author: WHITE, District Judge.

text:
    AMERITECH, INC., an Ohio corporation, Plaintiff, v. AMERICAN INFORMATION TECHNOLOGIES CORPORATION, a Delaware corporation, Defendant.
    No. C83-4993.
    United States District Court, N.D. Ohio, E.D.
    April 19, 1985.
    Edwin W. Oldham, Akron, Ohio, for plaintiff.
    Thomas P. Mulligan, Jones, Day, Reavis & Pague, Cleveland, Ohio, Robert G. Krupka, Richard H. Schneider, Chicago, Ill., for defendant.
   MEMORANDUM AND ORDER

WHITE, District Judge.

Plaintiff Ameritech, Inc., is a corporation incorporated under the laws of Ohio and having its principle place of business in Bedford Heights, Ohio. The defendant, American Information Technologies Corporation, (AIT) is organized under the laws of Delaware and has its principle place of business in Illinois. On this basis the plaintiff commenced this action pursuant to the Court’s diversity jurisdiction. 28 U.S.C. § 1332. Plaintiff also asserts that this is a case involving trademark infringement and unfair competition; allowing jurisdiction in this Court under 28 U.S.C. § 1338(a) and (b).

According to the complaint, the plaintiff corporation was formed in June 1979 and has done business continuously under the name Ameritech, Inc., from that time until the present date. The trade name “Ameritech” was registered with the State of Ohio on December 31, 1979. The plaintiff is engaged in the business of providing high-technology engineering services directed towards reclaiming of industrial lubricants and providing analytical laboratory services. Plaintiff has made substantial expends tures for advertising and promotion and has used the name “Ameritech” in connection with high technology engineering services and as a result the name has come to be recognized by the trade and purchasing public as identifying plaintiff and the services provided by plaintiff. The trade name “Ameritech” has acquired secondary meaning and has become a business asset of considerable value. The defendant AIT provides high-technology communication services to businesses and the general public in several states. On June 17, 1983 defendant used the name “Ameritech” to identify itself and its services in an advertisement in a nationally circulated publication and has continued to use this name in advertising in major newspapers in five states as well as in magazines. It is also listed on the New York Stock Exchange. Plaintiff has achieved a profitable business having plans to expand and has notified its shareholders of its intention to go public with its stock for the purposes of raising additional working capital and bringing a good return on investment to the original shareholders. Plaintiff has adopted a star-shaped logo while defendant uses a star-shaped relationship of the letter “A” in its use of the mark “Ameritech.” It is alleged that use of plaintiff's trade name “Ameritech” by defendant is likely to injure plaintiff’s business reputation. Employment of the name “Ameritech” has caused actual confusion in the trade and to the purchasing public so that the name “Ameritech” is no longer exclusively associated with plaintiff and has further resulted in interference with plaintiff’s business activities on a day-to-day basis and with respect to plans for growth and expansion. The acts of defendant were taken with knowledge that injury and harm would result. Defendant’s actions were allegedly willful and intentional and constitute trademark infringement and unfair competition. Plaintiff prays for a permanent injunction enjoining use of the name “Ameritech” along with an accounting to plaintiff for any and all profits derived by defendant and for all damages caused by defendant’s illegal conduct and that all packages, signs, advertising, and promotional material in possession or control of defendant that includes the name “Ameritech” be delivered and destroyed. The defendant has moved the Court, for summary judgment contending that plaintiff’s claim for relief is barred by estoppel by laches and on grounds that plaintiff’s products and services are completely unrelated to those of defendant precluding the likelihood of confusion.

A successful defense of laches by estoppel requires evidence that there was an unreasonable delay in bringing the action and the delay must result in prejudicial reliance by the opposing party. T.W.M. Manufacturing Co. Inc. v. Duro Corporation, 592 F.2d 346 (6th Cir.1979), Tandy Corporation v. Malone and Hyde, Inc., 581 F.Supp. 1124 (M.D.Tenn.1984). The length of delay necessary to establish laches depends on the circumstances of each case and on the degree of injury and prejudice to the party asserting this defense. Tandy Corp. v. Malone and Hyde, Inc., supra.

The depositions and exhibits submitted in support of defendant’s motion for summary judgment demonstrate that laches apply to this case. Plaintiff learned of defendant’s intention to use the name “Ameritech” on June 17,1983. The next day an article appeared, in the Cleveland Plain Dealer wherein it was stated that lawyers for plaintiff would contact defendant Ameritech in Chicago on Monday. However no one ever contacted defendant until this lawsuit was filed. Kenneth Millard, Senior Vice President and General Counsel for American Information Technologies Corp., was aware of the Plain Dealer article in June. Five days after the “Ameritech” name was announced AIT was sued in Michigan state court by a corporation known as Ameritech Corporation alleging trademark infringement and unfair competition. Throughout the time that the Michigan case was pending AIT continued to use and promote the name “Ameritech” and received no notice or communication from plaintiff. Millard was confident that AIT would be successful in defending the Michigan action because the businesses of the parties were totally unrelated. He believed the same premise applied to the plaintiff in the case at bar and that the plaintiff must have received similar advice and was abandoning its claim. Since the Michigan case was the only legal challenge to the use of the name “Ameritech” and the belief that the plaintiff in the present case had no objection to the use of the name, the Michigan case was settled. In November 1983 AIT issued approximately 100 million shares of common stock to 2.5 million shareholders. Each share includes the name American Information Technologies Corporation and Ameritech. The stock was issued at a time when it was believed that all legal challenges had been resolved especially since plaintiff had been silent. Plaintiff filed this action on December 13, 1984, six months after learning of the use of the name “Ameritech” by AIT. By this time the Michigan case was settled. Further prejudicial reliance in addition to issuance of stock and the settling of the Michigan case resulted from plaintiff’s delay in taking action. Defendant invested over 2.5 million in advertising; spent hundreds of thousands more putting the name “Ameritech” on trucks, buildings, equipment, stationary, business cards, phone books, promotional materials and other items necessary to conduct the telephone business. Also more than half a dozen subsidiaries using the name “Ameritech” were incorporated.

Plaintiff knew that the name “Ameritech” was going to be used and knew or should have known that large expense would be incurred to prepare for the name change. Yet plaintiff allowed six months to pass before acting. Meanwhile defendant was carrying on with whatever it needed to do to achieve its objective. The Court finds that six months is an unreasonable delay under the circumstances of this case and that the delay resulted in prejudicial reliance by defendant.

The defense of laches is available as an equitable defense capable of barring injunctive relief. The decision of what relief, if any, is barred depends on the circumstances of each case. Tandy Corp. v. Malone and Hyde, Inc., supra. In order to be successful in a trademark infringement or unfair competition action, the plaintiff must show a likelihood of confusion as to the source of origin. Frisch’s Restaurants, Inc. v. Elby’s Big Boy, 670 F.2d 642 (6th Cir.1982) cert, denied 459 U.S. 916, 103 S.Ct. 231, 74 L.Ed.2d 182 (1982). Induct-O-Matic Corp. v. Inductotherm Corp., 747 F.2d 358 (6th Cir.1984). The Sixth Circuit has set forth factors to help determine whether a likelihood of confusion exists. Frisch’s Restaurants, Inc. v. Elby’s Big Boy, supra, Induct-O-Matic Corp. v. Inductotherm Corp., supra. These are: (1) strength of plaintiff’s mark; (2) similarity of the marks; (3) evidence of actual confusion;. (4) marketing channels used; (5) likely degree of purchaser care; (6) defendants intent in selecting the market and (7) likelihood of expansion of the product lines. The circumstances as to each factor is a factual issue but the final determination of likelihood of confusion based on those factors is a legal conclusion. Frisch’s Restaurant, Inc. v. Elby’s Big Boy, supra. Induct-O-Matic Corp.

Plaintiff is primarily engaged in the oil reclamation business. It also sells new lubricants and analytical services which is related to materials testing. Defendant is involved in telecommunications and information handling. It provides telephone service, sells telephone equipment and sells telephone directory advertising. There is no doubt that the two companies do not compete nor are their products and services remotely related. It has been held that when goods and services are totally unrelated and non-competing there can be no infringement because confusion is unlikely. AMF Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir.1979).

Likelihood of confusion is also not found when the factors listed above are considered.

Strength of the Mark

The strength of the mark is important in determining what protection it should receive; the stronger the mark the greater the protection it will be afforded. AMF, Inc. v. Sleekcraft Boats, supra. Strength refers to the distinctiveness of the mark or its tendenacy to identify the goods sold under the mark as coming from a particular source. McGregor-Doniger, Inc. v. Drizzle, Inc., 599 F.2d 1126 (2nd Cir.1979). The name “Ameritech” is not at all related to the identify of plaintiffs goods or services. It has been admitted by plaintiffs president that plaintiffs name is not well known. Many other businesses use the name Ameritech on a variety of different goods and services. Plaintiffs mark is weak and is not entitled to the strongest trademark protection.

Similarity of the Marks

The test under this factor is whether the similarity of the mark is likely to provide confusion. McGregor-Doniger, Inc. v. Drizzle, Inc., supra, WLWC Centers, Inc. v. Winners Corp., 563 F.Supp. 717 (M.D. Tenn.1983).

Although the marks are applied the same, they have a different appearance. Defendant also has its full name below the word Ameritech. Defendant uses an angled block type set with a flash of light in the “A” and a line of light through the remaining letters. Plaintiff uses the letters “A” and “T” combined to resemble a star. It has the name Ameritech printed next to it and its address underneath the name. The marks are quite dissimilar. Defendant’s mark cannot possibly be mistaken as being related to plaintiff or viceversa.

Evidence of Actual Confusion

Plaintiff has presented some evidence of confusion. Telephone calls have been received by plaintiff from persons trying to reach the phone company. Letters to officers of defendant corporation and job applications have also been received. Several of plaintiff’s salesmen have had difficulties since the defendant corporation was formed. However the confusion was not as to the source of products but mostly misdirected correspondence and customer inquiries. Evidence by way of depositions of customers shows no confusion, at least not to the source of plaintiff’s products and services.

Marketing Channels Used

Defendant advertises in major newspapers throughout the country, in national magazines and on television, the primary purpose being to inform the public of its communication business. Plaintiff’s advertising is not nearly as extensive. It consists of mailings to prospective customers describing plaintiff’s oil reclamation products and services, listings in the local Yellow Pages Telephone Directory and buyers guides and appearances at tradeshows. The parties advertising appears in different places and is directed to different groups. The advertising describes the respective products and services leaving little chance for confusion.

Likely Degree of Purchaser Care

Plaintiff’s purchasers most likely exercise a higher degree of purchaser care. Only certain persons with a particular type of need for oil reclamation and its related services would be interested in the plaintiff’s company. Those persons are usually experienced buyers of the type of products and services offered by plaintiff. When selling new products or offering analytical services, plaintiff’s salesmen make numerous visits to a potential customer. Most orders are grouped in $1000 to $5000 range. The smallest are in the $400 category and the largest single order would not be above $12,000. The higher the value of a product the more careful the typical purchaser can be expected to be. The average purchaser of an expensive product will spend more time examining different products and determining the source or manufacturer than one purchasing an inexpensive item. Fisher Stoves Inc. v. All Night Stove Works, 626 F.2d 193 (1st Cir. 1980), McGregor or Doniger, Inc. v. Drizzle, Inc., supra.

Defendant’s Intent

The intent factor is concerned with whether defendant deliberately chose the name “Ameritech” to palm off its products and services as those of plaintiff. There is no evidence that defendant chose its name in order to take advantage of plaintiff’s goodwill. Defendant uses the name “Ameritech” in five states. Plaintiff is relatively unknown in those states, including its home state of Ohio. There is little likelihood that defendant selection of the name “Ameritech” is related to plaintiff.

Likelihood of Expansion of Products Lines

The present product lines of the parties are completely unrelated. The evidence shows that defendant has no plans to expand its products and services beyond telecommunications and information handling. In fact the consent decree which caused defendant’s divestiture from AT & T restricts it from entering into any other type of business. Plaintiff’s president testified that his firm had examined expansion but none of the areas mentioned were related to defendant’s type of business.

Conclusion

No single factor can be regarded as determinative. McGregor-Doniger, Inc. v. Drizzle, Inc. supra. Plaintiff mark is not very strong, the products and services are unrelated and noncompetitive, the trademarks are dissimilar despite the similar name, little confusion exists as to the source of plaintiff’s products and services, there was no intent to take advantage of plaintiff’s name, purchasers are likely to use a high degree of care in purchasing plaintiff’s products, different marketing channels are used and the parties are not going to expand into related product lines. The conclusion is there is no likelihood of confusion which is required for plaintiff to be successful in this trademark infringement litigation. As previously discussed laches may not be a complete bar to injunctive relief. However, since the Court finds that there is no likelihood of confusion plaintiff’s claim for relief must be DENIED.

Accordingly, defendant’s motion for summary judgment is GRANTED as to the defense of estoppel by laches and its contention that no likelihood of confusion exists.

IT IS SO ORDERED.


source: Caselaw Access Project

author: SHAPIRO, District Judge.

license: Public Domain

text:
    In the Matter of the Complaint of McALLISTER BROS., INC., a Delaware Corporation, and McAllister Bros., Inc., a New York Corporation, For Exoneration From or Limitation of Liability As Owners of the Tugs “Teresa McAllister”, “Holland”, and “Steven McAllister”.
    Civ. A. Nos. 81-0053, 81-0104 and 81-0105.
    United States District Court, E.D. Pennsylvania.
    April 25, 1985.

      Robert G. Kelly, Jr., Kelly, Harrington, McLaughlin & Foster, Philadelphia, Pa., for plaintiffs.
    James F. Young of Krusen, Evans & Byrne, Philadelphia, Pa., Robert B. Pohl of Burlingham, Underwood & Lord, New York City, Alfred J. Kuffler of Palmer Biezup & Henderson, Philadelphia, Pa., for defendants.
   FINDINGS OF FACT AND CONCLUSIONS OF LAW

SHAPIRO, District Judge.

This is an admiralty and maritime claim arising out of an incident in which the World Texas, a cargo vessel, sustained extensive damage on leaving the Port of Philadelphia. McAllister Brothers, Inc., a corporation which supplied tugboat services for the World Texas, filed this Limitation of Liability action under 46 U.S.C. § 183 to exonerate itself from liability; there is jurisdiction under 28 U.S.C. § 1333(1).

The M/V World Texas is a diesel-powered tankship operated by Philtankers, Inc., a wholly owned subsidiary of Phillips Petroleum, Inc. In December, 1980 the. World Texas was chartered by Swann Chartering, Ltd. to, transport refined oil. Under the charter party, the cargo was taken aboard the World Texas in Mexico for discharge in Chesapeake, Virginia. Subsequently, the discharge port was changed by Swann to its Philadelphia terminal. The Swann terminal is located on the west bank of the Schuylkill River, about four miles above the confluence of the Schuylkill and Delaware Rivers. The World Texas arrived at the Marcus Hook Anchorage in the Delaware River on December 22, 1980.

McAllister Brothers, Inc., a corporation owning tug boats, provided tug services for. the inbound voyage upon the request of Charles Kurz Company, the local agent for the World Texas. Orders for tug assistance on behalf of Philtankers, Inc. were made under a contract with McAllister. James Gilliland, licensed to pilot vessels in the Schuylkill River, boarded the World Texas as pilot for the inbound voyage and was paid for his services by those responsible for the World Texas. At all times during this inbound voyage, made without incident, the master of the World Texas was also on board. McAllister’s dispatchers received further orders from the vessel’s local agent to assist the World Texas out of Swann Terminal. On December 24, 1980, the World Texas departed from the Swann Terminal. On this outbound journey the rudder came in contact with an object in the river or with the bank of the channel and the vessel sustained damage.

Following the institution of this litigation, Philtankers, Inc. filed a motion on July 31, 1981 for a stay of proceedings for a limited period to permit expedited arbitration. Philtankers represented that if the outcome of the arbitration of the dispute between Philtankers and Swann exculpated Swann from liability there would be no further proceedings in this court and that the arbitration proceeding would be completed within six months. The court granted this motion on September 28, 1981 but allowed discovery to proceed notwithstanding the stay. The court further ordered that if there were no award of the arbitrators regarding liability for the claims between Philtankers and Swann within six months of the date of the order, any party to the proceedings could move for an order vacating the stay. On February 22, 1983, (following a report on the progress of the arbitration proceedings and with the consent of the parties) the court ordered the case to be placed in the administrative suspense docket. On June 27, 1983, Swann Chartering, Ltd. moved to have the case removed from the suspense docket. The court, dissatisfied with the delays in the arbitration proceeding, granted Swann’s motion on September 20, 1983; Swann and Philtankers then settled. Prior to the arbitrator’s decision and award, Swann agreed to pay Philtankers 36% of the vessel’s provable damages, with a payment ceiling of $1.5 million and received an assignment of the claim of Philtankers against McAllister. Swann then sought indemnity or contribution from McAllister for all or part of the amount paid to Philtankers, Inc. in its own right and as assignee of Philtankers.

At a pretrial conference on April 9, 1984, the court granted McAllister’s “Motion in Limine to Limit Proof and Theories of Liability Against McAllister,” and precluded Swann from affirmatively asserting: (1) that the pilot was negligent in handling the World Texas; (2) that the tugs were inadequate; and (3) that the tugs were not properly attached to the ship.

The reason the court granted this motion was that counsel for Swann had asserted at a pretrial conference held on January 3, 1984, that the sole legal theory upon which it would proceed was its claim that McAllister Brothers should have advised Swann that the Schuylkill River was not navigable for a vessel the size of the World Texas. Swann did not then rely on the assigned claim of Philtankers, which Philtankers, in obtaining a stay to permit arbitration, had represented would be fully disposed of by the arbitration. The case, previously tentatively listed for trial on March 19,1984 was rescheduled and specially listed for April 23, 1984.

McAllister Brothers pursued its discovery in reliance on the representations made by Swann to the court. After the discovery deadline passed, Swann attempted to assert new theories of liability, either on its own behalf or as assignee of Phil-tankers. McAllister Brothers was unable to take discovery regarding these new theories and would be greatly prejudiced by Swann’s attempts to introduce new theories of liability at such a late date; the court was unwilling to delay further this long-pending case. The sole issue upon which the court allowed trial to proceed was whether the Schuylkill River was an inappropriate navigational channel for the World Texas, and if so, whether McAllister owed Swann a duty to warn of this.

Swann claims that McAllister Brothers, employer of the pilot who navigated the World Texas on the Schuylkill River owed Swann a duty to warn of the potential dangers of navigating this ship in this river, and that the breach of this duty caused damage to the vessel. Swann alleges that the World Texas was too large to navigate the Schuylkill safely. It contends that because McAllister had local expertise regarding these hazards, it knew or should have known that the Schuylkill was unsafe for the World Texas and had a duty to warn Swann of this.

In a limitation of liability proceeding under 46 U.S.C. § 183, the party claiming damages, Swann, rather than the party seeking to exonerate itself from liability, McAllister Brothers, has the burden of proving that the Schuylkill was unsafe for the World Texas. See e.g., Northern Fishing & Trading Co., Inc. v. Grabowski, 477 F.2d 1267 (9th Cir.), cert, denied 414 U.S. 1079, 94 S.Ct. 597, 38 L.Ed.2d 485 (1973). Swann has not met its burden of proof. The evidence establishes that the ship would have made the passage safely if reasonable care had been exercised during navigation.

The standard the court must use in deciding whether the Schuylkill was a safe navigational channel is whether in the exercise of reasonable care in the circumstances, a competent pilot would have been able to navigate the ship down river without incident. See e.g., Venore Transportation Co. v. Oswego Shipping Corp., 498 F.2d 469, 472 (2d Cir.) cert, denied, 419 U.S. 998, 95 S.Ct. 313, 42 L.Ed.2d 272 (1974). The size of the World Texas does not itself prove that the Schuylkill was an unsafe navigational channel. The World Texas arrived at the Swann Terminal without incident. Although there was testimony by Swann’s expert, Arthur Fertig, that stern first navigation required for a vessel this size wás dangerous, Gene Neubauer, a tugboat captain who has provided assistance to vessels in the Schuylkill since 1973 testified that many vessels going up the Schuylkill bow first are taken out stern first. If reasonable care had been exercised during the down river passage, the World Texas would have made it safely.

Although the World Texas was very large, none of the pilots expressed concern that it could not safely navigate the Schuylkill. Pilots familiar with the Delaware River were aboard the World Texas for its journey from the Delaware breakwater to the Port of Philadelphia, for its trip from the anchorage in the Port of Philadelphia to the Swann Terminal on the Schuylkill River and from the Swann Terminal to the Delaware River. The evidence does not show that any of these pilots at any time questioned the ability of the vessel to navigate the Schuylkill River. Both Ewan Corlett, Swann’s expert at the arbitration proceedings, and James Stillwagon, McAllister’s expert, stated that the Schuylkill is not inherently dangerous for a vessel the size of the World Texas. Paul Barton Withstandley, who chartered vessels for Swann, testified that when chartering the World Texas, he was aware of its length, beam and draft, and believed that the Schuylkill channel was appropriate for its transit. Robert Bush, Senior Marine Adviser to Philtankers reviewed the Schuylkill River charts before the World Texas called at the Port of Philadelphia and did not object to the appropriateness of the Schuylkill as a navigational channel. Finally, James Gilliland, the pilot for docking and undocking of the World Texas, did not consider the transit to and from the Swann terminal inappropriate for that vessel.

The only evidence presented that a ship the size of the World Texas could not navigate the Schuylkill safely was that of Captain Arthur Fertig, an expert witness for Swann. However, the court does not credit Captain Fertig’s testimony; Captain Fertig was not a member of the Philadelphia maritime community and had piloting experience only on the Panama Canal. There is no persuasive evidence that anyone in the Philadelphia maritime community believed or had reason to believe that a ship the size of the World Texas could not navigate the Schuylkill safely with reasonable skill and care.

Since the Schuylkill was not unsafe for the World Texas, it follows that McAllister’s failure to warn of a situation that did not necessarily present a danger does not impose liability. Even if Swann’s contention that the Schuylkill was an unsafe navigational channel for the World Texas were correct, Swann has not established that McAllister had a duty to warn Swann about potential dangers involved.

The agreement between Swann and McAllister contained no- provision requiring McAllister to warn of navigational dangers and no such duty is imposed by law. The charter party between Swann and Philtankers provided:

“The vessel shall load and discharge at safe place or wharf, or alongside vessels or lighters reachable on her arrival which shall be designated and procured by the charterer, provided the Vessel can proceed there to lie at and depart therefrom, always safely afloat.”

Under this clause, Swann had a non-delegable duty to provide a safe berth to the World Texas. See Venore Transportation Co. v. Oswego Shipping Corp., 498 F.2d 469 (2d Cir.) cert, denied, 419 U.S. 998, 95 S.Ct. 313, 42 L.Ed.2d 272 (1974). Swann argues that because a charterer is vicariously liable to the owner of a ship for a towing company’s negligence in selecting a safe berth, the towing company is necessarily obligated to indemnify the charterer for such liability. Park S.S. Co. v. Cities Service Oil Co., 188 F.2d 804, 806 (2d Cir.) cert, denied, 342 U.S. 862, 72 S.Ct. 87, 96 L.Ed. 648 (1951), for example, held that although a pilot was employed and paid by the vessel owner, the pilot in selecting an anchorage was “performing a service for which the charterer was responsible.” The charterer was therefore liable to the vessel owner for the pilot’s failure to select a safe berth.

However, this and other cases > called to our attention requiring a third party to indemnify a charterer are those where the third party breached a contractual warrant of the safety of port and berth, or an implied warranty of workmanlike service. See Fairmont Shipping Corp. v. Chevron International Oil Co., Inc., 511 F.2d 1252 (2d Cir.1975); Bilkay Holding Corp. v. Consolidated Iron & Metal Co., 330 F.Supp. 1313 (S.D.N.Y.1971).

Swann contends that McAllister’s failure to warn was a breach of the warranty of workmanlike service, but failure to warn of hazardous navigational conditions is not a breach of this warranty. The implied warranty of workmanlike service generally applies to contracts for ship repair; it does not encompass a duty to warn. A contractor’s warranty of workmanlike service is an incident of its undertaking with the shipowner and is comparable to a manufacturer’s warranty of the soundness of its manufactured product. See S.S. Amazonia v. New Jersey Export Marine Carpenters, 564 F.2d 5 (2d Cir.1977).

The safe berth warranty is a separate express warranty, not a warranty implied by law. Here the warranty of safe berth was between Swann and Philtankers. No such warranty existed between Swann and McAllister Brothers. The duty of Swann to provide a safe berth was non-delegable. See Venore Transportation Co. v. Oswego Shipping Corp., 498 F.2d 469, 472 (2d Cir.) cert, denied, 419 U.S. 998, 95 S.Ct. 313, 42 L.Ed.2d 272 (1974). Swann could not delegate this duty to provide a safe berth to McAllister Brothers and cannot require McAllister Brothers to indemnify it for its alleged breach.

However, even assuming McAllister had a duty to warn imposed by law, McAllister’s breach of that duty would not impose liability. Swann contends that charterers rely heavily on the local expertise of pilots furnished by towing companies to ascertain local conditions and advise whether the vessel can safely make transit. It also contends that because McAllister had the greatest local knowledge concerning conditions in the Schuylkill, it was the party best situated to give the warnings required and that failure to provide such warning was a breach of duty. If there were a duty to warn imposed by law upon McAllister and if that duty were here implicated because the Schuylkill was unsafe for the World Texas, the claimed dangers were so obvious that Swann cannot contend that it reasonably relied on McAllister Brothers’ local expertise to its detriment.

Knowledge of the conditions that allegedly made the Schuylkill an unsafe channel did not require any specialized local expertise. The safety hazards alleged by Swann resulted from the World Texas’ size in relation to the Schuylkill River and from the fact that the World Texas would proceed out of the Swann terminal, stern first. The size of the World Texas was known to Swann as well as Philtankers. Information concerning the Schuylkill River was available from readily accessible navigational charts. If, as Swann alleges, these factors made the Schuylkill unsafe, then Swann should have known of these dangers also because they were so obvious. McAllister was not obligated to warn Swann about something it should have already known; there was no breach of a duty to warn imposing liability on McAllister.

In order for Swann to recover, it was required to establish not only that the Schuylkill was an unsafe navigational channel for the World Texas, a condition of which McAllister had a duty to warn, but also that it was this condition that caused the accident,, that is, that the damage suffered was the direct and proximate result of the dangers posed by the Schuylkill. See e.g., DiRago v. American Export Lines, 636 F.2d 8.60 (3d Cir.1981). Although Swann claims that because of the World Texas’ size, it hit the bank of the river, it failed to convince the court that collision with the river bank was the cause of the accident. The vessel’s deck log, prepared on December 24, 1980, stated that “the rudder hit some very hard submerged obstruction or the bank.” The report of accident prepared by the master the following day made no mention of the bank, but rather stated that “the ship’s rudder and propeller hit some hard submerged obstruction.” James Gilliland, the pilot aboard the World Texas during its departure, denied that the vessel’s stern ever came within fifty feet of either bank. Gene Neubauer testified that at all times, as far as he could determine, the World Texas was in the center of the channel during its stern first departure from Swann to the Delaware River. The more likely reason for the accident was navigational error or a submerged object. But because Swann has failed to meet its burden of proving that the Schuylkill was unsafe, the court need not decide the actual cause of the accident.

Swann has failed to establish that the Schuylkill River was an unsafe navigational channel for the World Texas or that McAllister had a duty to warn of navigational hazards the breach of which caused damage to Swann. Therefore, the court finds Swann is not entitled to indemnity from McAllister Brothers and judgment will be entered accordingly.

      . Philtankers had represented on numerous occasions that the arbitration proceeding would fully dispose of all claims involving. Philtankers as a reason for delaying this trial.


author: TROUTMAN, Senior District Judge.

text:
    Narcy R. MALEY v. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY.
    Civ. A. No. 82-863.
    United States District Court, E.D. Pennsylvania.
    April 26, 1985.

      John P. Foster, Philadelphia, Pa., for plaintiff.
    Thomas A. Shovlin, Philadelphia, Pa., for defendant.
   MEMORANDUM AND ORDER

TROUTMAN, Senior District Judge.

In July, 1946, plaintiff, Narcy R. Maley, began working as an insurance agent for defendant John Hancock Mutual Life Insurance Company. Mr. Maley began working in a managerial capacity in December, 1947. In March, 1970, he was appointed District Manager of Hancock’s Allentown District Office, a position he held until his retirement in April, 1980.

John Hancock is comprised of approximately 270 districts throughout the nation. A number of district offices are grouped together to form a region. The Allentown district office was one of eighteen (18) district offices which formed the defendant’s East Central Region. A District office is run by a district manager whose responsibilities include: recruiting, training and supervising a sales and clerical staff; minimizing agent turnover; attaining sales objectives set by the home office; and maintaining intra-office proficiency and morale. Aside from the district manager the staff of a district office is comprised of several staff managers, each of whom supervises a team of agents, the agents themselves, an office supervisor and clerical workers.

All district managers within a given region report to the field vice president responsible for that region. The field vice president reports to a second vice president who, in turn, reports to the senior vice president of the District Agency Department. From 1974 through the remainder of his employment with defendant, plaintiffs field vice president was Ronald Bair (Bair), his second vice president was Leroy Branton (Branton), and the senior vice president of the District Agency Department was A. William Rhodes (Rhodes).

John Hancock has a practice of ranking its district offices nationwide from most productive to least productive. The Allentown office maintained a high national ranking at all times. Plaintiff won several company citations between the years 1970 and 1977 with a Y.P. Trophy for outstanding achievement in 1977. On the whole, performance was good under plaintiffs control until the Spring of 1978. However, in 1974 Allentown’s performance within the East Central Region began a gradual decline. In 1974 Allentown ranked fifth within the East Central Region in the category of “ordinary issue” (Ex.D. 19). Allentown’s ranking within the region had dropped to thirteenth in 1978 and had missed the production objective set by the home office by more than $1.2 million Ex.D. 19). By 1979 Allentown ranked last in the region.

Problems began to develop at Allentown in April, 1978, with the inception of a militant union movement in the office, which diverted the staff’s attention and ultimately substantially reduced the volume of life insurance issued. Plaintiff stated during trial that “... a very bad and demoralizing atmosphere” pervaded the office as a result of the union movement and office performance in the summer of 1978 was disappointing.

Allentown’s problems worsened through 1979. Plaintiff testified that his clerical staff had formed cliques which would not cooperate with one another and that a negative attitude permeated the office staff. Plaintiff felt the office problems were attributable to the activities of at least one of his top producing agents and the inability of his office supervisor to control the clerical staff.

In October, 1979, due to his health, plaintiff requested assistance from Branton. Branton conferred with Rhodes and decided that a meeting should be arranged with the plaintiff. Both Branton and Rhodes were of the opinion that plaintiff’s performance was unsatisfactory, and some type of action was required.

A meeting took place between plaintiff, Branton and Bair in Allentown on November 7, 1979. Plaintiff was informed of Hancock’s dissatisfaction and concern regarding the decline in sales efforts and deepening morale problems in Allentown. Branton expressed concern that the interpersonal conflicts within the office would magnify the production problems in the future. Branton asked for plaintiff’s suggestions to improve performance in Allentown. Plaintiff suggested the removal of his top producing agent and his office supervisor. Branton declined the suggestions because in his opinion they were unsubstantiated and neither action would improve conditions at Allentown. Plaintiff’s superiors felt the source of the problem rested with the plaintiff in that he had lost credibility and the ability to deal with the people in his office.

Several options were presented to the plaintiff during the November 7, 1979, meeting. Plaintiff was offered the position of District Manager of the Easton or Norristown offices. Plaintiff was also offered the position of staff manager in Allentown or the opportunity to go into personal production as an agent. The availability of early retirement was also discussed.

Plaintiff rejected the options for continued employment with the defendant due to his poor state of health. Plaintiff stated during the meeting that he had suffered a heart attack in the early 1970’s. After informing his superiors of his health problem, plaintiff inquired of Branton whether he would qualify for disability benefits. Branton responded by asking if plaintiff’s physician would sign the standard disability claim form known as Form 12-G. Plaintiff stated that his doctor would sign the form. Branton relied upon plaintiff’s affirmative response and the production of a supporting Form 12-G when he stated to plaintiff that he would qualify for benefits. Branton testified at trial that it had never occurred to him that plaintiff could not substantiate his claim.

Plaintiff was aware after the meeting on November 7, 1979, that there was no assurance that he would receive the disability benefits discussed and so stated to his wife. (See Deposition of Narcy R. Maley at 116). On November 15, 1979, plaintiff phoned Branton to discuss his plans. During the course of the conversation plaintiff read Branton the contents of a letter directed to Rhodes, in which plaintiff stated that he planned to take his accrued vacation for 1979 and 1980. If, at the conclusion thereof, he did not feel better, he would apply for disability and then take early retirement (Ex.P. 11). Initially, Branton approved the contents of the letter; however, after some thought he realized that the plaintiff had to be more specific as to the course of action he intended to take if he did not qualify for disability benefits. Branton then telephoned plaintiff and suggested language appropriate to convey his intentions. Both Branton and Rhodes testified at trial that it was imperative that the Company be made aware of plaintiff’s future plans so they could act accordingly.

Plaintiff, via the letter of November 16, 1979, conveyed his intentions to Rhodes. Plaintiff stated that after he took his accrued vacation for 1979 and 1980 he would apply for disability benefits and if, for some reason, he did not qualify he would then take early retirement. (Ex.P. 1). Whereupon, plaintiff was replaced as district manager of the Allentown office on December 1, 1979.

On November 21, 1979, Rhodes wrote plaintiff acknowledging receipt of plaintiff’s letter and reiterating plaintiff’s intentions. In addition, Rhodes requested that plaintiff submit evidence to substantiate his disability claim.

Plaintiff’s physician submitted a Form 12-G on January 21, 1980, (Ex.P. 2). The only medical information supplied to defendant on the form was the word “Myalgias” (muscle pain) (Ex.P. 2). Defendant’s Benefit Payment Services Department informed plaintiff that further medical data would be required in order to properly evaluate his application for disability. Accordingly, on February 8, 1980, plaintiff’s physician submitted a second Form 12-G along with additional medical records (Ex.P. 3). The Court notes that at no point in time did the plaintiff attempt to substantiate his claim of a heart condition.

Dr. Harold S. Kost, M.D., defendant’s Medical Director, evaluated plaintiff’s application and concluded that the diagnosis and degree of severity did not appear to justify an award of disability benefits (Ex.D. 26). Plaintiff was so advised on March 14, 1980.

Following denial of his claim of disability, plaintiff spoke with Rhodes, who suggested that plaintiff submit additional medical information to support his claim. Plaintiff ignored Rhodes’ suggestion and began receiving early retirement benefits on April 1,1980, and has received all retirement benefits to which he is entitled under that plan.

Plaintiff filed suit against Hancock in the United States District Court for the Eastern District of Pennsylvania on or about February 25, 1982, asserting several claims. First, plaintiff contends that Hancock, through an authorized representative, fraudulently induced plaintiff to relinquish his position as District Manager by promising him disability benefits, asserting that his decision to leave active employment with Hancock was based upon such promise. Secondly, when plaintiff was denied disability benefits, he contends the defendant refused to let him resume active employment. Plaintiff claims that defendant’s action constituted a wrongful discharge and seeks damages resulting from defendant’s fraudulent conduct. The Court will address plaintiff’s claims seriatim.

FRAUD

When a claim of fraud is asserted by a party that party has the burden of proving by clear and convincing evidence the facts upon which the claim is based. Laughlin v. McConnell, 201 Pa.Super. 180, 191 A.2d 921 (1963); O’Callaghan v. Weitzman, 291 Pa.Super. 471, 436 A.2d 212 (1981). The evidence must be such as to enable the finder of fact to conclude without hesitation that the facts alleged are true. O’Callaghan, supra. Proof of several elements is necessary in a claim for fraud. Plaintiff must prove by clear and convincing evidence (1) a misrepresentation, (2) a fraudulent utterance or non-disclosure, (3) an intention by the maker that the recipient will thereby be induced to act, (4) justifiable reliance by the recipient upon the misrepresentation and (5) resulting damage to recipient. Neuman v. Corn Exchange National Bank and Trust Co., 356 Pa. 442, 51 A.2d 759 (1947); Marion Bank v. International Harvester Credit Corporation, 550 F.Supp. 456 (E.D.Pa. 1982), affirmed 725 F.2d 668 (3d Cir.1983).

The fraudulent misrepresentations alleged by plaintiff were repeated promises by Leroy Branton that plaintiff would receive disability benefits if’ he terminated active employment. Plaintiff claims that he relied on Branton’s fraudulent promises, and left his position as District Manager of Allentown believing he would receive disability benefits and then take early retirement. The Court finds no such promise was ever made by defendant or any of its agents and likewise finds there was no intention by defendant to defraud plaintiff.

The evidence is clear that Branton never promised plaintiff disability benefits. To the contrary, Branton relied on plaintiff’s representation that he had suffered a heart attack and was in poor health, when he stated that if his treating physician would sign Form 12-G, plaintiff would qualify for disability benefits. Branton stated that he believed that someone who suffered a heart attack would qualify for disability. It is equally clear that plaintiff did not rely upon representations made regarding disability benefits in reaching his decision to cease active employment. The Court concludes first that plaintiff was not certain he would qualify for disability benefits after the November meeting and so stated to his wife at that time. (Mr. Maley’s Deposition at 116). Second, plaintiff was aware that Branton was not a doctor, or a member of either the Benefit Payment Services or Medical Departments, the departments to which all claims for disability are- routinely sent. Third, plaintiff not only acted voluntarily, but in accordance with his intentions as expressed in the letter to Rhodes dated November 16, 1979. Finally, plaintiff failed to follow up his disability claim with supplemental medical data as suggested by Rhodes after the initial denial of benefits in March, 1980. The Court concludes plaintiff has not carried his burden of proving that the defendant acted with the specific intent to fraudulently induce plaintiff to cease active employment with John Hancock and, therefore, finds in favor of the defendant on plaintiff’s claim of fraud.

In light of the foregoing, the Court concludes as a matter of law that plaintiff is not entitled to damages on his claim for fraud.

WRONGFUL DISCHARGE

Having found in favor of the defendant on plaintiff’s claim of fraud, the Court will now address plaintiff’s contention that John Hancock wrongfully discharged him. Plaintiff claims that defendant is liable for wrongful discharge because it fraudulently induced plaintiff to submit a letter dictated by Branton, expressing an intent to apply for disability and take early retirement thereby terminating active employment with the Company. Plaintiff claims to have relied upon promises made by defendant’s agents that he would receive disability if he left active employment. After denial of his application for disability, plaintiff alleges the Company refused to allow him to resume active employment and forced him to retire, thereby terminating his employment. Plaintiff claims this conduct amounted to a wrongful discharge.

Presently in Pennsylvania an employee at will has no cause of action against an employer for wrongful discharge unless he proves the employer acted with the specific intent to cause harm or the act was contrary to public policy. O’Neill v. A.R.A. Services, Inc., 457 F.Supp. 182 (1978); Geary v. U.S. Steel Corp., 456 Pa. 171, 319 A.2d 174 (1974). In the present case the plaintiff acknowledged at trial that he was employed under a written contract (Ex.D. 29) which did not set forth any specific term of employment. Under the law of Pennsylvania such an employee is deemed to be an employee at will. Karr v. Township of Lower Merion, 582 F.Supp. 410 (E.D.Pa.1983); Bruffett v. Warner Communications, Inc., 692 F.2d 910 (3d Cir.1982).

The Court concludes, based on the evidence produced at trial, that plaintiff was in fact never discharged from employment with the defendant. To the contrary, defendant acquiesced to plaintiffs original intentions, as stated in his letter to Rhodes, dated November, 1979, to take early retirement if disability was not approved. Even if the Court were to conclude that defendant’s action taken as a whole constituted a discharge of plaintiff, plaintiff would have to prove that defendant acted in bad faith and against public policy in order to prevail. O’Neill, supra.; Geary, supra.

Plaintiff claims the methods used by defendant, promising disability and dictating a letter, later used to keep plaintiff from active employment, were against public policy. However, as stated above, the Court finds that neither the defendant nor any representative thereof made promises to plaintiff or acted with the specific intent to cause plaintiff harm.

In addition, testimony was presented which showed that defendant was dissatisfied with plaintiff’s performance and, therefore, had sufficient grounds to discharge him. Plaintiff stated at trial that he was aware that he could be discharged if his performance was unsatisfactory. Pennsylvania courts adhere to the subjective standard in deciding whether an employee had performed to the satisfaction of his employer. Kramer v. Philadelphia Leather Goods Corp., 364 Pa. 531, 73 A.2d 385 (1950). Therefore, defendant would have had sufficient grounds to discharge plaintiff if it so desired.

The Court does not accept plaintiff’s argument that the decision in Paul v. Lankenau Hospital, 114 Montg.Co.L.R. 3 (1984), is similar to the present case and should be followed. In that case, plaintiff, acting on representations of his supervisor, removed equipment from the hospital and was terminated for doing so. The court held that the hospital was equitably estopped from arguing that the plaintiff was an employee at will, and, therefore, had no right to continued employment. In the present situation this Court has found that the representations made by defendant were made in reliance on plaintiff’s statements concerning his health. Therefore, defendant’s statements were not in bad faith and Paul v. Lankenau, supra, is inapplicable.

Further, the mere fact that termination is likely to cause some financial harm to plaintiff does not give rise to the required specific intent to support a cause of action for wrongful discharge. Keddie v. Pa. State University, 412 F.Supp. 1264 (M.D.Pa.1976).

The Court concludes that plaintiff did not prove (1) that he was wrongfully discharged or (2) that he had a right to continued employment. Therefore, he is not entitled to compensatory damages in the nature of lost wages. In light of the foregoing, the Court denies defendant’s motion for involuntary dismissal.

This Court has jurisdiction. It is not questioned by either party. The above shall constitute the findings of fact and conclusions of law as found and entered by the Court. An appropriate order shall be entered.

ORDER

AND NOW, this 26th day of April, 1985, IT IS ORDERED that judgment is entered in favor of the defendant and against the plaintiff.

      . Ordinary issue is defendant’s term for volume of life insurance issued in terms of dollar amounts. Ninety percent of Allentown’s business was comprised of "ordinary issue”.

      . Defendant has a disability program known as Salary Continuation Benefits which it offers to district managers. The program provides three months at full pay and twenty-seven (27) months at
        A pay so long as the claimant is disabled and can substantiate his continuing disability with supplemental medical data.


author: NORDBERG, District Judge.

text:
    Donald V. McCANN, Plaintiff, v. FRANK B. HALL & CO. INC. and Albert J. Tahmoush, Defendants, FRANK B. HALL & CO. INC., Counter-plaintiff, v. Donald V. McCANN, Counter-defendant.
    No. 83 C 3070.
    United States District Court, N.D. Illinois, E.D.
    April 30, 1985.
    Edward M. Burke, Klafter & Burke, Chicago, 111., for plaintiff.
    John L. Huff, Winston & Strawn, Chicago, 111., for defendants.
   MEMORANDUM OPINION AND ORDER

NORDBERG, District Judge.

This matter is before the court upon the Report and Recommendation of the Magistrate of March 19, 1985. (Appendix A). This court adopts the Report and Recommendation of the Magistrate and hereby grants plaintiff’s motion for partial summary adjudication on Count I of the Amended Complaint in accordance with Fed.R.Civ.P. 56(d), and hereby finds the defendant liable to plaintiff for $177,000 ($150,000 salary from December 31, 1983 to December 31, 1984 and $27,000 for rental of plaintiff’s apartment through 1984). Plaintiff’s motion for partial summary adjudication on Counts II and III are denied in accordance with the Magistrate’s Report and Recommendation. The objections of defendant Frank B. Hall & Co. (“Hall”) are overruled for the following reasons.

Hall’s objection centers around paragraph 2 of an employment contract between plaintiff Donald McCann and defendant Hall. Paragraph 2 provides:

2. Unless you or the Company give written notice of termination, this agreement will be automatically extended on December 31 of each year to the December 31 two years from the date of the extension. For example, if no notice of termination is given in 1980, the agreement will be automatically extended on December 31, 1980 to a term to end December 31, 1982. A written notice of termination shall be effective on the date to which the agreement had last been extended. For example, a notice of termination delivered in 1981 shall be effective on December 31, 1982.

The Magistrate found, and this court agrees, that pursuant to paragraph 2, the employment contract automatically extends itself on December 31 of each year for two years, unless written notice of termination is given by either party. If written notice of termination is given, such termination becomes effective on the date to which the agreement had last been extended.

The issue before the Magistrate was whether the plaintiff’s oral notice of November 9, 1982 effectively invoked the termination provision of paragraph 2. Since the contract automatically extended itself at the end of each year for an additional two years, at the time the oral notice of termination was given on November 9, 1982, the contract had been automatically extended to December 31, 1983. If that oral notice was effective, then the contract terminated on that date, December 31, 1983. However, if the oral notice was not effective and written notice was required as McCann maintains, then the termination provision was not effectively involved until April 29, 1983 when written notice of McCann’s termination was given. Under these circumstances, the contract would have automatically renewed itself on December 31, 1982 for two years, until December 31, 1984. Thus, if written notice was required, McCann is entitled to an additional year’s salary and benefits in accordance with-the contract. After examining the pertinent cases, the court finds that the cases relied upon by Hall cannot be applied to the instant case.

Hall essentially relies on cases which support the proposition that an employment contract, which by its terms may be terminated by giving a specified period of notice prior to termination, may also be terminated without notice, on the condition that compensation is paid for the specified period of notice. 35 A.L.R. 889, 896 (1925) (citing cases). Thus, for example, where an employment contract provided that employment could be terminated upon ten days notice in writing, an employee, who received oral actual notice of termination and later written notice of termination, was entitled to ten days compensation from the date of oral actual notice. E.g., Malby v. J.F. Images, Inc., 632 P.2d 646 (Colo.Ct. App.1981). The reason for this rule is simple; the usual purpose of a notice provision in an employment contract is to give the employee the bargained for time to seek other employment. 35 A.L.R. 889, 896 supra. If the employer chooses to discharge the employee and pay the agreed salary for the time of the notice, it is difficult to see how the employee has been injured since he has received the benefit of his bargain. Id.

However, this general rule as exemplified by Malby, is inapplicable to the facts of the instant case. The notice provision in the instant case does not set a specified notice period, such as ten days, for termination of the contract. Rather, the giving of notice, in and of itself, operates to create the length of the employment contract. An extension of the contract, amounting to a two year employment contract, is created each December 31 provided no written notice of termination has been given during the year. Thus each December 31, McCann became entitled to two years of employment. Because the notice provision created the duration of the employment contract itself, proper invokation of that notice provision, i.e., written notice, was required. E.g., Bout v. Kimball, 46 Ill.App. 327 (1892). This principle, as exemplified by McCormick Harvesting Machine Co. v. Cordsiemon, 101 Ill.App. 140 (1902) is not an aberration as Hall contends. Rather, it is a general rule of contract construction which specifies that the requirements of a contract as to notice, as to the time of giving, the form, and the manner of service thereof, must be observed in canceling the contract. There must be exact compliance with the terms of the provision for notice. Bour v. Kimball, supra; see Criterion Advertising Co. v. Clemensen’s Florists & Decorators, Inc., 314 Ill.App. 383, 41 N.E.2d 232 (1942); Butterick Publishing Co. v. Frederick Loeser & Co., 232 N.Y. 86, 133 N.E. 361 (C.A.N.Y. 1921); see generally 12 Am.Jur.2d Contracts § 498 (1964 & Supp.1984) (citing cases). To find otherwise would not give McCann the benefit of his bargain and would disregard the plain and unambiguous meaning of the words of paragraph 2. Paragraph 2 did not merely entitle McCann to two years notice of termination as Hall contends. Paragraph 2 gave McCann more:' the right to written notice as a mechanism for setting the duration of any extension of his employment contract.

In view of the fact that the Magistrate found, as a matter of law, that McCann’s contract was extended through December 31, 1984, Hall’s further claims of error regarding the Report are without merit. Hall claims that the Magistrate made factual determinations unfavorable to it and that he did not prepare proposed findings of fact nor specify non-disputed facts as required by the Federal Rules. These claims of error ignore the fact that the Magistrate properly interpreted the unambiguous language of Paragraph 2 as a matter of law. It is well settled that in cases of contract construction, resolution of disputes involving the interpretation of unambiguous agreements is for the court to determine as a matter of law. Sunstream Jet Express Inc. v. International Air Service Co., 734 F.2d 1258 (7th Cir.1984). Thus, resolution of disputed factual issues was unnecessary in properly determining the meaning and effect of paragraph 2. Moreover, Hall does not dispute that McCann was fired on November 9, 1982. Hall attempts to create issues of fact by claiming that McCann waived his right to written notice since he understood he was fired and since he “virtually disappeared” from Chicago for about four months after his firing. (Hall’s Objections to March 19, 1985 Report & Recommendation). Even accepting these facts as true, they cannot, as a matter of law, amount to any waiver by McCann of his rights under paragraph 2. Hall does not dispute that the locks on McCann’s office were changed immediately after his firing “for security reasons.” (Id. at 5.) Nor does Hall claim that McCann should have forced himself into Hall’s office and attempted to work, despite his firing. Hall thus recognizes that McCann’s firing was immediate and that it owes some measure of damages to McCann. It merely seeks, by the above-mentioned facts, to shorten its liability under paragraph 2 by one year. This uncontested factual situation affords no basis for such relief. Moreover, the mere fact that McCann recognized and understood the effects of his meeting with McCaffrey on November 9, 1982, provides no basis for waiver. If McCann’s understanding and recognition that he was fired could constitute waiver in such circumstances, paragraph 2 would be deprived of its meaning by the unilateral act of Hall. McCann’s conduct, as described by Hall, amounts to no more than a recognition by McCann that Hall was firing him. The mere fact that he understood what was happening does not amount to waiver in such circumstances.

Conclusion

In accordance with the Report and Recommendation of the Magistrate, this court enters partial summary adjudication for plaintiff on Count I of the Amended Complaint and finds the defendant is obligated to pay plaintiff employment benefits specified in the employment contract through December 31, 1984.

APPENDIX A

REPORT AND RECOMMENDATION of Magistrate James T Balog

March 19, 1983

Before the court is the Plaintiffs motion for partial summary judgment. For the reasons stated below, it is recommended that the motion be granted in part and denied in part.

The facts, as alleged, are drawn primarily from the Plaintiffs complaint. Plaintiff, Donald V. McCann (“McCann”) began his employment with Frank B. Hall & Co., Inc. (“Hall”) in 1973. Hall is an insurance brokerage firm. Until January 1980, McCann held a sales position with Hall in Los Angeles, California. McCann was an extremely successful salesman, generating annual commissions of $1,250,000.00 dollars.

McCann desired to become involved in the upper management of Hall, so in May of 1980 he accepted a position as Regional Manager of the Midwest and Southwest branches of Hall. McCann was to be based in Chicago, Illinois. The employment agreement entered into by the parties provided that McCann was to be paid a minimum of $150,000.00 per year and that Hall would pay one-half the rental price of an apartment used by McCann in Chicago. The contract also contained the following provisions:

“2. Unless you or the Company give written notice of termination, this agreement will be automatically extended on December 31 of each year to the December 31 two years from the date of the extension. For example, if no notice of termination is given in 1980, the agreement will be automatically extended on December 31, 1980 to a term to end December 31, 1982. A written notice of termination shall be effective on the date to which the agreement had last been extended. For example, a notice of termination delivered in 1981 shall be effective on December 31, 1982.
4. Except with the written consent of the Company, you agree that while this agreement is in force and for two years after the agreement terminates, you will not compete directly or indirectly with the Company or any of its subsidiaries by soliciting or receiving income in any form for providing insurance services to any person or entity which was a client of the Company or any of its subsidiaries at any time during the six months prior to the end of the term of this agreement.”

On November 9, 1982, McCann was informed orally by John McCaffrey, Hall’s Executive Vice-President, that his employment with Hall was terminated. This meeting took place at Hall’s corporate headquarters in Briarcliff, New York. The next day McCann returned to his Chicago office and found that all the locks had been changed which prevented him from performing the employment agreement. (Plaintiff’s Memorandum in Support of Partial Summary Judgment at 3).

On March 29, 1983, McCann filed suit against Hall in the Circuit Court of Cook County, Illinois. The case was removed to the United States District Court for the Northern District of Illinois upon the motion of the Defendants. On April 29, 1983, Hall sent McCann written notice of termination, alleging December 31, 1983 as the effective termination date.

It is McCann’s contention that the oral notice given by Hall was ineffective to terminate the agreement. Since written notice was not given until April of 1983, McCann maintains he is entitled to compensation through December 31, 1985. Hall claims the oral notice was effective and terminated McCann’s contract as of December 31, 1983.

McCann also claims that the restrictive covenant in his employment agreement is void as against public policy. McCann further asks the court to order Hall to pay one-half of his rental of his Chicago apartment until December 31, 1985; that he is entitled to 2,000 shares of Hall stock under an employee stock grant; that he be paid an additional $30,000 in insurance benefits in that he has suffered mental anguish entitling him to $100,000.00 and that he is entitled to $50,000.00 in attorneys’ fees.

In considering a motion for summary judgment, the Plaintiff has the burden of demonstrating that no genuine issue of material fact exists and that he is entitled to judgment as a matter of law. Adiekes v. S.H. Kress & Co., 398 U.S. 144, 157 [90 S.Ct. 1598, 1608, 26 L.Ed.2d 142] (1970); Ross v. Bridgeport & Brass Co., 487 F.2d 804, 808 (7th 1973). Any doubt as to the existence of a genuine issue of material fact must be resolved against the movant. Trotter v. Anderson, 417 F.2d 1191, 1192 (7th Cir.1969). The evidence in the motion is considered in favor of the non-moving party and all favorable inferences are likewise to be drawn in their favor. Schafer v. First National Bank of Lincolnwood, 509 F.2d 1287, 1297-8 (7th Cir.1975), cert, denied, 425 U.S. 943 [96 S.Ct. 1682, 48 L.Ed.2d 186] (1976).

The first issue in this case which has not been considered in great detail by the parties is what law controls the instant agreement since the agreement itself is silent as to the controlling law. It is a well established principle that the law of the place of performance governs the construction and obligations of the contract when the place of making and place of performance differ, if the agreement is to be wholly performed in one jurisdiction. Charles O. Finley & Co., Inc. v. Kuhn, 569 F.2d 527, 542 (7th Cir.), cert, denied, 493 [439] U.S. 876 [99 S.Ct. 214, 58 L.Ed.2d 190] (1978). Since this contract was made in New York, but to be performed in Illinois, Illinois law will be controlling.

I. ORAL NOTICE OF TERMINATION.

The contract in the case at bar could not be any more unequivocal in the requirement that written notice was required for its termination. Although Illinois has never explicitly decided whether oral notice effectively terminates a contract where written notice is required, it is clear that the general principle is that the terms of the contract must be strictly followed. McCormick Harvesting Machine Co. v. Cordsiemon, 101 Ill.App. 140, 141 (3d Dist. 1902). In McCormick, the contract required five days’ notice in writing before its effective termination. The employee was discharged with no notice. The court held that “where a contract itself provides the method for recission, it should be followed ... [the Defendant] should have given the written notice specified in .the contract.” Id.

The same principle has been espoused by the Illinois courts when forfeiture provisions are in contracts. In Kelly v. Germania Savings & Loan Assoc., 28 Ill.2d 591, 192 N.E.2d 813 (1963), a real estate contract required written notice of forfeiture. The court held that the only proper method for forfeiture was by written notice since that was what the contract required. Id. at 545. Certainly, termination provisions in employment contracts are of the same magnitude as forfeiture provisions in real estate contracts. It would seem patently unjust to allow Hall to avoid the literal terms of the contract.

The Defendant relies on the case of Maltby v. J.F. Images, Inc., 632 P.2d 646 (Colo.App. 1981), in support of its contention that oral notice effectively terminates the contract, despite a provision requiring written notice. Colorado law does not control the case at bar, but a review of the Maltby case is nonetheless warranted. In Maltby, the Plaintiff’s contract required 10 days written notice before it could be terminated. On June 11, the Defendant orally notified the Plaintiff that her employment was terminated. It was not until August 3, that the Defendant notified the Plaintiff in writing. The court held that the oral notice effectively terminated the agreement and that the Plaintiff was entitled to be paid for only ten days from June 11.

The court mistakenly cited the case of Raynor v. Burroughs Corp., 294 F.Supp. 238 (E.D.Va.1968), to support the view that the oral notice was effective. However, a reading of Raynor supports the opposite view — that the notice was not effective until it was given in writing. In Raynor, the contract required 30 days written notice. The Plaintiff was orally notified on March 15 that his present position would be terminated as of April 27 and was offered another position within the company. On April 15, the Defendant sent the Plaintiff a letter confirming the March 15th verbal notice cancelling the contract and withdrawing the offer of the other position. On May 13, the Defendant sent the Plaintiff another letter stating his employment terminated as of May 13. The court found that the Plaintiff was entitled to damages from May 13 to June 13, thus finding that the notice was not effective until the written notice of May 13. Id. at 242.

In the case at bar, McCann was not given written notice until April 29, 1983. The contract provides that the agreement will be automatically extended on December 31 of each year to the December 31 two years from the date of the extension, unless written notice of termination was given. On December 31, 1982, McCann’s contract extended until December 31, 1984. The written notice given on April 29, 1983, by the terms of the contract was not effective until December 31, 1984.

Hall also contends that McCann, by his actions after the oral notice was given, waived the right to written notice. This argument is absurd. McCann merely told other Hall employees that he had been fired. (See Defendant’s Memorandum in Opposition to Plaintiff’s Motion for Summary Judgment, Ex. D). As the Plaintiff indicates, just repeating that he had been fired does not constitute a waiver of legal rights under the contract. Kubiniski v. Dockside Development, 33 Ill.App.3d 1015, 1020, 339 N.E.2d 529 (1975).

In Kubiniski, the court stated that in order for there to be a waiver of the provisions of a contract the facts and circumstances must show an-intentional relinquishment of a known right, and the acts relied on must be inconsistent with an intention to insist on the rights of the party under the contract. Id. at 1020 [339 N.E.2d 529]. McCann’s actions indicate no intentional relinquishment of any contractual rights. The day after his firing, the locks on his office had already been changed preventing him from performing his obligations under the agreement. Thereafter, his only statements to Hall employees were that he had been fired. Understanding that he had been fired and intentionally relinguishing his right to written notice are two vastly different things. Indeed, Hall’s own actions indicate it recognized the importance of written notice by its sending written notice in April of 1983.

In summary, Hall did not give effective notice of termination until April 29, 1983. There was no waiver of the right to written notice by McCann. Therefore, the agreement extended from December 31, 1982 to December 31, 1984.

II. RESTRICTIVE COVENANT.

McCann seeks a judicial determination that the restrictive covenant in his employment agreement is void as against public policy. The restrictive covenant in McCann’s contract states:

“Except with the written consent of the Company, you agree that while this agreement is in force and for two years after the agreement terminates, you will not compete directly or indirectly with the Company or any of its subsidiaries by soliciting or receiving income in any form for providing insurance services to any person or entity which was a client of the Company or any of its subsidiaries at any time during the six months prior to the end of the term of this agreement.”

Since we have found that McCann’s contract terminated December 31, 1984, this restrictive covenant would be in effect until December 31,1986. Restrict covenants are not per se void in Illinois. Illinois has long recognized the right of an employer to protect “legitimate business interests” by the use of restrictive covenants. See, e.g., Hursen v. Gavin, 162 Ill. 380, 44 N.E.2d 735 (1896); House of Vision v. Hiyane, 37 Ill. 2d 352, 255 [225] N.E.2d 21 (1967). However, Illinois takes a case by case approach to determine the reasonableness of restrictive covenants. The court stated in MBL (USA) Corp. v. Diekman, 112 Ill. App.3d 229, [67 Ill.Dec. 938] 237-8, 444 [445] N.E.2d 418 (1983), that “the question of enforceability [of a restrictive covenant] is a matter of law to be decided on the particular facts of each case.” Illinois uses what has been called the “blue pencil rule” to rewrite the covenant with reasonable restrictions. House of Vision, supra.

As a general rule, it can be said that the more limited the covenant is in geographic scope and length of time, the more likely it will be upheld. See, e.g., Wessel Co. v. Busa, 28 Ill.App.3d 686, 328 [329] N.E.2d 52 [414] (1975). However, where the employer has trade secrets of confidential customer lists which he may legitimately protect, a court will uphold greater restrictions. See Vander Weif v. Zunica Reality Co., 59 Ill.App.2d 173, 208 N.E.2d 74 (1965).

In the case at bar, the covenant appears to be unreasonable on its face since it contains no geographic limitations and a lengthy time restriction. But there are too many genuine issues of material fact for this Court to grant summary judgment. In a motion for summary judgment, the allegations made by the non-moving party are regarded as true. See, e.g., Askew v. Bloemaker, 548 F.2d 673, 680 (7th Cir.1976). Hall has alleged that it has trade secrets and confidential customer lists. (Defendant’s Memorandum in Opposition to Partial Summary Judgment, Ex. B). Although it is doubtful that these allegations are true, see American Hardware Mut. Ins. Co. v. Moran, 705 F.2d 219, 222-23 (7th Cir.1983), they must be accepted as true in the present motion. Since these factors change what may be reasonable in a restrictive covenant, the Plaintiff’s motion to declare the restrictive covenant void should be denied.

III. RENT AND OTHER BENEFITS.

Since McCann’s contract has been construed as extending to December 31, 1984, Hall will be liable for an additional years’ rental payment for one-half the amount for McCann’s Chicago apartment. This amount equals $27,000.00 dollars.

McCann also seeks 2,000 shares of Hall stock or its cash equivalent; and $30,000.00 in insurance benefits. These requests cannot be considered in his motion since he has submitted insufficient proof as to his right to these benefits, nor were they a part of his employment agreement.

McCann’s request for an award because of his mental anguish and for attorneys’ fees are also improper considerations in the motion for partial summary judgment.

For the reasons stated herein, IT IS RECOMMENDED that the court order Hall to pay an additional $150,000.00 dollars to McCann for salary from December 31, 1983 to December 31, 1984, and to pay an additional $27,000.00 for rental of McCann’s Chicago apartment through 1984.

Respectfully submitted, /s/ James T. Balog JAMES T. BALOG United States Magistrate

      . We note that the decision would be the same if New York law were controlling.

      . McCann’s interpretation of the length of the extension is erroneous. He contends that any notice given in 1983 is not effective until December 31, 1983 and then the two-year extension begins. In other words, McCann contends his contract extended until December 31, 1985. However, the contract specifically states,
      "Unless you or the Company given written notice of termination, this agreement will be automatically extended on December 31 of each year to the December 31 two years from the date of the extension. For example, if no notice of termination is given in 1980, the agreement will be automatically extended on December 31, 1980 to a term to end December 31, 1982. A written notice of termination shall be effective on the date to which the agreement had last been extended. For example, a notice of termination delivered in 1981 shall be effective on December 31, 1982.” [Emphasis added].
      No written notice was given by December 31, 1982. Thus, the agreement automatically extended to December 31, 1984. Written notice was given in 1983, thereby making it effective as of December 31, 1984.

      . Hall also submits a Telex announcement from November 10, 1983, announcing McCann’s "resignation” from Hall. This Telex certainly does not constitute written notice of termination, nor has Hall shown that McCann ever received or knew of the contents of the Telex.


author: CASSIBRY, Senior District Judge:

text:
    TRANSORIENT NAVIGATORS COMPANY S/A v. The M/S SOUTHWIND, her engines, tackle, apparel, etc., in rem Westwind Africa Line, Ltd., et al. FLOUR MILLS OF NIGERIA, LTD. v. M/V ASTROS, in rem, and Transorient Navigators Company, S.A. in personam, et al. WESTWIND AFRICA LINE, LTD. v. The UNITED STATES of America The United States Army Corps of Engineers, New Orleans District.
    Civ. A. Nos. 77-2107, 77-2410 and 78-199.
    United States District Court, E.D. Louisiana.
    May 2, 1985.

      William E. Wright, New Orleans, La., for plaintiff Transorient Navigators Co. S/A.
    John J. Broders, New Orleans, La., for plaintiff Flour Mills of Nigeria, Ltd.

      J. Dwight LeBlanc, Jr., New Orleans, La., for defendant Westwind Africa Line, Ltd. .
    Allen Van Emmerik, Washington, D.C., for defendant United States and U.S. Army Corps of Engineers.
   CASSIBRY, Senior District Judge:

OPINION ON REMAND

This case was remanded for an apportionment of liability between the United States Army Corps of Engineers (“Corps” or “United States”) and the M/S SOUTH-WIND (“SOUTHWIND”) for a collision between the SOUTHWIND and the M/V ASTROS (“ASTROS”) in the Mississippi River Gulf Outlet (“MR-GO” or “channel”) on June 17, 1977. Transorient Navigators Co., S.A. v. M/S SOUTHWIND, 714 F.2d 1358 (5th Cir.1983). The Fifth Circuit Court of Appeals reversed that part of the original judgment which exonerated the Corps from all liability for the collision. The parties have submitted briefs on the issues presented by the resurrection of the claims against the Corps. In accordance with the Fifth Circuit’s mandate, the court now enters the following in support of its judgment on remand.

I. Apportionment of Liability

The collision occurred when the SOUTHWIND sheered into the ASTROS during a port-to-port passage. The SOUTHWIND sheered because of unequal hydrodynamic forces created by the vessel’s approach to a submerged bank of a dredged area or borrow pit in the MR-GO. The Corps had completed dredging the borrow pit approximately six to eight weeks prior to the collision. However, the Corps failed to publish any information on the changes in channel conditions caused by the dredging. The failure to provide this information constituted a breach of the Corps’ duty to advise mariners under its own regulations and its duty to exercise reasonable care.

The negligence of the Corps in this regard was a proximate and legal cause of the collision. The lack of information concerning the configuration of the borrow pit prevented the pilot of the SOUTHWIND from accurately assessing the danger presented by the right angle cut formed by the western end of the pit. If the pilot had been warned of the change in submerged bank configurations and relative channel depth, he would have taken greater precautions in passing the ASTROS, and avoided the accident.

The Fifth Circuit affirmed that the pilot of the SOUTHWIND, Mark Delesdernier, was negligent and that his negligence was a proximate cause of the collision. When two or more negligent parties combine to cause a collision, liability must be allocated between them based upon their comparative fault. United States v. Reliable Transfer Co., Inc., 421 U.S. 397, 95 S.Ct. 1708, 44 L.Ed.2d 251 (1975). Assessing the comparative fault of the Corps and the SOUTHWIND in connection with the damage caused by their concurring negligence, I find that the SOUTHWIND is liable for eighty percent of the damage and the Corps for twenty percent.

Pilot Delesdernier was fully aware of the existence and general location of the borrow pit as well as its surface characteristics. Although he did not know the precise contours of the bank at the western end of the pit, he did know that the channel would narrow upon reaching the end of the pit. He understood the hydrodynamic effects of a narrowing channel and was familiar with the phenomena of bank suction and bank sheer. Despite all this, Pilot Delesdernier failed to ascertain the potential navigational hazards which he had more than ample reason to expect in this area of the channel. Furthermore, he took no precautionary measures to account for the presence of the borrow pit. In fact, he attempted to pass the ASTROS approximately fifty feet further from the center-line of the channel than was customary in the MR-GO. In summary I find that the pilot’s negligence was the main cause of the collision, and therefore, the SOUTH-WIND must bear the major portion of liability.

II. Transorient’s Damages

After a trial on liability, the parties stipulated to the amount owed Transorient Navigators Company, S.A. (“Transorient”), the owner of the ASTROS, for the damage to its vessel as a result of the collision. Judgment was then entered in favor of Transorient for $645,721.23 with legal interest from the date of the collision plus taxable costs. On remand, the interest award must be amended because interest may not be assessed prior to the date of judicial demand in a claim brought against the United States under the Suits in Admiralty Act (“Act”). 46 U.S.C.A. § 745 (West 1975). Furthermore, in contrast to the discretionary rates permitted in admiralty suits against private parties, the rate of interest is fixed by the Act at four percent per annum until satisfaction. 46 U.S.C.A. § 743 (West 1975).

Transorient takes heed of these statutory limits, but argues that it is entitled to recover from the SOUTHWIND “that portion of the full legal interest for which the United States is not liable by virtue of the act.” In essence, Transorient contends that since the United States Army Corps of Engineers and the SOUTHWIND are joint tortfeasors, the innocent'plaintiff may recover the full judgment, inclusive of interest, from either one regardless of any apportionment of fault. Although the underlying tenet may be sound, the conclusion reached by Transorient is without foundation in either law or logic.

First, Transorient cites no authority for the proposition that a plaintiff who is injured by the concurrent negligence of the United States and a private party may recover from the latter the amount of interest on the judgment which is not recoverable from the United States. Second, if the SOUTHWIND were required to pay the full judgment plus interest on that amount, it could then recover from the United States twenty percent of the total sum paid in accordance with this court’s apportionment of fault. The effect of this would be that the United States would pay its portion of the damages plus legal interest at the rate applicable to a private party, a rate which is assuredly higher than that permitted by the Act. If the United States had been sued alone, the amount of interest would clearly be limited to four percent from the date of judicial demand. The plaintiff may not avoid the mandate of the Act under the guise of joint and several liability.

I conclude that Transorient may recover from the SOUTHWIND eighty percent of its total damages, or $516,576.98, with legal interest to be assessed on that amount. Transorient may recover from the United States the remaining twenty percent, or $129,144.25, with simple interest at four percent per annum from the date suit was filed, or July 7, 1977. Interest was originally awarded against the SOUTHWIND from the date of the collision. This award was not disturbed on appeal, nor is the date now disputed. The rate of interest and the method of calculation were not initially determined; therefore, I will address these issues now.

Admiralty courts are given a great deal of discretion in setting the rate of prejudgment interest. Platoro Ltd., Inc. v. Unidentified Remains, Etc., 695 F.2d 893, 907 (5th Cir.1983) (citations omitted). Although not binding, state law may be consulted for guidance. Id. In the exercise of my discretion, I have decided to assess interest against the SOUTHWIND in accordance with article 2924 of the Louisiana Civil Code. Thus, the rate of interest shall be seven percent from thé date of the collision through September 11, 1980; ten percent from September 12, 1980 through September 11, 1981; and twelve percent from September 12, 1981 until the judgment is paid. In addition, interest shall be compounded daily. The duration of this litigation and the high interest rates available during its pendency have convinced me that such a method of calculating interest is fair and reasonable. See Todd Shipyards Corp. v. Turbine Services, Inc., 592 F.Supp. 380 (E.D.La.1984).

III. The Claims of Flour Mills and West-wind Against the United States

The imposition of liability upon the United States resurrects the respective claims of Flour Mills of Nigeria, Ltd. (“Flour Mills”) and Westwind Africa, Ltd. (“Westwind”). Flour Mills, the owner of the cargo aboard the SOUTHWIND, seeks to recover for the damage to its cargo as a result of the collision. In this case, Flour Mills is precluded from recovering against the SOUTHWIND, the carrying vessel, under the Carriage of Goods by Sea Act. 46 U.S.C. § 1304(2)(a) (West 1975) (exonerates ship and carrier from damage due to navigational error). However, an innocent cargo owner may recover its full damages, including general average contributions, from the noncarrying tortfeasor, in this case, the United States. The Atlas, 93 U.S. (3 Otto.) 302, 23 L.Ed. 863 (1876). The United States is then able to recover from the SOUTHWIND for contribution in proportion to fault. Allied Chemical Corp. v. Hess Tankship Co. of Del., 661 F.2d 1044, 1058 (5th Cir.1981). Thus, Flour Mills is entitled to a judgment against the United States for the full amount of its damages. The United States may then recover over from the SOUTHWIND eighty percent of the cargo damages. See Matter of Ta Chi Navigation (Panama) Corp., S.A., 513 F.Supp. 148, 156 (E.D.La.1981), affd, 728 F.2d 699 (5th Cir.1984).

Westwind, the owner of the SOUTHWIND, sued the Secretary of the Army, the Army Corps of Engineers, and the United States for the damage to its vessel as a result of the collision. Because Pilot Delesdernier was a compulsory pilot, his negligence cannot be imputed to West-wind as the owner of the vessel. Homer Ramsdell Transp. Co. v. Compagnie Generate Transatlantique, 182 U.S. 406, 21 S.Ct. 831, 45 L.Ed. 1155 (1901). Thus, Westwind correctly states that as between it and the United States, the United States is the only negligent party. Westwind, in effect an innocent plaintiff in this case, may recover its full damages from the United States. However, the fact that the pilotage was compulsory does not affect the liability of the ship, The China, 74 U.S. (7 Wall.) 53, 19 L.Ed. 67 (1869), and the United States may recover from the SOUTHWIND eighty percent of West-wind’s damages.

Because this case was originally tried solely on the issue of liability, the damages of Flour Mills and Westwind have not yet been proved. Therefore, the issue of damages is referred to Magistrate Chasez for disposition. The Clerk of Court shall withhold entry of final judgment until the amount of damages owed Westwind and Flour Mills has been determined.

      . The details of this case are set out in the Fifth Circuit's opinion, as well as in this court’s original opinion, and will not be repeated here. See Transorient Navigators Co., S.A. v. M/S SOUTHWIND, 524 F.Supp. 373 (E.D.La.1981).

      . See United States Army Corps of Engineers Regulation No. 1130-2-306 (May 8, 1978), quoted in 714 F.2d at 1365 n. 3. In claims brought under the Suits in Admiralty Act, the United States is held to the same standard of reasonable care required of private persons. 714 F.2d at 1364-65 (citations omitted).

      . A river pilot is required to exercise a special and high degree of skill and care in navigating waters through which he travels, and should inquire into conditions which would arouse the suspicions of an experienced pilot. See Davidson S.S. Co. v. United States, 205 U.S. 187, 27 S.Ct. 480, 51 L.Ed. 764 (1907); Petition of M/V Elaine Jones, 480 F.2d 11 (5th Cir.1973).

      . As between the two defendants, any payment to Transorient for lost interest is principal, and therefore, subject to contribution. See Complaint of Sincere Navigation Corp., 447 F.Supp. 672, 675 (E.D.La.1978).

      . I used simple interest because compound interest is not presumed to run against the United States. United States v. Isthmian S.S. Co., 359 U.S. 314, 325, 79 S.Ct. 857, 863, 3 L.Ed.2d 845 (1959).

      . Article 2924 provides, in pertinent part, as follows:
      The rate of judicial interest resulting from a lawsuit pending or filed during the indicated periods shall be as follows: (a) Prior to September 12, 1980, the rate shall be seven percent per annum, (b) On and after September 12, 1980, until September 11, 1981, the rate shall be ten percent per annum, (c) On or after September 11, 1981, the rate shall be twelve percent per annum.
      La.Civ.Code art. 2924 (West 1952). This case has been pending during each of the three periods delineated by the statute, and therefore, interest shall be assessed at the rate set for each respective period.

      . Counsel for the SOUTHWIND agrees to the assessment of prejudgment interest in accordance with the state rate for the respective time periods set forth in article 2924, but suggests that post-judgment interest be assessed in accordance with 28 U.S.C. section 1961. This suggestion complicates an already complex matter for no discernible reason. Thus, I shall make one award of interest at the state rate.

      . Throughout the record in this case, Flour Mills has been referred to as "Flower Mills.” The court has been informed by counsel of record that the proper spelling is that used in this opinion on remand.