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Complaint of Nautilus Motor Tanker Co.

May 20, 1996

IN THE MATTER OF THE COMPLAINT OF NAUTILUS MOTOR TANKER CO., LTD. AS OWNER OF THE M/T BT NAUTILUS FOR EXONERATION FROM OR LIMITATION OF LIABILITY,

NAUTILUS MOTOR TANKER CO., LTD,

APPELLANT,



APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY (D.C. Civil No. 90-cv-02419)

Before: STAPLETON, McKEE and NORRIS *fn*, Circuit Judges

McKEE, Circuit Judge

Argued: October 10, 1995

(Filed May 20, l996)

OPINION OF THE COURT

This dispute arises from the grounding of the tanker BT Nautilus, an 811 foot oil tanker owned by appellant Nautilus Motor Tanker Co., Ltd. ("Nautilus"). That grounding caused approximately 230,000 gallons of fuel oil to spill into the Kill van Kull waterway in Bayonne, New Jersey. Thereafter, Nautilus commenced a proceeding in the United States District Court for the District of New Jersey under the Limitation of Liability Act, 46 U.S.C. Section(s) 181-189, in an effort to escape liability from various potential claimants including Coastal Oil New York, Inc. ("Coastal"), the owner of the terminal. Coastal filed a counterclaim against Nautilus alleging that Nautilus was solely responsible for the grounding. Following a non-jury trial, the district court entered judgment for Coastal and against Nautilus on Coastal's counterclaim.

In this appeal from that judgment, we are asked to determine whether the district court erred in admitting opinions and conclusions contained in a Coast Guard Report of the incident into evidence. We must also decide the relevance and possible application of a rather ancient rule of maritime law - the Pennsylvania Rule - to this controversy; and finally, we must decide whether the district court erred in concluding that Coastal's failure to provide navigational aids and information about the limits of its ship berth did not contribute to the accident. For the reasons that follow, we will affirm the ruling of the district court.

I.

We need only briefly set forth the underlying facts as they are detailed in the district court's opinion, In the Matter of the Complaint of Nautilus Motor Tanker Co., Ltd., 862 F.Supp. 1260 (D.N.J. 1994), and largely uncontested. On the morning of June 7, 1990, Moran Towing & Transportation, Co., Inc. ("Moran") dispatched two tugs and a docking pilot, Captain James Naughton, to assist BT Nautilus Captain Albert Frank Ainscough in docking his vessel at Coastal's terminal in Bayonne, New Jersey. As the Nautilus neared the terminal, it ran aground. *fn1

On June 18, 1990, Nautilus filed a petition in the district court seeking exoneration and/or limitation of its liability under the Limitation of Liability Act, 46 U.S.C. Section(s) 181-189. *fn2 Coastal responded by filing a claim against Nautilus, and Nautilus responded by seeking damages for Coastal's alleged negligence in causing the grounding.

At the ensuing bench trial on Coastal's counterclaim, Nautilus argued that Coastal "had breached its duty as a wharfinger because the vessel either grounded in the ship berth or, if it grounded outside the ship berth, the approach to the berth was unsafe." Appellant's Brief at 5. Coastal countered by arguing that the grounding was a direct consequence of negligent navigation by the vessel's captain and the docking pilot.

On September 27, 1994, the district court issued its findings of fact and conclusions of law. The court found that the BT Nautilus ran aground "at least 125 feet east of the Coastal New York ship berth," Nautilus, 862 F.Supp. at 1268, and that Nautilus had failed to prove by a preponderance of the evidence that any of Coastal's alleged negligent acts were a proximate cause of the grounding. Accordingly, the district court entered judgment in Coastal's favor, and this appeal followed.

Nautilus challenges that judgment on three grounds. First, Nautilus contends that the district court erred in admitting opinions and conclusions contained in a Coast Guard Report of this incident. Second, Nautilus argues that the Pennsylvania Rule created a burden-shifting presumption that Coastal's statutory violations caused the grounding. Finally, Nautilus argues that the district court clearly erred in finding that Coastal's failure to provide navigational aids and information on the limits of its ship berth did not contribute to the grounding.We have jurisdiction pursuant to 28 U.S.C. Section(s) 1292(a)(3), which authorizes an appeal from an interlocutory order determining the rights and liabilities of the parties to admiralty cases. *fn3

II.

A. The Admissibility of the Coast Guard Report.

Coast Guard regulations require Coast Guard personnel to conduct an investigation, and prepare a report following marine casualties and accidents. See 46 C.F.R. Section(s) 4.07 (1994). *fn4 Accordingly, the United States Coast Guard investigated the June 7, 1990, grounding of the Nautilus and issued a public report that stated in part:

The apparent cause of this grounding was failure on the part of the Docking Pilot to maintain the BT NAUTILUS within the navigable limits of the channel . . .[t]he docking pilot was not familiar with the shape or dimensions of the dredged underwater basin leading from the channel to the Terminal.

Except as noted above there is no evidence of. . . misconduct, inattention to duty, negligence, or willful violation of law or regulation. . .nor evidence that any personnel of the Coast Guard, or of any other federal agency, or any other person contributed to this casualty. . .

Coast Guard Report ("Report") Para(s) 2, 18. At trial, Coastal offered the entire Report into evidence under the exception to the hearsay rule for public records, FRE 803(8)(C). *fn5 The court received the report over the objection of Nautilus. That objection was based upon a provision in the Coast Guard regulations that states:

investigations of marine casualties. . .are for the purpose of taking appropriate measures for promoting safety of life and property at sea, and are not intended to fix civil or criminal responsibility.

46 C.F.R. Section(s) 4.07-1(b). Nautilus argued that the foregoing portions of the Report held "no evidentiary relevance other than to fix liability. . .", Appellant's Brief at 14, and should therefore be excluded under 4.07-1(b).

The district court concluded that the entire Report fit within the confines of FRE 803(8)(C) and deemed it admissible irrespective of 46 C.F.R. Section(s) 4.07-1(b). *fn6

On appeal, Nautilus relies principally upon Huber v. United States, 838 F.2d 398 (9th Cir. 1988), and its progeny to argue that the district court erred in admitting the Report into evidence. In Huber, two crew members drowned when their yacht sank north of San Francisco Bay. The surviving crew member joined decedents' representatives in a suit against the Coast Guard for failure to assist the vessel. At trial, plaintiffs sought to admit two Coast Guard Reports prepared in the aftermath of the accident. The government objected and argued that the conclusions and recommendations in the Reports were barred by 46 C.F.R. Section(s) 4.07-1(b). The court overruled the government's objection, and allowed the Reports into evidence as admissions of a party opponent under FRE 801(d)(2).

On appeal, the Court of Appeals for the Ninth Circuit reversed. The court held that, under section 4.07-1(b), "the Coast Guard investigating officers' conclusions and recommendations. . .[are] inadmissible as evidence in civil proceedings arising out of accidents covered by the investigation reports." Huber, 838 F.2d at 402. In reaching this result, the court first emphasized the necessity of such a rule under the circumstances of the suit before it:

A Coast Guard investigator might feel less free to suggest appropriate measures 'for promoting safety of life and property at sea' if he thought that any suggestion of additional precautions might result in imposing pecuniary liability on the government.

Id. at 402-403 (citing Reliable Transfer Co. v. United States, 53 F.R.D. 24, 25 (E.D.N.Y. 1971) ). The court also noted a perceived similarity between 46 C.F.R. Section(s) 4.07-1(b) and federal enactments such as 49 U.S.C. 1903(c) -- which bars the admission into evidence of accident reports prepared by the National Transportation Safety Board. *fn7 The court noted that the only difference between the latter statute, and the former regulation is that

in one the Coast Guard acted pursuant to authority from Congress. . .and in the other, Congress acted directly. . . Either way, the result is the same: all or portions of the reports are excluded from evidence on authority of Congress.

Id. at 403. Other courts have relied on the reasoning of Huber to bar the admission of opinions and conclusions in Coast Guard Reports. See In the Matter of the Petition of Cleveland Tankers, Inc., 67 F.3d 1200, 1208 (6th Cir. 1995) (Barring opinions and conclusions in a Coast Guard Report); Yap v. Controlled Parasailing of Honolulu, Inc., 873 P.2d 1321, 1328 (Haw. 1994) (Same).

Nautilus argues that since the Coast Guard acted pursuant to congressional authority, 46 C.F.R. Section(s) 4.07-1(b) must preclude the admissibility of paragraphs two and eighteen of the Coast Guard Report. Appellant's Reply Brief at 2. We do not agree.

First, the government is not a party to this litigation. Thus, unlike in Huber, the Coast Guard has no interest in the outcome, and the policy justification for the regulation's evidentiary bar -- ensuring frank disclosure by Coast Guard investigators -- is completely removed. The investigators here have no bias that may interfere with a full, ...


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