City of Milwaukee v. Cement Division, National Gypsum Co.

Background

The owner of the E. M. Ford, the Cement Division of National Gypsum, and the ship’s insurers sued the City of Milwaukee after the Ford broke loose in a storm, struck the slip headwall, took on water, and sank. The District Court found both parties negligent and initially allocated 96% fault to the owner and 4% to the City; the Seventh Circuit later apportioned fault two-thirds to the owner and one-third to the City. The parties settled on a fixed damage amount of $1,677,541.86, leaving the question of whether respondents were entitled to over $5.3 million in prejudgment interest to be decided by the District Court and then appealed.

Reasoning

The central question was whether a good-faith dispute over liability or mutual fault justified denying prejudgment interest in maritime collision cases. The Court explained that prejudgment interest is compensatory — to make an injured party whole — and that admiralty law has long presumed awards of interest except in special circumstances like undue delay. The Court held that neither a legitimate dispute about who caused the loss nor the plaintiff’s comparative fault are sufficient reasons to deny interest. The Court relied on the comparative-fault rule that already reduces recoveries based on each party’s share of responsibility and therefore concluded denial would unfairly penalize the injured party.

Real world impact

The decision affirms that in maritime collisions injured parties ordinarily should receive prejudgment interest even when liability was contested or both sides shared fault. Practical questions about how to calculate the interest, including rate and compounding, were left to the District Court to decide.