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Mon River Towing, Inc. v. Industrial Terminal & Salvage Co.

December 4, 2009

MON RIVER TOWING, INC., PLAINTIFF,
v.
INDUSTRIAL TERMINAL & SALVAGE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Nora Barry Fischer United States District Judge

MEMORANDUM OPINION

Introduction

Mon River Towing, Inc. ("Plaintiff") brought this negligence suit against Industrial Terminal and Salvage Company ("Defendant)" seeking damages for an incident when a fleet of barges chartered by Plaintiff broke away from Defendant's fleeting facility. This opinion addresses the legal standard for determining what profits, if any, were lost by Plaintiff during the time its barges were out of service due to repair.

Procedural Background

The parties filed Motions for Summary Judgment on June 13, 2008. (Docket Nos. 33, 34). On March 31, 2009, the Court denied Plaintiff's motion, and granted, in part, and denied, in part, Defendant's motion. (Docket No. 57). The case then proceeded to a non-jury trial which began on July 27, 2009 and ended on July 31, 2009. (Docket No.104). Transcripts were prepared (Docket Nos. 110-114), and the parties have filed their proposed findings of fact and conclusions of law.

(Docket Nos. 121-23).

On September 16, 2009, after extensive discussion with the parties, the Court issued an Order Appointing a Special Master. (Docket No. 132). Specifically, it appointed Thomas Claassen, CPA, of Schneider Downs & Co., Inc., to act as Special Master to determine Plaintiff's lost profits, if any, between May 2, 2004, and October 15, 2004. Id.*fn1 The Order specified that the Special Master would consider the evidence of record from the trial, including selected documents submitted into evidence and trial transcripts, as well as the oral arguments of the parties. Id. It further provided that the Special Master is to complete a report of his findings on lost profits by January 4, 2010. Id. Oral argument was held before the Court and the Special Master on November 30, 2009, during which counsel presented their arguments for the proper calculation of lost profits in this matter. (Docket No. 133). The Court has ordered a transcript of the hearing.

This opinion is being issued to assist the Special Master in his determination by providing him guidance as to the legal standard for determining lost profits.

Legal Standard

In its Memorandum Opinion on the parties' summary judgment motions, the Court outlined the basis upon which a calculation for maritime lost profits are made in the Western District of Pennsylvania. (Docket No. 57 at 17-9). While the Court has considered the opinions of other circuit courts as argued by the parties*fn2 , the rulings in The Conqueror, 166 U.S. 110 (1896), Crain Brothers, Inc. v. Duquesne Slag Products Company, 273 F. 3d. 948 (3d Cir. 1959),and Charles Zubik & Sons v. Ohio River Co., 208 F. Supp 71 (W.D. Pa. 1962) provide the controlling law.*fn3 (Docket No. 57 at 19).

[T]he loss of profits or of the use of a vessel pending repairs, or other detention, arising from a collision or other maritime tort, and commonly spoken of as 'demurrage,' is a proper element of damage . . . however . . . demurrage will only be allowed when profits have actually been, or may be reasonably supposed to have been, lost, and the amount of such profits is proven with reasonable certainty. . . .

[T]wo things are absolutely necessary,-actual loss, and reasonable proof of the amount.

The Conqueror, 166 U.S. 110, 125 (internal quotations omitted). The United States Supreme Court formulated this reasoning in The Conqueror based upon a line of cases wherein ships were removed from the normal stream of commerce for repair. The ship in The Conqueror was itself a pleasure craft, but the Court used examples from cases involving the loss of use of commercial ships to form its opinion. Id. passim. The Supreme Court found that it is permissible to seek compensation for profits that could have been earned but for damage to the ship. The major issue in such cases is determining the compensation to be awarded, given the danger of pure conjecture such calculations may create.

The Supreme Court stated in The Conqueror that where the beneficial use of a vessel has been lost, the income that the ship would have earned is the gauge for lost profits. The Conqueror, 166 U.S. at 127. In The Conqueror, the Court specifies two measures ...


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