Court of Appeals
For the First
SOUTH PORT MARINE, LLC,
GULF OIL LIMITED PARTNERSHIP;
THE REINAUER COMPANIES,
f/k/a BOSTON TOWING AND
TRANSPORTATION COMPANY INC.;
APPEALS FROM THE UNITED
STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. D. Brock Hornby, U.S.
Torruella, Chief Judge,
Boudin and Lynch, Circuit
David J. Perkins, with whom Daniel G. Lilley, Patrick
J. Mellor and Perkins, Olson & Pratt, P.A. were
on brief, for appellant.
William H. Welte, with whom Welte & Welte P.A.
was on brief, for appellee Gulf Oil Limited Partnership.
Brian P. Flanagan, with whom Flanagan & Hunter, P.C.,
Leonard W. Langer, Marshall J. Tinkle and Tompkins,
Clough, Hirshon & Langer, P.A. were on brief, for appellee
Boston Towing and Transportation Co., L.P.
December 7, 2000
TORRUELLA, Chief Judge. This appeal, which arises out of a February
1997 gasoline spill in Maine's Portland Harbor, requires us to
interpret both historic and contemporary maritime law in the
United States. On the one hand, appellees present a Seventh Amendment
argument that involves the state of federal admiralty jurisdiction
in the early days of the Constitution. Appellant, on the other
hand, raises questions of federal preemption and statutory interpretation
in relation to two issues of much current interest: oil spills
and punitive damages. Finally, both parties dispute the sufficiency
of evidence presented to the jury on various aspects of appellant's
We conclude that the district court's
disposition of these issues must be affirmed in part and reversed
I. Factual and Procedural Background
A. The Parties
Appellant South Port Marine, LLC,
("South Port") is a family-owned marina located on
a cove in Portland Harbor, Maine. The marina is principally designed
to accommodate recreational motor and sailing vessels by allowing
them to tie up to floating dock segments that are connected with
fixed docks leading to the marina's onshore facilities. The floating
dock segments are identical in function and purpose to ordinary
fixed docks, but are designed in sections with Styrofoam flotation
which allows them to rise and fall with the tides.
In the winter of 1996-1997, South
Port's owners planned to dredge the marina and parts of the surrounding
cove to allow access by larger boats. The owners also intended
to increase the number of slips in the marina from approximately
one hundred to closer to one hundred and twenty-five.
Appellee Gulf Oil is a Massachusetts-based
petroleum company. It operates a distribution facility on Portland
Harbor where, inter alia, petroleum products such as gasoline
are pumped into barges for transportation to other ports. Appellee
Boston Towing and Transportation operates tug boats and tank
barges for the purpose of oil transportation. Gulf Oil was pumping
gasoline into a barge owned and operated by Boston Towing at
the time of the incident involved in this appeal.
B. The February 5, 1997 Spill
In the early morning hours of February
5, 1997, a Boston Towing tank barge was tied to the Gulf Oil
pier in Portland Harbor, while a crew member transferred gasoline
from a Gulf onshore storage facility into individual tanks on
the barge. The gasoline transfer process required the crew member
to monitor the filling of each tank and to manually switch the
flow of gasoline to the next empty tank when the prior tank reached
its full capacity.
Sometime after 2:00 a.m. in the
morning, under severe weather conditions, the crew member assigned
to monitor the gas flow left the barge and boarded a nearby tug
boat, leaving the gasoline transfer completely unattended. While
the crew member was absent, the gasoline overflowed the recipient
tank and subsequently overflowed the barge's safety transom,
flowing into Portland Harbor. Between 23,000 and 30,000 gallons
of gasoline spilled into the water.
A large portion of the spilled gas
entered the cove on which South Port Marine is located, and by
8:00 a.m. two to three inches of gasoline floated on the surface
of the water at the marina. The Styrofoam flotation of the dock
segments began to disintegrate, causing the docks to sink, list,
and in many cases, fully submerge. As this happened, a number
of electrical posts (at least some of which were apparently awaiting
installation) fell off the docks and into the water.
C. Alleged Effects of the
Spill on South Port Marine
At trial, South Port alleged damages
falling into three general categories: extensive property damage,
lost profits, and "other economic losses" including
loss of goodwill and business stress. The spill allegedly destroyed
between sixty and eighty Styrofoam floats and severely damaged
forty-five dock segments. According to South Port, the repair
and cleanup of this damage was both costly and, at a critical
time in its development, very time-consuming. South Port further
alleged that the spill set back its dredging plan an entire year
and put the construction of new slips on indefinite hold due
to the cash flow crisis caused by the accident and the diversion
of South Port's employees from gainful work to cleanup and repair
tasks. South Port claimed the economic injury caused by the spill
eventually forced it to restructure its debt and threatened its
owners' entire investment of almost $1,000,000.
D. Procedural History
On January 14, 1998, South Port
filed a complaint in federal district court raising claims under
the federal Oil Pollution Act of 1990 ("OPA") and asserting
several state common law tort actions. The complaint demanded
trial by jury on all claims. Appellants argued that South Port
was not entitled to a jury trial because its claims sounded in
admiralty. The court initially reserved judgment on that issue
and proceeded to try the case before a jury.
On April 7, 1999, the first day
of trial, appellees conceded liability under the OPA in response
to questioning from the court. However, the court then ruled
that South Port's state common law claims (which included strict
liability, negligence, private nuisance, and trespass) were barred
by Maine law, see Me. Rev. Stat. Ann. tit. 38,
§ 551(2)(D) (West 1999); see also Portland Pipeline
Corp. v. Envtl. Improvement Comm'n, 307 A.2d 1, 40
(Me. 1973), because South Port failed to bring its state law
claims under Maine's Oil Pollution statute, which displaces state
common law claims. The court also decided that punitive damages
were unavailable under the OPA.
On April 16, 1999, the jury returned
a verdict in favor of South Port. The jury awarded South Port
$181,964 in damages for injury to property, $110,000 for lost
profits, and $300,000 for injury to good will and business stress.
After the jury verdict, appellees renewed their motion for judgment
as a matter of law, moved for a new trial, and also renewed their
challenge to appellant's right to trial by jury.
The district court denied appellees'
challenge to the jury trial in an order and opinion issued July
27, 1999. The motions for judgment as a matter of law and for
a new trial, however, were granted in part and denied in part
by order and opinion issued October 14, 1999. The court held
that the evidence presented to the jury was insufficient as a
matter of law to support the award of damages for lost profits
and other economic loss and reduced the jury's award by $395,000.
Ruling in the alternative in case its decision should be overturned
on appeal, the court also granted appellees' motion for a new
trial unless appellant would agree to a remittitur of $100,000.
Appellant filed this timely appeal
challenging the district court's rulings on the availability
of punitive damages and sufficiency of the evidence, and appellees
have cross-appealed the district court's decision that appellant
was entitled to trial by jury. We will address the jury issue
first, the punitive damages issue second, and the sufficiency
of the evidence arguments last.
II. Law and Application
A. Appellant's Seventh Amendment
Right to Trial by Jury
In the district court, appellees
moved to strike South Port's jury demand on the basis that the
OPA claim was comparable to a claim in admiralty to which the
Seventh Amendment's guarantee of trial by jury does not apply.
The district court initially reserved judgment on the motion
and impaneled a jury with the caveat that the jury's verdict
would be merely advisory if the court later determined that appellant
had no right to a jury trial. Following trial, on July 27, 1999,
the district court ruled that the Seventh Amendment did in fact
guarantee South Port a trial by jury on its OPA claim, and entered
judgment according to the jury's verdict. Appellees now challenge
South Port's demand for a jury trial
in its complaint bound the district court to Federal Rule of
Civil Procedure 39, which required the court to try the case
before a jury unless it found that South Port was not entitled
to a jury trial under the Constitution or laws of the United
States. See Fed. R. Civ. P. 39(a). Because the OPA does
not create a statutory right to trial by jury, South Port's entitlement
to such jury trial must stem, if at all, from the Seventh Amendment
to the Constitution, which states, "In Suits at common law,
where the value in controversy shall exceed twenty dollars, the
right of trial by jury shall be preserved . . . ." U.S.
Const. amend. VII.
As the Supreme Court has declared,
Although "the thrust of the
Amendment was to preserve the right to jury trial as it existed
in 1791," the Seventh Amendment also applies to actions
brought to enforce statutory rights that are analogous to common-law
causes of action ordinarily decided in English law courts in
the late 18th century, as opposed to those customarily heard
by the courts of equity or admiralty.
Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 41-42
(1989). The issue before us, then, is whether South Port's OPA
claim is analogous to a cause of action in admiralty in 1791,
to which no right to trial by jury would apply, or to a cause
of action at law, which carries the Seventh Amendment guarantee.
We agree with the district court that in 1791, South Port would
have brought its claim for damages to its marina under the common
law rather than in admiralty, and we therefore affirm the use
of a jury to hear the claim at trial.
The earliest cases from the United
States courts on the scope of admiralty jurisdiction applied
a "locality" test to determine whether a tort fell
under the admiralty or common law jurisdiction. Justice Story,
riding the Circuit in 1813, stated his understanding "that
the jurisdiction of the admiralty is exclusively dependent upon
the locality of the act. The admiralty has not (I believe) deliberately
claimed to have any jurisdiction over torts, except such as are
maritime torts, that is, such as are committed on the high seas,
or on waters within the ebb and flow of the tide." Thomas
v. Lane, 23 F. Cas. 957, 960 (C.C.D. Me. 1813). More recently,
the Supreme Court summarized the locality test as follows:
The traditional test for admiralty
jurisdiction asked only whether the tort occurred on navigable
waters. If it did, admiralty jurisdiction followed; if it did
not, admiralty jurisdiction did not exist. This ostensibly simple
locality test was complicated by the rule that the injury had
to be "wholly" sustained on navigable waters for the
tort to be within admiralty. Thus, admiralty courts lacked jurisdiction
over, say, a claim following a ship's collision with a pier insofar
as it injured the pier, for admiralty law treated the pier as
an extension of the land.
v. Great Lakes Dredge & Dock Co., 513 U.S. 527, 531
(1995) (citations omitted).
As suggested by Grubart,
the "location" of a tort sometimes depended on the
nature of the injured structure, i.e., whether the structure
was considered "an extension of the land." Beginning
with The Plymouth, 70 U.S. (3 Wall.) 20 (1866), which
found no admiralty jurisdiction over damage to a warehouse destroyed
in a fire started on board a ship, admiralty jurisdiction "has
not been construed to extend to accidents on piers, jetties,
bridges, or even ramps and railways running into the sea."
Rodrigue v. Aetna Cas. Co., 395 U.S. 352 (1968).
Using this rubric, South Port contends that the injury to its
docks would not have fallen within the admiralty jurisdiction
of the federal courts in 1791.
Appellees, however, argue that several
cases, most notably The Blackheath, 195 U.S. 361 (1904),
support the opposite conclusion. In The Blackheath, Justice
Holmes distinguished The Plymouth and announced the Court's
decision that a collision with a beacon would lie in admiralty
since it served as a navigational aid. This remained so despite
the fact that the structure is "technically land, through
a connection at the bottom of the sea," Id. at 367.
Appellees have failed to persuade
us, however, that The Blackheath or any of the other cases
cited in their briefs invalidated the rule established in The
Plymouth. In fact, in Cleveland Terminal & Valley
R. Co. v. Cleveland S.S. Co., 208 U.S. 316 (1908),
the Supreme Court addressed the tension between The Plymouth
and The Blackheath and concluded that the two decisions
were not incompatible. After discussing both cases, the Court
reaffirmed that admiralty jurisdiction did not extend to injuries
inflicted by a vessel upon a bridge, its protective pilings,
and an adjacent dock, stating that "the bridges, shore docks,
protection piling, piers, etc., pertained to the land. They were
structures connected with the shore and immediately concerned
commerce upon land. None of these structures were aids to navigation
in the maritime sense, but extensions of the shore and aids to
commerce on land as such." Id. at 321.
Moreover, courts specifically examining
the nature of floating docks have consistently held that they
do not possess the characteristics associated with maritime objects.
In Cope v. Vallete Dry-Dock Co., 119 U.S. 625 (1887),
for example, the Supreme Court decided that the salvage of floating
dry-docks could not properly fall under admiralty jurisdiction
because they "had no means of propulsion . . . and were
not designed for navigation." Id. at 627. Circuit
cases in this century have reached similar conclusions. See,
e.g., Atkins v. Greenville Shipbuilding Corp.,
411 F.2d 279, 282-83 (5th Cir. 1969) (holding that as a matter
of law, a floating dock was not a "vessel" owing a
maritime warranty of seaworthiness); Royal Ins. Co. of America
v. Pier 39 Ltd. Partnership, 738 F.2d 1035, 1037 (9th
Cir. 1984) (ruling that policies insuring floating docks did
not fall under admiralty jurisdiction because the subject matter
was not maritime); cf. Digiovanni v. Traylor
Bros., 959 F2d 1119, 1123 (1st Cir. 1992) (stating that if
a float is not in actual navigation, the test for whether it
qualifies as a vessel is whether its "purpose or primary
business is . . . navigation or commerce"). Thus, appellees'
emphasis on the floating nature of South Port's docks is insufficient
and misplaced. See id. ("Floating is not enough.").
Although these structures move with the ebb and flow of the tides,
they remain moored to a fixed location and serve no navigational
function. Indeed, their purpose is precisely the same as that
of traditional fixed piers or docks: to facilitate commerce on
land, presumably conducted in and around whatever retail and
repair facilities are operated by South Port. In essence, South
Port's floating docks are "extensions of the land"
in the sense of that phrase in eighteenth century admiralty jurisprudence.
Consequently, a tort that causes damage to them does not occur
"wholly on the navigable waters" and would have constituted
an action at law, rather than in admiralty, in the late eighteenth
We therefore agree with the district
court that South Port's OPA claim is analogous to a claim under
the common law at the time of the Seventh Amendment's ratification
in 1791, and that South Port was entitled to trial by jury.
B. Punitive Damages
Plaintiff contends that the district
court erred in ruling that punitive damages were unavailable
as a matter of law. We affirm the district court's ruling.
Plaintiff's complaint alleged six
"counts": a claim under the OPA, four state law tort
claims, and a count entitled simply "Punitive Damages."
Punitive damages, however, do not constitute a separate cause
of action, but instead form a remedy available for some
tortious or otherwise unlawful acts. Consequently, plaintiff's
claim for punitive damages must relate to some separate cause
of action which permits recovery of punitive damages.
Despite a valiant effort, plaintiff
has been unable to point to a legal basis for its punitive damages
claim. One of the four tort claims alleged in the complaint might
have been adequate; those claims, however, were dismissed by
the trial court, a decision which plaintiff has not challenged
on appeal. The remaining possibilities, therefore, are (1) the
OPA, or (2) general admiralty and maritime law.
1. OPA Does Not Provide for
In 1990, in the wake of the Exxon
Valdez and other oil spill disasters, Congress established a
comprehensive federal scheme for oil pollution liability in the
OPA. See 33 U.S.C. § 2702 et seq. (1990).
The OPA sets forth a comprehensive list of recoverable damages,
including: removal costs; damage to natural resources and real
or personal property; loss of subsistence use of natural resources;
loss of government revenues, lost profits and earning capacity;
and costs of increased or additional public services occasioned
by the unlawful act. See 33 U.S.C. § 2702(b). Absent
from that list of recoverable damages is any mention of punitive
damages. The question before us, therefore, is whether, by leaving
punitive damages out of the OPA, Congress intended to supplant
the general admiralty and maritime law that existed prior to
the enactment of the statute, which permitted the award of punitive
damages for reckless behavior. See, e.g., CEH,
Inc. v. F/V Seafarer, 70 F.3d 694, 699 (1st Cir. 1995)
(punitive damages long recognized in admiralty actions for willful
or reckless conduct).
2. Congress Intended the OPA
To Be the Exclusive Federal Law Governing Oil Spills
First, we note that, although the
parties have referred to this issue as one of "preemption,"
it does not present any of the federalism concerns normally associated
with that word, because we are concerned only with the OPA's
effect on preexisting federal law. The question, therefore,
is not complicated by any "presumption against preemption,"
see, e.g., Medtronic, Inc., v. Lohr,
518 U.S. 470, 485 (1996), but is rather a straightforward inquiry
into whether Congress intended the enactment of the OPA to supplant
the existing general admiralty and maritime law, which allowed
punitive damages under certain circumstances in the area of oil
pollution. We conclude that Congress did so intend.
The best indication of Congress's
intentions, as usual, is the text of the statute itself. See
Strickland v. Com'r Dept. Human Services, 48 F.3d
12, 17 (1st Cir. 1995). Section 2702 sets forth a list of damages
recoverable under the OPA, briefly describing each type. As we
have noted already, this scheme is comprehensive. To our knowledge
no case or commentator has suggested that the availability of
punitive damages under general admiralty and maritime law survived
the enactment of the OPA. We take this to be a strong indication
that Congress intended the OPA to be the sole federal law applicable
in this area of maritime pollution.
The text of the statute is not without
its limitations, however. Plaintiff emphasizes the language at
33 U.S.C. § 2718, which states that the OPA shall not be
construed as "preempting the authority of any State or political
subdivision thereof from imposing any additional liability,"
33 U.S.C. § 2718(a), nor to "affect the authority of
the United States of any State or political subdivision thereof
(1) to impose additional liability of additional requirements;
or (2) to impose, or to determine the amount of, any fine or
penalty (whether criminal or civil in nature) for any violation
of law," id. § 2718(c). Plaintiff also points
to 33 U.S.C. § 2751, which states that "[e]xcept as
otherwise provided in this chapter, this chapter does not affect
. . . admiralty and maritime law." Plaintiff argues that
this language demonstrates that Congress intended to leave open
claims and damages other than those enumerated in the OPA.
We have indeed acknowledged that
Congress did not intend the OPA to bar the imposition of additional
liability by the States. SeeBallard Shipping Co. v. Beach
Shellfish, 32 F.3d 623, 630-31 (1st. Cir. 1994) (using OPA
to support validity of state liability statute permitting recovery
for purely economic loss). That determination rested on the underlying
federalism concerns that counsel a skeptical view towards federal
preemption of state statutes. See id. at 630 ("Where
as here the state remedy is aimed at a matter of great and legitimate
state concern, a court must act with caution."). This case,
however, presents an entirely different issue, namely, whether
Congress's very specific treatment of oil pollution in the OPA,
which does not provide for punitive damages, supplanted general
admiralty and maritime law, which has traditionally provided
for the general availability of punitive damages for reckless
conduct. This question has largely been decided for us by the
Supreme Court in Miles v. Apex Marine, 498 U.S.
19 (1990), in which the Court declined to supplement damage provisions
of the Death on the High Seas Act, 46 U.S.C. § 762. The
Court refused to allow recovery for loss of society when such
damages were not provided in the statute, reasoning that "in
an 'area covered by statute, it would be no more appropriate
to prescribe a different measure of damage than to prescribe
a different statute of limitations, or a different class of beneficiaries.'"
See Miles, 498 U.S. at 31 (quoting Mobil Oil
Corp. v. Higginbotham, 436 U.S. 618, 625 (1978)).
As we indicated in CEH, 70 F.3d 694 (1st Cir. 1995), Miles
dictates deference to congressional judgment "where, at
the very least, there is an overlap between statutory and decisional
law." Id. at 701. Such is obviously the case here.
Although our analysis might end
there, we think it necessary to address plaintiff's contention
that the OPA should be construed more liberally because it was
enacted for the purposes of benefitting the victims of oil pollution
and punishing its perpetrators. While we agree that such intentions
were Congress's principal motivation in enacting the OPA, we
think it would be naive to adopt so simpleminded a view of congressional
policymaking in light of the competing interests addressed by
the Act. For instance, the OPA imposes strict liability for oil
discharges, provides both civil and criminal penalties for violations
of the statute, and even removes the traditional limitation of
liability in cases of gross negligence or willful conduct. Yet
at the same time, the Act preserves the liability caps in most
cases and declines to impose punitive damages. We think that
the OPA embodies Congress's attempt to balance the various concerns
at issue, and trust that the resolution of these difficult policy
questions is better suited to the political mechanisms of the
legislature than to our deliberative process.
For the reasons set forth above,
we agree with the district court that punitive damages were not
available to plaintiff and affirm the court's ruling on that
C. Sufficiency of the Evidence
Finally, South Port challenges the
district court's decision granting judgment as a matter of law
to defendants on sufficiency-of-the-evidence grounds. The court
held that, as a matter of law, South Port had failed to introduce
sufficient evidence to support the jury's verdict with regard
to most of the damages claimed for lost profits and "other
economic harm." We affirm this decision in part, and we
reverse in part.
1. Lost Profits
The jury awarded $110,000 of the
$185,062 that South Port requested for damages in the form of
lost profits. These alleged damages were presented in two main
categories: (1) $105,000 in lost slip revenues resulting from
a delay in South Port's plans to dredge and expand the marina
by approximately twenty-five slips, and (2) $80,062 from business
interruption, including diversion of South Port's labor force
and the loss of slip fees due to the temporary closing of the
facility. The district court, however, vacated all but $15,000
of this award on the ground that it was not supported by sufficient
We disagree with the district court's
conclusion that South Port failed to introduce evidence sufficient
to support the award for lost slip revenues. Plaintiff presented
testimony establishing the marina's plan to dredge the cove leading
to the marina, as well as parts of the marina itself, and to
expand the marina by some twenty-five slips. South Port further
offered proof sufficient to support a finding that the delay
in this improvement to the business was caused, at least in part,
by the February 5, 1997 gasoline spill. The district court noted
that South Port introduced no evidence to support its hope that
the additional slips could be filled if constructed and that
no comparison was made with other marinas or with any indicator
of the number of boats in the Portland Harbor area seeking dockage.
We believe, however, that a jury could reasonably infer that
South Port's very willingness to make a substantial investment
was grounded in some professional certainty that a market would,
in fact, exist once the dredging was completed. Although the
district court did not find compelling the fact that the existing
slips had been nearly full in years prior to the spill, we think
this evidence substantially supports an inference that the new
slips would also be in demand. Thus, we uphold the jury's award
for lost slip fees resulting from the delay in expansion and
We also cannot agree with the district
court's conclusion on the issue of diversion of South Port's
workforce. The jury apparently compensated South Port for the
losses incurred by the marina when it was forced to allocate
employees who normally serviced boats (and billed clients) to
dock repair necessitated by the spill. The district court vacated
this award for the same reason it vacated the award for lost
slip fees--that the plaintiff had failed to establish demand
for the service work that the employees allegedly would have
been doing had they not been needed for repairs. Again, we think
that the claimed damage is considerably less speculative than
it appeared to the district court. South Port claims that, absent
the spill, things would have proceeded essentially as they always
had at the marina, with a portion of the labor force performing
service work that could be billed to clients rather than nonbillable
repair work. Robert Craig, South Port's damage expert, testified
that he had spoken with the principal operator of the marina,
Kip Reynolds, and others, and that he had also seen the diversion
of labor with his own eyes. Although Craig admitted that the
time cards used by South Port's employees did not allocate hours
to specific projects or types of work, he explained how he had
arrived at his expert opinion and estimates. Appellant might
have done more to establish this element of the damages it claimed.
Nevertheless, we think that the proof presented meets the minimum
inferential threshold and that the jury award should not have
been disturbed. We therefore reverse the district court on its
evaluation of the lost slip revenue diversion of labor issues
and reinstate the jury's award of $110,000.
2. Other Economic Losses
The district court also vacated
the jury's award for a $100,000 loss in goodwill and a $150,000
for business stress. After reviewing the record, we agree with
the district court that the evidence is insufficient to support
the jury's verdict on these claims.
South Port's goodwill loss is based
upon a projected loss of value of the business after the spill.
Certainly, a bad reputation which lingers even after South Port
repairs its damages could affect its expected earnings. This
loss could be calculated by discounting the estimated loss of
future revenues to present value or, alternatively, by assessing
the decrease in value of the business to potential buyers after
the spill repairs. South Port's estimated loss, however, was
not adequately supported by either of these calculations.
Craig offered his expert opinion
that South Port's goodwill following the spill was approximately
$100,000, or ten percent of the value of the business. The court
correctly determined that the jury could accept that ten percent
is typically the value of goodwill in this type of business.
However, as the district court observed, Craig "never gave
any basis for concluding that this goodwill had been reduced
to zero or to any other number." Craig did identify the
potential perception that South Port marina was located in a
cove susceptible, for geographic reasons, to spill-related pollution,
and South Port introduced evidence at least suggesting damage
to its reputation in the community (media coverage, etc.). There
were no concrete numbers, however, explaining how these factors
affected all, or even part, of the goodwill of the business
Similarly, South Port provided no
basis for its estimation of business stress. Like goodwill loss,
this claim involved a form of the loss in value of the business:
the reduction in the value of the business due to the bank loan
default and the risk that the workout plan may not succeed. Although
this is a plausible claim for recovery, Craig offered no analysis
for quantifying this potential loss at $150,000. The district
court concluded that Craig's estimate was not supported by evidence
that he conducted a more specific investigation "regarding
the market for a business like South Port Marine's." We
A reasonable calculation of loss
due to business stress might take into account general data concerning
the reduced value of businesses in default or a specific showing
that this property had declined in market value. At the very
least, the calculation of business stress resulting from South
Port's workout plan required a specific computation of its risk
of failure in the same arrangement. However, Craig derived his
estimation simply as a portion of South Port's $600,000 net value
after deducting the loan. We believe this, without a more accurate
account, is an insufficient foundation to sustain the jury's
award. Accordingly, we affirm the district court's vacatur of
the awards for loss of goodwill and business stress.
Affirmed in part, reversed in
part. Remanded for action consistent with this opinion.
1. The district
court correctly noted that the Admiralty Extension Act of 1948,
46 U.S.C. § 740 (1994), which eliminates the land-water
distinction, does not affect the analysis here. While the Act
might permit the extension of admiralty jurisdiction over South
Port's tort action today, it does not divest the claim of its
original common law character and its attendant right to trial
by jury. See, e.g., California v. Bournemouth,
307 F. Supp. 922, 925 (C.D. Cal. 1969) ("[T]he legislative
history clearly indicates that the Act makes available a concurrent
remedy in admiralty for the existing common-law action.").