Recent Development by Elizabeth A. Jackson
Two barges transporting 158 slabs of steel valued at nearly one million dollars sank in the Mississippi River. A.K. Steel Corporation of Middletown, Ohio, the initial purchaser, had contracted to purchase the steel cargo from Duferco, S.A. After the two barges, which were owned by the Canal Barge Company, sank with the steel cargo, Duferco filed a claim with its insurer, Unione Mediterranea di Sicurta Generali Marine S.P.A. (UMS) and Canal Barge's insurers, Steven Henry Adams et al. (Adams). Duferco then awarded a salvage contract to American Eagle Marine, Inc. In July 1994, before favorable salvage conditions materialized, a Duferco representative contacted American Eagle and instructed it to cease all salvage operations. Duferco wanted to write off the cargo as a total loss, therefore “abandoning” the steel. A Duferco attorney contacted Canal Barge and instructed it to place its underwriters on formal notice of Duferco's abandonment; the underwriters initially refused to accept Duferco's abandonment.
In a declaratory judgment action filed by Adams to ascertain which underwriter, it or UMS, bore the responsibility for reimbursing Duferco for the loss of the steel, the United States District Court for the Eastern District of Louisiana held that Duferco was entitled to recover for the constructive total loss of the cargo from UMS or Adams. Since Duferco demanded payment from Adams first, the court concluded that Adams must pay Duferco and then seek contribution from UMS. Pursuant to the district court's ruling, Adams made a partial payment to Duferco in exchange for an assignment of Duferco's rights in the sunken steel.
Several months later, in February 1995, American Eagle, no longer involved in a salvage contract with Duferco, commenced its own voluntary salvage operation. American Eagle subsequently sold all of its rights in the sunken steel to A.K. Steel. Before the salvage operation concluded, Adams learned of the operation and promptly contacted A.K. Steel and American Eagle, instructing both parties to cease all salvage operations. A.K. Steel and American Eagle refused, initially claiming that the steel belonged to them.
Upon learning of the refusal to cease salvage operations, Adams filed an amended declaratory judgment action asserting a claim to recover the value of the steel from American Eagle and A.K. Steel. The district court held that Duferco never expressly abandoned title to the cargo, and, therefore, Adams was entitled to exercise its option to the title under the assignment from Duferco. American Eagle and A.K. Steel appealed. On the abandonment issue, the United States Court of Appeals for the Fifth Circuit held that the evidence presented at trial supported the trial court's factual determination that Duferco never expressly abandoned title to the steel and, therefore, that the law of salvage applied. Adams v. Unione Mediterranea di Sicurta, 220 F.3d 659, 672-73, 2000 AMC 2788, 2801-02 (5th Cir. 2000), cert. denied, 121 S. Ct. 1191 (2001).
About the Author
Elizabeth A. Jackson.
Citation
75 Tul. L. Rev. 1823 (2001)