## Facts

- National Gypsum’s cement carrier, the *E.M. Ford*, was berthed in a slip owned by the City of Milwaukee when it sank during a severe winter storm.
- National Gypsum alleged the City, as wharfinger, negligently assigned the vessel to an unsafe slip.
- The City alleged National Gypsum negligently left the vessel virtually unmanned and unprepared to respond to weather conditions.
- The district court found both parties negligent and apportioned fault 96% to National Gypsum and 4% to the City.
- The parties stipulated to a partial judgment of about $1.67 million in damages for National Gypsum, expressly excluding prejudgment interest and reserving that issue.
- National Gypsum sought more than $5.3 million in prejudgment interest; the district court denied it, citing National Gypsum’s predominant fault and the existence of a genuine, good-faith dispute over the City’s liability.

## Issues

1. In an admiralty collision/property-damage case, may a court deny prejudgment interest because liability was genuinely disputed in good faith?
2. May a court deny prejudgment interest because the claimant was substantially at fault (mutual fault), where damages have been apportioned by comparative fault?

## Decision

- The Supreme Court affirmed the Seventh Circuit and held that prejudgment interest should have been awarded.
- Neither a good-faith dispute over liability nor mutual fault (including heavy claimant fault) qualifies as an exceptional circumstance justifying denial of prejudgment interest in admiralty.
- Prejudgment interest is part of full compensation for the loss of use of funds between injury and judgment, not a penalty.
- Because comparative fault already reduces the principal award, denying prejudgment interest based on mutual fault would effectively penalize the claimant twice.

## Legal Principles

- In admiralty collision/property-damage cases, prejudgment interest is the general rule; denial is limited to truly exceptional circumstances.
- A legitimate, good-faith dispute over liability is a common feature of litigation and is not an exceptional circumstance warranting denial of prejudgment interest.
- After proportional fault allocation under *United States v. Reliable Transfer Co.*, mutual fault cannot independently justify withholding prejudgment interest because fault is already accounted for in the damages calculation.
- Courts retain limited discretion to deny prejudgment interest only in genuinely unusual situations, but ordinary shared fault and contested liability do not meet that standard.

## Conclusion

The Court required prejudgment interest as a normal component of compensatory recovery in admiralty, holding that neither substantial claimant fault nor good-faith litigation over liability permits a court to withhold interest where comparative fault already determines each party’s share of damages.


City of Milwaukee v. Cement Division, National Gypsum Co., 515 U.S. 189 (1995)