Petition — Marine Development Corp. v. Heiman
Supreme Court brief1976
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IN THE
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OF THE UNITED STATES
OCTOBER TERM, 1976
MEDLIN MARINE, INCORPORATED,
Petitioner,
VS.
MRS. ALANA G. HEIMAN, in Her Own Right; SANDRA JEAN HEIMAN, by
MRS. ALANA G. HEIMAN, Her Mother and Next Friend; and H. MAURICE
MITCHELL and JOSEPH W. GELZINE, Co-Administrators in Succession
With Will Annexed of the Estate of Max Heiman, Deceased, and
MARINE DEVELOPMENT CORPORATION,
Respondents.
PETITION FOR A WRIT OF CERTIORARI
To the United States Court of Appeals
for the Eighth Circuit
WILLIAM H. SUTTON
The First National Building, Twentieth Floor
Little Rock, Arkansas 72201
Counsel for Petitioner
St. Louis Law Printing Co., Inc., 812 Olive Street 63101 314-231-4477
INDEX
Page
4 sGe keh ood hehe wee oe eC eae ee l
ND ecnccuendenkeneu bases saneeensenes |
Jurisdiction ...... A Vdd ee bee wae Ae ee ee 2
re ee ee re 2
SL SP OE gc ced acadccesesessnceaseeouns 2
SUNS GP GD GD THE nnn ccc venesuesssvas 5
1. The decision below is in conflict with the decisions
of other courts of appeals as to the right of indemnity,
under federal maritime law, of a non-negligent party
required to respond in damages, from the negligent
party whose conduct caused the injury ........... 5
2. The circuit courts are not in agreement on the ques-
tion of whether federal admiralty courts may con-
sider future inflationary trends in awarding damages
er EDs Nw oe 5 ods sco ess Raab as 8
eS: 3 otk Sil «iret a mene atas waa bas Wa ie a aine ars 14
Es UGuC LG SERARECEE CRED ORAS Rae Cee A-1
A. Per Curiam Order of the Court of Appeals ....... A-1l
B. Opinion of the Court of Appeals ............... A-3
C. Memorandum Opinion of the District Court ...... A-23
D. Memorandum Opinion of the District Court ...... A-26
E. Findings of Fact of the District Court ........... A-49
CITATIONS
Brooks v. United States, 273 F. Supp. 619 (1967) ...... 12
Federal Marine Terminals Inc. v. Burnside Shipping Co.,
Ss ee EN ED ok 06 Goo hh 0 50046 Sb ae 8 40k 8
Frankel v. Heim, 466 F.2d 1226 (3rd Cir. 1972) ....... 1]
Frankel v. U.S., 321 F. Supp. 1331 (E.D. Penn. 1970)... 11
Gowdy v. United States, 412 F.2d 525 (6th Cir. 1969)... 11
Johnson v. Penrod Drilling, 510 F.2d 234 (Sth Cir. 1975) 10
Johnson v. Serra, 521 F.2d 1289 (8th Cir. 1975) ....... 12
Ryan Stevedoring Co. v. Pan-Atlantic Steamship Corp.,
Ce ED bas cua kag enaeaes 844 Keb baa 8
Simpson Timber Company v. Park, 390 F.2d 353 (9th
ee SED 66d bea ook beaus aed ew ueeeeres is wee
Sleeman v. Chesapeake & Ohio Railway Co., 414 F.2d 305
ES pe cis Chey hang eed en kan esha ial 10, 13
Southern Pacific Co. v. Zehnle, 163 F.2d 453 (9th Cir.
8 rr ee er ee re 12
Standard Oil Company v. Robins Dry Dock and Repair
me Peer eee 5
Tri-State Oil Tool Industries, Inc. v. Delta Marine Drilling
Company, 410 F.2d 178 (Sth Cir. 1969) ........... 6,7
Williams v. United States, 435 F.2d 804 (Ist Cir. 1970).. 12
IN THE
SUPREME COURT OF THE UNITED STATES
OCTOBER TERM, 1976
BN cere ee
MEDLIN MARINE, INCORPORATED,
Petitioner,
VS.
MRS. ALANA G. HEIMAN, in Her Own Right; SANDRA JEAN HEIMAN, by
MRS. ALANA G. HEIMAN, Her Mother and Next Friend; and H. MAURICE
MITCHELL and JOSEPH W. GELZINE, Co-Administrators in Succession
With Will Annexed of the Estate of Max Heiman, Deceased, and
MARINE DEVELOPMENT CORPORATION,
Respondents.
PETITION FOR A WRIT OF CERTIORARI
To the United States Court of Appeals
for the Eighth Circuit
The Petitioner Medlin Marine, Inc. respectfully prays that a
Writ of Certiorari issue to review the judgment and opinion of
the United States Court of Appeals for the Eighth Circuit entered
in this proceeding on May 14, 1976.
OPINIONS BELOW
The per curiam order of the Court of Appeals, not yet re-
ported, appears in the Appendix, pages A-1-A-2. The original
—— om
Opinion of the Court of Appeals, not reported, appears in the
Appendix, pages A-3-A-22. The Supplemental Memorandum
Opinion of the District Court appears in the Appendix, pages A-
23-A-25. The Memorandum Opinion of the District Court, not
reported, appears in the Appendix, pages A-26-A-48. The
District Court’s Findings of Fact appear in the Appendix, pages
A-49-A-60.
JURISDICTION
The Judgment of the Court of Appeals was entered on May
14, 1976. A timely Petition for Rehearing was denied on May
7, 1976 and this Petition for Certiorari was filed within ninety
(90) days of that date. This Court's jurisdiction is invoked under
28 U.S.C. Sec. 1254 (1).
QUESTIONS PRESENTED
1. Whether, under Federal Maritime Law, the Court of Ap-
peals for the Eighth Circuit erred in refusing to grant indemnity
to petitioner, Medlin Marine, Inc., an innocent retailer, from
Marine Development Corporation, a negligent manufacturer.
2. Whether the Trial Court erred in projecting a specific
rate of inflation over Max Heiman’s life expectancy in measuring
damages for loss of future earnings.
STATEMENT OF THE CASE
This is an admiralty case originally brought in Federal Dis-
trict Court for the Eastern District of Arkansas under the pro-
visions of Federal Rules of Civil Procedure 9 (h). Max Heiman
died aboard a pleasure yacht from carbon monoxide asphyxia-
—
tion on the night of September 1, 1973. His wife, Alana, and
daughter, Sandra, were injured. An action was commenced by
the estate of Max Heiman and by his wife and daughter against
Boatel, the manufacturer of the boat; Kohler, the manufacturer
of a gasoline powered generator on the boat; Marine Develop-
ment, Inc., the manufacturer of an air conditioning unit on the
boat; and the petitioner, Medlin Marine, Inc., the retailer of the
boat.
The case was tried to the Court and at the conclusion of the
evidence the Trial Judge, in open court, made specific findings
of fact. The Court found that Boatel was negligent and liable
in strict liability. (Appendix pg. A-49) (Boatel was a bankrupt
and did not appear or defend at trial). Marine Development was
found negligent and strictly liable for failure to warn. (Ap-
pendix pg. A-57) The Court found that Medlin Marine was not
negligent but that it was liable in strict liability as seller of the
boat. (Appendix pg. A-49) Kohler was found not liable. (Ap-
pendix pg. A-29)
As between Boatel and Marine Development the Court ap-
portioned the fault as 80% on Boatel and 20% on Marine De-
velopment. (Appendix pg. A-47) Medlin was given judgment
for indemnity against Boatel. In a Supplemental Opinion, the
Court denied Medlin’s claim for indemnity against Marine De-
velopment holding instead that Marine Development and Medlin
Marine should share the loss equally. (Appendix pg. A-25)
In assessing damages for loss of future earnings, the Trial
Court allowed the testimony of an economist as to an inflationary
factor to be used in computing damages for future wage loss and
used the economist’s testimony in arriving at the damages to
award for future wage loss. (Appendix pg. A-46)
Petitioner appealed the lower court’s decision to the Eighth
Circuit Court of Appeals on the question of its right to in-
demnity from Marine Development and on the issue of damages.
— von
The Eighth Circuit originally found that Medlin was entitled
to indemnity from Marine Development. In addition, the Cir-
cuit Court found that the Lower Court erred in allowing the
economist to testify concerning future inflationary trends. The
Court of Appeals affirmed the Lower Court verdict however,
finding that the introduction of the economist’s testimony did not
constitute reversible error.
After rehearing en banc an equally divided Eighth Circuit
withdrew its earlier Opinion and reinstated the Lower Court
Judgment.
REASONS FOR GRANTING THE WRIT
1. The Decision Below Is in Conflict With the Decisions of
Other Courts of Appeals as to the Right of Indemnity, Under
Federal Maritime Law, of a Non-Negligent Party Required to
Iespond in Damages, From the Negligent Party Whose Conduct
Caused the Injury.
The Federal Courts sitting in admiralty have long recognized
the right of an innocent or only passively negligent party to re-
cover from the person whose wrong actually caused the injury.
In the case of Standard Oil Company v. Robins Dry Dock and
Repair Co., 32 F.2d 182 (2nd Cir. 1929), the Second Circuit
affirmed a ship owner's right to recover over for damages paid
to a seaman in its employ against a dry dock company whose
negligence caused the employee’s injury. In so holding, Circuit
Judge Augustus N. Hand stated:
“The matter which remained open to litigation in the case
at bar was the question whether the defective gangway in-
stalled by the drydock company was the primary cause of
the injuries to Anstee. The installation of a defective gang-
plank for the use of employees involved active negligence
on the part of drydock company, whereas the neglect of
the Standard Oil Company [ship owner] to inspect the
gangway and warn its employees against danger was a
secondary fault of omission. In such circumstances the
plaintiff was entitled to indemnity.”
In Simpson Timber Company v. Park, 390 F.2d 353 (9th Cir.
1968) the Ninth Circuit allowed indemnity to a ship owner
against the manufacturer of doors which were packed in such a
way that a seaman fell through the doors. In allowing indemnity
the Ninth Circuit stated:
“The ship owner's liability rested solely upon the ship
owner's breach, without fault, of its non-delegable duty to
—
provide the longshoreman a safe place to work, and the
unseaworthy condition was created solely by the manu-
facturer’s wrongdoing. When the ship owner pays the judg-
ment and thus discharges the manufacturer's obligation, the
manufacturer cannot equitably be permitted to retain the
benefit thus conferred. In these circumstances, settled prin-
ciples of quasi-contract require the manufacturer to hold
the ship owner harmless.”
The Ninth Circuit continued by saying:
“Moreover, by imposing ultimate liability upon the negli-
gent manufacturer, the loss is placed upon the actor whose
default caused the injury. The one best able to eliminate
the risk is given the greatest incentive to do so.”
In Tri-State Oil Tool Industries, Inc. v. Delta Marine Drilling
Company, 410 F.2d 178 (Sth Cir. 1969), the Fifth Circuit
recognized the general rule as stated in the Simpson Timber
Case:
“We are in agreement with the principles contained in the
Simpson Timber Case. It would be wrong to assess dam-
ages against a non-negligent or passively negligent ship
owner for loss or injuries suffered solely as a result of active
negligence of another party, regardless of the absence of a
contractual relationship between the parties.
“This accident occurred in navigable waters; therefore, the
Federal Maritime Law is the applicable law. (Citations
omitted). As we have already indicated, Maritime Law
provides for tort indemnity where there is no negligence or
only passive negligence attributed to the indemnitee.” 410
F.2d at 186.
In the present case, the Trial Court found that the death of
Max Heiman and the injuries to his wife and daughter were
caused by the negligence of Boatel, the manufacturer of the
=
boat, and the negligence of Marine Development Company, the
manufacturer of the air conditioner. The Judge apportioned
the negligence between these actively negligent parties as 80%
on Boatel and 20% on Marine Development. The Trial Judge
found as fact that Medlin Marine was not negligent and that its
liability was based solely on its position in the chain of distribu-
tion of the boat. After making those findings, the Trial Court
ruled that Medlin Marine, Inc. was entitled to indemnity from
Boatel (a bankrupt who did not participate in the trial) but that
Medlin was not entitled to indemnity from Marine Development
Corporation. The Trial Court treated Medlin and Marine De-
velopment as joint tort feasors and divided their liability equally.
Based on the principles set forth in the Simpson Timber Case
and the Delta Marine Case this holding was clearly erroneous.
On appeal to the Eighth Circuit that Court in its original Opinion
had no difficulty in deciding that Medlin Marine was entitled
to indemnity from Marine Development finding. “no authority
which would alter the traditional tests of indemnity under the
circumstances.” However, after rehearing the case en banc, an
equally divided Court ignored the precedents of the other cir-
cuits and its own research and withdrew its earlier opinion by
per curiam order without opinion.
The effect of the action of the Eighth Circuit was to reinstate
the decision of the District Court and hold that under Federal
Maritime Law, a non-negligent party is not entitled to in-
demnity from a party whose negligence actually caused the
wrongs complained of. As pointed out above, that is not the law
and has never been the law in the United States. Although the
present case does not involve liability imposed on a non-negligent
ship owner based on its non-delegable duty to provide a safe
place to work, the principles involved are exactly the same.
Medlin Marine’s liability was based entirely on its position in
the chain of distribution, without fault on its part. In both the
above instances, the non-negligent parties are held strictly liable
—
for damages merely because of their positions. The questions
presented in both instances is the same. Under Federal Mari-
time Law, is a non-negligent party entitled to indemnity from
a party whose negligent conduct caused the injury complained
of? The answer to that question is, of course, yes.
The principles involved in this case have been before this
Court before, however, the issue has never been presented so
clearly. In the two principal cases touching the issues involved
here, Ryan Stevedoring Co. v. Pan Atlantic Steamship Corp..,
350 US 124 (1956) and Federal Marine Terminals, Inc. v.
Burnside Shipping Co., Ltd., 394 US 404 (1969), the Court
found it unnecessary to decide the question. In addition in those
cases the issue was complicated by contracts and statutes. In
the instant case, the Trial Court made specific findings of fact,
finding Marine Development Corporation negligent and finding
Medlin Marine, Inc. not negligent. Those findings give the Court
the opportunity to face the issue squarely and hold that in-
demnity is the proper remedy in admiralty for a party required
to respond in dainages for the negligence of another, in the
absence of an express or implied contract.
This Court has not decided the issue of whether under Fed-
eral Maritime Law a non-negligent or only passively negligent
tort feasor is entitled to indemnity from a negligent tort feasor
whose wrongs caused the injuries. Federal Marine Terminals v.
Burnside Shipping Co., supra, see also, Ryan’s Stevedoring Com-
pany v. Pan Atlantic S. S. Corp., supra. The question specifically
left open in the above-cited cases is an issue of extreme im-
portance to litigants in the Admiralty Courts.
2. The Circuit Courts Are Not in Agreement on the Question
of Whether Federal Admiralty Courts May Consider Future In-
flationary Trends in Awarding Damages for Future Earnings.
When one considers classical categories of speculation and un-
certainty, it is not unusual for economic forecast to head the list.
a
Our courts have traditionally required more than speculation in
the adjudication of rights of parties. The specific question pre-
sented in this Petition is whether a federal judge may project in-
flationary trends to enhance a verdict for future wage loss
awarced. For the most part the circuits are in agreement that
expert testimony on inflationary trends and projected income in-
creases is not admissible and may not be considered in assessing
damages for future wage loss. There are several reasons for
their holdings, however, the primary reason, and the one that is
based on empirical evidence is that no one really knows what
the future will bring, especially over the short term. The nation’s
economists have not been successful in predicting what will hap-
pen next quarter, however, some federal courts are allowing
their testimony to show what will happen twenty or thirty years
in the future. Those economists may be able to predict what
the long term trend is, however, as Lord Maynor Keynes, the
father of modern economic theory so aptly put it, “In the long
term we are all dead.”
In the present case, the Trial Court allowed the testimony of
an economist who, based on a historical economic trend line,
projected an inflationary rate of 5¥2% per year over the dece-
dent’s working life of 21.6 years. Although the Trial Judge did
not accept the economist’s exact figures, he stated in his Memo-
randum Opinion:
“While not agreeing with certain of his findings and con-
clusions concerning future trends, the Court was impressed
with his overall analysis thereof and has used that analysis,
along with other evidence in the case, in reaching its own
conclusion as to the appropriate adjustment in this case
for inflationary trends.”
The Judge's own conclusion was that the inflation rate for the
next 21.6 years would be 4% per year. What other evidence in
the case was used in making that determination was not specified;
nor can it be discerned from a reading of the record.
—
Other circuits faced with the type testimony presented in this
case have, for the most part, refused to allow that testimony.
In Johnson v. Penrod Drilling, 510 F.2d 234 (Sth Cir. 1975),
the Trial Judge, sitting as a fact finder, after allowing the testi-
mony of an economist concerning future inflationary trends,
found that the plaintiff's future income would increase at a rate
of 4.8% per year and awarded damages based on that finding.
In reversing the lower court the Fifth Circuit stated at page 241:
“Although we today reverse the judgments entered below
on the jury trial question discussed supra, we expressly
disapprove the District Court's attempt to take into account,
in computing the plaintiff's future lost earnings, inflationary
trends in this nation’s economy for the next several decades.
As the Sixth Circuit concluded in its Sleeman Decision, we
hold that the influence on future damages of possible in-
flation or deflation is too speculative a matter for judicial
determination. Should either or both of these cases be
retried before a jury, the triers of fact should not be in-
structed to take into account future inflationary or defla-
tionary trends in computing future lost earnings, nor should
the jury be advised to consider such alternative descriptions
of inflationary and deflationary trends as the purchasing
power of the dollar or the consumer price index.”
In Sleeman v. Chesapeake & Ohio Railway Co., 414 F.2d
305 (6th Cir. 1969), a case relied on by the Fifth Circuit in
the Penrod Drilling Company Case above the Sixth Circuit re-
versed a damage award in a FELA case because the Trial Court
had not reduced the damages awarded for future earnings to
the present value because “inflationary trends would offset any
present worth reduction.” In reversing the case the Sixth Circuit
stated at page 307:
“As to the inflationary trend offset, this record provides no
evidentiary basis for the decision of the District Judge.
— eo
Gowdy v. United States, supra, in which the District Judge
arrived at the same conclusion after hearing some economic
testimony is not authority for the offset in this case, since
it has been reversed on other grounds. Gowdy v. United
States, 412 F.2d 525 (6th Cir. 1969). Nor do we encour-
age the trial courts of our circuit to explore such speculative
influences on future damages as inflation and deflation.
“Of course, the nation’s economic history since the 1930s
would appear to make the use of present wages as the
standard for loss of future earnings somewhat unfair to
plaintiffs. But as to the future, the inflation v. deflation
debate rages inconclusively at the highest policy levels of
our government, in national electoral campaigns, in learned
economic journals and is exemplified in the daily gyrations
of the stock markets. The debate seems unlikely to be re-
solved satisfactorily in one personal injury trial. And if
testimonal resolution of this factor bearing on the future is
attempted, the door is open to similarly speculative and
debatable offsets tending in other directions.” (emphasis
ours )
In Frankel v. Heim, 466 F.2d 1226 (3rd Cir. 1972) the
Third Circuit agreed with the District Court’s analysis and con-
clusion below regarding the consideration of inflation in award-
ing damages for future medical expenses. On the trial below the
District Court in Frankel v. U.S., 321 F. Supp 1331 (E.D. Penn.
1970) stated at 1346:
“The projected inflationary trend is speculation. Plaintiff
has used the decade of 1960, one of the more inflationary
times in the history of our country, as the basis for projec-
tion of over 50 years. It is common knowledge that our
government is and has been attempting to control infla-
tion, even to the point of considering wage and price con-
trols. Economist differ on their predictions. Moreover plain-
tiff will have money that can be invested and if inflation
— pe
continues, the returned money will be greater, and this
would have an offsetting effect. The increase in cost for
institutional care will not be considered.”
In Williams v. United States, 435 F.2d 804 (lst Circuit
1970), the Ist Circuit in an action pursued under the Federal
Tort Claims Act stated at pg. 807:
“Nor, finally, can we accept plaintiffs argument that the
anticipated future earnings are to be increased by some
multiple taken out of the air in the name of future inflation.
While plaintiff submitted a number of cases making refer-
ence to inflation most of them are simply rejections of com-
parisons with past verdicts, on the ground that subsequent,
already demonstrated, inflation has made the comparison
inapposite. None clearly accept the use of predictions as
to future inflation. While we have found a case which
may be read as speaking in terms of future inflation, South-
ern Pacific Co. v. Zehnle (9th Cir. 1947), 163 F.2d 453,
and one which must be so regarded, Brooks v. United
States, 273 F. Supp. 619 (1967) both rely exclusively on
cases involving inflation already established. Particularly
in considering predictions of an accumulated estate, which,
if there is inflation, must be adjusted for possibly inflated
expenses as well as earnings, we consider such speculation
inadmissible.”
The Eighth Circuit in one of its most recent cases on the
subject of inflation, Johnson v. Serra, 521 F.2d 1289 (8th Cir.
1975) made the following observation:
“The Federal Circuits that have faced the issue in cases
involving federally created claims, governed -by federal
rather than state law, have for the most part rejected testi-
mony, jury instructions or trial court consideration of future
inflationary trends in damage assessments.” (emphasis
ours )
=
And in its original Opinion the Eighth Circuit recognized that
expert testimony on future inflationary trends was speculative
and inadmissible. The Court, however, went on in their original
Opinion to answer the following question in the affirmative:
“The fundamental question is thus whether the trier of fact
may use his known understanding and experience in arriv-
ing at a damage figure where ‘expert evidence’ as to the
precise calculation, factors and result involved in the ques-
tion would be inadmissible.”
That finding was in the Court's original Opinion ard was with-
drawn by per curiam order of the Eighth Circuit en banc leaving
the Trial Court Opinion as the law in the case. Whether this
Court looks to the decision of the Eighth Circuit Court of Ap-
peals or that of the Trial Court, error is apparent. The Trial
Court allowed the testimony of projected future inflationary
trends and it used those projections in awarding damages for
future wage losses. The Eighth Circuit held it was error to allow
the introduction of the expert's testimony on future inflationary
trends but state that it was permissible for the Trial Court to
make its own projection based on no evidence whatsoever.
The cases from the other circuits cited above do not allow
expert testimony as to the impact of future inflationary trends
on future wage loss awards for the reason that those projections
ure too speculative. Neither do the above circuits allow the con-
sideration by the trier of fact of future inflationary trends on
damage awards for future wage loss. As pointed out so aptly
by Judge Ross in his dissent in the original Opinion of the Eighth
Circuit Court of Appeals in this case: “Economists have fared
only slightly better that fortune tellers and soothsayers.”
Whether the future will bring inflation or deflation is unknown.
As Circuit Judge Edwards stated in Sleeman v. Chesapeake &
Ohio Railway Co., supra, at pg. 308, “The inflation versus de-
flation debate rages inconclusively . . .~ The effect of allowing
—" on
the addition of inflation factors to damages awards can be seen
in the present case. The Court's addition of 4% per year to the
damage award for future wage loss increased the damages by
approximately $78,000.00. That staggering sum of money was
awarded based on a guess that the future would bring inflation
and a guess that the amount of inflation the future would bring
would be 4%.
The issue presented in this case is one of widespread im-
portance in the federal courts of this country. The question of
whether the impact of inflation or deflation may be considered
in damage awards for future wage loss is raised daily in the
federal courts in cases involving federally created claims. The
decisions reached by the District Courts and the Circuit Courts
are not in harmony. It is not right that parties litigating under
the federally created claim should be exposed to a major, sub-
stantive difference in the law based merely on geography. If in-
flation is too speculative to service justice in one circuit, it is
equally so in another. The decisions should be harmonized.
CONCLUSION
This Petition raises questions of far reaching impact in The
Federal Admiralty Courts. The issues raised have not been
decided by the Court and the decisions of the Courts of Appeal
are not in harmony on either issue. For this reason, a Writ of
Certiorari should issue to review the Judgment and Opinion of
the Eighth Circuit.
Respectfully submitted
WILLIAM H. SUTTON
Attorney for Petitioner Medlin
Marine, Inc.
APPENDIX
= eae
-
—_
APPENDIX A
United States Court of Appeals
For the Eighth Circuit
September Term, 1975
No. 75-1258
Mrs. Alana G. Heiman, etc., et al.,
vs.
Medlin Marine, Inc.
No. 75-1287
Appellees,
Appellant.
Mrs. Alana G. Heiman, etc., et al.,
VS.
Marine Development Corp.,
No. 75-1383
Appellees,
Appellant.
Mrs. Alana G. Heiman, etc., et al.,
VS.
Medlin Marine, Inc.,
No. 75-1384
Appellees,
Appellant.
Mrs. Alana G. Heiman, etc., et al.,
Vs.
Marine Development Corp.,
Per Curiam
Appellees,
Appellant.
\
Appeals from the
District Court for
the Eastern District
of Arkansas
Before Gibson, Chief Judge, Lay, Heaney, Bright, Ross,
Stephenson, Webster, and Henley, Circuit Judges
The prior panel opinion filed in these cases January 13, 1976
is ordered withdrawn.
a
The judgment of the United States District Court for the East-
ern District of Arkansas is hereby affirmed by an equally di-
vided Court.
April 14, 1976
— +
APPENDIX B
United States Court of Appeals
For the Eighth Circuit
Nos. 75-1258, 75-1287, 75-1383 and 75-1384
No. 75-1258
Appeal from the United States District Court for the
Eastern District of Arkansas
Mrs. Alana G. Heiman, in her own right; Sandra Jean Heiman,
by Mrs. Alana G. Heiman, her mother and next friend, and
H. Maurice Mitchell and Joseph W. Gelzine, Co-Adminis-
trators in Succession with Will Annexed of the Estate of Max
Heiman, Deceased,
Appellees,
Boatel Company, Inc., Marine Development Corporation,
and
Kohler Co.,
Appellee,
and
Medlin Marine, Inc.,
Appellant.
—_—~
No. 75-1287
Appeal from the United States District Court for the
Eastern District of Arkansas
Mrs. Alana G. Heiman, in her own right; Sandra Jean Heiman,
by Mrs. Alana G. Heiman, her mother and next friend; and
H. Maurice Mitchell and Joseph W. Gelzine, Co-Adminis-
trators in Succession with Will Annexed of the Estate of Max
Heiman, Deceased,
Appellees,
V.
Boatel Company, Inc., Marine Development Corporation,
Appellant,
and
Medlin Marine, Inc. and Kohler Co.
No. 75-1383
Appeal from the United States District Court for the
Eastern District of Arkansas
Mrs. Alana G. Heiman, in her own right; Sandra Jean Heiman,
by Mrs. Alana G. Heiman, her mother and next friend, and
H. Maurice Mitchell and Joseph W. Gelzine, Co-Adminis-
trators in Succession with Will Annexed of the Estate of Max
Heiman, Deceased,
Appellees,
v.
Boatel Company, Inc., Marine Development Corporation,
Kohler Co.,
and
Medlin Marine, Inc.,
Appellant.
—_*
No. 75-1384
Appeal from the United States District Court for the
Eastern District of Arkansas
Mrs. Alana G. Heiman, in her own right; Sandra Jean Heiman,
by Mrs. Alana G. Heiman, her mother and next friend; and
H. Maurice Mitchell and Joseph W. Gelzine, Co-Adminis-
trators in Succession with Will Annexed of the Estate of Max
Heiman, Deceased,
Appellees,
v.
Boatel Company, Inc.,
and
Marine Development Corporation,
Appellant,
Medlin Marine, Inc. and Kohler Co.
Submitted: October 17, 1975
Filed: January 13, 1976
Before Clark, Associate Justice,* Lay and Ross, Circuit Judges.
Lay. Circuit Judge.
This is an admiralty case brought by the Estate of Max Hei-
man, deceased, Mrs. Alana Heiman and Sandra Heiman against
Boatel Company, Inc. (Boatel), the manufacturer of a yacht
purchased in August, 1972 by Max Heiman. Boatel’s retail
franchise dealer, Medlin Marine, Inc. (Medlin), the air condi-
* Associate Justice Tom C. Clark, United States Supreme Court
Retired, sitting by designation.
—
tioning unit manufacturer, Marine Development Corp. (Marine),
and the generator manufacturer, Kohler Company, were also
sued.' The plaintiffs sought damages for the death of Max Hei-
man and for personal injuries to Mrs. Heiman and their daugh-
ter, Sandra, due to inhalation of carbon monoxide on September
1, 1973 while the Heimans slept on the yacht with the air condi-
tioner running.
The evidence disclosed that the gasoline-powered generator
created carbon monoxide and exhausted it at the stern below the
water line. Immediately over the boat's exhaust outlet were four
drainage holes which due to an overhang were not visible when
the boat was in the water. The generator’s need for air tended
to create a vacuum, causing the exhausted fumes to be sucked
through the four holes back into the engine compartment. The
boat's engine compartment was separated from the living quar-
ters by a non-airtight wall. Boatel installed the air conditioning
unit near a passage leading to the engine compartment. When
operating, the unit pulled air from that compartment, thereby
introducing dangerous amounts of carbon monoxide into the
living quarters.
Recovery was sought on the basis of negligence, breach of
implied warranty and strict liability. The case was tried to the
court, the Honorable Judge G. Thomas Eisele. The court’s
findings on liability were that:
1. Boatel, the yacht manufacturer, was negligent and was
also liable in strict liability;
2. Marine Development, the air conditioning unit manufac-
turer, was negligent for failure to warn;
3. Medlin Marine, the retailer, was liable in strict liability,
but was not negligent since there was no evidence that Medlin
knew or should have known of the holes over the exhaust; and
' The defendants cross-complained against each other. Plaintiff
dismissed its complaint against defendant Kohler, but the cross-com-
plaints against Kohler remained.
—<
4. Kohler, the generator manufacturer, had no duty to warn
and was not otherwise negligent.
The court apportioned the fault between Boatel and Marine,
finding that 80% was attributable to Boatel and 20% to Marine.
The court held that Medlin was entitled to indemnity against
Boatel for its entire liability. The court further found that the
fault of Medlin and Marine was equal and denied any indeniyty
between those parties. Medlin and Marine appeal. Boatel, a
bankrupt, did not defend below and takes no part in this
appeal.
The principal issues on appeal are 1) the sufficiency of evi-
dence to sustain Marine's liability for negligent failure to warn;
2) the question of indemnity between Medlin and Marine; and
3) whether the wrongful death damages awarded were based
on proper evidence and were not otherwise excessive.?
Marine’s Liability: Duty to Warn
At the conclusion of the trial, Judge Eisele filed detailed
findings of fact and conclusions. The court found that the air
conditioning unit was not mechanically or otherwise physically
defective; that Boatel installed the air conditioning unit in viola-
tion of the installation instructions furnished by Marine; that
there is nothing inherently dangerous in the use of properly in-
stalled air conditioning systems; and that had Boatel installed
the system in accord with the instructions, the Heimans would
not have been harmed.
Nonetheless, the trial court found Marine liable for its failure
to warn Boatel and the Heimans of the potential consequences
of improperly installing its air conditioning components. The
trial court found:
2 Medlin noticed an appeal of the trial court’s judgment that
Kohler was not liable, but neither argued nor briefed this issue on
appeal. Therefore we deem the appeal on this issue abandoned.
— v
. . . Marine Development Corporation knew or should
have known that there were significant openings from the
engine compartment into the living spaces .. . and that. . .
carbon monoxide might, during the life of the vessel, be
found in the engine compartment in dangerous concentra-
tions.
Marine Development also knew or should have known
that if the forward cooling unit were installed as it was in
the equipment room it could and would, under certain fore-
seeable circumstances, draw air from the engine compart-
ment and circulate it throughout the living areas of the
boat.
Of all the parties to this action, Marine is and should be
the most knowledgeable with respect to the effects of air-
conditioning system and their operations. It has more
than 50 percent of all the air-conditioning business in the
class of boats and yachts of the approximate size of the
Heiman vessel.
It has held itself out as a specialist in marine air-condi-
tioning...
The court further found:
Marine, being so intimately associated with boat manu-
facturers and boat designers, knew or should have known
that such manufacturers, for their own convenience and
for design purposes, might install the cooling unit so as to
have the effect of pumping air from the engine compart-
ment.
The potential seriousness of the injury which might re-
sult is obvious. In addition, there is no practical impediment
to its ability to give an adequate warning. Carbon monoxide
is odorless, colorless, and tasteless. It is insidious and
subtle in its operation and effect. If there is any risk of it
—
being introduced into a living space, a warning of that
risk should obviously be given.
»
The record reveals substantial evidence supporting these find-
ings. We cannot say under the circumstances that the findings
are clearly erroneous. It has long been held that a manufacturer
is liable for foreseeable misuses of its product and for failure to
warn of those misuses. See Griggs v. Firestone Tire & Rubber
Co., 513 F.2d 851 (8th Cir. 1975): Hoppe v. Midwest Con-
veyor Co., 485 F.2d 1196, 1201 (8th Cir. 1973); Larsen v.
General Motors Corp., 391 F.2d 495, 504-05 (8th Cir. 1968).
The trial court correctly pointed out the basic distinction be-
tween the duty to give adequate instructions for the installation
and use of a product and the duty to warn of hazards which
might result from failure to follow those instructions. See Buf-
fington v. Amchem Products, Inc., 489 F.2d 1053, 1054-55
(8th Cir. 1974); Ross v. Up-Right, Inc., 402 F.2d 943, 948
(Sth Cir. 1968); L. Frumer & M. Friedman, Products Liability
$ 8.05[1] (1975). Thus, there can be no argument that the
installation instructions were an adequate warning of the poten-
tial danger from improper installation of the unit.
Marine further urges that it had no duty to warn since Boatel
had similar knowledge, and that the dangers of improper instal-
lation was common knowledge. It is also urged that a warning
would have been futile since even after this accident, Boatel
failed to relocate air conditioning units on similar boats. We
think the evidence is sufficient to make these questions of fact,
rather than of law.
The trial court found that Marine had superior knowledge
of the operation of the air conditioning unit, that it held itself
out to the public as a specialist in marine air conditioning and
that it was totally familiar with boat construction. From this,
the court reasonably inferred that Marine should have known
of the danger that an improperly installed unit would act as a
— A-10 —
pump, drawing the gases from the engine compartment, whereas
Boatel did not possess such expertise and knowledge. The
question of whether a warning to the boat manufacturer would
have been futile is also a question to be resolved by the fact
finder. A similar question arose in Post v. American Cleaning
Equipment Corp., 437 S.W.2d 516 (Ky. 1969), which involved
an injury from an industrial vacuum cleaner bearing the instruc-
tions “only use on 115 volts AC or DC”. The plaintiff plugged
the unit into a 220 DC outlet and the issue was the adequacy
of the instructions. In reversing a directed verdict for the de-
fendant, the Kentucky Supreme Court stated:
It is no answer to say that appellant would have attached
the machine to a 220 DC outlet anyway, since he did so
in face of the directions which were furnished. Maybe he
would have, but the facts at hand make that a question of
conjecture. One thing seems certain—IF the dire conse-
quences of using 220 DC had been plainly and adequately
posted—the appellee would prevail as a matter of law.
The fact that reasonable differences of view may be reached
as to the adequacy of the warning here makes this a jury
C08. ...
437 S.W.2d at 521.
We conclude that there was sufficient evidence to support the
trial court's finding that Marine Development Corporation was
liable in both strict liability and negligence.
Indemnification
The court denied indemnification to Medlin, the retailer, as
against Marine Development, the air conditioner manufacturer.*
* The court also denied Marine’s claim for indemnification against
Medlin. Although Marine appealed from this judgment, it was
neither argued nor briefed on appeal and therefore is waived and
abandoned.
— A-11 —
It did so even though Medlin was liable only under strict lia-
bility, while Marine’s liability was based on negligence. The
court reasoned that strict liability implied fault and thus con-
sidered the question as one of contribution rather than indemni-
fication, concluding that the fault of Marine and Medlin was
equal.
The Restatement of Restitution provides:
A person who, without personal fault, has become sub-
ject to tort liability for the unauthorized and wrongful con-
duct of another, is entitled to indemnity from the other for
expenditures properly made in the discharge of such lia-
bility.
Restatement. Restitution § 96 (1937).
The difference between primary and secondary liability is not
based on a difference in degrees of fault. It rests rather on the
nature of the legal obligation owed by the wrongdoer to the
injured party. See Tromza v. Tecumseh Products Co., 378 F.2d
601, 605-06 (3rd Cir. 1967).
We find no authority which would alter the traditional tests
of indemnity under the circumstances. Medlin’s responsibility
is secondary when compared to Marine's. This is obvious from
the finding that Medlin’s fault is based only on strict liability and
that none of Medlin’s personnel knew or should have known the
danger involved. Medlin’s liability is vicarious and Marine must
make Medlin whole.
We therefore find that the court erred in denying Medlin in-
demnity against Marine.
Damages
The trial court awarded the administrators of the decedent's
estate the following amounts:
— A-12 —
Alana G. Heiman, wife, $443,762.07,
Sanda Jean Heiman, daughter, $41,536.33,
Judith Heiman Samuel, daughter, $21,000.00,
Estate of Max A. Heiman, $5,906.85.
Marine and Medlin attack this verdict on the grounds that the
trial court erred 1) in its method of determining contribution as
an element of damage; 2) in admitting Mrs. Heiman’s testi-
mony concerning her living expenses subsequent to Mr. Heiman's
death on the issue of contribution; 3) in considering a 5% to 6%
managerial fee for the operation of apartments owned by Mr.
Heiman; 4) in considering the decedent's tax records while he
was employed by the Gus Blass Company; 5) in allowing an
inflationary factor; and 6) in awarding excessive damages.
In awarding damages the trial court relied on the elements of
damage in admiralty wrongful death cases set forth in Sea-Land
Services, Inc. v. Gaudet, 414 U.S. 573 (1974).
4 There the Court observed:
Recovery for loss of support has been universally recognized,
and includes all the financial contributions that the decedent
would have made to his dependents had he lived. Similarly, the
overwhelming majority of state wrongful-death acts and courts
interpreting the Death on the High Seas Act have permitted re-
covery for the monetary value of services the decedent provided
and would have continued to provide but for his wrongful
death. Such services include, for example, the nurture, train-
ing, education, and guidance that a child would have received
had not the parent been wrongfully killed. Services the dece-
dent performed at home or for his spouse are also compensable.
Compensation for loss of society, however, presents a closer
question. The term “society” embraces a broad range of mu-
tual benefits each family member receives from the others’ con-
tinued existence, including love, affection, care, attention, com-
panionship, comfort, and protection. Unquestionably, the
deprivation of these benefits by wrongful death is a grave loss
to the decedent’s dependents.
- * x * * * *
Finally, in addition to recovery for loss of support, services,
and society, damages for funeral expenses may be awarded un-
der the maritime wrongful death remedy in circumstances where
the decedent’s dependents have either paid for the funeral or are
liable for its payment.
414 U.S. at 584-86, 591.
— A-13 —
The basic attack relates to the damages awarded by reason of
the alleged money contributions. Defendants contend that the
award was excessive due to Mr. Heiman’s deteriorating financial
position. To aid our discussion we set forth in the margin the
relevant part of Judge Eisele’s detailed findings and conclusions.”
In assessing damages for wrongful death a trier of fact must
make a reasonable extrapolation from the evidence of the amount
necessary as compensation for the loss. At best this can only be
an estimate of actual damage projected over a person’s life ex-
pectancy. The trier of fact has a duty to consider the totality of
the decedent's personality, work habits and character, his past
and present earnings as well as his proven capacity to earn. All
relevant evidence, past and present, which provides insight to
the fact finder may be considered in arriving at a just verdict.
To urge that one should not consider past income and past em-
ployment as reflected by tax returns, or that it is improper to
consider uncompensated endeavors which might have contributed
* Judge Eisele found:
Although the status of Mr. Heiman’s economic condition at
the time of his death, based as it was upon income from a motel
and from apartment complex ~s located in Arkansas and Florida,
was precarious and deteriorating, it is likely that, had he lived,
he would have salvaged at least some small part of his hold-
ar
... [A] fair interpretation of the evidence forces the Court to
find that, had Mr. Heiman lived, he would have needed a com-
bination of great effort and extremely good fortune to salvage
even as much as a fourth of his overall holdings and that, re-
alistically, it is more probable that, had he lived, Mr. Heiman
would only have been able to extricate himself from his finan-
cial difficulties without any net personal obligation, salvaging
only a small, perhaps even nominal, amount of his business
holdings. The Court must analyze the probable “contributions”
element of damages with this finding in mind.
The evidence clearly establishes that Mr. Heiman was a
man of business and executive ability. Before 1965 he had
held positions of responsibility with one of the largest depart-
ment stores in the State of Arkansas, the Gus Blass Company.
The evidence from his W-2 forms indicates that his average an-
= Spb a
to growth in future net worth is to suggest verdicts based on in-
complete evidence. To urge in a wrongful death case that the
deecased’s future earning capacity must be measured only in
terms of his actual income at the time of his death ignores reality
and benefits only the wrongdoer. The law of compensation does
not function within such narrow constraints. We similarly dis-
regard the attack on admission of the evidence of Mrs. Hei-
man’s expenses after the accident. These were all relevant
factors to be considered. The trial court, as any trier of fact,
was entitled to make reasonable inferences from all of the evi-
dence.
We have more difficulty with the admitted testimony of the
economist. In Riha v. Jasper Blackburn Corp., 516 F.2d 840
(8th Cir. 1975), this court reversed a jury verdict where an
economist had projected a specific annual inflation rate over a
person’s work expectancy. We held this to be unduly specula-
tive when the exact income was projected to the year 2005. Riha
was followed by Johnson v. Serra, 521 F.2d 1289 (8th Cir.
nual income for the last three years he was with the Gus Blass
Company (1963, 1964 and 1965) was in excess of $20,000.00.
The compensation for performing similar services in 1975 would
obviously be considerably in excess of that figure. . . . This,
then, is another of the bases upon which the Court’s decision
concerning the amount and the probability of future contribu-
tions must be predicated.
When Mr. Heiman got seriously involved in the real estate,
motel and apartment building ventures, he devoted most of his
time to personally overseeing such operations. He maintained
an office with a secretary at the Holcomb Heights Apartments.
It is true that he had on-the-site employees who looked after
the routine operations, the collection of rents and maintenance.
But, with the exception of the Fair Park Gardens, which were
under a management arrangement with Block Realty Company,
he contributed a considerable amount of his time to the overall
management of the properties. The evidence indicates that,
had Mr. Heiman not been performing these services, he would
have had the alternative of contracting for such services with
some real estate management company. The usual fee for
such services would run in the neighborhood of five to six
percent of the gross receipts. Of course, such a firm would
— A-15 —
1975), where in a wrongful death action we excluded testimony
of an economist's projection of an eight per cent inflation rate
over the decedent's work expectancy to the year 2002. In both
cases, we followed the Sixth Circuit's decision in Bach v. Penn-
sylvania Central Transportation Co., 502 F.2d 1117 (6th Cir.
1974). We approved language from Bach which indicated that
“{slome consideration of probabilities is inevitable in any fair
award of damages.” 516 F.2d at 845, quoting 502 F.2d at 1122.
Our opinions in Riha and Johnson were not intended to pre-
clude use of economists as experts to testify on probable wage
increases over reasonable periods of time or on inflationary or
deflationary factors of the past and their general relevance to
the future. In Riha we held, consistent with Nebraska law and
prior federal cases, that the precise mathematical projection by
the economist using an inflation factor of seven per cent to the
year 2005 was too conjectural. We held that the expert witness
was not competent to testify, within any acceptabie range of
probability, that a precise inflationary rate would continue for
have had to pay the management expenses and wages of the
on-the-site employees out of its fees. Looking at Mr. Heiman’s
tax records covering his various operations over a period of
years, the Court finds that he was performing services which,
had they been contracted, would have required the payment of
at least $20,000 per year over and above the management and
employee expense actually experienced.
. . . Looking at both Mrs. He. .an’s testimony as to her
actual expenses since Mr. Heiman’s death and the tax records
and other records kept by Mr. Heiman reflecting contributions
prior to his death, the Court finds that on an average Mr. Hei-
man was contributing just under $30,000 to the living expense
requirements of the entire family. In making this determina-
tion, the Court has disregarded certain items, such as jewelry
expenditures, from the figures testified to by Mrs. Heiman on
the one hand, and, on the other hand. has reduced the figures
revealed by Mr. Heiman’s records by the amounts of the insur-
ance premiums, the boat expense, and certain other expenses.
Had he lived, Mr. Heiman’s own living expenses would have
had to be defrayed out of the total living expense contributions.
Furthermore, if, as the Court suspects, financial circumstances
— A-16 —
so long. The rate of inflation depen: on many collateral con-
siderations such as war and peace, tax rates, the state of the
general economy, interest rates and myriad other extrapolations.
The science of economics is too imprecise at present for its ex-
perts to offer more than speculative guesses as to the state of the
economy for the future. As we stated in Johnson:
Inflationary forecasts of economists are, of course, only
personal opinions, even when based on past trends. It must
be recognized that trends may often be faulty indicators of
the future as well as the present and that economists have
fared only slightly better than fortune tellers and soothsayers
in foretelling the future. Economic factors operate at vary-
ing degrees of intensity in our economy, and it seems there
are as many explanations of past trends and predictions
of future trends as there are economists. We could be enter-
ing into an inflationary cycle with its attendant depreciation
of the dollar or into a deflationary era, as in the 1930's.
Both possibilities are to a considerable extent speculative
and conjectural.
521 F.2d at 1294.
would have required Mr. Heiman to accept employment from
a third-party employer, he would, of course, have had to pay
state and federal income taxes on his compensation, a situation
which would be entirely different from the tax situation which
had existed in the years immediately prior to his death where,
because of the nature of his investments and the tax laws in-
volved, he was not required to pay such taxes.
The court is convinced that, had Mr. Heiman lived, he and
his family would have had to cut down somewhat on their over-
all style of living but would still have been able to live most
comfortably.
From all the evidence, the Court finds that through one method
or another Mr. Heiman, had he lived, would have been able
to provide and would in fact have provided contributions and
support to the other members of his family (i.e., excluding him-
self) in the sum of $22,500.00 per year, measured in 1975
dollars, over the remaining working years of his life.
—_—s
The dangers of allowing the expert to make such “guesses”,
even though subjected to cross-examination, is that it leads to
protracted litigation of collateral issues without reasonable
boundaries and allows unreliable conjecture to be conveyed in
terms of mathematical certainty.
Consistent with our rulings in Riha and Johnson, we think
that in the instant case it was error for the trial court to receive
into evidence the economist’s projection of Mr. Heiman’s con-
tributions over his work life expectancy using a 542% inflation
rate. Whether this error requires a reversal and remand to the
district court, however. necessitates further analysis.
In the present case the trial judge, rather than a jury, served
as the trier of fact. The essential difference between a bench trial
and a jury trial is that the trial judge’s verdict is supported by
specific findings of fact which must withstand analysis under
the clearly erroneous test. As such, a trial judge’s conclusion is
more vulnerable on review than the jury verdict which will be
sustained upon demonstration of substantial evidence to support
the verdict. See Oil Screw Noah's Ark. v. Bentley & Felton
Corp., 322 F.2d 3, 5-6 (Sth Cir. 1963); cf. Jackson v. Hartford
Accident & Indemnity Co., 422 F.2d 1272, 1278 (8th Cir.
1970) (concurring opinion, Lay, J.). The jury’s methodology in
reaching its verdict is, of course, inherent in the verdict and is
not subject to collateral attack. Chicago, R. 1. & Pac. R. R. v.
Speth, 404 F.2d 291 (8th Cir. 1968).
Nonetheless, in the instant case, the trial judge has set forth
his factual findings, which clearly show that the court rejected
the economist’s analysis and applied his own understanding and
experience of inflationary impact on future contributions. Judge
Eisele in rejecting the economist’s testimony used a 5/2 % pres-
ent value discount rate and then applied an inflationary factor
of 4%, resulting in a discount of the projected earnings by
142%. The economist estimated loss of future contributions to
Mrs. Heiman as $760,276; Judge Eisele’s figure was $350,910.
— A-18 —
The fundamental question is thus whether the trier of fact
may use his own understanding and experience in arriving at
a damage figure where “expert” evidence as to the precise cal-
culation, factors and result involved in the equation would be
inadmissible.
In our prior opinions we have approved the following lan-
guage from Bach:
Even though no expert testimony on inflation and future
increases was admitted, it was still error for the district
court to charge the jury that it should not consider “future
increases or decreases in the purchasing power of money.”
Cf. Willmore v. Hertz Corporation, 437 F.2d 357 (6th
Cir. 1971). Inflation is a fact of life within the common
experience of all jurors. Admittedly, if the jury considers
this issue without expert testimony, their calculations will
be even more imprecise. There is always a chance that the
verdict may be too generous. But if jurors should be pro-
hibited from applying their common knowledge of infla-
tion in reaching a verdict, the party entitled to recovery
could be grievously under-compensated. The court can al-
ways rectify an exorbitant verdict through its power of
remittitur. See 6A Moore’s Federal Practice € 59.05{3].
502 F.2d at 1122, quoted in 516 F.2d 845.
Thus we are committed to the rule that although an expert
witness may not project an inflationary rate over a person's
life expectancy, the trier of fact may consider future increases
or decreases in the purchasing power of money. As indicated
in Bach, even though a jury's opinion, like the economist’s, may
be imprecise, the ultimate check on their extrapolation is whether
the verdict is exorbitant. Thus, we hold in the present case it was
not error for the trial court, sitting as a trier of fact, to consider
an inflationary impact on the damage award based on his own
understanding and experience. The remaining question we must
face then is whether the damage award is excessive.
— A-19 —
The fundamental tests of whether a verdict is excessive are
whether it falls within the reasonable range of the evidence and
whether it is shocking to the conscience. Krall v. Crouch Bros.,
Inc., 473 F.2d 717, 719 (8th )Cir. 1973); O’Brien v. Stover,
443 F.2d 1013, 1018-19 (8th/Cir. 1971); Solomon Dehydrat-
ing Co. v. Guyton, 294 F.2d(439, 447-48 (8th Cir.), cert. de-
nied, 368 U.S. 929 (1961). ‘The first is an objective test, the
latter a subjective evaluation by the judges of this court. As
we have discussed the verdict falls within a reasonable range of
the evidence. The projected earnings of the deceased were es-
tablisher :t $22,500 whereas there was evidence that in the past
Heiman earned more than this. Further, in evaluating the totality
of this proof and the circumstances surrounding Mr. Heiman’s
contributions to his wife and family, we do not find the verdict
shocking.
The judgments for the plaintiffs are affirmed as against Marine
and Medlin; the judgment denying the cross-complaint of Medlin
against Marine is reversed and the district court is directed to
enter judgment in favor of Medlin on its claim for indemnity
against Marine; the judgment in favor of Kohler on the cross-
complaint is affirmed. Costs of plaintiffs and Medlin shall be
assessed to Marine; Kohler shall pay its own costs.
Ross, Circuit Judge, Dissenting.
I respectfully dissent. The result reached by the majority
gives proof to the old saw that hard cases make bad law. The
death and injuries in this case were the result of negligence
and defective design of the Heiman yacht by Boatel; however,
Boatel is bankrupt and unable to respond in damages. Under
the law of strict liability and implied warranty the dealer who
acted as an intermediary between Boatel and the decedent Med-
lin is liable, even though it cannot be said that Medlin was at
fault in any traditional sense of the word. In this case it is
harsh that Medlin cannot be indemnified by Boatel, but that
— A-20 —
should not be justification to stretch the law of torts in order
to impose liability on a party who is just as innocent of fault:
Marine Development, the manufacturer of the air conditioning
components.
The components supplied by Marine Development were not
defective, and had they been installed as the manufacturer in-
structed, they would not have been dangerous. However, Boatel
installed the air conditioning system on the Heiman yacht in
such a way that one cooling unit’s air intake was from the
engineroom, and not surprisingly, the engineroom air contained,
at the time of the accident, carbon monoxide.
There is no duty to warn of obvious dangers under either
negligence or strict liability theory. Ward v. Hobart Manufactur-
ing Co., 450 F.2d 1176, 1188 (Sth Cir. 1971); Posey v. Clark
Equipment Co., 409 F.2d 560, 563 (7th Cir.), cert. denied, 396
U.S. 940 (1969); W. Prosser, The Law of Torts 649 (4th ed.
1971); Restatement (Second) of Torts § 388, comment k; see
Kerber v. American Machine & Foundry Co., 411 F.2d 419,
421-422 (8th Cir. 1969); Restatement (Second) of Torts, §
402A, comments i, j/. As Chief Judge Gibson stated in Larsen
v. General Motors Corp., 391 F.2d 495, 505 (8th Cir. 1968),
cited by the majority:
Almost any chattel or commodity is capable of inflicting
injury; knives cut, axes split, dynamite explodes, food
spoils, poison kills. Where the danger is obvious and known
to the user, no warning is necessary and no liability at-
taches for an injury occurring from the reasonable hazards
attached to the use of chattels or commodities; but where
the dangerous condition is latent it should be disclosed to
the user, and non-disclosure should subject the maker or
supplier to liability for creating an unreasonable risk.
I believe that as a matter of law Marine Development was not
liable here, because the installation of the airconditioner in a
— A-21 —
manner which permitted the introduction of carbon monoxide
into the unit's air intake was an obvious danger and a manu-
facturer is entitled to assume that his product will not be used
in an obviously dangerous manner. Marker v. Universal Oil
Products Co., 250 F.2d 603, 606-607 (10th Cir. 1957); see
Brown v. General Motors Corp., 355 F.2d 814, 819-821 (4th
Cir. 1966), cert. denied, 386 U.S. 1036 (1967). This is so a
fortiori where the product is merely a component which is to
be incorporated into a system by technicians and engineers, as
Boatel’s personnel were here. Jacobson v. Colorado Fuel &
Iron Corp., 409 F.2d 1263, 1273 (9th Cir. 1969). The ma-
jority has come dangerously close to making the manufacturer
an insurer in this case. I would reverse on the issue of Marine
Development's liability.
I also dissent from the affirmance of the award of over half
a million dollars in damages. It is inconceivable to me how—
when “economists have fared only slightly better than fortune
tellers and soothsayers” and the prediction of inflationary or
deflationary trends by an expert is “to a considerable extent
speculative and conjectural”’—we can allow a federal judge to
do what the acknowledged experts in the field cannot; that is to
project a specific annual inflation rate over a person’s life ex-
pectancy. As we recognized most recently in Johnson v. Serra,
521 F.2d 1289, 1295-1296 (8th Cir. 1975): “The federal cir-
cuits that have faced the issue in cases involving federally cre-
ated claims, governed by federal rather than state law, have for
tne most part rejected * * * trial court consideration of future
inflationary trends in damage assessment.” (Footnote omitted. )
In Johnson we indicated we would probably follow the majority
rule in a case applying federal law, such as this admiralty claim.
Johnson v. Serra, supra, 521 F.2d at 1295. The majority goes
further today than we went in Riha v. Jasper Blackburn Corp.,
516 F.2d 840, 843-845 (8th Cir. 1975). Certainly it goes fur-
ther than we said we would go in Johnson.
— A-22 —
I also have grave doubts about some of the matters consid-
ered by the trial court in computing the contributions Mr. Hei-
man would have made to his family. These included: 1) con-
sideration of the salary the decedent had earned eight to ten
years before his death in a business unrelated to his livelihood
at the time of the accident, 2) consideration of a “management
fee” of 5-6% of the value of apartments owned and operated
by the decedent after finding that he probably would have lost
75% of those real estate holdings, had he lived, 3) considering
living expenses of the Heiman family which were incurred af-
ter Mr. Heiman’s death in order to show what the decedent
would have been able to contribute.
Under the circumstances, I do not think an award of over
$512,000 was appropriate. Accordingly, I would remand this
case to the district court with directions to dismiss Marine De-
velopment as a defendant and for reconsideration of the ques-
tion of damages.
A true copy.
Attest:
Clerk, U. S§. Court of Appeals, Eighth Circuit.
— A-23 —
APPENDIX C
In the United States District Court
Eastern District of Arkansas
Western Division
Mrs. Alana G. Heiman in Her Own Right; Sandra Jean Heiman,
by Mrs. Alana G. Heiman, Her Mother and Next Friend; and
H. Maurice Mitchell and Joseph W. Gelzine, Co-Adminis-
trators in Succession With Will Annexed of the Estate of Max
Heiman, Deceased,
Plaintiffs,
v. No. LR-73-C-261
Boatel Company, Inc., Marine Development Corporation, and
Medlin Marine, Inc.,
Defendants,
Kohler Co.,
Third-Party Defendant.
Memorandum Opinion
The defendants, Medlin Marine, Inc. and Marine Develop-
ment Corporation, have now submitted very able briefs to the
Court, arguing their differing views concerning the law of in-
demnity and contribution as applied to the findings and conclu-
sions heretofore made by the Court. The issues tendered have
become of utmost important to the parties because of the bank-
ruptcy of the defendant manufacturer, Boatel Company.
The very strong and immediate reaction of the Court upon
reading the briefs of these two parties is that neither result con-
tended for would work justice in this case. On the contrary, to
accept the position of either would, in the opinion of the Court,
—_<
result in an extremely unjust apportionment of the financial re-
sponsibility arising out of the joint and several liability of these
defendants to the plaintiffs. It is true that the Court has here-
tofore apportioned the fault predicated upon negligence as be-
tween the two defendants held to be negligent, i.e., Boatel and
Marine Development, but it has not made any determination of
the comparative fault between the defendant Medlin and the
defendant Marine, or any other defendant. The basic fallacy of
Marine's position is that Medlin, because of its legal relation-
ship with Boatel, should at the very least stand in the shoes
of Boatel in terms of any apportionment of fault. From all that
has been said in open court and in the prior Memorandum
Opinion, it should be quite clear that, on any scale, the fault
of Boatel far exceeded that of Medlin. On the other hand, the
error of Mediin is in assuming, because of the Court's finding
that Medlin’s liability was one based simply upon Medlin’s legal
position as the retailer of the boat, that Medlin is “without
fault”. The truth is that the law of strict liability implies fault.
Medlin chose to deal with Boatel and to place the latter's prod-
ucts in the hands of the public. In other words, Medlin sells
to the public instrumentalities which, if they are defective, have
a great potential for harm. The policy of the law is indeed re-
flected in the very theory of strict liability.
After analyzing the precedents cited by both Medlin and
Marine the Court is convinced that we are dealing with a prob-
lem of contribution among tortfeasors rather than the question
of tort indemnity. The problem, however, is that we are called
upon to compare the fault of one held liable on a theory of strict
liability with the fault of another held liable on a theory of
negligent failure to warn.
One thing is clear from the facts of the case: the principal
“culprit”, the principal wrongdoer in this tragedy, was ob-
viously Boatel. Whether you examine Boatel’s responsibility on
the basis of strict liability, implied warranty, or negligence, that
— A-25 —
liability and its predominating causative relationship to the death
and injuries here is obvious, clear and certain. If it is open to
the Court to determine where the loss should rest as between the
two other defendants, whose fault is so much less, relatively,
than Boatel, then the Court would find it most difficult to find
greater fault on the part of one than on the other, viewing
“fault” in the light of the facts and the policies and attitudes
reflected in the law concerning negligence and strict liability.
After examining the precedents submitted, the Court has con-
cluded that it is open to the Court to apportion the loss between
the two financially responsible defendants in accordance with
the facts of the case. Those facts have been adequately found
and treated by the Court from the bench and in the prior writ-
ten memorandum. From a review thereof, the Court concludes
that the fault of Marine and Medlin is equal.
Dated this Sth day of May, 1975.
s’ GARNETT THOMAS EISELE
United States District Judge
— A-26 —
APPENDIX D
In the United States District Court
Eastern District of Arkansas
Western Division
Mrs. Alana G. Heiman in her own right; Sandra Jean Heiman,
by Mrs. Alana G. Heiman, Her Mother and Next Friend; and
H. Maurice Mitchell and Joseph W. Gelzine, Co-Adminis-
trators in Succession With Will Annexed of the Estate of Max
Heiman, Deceased
Plaintiffs
v. No. LR-73-C-261
Boatel Company, Inc., Marine Development Corporation, and
Medlin Marine, Inc.
Defendants
Kohler Co.
Third-Party Defendant
Memorandum Opinion
Although the trial of this cause lasted about ten days, most
of the basic facts are undisputed as will be revealed by an
examination of the record. Because of the pressure of time
and judicial business, the Court must content itself with making
the essential findings with respect to disputed issues of fact and
the necessary conclusions of law, providing in the process only a
minimum of background information.
On September 1, 1973, Mr. Max Heiman, Mrs. Alana Hei-
man, his wife, and Miss Sandra Heiman, his daughter, went
on an outing in Mr. Heiman’s 47 ft. Islander yacht on the
Arkansas River. On leaving the Little Rock Yacht Club, Mr.
Heiman radioed Mr. Harry Ehrenberg, who was upriver in his
— A-27 —
own boat and who had previously recommended a beach ren-
dezvous site to Mr. Heiman. Mr. Heiman asked Mr. Ehrenberg
how to get to the site, which was located one-quarter to one-half
mile past Palarm Creek on the way up the river. Mr. Ehren-
berg advised that it was somewhat difficult to find, and he
therefore volunteered to take his runabout out onto the river
and lead Mr. Heiman to the island where other boats had already
assembled. This he did, and Mr. Heiman brought his boat to the
island and beached it to the south of the other yachts. There
were approximately five boats in all that were beached along
the east side of the island. Mr. Heiman’s was the southernmost.
The bow of the boat rested on a very gentle slope in a manner
. which did not lower the rear of the boat more than two or three
inches further down in the water than it would be if floating
free.
That evening before dinner, the Heimans came ashore and
visited others on the boats to the north of them. The various
groups then returned to their own boats to dine. After dinner
the Heimans watched a football game and thereafter Mr. Heiman
came ashore again and walked his dog. He told Mr. Ehrenberg
that he did not wish to go fishing the next day, but intended to
rest. The Heimans retired about 10:30 on the evening of Sep-
tember 1.
On the morning of September 2, the Ehrenbergs and others
in the group were fishing and visiting up and down the line of
boats and getting ready for a fish fry. Later on, Mrs. Ehren-
berg became concerned since she had not observed any activity
on the Heiman boat. She insisted that Mr. Ehrenberg go over
to the boat to invite them to join the others. Mr. Sam Winstead
and Mr. Ehrenberg boarded the Heiman yacht, but could not
arouse anyone or open the door. Mr. Winstead pried the slid-
ing glass door open with a screwdriver, and he and Mr. Ehren-
berg rushed in. Mr. Winstead turned off the generator, and they
both then ran out for air. They immediately re-entered and
— A-28 —
found Mr. and Mrs. Heiman on the two beds in the rear living
compartment. Mr. Heiman was apparently dead. They man-
aged to get the Heimans out on the open deck. Mrs. Heiman
rolled her eyes and Sandra spoke once, but each then lapsed back
into acoma. Since Mr. Winstead had the fastest boat, the Hei-
mans were placed upon it and it returned with them to the Little
Rock Yacht Club. The Heiman yacht was piloted back to
the Little Rock Yacht Club by Mr. Dick Herget, who entered
the Heiman vessel with a deputy sheriff. Everyone was instructed
not to disturb anything on the boat. When the boat was back at
the Little Rock Yacht Club, Mr. Herget locked it and delivered
the keys to Mr. Buddy Payne. Mr. Payne kept the boat locked
thereafter, only opening it at the direction of the attorneys.
Contributory Negligence of Mr. and Mrs. Max Heiman and
Sandra Heiman
The defendants have contended that Mr. and Mrs. Max Hei-
man and Sandra Heiman were contributorially negligent. A con-
trary finding has already been made of record in open court. An
additional point, probably, needs to be made. The defendants
suggest that if the craft is anchored in open water it will weather-
vane with the wind and this would avoid the precise problem
which occasioned the death of Mr. Heiman and the injuries of
Mrs. Heiman and Miss Sandra Heiman. The short answer to
this is that all who were involved in the manufacture, sale and
operation of such craft knew, and know, that they will be fre-
quently beached for recreational purposes rather than anchored
in Open water. Further, if the carbon monoxide hazard was
known, or should have been known, and the safeguard against
same was to be the requirement that the boat always be anchored
in open water where it could freely pivot 360 degrees, then
obviously a clearcut instruction and warning to this effect would
be required. None was given or suggested.
— A-29 —
Boatel Liability
The Court made most of its findings of fact and conclusions
of law with respect to the liability of the various parties in open
court the day after the conclusion of the trial. The following
findings and conclusions are supplementary to those stated from
the bench and must be read in conjunction therewith to be
properly understood.
The defendant Boatel Company, Inc. sold its product, the 47
ft. Islander, to the defendant Medlin Marine, Inc. in defective
condition, unreasonably dangerous to the potential purchaser
and likely users. At the time of the sale, Boatel was engaged in
~ the business of selling boats and yachts, and the 47 ft. Islander
yacht which was sold by it to Medlin Marine, Inc. and thence to
Mr. Max Heiman was a standard production item. As was ex-
pected, the boat did reach the purchaser, Mr. Max Heiman, and
the other likely users of that boat, without substantial change in
the condition from that which existed at the time it left the
manufacturing plant in Mora, Minnesota. The product was so
dangerous and hazardous, as delivered to Medlin Marine and
as delivered to Mr. Max Heiman, that no prudent manufacturer
or seller would have marketed it had it been aware of the defec-
tive conditions and their potential. The defective conditions
have heretofore been stated in open court, and those conditions
were proximate causes of the death of Mr. Max Heiman and the
injuries sustained by Mrs. Alana Heiman and Miss Sandra
Heiman.
Kohler Liability
On the day after the completion of the trial, the Court made
findings of fact and conclusions of law with respect to various
liability issues. It concluded that Marine Development Corpora-
tion was liable to the plaintiffs, but it did not make a determina-
— A-30 —
tion as to the liability of the Kohler Company. Rather, the
Court on that occasion made certain factual findings concerning
the role of the Kohler Company, but expressly reserved the issue
of Kohler’s liability for further study. At this time the Court
supplements its findings of fact and conclusions of law with
respect to Kohler’s liability as follows:
The third-party defendant, Kohler Company, knew, or had
reason to know or believe, that its gasoline-driven generator
would be installed in the engine compartment of a boat manu-
factured by Boatel and, further, that such boat would have size-
able holes or openings in the forward wall of the engine compart-
ment. Kohler also knew, or had reason to know or believe, that
its generator unit might very likely be integrated with, and used
together with, a recirculating air conditioning system. Kohler
also knew, or had reason to know or to believe, that leaks do
occasionally develop in the exhaust systems of marine generator
engines resulting in the direct discharge of carbon monoxide
into the engine compartment. It also knew that these leaks
could occur through accident or ordinary wear and tear. And,
of course, it is undisputed that Kohler sold the engine that pro-
duced the carbon monoxide that resulted in the death and in-
juries in this case, and Kohler was fully aware of the fact that
its engine would produce carbon monoxide and that that gas
was potentially lethal.
The only real liability question in connection with Kohler is
whether it had a duty to warn and, then, if it did have such a
duty which it failed to discharge, was the breach of that duty
a proximate cause of the death and injuries in this case?
There was evidence in this case that carbon monoxide in the
engine compartment would probably diffuse and flow through
the openings in the engine compartment forward wall whether
there was an air conditioning system on the boat or not. There
is even testimony that if there were lethal concentrations of car-
bon monoxide in the engine compartment that lethal concentra-
—
tions would eventually build up in the living compartments even
in the absence of an air conditioning system. In the Court's
judgment, however, the evidence did not, and does not, support
a finding that concentrations of carbon monoxide which would
be hazardous to life or health would penetrate into the living
areas of a boat in the absence of an improperly installed air
conditioning system.' When the generator engine is operating,
it creates a negative pressure in the engine compartment since
it demands a source of air and oxygen. Of course, if there were
a sufficient leak directly from the exhaust system into the engine
compartment, positive pressures could be created which could
result in an out-flow of carbon monoxide into the living quar-
. ters.
The key question here is whether the Kohler Company had
reason to know, understand, and believe that the presence of
carbon monoxide in the engine compartment could be potentially
hazardous to the occupants and users of the boat in the living
compartments of the boat. If so, it could be argued that it
should have warned against any foreseeable circumstance which
would permit the introduction of carbon monoxide into that en-
gine compartment, and, again if it had that knowledge, then it
should warn the manufacturer and the potential users of the
potential, through accident or wear and tear, of a leak develop-
ing in the exhaust system within the engine compartment, and
it would also have a duty to warn the boat manufacturer not to
create entryways from outside of the boat in the vicinity of the
exhausts which would permit the reintroduction of the carbon
monoxide into the engine compartment. Here, Kohler argues,
in effect, that it gave such a warning when its manual stated,
“never put inlets in the transom.” It has already been stated in
open court that this language would avail Kohler little because,
1 It should be noted, and the Court so finds, that there is no sig-
nificant difference in the airflow situation in the case of a properly
installed recirculating air conditioning and heating system from that
which obtains in the complete absence of an air conditioning and
heating system.
— A-32 —
taken in appropriate context, it obviously referred to the proper
construction of the ventilation system, and the inlet ventilators,
which are designed to operate while the boat is in motion, obvi-
ously would not work if installed on the transom. But, even
assuming the language was intended to guard against the very
thing that Boatel in fact did here, was it adequate as a warning
as contrasted to its adequacy as a construction instruction? If
this were the sole issue, the Court would have to resolve it against
Kohler in the same fashion that it resolved a similar argument
against Marine Development Corporation, because, clearly, the
language does not suggest in any way the potential hazard to life
and health that might result from the failure to follow the in-
struction.
All this brings us back to the most difficult question: know-
ing that carbon monoxide might be in the engine compartment
as a result of the operation of its generator engine at some time
during the life of the boat, and knowing that there were open-
ings from the engine compartment communicating directly with
the living areas of the boat, did Kohler have a duty to warn
Boatel not to put holes in the exterior of the boat in the vicinity
of the engine exhausts, which holes would directly communicate
with the engine compartment, and to further point out that to
do so might have the effect of producing death or injuries to
those occupying the living spaces of the boat? The answer to
this question must turn on the further question: did Kohler
know, or should it have known, that an air conditioning system,
improperly installed, or however installed, might pump carbon
monoxide out of the engine compartment and into the living
areas of the boat? On the basis of the evidence, the Court must
find that Kohler did not know of this effect (indeed, none of
the parties did until after the accident) and it further finds and
concludes that it had no duty to know, or reason to know, of
this potential. To hold otherwise would charge the manufac-
turer of a generator with the unreasonable requirement of hav-
ing to be intimately aware of the tendencies and propensities
— A-33 —
and nature of all appliances and systems that might take electric
energy from a generating unit. The Court concludes, while
recognizing that the question here is a close one, that the law
does not go that far and, therefore, that Kohler had no duty
to warn Boatel which could form a predicate for liability against
it in this case.
Upon the basis of the same analysis, the Court must conclude
that Kohler had no duty to warn or recommend that the bilge
blower be operated continuously when the generator engine or
the other engines were operating and the boat was not under way.
Until the post-accident analysis of this case, at any rate, the
_ purpose and function of the bilge blower was considered by all
to be simply a method of ventilating the engine compartment for
the purpose of eliminating potentially explosive fumes. It was
not conceived by anyone that it would have any relationship
to the potential carbon monoxide problem.
Damages
The United States Supreme Court in Sea-Land Services, Inc.
v. Gaudet, 414 U.S. 573, 584, states that, under the maritime
wrongful-death remedy, the decedents dependents may recover
damages “for the loss of support, services, and society, as well
as funeral expenses”. It then goes on to discuss these elements
of damages:
“Recovery for loss of support has been universally recog-
nized, and includes all the financial contributions that the
decedent would have made to his dependents had he lived.
Similarly, the overwhelming majority of state wrongful-
death acts and courts interpreting the Death on the High
Seas Act have permitted recovery for the monetary value
of services the decedent provided and would have con-
tinued to provide but for his wrongful death. Such services
include, for example, the nurture, training, education, and
— A-34—
guidance that a child would have received had not the
parent been wrongfully killed. Services the decedent per-
formed at home or for his spouse are also compensable.
“Compensation for loss of society, however, presents a
closer question. The term ‘society’ embraces a broad range
of mutual benefits each family member receives from the
others’ continued existence, including love, affection, care,
attention, companionship, comfort, and protection. Un-
questionably, the deprivation of these benefits by wrongful
death is a grave loss to the decedent's dependents.”
x * = * * x *
“Finally, in addition to recovery for loss of support,
services, and society, damages for funeral expenses may
be awarded under the maritime wrongful-death remedy in
circumstances where the decedent's dependents have either
paid for the funeral or are liable for its payment.”
As a footnote to its discussion of “loss of society”, the Court
made it clear that this element should not be confused with
mental anguish or grief which are not compensable under the
maritime wrongful-death remedy. It states that loss of society
“entails the loss of positive benefits”, while mental anguish or
grief “represents an emotional response to the wrongful death”.
A “dependent” for our purposes may be such beyond his or
her legal majority and may be such independent of the legal
responsibilities imposed by state law. This is particularly so with
respect to certain “unfinished business” in the maturation proc-
ess such as advanced, college-level education. Where the evi-
dence discloses the intent and ability to pursue such an educa-
tion on the part of a child of the decedent and the concomitant
determination to, and ability to, provide such educational op-
portunities on the part of the decedent himself, then that child
would remain a “dependent” for such purposes until completion
of the educational process.
— A-35 —
A. Contributions
From the evidence it is clear beyond question that Mr. Hei-
man was an exceptional person and an ideal husband and father.
He occupied an important place in the civic and business life
of the Littlke Rock community and the highest positions of lay
leadership in his church. He was devoted to his wife and his
daughters and always put their interests first. He was concerned
with their welfare and did his utmost to shield them from life's
difficulties and vicissitudes. He had an intense personal inter-
est in the education of his daughters. He was a “family man” in
the sense that his whole life revolved about his wife and daugh-
ters. The members of the family spent much more of their
“free” time enjoying the companionship of each other than one
would expect in the average family.
Although the status of Mr. Heiman’s economic condition at
the time of his death, based as it was upon income from a
motel and from apartment complexes located in Arkansas and
Florida, was precarious and deteriorating, it is likely that, had
he lived, he would have salvaged at least some small part of
his holdings. Mr. Heiman had broad family and personal con-
tacts with influential and wealthy businessmen throughout the
country, and he also had what appears to be an unusual ability
to borrow money, considering the status of his overall financial
condition. This is dramatically illustrated by the evidence indi-
cating that he had arranged an additional $100,000 loan just
a few days prior to his death.
Nevertheless, a fair interpretation of the evidence forces the
Court to find that, had Mr. Heiman lived, he would have needed
a combination of great effort and extremely good fortune to
salvage even as much as a fourth of his overall holdings and
that, realistically, it is more probable that, had he lived, Mr.
Heiman would only have been able to extricate himself from
his financial difficulties without any net personal obligation, sal-
vaging only a small, perhaps even nominal, amount of his busi-
— A-36 —
ness holdings. The Court must analyze the probable “contri-
butions” element of damages with this finding in mind.
Mr. Heiman can be considered a victim of the times in the
sense that practically all of the overall financial conditions and
circumstances affecting the success of such investments went
sour at about the same time. Beyond that, he possibly did not
retrench when he should have. His concern for and interest in
his family, and his hope, based more upon wish than reality, led
him into the practice of using cash flow from depreciation as
the basis for contributions to his family and his own living
expenses. As a result, when conditions began to approach the
critical stage, he did not have the necessary reserves to fall back
upon to tide him over. This left him with only one possible
recourse: to borrow more, and this alternative would itself be-
come increasingly more difficult.
The evidence clearly establishes that Mr. Heiman was a man
of business and executive ability. Before 1965 he had held
positions of responsibility with one of the largest department
stores in the State of Arkansas, the Gus Blass Company. The
evidence from his W-2 forms indicates that his average annual
income for the last three years he was with the Gus Blass Com-
pany (1963, 1964 and 1965) was in excess of $20,000. The
compensation for performing similar services in 1975 would
obviously be considerably in excess of that figure. The evidence
of his ability to command executive-level compensation from
third-party employers is clear and convincing. This, then, is
another of the bases upon which the Court's decision concerning
the amount and probability of future contributions must be
predicated.
When Mr. Heiman got seriously involved in the real estate,
motel and apartment building ventures, he devoted most of his
time to personally overseeing such operations. He maintained
an office with a secretary at the Holcomb Heights Apartments.
— A-37 —
It is true that he had on-the-site employees who looked after
the routine operations, the collection of rents, and maintenance.
But, with the exception of the Fair Park Gardens, which were
under a management arrangement with Block Realty Company,
he contributed a considerable amount of his time to the overall
management of the properties. The evidence indicates that,
had Mr. Heiman not been performing these services, he would
have had the alternative of contracting for such services with
some real estate management company. The usual fee for such
services would run in the neighborhood of five to six percent of
the gross receipts. Of course, such a firm would have had to
pay the management expenses and wages of the on-the-site
. employees out of its fees. Looking at Mr. Heiman’s tax records
covering his various operations over a period of years, the
Court finds that he was performing services which, had they
been contracted, would have required the payment of at least
$20,000 per year over and above the management and employee
expense actually experienced.
It is clear from the evidence that Mrs. Heiman had no knowl-
edge of her husband’s business affairs prior to his death, and it
is also clear that Mr. Heiman shielded her from even the routine
responsibilities of paying household bills and expenses. There-
fore, she personally kept no records of, and has no knowledge
of, the contributions made to her and the family prior to Mr.
Heiman’s death. The executors have found records kept by
Mr. Heiman, however, which provide some insight into the
contributions made to the family over recent years. In addition,
Mrs. Heiman has kept an accurate record of her expenses since
Mr. Heiman’s death, and has testified that those expenditures
have been in line with, and certainly not more than, those in-
curred in prior years. Looking at both Mrs. Heiman’s testimony
as to her actual expenses since Mr. Heiman’s death and the tax
records and other records kept by Mr. Heiman reflecting con-
tributions prior to his death, the Court finds that on an average
Mr. Heiman was contributing just under $30,000 to the living
— A-38 —
expense requirements of the entire family. In making this de-
termination, the Court has disregarded certain items, such as
jewelry expenditures, from the figures testified to by Mrs. Hei-
man on the one hand, and, on the other hand, has reduced the
figures revealed by Mr. Heiman’s records by the amounts of the
insurance premiums, the boat expense, and certain other ex-
penses. Had he lived, Mr. Heiman’s own living expenses would
have had to be defrayed out of the total living expense contribu-
tions. Furthermore, if, as the Court suspects, financial circum-
stances would have required Mr. Heiman to accept employ-
ment from a third-party employer, he would, of course, have
had to pay state and federal income taxes on his compensation,
a situation which would be entirely different from the tax
situation which had existed in the years immediately prior to his
death where, because of the nature of his investments and the
tax laws involved. he was not required to pay such taxes.
The Court is convinced that, had Mr. Heiman lived, he and
his family would have had to cut down somewhat on their
overall style of living but would still have been able to live most
comfortably.
From all the evidence, the Court finds that through one
method or another Mr. Heiman, had he lived, would have been
able to provide and would in fact have provided contributions
and support to the other members of his family (i.e., excluding
himself) in the sum of $22,500.00 per year, measured in 1975
dollars, over the remaining working years of his life.
The plaintiffs put in evidence experience tables showing a
23.3 year life expectancy for a 48-year-old man. There was
evidence indicating that Mr. Heiman had in the past suffered a
heart attack, but there is no indication that he was not enjoying
reasonably good health just prior to his death. From the evi-
dence the Court finds that Mr. Heiman would have lived 21
more years and that he would have remained active an an
— A-39 —
economic producer for 20 years, calculated from the date of
his death.
Since the Court is convinced that decedent would have paid
the full costs of nis daughters’ college educations, it is obvious
that during those years when such payments would be required.
less would be available for the support of Mrs. Heiman. This
situation would reverse, however, when the daughters had com-
pleted their educations and were either married or “on their
own”.
B. Loss of services.
Under the Gaudet case, supra, “services” would include the
nurture, training, education, and guidance that Sandra and Judy
would have received had Mr. Heiman survived, and would also
include those services which he would have performed at home
or for his wife. With respect to the former, the Court must find
and conclude that both Sandra and Judy actually received
nurture, training, education, and guidance from their father over
the really important formative years of their lives. They now
possess in their personalities the benefits of those important con-
tributions to their lives. That Mr. Heiman would have continued
to provide guidance, had he lived, is equally obvious. The point
is, however, that the “twig had already been bent” and that Mr.
Heiman’s future contribution in this respect would have been
more on the basis of the mutual interchange one finds among
equal adults in a family unit. The Court is assessing some
damages for this loss, while recognizing that it was minimal
under the circumstances. The Court fixes the lump sum of
$1,000.00 as the present value of such loss to Judy Heiman and
the sum of $2,000.00 as the present value of such loss to Sandra
Heiman, taking into consideration the difference in the ages
and status of independence of the two girls at the time of Mr.
Heiman’s death.
— A-40 —
The situation is different with respect to Mrs. Heiman. The
evidence indicates that Mr. Heiman provided much in the way of
personal services for Mrs. Heiman and for the support of the
homeplace itself. He worked around the house, kept the family’s
books, paid the family’s bills, and provided much in the way of
direct assistance to his wife. The Court finds that the reasonable
value, on an annual basis, of such services would amount to $1,-
000.00 in 1975 dollars and that such services would have con-
tinued for the balance of Mr. Heiman’s life.
C. Loss of Society
The Gaudet case, supra, makes it clear that the decedent's
dependants are entitled to recover for “loss of society” which,
according to the Supreme Court, embraces a broad range of
mutual benefits, including “love. affection, care, attention, com-
panionship, comfort, and protection”. Although it is difficult
to place a value upon such things—most people feeling that ‘t
is impossible to measure such benefits in terms of dollars—still
lump sum awards will be made to reflect those important losses
in this case as follows:
1. For Mrs. Heiman $35,000.00
2. For Mrs. Lou (Judy) Samuel $10,000.00
3. For Miss Sandra Heiman $15,000.00
D. Funeral Expenses
Finally, the Gaudet case makes it clear that a recovery is per-
mitted for funeral expenses. The Court finds the funeral expense
to be $5,096.85.
—_ fh
Damages of Mrs. Alana Heiman and Sandra Jean Heiman
Mrs. Heiman testified that she recalls that the family retired
about 10:30 on the evening of September !. The next thing
that she recalls is her awakening in the intensive care unit of
St. Vincent Infirmary several days after the accident. From other
evidence the Court determines that Mrs. Heiman first regained
significant consciousness on September 5. She was not really
clear of mind until September 6. As she regained conscious-
ness, she found that it was difficult to breathe (a tracheostomy
having been performed while she was still in a comatose state)
and noticed that her hands were bound to the side of the bed.
She was confused and became instinctively terrified. She was re-
ceiving fluids intravenously and had to be suctioned when she
began to cough. As she regained awareness of the situation,
she found that she was on a respirator. Her leg, in which she
had phlebitis and in which she had received a transfusion, caused
her pain. She recalls developing pneumonia, with attendant
fatigue, coughing and pain in her chest.
She is aware that she developed cerebral edema and heart
difficulties which occasioned numerous cardiograms.
Mrs. Heiman has made a remarkable recovery, considering her
close brush with death. She has continuing difficulty with her
leg, which swells when she is on it for any length of time. When
the leg swells, it causes pain. She has experienced no contin-
ued difficulty as a result of the tracheostomy except an occa-
sional feeling of “drawing” or tension in her throat. Psycho-
logically she has not made as complete a recovery. She still is
extremely nervous and, on occasion, becomes emotionally upset.
She finds that she cries quite frequently, but is trying to fight
off these emotional residuals. She is, according to her own tes-
timony and the testimony of her doctor, coping quite well with
these difficulties.
— A-42 --
When Sandra Heiman first regained consciousness several
days after the accident in the intensive care unit of the hos-
pital, she, too, was very frightened. There were needles in her
arms and she had trouble breathing and talking. Her knees
were swelling and causing considerable pain. As indicated in
the discussion of Dr. Levy's testimony below, Sandra has made
a remarkable recovery, but she does have some residuals. She
finds that she tires much more quickly now than before the ac-
cident, feeling that she has somewhat limited breathing capac-
ity. Her voice is lower and cracks on occasion as a result of
the tracheostomy and treatment while in the hospital. She still
has a numb place on her leg.
Emotionally, Sandra finds that she still cries more often than
before, but it is evident to the Court, as it was to Dr. Levy,
that she is getting control of this situation.
It would be well at this time to discuss briefly the relationship
between Sandra and her father. Theirs was a particularly close
relationship. Sandra was a real “tomboy” and enjoyed fishing,
shooting skeet, and watching football games with her father.
She helped Mr. Heiman do such things as reloading his shells
and he, in turn, taught her how to drive an automobile. In
sum, there was a close, warm, affectionate relationship between
Sandra Heiman and her father that was obvious not only to
Sandra and her father but also noted by the rest of the family
and the family’s friends.
Dr. Jerome Levy was the physician in charge of the handling
of Mrs. Heiman’s case and Sandra Heiman’s case. The Court
was most favorably impressed by the testimony of Dr. Levy.
That testimony reflected that nice balance of personal concern
for his patients and complete professional objectivity. He was
not cross-examined by any of the attorneys for the defendants.
Dr. Levy is principally an internist. He first saw Mrs. Heiman
around 4:00 p.m. on September 2. (She had been earlier at-
— A-43 —
tended by Dr. John Samuel in the emergency room. Dr. Samuel
is now deceased.) He found Mrs. Heiman unconscious and in
a form of shock. She showed evidence of brain injury and her
pulse was rapid, although her blood pressure was normal. When
admitted, Mrs. Heiman’s lungs were clear and her breathing
was satisfactory. He assessed her overall condition as critical
due to carbon monoxide poisoning and sought consultation with
Dr. John Schultz, who was well-trained in respiratory problems,
and Dr. Howell, a neurologist. Dr. Schultz was called in be-
cause Mrs. Heinman soon developed difficulty in breathing.
Dr. Howell was called in because of the fear of possible brain
damage or injury. As the breathing difficulty developed, it be-
came obvious that a tracheostomy would have to be performed,
and Dr. Stewart, a chest surgeon, was called in for this purpose.
The breathing problem which developed is a form of respira-
tory failure. The collection of fluid in the tissue blocks the
oxygen distribution. Oxygen was administered and the trache-
ostomy permitted a satisfactory air exchange. Nevertheless,
Mrs. Heiman developed pneumonia. The carbon monoxide soon
produced cerebral edema in Mrs. Heiman. Although the pre-
cise mechanics of causation are not known, the lack of oxygen
available to the tissue causes fluids to develop in the cells and
between the cells with consequent swelling. This is treated by
the tracheostomy and provision for pure oxygen heretofore men-
tioned, and also by the use of dexamethasone, a steroid which
mobilizes the fluid permitting it to get into the bloodstream and
thus to be carried away.
About the time the doctors began to make progress with the
cerebral edema, they noted difficulties with Mrs. Heiman’s heart.
Some areas of the body are particularly susceptible to damage
due to loss of oxygen. The brain, lungs, heart and kidneys are
the critical organs. Heart tissue and cells become weak and do
not function properly because of lack of oxygen. Dr. Levy
testified that Mrs. Heiman did sustain injury to her heart re-
— A-44 —
flecting myocardial damage. This condition was treated by rest,
oxygen and the use of a drug which regulated Mrs. Heiman’s
blood pressure. The heart condition steadily improved, but it
was several months before Dr. Levy found the heart muscle
restored to its normal strength and condition.
Mrs. Heiman was in the hospital from September 2 to Sep-
tember 15, most of the time in intensive care.
The first day that Mrs. Heiman’s mind was clear was Sep-
tember 6. On that occasion she asked about Mr. Heiman, and
Dr. Levy told her the truth.
Dr. Levy has followed Mrs. Heiman since her discharge from
the hospital and has found that she has progressed very well
under the restrictions imposed by him. After approximately six
months, her physical condition stabilized, leaving her with only
minor physical residuals. She still has trouble with the blockage
of the vein in her leg resulting from the aggravation of her
phlebitis condition, but Dr. Levy is convinced, overall, that she
has done extremely well. Dr. Levy indicates that it will take
longer for Mrs. Heiman to attain complete relief from the emo-
tional and psychological results of her injuries, but he is con-
vinced that she is making a determined effort in this connection.
Although Mrs. Heiman has made a remarkable recovery, it
is equally clear to the Court that she suffered great mental and
physical pain as a direct result of her exposure to the carbon
monoxide.
Dr. Levy also handled Sandra Heiman’s case. Sandra was
17 at the time of the accident and was just preparing to enter
her senior year in high school. Miss Heiman’s symptoms and
difficulties paralleled those of her mother, but in some areas were
worse, according to Dr. Levy. She developed an almost fatal
complication relating to her renal system. At the very time when
she was recovering from the same cerebral edema and heart con-
—_~
ditions as those suffered by her mother, she had a kidney failure
which approached a uremic state. However, she was treated for
this condition and fortunately snapped back, and thereafter pro-
ceeded steadily on the road to recovery. Sandra also suffered
from acute respiratory failure which also required a tracheos-
tomy. A respirator was used to assist her to breathe, just as
in the case of her mother. She also was discharged from the
hospital on September 15.
Dr. Levy states that the brain, heart, lung and kidney con-
ditions suffered by Sandra Heiman have been restored and re-
paired by nature's efforts since then. Sandra, too, noted her own
remarkable recovery as far as her physical condition is con-
cerned. The main residua!, according to Dr. Levy, is that re-
sulting from emotional shock. Even in this area, it appears
that she has made good progress although, as expected, she
experiences some relapses on occasion. It is clear from the
evidence that Sandra has suffered no permanent brain damage.
She is making an excellent scholastic record in college.
The Court finds the reasonable value of the medical and hos-
pital services rendered to Mrs. Heiman to be $5,893.50 and the
reasonable value of such services for Sandra Heiman to be
$5,037.88.
For all other appropriate elements of damage for their per-
sonal injuries, the Court finds that Mrs. Heiman is entitled to
the sum of $15,000.00 and Miss Sandra Heiman is entitled to
the sum of $12,500.00.
Besides Sandra Heiman, the Heimans had only one other
child, Judy, who is now Mrs. Lou Samuel. Judy was at the
University of Arkansas at Fayetteville when she learned of the
tragedy. She immediately came home and did not thereafter
return to the University at Fayetteville.
— A-46 —
Judy, too, had a very special and close relationship with her
father. When Judy was at Sophie Newcomb College in New
Orleans, her father talked to her by long distance telephone
from his office at least once a week. Whenever he went to
Florida to check on his business investments, he would detour
through New Orleans so he could visit Judy. In addition, Mr.
and Mrs. Heiman both made frequent trips to New Orleans to
visit their daughter.
Judy was engaged to be married at the time of the accident.
Mr. Heiman made several trips with her about the country so
that she might find a wedding dress that they both liked. Such
episodes simply illustrate the basic relationship.
To further detail that evidence which so clearly shows the
Strong mutual happy feelings of love, concern, understanding
and warm affection which characterized this strong family unit
would serve no useful purpose. What has been said should
suffice.
Damages—Inflation Factor
The Court is convinced that the law permits, and realism re-
quires, the assessment of any reasonable probable inflationary
or deflationary trend over the future years in which it is found
that contributions would have been made or services would
have been rendered by a decedent. Where a proper evidentiary
basis is laid, the Court should consider such trends and their
effect upon the purchasing and earning power of the dollar.
The Court was impressed with the testimony of Dr. Floyd Dur-
ham, a professor of economics at Texas Christian University.
While not agreeing with certain of his findings and conclusions
concerning future trends, the Court was impressed with his over-
all analysis thereof and has used that analysis, along with other
evidence in the case, in reaching its own conclusion as to an
appropriate adjustment in this case for inflationary trends.
—_S
The law requires the trier of fact to determine the present
valuation of contributions which would have, had the decedent
lived, been made over a period of future years. To get the
present value, the trier of fact must determine an appropriate
discount rate. On the other side of the coin, the trier of the
facts should attempt to evaluate future inflationary trends in
order to properly reflect the purchasing and earning power of
the dollar over those same future years. Dr. Durham used a
discount rate of 4% percent and an inflationary rate of 54%
percent. The Court, on the other hand, finds that the more ap-
propriate discount rate would be 52 percent and the more
appropriate inflation rate would be 4 percent considering the
two decade projections we are working with here.
Indemnity
Medlin Marine, Inc. is entitled under the law to an indemnity
judgment over against the defendant Boatel for all amounts for
which judgment against Medlin has been awarded herein in
favor of the plaintiffs.
Contribution Among Tortfeasors
The Court fixes and assesses the relative degree of fault be-
tween the defendant Boatel Company and the defendant Marine
Development Corporation as follows:
Boatel Company 80%
Marine Development Corporation 20%
This Memorandum Opinion, together with the findings of fact
and conclusions of law heretofore stated in open court, shall
constitute the decision and the opinion of the Court in this
proceeding.
—_Y
Plaintiffs’ counsel will prepare a judgment in accordance here-
with and submit it to opposing counsel for their approval as to
form, and then to the Court.
Dated this 7th day of March, 1975.
GARNETT THOMAS EISELE
United States District Judge
— A-49 —
APPENDIX E
Finding of Fact Issued by the Trial Judge From the
Bench at the Conclusion of the Evidence
I am not today making any findings with respect to dam-
ages, although, as you will note presently, those issues are very
much before the Court and I did spend some time on those is-
sues today, perhaps at the cost of the business at hand.
I am making these findings but I may well file additional
findings, even with respect to the issues covered here. I may sup-
plement these findings in a memorandum since a memorandum
will have to be filed covering other issues anyway.
I want to start by stating certain conclusions of law, partic-
ularly with respect to matters that I do not believe are subject
to any real controversy and where the underlying facts are quite
clear.
Boatel is liable to the plaintiffs on the bases of strict liability,
implied warranty, and negligent design. |
Medlin Marine, Incorporated is liable to the plaintiffs on
the bases of strict liability and implied warranty.
There is no negligence or carelessness on the part of the de-
cedent, Mr. Max Heiman, or on the part of Alana G. Heiman
or Sandra Jean Heiman which caused or contributed to the death
of Mr. Heiman or to the injuries and damages sustained by
Alana Heiman and Sandra Jean Heiman.
The Court further concludes that the liability of the defend-
ant Medlin Marine, Incorporated is based upon the legal rela-
tionships existing between it and the manufacturer, on the one
hand, and between it and Mr. Max Heiman on the other.
— A-50 —
There is no separate and independent basis for liability of
Medlin Marine to the plaintiffs based upon the acts or omis-
sions of Medlin or any of its agents or employees. In this con-
nection the Court finds that none of the representatives of Med-
lin—any of its agents or employees—knew or should have
known of the four holes on the underside of the transom of the
Heiman boat prior to the accident.
Now this is probably not really in dispute, but I want to make
this finding. There is no evidence to indicate that either Mr.
Heiman or anyone else ever spent a night on the yacht prior to
the night of September 1, 1973. There is no evidence to indi-
cate or to suggest that the generator, airconditioning system on
the yacht was ever, prior to September 1, 1973, operated for any
substantial period while the vessel was moored, beached, or
anchored.
In fact, the evidence is to the contrary, indicating this was
the first and only night the Heimans ever spent on the yacht
and the first and only occasion during which the generator, air-
conditioning systems were operated together for an extended
period of time while the boat was stationary.
The night in question was, according to Mr. Eherenberg—
and the Court so finds—was ideal. The water was calm. There
was a slight breeze from the east, which would mean that it
approached the Heiman boat from the stern.
Now I am going to make what might be called “miscellaneous
findings of fact”, because they are not really tied together in
any narrative form, in response to the requests and suggestions
of the parties. Of course, it’s going to be necessary that these
findings be integrated in with and related to the other findings
that I am going to make today and perhaps later.
Considering the arrangement of the boat and its equipment
as it existed on September 1, 1973, a substantial risk existed
that discharged engine exhaust gases would be drawn back
\
an fh on
into the engine compartment through the four water drain
hole when the generator engine alone was operating.
This process would be accelerated when the forward air-
conditioning system was activated. This would be so, even
with the sliding door entirely open; but the tendency would be
increased as the sliding door was progressively closed.
There are direct air passages, significant in size, between the
engine compartment and the other areas of the yacht as a result
of openings in the forward wall of the engine compartment. The
largest of these openings is next to the upper starboard wall of
the engine compartment. There is a smaller opening at a similar
location on the port side. In addition, there is a tiny crack
around the thermostat which is used to control the heater in
the engine compartment.
On the night in question carbon monoxide from the genera‘or
engine was exhausted into the water immediately under :he
overhang portion of the transom. The carbon monoxide, which
is slightly lighter than air and which was also warmer than the
ambient air, was propelled out of the water directly under the
transom where it was drawn through the four holes in the tran-
som into the engine compartment by the negative pressure being
created in the engine compartment by the operation of the
generator and the air-conditioning system.
High concentrations of carbon monoxide developed in the
engine compartment and were drawn forward, principally
through the right starboard opening in the engine compartment,
into the equipment room where the carbon monoxide entered
the forward cooling unit from which it was discharged into
the forward living areas and then circulated by both air-condi-
tioning units throughout the yacht.
The buildup of the carbon monoxide in the living quarters
resulted in the death of Mr. Max Heiman and the injuries to
Mrs. Heiman and Sandra Heiman.
— A-52 —
A completely airtight bulkhead between the rear cabin and
the engine compartment of the Heiman yacht would have elimi-
nated the hazard of introducing carbon monoxide from the
generator engine into the living quarters of that vessel.
The introduction of an appropriately designed arrangement
which would induce fresh air into the air-conditioning system
at the proper point could have virtually eliminated the hazard
of introducing lethal quantities of carbon monoxide into the
living quarters of the vessel.
This simply means that positive pressure can be designed into
an air-conditioning system which will have the effect of causing
an outflow rather than an inflow of air from the engine com-
partment. Such a system ‘vould probably require larger air-
conditioning tonnage and consequently cost more to obtain the
same cooling and heating effect as a recirculating system.
It should be noted, however, that elsewhere in my findings
I have found that there is nothing inherently or per se hazard-
*ous in the use of a properly installed recirculating system on
a boat such as Mr. Heiman’s.
Leaks do occasionally develop in the exhaust systems of
marine generator engines and in the exhaust systems of marine
propulsion engines, resulting in the direct discharge of carbon
monoxide into the engine compartment, and this fact was known
by or should have been known by the defendants and third-
party defendant, Kohler.
The four holes in the transom of the Heiman yacht consti-
tute a defect which was a proximate cause of the death of Max
Heiman and the injuries to Mrs. Heiman and Sandra Heiman,
and thus creates liability against Boatel and Medlin Marine on
the basis of strict liability.
The location of the intake for the forward air-conditioner
in the equipment room of the yacht, combined with the mak-
— A-53 —
ing of the openings in the engine room forward bulkhead and
the location of such openings, together constitute a defect which
was a proximate cause of the death of Max Heiman and the
injures to Mrs. Heiman and Sandra Heiman, thus creating lia-
bility against Boatel and Medlin Marine on the basis of strict
liability and tort.
The defendant, Marine Development Corporation, did not de-
sign the air-conditioning as it is found and arranged in the Hei-
man boat. That design and arrangement was made and carried
out by Boatel alone and was in direct violation of the clear and
unambiguous installation instruction furnished by Marine De-
velopment.
The Court finds and concludes that there is nothing inherently
or per se defective or hazardous in the use of properly installed
recirculating air-conditioning systems.
Further, although there was evidence to the contrary, the
Court finds that had the air-conditioning components provided
by Marine Development been properly installed by Boatel in
accordance with Marine’s manual the Heimans would not have
been harmed.
This finding must be limited to the facts of this case since
the evidence suggests that under altered configurations such a
system, even if installed according to the manual, might cause
or contribute to such an accident.
Therefore, the difficult question concerning Marine’s liability
does not turn on any defects in its components—there were none
—or upon its participation in the as-is design of the Heiman air-
conditioning system; but rather upon its duty to warn Boatel
of the potential consequences of improperly installing its com-
ponents, given its knowledge or imputed knowledge of the boat
designs and given its overall business relationship with Boatel.
—_
It is clear from the evidence that none of the parties to this
action ever realized, prior to their investigations of this accident,
the serious hazard which results from the improper location of
the cooling units when combined with the circumstances that
the bulkhead between the engine compartment and the living
spaces of the boat is not airtight or even substantially airtight.
Still, the evidence is such that all of the defendants and the
cross-defendant, Kohler Company, knew or should have known
there was a risk—however slight—that carbon monoxide would,
at sometime during the life of the vessel, be in the engine com-
partment.
The principal basis for this statement is not that any of the
parties except Boatel knew or should have known that Boatel
would design a drain system as it did, thereby providing direct
access of carbon monoxide from outside the boat back into the
engine compartment; but rather that such parties knew or should
have known that carbon monoxide might, during the life of the
vessel, escape from either the generator motor or from one of
the two propulsion engines due to accident or ordinary wear and
tear during the life of the vessel.
The Court finds and concludes that Marine Development
Corporation knew or should have known that there were sig-
nificant openings from the engine compartment into the living
spaces—and I believe that statement was acknowledged in the
opening statement of Mr. Carroll—and that they knew or should
have known that carbon monoxide might, during the life of the
vessel, be found in the engine compartment in dangerous con-
centrations.
Marine Development also knew or should have known that if
the forward cooling unit were installed as it was in the equip-
ment room it could and would, under certain foreseeable cir-
cumstances, draw air from the engine compartment and circulate
it throughout the living areas of the boat.
— A-55 —
Of all the parties to this action, Marine is and should be the
most knowledgeable with respect to the effects of air-condition-
ing systems and their operations. It has more than 50 percent
of all of the air-conditioning business in the class of boats and
yachts of the approximate size of the Heiman vessel.
It has held itself out as a specialist in marine air-conditioning
and has represented to its customers and to the public at large
that it has a long history of testing and improving its products.
It has maintained a close relationship with a large number of
boat manufacturers. It has a naval architect on its staff and
others experienced in boat construction.
Jt knew that with very rare exceptions all craft for which it
supplies air-conditioning equipment have non-airtight engine
compartments. It knew that the engine which drives the gene-
rator is almost invariably located in the engine compartment
along with the propulsion engines. It knew that its products
would be integrated with the Kohler unit or an Onan unit and
operated in conjunction with such a unit.
It is further clear from the evidence that Marine Development
Corporation sells more than off-the-shelf products to its cus-
tomers be the manufacturers of boats or its franchise dealers.
Marine, in fact, offers advice and assistance with respect to
the design and installation of the components which it manu-
factures. Here Boatel, if it actually received such advice, did
not follow it; but the question remains: Should a party in the
position of Marine, with its superior knowledge and informa-
tion, not only advise its customers how properly to install its
products but also where there is a significant, known hazard to
health or life which could result from improper installation,
clearly and specifically to warn thereof.
The Court has already found that Marine did not really un-
derstand and appreciate the effect of the improper location of
its units in terms of the hazard to life and health involved, al-
— A-56 —
though it did understand the effects of such improper location
upon the efficient operation of its cooling and heating equip-
ment.
The Court finds and concludes that defendant, Marine De-
velopment Corporation, should have known of the hazard to
life and health posed by the improper installation of its equip-
ment; and, therefore, that it should have warned Boatel in a
clear and unequivocal way concerning same.
A manufacturer must know the nature and propensities of
its products and warn of dangers created by that nature and
those propensities. In this connection a distinction must be
drawn between the duty to give adequate instructions and di-
rections for the use or installation of a product, on the one
hand, and the duty to warn of potential hazards which might
result from deviations from such directions or instructions, on
the other hand.
Here Marine did not know the hazards and, therefore, did
not warn against them. Its instructions requiring that the cool-
ing unit be located in the space to be cooled or heated and that
such units should be installed so that there would be an ade-
quate path for the air to circulate freely into the units from
the space being cooled and then from the units back to the
space being cooled were obviously and clearly directed toward
the objective of the efficient utilization of the equipment for
heating and cooling.
In the eyes of Marine Development Corporation the improper
installation of a cooling unit in a space other than that to be
cooled would greatly interfere with the efficient operation of the
equipment. That it might also act as a pump to draw any car-
bon monoxide which might be in the engine compartment was
not known or considered by Marine prior to the investigation
of this tragedy.
—.
Directions and warnings obviously serve different purposes.
Rarely can one be an adequate substitute for the other. It was
Marine's duty here, therefore, to warn of any hazard to life or
health that might foreseeably result from the improper location
of its equipment.
The failure to warn may be predicated upon the theories of
either negligence or strict liability. Here Marine, being so in-
timately associated with boat manufacturers and boat design-
ers, knew or should have known that such manufacturers, for
their own convenience and for design purposes, might install
the cooling unit so as to have the effect of pumping air from
the engine compartment.
The potential seriousness of the injury which might result is
obvious. In addition, there is no practical impediment to its
ability to give an adequate warning. Carbon monoxide is odor-
less, colorless, and tasteless. It is insidious and subtle in its
operation and effect. If there is any risk of it being introduced
into a living space, a warning of that risk should obviously be
given.
The Court finds and concludes that Marine Development Cor-
poration owed such a duty to warn not only Boatel, the boat
manufacturer, but also prospective purchasers and users of the
craft under the facts and circumstances of this case.
Marine Development did not undertake to actually inspect
and supervise the installation of its equipment by boat manu-
facturers, although it frequently made itself available to per-
form such services when a new model or a new installation was
contemplated.
Where it knows that it will not be in a position to supervise
and inspect the installations on each of the boats in which its
equipment is installed, then it obviously has the duty to pro-
spective purchasers and users to adequately warn them of the
— A-58 —
potential hazard which would result from the improper installa-
tion of that equipment.
The Court finds and concludes that Marine Development's
failure to give such a warning was a proximate cause of the
death of Mr. Heiman and the injuries of Mrs. Heiman and
Sandra Heiman.
Now I am going to make certain findings with respect to
Kohler, but I can tell you before I conclude that I have yet
to determine legal liability with respect to that particular ques-
tion. I hope to do so promptly.
In any event, (ie factual findings that I will make are as fol-
lows:
The Kohler Company supplied Boatel with a generator set
consisting of the generator proper, an interna! combustion en-
gine to drive the generator, and a muffler which Boatel then
installed in the engine compartment of the Heiman boat. These
Kohler products were line production items which were sold by
Kohler to Kizer Engine Sales in Green Bay, Wisconsin, which
in turn sold them unchanged to Boatel.
The first Islander 47 yacht was constructed in September
1969 and either contained an Onan or Kohler generator unit.
The recirculating air-conditioning systems were not installed
on Boatel yachts as optional equipment until sometime in 1971.
No tests were made by Boatel, the manufacturer, to determine
how these items of optional equipment affected each other in
the completed boat. The photos of the yacht contained in the
Boatel brochure, Plaintiff's Exhibit 34, and other evidence in-
dicates that not all Islander 47 yachts have the bilge blower
exhaust vent located on the vertical transom panel.
Although there was some evidence indicating that Kohler
representatives saw the Islander 47 yacht displayed at the boat
— A-59 —
show in 1969, there is no adequate evidentiary basis for the
Court to find that the displayed boat had the bilge blower ex-
haust vent located in its transom as it is on the Heiman boat.
The Court further finds that at no time prior to the com-
mencement of this action did Kohler or any of its representatives
know or have any reason to know of the four drain holes lo-
cated in the underside of the overhanging portion of the transom.
Now by way of footnote, Kohler cites as a defense the lan-
guage which is contained in its manual which provides: “Never
put inlets on the transom.” The Court does not feel this lan-
guage gives Kohler much comfort because it finds that the
term “inlets” properly interpreted, in context, would be restricted
to the venting systems of inlets and outlets there under con-
sideration in that portion of the manual.
In installing the generator, Boatel relied upon the Kohler
technical installation manual. Although Kohler’s manual in-
dicates on the first page that detailed installation plans can be
obtained upon request from Kohler, none were ever requested
by Boatel. Boatel alone designed the transom of the boat, the
engine compartment, the forward wall of the engine compart-
ment, the installation arrangement for the air-conditioning sys-
tem, and the sliding door arrangement for the forward air
intake.
It is undisputed that no consequential leaks existed in the
Kohler unit or its exhaust system. There is no evidence that the
Kohler components were defective in design, installation or
operation. There is a complete absence of any evidence of any
manufacturing defect which was in existence at the time the
components left the Kohler factory. It is undisputed that fumes
and gases from the Kohler gasoline combustion engine were
exhausted outside of the boat.
Mr. Klapmeier of Boatel admitted that he was well aware
of the fact that internal combustion engines emit carbon mo-
— A-60 —
noxide, that carbon monoxide is dangerous and lethal, and that
he knew these facts before designing the Islander 47 yacht.
Now, gentlemen, that is as far as I have gotten. I have
not made my final decision on the possible Kohler liability and
I have not made findings here yet with respect to damages. I
hope to complete this maybe even tomorrow—hopefully to-
morrow—because I need to get on with the business of the
Court. If so, we will call you and let you know so that you
can come by and pick up copies of the further findings and con-
clusions.
If there is nothing else, we will be in recess.
(Whereupon, at 5:35 p.m., the above-entitled proceedings
were concluded.)
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.