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Bhd. Shipping Co. v. St. Paul Fire & Marine Ins. Co. - 985 F.2d 323 (7th Cir. 1993)

Rule:

Under the standard of negligence in admiralty cases, a defendant is negligent if the burden (cost) of the precautions that he could have taken to avoid the accident is less than the loss that the accident could reasonably be anticipated to cause, discounted by the probability that the accident would occur unless the precautions were taken. The cost-justified level of precaution, the level that the defendant must come up to on penalty of being found to have violated his duty of due care if he does not, is thus higher the likelier the accident that the precaution would have prevented was to occur and the greater the loss that the accident was likely to inflict if it did occur. The formula shows that the cheaper it is to prevent the accident, the more likely prevention is to be cost-justified and the failure to prevent therefore negligent.

Facts:

A freighter owned by plaintiff Brotherhood Shipping Co., Ltd., (BSC") was damaged and temporarily put out of service in an accident in the Port of Milwaukee on Lake Michigan. BSC then filed an admiralty action in federal district court against defendant Afram Lines Int'l, Inc, which chartered the ship, and also against defendant City of Milwaukee ("City"), which owned the port, and the City's insurer, defendant St. Paul Fire & Marine Ins. Co. BSC sought damages for the damage to the ship and for the loss of revenues from the ship's being out of service because of the accident. BSC claimed that the City was negligent and its negligence contributed to the accident. The district judge granted the City's motion for summary judgment and dismissed the BSC's claims against it. BSC appealed.

Issue:

Did the district court properly grant the City's motion for summary judgment?

Answer:

No.

Conclusion:

The appellate court reversed the district court's judgment. The court noted the historical record of ship-involved accidents that occurred in the port as result of the combination of particular weather conditions and the construction and layout of the port. The court ruled that BSC raised a genuine issue of material fact concerning the adequacy of the precautions that the City took to prevent the type of serious, and by no means remotely unlikely, accident that damaged BSC's ship. There was evidence from which a reasonable trier of fact could infer that the City was negligent and that the accident would not have occurred had it not been.

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