Truman-Hobbs Bridge Act Limits Depreciation of Sunshine Bridge in Allision
State v. Taira Lynn Marine, Ltd., 2018 La.App. LEXIS 689, 2018 WL 1735057, 17-582 (La. App. 5th Cir. 04/11/19)
M/V RICKY J. LEBOUEF allided with the Sunshine Bridge Pier No. 4 fender system and caused over $1.15 million in damages. Having stipulated to liability, the sole issue in the case was the rate of depreciation to apply. The trial court capped depreciation at 50% ($720,696) and a bid bond credit of $64,000. The defendants (owner and operator) appealed maintaining that straight line depreciation should apply and that it was legal error to cap depreciation at 50%.The Truman-Hobbs Bridge Act of 1940 (33 C.F.R. § 277.8(g)(2)) suggests a “50% depreciation on the expired service life of the structure in establishing depreciation.” (2018 La. App. LEXIS 689 at *3-4) [Question: Has any one heard of this regulation? It’s a new one to me.] The defendants wanted the straight line depreciation to apply arguing that the structure had 90% depreciated. The structure was 45 years old with a 50 year life expectancy at acquisition (45/50=.9) As stated in the regulation, its purpose is to provide “the procedures for apportionment of costs of bridge alterations, as established by the U.S. Coast Guard (reference § 277.3(c)) and adapted for use in Corps planning and construction programs.”The court noted that while straight line depreciation is used in maritime law, it is not the exclusive method. “[T]his method is not to be applied where evidence establishes that the original property had been deteriorating at a nonlinear rate." (Citing Pillsbury Co. v. Midland Enterprises, Inc., 715 F. Supp. 738, 765-766 (E.D. La. 1989), aff'd and remanded, 904 F.2d 317 (5th Cir. 1990) (citations omitted)).The panel also noted that neither expert testified that straight line depreciation is appropriate in this case. It also commented that only one fender was repaired, not the entire bridge. As the pier is only part of the entire structure, it does not have an independent life expectancy of its own.The trial court also did not err relying on the Truman-Hobbs Bridge Act and thus limiting depreciation to 50% of the cost of the repairs. The court stated that though the act is not intended to be used for compensatory damages in a civil suit, it can be a useful tool “in the difficult task of calculating the expected life span and rate of depreciation of an integral part of a bridge….” 2018 La.App. LEXIS 689 at *13)Finally, though 33 C.F.R. § 277.8(g)(2) refers to railroad bridges, there is no legal error in light of parts (3) (“The service life of highway bridges, except for certain long span bridges, is usually limited by obsolescence as well as structural deficiency and deterioration.) and (4) (“The foregoing service life figures are not to be used arbitrarily, but as a basis for a fair judgment of the service life considering all other factors that pertain in any particular case.”)
