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Barge Damage to Bulkhead Claimed

Court Applies Admiralty Law

Zerega Avenue Realty Corp. v. Hornbeck Offshore Transportation, LLC Case No. 08-0639 (C.A. 2, July 6, 2009)

Zerega and Todino & Sons own property along Westchester Creek (the “Zerega property”). At the waterfront of the Zerega property, there is a bulkhead (also called a retaining wall or relieving platform) and, farther inland, a one-story office building with a basement. Hornbeck owns and operates the tug STAPLETON SERVICE (the “tug”) and the Barge ENERGY 2201 (the “barge”), which is approximately 250 feet long and 50 to 60 feet wide.

In October 2005, the Plaintiffs-Appellees commenced an action for damages against their insurance carriers and Hornbeck. The amended complaint alleged that on October 29, 2002, Hornbeck’s barge, while being pulled by its tug, struck the bulkhead on the Zerega property due to Hornbeck’s negligent operation while traveling south on Westchester Creek. It further alleged that the allision resulted in the rapid and severe weakening of the bulkhead, which caused most of the bulkhead to collapse nearly two weeks later. The Plaintiffs-Appellees sought damages for repair of the bulkhead and the office building. After a four-day bench trial, the Magistrate Judge found Hornbeck liable for negligently causing damage to the bulkhead and the office building and entered an award of $1,505,353, plus pre-and post-judgment interest, in favor of Zerega and Todino & Sons.2

The Magistrate Judge, trying the case by consent, see 28 U.S.C. § 636(c), found that Hornbeck’s tug was pulling the barge, in light condition, southbound in Westchester Creek toward Unionport Bridge. The tug was being operated by Mate Steven Spurlock with assistance from Training Mate Eric Fuerstinger. Spurlock and Fuerstinger stalled the vessels in the immediate vicinity of the Zerega property in midafternoon, while waiting in the narrow channel for the Unionport Bridge to open. During that time, Spurlock became concerned that the stern of the barge was drifting too close to the bulkhead of the Zerega property, and that the wind, which the Court found to be blowing toward the bulkhead, would cause the barge in its light condition to hit the retaining wall. Spurlock maneuvered the tug in an attempt to straighten the barge. As the Court found, Spurlock could not see the rear end of the barge while operating the tug, and Fuerstinger did not have a direct view of the rear of the barge on the starboard side.

The Court found, on the testimony of four witnesses, that the barge allided with the bulkhead structure on the Zerega property. Christopher Todino (“Todino”), principal of Todino & Sons, and his business guest, Michael Justino (“Justino”), were meeting in an office located at the southern end of the office building at around 3:30 p.m. They each testified that they suddenly felt a strong jolt and observed from the office window a barge being pulled away from the Zerega property by a tug. Louis Bruno, an office manager of Todino & Sons, working in the center of the office building at around 3:30 p.m., testified that he felt a thump, heard Todino and Justino yelling, and ran to a window from which he observed a barge being pulled away from the bulkhead by a tug. Laura Bruno, vice-president of Todino & Sons, testified that, upon hearing Todino and Justino yelling, she went to a window of the office building and observed a barge being pulled away from the Zerega property by a tug.

At trial, there was no dispute that on November 11, 2002, nearly two weeks after the allision, a significant portion of the bulkhead on the Zerega property collapsed into Westchester Creek. However, the parties disputed the cause of the collapse and sought to introduce the opinions of expert witnesses to support their competing theories. Zerega was permitted to introduce the expert testimony of Steven Schneider (“Schneider”), a professional engineer, that the bulkhead structure collapsed because either: (a) Hornbeck’s barge struck the retaining wall, causing the piles to shift, and, as the piles moved back, they ripped the planking hardware off the steel, which undermined the retaining wall; or (b) timber or a pole, latched on to Hornbeck’s barge, was dragged along the face of the retaining wall, like a stick being pulled along a picket fence, and destroyed the planking that was holding the earth underneath the structure in place, thereby causing the structure to collapse.

The Court precluded Hornbeck from introducing the expert testimony of Roderic Ellman (“Ellman”) and Pierce Power (“Power”), both professional engineers. Preclusion was ordered because the Court deemed Hornbeck to have failed to comply with a pretrial order of the Court. That order stated that “on or before March 22, 2006, the parties shall provide to the Court such information as they reasonably believe will enable the Court to fulfill the gatekeeping responsibilities imposed upon it by the Supreme Court in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S. Ct. 2786 (1993).”

Ellman, one of the precluded witnesses, would have offered the opinion that the cause of the bulkhead collapse was horizontal forces applied from the direction of the land against the bulkhead structure, whose wood pilings had become disconnected due to the corrosion of the metal fasteners and had deteriorated due to the natural biological decay of the timber. Power would have offered the opinion that the barge did not strike the bulkhead.

Although the testimony of Ellman was precluded, Hornbeck was permitted to introduce other evidence regarding the deterioration of the bulkhead. Hornbeck introduced the pretrial deposition testimony of Paul Cirillo, who owned the Zerega property from the late 1960s tolike a stick being pulled along a picket fence, and destroyed the planking that was holding the earth underneath the structure in place, thereby causing the structure to collapse. The Court precluded Hornbeck from introducing the expert testimony of Roderic Ellman (“Ellman”) and Pierce Power (“Power”), both professional engineers. Preclusion was ordered because the Court deemed Hornbeck to have failed to comply with a pretrial order of the Court. That order stated that “on or before March 22, 2006, the parties shall provide to the Court such information as they reasonably believe will enable the Court to fulfill the gatekeeping responsibilities imposed upon it by the Supreme Court in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S. Ct. 2786 (1993).” Ellman, one of the precluded witnesses, would have offered the opinion that the cause of the bulkhead collapse was horizontal forces applied from the direction of the land against the bulkhead structure, whose wood pilings had become disconnected due to the corrosion of the metal fasteners and had deteriorated due to the natural biological decay of the timber. Power would have offered the opinion that the barge did not strike the bulkhead. Although the testimony of Ellman was precluded, Hornbeck was permitted to introduce other evidence regarding the deterioration of the bulkhead. Hornbeck introduced the pretrial deposition testimony of Paul Cirillo, who owned the Zerega property from the late 1960s to the mid-1990s, that a sinkhole would develop in the bulkhead structure every eight to twelve months and require filling, and that in July and August of 2002, he observed a small sinkhole in the bulkhead of the Zerega property, which grew larger over time. Spurlock and Fuerstinger also stated through direct testimony that they observed a sinkhole on the Zerega property when they passed it on October 29, 2002. The District Court determined that the testimony of Cirillo, Spurlock, and Fuerstinger lacked credibility in light of the totality of the evidence and inconsistencies brought out during crossexamination. See Zerega Avenue Realty Corp., 2007 WL 3125318, at *3 & n.3. Apart from that testimony, the only other evidence on which Hornbeck relied was the testimony of Stanley White (“White”), Zerega’s expert on the amount of damages. White acknowledged on crossexamination that more than one plausible explanation for the bulkhead’s collapse existed and that certain hardware was missing from the area where the bulkhead collapsed, but also stated that the hardware could be at the bottom of the Creek.

In determining Hornbeck’s liability, the District Court applied what is known in admiralty law as the “Oregon rule.” The Court stated the rule as follows: “It is a well-established proposition of maritime collision law that when a moving vessel collides with a stationary object, an inference of negligence arises and the burden is then upon the owners of the vessel to rebut the inference of negligence.” Id. at *5 (internal quotation marks omitted). The Court ruled that, once Zerega established that the barge struck the bulkhead, a presumption arose that the barge was being negligently operated. The Court further ruled that Hornbeck could rebut that presumption by showing, by a preponderance of the evidence, that it acted with reasonable care, that the allision was the fault of the stationary object, or that the allision was an unavoidable accident. See id. at *6.

Implicitly concluding that Hornbeck had not rebutted the inference of negligent operation, the Court then applied the Oregon rule to the issue of causation, casting on Hornbeck the burden of rebutting a presumption that its negligence caused Zerega’s damages. See id. at *5-*6 & n.4.3 In evaluating Hornbeck’s evidence, the Court ruled that Hornbeck “failed to proffer evidence at the trial that would establish, by a preponderance, that the cause of the collapse of the plaintiffs’ bulkhead structure was its deterioration and unsound condition.” Id. at *6. The Court therefore held Hornbeck liable and, finding White’s testimony as to damages to be credible, awarded Plaintiffs-Appellees $1,505,353 for the damage to the bulkhead and the office building, with pre- and post-judgment interest.



 

Judge(s): Feinberg, Newman, and Katzmann
Jurisdiction: U.S. Court of Appeals, Second Circuit
Related Categories: Civil-Procedure, Civil-Remedies, Damages, Maritime, Property
 
Appellant Lawyer(s)Appellant Law Firm(s)
Joseph T. StearnsGino A. Zonghetti, Kenny, Stearns & Zonghetti LLC

 
Appellee Lawyer(s)Appellee Law Firm(s)
Alex SpizzScott A. Markowitz, Todtman Nachamie Spizz and Johns

 





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that the victims' "psychological impediments" were "caused, at least in part, by the defendant," guideline range, reserving only the right to appeal from a sentence a month for five years, id. at 18. reagles estimated that jane doe #2 would need periodic broad . . . , it does not distinctly negate [the] statement that restitution will plea of guilty here today and any sentence the court might impose on you." plea tr. 28:17-20. discretion. to identify such abuse, we must conclude that a challenged ruling rests on an error of estimate of the cost of future counseling. we express no view on this point. at this point, we victims. life, an order of restitution as specified above, a special assessment of did not have a sound basis for determining what the projected costs of therapy were for the two conduct even deferential review of whether the final restitution order reflects a reasonable the court accepted pearson's guilty plea. in the first paragraph of the agreement, the parties stipulated that "the particular sentence agreement and knowingly and voluntarily waived the right to appeal a certain sentence, then appeal the merits of a sentence conforming to the agreement." united states v. salcido- defendant-appellant. including what the two victims had "done subsequent to the time they were involved with conclusion plea agreement. during those proceedings, the district court confirmed that pearson understood 07-0142-cr 1154, 1159-60 (9th cir. 2007); united states v. danser, 270 f.3d 451, 455 (7th cir. 2001); b e f o r e : herein, including any related issues with respect to the establishment of the remand the case simply to secure a more thorough explanation from the district court as to the pornography, and sentencing him to, inter alia, pay restitution in the amount of $974,902. we hearing, the district court stated that it had reviewed the "plethora of information" and sentencing we review an order of restitution "deferentially, and we will reverse only for abuse of unambiguously waived his right to appeal a district court's award of full restitution, but he has "discount[ed] substantially what dr. [reagles] has put before us because he's not competent to the court relied on reagles's proposed restitution amounts as starting points, but it did is able to estimate, based upon facts in the record, the amount of victim's loss with some [t]hough ready's waiver of his appellate rights . . . is admittedly judgment and remand for further sentencing proceedings limited to that issue. added). we conclude, therefore, that pearson has not unambiguously waived his right to appeal 2007, in the united states district court for the northern district of new york (mcavoy, j.) however, "[i]n no circumstance . . . may a defendant, who has secured the benefits of a plea reliably predicted future loss, and it ordered restitution in a substantially lower amount. still, concluded that the next paragraph, entitled "potential penalties," confirmed pearson's understanding memoranda submitted by the parties, as well as "the materials submitted on behalf of the victims the "same mathematical formula" as it had employed for the first victim. id. at 14:12. the care." three of our sister circuits have considered this language and concluded that 2259 abraham pearson, estimated to be a period of 42.2 years, id. at 112-13; personal counseling once a week for the we are called upon to consider whether a restitution order pursuant to 18 u.s.c. 2259 may some for the rest of her life" as a result of her sexual assault by pearson. id. at 12-14, 109-10. here, as in ready, "the agreement explicitly applie[d] the background presumption of quotation marks and citations omitted). paragraph also stated that "[pearson] consents to the entry of an order directing him to pay reasonable certainty."); danser, 270 f.3d at 455-56 (concluding that the restitution figure was treatment requirements and the estimated cost for each treatment. what the [victims'] problems were before they encountered mr. pearson and what the . . . make all these judgments," id. at 13:5-6. the court concluded also that the victims' future losses are likely but the amount cannot be calculated with reasonable certainty at the time of the imprisonment and a lifetime term of supervised release. years, gov't app. at 15-17; personal counseling once a week for the next seven years and twelve accordingly, we vacate that part of the judgment ordering $974,902 restitution and "th[e] court may also order your client to make restitution pursuant to 18 u.s.c. sections 3663 guilty to twenty-one counts of the second superseding indictment. divided equally between jane doe #1 and jane doe #2. id. and possessing child pornography, and sentencing him, inter alia, to serve fifteen years' incorporating the agreed disposition specified herein." plea agreement 11. according to the that he was waiving "the right to appeal or collaterally attack your conviction arising out of your 82 f.3d 551, 560 (2d cir. 1996) (alteration in original). elsewhere the agreement provided: 3 intended the phrase, `"whatever sentence is imposed," to mean "whatever guilty plea to multiple counts of producing, transporting, receiving, and possessing child in paragraph 3, entitled "agreed-upon sentence," the government and pearson, pursuant without more information as to how the district court reached the lower figure, we are unable to contreras, 990 f.2d 51, 53 (2d cir. 1993) (per curiam). discussion entry of an order directing him to pay restitution in full." plea agreement 1(c) (emphasis 488 f.3d at 1160 ("we will uphold an award of restitution under section 2259 if the district court pearson argues that the restitution order in this case is erroneous because the district court united states court of appeals agreement plainly contemplates a future determination of the amount necessary to provide "full" quantify" or "pinpoint the etiology" of the victims' mental health issues that required ongoing constitutes full restitution. $974,902 to afford the district court flexibility to adjust the award if, in providing its explanation, on june 6, 2006, pearson entered into a plea agreement in which he agreed to plead guilty next three years and eight to ten times a year for rest of her life after that, id. at 114; and group $921,976 for jane doe #1 and jane doe #2, respectively. gov't app. at 18, 114.1 [pearson] acknowledges that, after consultation with defense counsel, he august term, 2008 government, we must presume that on the issue of restitution, the parties although we acknowledge that the defendant consented to the entry of an order2 the district court then confirmed that pearson had signed the plea agreement voluntarily, in this case, although the record contains evidence of the victims' need for long term trial attorney, for andrew t. baxter, interim united states find that the district court has not explained adequately its calculation of the restitution amount remand the case for the limited purpose of ordering restitution consistent with this opinion. in defendant-appellant abraham pearson appeals from a judgment entered january 12, based on united states v. booker, 543 u.s. 220 (2005) and its progeny. usa v. pearson penalties imposed illegally. construing this ambiguity strictly against the appellee. restitution statute as a basis for its judgment, it is the language of 2259 with which we are b. restitution amount _______________ a threshold question is whether pearson waived his right to appeal the restitution order. prior to sentencing, the government submitted in support of its request for restitution to in this case, pearson waived his right to appeal "his conviction and any sentence court ordered that pearson pay jane doe #2 restitution of $307,325, explaining that it had applied a. appellate waiver equivalent to the annual change in appropriate elements of the medical price index for the past 3663a, of the above mentioned offense(s)." id. 1(c). "in furtherance of his restitution specified below is the appropriate disposition of this case." plea agreement 1(b). that district court indicated that there were "a lot of other things" that it had put into the calculations, persuaded by the analysis of our sister circuits and conclude that a restitution order pursuant to 18 11 attack the conviction and sentence in this case, including by a challenge with failing to keep records pertaining to individuals portrayed in sexually explicit conduct. the imprisonment and to pay restitution to the child victims of his crime in the amount of $974,902. paul d. silver, assistant united states attorney, and steve grocki, annual cost, which, in the case of future treatments, he appreciated "by a percentage factor imposed, including any issues that relate to the establishment of the background paid presently. a sentence of 15 years imprisonment, a term of supervised release of up to 8 for the calculation of restitution in this case. see united states v. julian, 242 f.3d 1245, 1246 _______________ a. the plea agreement but the court observed that the victims "had some problems before" and that it was difficult "to restitution in full to any person who would qualify as a victim, under 18 u.s.c. 3663 or (10th cir. 2001) ("[e]ven if the district court erroneously used the general rather than the specific concerned in determining whether the court had statutory authority and discretion to award future of mental health issues that will require treatment and services presently and into the future, law, a clearly erroneous finding of fact, or otherwise cannot be located within the range of exacerbation turned out to be after their experiences with mr. pearson," id. at 11:17-20, the court consultation services, as well as employee assistance, case management, and psychological reasonable. we hold that a restitution order pursuant to 18 u.s.c. 2259 may provide for a defendant's knowing and voluntary waiver of his right to appeal a conviction and sentence and therefore vacate that portion of the judgment and remand for further sentencing proceedings. counseling twice a month for four years, id. for each treatment, reagles provided the present appeal from a judgment entered january 12, 2007, in the united states district court for id. 11. purportedly specify the agreed upon disposition of a restitution order in a criminal case. --v.-- resulting from an adjusted base offense level of greater than twenty-three." laurie s. hershey, manhasset, ny, for defendant-appellant. u.s.c. 2259 may include restitution for estimated future medical expenses. not plainly erroneous based on the uncertainty of the projected costs where the court held a 2 to sixteen times a year for the twenty-seven years after that, id. at 17; and group counseling twice (hereinafter referred to as "the agreed disposition"). the defendant. that "[p]ursuant to the mandatory victim restitution act, the sentencing court must order that adequately its calculation of the restitution amount. therefore, we vacate that portion of the not unambiguously waived appeal of possible errors in the determination of what amount section 2259 of title 18 of the united states code provides the applicable framework3 times a year) and a regimen of medications for the rest of her life, estimated to be a period of 39 he estimated the future cost to pearson's victims of obtaining medical care to be $2,002,732 and medical expenses, "an order of restitution for future losses may be inappropriate [where] the finally, in paragraph 11, the agreement provided: authorizes compensation for future counseling expenses. see united states v. doe, 488 f.3d sentence is imposed by law." id. 3 (emphasis added). the agreement specified that the term of supervised release was not basis for its restitution determination. in doing so, we vacate that part of the judgment ordering $2,100, an order of forfeiture as set forth below, and the other conditions "who is a very good economist, [is] qualified to make diagnoses in the case of severe pearson's victims reports prepared by dr. kenneth reagles, the owner of k.w. reagles & obligations," pearson agreed to provide $100,000 to the government, prior to sentencing, to be costs for counseling." (citation omitted)). advisory sentencing guidelines range or the reasonableness of the medical expenses should not be discounted to a present value because the restitution could not be _______________ and 3664." id. at 559 (alteration in original). noting this latter provision of the agreement, we treatment. id. at 10:13-11:8. although reagles's reports included "a very detailed analysis of counts involved, including the maximum and mandatory minimum terms of imprisonment and per curiam: _______________ amount of loss is too difficult to confirm or calculate." laney, 189 f.3d at 967 n.14; see doe, in january 2007, pearson appeared before the district court for sentencing. at the it determines that the original order does not accurately reflect "full" restitution, as agreed to by 4 because we conclude that the defendant has not waived his right to appeal the restitution amount, include an amount for estimated future medical expenses, and, if so, whether the amount of while a restitution order pursuant to 18 u.s.c. 2259 may include an amount for future be imposed in accordance with the restitution statute. there is thus an hearing concerning the victim's need for long term counseling and had evidence of the costs of legality," id., to the court's restitution order when it provided that "[pearson] consents to the indictment alleged that he had, inter alia, videotaped and photographed two minor females convicting him, following a guilty plea to multiple counts of producing, transporting, receiving, initial sentence, a victim may nevertheless be able to secure compensation for the further losses for the second circuit counseling and of the cost of that counseling, the district court did not explain how it estimated the northern district of new york (mcavoy, j.) convicting defendant-appellant, following his reagles estimated that jane doe #1 would need periodic psychiatric evaluations (four1 the defendant pay restitution to any victims of the offenses of conviction, as more fully set forth _______________ julian, 242 f.3d at 1246-48; united states v. laney, 189 f.3d 954, 966-67 (9th cir. 1999). we attorney for the northern district of new york, albany, ny, for the rights that he was waiving by pleading guilty. on inquiry from the court, pearson said that he attention to the appeal waiver provision of the agreement, the court asked if pearson understood to federal rule of criminal procedure 11(c)(1)(c), agreed that appellee, in june 2006, pearson appeared before the district court to plead guilty pursuant to the 9 within an agreed upon guideline range is enforceable. see united states v. hernandez, 242 f.3d "[the defendant] and the united states knowingly and expressly waive all conviction and any sentence incorporating the agreed disposition specified sentence imposed. sexually explicit conduct for the purpose of producing visual depictions of such conduct. future counseling); julian, 242 f.3d at 1248 (vacating and remanding for a hearing on the set forth in paragraph 1 above is the appropriate disposition of this case 7 discussing reagles's reports, the court noted that it "d[id]n't believe" that dr. reagles, pursuant to 18 u.s.c. 3664(d)(5). in january 2006, pearson was charged in a seventy-four count second superseding fully understands the extent of his rights to appeal, and/or to collaterally in united states v. ready, we considered the following waiver language: to twenty-one counts of the second superseding indictment. psychological impediments caused allegedly by the defendant." id. at 10:10-15. the court found had talked to his attorney about pleading guilty to the relevant counts and that his attorney had may include restitution for estimated future medical expenses. section 2259(b) provides for3 the victims' future expenses. plainly, it was not persuaded that dr. reagles's calculations (submitted: may 20, 2009 decided: july 2, 2009) part of the rule 11(c)(1)(c) agreement and would be determined by the court. estimated future medical expenses, but we find that the district court has not explained 6 110, 113 (2d cir. 2001) (per curiam). "waivers of appellate rights . . . are to be applied narrowly specified above," id. 3, to wit, an order to pay restitution "in full," id. 1(c). such an2 told him "the consequences of pleading guilty and the deal." plea tr. 6:17-18. pearson then pled miner, katzmann, and raggi, circuit judges. u.s.c. 3742 and/or 28 u.s.c. 2255, to appeal or collaterally attack his ("jane doe #1" and "jane doe #2") in sexually explicit positions, and enticed them to engage in psychiatric evaluations (four times a year) and a regimen of medications for the rest of her life, 10 years, viz. 4.6% per year." id. at 16, 112. his total estimates were based on the estimated b. the plea proceedings restitution of $667,577, an amount equal to one-third of the amount proposed by reagles. the id. (emphasis added). _______________ rights conferred by 18 u.s.c. section 3742 to appeal whatever sentence is ambiguity (at the least) as to the parties' intent with regard to restitution and construed strictly against the government." id. (internal quotation marks omitted). all other respects, the district court's judgment of conviction is affirmed. counseling services." gov't app. at 65, 132. reagles concluded that each victim "has a number in paragraph 1." id. 2(e). [pearson]." id. at 14:15-19. in addition, the court sentenced pearson to 180-months' are not aware of any of our sister circuits that have reached a contrary conclusion. we are parties' stipulation, the "agreed disposition" included, inter alia, an order of restitution "as read it before he signed it, discussed it with his attorney, and understood it. directing pearson's permissible decisions." united states v. boccagna, 450 f.3d 107, 113 (2d cir. 2006) (internal associates, l.l.c., a company that provides "[f]orensic vocational, rehabilitation, and economic supervised release, and the amount of the special assessment. the government did not, however, united states of america, victim's need for future counseling and the estimated cost of that counseling). where further c. the sentencing proceeding not adopt those amounts. with respect to jane doe #1, the court ordered that pearson pay describe pearson's potential restitution obligations. restitution ordered, which included an estimate of the victims' future medical expenses, is directing him to pay restitution "in full," we do not endorse the use of such vague language to pearson stated that he understood. indictment with the production, transportation, possession, and receipt of child pornography, and with the restitution issue" by reagles. sent'g hr'g. tr. 3:17-25. whether the amount of restitution ordered compensates the victims "in full." our circuit has not addressed whether restitution ordered pursuant to 18 u.s.c. 2259 incurred by the victim" for "medical services relating to physical, psychiatric, or psychological restitution to defendant's victims. in these circumstances, we conclude that pearson has [pearson] waives any and all rights, including those conferred by 18 mandatory restitution of "the full amount of the victim's losses," which includes "any costs docket no. 07-0142-cr thereafter, the government identified the maximum and minimum penalties for the 10 5


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