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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1988
- **Citation:** 486 U.S. 1023

## Text

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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**
~t

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.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385019_1574%3A2. Public record. Not legal advice.