Last week, Levin Papantonio Rafferty (LPR) attorney Brian Barr gave oral arguments on behalf of appellees in Skanska’s appeal from a judgment in limitation of liability cases related to the breakaway of barges in Pensacola Bay during Hurricane Sally. Barr represents claimants who suffered property damage and economic losses.

Arguments were heard in the U.S. Court of Appeals for the Eleventh Circuit.

In December 2020, Skanska filed 28 Petitions for Limitation of Liability asking the U.S. District Court for the Northern District of Florida Pensacola Division for exoneration from, or limitation of their liability pertaining to, the widespread damage caused when 28 of the construction giant’s barges broke free during the hurricane.

After a 5-day bench trial, the federal court issued its Order and Final Judgment, finding that Skanska was not entitled to any relief under the Limitation of Liability Act. The case was tried by Barr, Tom Gonzalez from Beggs & Lane, and Sam Geisler, Nikki Gunter and Steve Echsner from Aylstock Witkin.

For the Limitation of Liability Act to apply, Skanska had to overcome a presumption of fault for the release of the barges. The company failed in this capacity, and it also failed to show it was without knowledge or privity related to this negligence.

The District Court dismissed all of Skanska’s Petitions for Exoneration from or Limitation of Liability and dissolved a previously ordered injunction staying all state court proceedings related to the instant action.

Skanska: “The Lower Court Erred”

In Thursday’s oral arguments before the Court of Appeals, Skanska’s attorney argued that the lower court erred by:

• Not granting Skanska exoneration with respect to economic loss claims
• Denying Skanska discovery regarding how the U.S. Navy had evaluated the weather forecast
• Imposing spoilation sanctions (related to destruction of evidence)

Barr: “The District Court Should Be Affirmed”

Barr gave a 20-minute argument speaking to the issue of exoneration. Attorney Nikki Guntner argued her points on the issue of spoilation of evidence, and Attorney Rob Kelly of the Department of Justice argued about the discovery limit issues on behalf of the U.S. Navy.

“The District Court should be affirmed on all issues presently before the court,” Barr said. “Skanska failed to meet its burden of proof as set out under Hercules and Bunge [Hercules Carriers, Inc. v. Claimant State of Florida, 768 F.2d 1558 (11th Cir. 1985); Bunge Corp. v. Freeport Marine Repair, Inc., 240 F.3d 919 (11th Cir. 2001)]. They are not entitled to exoneration. The court appropriately limited irrelevant discovery and testimony. And finally, the court was not required to rule on the issue of duty to determine if Skanska committed acts of negligence.

“For those reasons, the court should be affirmed,” Barr stated.

“There’s No Entitlement to Exoneration”

The Limitation of Liability Act of 1851 (46 U.S.C. § 30501) states that the owner of a vessel may limit damage claims to the value of the vessel at the end of the voyage plus “pending freight,” provided the shipowner can prove it lacked knowledge of the problem beforehand.

“Skanska committed acts of negligence that caused the release of 28 barges during the course of Hurricane Sally,” Barr explained. “The acts of negligence that are being complained about, they’re all in privity and knowledge of, and with that, the right to ask for exoneration vanishes.”

Barr further underscored the purpose of the Limitation of Liability Act proceeding: “to determine whether there would be a limited fund that the court then would pro rata allocate among the claimants.

“If there’s never going to be a limited fund, which there’s not going to be here, then there’s no reason to hold claimants up in federal court,” Barr said.

Skanska’s attorney pressed the issue that the District Court erred in not addressing the economic loss claims during the Limitation Act proceeding, specifically by showing that Skanska had a “duty” to claimants. When the judge asked Barr about the federal court’s decision to handle the proceeding in this manner, Barr offered that the lower court acted in recognition of an unusually complex situation.

“[There were] 28 separate petitions for limitations of liability a thousand claimants of different varieties. You had local governments, you had business owners, you had oyster farmers, you had dock owners—all these different types of claims that had come together,” Barr explained. “And what this court was trying to do was balance Skanska’s right to petition for limitations of liability with the claimant’s rights under the savings to suitors clause.”

By federal law, the Saving to Suitors clause allows an entitled party to pursue maritime claims in a state court before a jury (as opposed to a bench trial in federal court). Under 28 U.S. Code § 1333, such individuals can file their case in state court or in federal court. The choice is theirs to make. “Skanska can’t force that right on them,” Barr said.

Barr further explained that the District Court bifurcated (divided) the proceeding to first determine the acts of negligence, then whether Skanska was in privity and knowledge. Only if the District Court found that Skanska was entitled to limit its liability would the District Court proceed to the next phase of testing the validity of the claims, Barr said. Since Skanska is not entitled to limit, the claims will be proven in state court.

Skanska’s rights to petition for limitation of liability were fully protected and no claimant would be able to recover without proving all of the elements of negligence. “You don’t get a piece of the limited fund just because you asserted a claim. You have to come in and say, ‘Okay, this happened, and now, those acts of negligence caused my damage. I have damage,’” Barr elaborated. “At that point in time, the court can decide the duty question.

“There’s no reason why [duty] had to be decided when you’re just trying to determine whether or not this vessel owner committed acts of negligence,” Barr said.

“There is no entitlement to exoneration,” Barr added. “If Skanska’s right, and they are entitled to have exoneration decided regardless of whether there can be a limitation of liability, then the saving to suitors clause has no meaning. You might as well just erase it from the statute book. And so, the court was trying to give that statute meaning.”

“There’s No Way to Argue That Skanska Acted With Reasonable Care”

The District Court’s order refers to two elements–presumption of negligence and knowledge or privity—both of which were satisfied in the case presented to the lower court, according to Barr. There were 28 separate allisions, 28 barges that ran into stationary objects,” Barr reiterated, adding that “[Skanska starts] this case at fault.”

Barr cited Bunge Corp. v. Freeport Marine Repair, Inc., 240 F.3d 919, 923 (11th Cir. 2001) in support of this argument.

As Barr reminded the Court, there are three ways to rebut the presumption of negligence:

• It was the fault of the stationary object (“they didn’t even try that one,” Barr said.)
• They acted reasonably (“They tried that and failed,” Barr said.)
• It was an inevitable accident (“They don’t talk about that in their appeal,” Barr said.)

Considering the above, Barr argued, “There’s no way for [Skanska] to argue that they acted reasonably.”

“The claimants weren’t required to prove anything in the limitation case,” he added. “It was completely [Skanska’s] burden to come in and show they acted with reasonable care.”

Barr emphasized that the District Court trial did not result in any of the claimants having a judgment on which they could collect. Rather, each claimant still has to prove their case—but they get to do so in the forum of their choice, as provided under the savings to suitors clause.

“I can’t stress enough the limits on the Limitation of Liability Act and how that balances with the savings to suitors clause,” Barr concluded. “I think the court did an admirable job trying to balance these broad issues and operating in the most efficient way, which it has the discretion to do in how it manages its docket. And it did everything it could to protect Skanska’s rights under the Limitation of Liability Act and to protect the claimants’ rights under savings to suitors. And for those reasons, the court should be affirmed.”

Skanska Cellphones Were Wiped

The Appeals Court judges then heard arguments from Guntner regarding the spoilation issue. According to Guntner, Skanska destroyed evidence from five of the 13 custodians that it conceded were “key custodians “expected to have generated or maintained the most crucial, discoverable, ESI in this case.”

According to Guntner, Skanska admitted to a duty to preserve evidence as early as September 16, 2020. “These phones were all destroyed after the admission of duty to preserve evidence, after discovery had been served, after litigation had been filed,” Guntner said. “The timing cannot be described by anything other than bad faith.

“They admit to this duty in September of 2020,” Guntner continued. “These phones were not even collected and processed until June of the following year.”

At this point, the U.S. Court of Appeals has the Skanska case under advisement and will render its decision at a future date.