Appeal from the United States District Court for the Eastern District of Missouri.
The opinion of the court was delivered by: Colloton, Circuit Judge.
Submitted: January 14, 2010
Before MELLOY, SMITH, and COLLOTON, Circuit Judges.
This appeal is one of several stemming from an allision between one or more barges and a casino boat on the Mississippi River. The barges broke loose from a towboat belonging to American Milling Co., UN Ltd., HB Marine, Inc., and American Milling LP (collectively, "American Milling") and damaged The Admiral, a moored casino entertainment ship owned by President Casino, Inc. ("President Casino").
This court previously addressed the parties' liability from the incident, American Milling's right to limit its liability, and the value of the limitation fund. In re American Milling Co., 409 F.3d 1005 (8th Cir. 2005). This appeal involves an interpretation of Supplemental Rule for Admiralty or Maritime Claims F(1) ("Rule F(1)"). This rule outlines the procedure for posting security on a limitation fund and specifies the interest to be paid. Pursuant to Rule F(1), the district court*fn1 ordered American Milling to pay interest on its security at a rate of six percent compounded annually, and denied American Milling's motion to deposit the cash value of the security into the court registry at a later stage of the proceedings. We affirm.
On April 4, 1998, the towboat M/V Anne Holly was traveling upstream on the Mississippi River when its tow of barges allided with the Eads Bridge near St. Louis, Missouri, and broke apart. One or more of the loosed barges allided with and damaged The Admiral, which was moored at the Missouri shore just downstream from the Eads Bridge. Two days later, American Milling filed a complaint in the district court seeking to limit its liability to the value of its vessel, pursuant to the Limitation of Shipowners' Liability Act of 1851 (the "Limitation Act"), 46 U.S.C. app. § 183 (current version at 46 U.S.C. § 30505). In accordance with Rule F(1), American Milling also submitted security to establish a limitation fund in the amount of $1.25 million, which the company claimed to be the fair market value of the M/V Anne Holly. President Casino, along with the barge claimants Brennan Marine, Inc., Pinnacle Barge Co., and Pinnacle Transportation, Inc., filed claims against American Milling to recover damages.
After American Milling sold the vessel for $2.2 million ten months after the allision, the district court ruled in January 2001 that the fair market value of the M/V Anne Holly, and hence the value of the limitation fund, was $2.2 million, not $1.25 million. In re American Milling Co., 125 F. Supp. 2d 981 (E.D. Mo. 2001). The court then directed American Milling "to establish the limitation fund by posting either a corporate surety bond in the amount of $2.2 million, or depositing cash into the court registry in the total amount of $2.2 million." Id. at 987. American Milling elected to post a bond.
In June 2003, following a trial, the district court determined that American Milling was eighty percent at fault for the allision, and attributed the remaining twenty percent of fault to President Casino. In re American Milling Co., 270 F. Supp. 2d 1068 (E.D. Mo. 2003). The court also concluded that American Milling was entitled to limit its liability under the Limitation Act to the $2.2 million value of the M/V Anne Holly. Id. This court affirmed those determinations in May 2005, and remanded the case for further proceedings regarding damages. In re American Milling Co., 409 F.3d at 1022.
American Milling moved on remand to deposit the cash value of the limitation fund, along with the simple interest accrued on its security since April 6, 1998, into the registry of the district court. The court initially granted the motion, on the mistaken impression that the request was unopposed, but President Casino filed a motion to set aside the court's order. President Casino's position was that interest on the fund should be compounded annually, and that American Milling should be required to maintain the surety bond throughout the proceedings.
President Casino invoked principles of equity to urge that the security should be maintained in the form most beneficial to the claimants, which in this case was the bond, and that interest should be compounded annually. American Milling opposed the motion to set aside, contending that the "per annum" language of Rule F(1) permitted only simple interest. The company also asserted that because depositing funds with the court is a permissible means of offering security for a limitation fund under Rule F(1), the court could not require American Milling to maintain a bond at the above-market, six percent interest rate specified in the rule. The district court granted the claimants' motion, vacated its order of May 2, 2006, and ordered that the six percent interest on the surety bond be compounded annually.
American Milling first challenges the district court's interpretation of the "per annum" language of Rule F(1) to permit compound interest on the security for the limitation fund. Rule F(1) is part of the Federal Rules of Civil Procedure, and we review the district court's interpretation of the rule de novo. See Burns v. Lawther, 53 F.3d 1237, 1240 (11th Cir. 1995).
As other courts have explained, "Rule F evolved as a procedural device to implement the [Limitation Act]." Bouchard Transp. Co. v. Updegraff, 147 F.3d 1344, 1347 (11th Cir. 1998). Congress passed the Limitation Act to limit the liability of shipowners to the post-accident value of the vessel at issue and any pending freight. "The apparent purpose of the Act was to encourage shipbuilding in this country and to place the U.S. shipping industry on equal footing with foreign competitors," who were protected against claims under European maritime codes. Magnolia Marine Transp. Co. v. Oklahoma, 366 F.3d 1153, 1155 (10th Cir. 2004) (citing 2 Thomas J. Schoenbaum, Admiralty & Maritime Law § 15-1, at 137 (2d ed. 1994)). The statute, however, did not establish a procedure to implement the limitations on liability that it established. In 1872, the Supreme Court enacted rules to establish a uniform judicial procedure by which a vessel ...