City Of Milwaukee v. Cement Div., National Gypsum Co.

515 U.S. 189 (1995)

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Nature of the Case

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Facts

P is the owner and the insurers of the E. M. Ford, a ship that sank in Milwaukee's outer harbor. In the course of a severe storm, she broke loose from her moorings, battered against the headwall of the slip, took on water, and sank. P sued the City (D), invoking the District Court's admiralty and maritime jurisdiction. P alleged that D had breached its duty as a wharfinger by assigning the vessel to a berthing slip known to be unsafe in heavy winds and by failing to give adequate warning of hidden dangers in the slip. P sought damages of $4.5 million, later increased to $6.5 million. D denied fault and filed a $250,000 counterclaim for damage to its dock. D that P was negligent in leaving the ship virtually unmanned in winter, with no means aboard for monitoring weather conditions or summoning help. The court determined that P bore 96% of the responsibility for the disaster, while D bore 4% of the fault. Given the disparity in the parties' damages, a final judgment giving effect to that allocation (and awarding the damages sought in the pleadings) would have essentially left each party to bear its own losses. The Court of Appeals for the Seventh Circuit rejected the allocation of 96% of the responsibility to the owner as clearly erroneous. The Court of Appeals apportioned liability two-thirds to P and one-third to D. The parties entered into a partial settlement fixing respondents' damages, excluding prejudgment interest, at $1,677,541.86. 3 The parties agreed that any claim for interest would be submitted to the District Court for decision. Ps then sought an award of over $5.3 million in prejudgment interest. That request was denied; special circumstances justified a departure from the standard rule in this case. The court concluded that P's contributory negligence was of such magnitude that an award of prejudgment interest would be inequitable. The Court of Appeals reversed. It noted that prior to this Court's announcement of the comparative fault rule in United States v. Reliable Transfer Co., 421 U.S. 397 (1975), some courts had denied prejudgment interest in order to mitigate the harsh effects of the earlier rule commanding an equal division of damages whenever a collision resulted from the fault of both parties, even though one party was only slightly negligent. In the court's view, after the divided damages rule was 'thrown overboard' and replaced with comparative fault, mutual fault could no longer provide a basis for denying prejudgment interest. The Court of Appeals also read our decision in West Virginia v. United States, 479 U.S. 305, 311 (1987), as disapproving of a 'balancing of the equities' as a method of deciding whether to allow prejudgment interest.