via telephone. They discussed and agreed to the following terms and conditions for this carriage of naptha, from Marathon’s Texas City, Texas refinery to its Garyville, Louisiana refinery:

1. The price for transporting the naptha;
2. The quantity of naptha to be transported;
3. The date and time for loading and discharging the naptha;
4. The lay time to be allowed the tow in Texas City and Garyville;
5. The demurrage rate per hour.

Mr. Malloy of Alamo then sent a document entitled “Barge Charter Party” (Plaintiff’s Exhibit #7) to Mr. Deeter at Marathon. On the front of this document, Mr. Malloy listed the terms and conditions discussed by and agreed to by the parties pursuant to their phone conversation. The back side of this document contained twelve additional terms and conditions. These included “boiler plate” clauses, specifically a both to blame clause in favor of the carrier, Alamo, as well as an insurance clause that operated to absolve Alamo from any liability to Marathon in the event of cargo loss. The testimony indicates that these twelve clauses were never discussed by the parties during their negotiations. Marathon did not sign the documents after they received them from Alamo, but simply “filed them away.” During their negotiations, the parties never stated that their oral agreement was to be finalized and/or controlled by the previously undiscussed terms of the Barge Charter Party. It was the parties intent to be bound by the specific terms and conditions that were discussed during their phone negotiations, set forth on the front side of the Barge Charter Party signed and delivered by Alamo to Marathon. The evidence adduced at trial indicates that while Marathon did not ever express an intention not to be bound by the terms set forth on the reverse of the Barge Charter Party, they did not, within the preceeding two years, ever return a signed copy of the barge Charter Party to Alamo.

CONCLUSIONS OF LAW

The Court exercises jurisdiction over this case pursuant to its Admiralty and Maritime Authority, 28 U.S.C. § 1331.

I. The Allision

In this allision case, the Court is guided by the admiralty law precepts of United States v. Reliable Transfer Co., Inc., 421 U.S. 397, 95 S.Ct. 1708, 44 L.Ed.2d 251 (1975), and thus aportions liability between the parties.

A. Alamo

The PHILIP ARTHUR’S insufficient horsepower for the task at hand and Captain Talbert’s improper course and helm commands constituted unseaworthiness and negligence and were causes of the allision and resulting damage.

The 900 horsepower PHILIP ARTHUR was underpowered for the task at hand, and could not adequately navigate in the high water and current conditions that existed on the day of the accident. Given those conditions, and the vessel’s inadequate power, the PHILIP ARTHUR’S captain and/or pilot should have requested and utilized helper boats to enter the river from the Port Allen Lock.

Further, Captain Talbert’s course and helm commands were additional causes of the allision. Captain Oaks and Charles Edwards were of the opinion that Captain Talbert’s maneuver after exiting the Port Allen Locks was improper. They testified he should have set a course that directed him across the river to the Magnolia Docks; not one that pointed him upriver, as indicated by position “1” on Exhibit Talbert 1. The proper procedure according to the testimony of Oaks and Edwards would have been to drive almost straight across the river with little or slight left rudder (to maintain headway), and then, after crossing the river, to fall down with the current and proceed downriver close to the east bank and clear of anchored ships in the area. Talbert’s failure to properly execute this maneuver, coupled with his “hard left” rudder (an incorrect helm instruction), caused the vessel to get caught by the current before it crossed the river, sending it into an uncontrolled clockwise swing from which it eventually made contact with the port bow anchor chain of the NOR-CHEM.

B. Rim and NORCHEM

Rim and the NORCHEM are guilty of statutory violations in anchoring the NORCHEM. The anchorage, outside of the designated Baton Rouge zone, was in violation of 33 C.F.R. § 110.195(a)(24) (1983). The NORCHEM failed to sufficiently justify its illegal anchorage. Furthermore, its extreme midchannel position failed to comply with the provisions of 33 C.F.R. 110.195(c) (1983) governing emergency anchorage outside of the designated anchorage area for Baton Rouge. The NORCHEM’s position, during the extreme water and current conditions present in the river on June 6,1983 constituted a violation of 33 U.S.C. § 409, and 33 C.F.R. 110.-195(c), as its midchannel position and proximity to the Port Allen Lock created an obstruction to navigation for tugs and tows leaving the Port Allen Lock and heading downriver.

These violations place a heavy burden on Rim and the NORCHEM to show that this illegal anchorage did not and could not have caused the June 6, 1983 allision. The PENNSYLVANIA, 86 U.S. (19 Wall.) 125, 22 L.Ed. 148 (1874). However, this heavy burden has been “tempered by the equitable overlay of Reliable Transfer” Davis v. Superior Oil Co., 510 F.Supp. 1162, 1165 (E.D.La.1981). Thus, liability for property damages sustained in this maritime collision must be allocated according to the degree of the parties’ comparative fault, this is so even where one party is guilty of statutory violations. Florida East Coast Ry. v. Revilo Corp., 637 F.2d 1060, 1066-67 (5th Cir.1981).

The Court is also aware of the presumption of negligence that arises against a moving vessel when it strikes an anchored vessel. The OREGON, 158 U.S. 186, 15 S.Ct. 804, 39 L.Ed. 943 (1894); Skidmore v. Grueninger, 506 F.2d 716 (5th Cir.1975). However, since the NORCHEM was anchored in violation of the law, it cannot avail itself of this presumption. Davis, 510 F.Supp. at 1166 (and cases cited therein).

II. The Valuation of the PHILIP ARTHUR

In Standard Oil Co. v. Southern Pacific Co., 268 U.S. 146, 156, 45 S.Ct. 465, 467, 69 L.Ed. 890 (1925), the Supreme Court articulated the law of damages as follows:

In case of total loss of a vessel, the measure of damages is its market value, if it has a market value, at the time of destruction____ Where there is no market value, such as is established by contemporaneous sales of like property in the way of ordinary business, as in the case of merchandise bought and sold in the market, other evidence is resorted to. The value of the vessel lost properly may be taken to be the sum which, considering all the circumstances, probably could have been obtained for her on the date of the collision; that is, the sum that in all probability would result from fair negotiations between an owner willing to sell and a purchaser desiring to buy ____ And by numerous decisions of this Court, it is firmly established that the cost of reproduction as of the date of valuation constitutes evidence properly to be considered in the ascertainment of value.

Id. at 155-56, 45 S.Ct. at 466-67 (citations omitted) (emphasis added).

Subsequent cases have focused on the kinds of other evidence admissible when market value cannot be ascertained. In Carl Sawyer, Inc. v. Poor, 180 F.2d 962, 963 (5th Cir.1950), the Court listed the opinion of marine surveyors, engineers, the cost of reproduction less depreciation, the condition of repair which the vessel was in, and the uses to which it could be put and the amount of insurance on the vessel as factors to be taken into account in determining damages. Bisso v. Inland Waterways Corp., 139 F.Supp. 387, 389 (E.D.La. 1956) held that capitalization of earning capacity and book value to the owner were properly considered by the Court as additional factors in determining damages. Furthermore, in Greer v. United States, 505 F.2d 90, 93 (5th Cir.1974), the Court stated that, “In situations where market value cannot readily be established, the Court should consider any and all evidence before it to establish a fair valuation.” See, also, King Fisher Marine Services, Inc. v. NP Sunbonnet, 724 F.2d 1181, (“value to owner” considered a factor in determining damages), reh’g denied, 729 F.2d 315 (5th Cir.1984).

Under the facts of the case at bar, evidence was presented of comparable sales ranging from $140,000 to $395,000. Because the market for tug boats was severly depressed, the Court also questions whether these prices actually reflect what a “willing” buyer and seller would buy and sell for in an “ordinary market” situation. See, Standard Oil, 268 U.S. at 156, 45 S.Ct. at 467. Thus, market value, based on comparable sales appears difficult if not impossible to accurately ascertain. Given the applicable case law, it is proper for the Court to consider other factors in placing a value on the PHILIP ARTHUR. In properly compensating the owner of the tug for his loss, the following factors were considered by the Court:

1. At the time of the accident, the PHILIP ARTHUR was insured for $500,000.
2. The tug was built in 1956 and acquired by Alamo in 1970. It was refurbished in 1977 for $634,000 and 1979 for $349,000.
3. The book value of the tug at the time of the accident was $348,292.71.
4. Replacement costs were estimated at $360,000 to $400,000.
5. The condition of the vessel at the time of the accident.
6. The testimony of Mr. Ed Smith, president of Alamo that the PHILIP ARTHUR was a profitable tug, and that at the time of the accident, all of his vessels in the 900 HP range were working steadily.

In weighing these factors, it should be noted that “the ascertainment of value is not controlled by artificial rules. It is not a matter of formulas, but there must be a reasonable judgment having its basis in a proper consideration of all relevant facts.” Standard Oil, 268 U.S. at 156, 45 S.Ct. at 467. Therefore, in consideration of the factors mentioned above, the Court places the valuation of the PHILIP ARTHUR at the time her loss at $350,000.

III. The Cargo Claim

The Court also finds that an oral agreement was reached between Alamo and Marathon Petroleum Company (“Marathon”). The agreement provided that Alamo would transport Marathon’s naptha from Texas City, Texas to Garyville, Louisiana. The terms agreed upon by Messrs. Molloy and Deeter for their respective principals were sufficient to form a maritime contract, without regard to its oral nature. See, Kossick v. United Fruit Co., 365 U.S. 731, 734, 81 S.Ct. 886, 889, 6 L.Ed.2d 56 (1961); Central Marine Service Co. v. Ocean Marine Contractors, Inc., 1984 AMC 1730, 1734 (5th Cir.1982) (per curiam) Gardner v. M/V CALVERT, 1958 AMC 800 (3d Cir.1958).

Since Marathon agreed to employ the entire capacity of the barges, the contract referred to above created a contract for private carriage and the parties’ agreement formed a contract of affreightment. Romano v. West India Fruit & S.S. Co., 151 F.2d 727 (5th Cir.1945); Alamo Chemical Transportation Co. v. M/V OVERSEAS VALDES, 469 F.Supp. 203 (E.D.La. 1979), disapproved of on other grounds, Allied Chemical Corp. v. Hess Tankship Co., 661 F.2d 1044 (5th Cir.1981).

This being United States Coastwise trade, and private carriage, the Harter Act, 46 U.S.C. § 190 et seq. and the Carriage of Goods by Sea Act (“COGSA”), 46 U.S.C. § 1300, et seq. do not apply ex proprio vigore. MARINE SULPHUR QUEEN, 460 F.2d 89, 102 (2d Cir.), cert. denied, 409 U.S. 982, 93 S.Ct. 318, 34 L.Ed.2d 246 (1972).

The June 2, 1983 “Bill of Lading” issued by Alamo constituted a mere receipt for the goods carried, and did not constitute a document of title or contract of carriage between the parties. Unterweser Reederei Aktiengesellschaft v. Potash Importing Corp., 36 F.2d 869 (5th Cir. 1930). Furthermore, the coastwise nature of this carriage renders the COGSA incorporation clause of that document inapplicable. Consequently, the terms and conditions agreed to by the parties during their phone negotiations constituted their contract of carriage. See, Alamo, 469 F.Supp. at 209.

When Marathon loaded barges ALAMO 7, ALAMO 9 and ALAMO 10 with straight-run naptha at Texas City, Texas, custody and control of the naptha passed to Alamo. Thus, a bailment relationship was established. Commercial Molasses Corp. v. New York Tank Barge Corp., 314 U.S. 104, 108, 62 S.Ct. 156, 159, 86 L.Ed. 89 (1941); Pure Oil Co. v. M/V CARIBBEAN, 235 F.Supp. 299, 304 (W.D.La.1964), affd, 370 F.2d 121 (1966). This bailment relationship imposes upon the carrier a duty of ordinary care to safeguard the cargo. Commercial Molasses, 314 U.S. at 110, 62 S.Ct. at 160.

Although the burden of proof of Alamo’s breach of its duty of ordinary care is upon Marathon, the shipper/bailor, Marathon, has carried that burden by showing that 1,273.01 barrels of its naptha were not delivered to its Garyville Refinery. As a result thereof, an inference of negligence on the part of Alamo Barge Lines arises by operation of law. Commercial Molasses, 314 U.S. at 112, 62 S.Ct. at 161.

Due to insufficient horsepower of the tow and Captain Talbert’s incorrect helm instruction and improper course setting, the Court finds that Alamo failed to exercise ordinary care in the custody and carriage of the naptha and that this negligence proximately caused the loss.

The Court further concludes that Rim Maritime, K.K. and the NORCHEM are liable to Marathon Petroleum Company as a result of their negligence as set out hereinabove in causing the allision of the PHILIP ARTHUR and its flotilla with the NOR-CHEM and the NEPTUNE YOLANS and the ARBOREOUS.

Negligence of a non-carrying vessel which proximately causes an allision which results in damages to cargo, imposes upon the non-carrying vessel interest liability to cargo for its full loss. The Atlas, 3 Otto 302, 93 U.S. 302, 23 L.Ed. 863 (1876); Allied Chemical Corp. v. Hess Tankship Co., 661 F.2d 1044, 1058 (5th Cir.1981). The United States Supreme Court’s decision in Reliable Transfer does not affect the ability of innocent cargo to recover the whole of its damages from either Rim or Alamo. Allied Chemical, 661 F.2d at 1058; Gulf Coast Transit Co. v. M/T ANCO PRINCESS, 1978 AMC 2471 (E.D.La.1977).

Alamo’s position that all the provisions of its barge charter party were agreed to by Marathon through their course of dealing, is not supported by the law or the evidence. The evidence did not demonstrate that Marathon, in prior contracts, accepted Alamo’s Barge Charter Party. Although there were previous and regular contracts of carriage between the parties, each carriage was negotiated by telephone. In some instances, Alamo sent its Barge Charter Party, signed, to Marathon, but in other cases it did not. When the documents were sent to Marathon, they were usually sent after performance of the contract pursuant to the oral agreements for the carriage. Alamo failed to show that Marathon ever agreed to, or signed their Barge Charter Party. Alamo, in turn, never inquired into Marathon’s failure to sign and return the documents. In order for a usage or custom to be binding, such that it adds to or modifies the terms of a contract, the usage or custom must be so uniform, long-established, understood, and generally acquiesced in, that it induces the belief in the parties that the parties contracted with reference to it, nothing appearing in their contracts to the contrary. 25 C.J.S. Customs & Usages § 2 (1966); Premier Electrical Construction Company v. Miller-Davis Company, 291 F.Supp. 295 (N.D.Ill.1968), aff'd in part, rev’d in part, 422 F.2d 1132 (7th Cir.) cert. denied, 400 U.S. 828, 91 S.Ct. 56, 27 L.Ed.2d 58 (1970). Alamo has made no such showing.

The only reasonable inference from the manner in which the course of dealing occurred is that the “Barge Charter Party” (Plaintiff’s Exhibit # 7) was employed to memorialize the parties agreement, and for billing purposes as to:

1. The price for transporting the naptha;
2. The quantity of naptha to be transported;
3. The date and time for loading and discharging the naptha;
4. The lay time to be allowed the tow in Texas City and Garyville;
5. The demurrage rate per hour.

Alamo failed to demonstrate by a preponderance of the evidence that Marathon intended to be bound by the printed matter appearing on the reverse of said Plaintiff Exhibit No. 7.

IV. Damages

The Court finds the damages from this allision to be as follows:

Loss of the PHILIP ARTHUR ..... $850,000.00
Damage to Marathon’s naptha...... $ 43,307.80
Damage to the ARBOREOUS ...... $ 2,979.00
Damage to the NEPTUNE VOLANS $ 25,000.00
Damage to the ALAMO 10......... $ 45,000.00
Damage to the NORCHEM..........$107,608.00

The damages to the PHILIP ARTHUR, ALAMO 10, and the NORCHEM total $502,608.00 and are to be apportioned between Alamo and Rim as follows:

Plaintiff, Alamo Barge Lines, Inc. — 65%
Defendant, Rim Maritime, KK — 35%

Intervenor, Marathon is entitled to judgment against either Alamo Barge Lines, Inc. and/or Rim Maritime, KK for the full extent of its loss, reserving to each party the right of contribution in accordance with the aforesaid proportions in the event that they pay in excess of their portion of Marathon’s claim.

Intervenor, Panama Transworld Leasing, S.A. (“Panama”), as owner of the NEPTUNE VOLANS is entitled to judgment against Alamo Barge Lines, Inc. and/or Rim Maritime, KK for $25,000, reserving to each party the right of contribution in accordance with the aforesaid proportions in the event that they pay in excess of their portion of Panama’s claim.

Intervenor, Teh-Hu Cargocean Management Co., Ltd. (“Teh-Hu”), as owner of the ARBOREOUS is entitled to judgment against Alamo Barge Lines, Inc. and/or Rim Maritime, KK for $2,979, reserving to each party the right of contribution in the aforesaid proportions in the event they pay in excess of their portion of Teh-Hu’s claim.

As per stipulation of the parties, interest on the claims of Marathon, Panama, and Teh-Hu shall run from date of judgment; on all other claims, interest shall run from date of judicial demand.

ACCORDINGLY, the Clerk of Court is directed to enter judgment in accordance with the foregoing.

      . The M/V PHILIP ARTHUR ("PHILIP ARTHUR") was a conventional twin-screw river towboat which was first constructed in 1956 and received substantial hull repairs in 1977. The PHILIP ARTHUR also had major repairs done after a collision and fire in 1979. It had two 450-horsepower D-397 Caterpillar diesel engines, for a total of 900 horsepower, was about 70 feet in length overall, with a breadth of 23 feet, had about 8.1 to 8.5 feet of hull depth, and a 3-to-l reduction gear.
      The Barges ALAMO 10, 9 and 7 are tank barges and on June 2, 1983, these barges were loaded with naptha, a flammable oil-based chemical, much like gasoline, and had a draft of between 9 and 9'/2 feet. These barges were en route from Texas to Garyville, Louisiana and were being pushed in a single line by the M/V PHILIP ARTHUR. The ALAMO 10 was the lead barge, the ALAMO 9 the middle barge, and ALAMO 7 the trailing barge. The entire length of the M/V PHILIP ARTHUR flotilla was about 690 feet.

      . At the time of this allision, the Mississippi River was at flood stage; the Bonnet Carre Spillway was opened completely, a flood-control measure very rarely taken and only during extremely high water. The New Orleans/Carroll-ton gauge was 17.2 feet above sea level and the Baton Rouge gauge at 43.7 feet above sea level. According to the testimony of Billy J. Garret on June 6, 1983, the mean surface current of the Mississippi River in the Baton Rouge, Louisiana area (at the Port Allen Lock) was estimated to be 6 miles per hour, with the maximum surface current estimated at 8-8.5 miles per hour.

      . The General Anchorage for vessels in the Baton Rouge Harbor extends between Miles 225.8 and 227.3 above the Head of Passes and measures 1,400 feet in width measured from the right descending bank of the Mississippi River. 33 C.F.R. § 110.195(a)(24) (1983).

      . Although the PHILIP ARTHUR had used helper boats during its transit of the Berwick Bridge area, as per government regulations, neither Talbert nor the permanent captain, Jerrell Oaks, asked for a helper boat to assist the PHILIP ARTHUR’S tow while entering the Mississippi River from the Port Allen Lock.

      . See Positions “1-5” on Exhibit Talbert 1.

      . That clause provides, in pertinent part:
      If this Bill of Lading is a document of title to which the Carriage of Goods by Sea Act of The United States ... applies by reason of the port of loading or discharge being in territory in which said Act or other similar legislation is in force, this Bill of Lading shall have effect subject to the provisions of the said Act.


source: Caselaw Access Project

author: ZIEGLER, District Judge.

license: Public Domain

text:
    John M. BETHEL and United Dairy, Inc., Plaintiffs, v. Bryan CRITES: Agate Elevator Agricultural Co-Operative; Donald Carpenter: and Glenn Gullett Trucking Company, Defendants.
    Civ. A. 81-1137.
    United States District Court, W.D. Pennsylvania.
    Nov. 5, 1984.
    Joseph Bagley, Pittsburgh, Pa., for plaintiffs.
    James David Elder, Kenneth S. Robb, Richard L. Rosenzweig, Thomas M. Mulroy, Pittsburgh, Pa., for defendants.
   MEMORANDUM OPINION

ZIEGLER, District Judge.

Pending before the court is the motion of plaintiffs “to set aside joint tortfeasors releases to Donald Carpenter and Bryan Crites.” Plaintiffs contend that the releases, dated January 29, 1983, should be set aside due to fraud and mutual mistake. Since the record is devoid of evidence of fraud or mutual mistake, the motion will be denied.

This case is a vivid example of the pitfalls of joint tortfeasors releases. Indeed, there is an adage of trial practice that a plaintiff should never release a tortfeasor unless that party has paid the full value of the claim. Plaintiffs executed the releases and gambled that the jury would find that Bryan Crites was a servant of Agate Elevator Agricultural Co-operative. Plaintiffs lost.

The facts are as follows. On January 29, 1983, plaintiffs executed joint tortfeasor releases for the payment of $69,500.00. The releases recite that plaintiff, United Dairy, Inc., was paid $13,200.99 for property damage. The releases further recite that plaintiff, John M. Bethel, was paid $56,299.01 for personal injuries. In sum, plaintiffs released all defendants in this case except Agate Elevator Co-operative and Bryan Crites, as its agent, servant or employee.

The case proceeded to a bi-furcated trial and the jury found in answer to special interrogatories that (a) Crites was not an agent, servant or employee of Agate Elevator; (b) Agate’s placards were not on the vehicle at the time of the accident; and (c) Crites was a servant of Glenn Gullett Trucking Company and Donald Carpenter. Since plaintiffs had released Glenn Gullette, Carpenter and Crites, as their agent, servant and employee, prior to trial “from all claims, damages, actions and suits of whatsoever kind,” and because the jury found that Agate Elevator was not a master of Crites, and because the verdict had resolved all remaining issues, the court molded the verdict and entered judgment on July 19, 1984. See WRIGHT & MILLER, FEDERAL PRACTICE & PROCEDURE: Civil 2510.

II.

Plaintiffs contend that this court should set aside the joint tortfeasor releases because “[pjlaintiffs were prejudiced by the fraud, deceit and perjury of Donald Carpenter and Bryan Crites, as found by the Jury, as they relied on the truthfulness of the deposition testimony of Donald Carpenter and Bryan Crites at the time of the signing of the Joint Tortfeasors Releases.” See plaintiffs’ motion at ¶ 13. We begin by noting that plaintiffs failed to raise this issue in their motion for new trial. The Court of Appeals has held that a district court is without jurisdiction to address an issue which is not raised in a timely post-trial motion. Arkwright Mutual Ins. Co. v. Phila. Elect. Co., 427 F.2d 1273, 1275-1276 (3d Cir.1970). Thus, we have reservations whether we have jurisdiction. However, we do have jurisdiction under Rule 60(b) to alter or amend the judgment due to fraud or mistake, and therefore we will address plaintiffs’ motion on the merits.

We hold that plaintiffs’ motion is without merit. Fraud is defined as (1) a specific false representation of material facts; (2) knowledge by the person who made it of its falsity; (3) ignorance of its falsity by the person to whom it was made; (4) the intention that it should be acted upon; and (5) the plaintiff acted upon it to his damage. Christidis v. First Penna. Mrtg. Trust, 717 F.2d 96, 99 (3d Cir.1983); RESTATEMENT (SECOND) OF CONTRACTS § 162 (1979).

Donald Carpenter testified at trial that a placard of Agate Elevator was on the vehicle when he arrived at the site of the accident. His testimony at trial was consistent with his testimony at a pre-trial deposition. Bryan Crites was deposed on the same issue and his deposition was introduced by plaintiffs as evidence. Hence, neither Carpenter nor Crites represented any fact at trial that was distinct from their recitation of the facts when plaintiffs executed the joint tortfeasor releases. Plaintiffs’ disappointment in the rejection of the testimony of these witnesses by the jury does not establish that Carpenter or Crites falsely represented any fact. If anything, their evidence was entirely consistent with the facts known to plaintiffs prior to trial and plaintiffs have no basis to assert that they relied on or “were prejudiced by the fraud, deceit and perjury of Donald Carpenter and Bryan Crites.”

Plaintiffs’ argument that the findings of the jury establish fraud or perjury requires little discussion. First, the jury’s finding does not establish that these witnesses committed perjury. It means only that the jury did not believe their testimony. Second, as rehearsed, Carpenter and Crites testified precisely as they did prior to trial. There were no misrepresentations. And third, plaintiffs executed the releases with knowledge that Carpenter and Crites would support their theory of agency, and also with knowledge that Agate Elevator had photographs, and other evidence which directly contradicted plaintiffs’ evidence. Hence plaintiffs can not claim that they detrimently relied on the depositions of these witnesses when the releases were executed because they knew that the question of agency was hotly contested. In short, we hold that plaintiffs have failed to allege or prove intrinsic or extrinsic fraud, misrepresentation, or misconduct of an adverse party which would authorize the relief sought by plaintiffs.

Plaintiffs’ argument of mutual mistake is also without merit. The only mistake in this case was plaintiffs’ decision to settle prior to trial and proceed to judgment against Agate Elevator. If plaintiffs were dissatisfied with the offer of settlement of the released defendants, the offer should have been rejected. Instead, plaintiffs, who were represented by an experienced lawyer, determined to release certain defendants for the payment of $69,500. Clearly, the mistake, if any, was unilateral, and with full knowledge of the facts known to all counsel at the time. See RESTATEMENT (SECOND) OF CONTRACTS § 154 (1979).

The Uniform Contribution Among Tortfeasors Act, 42 Pa.C.S.A. § 8326, also undermines plaintiffs’ argument of mistake. Section 4 provides that “[a] release by the injured person of one joint tortfeasor, whether before or after judgment, does not discharge the other tortfeasor unless the release so provides____” Here, plaintiffs negotiated agreements that released Donald Carpenter and Bryan Crites as his agent, servant and employee. Since the releases “so provide,” the intent of plaintiffs is clear. Hasselrode v. Gnagey, 404 Pa. 549, 172 A.2d 764 (1961). Their complaint of mistake must be rejected.

Plaintiffs’ final argument that we should proceed to judgment against Donald Carpenter, determine damages, and credit Carpenter with “his share of the verdict of $9,933” is without merit. See plaintiffs’ motion at ¶ 16. First, Donald Carpenter has not filed a post-trial motion and thus he appears content with the judgment. Second, the release insulates Carpenter from all further liability to plaintiffs. Third, the issue of damages was not submitted to the jury because the jury’s resolution of the agency question resolved all pending questions. Fourth, the judgment of July 19, 1984 resolves the cross-claim of Agate Elevator against Donald Carpenter. And, fifth, plaintiffs have no standing to advance the cause of Carpenter, and this court has no reason to determine damages because plaintiffs have been paid by Carpenter, and the remaining tortfeasors as required by the releases.

In summary, plaintiffs’ claim of fraud and mistake is an attempt to extricate themselves from a situation that they have created. Apparently, they are dissatisfied with the settlement of $69,500, or the finding of the jury, or both. As we noted in our opinion of October 1, 1984, the finding of the jury is supported by competent evidence, and there is no justification to set aside the releases. Plaintiffs gambled and lost, and the bargain they struck is neither unconscionable nor unjust.

The motion of plaintiffs to set aside the releases will be denied.


author: CARRIGAN, District Judge.

text:
    Steven C. KINNETT, et al., Plaintiffs, v. SKY’S WEST PARACHUTE CENTER, INC., et al., Defendants.
    Civ. A. No. 81-C-1756.
    United States District Court, D. Colorado.
    Nov. 5, 1984.

      John L. Breit, Edwin A. Howe, Hansen & Breit, Denver, Colo., John O’Quinn, Houston, Tex., for plaintiffs.
    Paul D. Renner, Patrick Burke, Renner, Rodman & Burke, James L. Tilly, Tilly & Graves, Denver, Colo., Lee & Marturano, Englewood, Colo., Kern & Wooley, Los Angeles, Cal., James Piper, U.S. Dept, of Justice, Washington, D.C., for defendants.
   ORDER

CARRIGAN, District Judge.

Plaintiffs LaDora McPeters, et al., filed a motion for application of Wyoming’s wrongful death statute in the present case. Defendant Air U.S. opposes this motion. The parties have thoroughly briefed the issues, submitting briefs well in excess of the page limit set by Local Rule 408(C). Oral argument would not assist the decision process. Jurisdiction is based on 28 U.S.C. § 1332.

The decedent, Wilfred McPeters, was a Wyoming resident living with his family in Upton, Wyoming. He purchased a round trip ticket to Dallas, Texas from Air U.S. at its Gillespie, Wyoming office. On his return trip he travelled aboard Air U.S. flight 716 which took off from Stapleton Airport in Denver, Colorado, bound for Gillette, Wyoming. Shortly after takeoff, and while still flying over Colorado, the Air U.S. plane collided with a plane operated by the co-defendant, Sky’s West Parachute Center. Wilfred McPeters was killed.

Wilfred McPeters’ widow, LaDora McPeters, and a group of his surviving relatives commenced the instant wrongful death action in this court. At the time of the accident, all the plaintiffs were residents of Wyoming. Defendant Air U.S. is a Colorado corporation doing business in several states, including both Colorado and Wyoming. Defendant Sky’s West is also a Colorado corporation which operates out of Loveland, Colorado.

Plaintiffs contend that Wyoming’s wrongful death statute, rather than Colorado’s should govern damages. Wyoming law allows prevailing wrongful death plaintiffs to recover punitive damages and damages for loss of probable future companionship, society and comfort. Wyo.Stat. § 2-14-202(e). Colorado’s wrongful death statute limits recovery to net pecuniary loss. Colo.Rev.Stat. § 13-21-201. Colorado law allows no punitive damages for wrongful death. Herbertson v. Russell, 150 Colo. 110, 371 P.2d 422 (1962).

Because jurisdiction here is based on diversity, Colorado’s choice-of-law rules apply. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1942). Colorado courts apply the law of the state with the “most significant relationship to the occurrence and the parties.” See First National Bank v. Rostek, 182 Colo. 437, 514 P.2d 314, 320 (1973); Restatement (Second) of Conflict of Laws § 175 (1960). In wrongful death actions, the Colorado courts have followed Restatement §§ 175 and 178 in deciding choice of law questions. See, e.g., Murphy v. Colorado Aviation, Inc., 41 Colo.App. 237, 588 P.2d 877, 880 (1978); Niven v. Falkenburg, 553 F.Supp. 1021 (D.Colo.1983).

Section 178 provides, “The law selected by application of the rule of § 175 determines the measure of damages in an action for wrongful death.” Section 175 states:

“In an action for wrongful death, the local law of the state where the injury occurred determines the rights and liabilities of the parties unless, with respect to the particular issue, some other state has a more significant relationship under the principles stated in § 6 to the occurrence and the parties, in which event the local law of the other state will be applied.”

Section 6 lists, as factors to be considered in determining which state’s law to apply:

(a) the needs of the interstate and international systems,
(b) the policies of the forum,
(c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,
(d) the protection of justified expectations,
(e) the basic policies underlying the particular field of law,
(f) certainty, predictability and uniformity of result, and
(g) ease in the determination and application of the law to be applied.

Colorado courts, in applying the Restatement standards, have not always applied the tort law of the state in which the accident occurred. See First National Bank v. Rostek, supra; Sabell v. Pacific Inter-Mountain Express Co., 36 Colo.App. 60, 536 P.2d 1160 (1975). Rather, they have considered a variety of factors in determining which state has the most significant contacts with the parties and the occurrence. See Vandeventer v. Four Corners Elec. Co., 663 F.2d 1016, 1017 (10th Cir. 1981).

In this area of the law, it is difficult to generalize about which contacts are most significant. The specific facts of each case must be analyzed. Here, the plaintiffs reside in Wyoming, and the decedent lived there. The decedent purchased his ticket in Wyoming, from a corporation doing business there. His purpose was to make an interstate round trip beginning in Wyoming and ending back in Wyoming. The accident occurred in Colorado airspace, near the Wyoming border, while the decedent was returning to Wyoming. The decedent’s Colorado contact was merely fortuitous; the Wyoming bound plane on which he was a passenger collided and crashed south of the Color ado-Wyoming border. Moreover, Wyoming has a strong interest in seeing that its citizens are fully compensated for their injuries. See Wyo.Stat. § 2-14-201 et seq.

Defendant argues that Colorado’s limitations on wrongful death recoveries promote Colorado’s interest in providing a stable business environment for its domestic corporations, including the defendants’. There is no injustice in requiring non-Wyoming corporations, which conduct substantial business in Wyoming, to be responsible according to Wyoming law for tortious injuries and deaths of Wyoming residents while these residents are being transported on round trips beginning and ending in Wyoming. Clearly, Wyoming’s interest in seeing its citizens fully compensated outweighs the tenuous asserted possibility of improvements in Colorado’s business climate if this court were to apply Colorado law.

I conclude that under the principles stated in §§ 6 and 175 of the Restatement (Second) of Conflict of Laws, Wyoming had the most significant relationship to the occurrence and the parties. Accordingly, it is ordered that Wyoming’s law governing wrongful death damages will be applied in this action.


author: COHILL, District Judge.

text:
    UNITED MINE WORKERS OF AMERICA, DISTRICT 5, Plaintiff, v. U.S. STEEL MINING CO., INC., a subsidiary of United States Steel Corporation, Defendant.
    Civ. A. No. 83-1488.
    United States District Court, W.D. Pennsylvania.
    Nov. 6, 1984.

      Ronald J. Zera, Pittsburgh, Pa., for plaintiff.
    Jeffrey E. Beeson, Pittsburgh, Pa., for defendant.
   OPINION

COHILL, District Judge.

Plaintiff, United Mine Workers of America, District 5 (the “Union”) brought this action against the Defendant, U.S. Steel Mining Co. (“USS”) under section 301 of the Labor Management Relations Act, 29 U.S.C. § 141 et seq., § 185 to vacate an arbitrator’s decision. This matter is presently before us on Defendant’s motion for summary judgment.

USS and the Union are parties to a collective bargaining agreement, the National Bituminous Coal Wage Agreement of 1981 (the “Agreement”). The agreement contains a grievance procedure providing for arbitration of disputes as to the meaning or application of provisions of the Agreement. See Agreement, Art. XXIII(c).

Procedural History

The grievance procedure initiated in this case concerned the discharge by USS of one of its employees, Regis Bell, for allegedly falsely reporting a threat against his life in violation of Mine and Shop Conduct Rules.

On April 21, 1983, USS suspended Bell with intent to discharge. On April 25, 1983, a “24-48” hour meeting was held, as provided by Article XXIV, section (b) of the Agreement. This provision grants a suspended employee the right to meet with the mine superintendent or management. The same day, a written grievance was filed by the Union.

When the dispute was not resolved the Union elected, on April 28, 1983, to proceed to “Immediate Arbitration” as provided by Article XXIV of the Agreement. Arbitrator’s Report, at 5. A hearing was held on May 11, 1983, at which both sides presented testimony and evidence. No court reporter was present, but both sides tape-recorded the hearing. The record was closed at the conclusion of the hearing. Id. at 1. On May 16, the Arbitrator orally notified the parties that the Company had just cause to discharge Mr. Bell, id., and on May 20, issued a written decision and award. The Arbitrator concluded, after consideration of expert and other testimony, that Mr. Bell was the author of the note, and that Mr. Bell’s conduct constituted just cause for discharge. Id. at 6-8.

Plaintiff alleges, in its complaint, three reasons why the arbitrator’s award should be vacated: 1) that the Arbitrator, contrary to strict contractual provisions of Article XXIII of the Agreement, failed to take a transcript or record the proceedings; 2) that the Arbitrator, in his award, went beyond the scope of the reasons given by defendant in support of its decision to discharge and supplied reasons not relied upon by the Defendant; and 3) that while the Arbitrator admitted evidence on behalf of the Defendant, he refused to permit Plaintiff the opportunity to offer exculpatory evidence which would have tended to discredit such testimony. Complaint, ¶ 8. The parties have not disputed the facts, and we find, pursuant to Fed.R.Civ.P. 56, that Defendant is entitled to summary judgment as a matter of law.

Standard of Review

It is well settled that the scope of review of an arbitration decision is extremely limited, and that an award is considered legitimate if it “draws its essence from the contract.” United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597, 80 S.Ct. 1358, 1361, 4 L.Ed.2d 1424 (1960). Whether an award “draws its essence” from the agreement in question has been defined as whether

the interpretation can in any rational way be derived from the agreement, viewed in the light of its language, its context, and, other indicia of the parties’ intention; only where there is manifest disregard of the agreement, totally unsupported by principles of contract construction and the law of the shop, may a reviewing court disturb the award.

Johnson Bronze Co. v. International Union of United Auto Workers, 621 F.2d 81, 82 (3d Cir.1980) (quoting Ludwig Honold Mfg. Co. v. Fletcher, 405 F.2d 1123, 1128 (3d Cir.1969)). The reason for this limited scope lies in the fact that the parties bargained for resolution by arbitration. Kobielnik v. Union Carbide Corp., 532 F.Supp. 28, 30 (E.D.Pa.1981). Refusal to review the merits of an arbitration award is the proper approach to arbitration under collective bargaining agreements. International Ladies Garment Workers’ Union, Local No. 111 v. DeeVille Blouse Co., Inc., 486 F.Supp. 1253, 1254-55 (E.D.Pa. 1980) (citing United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 596-99, 80 S.Ct. 1358, 1360-62, 4 L.Ed.2d 1424 (I960)). Finally, contractual interpretations made in the course of labor arbitrations must not be disturbed so long as they are not in manifest disregard of the law. The question of whether or not an arbitrator misconstrued the contract does not open an award to judicial review. See Sun Petroleum Products, Co. v. Oil, Chemical & Atomic Workers Int’l Union, 681 F.2d 924, 927-29 (3d Cir.1982).

Failure to Transcribe Proceedings

Article XXIV of the Agreement, entitled “Discharge Procedure,” provides in part,

Section (b) Procedure
Where management concludes that the conduct of an Employee justifies discharge, the Employee shall be suspended with intent to discharge and shall be given written notice stating the reason, with a copy to be furnished to the Mine Committee. After 24 hours, but within 48 hours, the Employee shall be afforded the right to meet with the mine superintendent or manager. At such meeting, a member or members of the Mine Committee shall be present and, if requested by the Employee or the Mine Committee, a representative of the District shall also be present.

Art. XXIV, § (b). Article XXIV further provides,

Section (d) Immediate Arbitration
(1) If the District believes that just cause for discharge does not exist, it shall arrange with the Employer for immediate arbitration of the dispute, bypassing steps one through three of the grievance procedure.
(2) The next available district arbitrator shall immediately be assigned to hear the case.
(3) The appropriate district arbitrator shall hear the case within five days. At the conclusion of the hearing, the district arbitrator shall at that time announce his decision which shall be binding on all parties. Following the hearing, the arbitrator shall forthwith reduce his decision to writing within 10 days. If the arbitrator determines that the Employer has failed to establish just cause for the Employee’s discharge, the Employee shall be immediately reinstated to his job. If the arbitrator determines that there was just cause for the discharge the discharge shall become effective upon the date of the arbitrator’s decision.

In providing an alternative procedure for “Immediate Arbitration” separate from the usual grievance procedure specified in section (c) of Article XXIII, Article XXIV, section (d) provides that “steps one through three” of the grievance procedure shall be bypassed. See Art. XXIV, § (d), supra.

The Agreement does not state whether section 4 of the regular grievance procedure shall be applicable in situations where immediate arbitration is elected. Section 4 provides, in part, that “the hearing shall be recorded by the arbitrator and shall be closed upon completion of testimony.” Art. XXIII, § (c)(4).

The Union argues that, in spite of the fact that both sides tape-recorded the hearing, the award should be vacated because the Arbitrator did not provide an official record. Plaintiff’s Brief, at 3-4. In support, the Union argues that the recordings could not be quoted or cited in argument before the Arbitrator. The Union proceeds to quote from portions of the hearing relating to whether Mr. Bell’s actions technically fell within the wording of the shop rules allegedly violated, and concludes that if there had been an official record, the grievance would have been sustained. Id. at 3-6.

Two issues are raised by the Union: 1) whether the arbitrator’s failure to make an official transcript requires vacating the award; and 2) whether, if there had been a transcript to which the Union could have referred, the grievance would have been sustained.

A. Failure to Make an Official Transcript

In the present case, the Agreement is silent as to whether the immediate arbitration hearing shall be recorded by the Arbitrator. However, both sides recorded the hearing themselves. In the case of an immediate arbitration hearing, we fail to see the effect of a lack of an official transcript.

It is unclear when the Union would have referred to the transcript. Assuming the applicability of Article XXIII, post-hearing briefs are not permitted except in cases in which the Arbitrator deems them necessary; the Arbitrator did not deem them necessary in this case. In any event, post-hearing arguments based on a transcript would be contrary to the concept of immediate arbitration. The Arbitrator’s Report we believe, thoroughly summarized the facts and testimony; we do not believe, as Plaintiff asserts, that the Arbitrator relied on his “feelings” or rendered a decision contrary to the evidence. See Plaintiff’s Brief, at 7. Whether or not subsection (4) of Article XXIII(c) of the Agreement applies in Immediate Arbitration proceedings, we believe that where the section providing for Immediate Arbitration is silent, and where both sides in fact recorded the hearing, that the award does not fail to “draw its essence from the contract.” Johnson Bronze, supra, 621 F.2d at 82 (3d Cir. 1980). “While an arbitrator’s task is to interpret the clauses of the agreement, a reviewing court may only determine whether the arbitrator’s award was ‘totally unsupported by principles of contract construction.’ ” Arco Polymers, Inc. v. Local 8-74, 671 F.2d 752, 755 (3d Cir.1982) (quoting Johnson Bronze, supra, 621 F.2d at 82).

B. The Effect of a Transcript

While we feel this question is arguably an attempt to reargue the merits of the case, we will, construing it as favorably as possible to Plaintiff, interpret it as an argument that the evidence showed no violation of any conduct proscribed by Mine Shop Conduct Rules 4 and 6, and thus, that the Arbitrator exhibited an “infidelity” to the intent of the parties as embodied in the collective bargaining agreement. See Mobil Oil v. Independent Oil Workers Union, 679 F.2d 299, 304 (3d Cir.1982).

The Arbitrator found that the false reporting of a threat against Mr. Bell’s life, calling into play the investigative and security forces of the employer, constituted a violation of “reasonable standards of an employer-employee relationship” as stated in the preamble to the Mine and Shop Conduct Rules. Arbitrator’s Report, at 8. The preamble states, in full,

The Company believes that a safe and trained employee is a valuable person to himself, his dependents, and his company and therefore his continued employment is a shared goal. In order to minimize the occasions for discipline or discharge, each employee should avoid conduct which violates reasonable standards of an employer-employee relationship, including. ..

Mine and Shop Conduct Rules, preamble. The Conduct rules proceed to enumerate certain prohibited conduct:

Rule 4 Insubordination (refusal or failure to perform work assigned or to comply with supervisory direction) or use of profane, obscene, abusive or threatening language or conduct towards subordinates, fellow employees, or officials of the Company.
Rule 6 “Falsifying or misrepresenting records.” Mine and Shop Conduct Rules, attached to Plaintiff’s Brief Opposing Summary Judgment.

The Arbitrator’s award is supported by the language of the preamble, and is, thus, a rational construction of the contract in construing “cause.”

C. Consideration of Evidence Not Relied on by Employer

The Union contends that the Arbitrator erred in considering Mr. Bell’s admission to the State Police of having authored the note. See Complaint, 118; Plaintiff’s Brief, at 7. We find this argument to be without merit.

An arbitrator, in deciding whether there was “cause” for a discharge, may consider all evidence, and apply all the surrounding facts and circumstances. This includes consideration of post-discharge evidence. See Mobil Oil Corp. v. Independent Oil Workers Union, 679 F.2d 299, 303 (3d Cir.1982); Super Tire Engineering v. Teamsters Local Union No. 676, 546 F.Supp. 547, 551 (D.N.J.1982), rev’d on other grounds, 721 F.2d 121 (3d Cir.1983).

D. Refusal to Permit Exculpatory Evidence

Finally, Plaintiff contends that “[w]hile admitting evidence on behalf of the Defendant to support his decision, the Arbitrator refused to permit the Plaintiff to offer exculpatory evidence which would tend to discredit the evidence of the Defendant.” Complaint, 118. Though not addressed in Plaintiff’s brief, we gather the Union is referring to its submission of a psychiatrist’s report at the end of the hearing. See Arbitrator’s Report, at 8.

The Arbitrator noted that at no time did the Union offer a defense that Mr. Bell needed psychological rehabilitation. Inasmuch as the evidence was offered in support of a rehabilitative remedy, the Arbitrator found that he did not have the authority to fashion such a remedy. Id. at 8.

Under the Immediate Arbitration provision of Article XXIV, the arbitrator is to determine whether the employer has established just cause for the discharge. Art. XXIV, § (d)(3). If the employer fails to establish just cause, the employee is immediately reinstated. Id. “If the arbitrator determines that there was just cause for the discharge, the discharge shall become effective on the date of the arbitrator’s decision.” Id.

We decline to overrule the Arbitrator’s finding that the report was not offered as “exculpatory,” but offered, instead, in support of a rehabilitative remedy. The Arbitrator’s conclusion that he did not have authority to fashion such a remedy must stand in light of the language of the Immediate Arbitration provision. See Art. XXIV, § (d)(3), supra. See Arco Polymers, supra, 671 F.2d at 755.


author: H. FRANKLIN WATERS, Chief Judge.

text:
    Howard BARNES, Plaintiff, v. SOUTHWESTERN BELL TELEPHONE COMPANY and Linda Merten, Defendants.
    Civ. No. 84-5153.
    United States District Court, W.D. Arkansas, Fayetteville Division.
    Nov. 6, 1984.

      C. Thomas Pearson, Jr., Pearson, Wood-ruff & Evans, Fayetteville, Ark., for plaintiff.
    Patricia J. Nobles, D.D. Dupre, Timothy D. Brewer and Ronald D. Young, Little Rock, Ark., for defendants.
   MEMORANDUM OPINION

H. FRANKLIN WATERS, Chief Judge.

On March 13, 1984, plaintiff filed suit against defendant, Southwestern Bell Telephone Company, in the Circuit Court of Washington County, Arkansas. In that lawsuit, plaintiff attempted to state a cause of action against Southwestern Bell Telephone Company only. Linda Merten, an additional defendant in this suit, was not a party in the first one.

In the initial complaint filed in state court, plaintiff alleges that he was engaged in the business of livestock transportation from his place of business in Fayetteville, Arkansas, to which the defendant telephone company provided telephone service. He claims that when he moved his business to a new address in Fayetteville, he contracted with an employee and agent of the defendant telephone company to have the removal and reinstallation at the new address made at a specified rate. He alleges that after the telephone equipment and service was disconnected from the old address and moved to the new one, the company billed him in an amount over three times the amount agreed to and, when he refused to pay the bill, his telephone service was discontinued without notice to him, at a time when he was out of town on other business, resulting in damages in the total amount of $11,516.36. He also prayed for punitive damages in the amount of $10,-000.00.

The telephone company then removed the case to this court (Civil No. 84-5046), and subsequently filed a motion for partial summary judgment alleging that there was no genuine issue as to any material fact in relation to the claim for the cost of the service, since the amount that is to be charged for such service is controlled by tariffs approved by the Arkansas Public Service Commission and the Federal Communication Commission. Motion for partial summary judgment was filed on September 4, 1984, and on September 7, 1984, the plaintiff moved to dismiss his cause of action, without prejudice, and alleged that it was necessary for him to do so in order to add an additional necessary party. He claimed that the additional party could not be made a party defendant under the provisions of Rule 19 of the Federal Rules of Civil Procedure for the reason that joinder of such person would deprive the court of jurisdiction over the subject matter of the action. Defendant telephone company objected on the basis that dismissal should not be granted in view of the pendency of the motion for partial summary judgment. Defendant did not request, as an alternative, that any conditions be imposed in the event that the motion to dismiss was granted. The court, by order dated September 14, 1984, granted the motion and the case was dismissed without prejudice.

No appeal was taken from that order, and the time to do so has lapsed.

On September 20, 1984, the plaintiff filed a new lawsuit in the Circuit Court of Washington County, Arkansas. The substantive allegations of the complaint in respect to the claimed discontinuance of service are almost identical to the allegations contained in the initial complaint. However, in addition to Southwestern Bell Telephone Company, the defendant named Linda Merten, a resident of Fayetteville, as an additional defendant, and alleged that Ms. Merten was the agent of the telephone company with which he dealt and through which he made the “contract” to have his service disconnected and reinstalled at the new location at the rate that he and Ms. Merten agreed to. He claims that Ms. Merten is made a party to the lawsuit because the defendant telephone company contends that the contract made by her was without authority and was contrary to the laws of the state of Arkansas. He prays for judgment against the defendants jointly and severally, in amounts identical to the amounts claimed in the earlier lawsuit.

The defendants then removed the matter to this court alleging that Ms. Merten was fraudulently joined in order to defeat federal jurisdiction. Contemporaneously with the filing of the petition for removal, the defendants filed a motion for partial summary judgment which is substantially identical to the one filed in the earlier lawsuit. Plaintiff then moved to remand the matter to state court, the defendants responded, and the court is now prepared to rule.

It is appropriate to first discuss the principles applicable to removal jurisdiction in general, and those which apply where a fraudulent joinder to defeat jurisdiction is alleged. In determining whether a case should be remanded, a great number of cases hold that if federal jurisdiction is doubtful, such doubts should be resolved in favor of state court jurisdiction and the case remanded. See numerous eases cited in 14 Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction § 3739 n. 23. As is pointed out in that treatise, at p. 762, that rule rests on both the expediency and unfairness of exposing the plaintiff to the possibility that he will win a final judgment in federal court, only to have it determined on appeal that the court lacks subject matter jurisdiction. In this respect, the law clearly is that action by a federal court which lacks subject matter jurisdiction is a nullity and that either party, even the party that invoked the jurisdiction of the court, can attack the jurisdiction at any time even after judgment is rendered against him. Amer. Fire & Cas. Co. v. Finn, 341 U.S. 6, 71 S.Ct. 534, 95 L.Ed. 702 (1951). In short, what this case and other cases say is that if this court does not have subject matter jurisdiction of the cause of action, either party, including the telephone company which earnestly argues now that the court has jurisdiction, may, on appeal, attack any judgment rendered on the grounds that the court did not, in fact, have subject matter jurisdiction.

The right of removal from a state court to a federal court exists only in certain enumerated classes of actions, and in order to exercise the right of removal, it is essential that the case be shown to be one within one of those classes. Ches. & Ohio Ry. v. Cockrell, 232 U.S. 146, 34 S.Ct. 278, 58 L.Ed. 544 (1914). The burden of showing that removal was proper is always upon the party removing. Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 42 S.Ct. 35, 66 L.Ed. 144 (1921). The removal statutes will be strictly construed in favor of state court jurisdiction. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 61 S.Ct. 868, 85 L.Ed. 1214 (1941).

The principle that doubt should be resolved in favor of state court jurisdiction rather than federal jurisdiction enunciated by the cases cited above is also expressed in the cases considering whether a party has been fraudulently joined to defeat federal court jurisdiction. The cases hold that, in determining whether a joinder is fraudulent, the court is to consider whether there is a possibility that the plaintiff has stated a cause of action against the party who is allegedly fraudulently joined, and if it is determined that there is such a possibility, the case is to be remanded. Fitzgerald v. Perkins Oil Co. of Delaware, 89 F.2d 98 (8th Cir.1937); Wells v. Missouri Pacific Ry. Co., 87 F.2d 579 (8th Cir.1937). The Court of Appeals for the Eighth Circuit stated in Bolstad v. Central Surety & Ins. Corp., 168 F.2d 927 (8th Cir.1948), that the test is: “On the question of removal, it is unnecessary to consider more than whether there was a real intention to get a joint judgment, and whether there was a colorable ground for it shown.” Citing Chicago, R.I. & Pac. Ry. Co. v. Schwyhart, 227 U.S. 184, 33 S.Ct. 250, 57 L.Ed. 473, and Pullman Co. v. Jenkins, 305 U.S. 534, 59 S.Ct. 347, 83 L.Ed. 334.

The motive for joining a resident defendant is immaterial. Chicago, R.I. & Pac. Ry. Co., supra; and Illinois Central Ry. Co. v. Sheegog, 215 U.S. 308, 30 S.Ct. 101, 54 L.Ed. 208 (1909); Chicago, R.I. & Pac. Ry. Co. v. Whiteaker, 239 U.S. 421, 36 S.Ct. 152, 60 L.Ed. 360 (1915); and McAllister v. C. & O. Ry. Co., 243 U.S. 302, 37 S.Ct. 274, 61 L.Ed. 735 (1917). Bad faith in bringing the action is not material. Rather, bad faith in joinder is necessary. Chesapeake & Ohio Ry. v. Cockrell, 232 U.S. 146, 34 S.Ct. 278, 58 L.Ed. 544 (1914).

With these principles in mind, the court will discuss the allegations made in respect to Ms. Merten in this case. As indicated above, in the initial lawsuit filed plaintiff alleged that he contracted with the defendant telephone company through an agent and that the agent agreed, in behalf of the telephone company, that the service changes would be made for a specified amount. He claimed that, in spite of this contract or agreement that he had, the defendant telephone company attempted to collect from him amounts considerably in excess of the amounts agreed to. In response to this allegation, the defendant telephone company filed a motion for partial summary judgment, contending that the rates which it attempted to charge were those fixed by law and that no other rates could be charged. Thus, in effect, the company took the position that, irrespective of whether its agent made a contract calling for a specific rate, there was no authority to do so because of the provisions of Arkansas and federal law.

The plaintiff then nonsuited that lawsuit and refiled the one that was removed to this court, alleging that if that was true, Ms. Merten would be individually liable for entering into a contract which was not authorized. In its response to its motion to remand, the defendant telephone company seems to miss the point of plaintiffs allegations and contentions in this respect. At p. 3 of its response to the motion to remand, the telephone company states: “Southwestern Bell has never admitted or contended that Ms. Merten made the contract alleged in plaintiffs complaint,” then argues that since this is true, no cause of action is even attempted to be stated against Ms. Merten and, thus, she was fraudulently joined.

Plaintiff does not claim that the telephone company contends or even admits that the contract was made by Ms. Merten in its behalf. Instead, plaintiff claims that that is the case and alleges that Ms. Merten, in behalf of her employer (principal) entered into an agreement with plaintiff calling for the service to be moved to the new location for a specified amount. He alleges that since it is the telephone company’s position that the amount that Ms. Merten agreed to was unauthorized, she is personally liable under Arkansas law.

As indicated above, the law, at least in this circuit, appears to clearly be that, in determining whether a joinder is fraudulent, the court is to determine only whether there is a possibility that the plaintiff has stated a cause of action against the party who is allegedly fraudulently joined. If the telephone company’s position in respect to the authority of Ms. Merten to enter into the alleged contract is correct, the court certainly cannot say that there is not a substantial possibility that the complaint states a cause of action against her, or that that is not a legitimate issue to be litigated.

The law in respect to the liability of agents for unauthorized contracts entered into by them is well stated in 3 Am.Jur.2d Agency § 298, as follows:

It is well settled that one who purports as agent to enter into a contract, upon which the principal is not bound because of the fact that the agent has contracted without authority or in excess of his authority, is personally liable for the damage thus occasioned to the other contracting party.

Citing eases including Dale v. Donaldson Lumber Co., 48 Ark. 188, 2 S.W.2d 703 (1886). See also Restatement (Second) of Agency § 329.

In Little Rock Furniture Mfg. Co. v. Kavanaugh, 111 Ark. 575, 164 S.W. 289 (1914), the Arkansas Supreme Court long ago stated what appears to still be the law in Arkansas as follows: “Where one assumes to act as agent for another he impliedly represents that his principal has existence, and that he has authority to act for him, and if either of these things be false, the agent becomes personally liable.” 111 Ark. 586, 164 S.W. 289.

Perhaps the court should make it clear that it is not finding that Ms. Merten is liable as alleged, but only that plaintiff has stated a legitimate cause of action against her, or at least that there is a strong possibility that he has. In view of the law as expressed in cases such as Fitzgerald, supra, and Wells, supra, that is all that is necessary in order to rule that Ms. Merten was not fraudulently joined, and that this matter should, thus, be remanded to the Circuit Court of Washington County, Arkansas.

Perhaps the court should discuss two of the cases cited in defendants’ brief. They cite Fields, Inc. v. Hunt and Wesson Foods, Inc., 397 F.Supp. 707 (W.D.Okla. 1975), and an Arkansas case decided by Judge Henry Wood, Tallent, et al. v. Dwight Harshaw, et al., 592 F.Supp. 66 (E.D.Ark.1984), and contend that these cases are directly on point. In making this contention, it appears that defendants have again missed the point of plaintiff’s allegations. In each of those cases, the district court simply held that an agent of a disclosed principal, acting within the scope of his authority, who enters into a contract in behalf of his disclosed principal is not liable for a breach of such contract. That is, of course, clearly the law, but that is not what is alleged in this case. In neither of those cases did the defendant take the position that the agent or employee acted without authority or in excess of his authority. It would serve no purpose to reiterate the contentions made by plaintiff in this respect in this case, but it is clear that, for the reasons set forth above, these cases cited by the defendants are not on point and do not support defendants’ contention that Ms. Merten was fraudulently joined.

For the reasons set forth above, the court finds that the complaint filed in this case by the plaintiff indicates that he has “a real intention to get a joint judgment” and that there “was a colorable ground for it shown.” Bolstad, supra. The case will be remanded by separate order to the Circuit Court of Washington County, Arkansas.


author: SWEET, District Judge.

text:
    PRINTERS II, INC., Plaintiff, v. PROFESSIONALS PUBLISHING, INC., Defendant.
    No. 84 Civ. 2745 (RWS).
    United States District Court, S.D. New York.
    Nov. 7, 1984.
    Flemming, Zulack & Williamson, New York City, for plaintiff; Pamela Sloan, New York City, of counsel.
    Carraher & Horne, New York City, for defendant; Laura Carraher, New York City, of counsel.
   OPINION

SWEET, District Judge.

Plaintiff Printers II, Inc. (“Printers II”) has brought this motion to strike defendant Professionals Publishing, Inc.’s (“Professionals”) demand for a jury trial as untimely under Fed.R.Civ.P. 38. The motion is granted.

Prior Proceedings

There is no factual dispute between the parties. Printers II initiated this diversity action on April 11, 1984 by filing a complaint alleging breach of a printing contract by Professionals. Professionals answered on May 15, 1984, denying Printers II’s allegations and raising counterclaims based on breach of contract, fraud, and defamation. On July 27, 1984, after obtaining Printers II’s consent, Professionals filed an amended answer which corrected certain dates in the initial answer. Professionals concedes that the amended answer did not raise any new issues but merely corrected specific errors contained within the May 15 answer. On either August 6th or 7th, Professionals served a jury demand upon Printers II.

The issue presented is whether Professionals’ jury demand is untimely under Fed.R.Civ.P. 38, and, if it is, whether I should use my discretionary authority under Fed.R.Civ.P. 39(b) to relieve Professionals of its waiver of its jury demand.

Fed.R.Civ.P. 38 requires that a party serve a jury demand upon the other party not later than 10 days after the service of the last pleading relating to the issue for which a jury is sought. Failure to adhere to this timetable results in an automatic waiver of the party’s right to a jury trial under the plain terms of the rule. Fed.R. Civ.P. 38(d).

Although service of an amended pleading which introduces additional issues into a case will recommence the 10-day period for a jury demand with respect to the additional issues, an amendment of a pleading which does not introduce new issues will not extend the period within which a jury demand must be served. State Mut. Life v. Arthur Andersen & Co., 581 F.2d 1045, 1049 (2d Cir.1978); Lanza v. Drexel & Co., 479 F.2d 1277, 1310 (2d Cir.1973); 5 Moore’s Federal Practice If 38.41 (1982). Since the parties agree that Professionals’ amended answer did not introduce new issues, the service of the amended answer did not extend the time for serving a jury demand. May 25, 10 days subsequent to Professionals’ filing of its answer, was consequently the final date for the timely service of a jury demand, and Professionals’ failure to make the demand within the proper time frame constituted waiver pursuant to Fed.R.Civ.P. 38(d).

Professionals’ has moved that I exercise my discretionary authority pursuant to Fed.R.Civ.P. 39(b) to permit its August 7 jury demand to survive Printers’ motion to strike. The liberality with which 39(b) discretion is to be exercised has varfed from circuit to circuit. Although a majority of circuits have held that absent compelling reasons to the contrary a party’s jury demand should be granted, see Swofford v. B & W, Inc., 336 F.2d 406 (5th Cir.1964), cert. denied, 379 U.S. 962, 85 S.Ct. 653, 13 L.Ed.2d 557 (1965); Cascone v. Ortho Pharmaceutical Corp., 94 F.R.D. 333 (S.D.N.Y.1982), aff’d 702 F.2d 389 (2d Cir.1983) (observing predominance of Swofford holding among circuits), this circuit has in the past set forth a more restrictive view. In Noonan v. Cunard Steamship Co., 375 F.2d 69 (2d Cir.1967), the court held that precedent interpreting judicial discretion in exercising 39(b) authority limited a judge’s authority “to determining whether the moving party’s showing beyond mere inadvertence is sufficient to justify relief____” Id. at 70 (emphasis in original).

Subsequent to Noonan, the Circuit’s attitude towards the exercise of 39(b) discretion in favor of a party seeking a jury trial has become more flexible. In Higgins v. Boeing Co., 526 F.2d 1004 (2d Cir.1975) (per curiam) the Court found that an exercise of discretion granting a jury trial was warranted where the case had been removed from state to federal court, the prevailing New York State rule did not require a jury demand within a specified period of time, and both parties had, throughout the course of the federal court’s control of the case, believed the case to be destined for a jury trial.

Where a case was removed from state to federal court, and where the rules regulating the timeliness of a jury demand in state court differ from the rules in federal court, the Circuit has recently stated that “there is some ‘play in the joints’ for accommodating a removed party who may not be at ease in the new surroundings imposed upon him.” Cascone, supra, 702 F.2d at 392. The court indicated a certain solicitude for petitioners in 39(b) motions where the movant had been removed from state to federal court. In the context of removed cases, the Circuit held that “ ‘The court ought to approach each application under Rule 39(b) with an open mind and an eye to the factual situation in that particular case, rather than with a fixed policy against granting the application ... ’” Id. quoting 9 C. Wright & A. Miller, Federal Practice & Procedure, § 2334 at 116 (1971).

I do not read the Circuit’s willingness to countenance a discretionary override of Rule 38’s strict requirements to amend the rule: “We do not consign Noonan to overruled status. Its holding shall continue to govern where it is applicable.” Id. at 393. Consequently, I decline to exercise my discretion in favor of permitting the untimely jury demand.

First, this action originates in federal court and does not fall within the Higgins exception to Noonan. Since the party seeking discretionary leave to file a delayed jury demand alleges nothing more than inadvertance, the motion fails the Noonan standard, which prevails in the absence of a Higgins exception. Further, sanctioning a two month delay in requesting a jury trial where the litigant alleged nothing more than inadvertance would destroy Rule 38’s requirement that a jury demand be filed within 10 days after the last pleading directed to an issue. The Rule should not be vacated under the guise of an exercise of discretion.

Finally, there is “not the slightest reason to doubt that a judge is quite as able as a jury to make a fair determination” of the issues in this case. Noonan, supra, at 72.

The motion to strike the demand for a jury trial is granted. Discovery will be completed by January 30, 1985 and the pretrial order submitted by February 6, 1985.

IT IS SO ORDERED.