Opposition Brief — Alvarez ex rel. American Home Insurance v. Merrill Stevens Dry Dock Co.

No. 87-1635

In The

Supreme Court of the United States

October Term, 1987

ray

VIVIAN ALVAREZ, f/u/b/o AMERICAN

HOME INSURANCE COMPANY,

Petitioner,

VS.

MERRILL STEVENS DRY DOCK COMPANY,

Respondent.

ray

ON PETITION FOR A WRIT OF CERTIORARI

TO THE FLORIDA THIRD DISTRICT

COURT OF APPEAL

ray

Vv

RESPONDENT’S BRIEF IN OPPOSITION

fy

Vv

G. Morton Goon, Esquire

KELLEY, Dryve & WARREN

including

SMATHERS AND THOMPSON

Suite 2400 Miami Center

100 Chopin Plaza

Miami, Florida 33131

and

DANIELs AND Hicks, P.A.

Suite 2400 New World Tower

100 North Biscayne Boulevard

Miami, Florida 33132-2513

(305) 374-8171

By: ExizasetH Korset Ciarke, Esa.

Counsel of Record

Attorneys for Respondent

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

or call collect (402) 342-2831

QUESTION PRESENTED

WHETHER A FLORIDA STATE COURT DECISION

WHICH PROPERLY APPLIED ESTABLISHED

MARITIME LAW PRINCIPLES IN INTERPRETING

A PARTICULAR SHIP REPAIR CONTRACT AND

WHICH CONFLICTS WITH NO FEDERAL DECI-

SIONS PRESENTS ANY BASIS FOR REVIEW BY

THIS COURT

iis

il

LIST OF PARTIES

Vivian Alvarez, f/u/b/o American Home Insurance Com-

pany

Merrill Stevens Dry Dock Company

ill

TABLE OF CONTENTS

TABLE OF AUTHORITIES Siccesbeabaalildiiemeten iv

pe ey 8 St elt) gil 8 by) | cre 1

SUMMARY OF ARGUMENT 3

ARGUMENT ica aan denial SAO

CONCLUSION 8

CERTIFICATE OF SERVICE 9

TABLE OF AUTHORITIES

Allied Chemical Corp. v. Gulf Atlantie Towing

Corp., 244 F.Supp. 2 (E.D.Va. 1964) ooo

B.H. Morton vy. Zidell Explorations, Inc., 695

F.2d 347 (9th Cir. 1982), cert. denied, 460 U.S.

1039 (1983)

BASF Wyandotte Corp. v. Tug Leander, 590 F.2d

96 (5th Cir. 1979) ,

Bisso v. Inland Waterways Corp., 349 U.S. 85

Chile Steamship Co., Ine. v. The Tug MeAllister,

168 F.Supp. 700 (S.D.N y 1958)

Coastal Iron Works, Ine. v. Petty Ray Geophysi-

eal, 783 F.2d 577 (Sth Cir. 1986)

Coastal States Petrochemical Co. v. Montpelier

Tanker Co., 321 F.Supp. 212 (S.D.Tex. 1970)

Dillingham Tug & Barge Corp. v. Collier Carbon

& Chemical Corp., 707 F.2d 1086 (9th Cir. 1983),

cert. denied, 465 U.S. 1025 (1984)

Dixilyn Drilling Corp. v. Crescent Towing and

Salvage Co., 372 U.S. 697 (1963)

Edward Leasing Corp. v. Uhlig & Assoe., Ine.,

785 F.2d 877 (11th Cir. 1986)

Fluor Western, Inc. v. G & H Offshore Towing

Co., Ine., 447 F.2d 35 (5th Cir. 1971). cert. de-

nied, 405 U.S. 922 (1972) ...

Hercules, Ine. v. Stevens Shipping Co., Ine., 698

P20 ico (Sth Cir. 1963) ______.....

Hicks v. Ocean Drilling and Exploration Co., 512

F.2d 817 (5th Cir. 1975), cert. denied, 423 C. S.

sauuttdy Oy

1050 196) OG Ot Et SE

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wD) |

na) |

**

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TABLE OF AUTHORITIES—Continued

In re Gulf & Midlands Barge Lines, Ine., 509 F.2d

Ta COED Cle PB) cisicieccenti eon

Island Creek Fuel and Transport Co., Delaware

v. Kenova Terminal Co., 150 F.Supp. 479 (S.D.

i EE ee ees pe eet. Mise Misia whose a AY

M/S BREMEN vy. Zapata Off-Shore Co., 407 U.S.

1 (1972) sibel nasecnsnidestionss ceaseienialeda aaa eat

National Distillers Products Corn. v. Boston Tow

Boat Co., 1384 F.Supp. 194 (D.Mass. 1955) ........... eet

Ortiz v. ETPM-U.S.A.. Ine., 553 F.Supp. 549

CUR i: WO i eee

People of the State of California v. S/T) NOR-

FOLK, 435 F.Supp. 1039 (N.D.Cal. 1977) occ

Pure Oil Co. v. Boyne, 870 F.2d 121 (5th Cir. 1966)

Pure Oil Co. v. M/V CARTBBEAN, 235 iene

299 (W.D.La. 1964) pica =

Reederei Franz Hagen v. Diesel Tug Resolute,

400 F.Supp. 680 (D.Md. 1975)

Seley Barges, Inc. v. Tug El, LEON GRANDF,

396 F.Supp. 1020 (E.D.La. 1974), aff'd, 513 F.2d

Gs Cee Rey Be eee

Smith v. Shell Oil Co., 746 F.2d 1087 (5th Cir. 1984) ....

Southwestern Sugar & Molasses Co. v. River Ter-

minals Corp., 360 U.S. 411 (1959)

Todd Shipyards Corp. v. Turbine Service, Inc., 674

F.2d 401 (5th Cir. 1982), cert. denied, 459 U.S.

Oe ENED x. ccsn2scoctntrnt cecnteonantshemearlaoeaianla eisai eis oats.

Twenty Grand Offshore, Inc. v. West India

Carriers, Inc., 492 }°.2d 679 (5th Cir. 1974),

cert. denied, 419 U.S. 836 (1974) onc ccc ccccccccccecccceseeeee

CO

Vi

TABLE OF AUTHORITIES—Continued

Page

Note: “ \dmiraity—The Undermi: of the Bisso

Rule,” 9 Mem. St.L.Re 223) (1979 5

“The Continu ng Krosio} ol bisso Waiver 0}

Subrogatior and Benefit of |i irance ( lauses

Dixon and Car r | ira e Counsel Journa

(1977) ;

STATEMENT OF THE CASE

Petitioner Alvarez’ yacht ALISAN V sank at her dock

in July of 1982, thus requiring the vessel to be raised and

repaired. (Petitioner’s Appendix, p. 2). Uneontested find-

ings of fact made by the trial court establish that (1)

based on the recommendation of a surveyor, competitive

bids were solicited for the repairs to the yacht, (2) ulti-

mately, the contract for repair was awarded to Respon-

dent Merrill Stevens Dry Dock Company, and (3) Petition-

er Alvarez and American Home Insurance Company, in-

surer of the ALISAN V and Petitioner-in-interest herein,

arranged to have Merrill Stevens raise the yacht and per-

form the repairs. (Petitioner's Appendix, p. 2).

Failure to replace insulating blankets on the engine’s

turbo chargers during the repairs subsequently caused a

fire which destroyed the vessel. (Petitioner's Appendix,

p. 10). Petitioner-in-interest American Home paid Peti-

tioner Alvarez the $150,000 found to be the fair market

value of the yacht. (Petitioner’s Appendix, p. 13). This

suit represents American Home's subrogated claim seeking

to recover the insurance monies it paid from Merrill Ste

vens. Merrill Stevens, relying on limitation clauses in the

parties’ ship repair contract, denied any obligation to re-

imburse American Home.

At all times the parties and Florida courts involved

in this suit have been in accord that maritime law gov-

erns the parties’ ship repair contract. The trial court—

applying maritime law—initially held that the repair con-

tract:

clearly and unequivocally expresses the intent that

Merrill Stevens shall have no liability for any dam-

l

eile

ages or losses sustained, whether im tort or contract

unless and unt?! it has been established that their con-

duct amounted to gross negligence. Such clauses un-

der the maritime law, known as “Red Letter” clauses

have heen held to be valid and binding. Todd Ship

yard Corp. v. Turbine Service, Inc., 674 F.2d 401 (Sth

Cir. 1982): Morton v. Zidell Explorations, Inc., 695

F.2d 347 (9th Cir. 1982): Ortiz v. EJPM U.S-_A., Tne.,

553 F.Supp. 549 (S.D. Tex. 1982): Noruna IV, AMC

967 (D. Miss. 1982). Clause 7 was under all the eir-

cumstances surrounding these repairs binding on the

parties, valid and enforceable.

(Petitioner’s Appendix, p. 23). The trial court, on rehear-

ing, changed its holding as to Merrill Stevens’ liability,

hut on appeal the Florida Third District Court of Appeal

reversed stating that the trial court’s above statement was

right in the first place. The clause was held valid, and the

Third District concluded by stating: “This is simply an

unambiguous arm's length transaction between parties of

like bargaining power who were well able to allocate who

was to bear the responsibility for insuring against loss.’’

(Petitioner’s Appendix, p. 24). Rehearing was denied,

and thereafter the Florida Supreme Court also denied

review. (Petitioner’s Appendix, pp. 31-33).

Respondent notes that Petitioner's Statement of the

Case does not comply with this Court’s Rule 21.1(h) which

requires Petitioner to specify with reference to the record

the manner in which the federal question presented for

review was raised in the state courts. In fact, the argu

ment advanced by Petitioner here (albeit incorrectly)

that the Bisso and Edward cases represent a blanket pro

hibition of exculpatory clauses in all maritime econtracts—

was first raised by Petitioner on rehearing at the Florida

Third District Court of Appeal. (Respondent’s Appendix

p. 24). Prior to that time, Petitioner’s arguments com

ported with the actual state of the maritime law, i.e., that

the enforceability of limiting or exculpatory clauses in

ship repair contracts depends on equality of bargaining

power and clarity. (Respondent’s Appendix, p. 9).

SUMMARY OF ARGUMENT

The state court decision of which Petitioner seeks re-

view does not conflict with either of the cases cited by

Petitioner. Bisso v. Inland Waterways Corp., 349 U.S.

85 (1955) set down a rule prohibiting exeulpatory clauses

in towage contract cases. The Bisso rule has been re-

stricted to towage cases, and in fact has been subjected

to numerous exceptions even in the towage context. The

uniform maritime rule in the ship repair contract context

pertinent here is that exculpatory or limiting clauses in

such contracts will be upheld absent evidence of over-

reaching, inequality of bargaining power, or ambiguity.

Edward Leasing Corp. v. Uhlig & Assoc., Ine., 785 F.2d

877 (11th Cir. 1986), also cited by Petitioner, actually ar

ticulated the repair contract rule, and merely held the par-

ticular clause in that case invalid.

The state court decision herein properly applied the

established maritime rule, and in no way conflicts with

Bisso or Edward Leasing. Petitioner has presented no

basis for the exercise of certiorari jurisdiction by this

Court. The petition should be denied.

o

ARGUMENT

Contrary to Petitioner’s assertion, the Florida appel-

late decision herein conforms with the federal maritime

law which was properly applied by the state court in con-

sideration of this ship repair contract.

Bisso v. Iniand Waterways Corp., 349 U.S. 85 (1955),

with which Petitioner quite incorrectly suggests conflict,

held that exculpatory clauses in towage contracts are in-

valid as a matter of public policy. The Bisso court’s de-

cision was based on what the majority then perceived as

“potential monopolistic power” of the towage industry

which placed towers in a position to overreach. 349 U.S.

at 91.' The Bisso decision was directed to the towage in-

dustry, and the Bisso rule has been consistently restricted

. The Bisso dissent noted the lack of evidence to support the

conclusion that the towage industry “was characterized by

monopolistic tendencies or inequality of bargaining power

... 349 U.S. at 118, n. 14. Questions as to the soundness

of the Bisso majority's assessment of the economic under-

pinnings of the towage industry have continued. See, e.g.,

Harlan, J., concurring in Dixilyn Drilling Corp. v. Crescent

Towing and Salvage Co., 372 U.S. 697 (1963); Seley Barges,

Inc. v. Tug EL LEON GRANDE, 396 F.Supp. 1020 (E.D.La.

1974), aff'd, 513 F.2d 628 (5th Cir. 1975). The instant case

is not a towage case so the continuing validity of Bisso is

not presented here.

Eo

to towage contracts.* In fact, significant erosion of the

Bisso rule has occurred even in the towage context.’

Bisso has not only been restricted to towage cases but

it is also specifically distinguished and held not controlling

in ship repair contract cases. The uniform rule as to ship

repair contracts is that exculpatory or limiting clauses

N

See, e.g., Fiercules, Inc. v. Stevens Shipping Co., Inc., 698

F.2d 726 (5th Cir. 1983); Hicks v. Ocean Drilling and Ex-

ploration Co., 512 F.2d 817 (5th Cir. 1975), cert. denied,

423 U.S. 1050 (1976); People of the State of California v.

S/T NORFOLK, 435 F.Supp. 1039 (N.D.Cal. 1977); Ortiz v.

ETPM-U.S.A., Inc., 553 F.Supp. 549 ($.D.Tex. 1982); Pure Oil

Co. v. M/V CARIBBEAN, 235 F.Supp. 299 (W.D.La. 1964)

aff'd Pure Oil Co. v. Boyne, 370 F.2d 121 (5th Cir. 1966);

National Distillers Products Corp. v. Boston Tow Boat Co.,

134 F.Supp. 194 (D.Mass. 1955); Allied Chemical Corp. v.

Guli Atlantic Towing Corp., 244 F.Supp. 2 (E.D.Va. 1964);

Reederei Franz Hagen v. Diesel Tug Resolute, 400 F.Supp.

680 (D.Md. 1975); Island Creek Fuel and Transport Co.,

Delaware v. Kenova Terminal Co., 150 F.Supp. 479 (S.D.

W.Va. 1957); Coastal States Petrochemical Co. v. Mont-

pelier Tanker Co., 321 F.Supp. 212 (S.D.Tex. 1970); and

cases cited re ship repair contracts, infra.

See, e.g., M/S BREMEN v. Zapata Off-Shore Co., 407 U.S. 1

(1972); Southwestern Sugar & Molasses Co. v. River Ter-

minals Corp., 360 U.S. 411 (1959); Smith v. Shell Oil Co.,

746 F.2d 1087 (Sth Cir. 1984); Dillingham Tug & Barge Corp.

v. Collier Carbon & Chemical Corp., 707 F.2d 1086 (9th

Cir. 1983), cert. denied, 465 U.S. 1025 (1984); BASF Wyan-

dotte Corp. v. Tug Leander, 590 F.2d 96 (Sth Cir. 1979);

Twenty Grand Offshore, Inc. v. West India Carriers, Inc.,

492 F.2d 679 (5th Cir. 1974), cert. denied, 419 U.S. 836

(1974); In re Gulf & Midlands Barge Lines, Inc., 509 F.2d

713 (5th Cir. 1975); Fluor Western, Inc. v. G & H Offshore

Towing Co., Inc., 447 F.2d 35 (5th Cir. 1971), cert. denied,

405 U.S. 922 (1972); Chile Steamship Co., Inc. v. The Tug

McAllister, 168 F.Supp. 700 (S.D.N.Y. 1958). See also Note:

“Admiralty—The Undermining of the Bisso Rule,”” 9 Mem.

St.L.Rev. 223 (1979); “The Continuing Erosion of Bisso—

Waiver of Subrogation and Benefit of insurance Clauses,”

Dixon and Canning, Insurance Counsel Journal (1977).

6

will be upheld absent a showing of overreaching, ambig-

uity, or unequal bargaining power. Coastal Iron Works,

Inc. v. Petty Ray Geophysical, 783 F.2d 577 (5th Cir.

1986); B.H. Morton v. Zidell Explorations, Inc., 695 F.2d

347 (9th Cir. 1982), cert. denied, 460 U.S. 1039 (1983);

Todd Shipyards Corp. v. Turbine Service, Inc., 674 F.2d

401 (5th Cir. 1982), cert. denied, 459 U.S. 1086 (1982);

M/V AMERICAN QUEEN v. San Diego Marine Con-

struction Corp., 708 F.2d 1483 (9th Cir. 1983); Alcoa

Steamship Co. v. Charles Ferran & Co., Inc., 383 F.2d 46

(5th Cir. 1967), cert. denied, 393 U.S. 836 (1968): Hudson

Waterways Corp. v. Coastal Marme Service, Inc., 436

F.Supp. 597 (E.D.Tex. 1977).

The Petitioner’s remaining and equally inappropri-

ate “conflict” case—Edward Leasing Corp. v. Uhlig &

Associates, Inc., 785 F.2d S77 (11th Cir. 1986)—in faet

specifically articulates the distinction made between ship

repair contract cases and Bisso:

Since Bisso, several admiralty cases dealing with the

limitation of liability clauses in boat repair contracts

have distinguished Bisso and held that parties to such

repair contracts may validly stipulate that the repair-

er’s liability is to be limited ... The rationale behind

upholding such clauses, so long as no overreaching

is found, is that businessmen can bargain this in their

negotiations and set their ultimate price accordingly.

785 F.2d at 888.4 This was precisely the rationale utilized

by the state court herein. No conflict with Edward Leasing

exists.

* The Edward Leasing court simply found that the particular

clause involved in that case was ambiguous and unen-

forceable.

The Florida appellate court here applied the proper

maritime rule for ship repair contracts and—based on the

uncontested conclusion that no unequal bargaining posi-

tions between the parties existed—enforced the limitation

clause in the parties’ negotiated repair contract. There

is no conflict with Bisso which applies only in towage con-

tract cases, and no conflict with Edward which states the

very rule applied in the decision herein.

Petitioner’s two policy suggestions for exercise of

certiorari review are similarly without merit. As to the

first, Petitioner has no record support for its assertion

that Flerida’s shipyards will be in a position to overreach

if the state court’s decision stands. No showing of mon-

opolistie potential was made in this ease. In fact, this

record shows quite the reverse. There is a specific trial

court finding that Petitioner solicited competitive bids for

the repairs to the yacht.

Second, Petitioner’s implication that the state court

applied Florida law is completely refuted by the face of

the state court’s opinion, which refers only to federal mari-

time eases and cites no !*lorida case law at all. Absolute-

ly nothing about the decision implies that state law ap-

plies in maritime cases.

In final, this was a case where yacht owner Alvarez

and yacht insurer American Home Insurance Company

solicited competitive bids for yacht repairs, and then se-

lected and entered a contract with Merrill Stevens Dry

Dock Company. As parties with equal bargaining power,

they were held to their unambiguous agreement in precise

conformity with the controlling maritime law. The case

is of no significance to anyone but the parties. No rea-

8

son is presented for this Court to exercise certiorari jur-

isdiction.

oO

Vv

CONCLUSION

Based on the foregoing facts and authorities, Respon-

dent respectfully submits that the petition for writ of

certiorar! should be denied.

By:

Respectfully submitted,

KELLEY, Dryve & WARREN

including

SMATHERS AND THOMPSON

Suite 2400 Miami Center

100 Chopin Plaza

Miami, Florida 33131

and

DanikELs AND Hicks, P.A.

Suite 2400 New World Tower

100 North Biseayne Boulevard

Miami, Florida 33132-2513

(305) 374-8171

EvizABETH KoEBEL CLARKE

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that three copies of the fore-

going Respondent’s Brief in Opposition were mailed this

2 day of May, 1988 to:

Domingo C. Rodriguez, Esq.

Hayden and Milliken, P.A.

5915 Ponce de Leon Blvd., Suite 63

Miami, Florida 33146

(305) 662-1528

Attorneys for Petitioner

Flin nV vebrl Ynhre

ELIZABETH KOEBEL CLARKE

APPENDIX

la

APPENDIX

IN THE DISTRICT COURT OF APPEAL

OF FLORIDA, THIRD DISTRICT

Case Number 86-1732

cemEiegnedantiinipnedineme —() ——_——-—_ —

MERRILL STEVENS DRY DOCK COMPANY

Appellant,

v.

VIVIAN ALVAREZ, f/u/b/o AMERICAN

HOME INSURANCE COMPANY

Appellee/Cross-A ppellant

~ /

On Appeal from the Circuit Court

of the Eleventh Judicial Circuit

In and for Dade County, Florida

fay

Vv

ANSWER BRIEF OF

APPELLEE/CROSS-APPELLANT

— —-— ——-(- ——

DOMINGO C. RODRIGUEZ, ESQ.

HAYDEN AND MILLIKEN, P.A.

Suite 63

5915 Ponee De Leon Boulevard

Miami, Florida 33146

(305) 662-1523

Attorneys for Appellee/

Cross-Appellant

TABLE OF CONTENTS

PAGE

TABLE OF CONTENTS

TABLE OF CITATIONS AND OTHER AUTHORL-

TIES

STATEMENT OF THE CASE AND FACTS

‘

Il.

STATEMENT OF FACTS

COURSE OF PROCEEDINGS AND DISPOSI-

TION IN THE LOWER TRIBUNAL

SUMMARY OF ARGUMENT

ARGUMENT

Il.

MERRILL STEVENS EXPRESSLY WAR-

RANTED TO REPAIR THE ALISAN V IN A

GOOD AND WORKMANLIKE MANNER

AND CANNOT EXCULPATE ITSELF FROM

THAT EXPRESS WARRANTY.

THE COURT ERRED IN FAILING TO

AWARD ATTORNEYS FEES FOR BREACH

OF MERRILL STEVENS’ WARRANTY OF

WORKMANLIKE PERFORMANCE.

CONCLUSION

CERTIFICATE OF SERVICE

to

qr

3a

TABLE OF CITATIONS

PAGE

CASES

Alcoa Steamship Company, Inc. v. Charles Ferran

and Company, Ine.., 383 2d 46, 1957, A.M.C.

2578 (Sth Cir. 1967), cert. denied, 393 U.S. 836.

89 S.Ct. 11 (1962) 6, 7,9, 10,11, 13

American Export Isbrandsten Lines, Inc., v. Unit-

ed States 390 F.Supp. 63 (S.D.N.Y. 1975) 7

M/V AMERICAN QUEEN v. San Diego Marine

Construction, T08 F.2d 1483 (9th Cir. 1983) 12

Bisso v. Inland Waterways Corp., 349 U.S. 85, 75

S.Ct. 629, 99 L.Ed.2d 911 (1955) ‘ 5, 9

Branch v. Schumann, 445 F.2d 175 (5th Cir. 1971) a

Capozziello v. Brasileiro, 443 F.2d 1155 (2nd Cir.

1977)

Cigarette Racing Team rv. Gandee, 418 So.2d 337

(Fla. 3rd D.C.A. 1982) a 7

Edward Leasing Corp. v. Uhlia d Associates, Inc.,

785 F.2d 887 (11th Cir. 1986) d, 7, 8, 9, 12, 13

Fairmont Shipping Corp. v. Chevron Internation-

al Oui Company, 511 F.2d 1252 (2nd Cir. 1975) 14

Harbor One, Inc. v. Preston, 172 So.2d 478 (Fla.

3rd D.C.A. 1965) — ; —

Hart v. Blakemore, 410 F.2d 218 (Sth Cir. 1969) 9

Hudson Waterways Corp. v. Coastal Marine Ser-

vices, Inc., 436 F.Supp. 597 (E.D.Tex. 1977) 5, 6

Trey Plants, Inc. v. FMC Corporation, 282 So.2d

902 (Fla. 4th D.C.A.) 13, 14

da

TABLE OF CITATIONS—Continued

PAGE

CASES

Jig the Third Corporation v. Puritan Marine In-

surance Underwriters Corp., 519 F.2d 171 (5th

Cir. 1975) cert. denied, 424 U.S. 594 (1976) 9,11,

12, 13, 14

McCawley v. Ozeannosun Compagnia Maritime,

| S.A., 505 F.2d 526 (Sth Cir. 1974) 15

| Miami Valley Broad: astina Corp. v. Lana, 429

So.2d 1333 (Fla. 3rd D.C.A. 1983) 7

| Navieros Oceanikos, S.A. v. S.T. MOBILE

TRADER, 1977 A.M.C. 739, 554 F.2d 43 (2nd

Cir. 1977) 7

Northern Pacific S.S. Company v. Hall Brothers

Marine Railroad and Shipbuilding Company,

249 U.S. 119, 39 S.Ct. 221 (1919) 6

Parfait v. Jahnecke Services, Inc., 484 F.2d 296

(5th Cir. 1973) - 4

Sniffen v. First National Bank of Broward, 375

So.2d 902 (Fla. 4th D.C.A. 1979) 13

Stevens v. East West Towing Company, Inc., 649

F.2d 1104 (5th Cir. 1981) 14

Still vr. Dixon, 327 So.2d 1033 (Fla. 2nd D.C.A. 1971) 7

Strachan Shipping Company v. Konin Klyke Ne d-

erlandsche, 342 F.2d 746 (5th Cir. 1963) 15

Todd Shipyards Corp. e. Turbine Se rvices, Inc.,

674 F.2d 401 (5th Cir. 1982) 5, 8, 9, 11, 14

Thibodeaux v. Texas Eastern Transmission Corp.

548 F.2d 581 (5th Cir. 1977) 15

Inited States rv. Seckinae A 397 U.S. 203, 90 S.Ct.

880, 25 L.FPid.2d 224 (1970) 7

iil

———EEE~*~

STATEMENT OF THE CASE AND FACTS

lL. STATEMENT OF FACTS

On July 12 or 15, 1982, the yacht ALISAN V sank at

its dock. T.18.' The owners of the yacht contacted MER-

RIL STEVENS DRY DOCK COMPANY who raised the

vessel and towed it to their facility at Dinner Key Marina,

Miami, Florida, T.33-34. Thereafter, surveyor Alex Milli-

gan surveyed the vessel and based upon that survey, MER

RILL STEVENS submitted its bid for the necessary re-

pairs. The contract for repairs was awarded to MERRILL

STEVENS based upon that bid. R.128; T.35, lines 6-9.

MERRILL STEVENS contracted, in part, to over-

haul the engines and reinstall them in the vessel. R.128-129.

The ALISAN V had two turbocharged Detroit Diesel

671T1 engines. R. 129. Before the vessel sank in July,

1982, the turbochargers were covered with protective in-

sulation coverings, which were referred to at trial as the

‘*turbocharger blankets’’. R. 219; See e.g. T.19; T.37-41;

and 'T.47-48.

MERRILL STEVENS removed the engines and tur-

bochargers from the ALISAN V and they were trucked to

Pitts Transmission with whom MERRILL STEVENS

subeontracted the engines’ overhaul. R.129-130. Neither

the owners nor their insurers participated in selecting

Pitis, and the owners and insurers were billed directly by

1. Citations to the trial transcript will be designated by “T’

followed by the page number. Citations to the record will be

designated by “R” followed by the page number. Exhibits, or

portions thereof, will be designated by “A” followed by the

page number and are attached hereto as an appendix.

6a

MERRILL STEVENS for work performed by Pitts.

R. 219, T.37. (There is no dispute that MERRILL

STEVENS is liable to Plaintiffs for any fault or negli-

gence on the part of their subcontractor.)

In August, 1982, MERRILL STEVENS employee

Mike Vores was requested by Pitts Transmission to pre-

pare a purchase order directed to Johnson and Towers,

Ine., a supplier of General Motors parts, requesting two

turbocharger blankets for the ALISAN V. R. 130; T.57-

59; A.1l. Johnson and Towers never delivered the turbo-

charger blankets because they were back-ordered. R.130;

T.38-41; T.59; A.2. MERRILL STEVENS never pursued

the matter to assure that turbocharger blankets were

otherwise procured for the ALISAN V. T.41. The ALI-

SAN V was delivered to her owner on April 29, 1983 with.

out any turbocharger blankets. R.131. On May 1, 1983, the

owners of the ALISAN V took her from their home on

Northern Biscayne Bay—near 79th Street—to the anchor-

age at Elliott Key in Southern Biscayne Bay. R.131; T.16.

As the vessel was arriving at the Elliott Key anchorage, a

smoky smell was noted in the main salon. R.131. Soon the

vessel was burning out of control despite the efforts of the

owners and John ‘*Moby’’ Griffin, a marine salvor who

was at the anchorage and who had come to assist when he

note! the vessel on fire. R.131-182. The vessel was de-

clared a constructive total loss. 7.13. The Court found,

based upon expert testimony, that the canse of the fire was

the absence of turbocharger blankets on the ALISAN V

with the concomitant proximity of flammable materials in

the engine compartment. T.132. The Court found Plain-

tiff’s damages to be $222,249.00 and denied Plaintiff’s

claim for attorneys fees. R. 156.

Il. COURSE OF PROCEEDINGS AND DISPOSITION

IN THE LOWER TRIBUNAL.

The Plaintiff, VIVIAN ALVAREZ f/u/b/o AMERIJ-

CAN HOME INSURANCE COMPANY sued MERRILL

STEVENS DRY DOCK COMPANY alleging causes of

action sounding in negligence and for breach of MERRILL

STEVENS’ express and implied warranties of workman-

like performance. A non-jury trial was conducted on

Mareh 10 and 11, 1986.

On April 28, 1986, the Court signed Findings of Facts

and Conclusions of Law, R.86-94, which held that MER-

RILL STEVENS could not be liable for Plaintiff's dam-

ages based upon Paragraph 7 printed on the reverse side

of MERRILL STEVENS’ Work Order and Repair Con-

tract. A.3. On May 8, 1986, Plaintiff filed its Motion for

Rehearing and Motion to Amend Findings of Facts and

Conclusions of Law. R.83-84. That Motion was granted at

the hearing of May 30, 1986, and Amended Findings of

acts and Conclusions of Law were signed on June 11,

1986. R.128-136.

The Court held that Paragraph 1 constituted an ex-

press warranty that MERRILL STEVENS could not re-

pudiate by any subsequent attempted exculpatory language

contained within Paragraph 7 of its Work Order. R. 135.

Defendant/Appellant MERRILL STEVENS appeals

the Court’s ruling that MERRILL STEVENS is liable to

Plaintiff for breach of its express warranty of workman-

like performance notwithstanding the attempted excul-

patory language—the so-called ‘‘red letter’’ clause—

printed on the reverse side of MERRILL STEVENS’

Work Order and Repair Contract. Plaintiff/Appellee

Sa

Cross-Appellant, VIVIAN ALVAREZ f/u/b/o AMERI-

CAN HOME INSURANCE COMPANY, ercss-appeals

that portion of the Amended Findings of Facts and Con-

clusions of law wherein the Court denied attorneys fees as

an element of Plaintiff’s damages for breach of the war-

ranty of workmanlike perforinance. R. 136.

SUMMARY OF ARGUMENT

MERRILL STEVENS cannot exculpate itself from

liability for negligence or breach of the warranty of work-

manlike performance where MERRILL STEVENS ex-

pressly warrants to perform the repairs in good and work-

manlike manner and where the purported exeulpatory

language is conflicting, confusing and deceptive. The Final

Judgment against MERRILL STEVENS should, there-

fore, be affirmed.

In admiralty when a ship repairer breaches the war-

ranty of workmanlike performance, the shipowner is en-

titled to receive full compensatory damages, attorneys fees

and litigation expenses. The trial court’s ruling denying

attorneys fees and litigation expenses should, therefore, be

reversed and remanded.

ARGUMENT

I

MERRILL STEVENS EXPRESSLY WAR-

RANTED TO REPAIR THE ALISAN V IN A

GOOD AND WORKMANLIKE MANNER AND

CANNOT EXCULPATE ITSELF FROM THAT

EXPRESS WARRANTY.

The Court found as a factual matter that MERRILL

STEVENS was negligent and breached its express and im-

9a

plied warranties to repair the vessel in a good and work-

manlike manner. MERRILL STEVENS does not dispute

this finding.

The issue here is whether, having breached these

duties and warranties, MERRILL STEVENS ean rely on

confusing and vague language and be exculpated from all

lability.

A ‘*Red Letter’’ clause in a ship repair contract is de-

fined as one which limits the repairer’s liability for negli-

gence or breach of contract to a specific monetary amount.

See e.g. Todd Shipyards Corp. v. Turbine Services, Inc.,

G74 F.2d 401, 410 (Sth Cir. 1982). Red letter clauses are

distinguished by maritime courts from other similarly

plrased clauses which purport to effectively exculpate the

repairer from liability for negligence or breach of contract.

Edward Leasing Corp. v. Uhlig € Associates, Inc., 785 F.2d

877, SS8-89 (11th Cir. 1986). Red letter clauses—that is,

limitation of liability clauses—are generally valid. Todd

Shipyards Corp. v. Turbme Services, Inc., 674 F.2d 401

(Sth Cir. 1982). Conversely, exculpatory clauses are

strongly disfavored, Bisso v. Inland Waterways Corp. 349

US 85, 75 S.Ct. 629, 99 L.Ed. 2d 911 (1955), and, they will

he upheld only on rare occasions and are subject to the

strictest serutiny. Edward Leasing, 785 F.2d 877; Hudson

Waterways Corp v. Coastal Marine Services, Inc., 436

F.Supp.597 (ED, Tex.1977).

Originally, the trial court confused these two distinct

types of clauses, finding that the language here was a

valid red letter clause. R.86-94. On rehearing, R.85-84,

the Court recognized the distinction and held that MER-

10a

RILL STEVENS could not repudiate its express warranty

of workmanlike performance. R. 135. The language which

is at issue is as follows:

1. Contractor agrees to repair said vessel in a good

and workmanlike manner pursuant to the terms as

outlined, and the owner and/or vessel agrees to

pay contractor for said work, labor and materials

as hereinafter stated. Other than specifically set

forth herein, contractor makes no warranties con-

cerning its workmanship or material either ex-

press or implied, including any implied warranty

of merchantability or fitness for a particular pur-

pose.

* . *

7. Contractor undertakes to perform the work out-

lined * * * only upon the condition that it shall not

be liable, directly or indirectly, in contract, tort,

or otherwise * * * unless such (damage) is caused

by contractor’s gross negligence or the gross

negligence of any of its employees, which gross

negligence shall not be presumed but must be af-

firmatively established. In ne event, including the

negligence and/or the gross negligence and/or the

breach of contract by contractor, shall the con-

tractor’s liability to such parties in interest for

personal injury, death or damage * * * exceed tie

sum of $300,000.00.

The contract to repair a vessel is a maritime contract

and subject to the law of admiralty. Northern Pactfie SS.

Company v. Hall Brothers Marine Railroad and Shipbuild-

img Company, 249 U.S. 119, 39 S.Ct. 221 (1919); Alcoa

Steamship Company, Inc. v. Charles Ferran and Company,

Inc. 383 F.2d 46, 1957 AMC 2578 (5th Cir. 1967), cert.

denied, 393 US 836, 89 S.Ct. 11 (1962) (hereinafter refer-

red to as the ‘‘ Alcoa Corsair’’). *‘Onee Admiralty juris-

lla

diction is established, then all of the substantive rules and

precepts of the law of the sea become applicable.’’ Cig-

arette Racing Team v. Gandee, 418 So.2d 337 (3rd DCA

1982) ; see also Branch v. Schumann, 445 F.2d 175 (5th Cir.

1971); Miami Valley Broadcasting v. Lang, 429 So.2d 1333

(3rd DCA 1983) ; and Still v. Dixon, 337 So.2d 1033 (Fla.2d

DCA 1971). ‘‘The traditional rule of construction in Ad-

miralty cases is to construe the contract language most

strongly against the drafter and that an ambiguous clause

in a maritime contract is to be interpreted under maritime,

not state, law.’’ Edward Leasing Corp. v. Uhlig & Asso-

ciates, Inc., 785 F.2d 877 at 889 (11th Cir.1986). See also

Navieros Oceanikos S.A. «. S.T. MOBILE TRADER, 1977

AMC 739, 745 (2d Cir. 1977); Capozziello v. Brasileiro,

443 F.2d 1155, 1157 (2d Cir. 1971); American Export Is-

brandsten Lines, Inc. v. United States, 390 F. Supp. 63, 66

(SDNY 1975); and United States v. Seckinger, 397 US 203,

210-211, 90 S.Ct. 880, 884-85, 25 L.Ed 2d 224 (1970).

Here, the first sentence of Paragraph 1 quoted above

gives rise to an express warranty to ‘‘repair the vessel in

> The seeond sentence

a good and workmanlike manner.’

of Paragraph 1 purports to disclaim any express or im-

plied warranties, including warranties of merchantability

or for a particular purpose. However, this purported dis-

claimer is prefaced by the phrase ‘‘other than as specifi-

eally set forth herein’’. This clearly refers to the express

warranty of workmanlike performance set forth in the im-

mediately preceding sentence.

The above-quoted language in Paragraph 7 is incon-

sistent and confusing. While this Court does not need to

determine whether the $300,000.00 limitation is valid (be-

cause the damages here are less than $300,000.00), the

12a

confusion and inconsistency is easily illustrated. On the

one hand, Paragraph 7 purports to expuleate MERRILL

STEVENS from all liability except for gross negligence.

The second sentence, however, attempts to limit liability,

including liability for negligence and breach of contract to

$300,000.00. If the first sentence is true, then the phrase

‘‘ineluding liability for negligence and breach of contract’’

is contradictory and unnecessary. One simply cannot tell

what the writer meant.

In Edward Leasing Corp. v. Uhlig & Associates, Inc.,

785 F.2d 877 (11th Cir. 1986), the Eleventh Cireuit was

confronted with a similar situation. Kdward Leasing con-

tracted with Uhlig for Uhlig to perform certain repairs on

the M/Y JANETTE. The contract contained certain

clauses—referred to as ‘‘red letter’’ clauses—which Uhlig

argued absolved them from all liability. The court quoted

the clauses at length and found them to be in conflict, de-

centive and, therefore, void. 785 F.2d at 888-89. The court

alS0 held that the attempted disclaimer of all liability was

unenforceable. 785 F.2d at 8838.

The elauses in the Uhlig & Associates contract do not

deter negligence on the part of the repairer, but af-

fords a false sense of protection to the shipowner, and

therefore are contrary to the public policy as set forth

in Bisso v. Inland Waterways Corp., 349 US 85, 75 S.

Ct. 629, 99 L.Ed.2d 911 44955). See also Todd Ship-

yards, 674 at 410. 785 F.2d at 888.

In Bisso, the Supreme Court held invalid an exeul-

patory clause purportedly absolving a towing company

from all liability arising from its negligence in towing a

vessel. The Supreme Court through Justice Black rea-

soned that the policies for striking down such clauses are

13a

(1) to discourage negligence by making wrongdoers pay

for the damage they cause, and (2) to protect those in in-

ferior bargaining positions from overreaching. See also

Hart v. Blakemore, 410 F.2d 218 (Sth Cir. 1969) (holding

that a written agreement which purportedly freed defen-

dant from all liability, including negligence, was void on

te basis that a contract to release one’s own negligence is

contrary to the public policy and unenforceable.)

As the Eleventh Circuit noted in Edward Leasing,

there have been several Admiralty cases since Bisso con-

struing limitation of liability clauses in marine repair con-

tracts. In its Initial Brief, MERRILL STEVENS relies

on the Aleoa Corsair, 385 F.2d 46 (5th Cir. 1967); Jig the

Third Corporation v. Puritan Marine Insurance Under-

writers Corp., 519 F.2d 171 (5th Cir. 1975) cert. denied

494 U.S. 954 (1976); Hudson Waterways Corp. v. Coastal

Marine Services, Inc., 436 F.Supp. 597 (B.D. Tex. 1977) ;

and Todd Shipyards Corporation v. Turbine Services,

Inc., 674 F.2d 401 (5th Cir. 1982). MERRILL STEVENS

cites these cases for the proposition that “maritime courts

have routinely sustained the validity of substantially sim-

ilar clauses to the ones in issue here where the action was

founded on breach of an implied warranty of workmanlike

performance.” Appellant’s Initial Brief at Page 7-8. This

statement contained in Appellant’s brief is simply not

correct.

In Hudson Waterways, 436 F.Supp. 597, the District

Court in construing a ship repair contract stated as fol-

lows:

Immunity from liability for one’s own negligence ‘can

arise only from the plainly expressed intention of the

parties, manifested by the language couched in un-

l4a

mistakeable terms.’ (Citations omitted). Thus, the

court must examine the language of the contract in

the light of the surrounding circumstances to see if

it manifests an intention on the part of the partiesthat

defendant is not to be held liable, even for its own

negligence. (Citations omitted). It is the objective

intention of the parties not the subjective intention,

that the court must ascertain. (Citations omitted).

The language of the contract must be viewed from the

standpoint of the parties, the relative freedom of

action and real bargaining strength. (Citations omit-

ted).

The language of the contract states that ‘ ... we

undertake to perform work ... only upon condition

that we shall not be liable in any respect to or by any

vessel, .. . or individual person directly or indirectly,

in contract, tort or otherwise, to its owners, charter-

ers, underwriters, ete., for any injury, loss or damage

to or by such vessel, ... or person or for any con-

sequences thereto.’ In the court’s opinion, this clause

in the contract unequivocally states that the defen-

dant is not to be held liable by the plaintiff, even for

the defendant’s own negligence. The language in the

contract is strong. It states that the defendant under-

takes to perform work only upon the condition that

defendant will not be held liable in any respect, for

any injury, loss or damage, to the vessel or its owners.

Hudson Waterways, 436 F.Supp. at 605.

Clearly, the court looked at the express language at

issue and carefully analyzed it in light of the cireum-

stances. In addition to the above quoted excerpt, the Hud-

son Waterways court quoted the full text of the contract.

See 4386 F.Supp. at 604, n. 12. The court’s ruling was far

from routine as Appellant suggests, and was based upon

express language, not an implied warranty, which, unlike

the present case, clearly expressed the intention of the

parties.

15a

Likewise, in the Alcoa Corsair, 242 F.Supp. 962 (E.D.

La. 1965) aff'd. 383 F.2d 46 (5th Cir. 1967), the court

quoted and considered the exact language at issue:

We contract only upon the following terms, ap-

plicable to every contract; ... furthermore, we under-

take to perform work on vessels ... only upon the

condition that we shall not be liable in respect to any

one vessel, directly or indirectly, in contract, tort or

otherwise, ... unless such injury is caused by our neg-

ligence or by the negligence of our employees and in

no event shall our aggregate liability to all such par-

ties in interest for damages sustained by them

exceed the sum of $300,000.00. Alcoa Corsair, 242

F’. Supp. at 965.

The language in the Alcoa Corsair is distinguishable

from that here in that it does not contain an express war-

ranty. Similarly, unlike the present case, the “red letter”

clause at issue in the Alcoa Corsair provides that the re-

pairer would be liable for negligence. Expressly relying

on the policy considerations of Bisso the Fifth Circuit

held that the repairer’s potential liability for negligence to

the extent of $300,000.00 was sufficient to deter negligence;

and that the evidence showed that Aleoa’s bargaining po-

sition was not that inferior vis-a-vis the repairer. The

exculpatory language in MERRILL STEVENS’ contract

would not deter negligence. Rather, it would be a disin-

eentive for following workmanlike standards in the repair

of vessels since MERRILL STEVENS would not be re-

sponsible for any consequences. Such results would be

dramatically different from what the Fifth Cireuit eon-

templated in the Alcoa Corsatr.

Todd Shipyards Corp. v. Turbine Services, Inc., 674

I'.2d 401 (5th Cir. 1982) similarly dealt with a “red letter

16a

clause” which limited liability for negligence or breach

of contract to $300,000.00. 674 F.2d at 410. Todd is there-

fore distinguishable since here MERRILL STEVENS

seeks not to limit liability for negligence or breach of

warranty, but seeks to completely exculpate itself.

Appellant's reliance on Jig the Third, 519 F.2d 171

(Sth Cir. 1975) is grossly misplaced. There, the Fifth

Circuit held that a shipbuilder’s attempted disclaimer did

not exeulpate the shipbuilder from liability for negligence

or breach of contract arising from the sinking of one of

its vessels. The court, again, quoted the warranty at length

and held that based upon either the general maritime law

or Florida law, the language was not clear and unequivocal,

and therefore, unenforceable. Thus, Jig the Third stands

for exactly the opposite proposition than what Appellant

argues.

Similarly, in the M/V AMERICAN QUEEN vy. San

Diego Marine Construction, 708 F.2d 1483 (9th Cir. 1985),

“the limitation clause was not an absolute exculpatory

clause either, but rather absolved the repairer of liability

if notice was not given within 60 days; it allowed for h-

ability up to $100,000.00, as well. The court was not deal-

ing with a total limitation of liability. 708 F.2d at 1487.”

Edward Leasing 785 F.2d 888-89.

Moreover, the record contains ample evidence of over

reaching on the part of MERRILL STEVENS. First, the

language upon which MERRILL STEVENS relies is

printed on the reverse side of its Work Order and Repair

Contract. A.3. The contract for repair of the ALISAN V

was awarded to MERRILL STEVENS based upon a bid

which was submitted pursuant to Alex Milligan’s survey.

lia

R128. MERRILL STEVENS introduced no evidence

showing that the language upon which it relies was con-

tained within their bid.

There is similarly no evidence showing that owners

or the assurers had an opportunity to negotiate the terms

of MERRILL STEVENS’ printed form. Cf. Hudson Wa-

terways, 436 F.Supp. 605, 606. The contract there contained

a provision stating that “additional liabilities will be as-

sumed by us upon request ... and an appropriate adjust-

ment made in the price”. 436 F.Supp. at 676.

Similarly, in the Alcoa Corsair, 383 F.2d 46, the re-

pairer introduced evidence that the parties had done bus-

iness numerous times and each time they understood that

the red letter clause was applied to each contract. Con-

versely, here, MERRILL STEVENS introduced no such

evidence. Thus, the conflicting and confusing language of

MERRILL STEVENS’ repair contract when coupled with

the overreaching on the part of MERRILL STEVENS

renders the contract unconscionable and does nothing to

deter negligence or breach of contract. Edward Leasing,

785 F.2d 887, 89.

Whether the court looks to the general maritime law,

as discussed above, or to Florida law as Appellant argues

in its Initial Brief, the result is the same. See Jig the

Third, supra. Since Appellant argues the applicability of

Florida law—despite Appellant’s apparent agreement that

this case is governed by General Maritime law (Appel-

lant’s Initial Brief at page 6)—Florida law should also

be considered. In Florida, exculpatory clauses have tra-

ditionally been disfavored and such clauses must be con-

strued strictly against the drafter. Harbor One, Inc. v.

18a

Preston, 172 So. 2 478 (Fla. 3rd DCA 1965). On those

rare occasions where these clauses may be upheld, such

should only occur in those cases where the language of

the exculpatory clause is clear, unambiguous and where

the contract is drawn between those in equal bargaining

position. Ivey Plants, Inc. v. FMC Corporation, 282 So.2d

205 (Fla. 4th DCA 1973); Sniffen v. First National Bank

of Broward, 375 So.2d 902 (Fla. 4th DCA 1979). Here,

contractual language, as noted above, is far from clear

and unequivocal and whether Florida or General Maritime

law is applied, the result is the same. Jig the Third, 519

F.2d 171; Sniffen, 375 So.2d 902; Ivey, 282 So.2d 902.

I.

THE COURT ERRED IN FAILING TO

AWARD ATTORNEYS FEES FOR BREACK

OF MERRILL STEVENS’ WARRANTY OF

WORKMANLIKE PERFORMANCE

Iu Admiralty, one who contracts to repair a vessel

is bound by the implied warranty of workmanlike per-

formance. Todd Shipyards Corp. v. Turbine Services,

674 F.2d 401 (5th Cir. 1982); and Parfait v. Jahnecke

Services, Inc., 484 F.2d 296 (5th Cir. 1973.)

The warranty of workmanlike performance is breached

by a repairer when:

A shipowner, relying on the expertise of another

party (the contractor) enters into a contract whereby

the contractor agrees to perform services without

supervision or control by the shipowner, the improper,

unsafe or incompetent execution of such services

would foreseeably render the vessel unseaworthy or

bring into play a preexisting unseaworthy condition;

19a

the shipowner would thereby be exposed to liability

regardless of fault. Fairmont Shipping Corp. v. Chev-

ron International Oil Company, 511 F.2d 1252 (2nd

Cir. 1975), cert. denied 423 U.S. 838 (1975). Stevens

v. Kast West Towing Company, Lic., 649 F.2d 1104

(Sth Cir. 1981).

When a vessel owner proves that a repairer breached

the warranty of workmanlike performance, which breach

proximately caused his damages, the party is entitled as a

matter of law to full indemnity for his loss, including

actual litigation expenses (as opposed to taxable costs)

and attorneys fees. Todd Shipyards Corp. v. Turbine

Services, Inc. 674 F.2d 401 (Sth Cir. 1982); and Parfait v.

Jahnecke Services, Inc. 484 2d 296 (5th Cir. 1973).

In Todd, the Fifth Cireuit repeated the rule that:

In this circuit foreseeable damages resulting from the

breach of warranty of workmanlike performance in-

clude atiorneys fees and litigation expenses. Stracian

Shipping Company v. Konin Klyke Nederlandsche,

342 b.2d 746 (Sth Cir. 1963); MeCawley +. Ozeannosun

Compania Maritime, S.A., 505 F.2d 526, 532 (Sth Cir.

1974); Accord Thibodeaux v. Texas Eastern Trans- -

mission Corp., 548 F.2d 581 (Sth Cir. 1977). Todd,

674 F.2d at 415.

The rationale for this rule is that damages awarded

for breach of contract, or specifically the warranty of

workmanlike performance, should return the party to the

position he would have oceupied had the contract or war-

ranty not been violated.

It is too well settled to require citation to authority

that damages awarded for breach of contract should

return the party to the position he would have oceu-

pied had the contract not been violated. Owners

20a

are entitled to have the L.P. turbine in the condition

contracted for, and to recover as well for the loss of

use of the vessel, out-of-pocket expenses and (since

the defendants breached the warranty of workmanlike

performance) costs and atlorney’s fees. Todd, 674

I'.2d at 412.

Here the court at trial reserved jurisdiction to receive

evidence on attorneys fees and costs upon post-trial mo-

tions. However, since the Court ruled that attorneys fees

would not be recoverable, no such hearing has ever been

held.

Appellee/Cross Appellant respectfully requests this

Court reverse and remand the trial court’s decision re-

garding attorneys fees with instructions to conduct an

evidentiary hearing concerning the reasonable amount of

aitorneys fees and litigation expenses to be awarded ‘o

Appellee/Cross-A ppellant.

CONCLUSION

Based upon the foregoing argument and citation of

authorities, it is respectfully submitted that the trial court

properly held that MERRILL STEVENS cannot excul-

pate itself from liability for breach of its express warranty

and the Final Judgment must therefore be affirmed; and,

the trial court erred in denying Plaintiff’s claim for at

torneys fees and litigation expenses and this Court shoul

remand this case with instructions to conduet an evident-

iary hearing regarding attorneys fees and litigation ex

penses.

2la

Respectfully submitted,

HAYDEN AND MILLIKEN, P.A.

Attorneys for Appellee;

Cross-Appellant

Suite 63

5915 Ponce de Leon Boulevard

Miami, Florida 33146

By: /s/ Domingo C. Rodriguez

DOMINGO ©, RODRIGUEZ

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that I have, on this 18th day

of December, 1986 mailed a copy of the Answer Brief of

Appellee/Cross-Appellant to Debra L. Brady and G.

Morton Good, Smathers & Thompson, Attorneys for Ap-

pellant, 1301 Alfred I. duPont Building, 169 FE. Flagler

Street, Miami, Florida 33131.

/s/ Domingo C. Rodriguez

DOMINGO CC, RODRIGUEZ

22a

IN THE DISTRICT COURT OF APPEAL

OF FLORIDA

THIRD DISTRICT

CASE 86-1732

MERRILL STEVENS DRY DOCK

COMPANY,

Defendant, Appellant

v.

VIVIAN ALVAREZ, f/u/b/o

AMERICAN HOME INSURANCE

COMPANY,

Plaintiff /Appellee

MOTION FOR REHEARING AND MOTION

FOR REHEARING EN BANC

COMES NOW the Plaintiff/Appellee, VIVIAN AL-

VAREZ f/u/b/o AMERICAN HOME INSURANCE

COMPANY, by and through its undersigned counsel, pur-

suant to Rule 9.330, Florida Rules of Appellate Proce-

dure, and files its Motion for Rehearing. In conjunction,

pursuant to Rule 9.331(e), Florida Rules of Appellate Pro-

eedure, Plaintiff/Appellee files its Motion for Rehearing

En Bane.

STATEMENT OF THE CASE

1. On May 1, 1983 the yacht ALISAN V was totally

destroyed by fire. Plaintiff/Appellee sued MERRILL

STEVENS alleging the fire was caused by MERRILL

STEVENS’ negligence and/or breach of contract or war-

ranties, A non-jury trial was held on March 10 and 11,

1986. The Court found the fire was caused by MERRILL

STEVENS’ negligence and/or breach of express and im-

plied warranties. MERRILL STEVENS argued that not-

23a

withstanding its negligence and breach of contract it

should not be responsible for the destruction of the ALI-

SAN V beeause of an exculpatory clause in its repair con-

tract. The pertinent clauses in the repair contract are as

follows:

1. Contractor agrees to repair said vessel in a good

and workmanlike manner pursuant to the terms as

outlined, and the owner and/or vessel agrees to

pay contractor for said work, labor and materials

as hereinafter stated. Other than specifically set

forth herein, contractor makes no warranties con-

cerning its workmanship or material either ex-

press or implied, including any implied warranty

of merchantability or fitness for a particular pur-

pose.

* * *

~)

.

Contractor undertakes to perform the work out-

lined * * * only upon the condition that it shall

not be liable, direetiy or indirectly, in contract,

tort, or otherwise * * * unless such (damage) is

eaused by contractor’s gross negligence or the

gross negligence of any of its employees, which

gross negligence shall not be presumed but must

be affirmatively established. In no event, includ-

img the negligence and/or the gross negligence

and/or the breach of contract by contractor, shall

the contractor’s liability to such parties in inter-

est for personal injury, death or damage * * * ex-

ceed the sum of $300,000.00.

2. After post-trial motions the court entered judeg-

ment on June 16, 1986 in favor of Plaintiff/Appellee in

the amount of $222,249.00. The trial court denied Plain-

tiff’s claim for attorneys fees,

3. On July 8, 1986, MERRILL STEVENS filed its

Notice of Appeal. On June 23, 1987, this court rendered

24a

its per curiam opinion in favor of MERRILL STE-

VENS, affirming in part and reversing in part the judg-

ment of the trial court. The court affirmed the trial court’s

denial of attorney’s fees and reversed the finding of liabil-

ity on the part of MERRILI STEVENS. The per curiam

decision was by majority.

MOTION FOR REHEARING

Plaintiff/Appellee seeks a rehearing on the following

grounds:

A. Plaintiff/Appellee's claim arises from the breach

of a maritime contraci, that is, a contract to repair a vessel,

and is thus governed by principles of maritime law. See,

e.g., Alcoa Steamship Company, Inc. v. Charles Ferran

and Company, Inc., 383 F.2d 46 (5th Cir. 1967) cert. de-

nied 393 U.S. 836. The United States Supreme Court in

Bisso v. Inland Waterways, 339 U.S. 85, 75 S.Ct. 629, 99

L.ED. 911 (1955) expressly diaspproved exculpatory

clauses in maritime contracts as contrary to the public

policy of admiralty. Accord, Edward Leasing Corp. v.

Uhlig and Associates, Inc., 785 F.2d 887 (11th Cir. 1986).

The majority does not mention the above cited cases. It

is respectfully submitted that the majority overlooked con-

trolling law mentioned above.

B. The issues raised by this ease le in the realm

of admiralty and maritime law. This court has previously

ruled that onee maritime jurisdiction attaches the law to

be applied is federal maritime law, not state law, regard-

less of the forum chosen. Miami Valley Broadcasting

Corp. v. Lang, 429 So.2d 1333 (Fla. 3rd DCA 1983) ; Booth

Steamship Co., Lid. v. Calzada, 382 S.2d 425 (Fla. 3rd

DCA 1980). In failing to apply the controlling federal

25a

law, the majority has overlooked the law of this court

compelling application of maritime law to cases sounding

in admiralty.

C. The majority decision focuses on language in the

first part of the subject exculpatory clause, overlooking

subsequent language in the clause which expressly admits

liability for negligence or breach of contract. The major-

ity relies on part of the clause which purports to impose

liability only if MERRILL STEVENS is grossly negli-

gent. However, a subsequent section of the same clause

states that MERRILL STEVENS is liable to the extent

of $300,000.00 for ‘‘negligence and/or... gross negligence

7?

and/or breach of contract... .°? The majority is silent

as to the significance of this language. It is respectfully

submitted that the dissenting opinion correctly notes that

the parties and the drafters of the contract obviously en-

visioned circumstances where MERRILL STEVENS

would be liable under theories of negligence, gross negli-

gence or breach of contract. The subject clause is, at best,

confusing, equivocal and ambiguous. Under either Florida

law or maritime law, contractual language is construed

most strongly against the drafter. United States v. Seck-

ger, 397 U.S. 203, 210-11, 90 S.Ct. 880, 884-85, 25 L.Ed.

2d 224 (1970); Edward Leasing Corp. v. Uhlig and Asso-

clates, Inc., 785 F.2d 877, 89 (11th Cir. 1986) ; Harbor One,

Inc. v. Preston, 172 So.2d 478 (Fla. 3rd DCA 1965). It is

respectfully submitted that the majority overlooked the

second section of the purported clause, and overlooked the

applicable state and federal law concerning judicial con-

struction of contractual terms.

Furthermore, paragraph 1 of the pertinent clauses

(quoted in full on page 2 of this Motion) is an express

26a

warranty ‘‘to repair said vessel in a good and workman-

like manner.’’ Thereafter, in paragraph 7 (also quoted on

page 2 of this Motion) MERRILL STEVENS attempts to

insert an exculpatory clause. The meanings of these two

clauses are diametrically opposed. This conflict was the

basis of the trial court holding MERRILL STEVENS

liable for breach of its express warranty. The panel de-

cision is silent as to this conflict, and it is respectfully

submitted that the panel decision has overlooked same.

D. The majority has overlooked or misapprehended

the nature of the contract between the parties. The ma-

jority states: ‘‘This is simply an unambiguous arm’s

length transaction between parties of like bargaining

power who were well able to allocate who was to bear the

> The eourt

responsibility of insuring against what loss.

has overlooked that there is a complete lack of evidence

supporting the court’s conclusion. The evidence showed

that MERRILL STEVENS was awarded the repair con-

tract based on a bid requested by a marine surveyor. R.

128. There was no evidence that the exculpatory clause

was contained within their bid.

K. The majority overlooked the cases of Todd Ship-

yards Corp. v. Turbine Services, Inc., 674 F.2d 401 (5th

Cir. 1982) and Parfait v. Johnecke Services, Inc., 484 F.2d

296 (5th Cir. 1973) which hold that damages in a ease

against a vessel repairer for breach of the warranty of

workmanlike performance include litigation expenses and

attorneys’ fees.

MOTION FOR REHEARING EN BANC

Pursuant to Rule 9.331 (¢), Florida Rules of Appellate

Procedure, Plaintiff/Appellee hereby moves for rehearing

<6 ted

27a

en bane. Pursuant to Rule 9.331 (ec) (2), the undersigned

counsel certifies as follows:

I express a belief, based on a reasoned and studied

professional judgment, that the panel decision is of

exceptional importance.

The reason for this belief is that the panel decision

represents a departure from firmly established principles

of law, and will have an enormous impact on Florida’s boat

owners. Florida is a boating mecea, with over 500,000

registered watercraft. The boating and boat repair in-

dustries are vitally important to Florida’s economy. The

panel decision will enable boat repairers to avoid lability

for their negligence and shoddy workmanship simply by

including ambiguous, convoluted or hidden exculpatory

clauses in their contracts, the terms of which, by virtue of

the vast difference in bargaining power, Florida consum-

ers will have no opportunity to negotiate.

Equally important, by virtue of the majority decision

the court has created a difference between state and fed-

eral interpretation of exculpatory clauses in marine re-

pair contracts. The effect of this dichotomy is that sub-

sequent disputes concerning construction of exculpatory

clauses in such contracts will be decided not upon legal

principles, but upon which court the suit is brought. This

effectively destroys the uniformity of admiralty, and en-

courages the vice of forum shopping.

Further, pursuant to Rule 9.33 (ec) (2) the undersigned

counsel certifies as follows:

I express a belief, based on a reasened and studied

professional judgment, that the panel decision is con-

28a

trary to the following decisions of this court and that

a consideration by the full court is necessary to main-

tain uniformity of decisions in this court:

In Cigarette Racing Team v. Gandee, 418 Soa.2d 337

(Fla. 3rd DCA 1982), this Court held that Federal mari-

time law governed a passive tortfeasor’s indemnity claim

against an active tortfeasor where the underlying tort was

cognizable in admiralty. The court also refused to apply

F.S. Section 371.52 (1977) beeause such application would

be contrary to substantive principies of maritime law.

See also Miami Valley Broadcasting Corp. v. Lang, 429

So.2d 1333 (Fla. 4th DCA 1983).

In Booth Steamship Co., Ltd. v. Calzada, 382 So.2d

425 (Fla. 3rd DCA 1980), this Court held that ‘‘[i]t is

obligatory that federal maritime law be applied in both -

federal and state courts.’’ Booth Steamship, 382 So.2d

at 426. The court therefore reversed a directed verdict

in favor of plaintiffs/appellees because_ the trial court

failed to apply federal maritime law as set forth by the

United States Supreme Court in Joragne v. States Marine

Lines, 398 U.S. 375, 90 S.Ct. 1772, 26 L.Ed.2d 339 (1970)

and United States v. Reliable Transfer Co., 421 U.S. 397,

95 8.Ct. 1708, 44 L.Ed. 2d 251 (1975). See also, Bilbrey

v. Weed, 215 So.2d 479 (Fla. 1968).

The majority opinion in the case at bar is contrary

to these cases because it fails to apply and follow the fed-

eral maritime law cited to the court in Appellee’s brief

and which has been cited herein.

Wherefore, Plaintiff/Appellee, VIVIAN ALVAREZ

f/u/b/o AMERICAN HOME INSURANCE COMPANY,

PET WOR

Vos

29a

by and through its undersigned counsel requests the court

grant its Motion for Rehearing, quash the per curiam

decision of June 23, 1987 and affirm the judgment of the

trial court. Alternatively, Plaintiff/Appellee respectfully

requests rehearing en bane as the decision of majority

is of exceptional importance and is contrary to decisions

of this court and of federal maritime courts, and consid-

eration by the full court is necessary to maintain uniform-

ity.

Respectfully submitted,

HAYDEN AND MILLIKEN, P.A.

Attorneys for Plaintiff/Appellee

Suite 63

5915 Ponce de Leon Boulevard

Miami, Florida 33146

305/662-1523

~ By: /s/ Domingo C. Rodriguez, Esq.

DOMINGO C. RODRIGUEZ, ESQ.

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that I have, on this 8th day

of July, 1987 hand-delivered a copy of the above Motion

to Debra L. Brady, Esq., and Morton Good, Esq., Smathers

and Thompson, Attorneys for Defendant/Appellant, 1301

Alfred I. Dupont Bldg, Miami, Florida 33131.

/s/ Domingo C. Rodriguez, Esq.

DOMINGO C. RODRIGUEZ, ESQ.