JOEL H. SLOMSKY, District Judge.
On November 26, 2004, as the oil tanker M/T Athos I approached its final destination in Paulsboro, New Jersey, it struck an unknown, abandoned ship anchor on the bottom of the Delaware River. The submerged anchor punctured the M/T Athos I's hull, causing approximately 264,000 gallons of crude oil to spill into the Delaware River. An extensive cleanup effort ensued. Although the cleanup was successful, it was also expensive and led to the instant litigation in this Court.
At or near the heart of this dispute is the M/T Athos I ("Athos I"), a single-hulled oil tanker measuring approximately 748 feet long and 105 feet wide.
CITGO Asphalt Refining Company, CITGO Petroleum Corporation, and CITGO East Coast Oil Corporation (together referred to as "CARCO") sub-chartered the Athos I from the Star Tankers pool to deliver a shipment of crude oil from a facility in Puerto Miranda, Venezuela, to its asphalt refinery located in Paulsboro, New Jersey.
On November 26, 2004, the Athos I was nearing its final destination at CARCO's asphalt refinery in Paulsboro, New Jersey.
CARCO's Paulsboro facility sits on a jetty on the New Jersey side of the Delaware River.
To reach the berth, Captain Bethel had to maneuver the vessel from the channel through Federal Anchorage Number Nine, and then to the dock at CARCO's berth.
It was later determined that the Athos I had allided
This litigation involves an attempt by three parties to apportion monetary liability for the casualty.
Frescati has brought a contract claim against CARCO for breaching the safe berth warranty included in the contract that CARCO made with Star Tankers, Inc. ("Star Tankers"), the intermediary responsible for chartering the Athos I to transport crude oil to CARCO's Paulsboro berth.
Following a forty-one day bench trial in 2010 before the Honorable John Fullam, a retired Judge of this Court, Judge Fullam found that CARCO was not liable for the casualty under any theory of liability.
On April 1, 2014, this Court (Slomsky, J.) held a status hearing to discuss the parameters of the case on remand. During the hearing, counsel for CARCO noted that because a successor judge has been assigned to this case, Federal Rule of Civil Procedure 63 applies. The text of this Rule is quoted below. All parties ultimately agreed that the Rule applied here, which added a dimension to this case not mentioned by the Court of Appeals in its remand opinion.
Rule 63 of the Federal Rules of Civil Procedure covers a proceeding where "[a] successor judge steps into the shoes of the original judge in order to finish something that the original judge had started."
Fed. R. Civ. P. 63. Rule 63 requires that the successor judge certify familiarity with the record and determine that the proceeding may be completed without prejudice to the parties.
If the successor judge feels that, after certifying familiarity, factual findings and conclusions of law can be drawn from the record without prejudice to the parties, he may dispose of the case. 11 Charles Alan Wright & Arthur R. Miller,
In limited circumstances, a successor judge may make a finding of fact based on evidence heard by a different judge earlier in the proceeding. Fed. R. Civ. P. 63, Advisory Committee's note to 1991 amendment. The Committee's note to Rule 63 states that:
Rule 63 also allows a successor judge to recall witnesses
The parties here contested what evidence from the original trial could be considered by the successor judge. Ultimately, on November 17, 2014, this Court issued an Order on the evidence that would be considered at the Rule 63 proceeding. (Doc. No. 736.)
(Doc. No. 736 at 1-2.) Thus, the testimony of recalled witnesses at the Rule 63 rehearing became part of the evidentiary record for making credibility determinations, findings of fact, and conclusions of law. This testimony gave the successor judge an opportunity to observe witnesses as they testified and be in a better position to make factual findings based on that evidence. Prior testimony of recalled witnesses also could be used as the Federal Rules of Evidence and Civil Procedure permit. In addition, an unavailable witness's trial testimony was the equivalent of a recorded deposition available for use at the Rule 63 proceeding.
On October 22, 2014, this Court certified familiarity with the record and found that this case could be completed without prejudice to the parties. The Court entered the certification before making any substantive rulings in this case. (Doc. No. 723.) On March 4, 2015, the Rule 63 hearing began. More than twenty witnesses were recalled, resulting in a thirty-one day proceeding.
As the responsible party required to clean up the oil spill under the Oil Pollution Act of 1990, Frescati did so and incurred approximately $143 million in cleanup costs and damages. As noted, the Government reimbursed Frescati nearly $88 million. Thus, it is evident that the statutory scheme of the Oil Pollution Act heavily influenced the actions of the parties in this case and the eventual cleanup of the oil spill.
The Oil Pollution Act of 1990 ("OPA") was passed in the aftermath of the Exxon Valdez spill in 1989, which released over eleven million gallons of oil into Alaska's Prince William Sound and created an environmental disaster that cost over $3 billion in cleanup efforts.
OPA makes the responsible party for a vessel from which oil is discharged liable for removal costs and damages under 33 U.S.C. § 2702, which provides: Notwithstanding any other provision or rule of law, and subject to the provisions of this Act, each responsible party for a vessel or a facility from which oil is discharged, or which poses the substantial threat of a discharge of oil, into or upon the navigable waters or adjoining shorelines or the exclusive economic zone is liable for the removal costs and damages specified in subsection (b) of this section that result from such incident.
33 U.S.C. § 2702(a). Responsible parties include owners and operators of both vessels and facilities. 33 U.S.C. § 2701(32). The act imposes strict liability on those found responsible for discharging oil. 3
Three complete defenses to strict liability are permitted under OPA. 33 U.S.C. § 2703(a). If the discharge of oil was caused solely by (1) an act of God, (2) an act of war, or (3) an act or omission of a third party, then the spiller will have a complete defense to liability.
OPA encourages rapid private party responses to environmental disasters.
In the instant action, Frescati was able to limit its liability for cleanup costs to $45,474,000, thus allowing it to recover cleanup costs exceeding that amount from the Fund.
Once the Fund has compensated a claimant, including a responsible party, it is subrogated to all rights the claimant has under any law. 33 U.S.C. § 2715(a). This Section provides that "[a]ny person, including the Fund, who pays compensation pursuant to this Act to any claimant for removal costs or damages shall be subrogated to all rights, claims, and causes of action that the claimant has under any other law."
Oil spill responses under OPA and other federal laws are highly regulated to ensure that oil removal is handled as quickly and safely as possible.
First, OPA requires owners and operators of tank vessels and facilities to create a detailed contingency response plan, which is referred to as "vessel response plan," covering a worst-case scenario oil spill.
Second, a vessel response plan must identify a "qualified individual" who acts as a liaison between the vessel interests and the United States Coast Guard. The qualified individual has the authority to implement oil removal efforts, and to represent both the vessel owner and the protection and indemnity club, which is known as a "P&I Club."
Third, although responsibility for the oil removal and cleanup lies with the responsible party, the Government directs the cleanup effort. 2 Schoenbaum,
Fourth, the Coast Guard federal on-scene coordinator (who is referred to as the "FOSC") is responsible for managing the cleanup efforts. 2 Schoenbaum,
Fifth, the national contingency plan "provides the organizational structure and procedures for preparing for and responding to discharges of oil." 40 C.F.R. § 300.1. In particular, it outlines strategic objectives and priorities regarding oil spill responses. 40 C.F.R. § 300.3. It prioritizes oil spill response goals in the following order:
40 C.F.R. § 300.317. Thus, safety of all personnel and stabilization of the damaged vessel are top priorities. 40 C.F.R. § 300.317(d). The plan directs the FOSC to contain the oil spill as quickly as possible to ensure these priorities are met. The cost incurred for removal is not the immediate priority.
The FOSC manages the oil spill response efforts through the incident command system ("ICS"). The FOSC works with the responsible party's designated incident commander, and state on-scene coordinators to implement the ICS.
Planning involves creating a daily plan to combat the oil spill, which is referred to as the incident action plan. This includes daily objectives and work assignments. Work assignments are itemized on standard forms known as "ICS 204 assignment lists." The FOSC must approve the incident action plan each day, ensuring that it meets the requirements outlined in OPA and the national contingency plan. 33 U.S.C. § 1321(d)(4); 40 C.F.R. § 300.317. Additionally, the operations section monitors the execution of each work assignment on the ICS 204 assignments lists. The logistics section orders, organizes, and delivers equipment, personnel, and other resources on a daily basis. Meanwhile, finance is responsible for managing the daily costs of the operation.
The ICS verifies that the cleanup is being completed. Coast Guard personnel monitor the cleanup efforts to ensure the tasks are being performed properly. Furthermore, the ICS uses standardized documents as a form of verification, such as the ICS Incident Status Summary Form, the ICS 211 Check-In Form, the ICS 213 RR Resource Request Form, and the ICS 214 Daily Log. The oil spill response is highly organized and regulated to ensure that oil removal is handled as quickly and as safely as possible.
Before moving on in this Opinion to the Findings of Fact and Conclusions of Law, a review of the Opinion of the Third Circuit Court of Appeals in this case is necessary, especially given the information already discussed above and the guideposts set forth in the decision. As already noted, an appeal to the United States Court of Appeals for the Third Circuit was taken from the decision of the District Court (Fullam, J.) that CARCO had no liability for the oil spill. On May 16, 2013, the Third Circuit issued the Opinion in this case, in which it vacated in part the decision of Judge Fullam and directed this Court to resolve certain issues on remand.
In accordance with the Opinion of the Third Circuit, this Court has been asked to determine first whether the contractual safe berth warranty was breached, and, if necessary, whether CARCO was negligent in maintaining the approach to its berth. The Third Circuit held that CARCO conceded that the safe berth warranty "`would include the area in and around Paulsboro,' including [Federal Anchorage Number Nine]."
To determine whether the warranty was breached, this Court must first determine whether the safe berth warranty covered a draft of 37 feet or less.
Findings as to the Athos I's actual draft at the time of the accident must also be made. This draft must be found because "the warranty made by CARCO appears to have covered the Athos I up to a draft of 37 feet."
The Third Circuit continued that if the Court cannot determine the draft or if the ship was drawing more than 37 feet, the Court must determine the amount of clearance above the anchor.
The next issue this Court will decide is whether CARCO was negligent in maintaining the approach to its terminal.
Additionally, this Court must find whether CARCO breached the applicable standard of care.
Finally, with regard to negligence, this Court must determine "whether the failure, if any, to meet the standard of care proximately caused the accident."
The Third Circuit made other legal rulings, which guide this Court's analysis in this case. First, with respect to the contractual safe berth warranty, the Third Circuit concluded, "although Frescati was not a named beneficiary to the safe berth warranty . . . the Athos I benefits from this warranty, and Frescati, as the vessel's owner, is thus a third party beneficiary."
Second, the Third Circuit determined the scope of the safe berth warranty. Guided by the Second Circuit, the Court of Appeals found that the safe berth warranty is an express assurance for the safety of the vessel that the berth will be as represented.
Third, the Court of Appeals determined the scope of the approach to the berth. It stated that the approach "should be understood by its ordinary terms, and that its scope is derived from custom and practice at the particular port in question."
1. This action arises out of an oil spill on the Delaware River.
2. The Athos I is a single-hulled oil tanker measuring approximately 748 feet long and 105 feet wide.
3. The Athos I is classified as a Panamax-size tanker, meaning that it is capable of passing through the lock chambers of the Panama Canal.
4. A tanker is a "vessel used primarily for transporting bulk liquid cargoes, such as . . . liquid petroleum products."
5. A single-hulled oil tanker like the Athos I has tanks containing cargo right behind the steel shell plating of the hull.
6. The first party in this action, the Plaintiffs, includes Frescati Shipping Company, Ltd., and Tsakos Shipping & Trading, S.A.
7. Frescati Shipping Company, Ltd. owned the Athos I.
8. Tsakos Shipping & Trading, S.A. ("Tsakos") was the manager of the Athos I pursuant to a contract with Frescati.
9. The second party in this action is the United States Government ("the Government"), which reimbursed Frescati nearly $88 million for the oil spill cleanup efforts.
10. The third party in this action, the Defendants, includes CITGO Asphalt Refining Company, CITGO Petroleum Corporation, and CITGO East Oil Corporation.
11. CARCO requested that oil be shipped on the Athos I from Puerto Miranda, Venezuela, to CARCO's asphalt refinery in Paulsboro, New Jersey.
12. Before the accident, Frescati chartered the Athos I to Star Tankers, Inc. ("Star Tankers"), which placed the Athos I in a tanker pool under a pooling agreement.
13. In admiralty, contracts for service are known as charter parties.
14. Two common types of charter parties were used in this case: a time charter party and a voyage charter party.
15. In October 2001, the Athos I was chartered into a tanker pool assembled by Star Tankers pursuant to a time charter party.
16. CARCO was interested in transporting a load of crude oil from Venezuela to its asphalt refinery in Paulsboro, New Jersey. To do so, it vetted the Athos I to ensure the vessel was fit for transporting its cargo. (Rankine Tr., 186:17-21, May 26, 2015.) The vetting process is performed to inspect the condition of each vessel prior to its employment. (Rankine Tr., 186:17-21, May 26, 2015.) It includes a physical inspection of the vessel, as well as a review of the vessel's documentation. (Rankine Tr., 198:9-17, 211:12-19, May 26, 2015.)
17. In 2004, CARCO hired International Marine Consultants ("IMC") to perform the Athos I's physical vetting in Corpus Christi, Texas. (Rankine Tr., 9:12-10:4, May 27, 2015.)
18. On October 24, 2004, IMC Captain Khushru Dasoor ("Captain Dasoor") vetted the Athos I. (Rankine Tr., 36:5-10, May 28, 2015; CITGO Vetting Inspection Report, Ex. P-1373.) This included a physical inspection as well as paper vetting. Paper vetting was required to ensure that all certificates were valid, including the Safety Management Certificate, the Document of Compliance, and the International Oil Pollution Prevention. (Rankine Tr., 32:25-33:10, 34:19-35:14, May 28, 2015.)
19. The paper vetting of the Athos I included review of a Q88 Form, which is an online form that is completed by the vessel owner and then downloaded by entities interested in employing the vessel for transporting cargo. (Rankine Tr., 198:9-24, May 26, 2015.)
20. After vetting the Athos I, Captain Dasoor gave the vessel a rating of seven, which is an acceptable rating. (Rankine Tr., 36:5-10, May 28, 2015.)
21. The Q88 Form did not include information regarding an incident involving the Athos I that occurred in March 2004 off the coast of South Korea. (Rankine Tr., 30:8-10, May 28, 2015.) This incident occurred while the Athos I was managed and crewed by another company known as MareGulf, and does not affect the current matter.
22. On November 12, 2004, CARCO sub-chartered the Athos I from the Star Tankers pool to transport a load of crude oil from Venezuela to its asphalt refinery in Paulsboro, New Jersey.
23. CARCO's particular voyage charter party, based on a standard industry form, contained a safe berth warranty.
24. The safe berth warranty provided that: "The vessel . . . shall, with all convenient dispatch, proceed as ordered to Loading Port(s) named . . . or so near thereunto as she may safely get (always afloat) . . . and being so loaded shall forthwith proceed, as ordered on signing Bills of Lading, direct to Discharging Port(s), or so near thereunto as she may safely get (always afloat), and to deliver said cargo." (Voyage Charter Party, Ex. P-357, Part II, ¶ 1). The loading port was located in Puerto Miranda, Venezuela, and the discharging port was CARCO's berth in Paulsboro, New Jersey.
25. It further stated that:
(Voyage Charter Party, Ex. P-357, Part II, ¶ 9).
26. The safe berth warranty included two separate protections: "a contractual excuse for a master who elects not to venture into an unsafe port, and protection against damages to the ship incurred in an unsafe port to which the warranty applies."
27. The Third Circuit noted that, from the record, "CARCO warranted a safe berth with the understanding that the Athos I would be drawing as much as 37 feet of water upon its arrival."
28. On November 15, 2004, CARCO provided Iosif Markoutsis ("Captain Markoutsis"), the Captain of the Athos I, with voyage instructions, which dictated the Athos I load cargo only up to a draft of 37 feet at Puerto Miranda, Venezuela.
29. The voyage instructions stated that the Athos I would be filled with a quantity of crude oil "always . . . consistent with a 37 [foot] or less [fresh water] sailing draft at loadport." (Voyage Instructions, Ex. P-360). The voyage instructions further required that after loading, the Athos I would advise CARCO of the vessel's fresh water navigational draft. (
30. Another draft restriction on the Athos I was established by the Docking Pilots Association ("DPA") Guidelines.
31. The Court finds in this case that the maximum allowable draft for the Athos I upon its arrival to berth at the CARCO dock until the point of actual docking was at all times 37 feet, as noted in the voyage instructions, which required that the Athos I be filled with a quantity of crude oil always consistent with a 37 foot or less sailing draft at load port.
32. The Delaware River is a major river on the Atlantic Coast of the United States. Originating in New York, it forms the entire boundary between Pennsylvania and New Jersey. It also is part of the boundary between Pennsylvania and New York, and, for a few miles, the boundary between Delaware and New Jersey.
33. The Delaware River flows south, where it empties into the Delaware Bay (and the Atlantic Ocean) between Cape Henlopen, Delaware and Cape May, New Jersey.
34. All vessels traveling from the Delaware Bay north to the Delaware River, including the Athos I, are required to use a Delaware River Pilot to traverse its waters.
35. The pilot station where Delaware River Pilots board ships is located at Cape Henlopen, Delaware. (British Admiralty Chart 2564, Ex. P-459.)
36. A Delaware River Pilot will generally navigate a vessel from the entrance to the Delaware Bay north, up the Delaware River, to its final destination.
37. With larger vessels such as the Athos I, Delaware River Pilots will generally stay within the Delaware River Channel, which has been dredged to a project depth of 40 feet.
38. The Delaware River channel is divided into ranges, each of which is named. (
39. On either side of the channel are shallower waters, shoals, and anchorages. A shoal is "a sandbank or sandbar that makes the water shallow."
40. Section 7 of the Rivers and Harbors Act of 1915 authorized the establishment of "anchorage grounds for vessels in all harbors, rivers, bays, and other navigable waters of the United States whenever it is manifest . . . that the maritime or commercial interests of the United States require such anchorage grounds for safe navigation." 33 U.S.C. § 471(a).
41. "By 1930, a `lack of adequate anchorage room' was creating a hazard on the Delaware River between navigating vessels and `those awaiting accommodation at the wharves, or awaiting cargo orders.'"
42. In 1930, Federal Anchorage Number Nine, also known as the Mantua Creek Anchorage, was established.
43. The voyage from Puerto Miranda, Venezuela, to Paulsboro, New Jersey, is approximately 1,900 miles. Once the vessel reaches the entrance to the Delaware River, about 80 miles remain until the ship arrives at CARCO's Paulsboro berth.
44. In order to reach this berth, the vessel must travel along the Delaware River Channel, past the Billingsport Range. Once it reaches the Mifflin Range and is positioned in the channel, the vessel will start its approach into CARCO's berth. To do so, the vessel will move toward the eastern shore of the river, toward Paulsboro, New Jersey. In order to reach CARCO's Paulsboro berth area, the vessel must pass through Federal Anchorage Number Nine.
45. CARCO's Paulsboro berth is a fresh water port.
46. CARCO maintains a triangular-shaped berth area, which runs along the length of its terminal and extends offshore to the boundary of Federal Anchorage Number Nine.
47. CARCO hired S.T. Hudson Engineers to perform annual hydrographic surveys of its triangular berth area.
48. The single-beam hydrographic surveys performed by S.T. Hudson Engineers for CARCO covered the entire triangular berth area, and a minimal area of Federal Anchorage Number Nine.
49. CARCO did not conduct any surveys within its berth area or Federal Anchorage Number Nine to search for hazards and obstructions.
50. CARCO did not ask the Army Corps of Engineers to search for hazards or obstructions in Federal Anchorage Number Nine.
51. Federal Anchorage Number Nine is neither controlled nor maintained by CARCO.
52. Although the Third Circuit noted in
53. The Government is responsible for maintaining federally controlled waterways such as Federal Anchorage Number Nine. The United States Army Corps of Engineers (the "Corps"), the National Oceanic and Atmospheric Administration ("NOAA"), and the United States Coast Guard (the "Coast Guard") are all tasked with this responsibility.
54. The Corps has regulatory jurisdiction that "extend[s] laterally to the entire water surface and bed of a navigable waterbody, which includes all the land and waters below the ordinary high water mark." 33 C.F.R. § 329.11(a);
55. The Corps conducts hydrographic surveys and dredges as necessary to maintain the Anchorage's project depth at 40 feet. (DePasquale Tr., 25:3-5, 40:2-10, Mar. 19, 2015.) The goal of the Corps is to conduct regular single-beam hydrographic surveys of federally controlled waterways to alert mariners to any change of water depths. (DePasquale Tr., 27:4-6, 32:6-7, Mar. 19, 2015.) Anthony DePasquale ("Mr. DePasquale"), Chief of the Operations Division for the Army Corps of Engineers, explained that some areas are surveyed more frequently than others "because of the nature of the shoaling or historical—the historical shoaling pattern in that area, so we do them more often than a year sometimes to keep up with what is going on."
56. The Government traditionally uses single-beam hydrographic surveys when monitoring Federal Anchorage Number Nine. It also has side-scan sonar equipment, which is predominantly used for searching for underwater obstructions.
57. Once the surveys are performed, the Corps updates the depth charts for the surveyed areas and reports these changes in "survey channel exams," which are maps of the surveyed areas, and in "channel statements," which summarize the shallowest depths of each area. (DePasquale Tr., 26:5-27:3, Mar. 19, 2015; Bethel Tr., 126:3-24, Mar. 17, 2015; Ex. D-1174.) These updated maps are mailed to mariners to put them on notice of any changes. (DePasquale Tr., 26:15-20, Mar. 19, 2015.) The Corps routinely provides this information to local pilots, mariners, and anyone else who requests it by phone, e-mail, or at meetings of the local Mariners' Advisory Committee ("MAC"). (DePasquale Tr., 25:5-15, Mar. 19, 2015.)
58. Members of the local MAC include the Coast Guard, Delaware River pilots, the Corps, and representatives from the river terminals. (Ratcliffe Tr., 64:1-65:1, Mar. 16, 2015;
59. The Corps determines the areas on the Delaware River that need to be dredged. Commercial dredging operations can include using old anchors to dig up sediment on the river bottom. (DePasquale Tr., 56:23-57:21, Mar. 19, 2015.)
60. The Corps also regulates any construction or excavation within navigable waters, including the issuance of dredging permits. 33 U.S.C. § 403. No dredging in the Anchorage is permitted without prior approval from the Corps.
61. On June 23, 2004, the Corps conducted a single-beam hydrographic survey of Federal Anchorage Number Nine. (DePasquale Tr., 29:10-15, Mar. 19, 2015.) The survey was conducted to update the controlling water depths of the Anchorage. The survey lines were approximately 400 feet apart. (DePasquale Tr., 30:20-24, Mar. 19, 2015.)
62. In addition to the Corps, the National Oceanic and Atmospheric Administration (NOAA) is involved in maintaining navigable waterways, including Federal Anchorage Number Nine. Like the Corps, NOAA conducts hydrographic surveys of the Delaware River, including Federal Anchorage Number Nine. NOAA has taken on the task of preparing and updating navigational charts used by mariners. The purpose of the charts is to promote safe navigation. (
63. NOAA also maintains an Automated Wreck Obstruction Information System ("AWOIS") database, which publishes information on the location of known or suspected obstructions. The AWOIS website includes more than 10,000 reports, and as part of its hydrographical survey duties, NOAA reviews the AWOIS reports, determines which objects warrant field investigation, and assigns those objects to NOAA survey boats for investigation.
64. NOAA occasionally conducts surveys of the surrounding waterways for various federal projects. In 1981, NOAA surveyed Federal Anchorage Number Nine. (NOAA Descriptive Report 1981, Ex. D-1517.) Additionally, in 2002, NOAA performed a hydrographic survey of the Delaware River using side-scan and multi-beam sonar. (Ex. D-1520; Ex. D-1525.) In 2004, NOAA maintained a fleet of hydrographic survey vessels that were equipped with side-scan and multi-beam sonar. (Doc. No. 555.)
65. Along with the Corps and NOAA, the Coast Guard participates in monitoring federal waterways, including Federal Anchorage Number Nine.
66. The Coast Guard marks obstructions to navigation, including submerged structures.
67. The Coast Guard maintains a warning communication system titled "Notice to Mariners," which is published weekly and notifies mariners of any changes and discrepancies from the charts of navigable waterways, including shoaling and the location of newly discovered hazards to navigation.
68. Together, the Corps, NOAA, and the Coast Guard are responsible for ensuring that information concerning any changes in navigable waterways is promptly made public for the benefit of the maritime community. 33 C.F.R. § 209.325.
69. These governmental agencies are responsible for handling hazards to navigation.
70. The Government never suggested to CARCO that private wharfingers were responsible for surveying Federal Anchorage Number Nine. (Rankine Tr., 182:15-19, 182:23-183:13, May 26, 2015.) There is also no evidence that the Government instructed wharfingers to inspect the Anchorage for obstructions. (Rankine Tr., 77:5-13, May 27, 2015.)
71. As noted, Richard Long, who has performed single-beam hydrographic surveys for many facilities on the Delaware River, surveyed the permitted berth area for these terminals. (Long Tr., 74:11-20, May 26, 2015.) These surveys did not extend to the entirety of federally controlled waterways such as Federal Anchorage Number Nine. (Long Tr., 14:23-15:2, 52:23-53:3, May 26, 2015.) Instead, terminal operators along the Delaware River relied on the Government to inspect and maintain federal anchorages. (Long Tr., 74:6-10, May 26, 2015.) As a result, CARCO did not search for debris and hazards in Federal Anchorage Number Nine. (Rankine Tr., 140:3-5, May 27, 2015.)
72. The voyage instructions required the Athos I to be loaded to a draft of 37 feet or less in fresh water at Puerto Miranda, Venezuela.
73. Captain Markoutsis, the Captain of the Athos I, decided to load the vessel to a draft of 36 feet, 6 inches to ensure safe passage through the Maracaibo Channel. (Markoutsis Tr., 198:18-199:3, 200:7-201:13, Oct. 13, 2010.)
74. On November 19, 2004, Chief Mate Georgios Zotos ("Chief Mate Zotos") was in charge of loading the Athos I. He loaded the Athos I to a draft of 36 feet, 6 inches.
75. Expert witnesses presented by Frescati and CARCO agreed that the Athos I was loaded to a draft of 36 feet, 6 inches at Puerto Miranda based upon documentation and loading computer data from the vessel. Frescati's expert witness, Anthony Bowman ("Mr. Bowman"), determined that the Athos I had a fresh water departure draft of 36 feet, 6 inches.
76. On November 20, 2004, the Athos I left Puerto Miranda and passed through the Maracaibo Channel at high tide. (Markoutsis Tr., 82:24-83:19, Oct. 14, 2010.)
77. The Athos I crew used the vessel's echo sounder to ensure that there was sufficient underkeel clearance to traverse the Maracaibo Channel safely.
78. After passing through the Maracaibo Channel, the Athos I traveled to the entrance to the Delaware Bay. This voyage took approximately six days. (Athos I Bridge Log, Ex. P-1615.)
79. During the transit, a pump man monitored the oil cargo tanks and the ballast tanks daily.
80. On November 25, 2004, the day before the Athos I arrived at the entrance to the Delaware Bay, the ballast tanks were sounded and were found to be empty.
81. The voyage from Venezuela to the Delaware Bay was uneventful. Nothing occurred during transit that contributed to the casualty.
82. On November 26, 2004, the Athos I arrived at the entrance to the Delaware Bay. 83. The Athos I had burned fuel to sail from Venezuela to the Delaware Bay. (Bowman Tr., 6:11-19, Mar. 10, 2015.) By burning fuel, the vessel became lighter, meaning that the "vessel would have risen in the water." (Bowman Tr., 20:15-23, Mar. 10, 2015.) During the voyage, fresh water stored on the vessel was consumed. (Bowman Tr., 6:11-19, Mar. 10, 2015.) As a result, the Athos I's mean draft was reduced by approximately 2 inches, to 36 feet, 4 inches.
84. As a result of consuming fuel and fresh water during its voyage, the Athos I had a draft of about 36 feet, 4 inches when it reached the entrance to the Delaware Bay. (Bowman Tr., 7:21-8:22, Mar. 10, 2015.)
85. At that point, the Athos I was no longer sailing at an even keel. (Bowman Tr., 9:7-12, Mar. 10, 2015.) Rather, the Athos I was "trimmed by the bow," meaning that the bow or front of the ship was deeper in the water than the stern or rear of the ship. (Bowman Tr., 9:7-12, 9:22-25, Mar. 10, 2015.) The change in trim was due to the consumption of fuel and water from tanks that were located on the rear of the ship. (Bowman Tr., 9:9-12, Mar. 10, 2015.)
86. The Athos I took on approximately 510 metric tons of ballast water to restore it to an even keel. (Bowman Tr., 10:1-7, 12:25, Mar. 10, 2015.)
87. After taking on the 510 metric tons of ballast, the Athos I had a sailing draft of 36 feet, 7 inches. (Bowman Tr., 157:7-10, Mar. 9, 2015; 14:10-15, Mar. 10, 2015.)
88. The Athos I did not take on extra ballast (beyond the 510 metric tons) during the voyage to CARCO's berth. (Bowman Tr., 61:8-16, Mar. 10, 2015.)
89. On the morning of November 26, 2004, Captain Howard Teal, Jr. ("Captain Teal") was designated as the Delaware River Pilot for the Athos I's transit up the Delaware River.
90. Captain Teal was assigned to sail the Athos I on the Delaware River until the vessel reached Billingsport Range, which is a section of the Delaware River Channel not far from CARCO's Paulsboro berth area.
91. On November 26, 2004, around 12:15 p.m., Captain Teal boarded the Athos I. (Teal Tr., 67:20-23, Mar. 16, 2015.) Captain Teal planned on navigating the Athos I entirely within the Delaware River Channel, which has a project depth of 40 feet Mean Lower Low Water ("MLLW").
92. Before stepping onto the loading craft to board the Athos I, Captain Teal checked the tide gauges on the dock at Cape Henlopen. He observed that the tide "looked normal." (Teal Tr., 58:21-59:1, Mar. 16, 2015.)
93. Upon boarding, Captain Teal went to the bridge and met with Captain Markoutsis. (Teal Tr., 48:2-4, 51:12-52:18, Mar. 16, 2015.) They had a discussion, which he referred to as a master-pilot exchange, during which they talked about the transit up river. (Teal Tr., 51:12-52:18, 160:11-15, Mar. 16, 2015.) They discussed information including the anticipated arrival draft, wind, visibility, and tides. (Teal Tr., 51:12-52:18, 160:11-15, Mar. 16, 2015.) Captain Markoutsis informed Captain Teal that the Athos I's draft was "36 feet, 6 inches, even keel, fresh water." (Teal Tr., 52:4-18, Mar. 16, 2015.) This was the draft that Captain Markoutsis anticipated the Athos I would have when it arrived at CARCO's Paulsboro facility. (Teal Tr., 135:23-136:2, Mar. 16, 2015.) Captain Teal signed a pilot card indicating the draft and other conditions of the Athos I. (Teal Tr., 59:10-23, Mar. 16, 2015; Pilot Card, Ex. P-466.)
94. More specifically, in reference to the master-pilot exchange he had with Captain Markoutsis, Captain Teal stated that they "talked about the normal, my master-pilot relationship and points that we needed to discuss to take the ship up the river." (Teal Tr., 51:19-21, Mar. 16, 2015.) He and Captain Markoutsis talked about "[w]ind, visibility, expected meeting of other vessels, the tides and the current situation here and what they would be expected to be upon arrival in Mantua." (Teal Tr., 51:23-52:1, Mar. 16, 2015.) Captain Teal also stated that he and Captain Markoutsis "discussed the functioning of the ship[,] . . . the systems, the function of the ship, the weather, the available tide concerning the draft, the panamax advisory of the ship and decided that we could go and did go and made a successful transit." (Teal Tr., 160:11-15, Mar. 16, 2015.)
95. Captain Teal informed Captain Markoutsis that he expected the Athos I would have about 1.5 to 3 meters (approximately 4 feet, 11 inches to 9 feet, 10 inches) of underkeel clearance during the transit. (Teal Tr., 53:19-22, Mar. 16, 2015.) Captain Teal explained that both he and Captain Markoutsis knew "that there was a necessary underkeel clearance for every ship that goes up the river," and took this into consideration in planning the transit up river. (Teal Tr., 164:17-19, Mar. 16, 2015.) He explained that in their exchange, clearance meant that "there would be sufficient water to take the ship to Philadelphia and have a clearance acceptable to the company to do that." (Teal Tr., 54:4-7, Mar. 16, 2015.)
96. Captain Teal stated that, in his discussions with Captain Markoutsis, one of the first things the men determined was "that the draft of the ship on arrival at the terminal, near the terminal, would be 36 feet, 6 inches, even keel." (Teal Tr., 135:23-136:2, Mar. 16, 2015.)
97. Captain John Betz ("Captain Betz") explained the type of activity that constitutes an adequate master-pilot exchange.
98. Master-pilot exchanges occur to ensure the safe transit of the vessel.
99. Captain Betz opined that the master-pilot exchange between Captain Markoutsis and Captain Teal was adequate and appropriate. (Betz Tr., 22:16-23:4, 26:12-27:16, Mar. 18, 2015.) Captain Betz noted one exchange that contributed to his opinion that the master-pilot exchange was adequate: "[Captain Teal] had a discussion. He obtained the draft, confirmed the draft with the Captain. And he told the Captain that they were going to be running against a low tide or an outgoing tide and that he expected when the ship arrived up where they were going to board the docking pilot, that the tide at that point would be flooding and starting to rise." (Betz Tr., 26:12-18, Mar. 18, 2015.)
100. Captain Betz testified that it was not customary for a river pilot to review the wheelhouse poster or the voyage plan during the master-pilot exchange.
101. Based on the testimony of Captain Teal and Captain Betz, and a review of the pilot card, there was a sufficient master-pilot exchange.
102. Captain Teal estimated that he took control as the ship's pilot (referred to as taking the "conn") within five minutes or so of his discussion with Captain Markoutsis. (Teal Tr., 68:15-17, Mar. 16, 2015.)
103. At approximately 12:30 p.m., Captain Teal started piloting the Athos I up the Delaware River. (Teal Tr., 71:4-8, Mar. 16, 2015.) Weather conditions during the transit were good, and visibility was "crystal clear." (Teal Tr., 71:4-21, Mar. 16, 2015.)
104. Captain Teal expected that, by the time the Athos I arrived at Billingsport Range, there would be a rising tide and a slack flood current.
105. Captain Teal observed the tides as he piloted the Athos I on the Delaware River. (Teal Tr., 71:22-73:9, Mar. 16, 2015.) He used several fixed markers and shoals to get an idea of how the tide was moving. (Teal Tr., 72:8-73:2, 150:5-6, Mar. 16, 2015.) He also looked at the tide books to predict the tides for the transit. (Teal Tr., 142:10-11, Mar. 16, 2015.) As he piloted the Athos I up river, he considered the tide to be a "normal falling tide." (Teal Tr., 73:7-9, Mar. 16, 2015.) Although the falling tide or ebb current was with the ship for most of the transit, the tide caught up with the Athos I as it progressed up river. (Teal Tr., 148:20-21, Mar. 16, 2015.) By the time Captain Teal was relieved of his piloting duties, the tide had started to flood. (Teal Tr., 79:13-20, Mar. 16, 2015.)
106. Captain Teal did not experience any problems with squat as he piloted the vessel up river.
107. The transit along the Delaware River was uneventful. (Teal Tr., 77:8-21, Mar. 16, 2015.)
108. On November 26, 2004, around 8:25 p.m., Docking Pilot Joseph Bethel ("Captain Bethel") boarded the Athos I at the "upper end of Tinicum Range," which is just south of Billingsport Range.
109. Upon boarding, Captain Bethel spoke to Captain Teal about the Athos I. (Bethel Tr., 38:12-16, Mar. 17, 2015.) The two discussed the draft of the ship, which Captain Teal indicated was 36 feet, 6 inches, even keel, fresh water. (Bethel Tr., 39:2-7, Mar. 17, 2015.) They spoke about the vessel's condition, handling, and speed. (Bethel Tr., 38:12-16, Mar. 17, 2015; Teal Tr., 80:1-8, Mar. 16, 2015.) They also discussed the "telegraph order of the ship at [that] moment."
110. Captain Bethel took over piloting the ship within a few minutes of this exchange with Captain Teal. (Teal Tr., 88:15-17, Mar. 16, 2015.)
111. Captain Bethel testified that the Athos I's navigational equipment was functioning properly, the propulsion system was working, and that the crew was performing well. (Bethel Tr., 69:11-19, Mar. 17, 2015.)
112. To decide on the docking maneuver for the Athos I, Captain Bethel needed to determine what the tide was doing. First, before boarding the vessel, he looked at the tide booklet from the Docking Pilots Association, which stated that the predicted flood current should start somewhere around 8:45 p.m. to 8:50 p.m. (Bethel Tr., 36:5-9, Mar. 17, 2015.) Second, he observed the tides. (Bethel Tr., 35:3-9, 36:15-17, Mar. 17, 2015.) He looked at the piers, the buoys, and the shoals as he boarded the Athos I and saw that there was a flood current. (Bethel Tr., 35:15-22, 36:12-17, Mar. 17, 2015.) He determined that the tide was rising and that there was a normal flood current. (Bethel Tr., 36:15-37:3, Mar. 17, 2015.) When he began to maneuver the Athos I into the Anchorage to dock the ship, he confirmed by visual observation that the flood was occurring for about one hour and the tide was rising. (Bethel Tr., 47:22-48:10, Mar. 17, 2015.)
113. Vincent Capone ("Mr. Capone"), an expert in hydrography, confirmed that the tide was rising when Captain Bethel made this determination.
114. Captain Bethel knew that to dock the Athos I at CARCO's Paulsboro berth, he would need to steer the ship from the Delaware River Channel through Federal Anchorage Number Nine before reaching the berth area. (Bethel Tr., 45:23-46:8, Mar. 17, 2015.) In addition, the ship needed to be turned 180º so that its port side would dock at the wharf. As the Third Circuit explained, "a tanker of the Athos I's size would come up the River, make a starboard (right) 180° turn into the Anchorage, and would then be pushed sideways by tugs (i.e., parallel parked) into CARCO's pier."
115. As Captain Bethel began the docking maneuver, the Athos I was even keel and was not listing to one side. (Bethel Tr., 51:2-3, 52:16, Mar. 17, 2015.)
116. The Athos I began its final approach into CARCO's Paulsboro berth by starting the docking maneuver. (Bethel Tr., 45:23-46:8, Mar. 17, 2015.)
117. The Athos I made a starboard turn. (Bethel Tr., 45:23-46:8, Mar. 17, 2015.)
118. As the Athos I was making the turn, tugs began to slowly push the Athos I across Federal Anchorage Number Nine to CARCO's Paulsboro berth. As this occurred, the ship's speed was "just about dead in the water." (Bethel Tr., 51:24-25, Mar. 17, 2015.)
119. On November 26, 2004, at 9:02 p.m., as the tugs pushed the Athos I across Federal Anchorage Number Nine, Captain Bethel felt the vessel begin to list about five to seven degrees. (Bethel Tr., 57:2-5, Mar. 17, 2015.) The engines automatically shut off, and he saw oil in the water. (Bethel Tr., 58:7-8, 62:3-10, Mar. 17, 2015.) At this point, the Athos I was approximately halfway through Federal Anchorage Number Nine, and only 900 feet away from CARCO's berth.
120. Captain Bethel immediately eased off the tugs and anchored the ship as the crew attempted to stop the leak. (Bethel Tr., 60:25-61:5, Mar. 17, 2015.)
121. Captain Bethel called the Coast Guard to alert them to the emergency and requested that an oil spill response team arrive as soon as possible. (Bethel Tr., 59:10-22, Mar. 17, 2015.)
122. Captain Markoutsis rushed down to the engine room and began transferring cargo from the cargo tank that was breached into another tank that could hold extra oil. (Bethel Tr., 63:3-10, Mar. 17, 2015.)
123. The Athos I crew was able to stop the oil from leaking into the Delaware River. (Markoutsis Tr., 44:6-46:10, Oct. 14, 2010.)
124. In the immediate aftermath of the casualty, it was unclear what the Athos I had encountered to cause the oil spill.
125. It was later discovered that the Athos I had struck an abandoned steel anchor that was on the riverbed in Federal Anchorage Number Nine. The allision with the anchor caused the oil spill.
126. After the casualty, John Fish ("Mr. Fish"), an underwater search and surveyor, was asked to search for obstructions around the accident site.
127. In surveying the site, Mr. Fish also located "several concrete blocks and . . . a centrifugal pump casing" in the Anchorage. (Fish Tr., 189:2-3, Mar. 19, 2015.) These objects did not cause the accident on November 26, 2004.
128. On January 17, 2005, the anchor was exhumed and examined. (Crosson Tr., 30:7-10, Mar. 25, 2015.) It weighed approximately nine tons and measured 6 feet, 8 inches long, 7 feet, 3 inches wide, and 4 feet, 6 inches high.
129. The anchor has two natural stable positions, either in a "flukes-up" or "flukes-down" orientation, because it has a low center of gravity.
130. The owner of the anchor has never been identified.
131. The parties stipulated that the anchor had been in Federal Anchorage Number Nine for at least three years prior to the casualty "because it was detectable from a sonar scan performed by the University of Delaware in 2001 as part of an independent geophysical study."
132. In the sonar images from the University of Delaware study, the anchor appears to be in the "flukes-down" position. (Traykovski Tr., 56:11-20, Mar. 30, 2015.) With this orientation, the anchor reached a maximum height of approximately 41 inches above the riverbed. (Traykovski Tr., 57:8-11, Mar. 30, 2015; University of Delaware Survey Image dated August 15, 2001, Ex. D-1494.)
133. In the "flukes-up" position, the anchor would have reached a maximum height of approximately 7 feet above the riverbed. At some point before the casualty, the anchor moved from a "flukes-down" position to a "flukes-up" orientation. (Bowman Tr., 127:20-128:1, Mar. 9, 2015.)
134. From 1997 to 2004, 673 vessels anchored in Federal Anchorage Number Nine. (Rankine Tr., 62:14-64:3, May 27, 2015; Ex. D-2042.) From 2001 to 2004, 241 of those vessels went to CARCO's Paulsboro berth. (Rankine Tr., 64:8-71:4, May 27, 2015; Ex. D-1859). With hundreds of ships anchoring in Federal Anchorage Number Nine from 1997 to 2004, which even includes the period after 2001, a vessel's sweeping anchor chain could have caught and moved the submerged anchor into an upright position.
135. After the casualty, the anchor was found in the "flukes-down" position. (Fish Tr., 205:20-22, Mar. 19, 2015.) It reached a height of approximately 39 inches above the riverbed. (Fish Tr., 205:20-22, Mar. 19, 2015.)
136. It was found approximately 10 feet from the location of the casualty. (Traykovski Tr., 63:25-64:12, Mar. 30, 2015; Fish Tr., 68:16-19, Mar. 20, 2015.)
137. The abandoned anchor pierced the Athos I's hull, making two holes—a long hole and a round hole. (Crosson Tr., 14:22-16:16, Mar. 25, 2015.)
138. The anchor pierced two tanks, Number Seven Port ballast tank and Number Seven Center cargo tank. (Bowman Tr., 162:11-23, May 28, 2015; Hall Tr., 134:5-13, Mar. 4, 2015.) The Number Seven Port ballast tank was filled with water and did not cause any damage to the environment. The cargo tank was filled with crude oil, which poured into the Delaware River. (Bowman Tr., 162:11-23, May 28, 2015.)
139. Expert witnesses examined the anchor and damage to the Athos I to determine how the vessel came into contact with the submerged anchor. (Bowman Tr., 127:20-128:1, Mar. 9, 2015; Crosson Tr., 229:20-230:6, Mar. 24, 2015.)
140. The Athos I was being pushed by tugs and was moving "astern and to port" when it made contact with the anchor.
141. As Captain Bethel explained, he was completing the docking maneuver when the Athos I contacted the submerged anchor. The docking maneuver required Captain Bethel to steer the Athos I from the channel, make a starboard (right) turn while in Federal Anchorage Number Nine, and allow the ship to be pushed by tugs in order to dock. (Bethel Tr., 45:23-46:8, Mar. 17, 2015.)
142. Tugs alone do not turn a ship of the Athos I's size with the precision required to move it into a parallel position with the dock. Rather, Captain Bethel had to change the movements of the Athos I's engine. The log book shows that the engine movements were changed from ahead to astern, and that the Athos I was moving astern for two minutes immediately before the casualty. (Bowman Tr., 93:14-96:24, Mar. 10, 2015; Engine Bell Book, Ex. P-372.) Changing the ship's engine to astern is analogous to putting a car in reverse. (Bowman Tr., 93:14-96:24, Mar. 10, 2015.) At the same time the engine was moving astern (or in reverse), the tugs were on the starboard side of the ship pushing the Athos I sideways to the dock, meaning that the Athos was moving "astern and to port" when it struck the anchor. (Bethel Tr., 73:4-7, Mar. 17, 2015).
143. The anchor was in the "upright or close to upright position" (i.e., "flukes-up" orientation) when it punctured the hull. (Bowman Tr., 127:20-128:1, Mar. 9, 2015.) As noted, the tips of the anchor's flukes are approximately 7 feet above the riverbed when the anchor is in a "flukes-up" position.
144. The tip of a fluke first came into contact with the ship. (Bowman Tr., 116:6, Mar. 10, 2015.) As the hull of the Athos I pushed against the fluke of the anchor, "[t]he anchor would have initially resisted movement," but by the ship continuing to move across the anchor, the forces against it would have increased, bending the fluke tip, and then ultimately penetrating the hull of the Athos I, creating the long hole. (Bowman Tr., 129:8-129:16, Mar. 10, 2015.) Dr. Ratcliffe explained how there were sufficient forces against the anchor fluke to initially cause the steel fluke tip to bend before it punctured the hull of the ship. (Ratcliffe Tr., 101:12-102:8, Mar. 12, 2015.)
145. The riverbed was composed of material, including rocks and sediment, sufficiently hard that the competing forces from the river bottom and the ship caused the anchor's fluke to puncture the hull, rather than cause the anchor to sink into the riverbed.
146. The tip of the fluke made the long hole in the Athos I, and punctured the Number Seven Port ballast tank, which was holding ballast water. (Bowman Tr., 116:5-6, Mar. 10, 2015; Crosson Tr., 55:23-25, Mar. 25, 2015.)
147. The fluke tip that created the long hole in the Number Seven Port ballast tank left a scratch or score mark on a flap of steel located on the hull, which is referred to as Flap "A," where the hull first came into contact with the fluke.
148. The scraping on what has been referred to as Flap "A" of the long hole was caused by the massive pressure of the ship passing over the anchor, which resulted in the tip of the fluke that created the scraping to bend. (Crosson Tr., 24:24-25:7, 43:16-44:25, 48:12-20, Mar. 25, 2015.) The fluke pierced the hull and became entrapped inside the hull. (Crosson Tr., 49:11-50:25, Mar. 25, 2015.)
149. With the continuing movement of the ship, the fluke's penetration into the hull made the anchor rotate, causing the palm to accelerate upward and make a second hole in the Athos I's hull—the round hole. (Bowman Tr., 128:12-129:5, Mar. 9, 2015; Crosson Tr., 53:17-25, Mar. 25, 2015.) The pressure created caused the anchor to spike upward, resulting in the palm at the other end of the anchor puncturing the hull and creating the round hole. (Crosson Tr., 50:22-52:15, Mar. 25, 2015.)
150. The upward thrust caused by the force of the rotation punched a hole in the Number Seven Center cargo tank containing the oil. (Bowman Tr., 109:23-112:22, Mar. 9, 2015; Crosson Tr., 20:6-21:9, Mar. 25, 2015.)
151. There were no score marks leading into the round hole. (Bowman Tr., 115:3-116:4, Mar. 10, 2015; Crosson Tr., 60:19-63:21, 64:22-66:17, Mar. 25, 2015.) The Athos I therefore did not initially contact the anchor by scraping over a tripping palm. (Bowman Tr., 109:23-112:22, Mar. 9, 2015; Crosson Tr., 50:18-51:17, Mar. 25, 2015.)
152. By puncturing the Number Seven Center cargo tank, oil began to pour out of the vessel with some speed. (Bowman Tr., 103:23-104:2, Mar. 10, 2015.) The oil created a scour mark in the riverbed, showing the path of the oil coming out of the vessel, which illustrated how the Athos I was moving astern and to port. (Bowman Tr., 104:7-105:4, 106:12-107:1, Mar. 10, 2015; Diagram of Ship's Track and Score Mark, Ex. P-1353.)
153. On November 26, 2004, when the Athos I struck the submerged anchor, the vessel had a sailing draft of 36 feet, 7 inches. (Bowman Tr., 157:7-10, Mar. 9, 2015.)
154. Mr. Bowman calculated the draft of the Athos I at 36 feet, 7 inches at the time of the casualty based on the departure draft and the calculated weights on the ship using his Seamaster software program. (Bowman Tr., 156:17-25, Mar. 9, 2015.)
155. By the time the Athos I had reached the entrance to the Delaware Bay, it had been sailing for six days. During this six-day voyage, the vessel burned fuel and fresh water was consumed, making the ship lighter in the water. (Bowman Tr., 20:15-23, Mar. 10, 2015.)
156. As a result of consuming fuel and fresh water during its voyage, the Athos I had a draft of about 36 feet, 4 inches when it reached the entrance to the Delaware Bay. (Bowman Tr., 7:21-8:15, Mar. 10, 2015.)
157. Additionally, as a result of consuming fuel and fresh water during its voyage, the Athos I was no longer sailing at an even keel. (Bowman Tr., 9:7-12, Mar. 10, 2015.) Rather, the Athos I was "trimmed by the bow," meaning that the bow of the ship was deeper in the water than the stern. (Bowman Tr., 9:7-12, 9:22-25, Mar. 10, 2015.) The change in trim was due to the consumption of fuel and water from tanks that were located on the aft of the ship. (Bowman Tr., 9:9-12, Mar. 10, 2015.)
158. The Athos I took on approximately 510 metric tons ballast water to restore it to an even keel. (Bowman Tr., 10:1-7, 12:25, Mar. 10, 2015.)
159. By taking on 510 tons of ballast to restore the vessel to an even keel, the vessel weighed more, and sank lower in the water. (Bowman Tr., 13:13-22, Mar. 10, 2015.)
160. After taking on the 510 tons of ballast, the Athos I had a mean draft of 36 feet, 7 inches. (Bowman Tr., 157:7-10, Mar. 9, 2015.)
161. No other ballast was taken on during the course of the voyage. (Bowman Tr., 61:8-16, Mar. 10, 2015.)
162. At the time of the casualty, the Athos I had a mean draft of 36 feet, 7 inches. (Bowman Tr., 157:7-10, Mar. 9, 2015.) This is the equivalent of 36.58 feet. At that point, the midship draft and the vessel were about on even keel. (Bowman Tr., 156:7-157:24, Mar. 9, 2015.) The bow draft was very close to the stern draft, so there was no significant trim on the ship at that time. (Bowman Tr., 156:7-157:24, Mar. 9, 2015.)
163. Ultimately, Mr. Bowman found, using the Seamaster program, that the Athos I's draft on arrival at Paulsboro was 36 feet, 7 inches. (Bowman Tr., 156:7-157:24, Mar. 9, 2015; 13:5-14:9, Mar. 12, 2015.) This was the draft at the time of the allision with the anchor.
164. The reliability of Mr. Bowman's Seamaster Program, and his testimony about verifying the accuracy of its findings with measurements taken by different individuals after the allision when cargo and ballast was shifted on board the Athos I to bring it back to even keel, confirm that the Athos I's draft was 36 feet, 7 inches before it struck the anchor.
165. The Athos I had at least 5 feet of underkeel clearance immediately before the allision.
166. On November 26, 2004, at 9:02 p.m., when the Athos I struck the anchor, the tide had been rising for "roughly 50 minutes to [one] hour." (Capone Tr., 222:14-19, Mar. 18, 2015; Bowman Tr., 126:23-127:8, Mar. 9, 2015.)
167. At the time of the allision, the average depth of the water at the accident site was 41.45 feet Mean Lower Low Water ("MLLW"). (Capone Tr., 215:20-217:17, Mar. 18, 2015; Traykovski Tr., 85:5-16, Mar. 30, 2015.)
168. At the time of the allision, the tide was between 0.2 and 0.7 feet above MLLW. (Capone Tr., 215:20-216:13, Mar. 18, 2015.) As such, the water depth at the accident site was at least 41.65 feet.
169. Since the Athos I was in approximately 41.65 feet of fresh water and had a draft of 36 feet, 7 inches (which is equal to 36.58 feet) at the time of the casualty (Capone Tr., 215:20-217:17, Mar. 18, 2015; Bowman Tr., 157:10-15, Mar. 9, 2015), the vessel would have had approximately 5.07 feet of clear underkeel clearance had no obstruction been present.
170. On November 27, 2004, at 7:36 a.m., David Hall ("Mr. Hall") arrived on the Athos I to inspect the ship for the owners.
172. On November 27, 2004, Mr. Hall did not notice anything out of the ordinary in the Athos I's pump room.
173. Mr. Hall also inspected the ballast system. He watched the crew take soundings of the ballast tanks and determined that they were doing this procedure properly. (Hall Tr., 129:17-130:2, 137:12-18, Mar. 4, 2015.) He could find no major problems with the ballast tanks. (Hall Tr., 175:2-3, Mar. 4, 2015.) He went into the Number Six Port ballast tank, which is adjacent to the Number Seven Port ballast tank, to check that the soundings were working properly, and found that the tank was completely dry. (Hall Tr., 147:4-6, 150:7-152:20, Mar. 4, 2015.) There were no indications of ballast or recent ballast being present in the tank. He determined that there could not have been any illicit removal of ballast by the crew because the ship was listing so heavily that it would have been impossible to remove the water from the vessel. (Hall Tr., 178:9-16, Mar. 4, 2015.)
174. Through his inspection, Mr. Hall estimated that 264,335 gallons of crude oil had spilled into the Delaware River as a result of the accident. (Hall Tr., 170:3-12, Mar. 4, 2015; Letter from David Hall to Captain Sarubbi, Ex. P-1203.) He later refined his calculation by reducing it 14 gallons to 264,321 gallons. (Hall Tr., 171:4-21, Mar. 4, 2015; Ex. P-1358.)
175. In December 2004, the remaining cargo on the Athos I was unloaded at CARCO's berth.
176. The Athos I was then moved to dry dock in Mobile, Alabama, where the full extent of the damage was inspected.
177. CARCO alleges that the pilots, captain, and crew of the Athos I engaged in poor navigation and seamanship that caused or contributed to the accident, and that the following four actions demonstrate the poor navigation and seamanship. (Doc. No. 867 at 102-138.) First, the Athos I crew attempted to dock the vessel during an inappropriate stage of the tide. (
178. CARCO contends that Captain Bethel attempted to dock the Athos I at an inappropriate time. (
179. The Court has already found that the Athos I attempted to dock at an appropriate time. Captain Teal observed that the tide was rising when the Athos I reached the docking site in the Delaware River channel. (Teal Tr., 78:10-79:20, 87:1-7, Mar. 16, 2015.) Similarly, Captain Bethel observed that the tide was rising when he boarded the Athos I. (Bethel Tr., 35:15-22, 36:12-17, Mar. 17, 2015.) The tide had been rising for approximately fifty minutes to one hour before the Athos I attempted to dock, and therefore was within the suggested docking window. (Capone Tr., 222:15-19, Mar. 18, 2015.)
180. The Third Circuit found "no indication in the record that the Athos I was attempting to dock at an inappropriate time."
181. CARCO also contends that Frescati failed to conduct a proper master-pilot exchange, failed to prepare a proper voyage plan, and failed to calculate the Athos I's underkeel clearance. (Doc. No. 867 at 130-55.)
182. As already noted, Captain Teal and Captain Markoutsis conducted an adequate master-pilot exchange.
183. Captain Bethel also engaged in a proper master-pilot exchange. When he first boarded the Athos I, he went up to the wheelhouse and had a lengthy discussion with Captain Teal. (Bethel Tr., 38:10-44:5, Mar. 17, 2015.) They discussed how the ship was handling, the navigation of the ship, and its draft. (Bethel Tr., 38:10-44:5, Mar. 17, 2015.) He also reviewed the pilot card. (Bethel Tr., 38:10-44:5, Mar. 17, 2015.)
184. Captain Betz also watched the testimony of Captain Bethel. He confirmed that Captain Bethel had engaged in an adequate and appropriate master-pilot exchange. (Betz Tr., 47:3-23, Mar. 18, 2015.)
185. CARCO also alleges that Frescati failed to abide by federal regulations governing voyage planning and underkeel clearance.
186. Although CARCO alleges that the Athos I crew destroyed the original written voyage plan, based on all the Court's findings in this case, no credible inference can be drawn that what was contained in this voyage plan caused or contributed to the allision with the submerged, unknown anchor.
187. CARCO alleges that the Athos I crew failed to abide by other regulations, resulting in poor navigation and seamanship. (Doc. No. 867 at 112.) For instance, CARCO alleges that Frescati did not have a wheelhouse poster on the bridge of the ship, in violation of federal regulations and resolutions.
188. Finally, CARCO contends that the Athos I was unseaworthy. (Doc. No. 867 at 190-205.) In particular, CARCO alleges that Frescati failed to maintain the ballast system, failed to man the vessel with a competent crew, and failed to maintain a proper safety management system. (
189. CARCO alleges that problems with the Athos I's ballast system caused the vessel to take on extra ballast, resulting in an increase in the ship's draft. (
190. CARCO alleges that the crew was not competent. Tsakos trained the Athos I crew. (Athos I Inspections & Audits, Ex. P-1310.) It ensured that the ship's navigational officers were properly licensed and had appropriate certificates of competency for their rank. (Ex. P-286; Ex. P-289; Ex. P-295; Ex. P-298; Ex. P-301.) Witnesses such as Mr. Hall observed the crew perform tasks and found them to be competent. (Hall Tr., 136:9-137:18, Mar. 4, 2015.) Contrary to CARCO's contention, the Court finds that the Athos I pilots, captain, and crew were competent and were properly trained.
191. Finally, CARCO alleges that the Athos I pilots, captain, and crew failed to maintain a proper safety management system in violation of the Safety of Life at Sea ("SOLAS") standards, the International Safety Management ("ISM") code, and other federal regulations, which would make the vessel unseaworthy. (Doc. No. 867 at 199.) Specifically, CARCO alleges a violation of IMO Resolution A.741(18) and 33 C.F.R. §§ 96.220-96.250, which directed vessels to implement a written safety management system.
192. Tsakos had an established and comprehensive safety management system. (Ex. P-332.) This system included a maintenance plan that covered all mechanical components of the Athos I. (
193. CARCO contends that Frescati spoliated evidence. In particular, CARCO alleges that Frescati lost, destroyed, or altered the following documents: the original voyage plan of the Athos I, the rough deck log, the cargo control room log, the pump room patrol logs, the wheelhouse poster, and the original Anko Loadicator data.
194. As will be explained in further detail,
195. The oil spill response went into effect immediately after the casualty on November 26, 2004 and extended into January 2005, when the oil finally was removed from the Delaware River environment.
196. Pursuant to OPA, Frescati had in place a preexisting vessel response plan, which covered what to do in the event of a "worst case discharge" oil spill. 33. U.S.C. § 1321(j)(5). Frescati's vessel response plan outlined the responsibility of the captain in the event of an emergency. It also identified the primary Oil Spill Response Organization ("OSRO") that contracted with Frescati to provide oil spill cleanup services. (Benson Tr., 133:1-134:8, Mar. 23, 2015.)
197. The vessel response plan identified Courtney Ben Benson ("Mr. Benson") as the qualified individual who had the authority to implement oil spill response operations.
198. Captain Sarubbi requested assistance from the Coast Guard's specialized strike team, which provides advanced expertise in oil spill responses. (LaFerriere Tr., 6:21-24, Mar. 23, 2015.) Captain Roger LaFerriere ("Captain LaFerriere") was the commanding officer of the Coast Guard Atlantic strike team.
201. Over 1,800 people were dispatched in the oil spill response. (LaFerriere Tr., 11:12-14, Mar. 23, 2015.) Personnel came from private contractors, as well as federal, state, and local governmental agencies. (LaFerriere Tr., 12:3-19, Mar. 23, 2015.)
202. Mr. Benson explained the general objectives of the Athos I oil spill response. The top priority in any oil spill response is safety. (Benson Tr., 174:25-175:3, Mar. 23, 2015.) The second priority is "to facilitate vessel movement in affected port areas." (Benson Tr., 175:4-10, Mar. 23, 2015.) This is imperative for minimizing the economic impact of the spill and for resuming the local shipping industry. (Benson Tr., 175:11-16, Mar. 23, 2015.) Third, spill responses prioritize the decontamination of other vessels to prevent the spread of pollution. (Benson Tr., 175:17-176:16, Mar. 23, 2015.) Both Mr. Benson and Captain LaFerriere explained that the national contingency plan does not prioritize cost minimization when responding to an emergency oil spill. (Benson Tr., 174:25-176:12, Mar. 23, 2015; LaFerriere Tr., 27:2-11, Mar. 23, 2015.)
203. To achieve these objectives while simultaneously cleaning up the spilled oil, the responders used the incident command system and created an incident action plan, which included the daily objectives and work assignments. Work assignments were itemized on standard forms called "ICS 204 assignment lists." Each work assignment identified personnel and equipment needed to complete the task. (Benson Tr., 187:10-188:22, Mar. 23, 2015.) Supervisors, monitors, and even helicopters were used to survey the tasks to ensure that each assignment was being completed as quickly as possible. (Benson Tr., 191:7-193:14, Mar. 23, 2015.) At the end of each day, every supervisor was required to submit documentation on the work completed, "itemizing labor, equipment, materials, and supplies on a day-to-day basis." (Benson Tr., 187:10-21, Mar. 23, 2015.) These daily support sheets were submitted to the finance team of the oil spill response, which conducted audits to verify expenses. (Benson Tr., 194:22-195:13, Mar. 23, 2015.) The finance department also used an automated verification system to inspect contractor invoices that came in daily. (Benson Tr., 210:3-211:12, Mar. 23, 2015.)
204. Mr. Benson made sound business decisions in responding to the Athos I oil spill. He explained that from November 27, 2004 to December 16, 2004 the response was in the emergency phase, where responders were focused on cleanup of the oil and preventing further ecological damage. (Benson Tr., 217:8-14, Mar. 23, 2015.) By December 16, 2004, the response transitioned from the emergency phase into the project phase, when Mr. Benson was able to look ahead beyond the next day, and was able to re-negotiate contracts and cut costs for the remaining cleanup efforts. (Benson Tr., 214:24-215:6, 215:9-14, 216:4-11, 216:16-217:7, Mar. 23, 2015.) To minimize costs, Mr. Benson reduced rates that contractors were able to charge. (Benson Tr., 225:8-23, Mar. 23, 2015.) This included auditing contractors' bills and negotiating expenses on an ongoing basis. (Benson Tr., 227:7-228:18, Mar. 23, 2015.) He also centralized the supply of equipment and materials to one main distributor to reduce this expense. (Benson Tr., 226:7-227:3, Mar. 23, 2015.) Furthermore, Mr. Benson reduced the overall per diem rate, which was a fixed cost for personnel lodging and meals. (Benson Tr., 228:19-230:9, Mar. 23, 2015.)
205. Captain LaFerriere testified that the Athos I oil spill response had the "best use of the incident command system" that he had seen in all of the spill responses in which he had been involved. (LaFerriere Tr., 81:8-10, Mar. 23, 2015.)
206. Frescati initially incurred over $143 million in cleanup costs and damages resulting from the casualty. The Government reimbursed Frescati nearly $88 million for expenses associated with the oil spill. Frescati's remaining damage claim can be organized into six categories:
207. In the first category, Frescati seeks damages totaling $45,317,511 for unreimbursed OPA oil spill removal costs. (Doc. No. 862 at 29.) As the responsible party under OPA, Frescati initially bore the cost of the oil spill response. 33 U.S.C. § 2702(a). Because OPA sets liability limits for cooperative responsible parties, an incentive existed for Frescati to respond quickly to the oil spill to limit its financial exposure. (LaFerriere Tr., 118:10-119:4, Mar. 23, 2015; 33 U.S.C. § 2704.) Frescati was able to limit its liability under the provisions of OPA to $45,474,000 as the cost incurred to clean up the oil. 33 U.S.C. § 2704 (2013). Moreover, Frescati reduced its OPA removal costs by $156,489 by selling equipment it purchased for the cleanup. (Ex. P-1419.)
208. These costs were reasonable. As noted in the testimony of Mr. Benson, Frescati monitored all costs associated with the oil spill response and reduced these costs when possible. For instance, Frescati negotiated reduced rates with personnel after the emergency phase of the spill response, even while the efforts continued. (Benson Tr., 244:12-245:9, Mar. 23, 2015.) It also reduced per-diem rates after the emergency phase of the spill response. (Benson Tr., 244:12-245:9, Mar. 23, 2015.) Additionally, it established a central supply system. (Benson Tr., 226:4-227:6, Mar. 23, 2015.) Frescati was able to reduce price mark-ups by negotiating directly with vendors. To monitor these costs, it organized daily invoices for the entire response effort.
209. In support of the reasonableness of the payments, Frescati presented testimony and opinions of several witnesses and also relied upon the testimony of Government witness Donna Hellberg ("Ms. Hellberg"), the Lead Claims Manager in the Claims Adjudication Division of the National Pollution Funds Center ("NPFC").
210. During the pre-federalization phase of an oil spill response, the responsibility for response and payment lies with the responsible party. (LaFerriere Tr., 86:12-14, Mar. 23, 2015.) If Frescati had not properly responded to the oil spill as the responsible party under OPA, and the Coast Guard had taken over initially and assumed responsibility for the cleanup, the total cost of the oil spill response would have dramatically increased, and probably would have been "2 to 3 times more expensive." (LaFerriere Tr., 83:1-12, 86:12-14, 87:19-88:3, Mar. 23, 2015.)
211. Throughout the cleanup effort, Frescati faced the threat of early federalization if it did not carry out its functions efficiently as required by OPA. Mr. Benson explained, "[i]f we fail[ed] in any component . . . if we fail[ed] to support our contractors and the contractors fail[ed] to perform in the field with fear of not being paid, for example, the Coast Guard ha[d] full authority to step in and federalize that component of the spill." (Benson Tr., 144:10-14, Mar. 23, 2015.) Mr. Benson further stated, "if the Coast Guard was to intercede and federalize the spill, costs are going to rise dramatically . . . it could be punitive to the course of treble damages overall." (Benson Tr., 144:24-145:3, Mar. 23, 2015.)
212. Ms. Hellberg reviewed the claim documents presented by Frescati, which included invoices, proof of payment, dailies, receipts, and contemporaneous records that corroborated the expenses incurred. (Hellberg Tr., 69:16-23, Mar. 24, 2015.)
213. In the course of adjudicating Frescati's claim for reimbursement, Ms. Hellberg reviewed in excess of five feet of documents. (Hellberg Tr., 134:7-9, Mar. 24, 2015.) In total, Ms. Hellberg stated that Frescati provided more than 53,000 pages of documentation to support its claim submission. (Hellberg Tr., 87:6-12, Mar. 24, 2015.)
214. Frescati's second category of damages is non-OPA removal costs. (Doc. No. 862 at 11.) These costs are for expenses that the NPFC deems not "OPA compensable," and total $1,541,597.79. (Doc. No. 862 at 74.) These expenditures include costs incurred to manage third-party claims, to decontaminate recreational boats, and to remove the anchor and pump casing. (
215. Frescati had expenses in managing the third-party claims. In a large and complex oil spill, there are many third-party claims that are made and must be handled on an on-going basis, concurrently with the oil spill cleanup efforts. Hudson Marine Management Services ("HMMS") charged $873,783.08 for managing the third-party claims. (Ex. P-1420.) Third-party claims were made for contaminated or damaged marinas, wharfs, or boats. HMMS organized how each would be resolved. Third party claimants were given the option of accepting money for the claim or having their property cleaned. (Ex. P-1280.) When a claimant elected to have its property cleaned, HMMS directed the claimant to Global Response Services, Inc. ("Global") to do this work.
216. Frescati incurred costs associated with cleaning recreational boats that were contaminated by the oil spill. Over 100 vessels were contaminated and required not only cleaning but also winterization. (Benson Tr., 176:19-177:13, 180:23-181:4, Mar. 23, 2015.) Frescati paid Global $386,925.43 to set up and operate recreational boat cleaning and winterizing stations. (Ex. P-1420.) Of these costs, $2,475 was deemed compensable by the NPFC. (Ex. P-1419.) Along with Global, E.A. Renfroe ("Renfroe") was paid $233,091.48 to assist in decontaminating and repairing boats damaged by the oil spill. For example, repairs consisted of fixing and replacing boat equipment such as power washers, air compressors, and pumps. This work was essential to the oil spill response because it cleaned contaminated vessels that were in the Delaware River. If Frescati had failed to clean these boats, oil would have continued to pollute the Delaware River well beyond the end of the cleanup effort. (Benson Tr., 175:4-176:16, Mar. 23, 2015.)
217. Frescati paid for costs associated with the removal of the anchor and pump casing in order to determine how the Athos I was holed. It contracted with Weeks Marine, Inc. ("Weeks Marine") and Environmental Protection Engineering, S.A. ("EPE") for this service. Weeks Marine charged $26,716.20 for retrieving these two items, which included the cost of marine equipment used for removal operations (i.e., a barge, cranes, and other salvage equipment). (Ex. P-1420.) Additionally, EPE was paid $23,556.60 for oversight and consulting in response to the casualty.
218. Frescati's third category of damages is for an expense of $1,500,000 associated with the Salem Plant Settlement. (Ex. P-1422.) Frescati settled a third-party claim submitted by the Salem Nuclear Power Plant. When oil spilled into the Delaware River, the Salem Nuclear Power Plant immediately had to shut down its nuclear reactors, because oil started to appear in the power plant's water supply intakes. Turning the reactors off avoided damaging the reactors' intake and cooling systems. The Salem Nuclear Power Plant first submitted a claim to the NPFC for lost profits and other costs incurred due to the emergency shutdown. The NPFC adjudicated this claim for more than $30,000,000, not including interest. Subsequently, in November of 2008, the Salem Nuclear Power Plant asserted a claim against Frescati for more than $4,600,000, representing interest that the NPFC had refused to pay because the NPFC is not statutorily authorized to pay interest on its claims awards. Frescati settled this suit for $1,500,000.
219. The fourth category of damages is for unrepaired hull damage to the Athos I, which totaled $438,542.25. (Ex. P-1417a.) This claim is based on unreported damage that the Athos I sustained, which was discovered when the vessel was dry docked in Mobile, Alabama. The damage could not be repaired in Mobile because that port did not have the capability to manage the volume of contaminated liquid still aboard the Athos I. (Ex. P-1429.) BMT Salvage inspected the Athos I, itemized the repairs, and estimated that the remaining repairs would cost $438,542.25. (Ex. P-1417a.)
220. The fifth category of damages is described as "vessel/miscellaneous port expenses." (Doc. No. 862 at 81.) These costs totaled $50,642.01 for stern tube oils,
221. Frescati seeks recovery of stipulated damages in the amount of $6,649,082.90. (Doc. No. 862 at 82.) Frescati and CARCO have stipulated to the amount of damages for three items: hull damage, loss of hire, and a natural resource damage assessment. (Doc. Nos. 518, 526.) Frescati seeks to recover $3,925,585.11 for hull damages, which represents costs it incurred to find and remove the anchor, to repair the Athos I temporarily to facilitate the move from the Port of Philadelphia to a dry dock in Mobile, Alabama, and to permanently repair the hull plates damaged by the anchor in the approach to CARCO's berth. (Doc. No. 863 ¶ 30.) Frescati also asserts that it is entitled to damages in the amount of $2,100,000 for loss of hire to compensate it for its lost earnings while the Athos I was out of use and awaiting repairs. (
222. The casualty occurred over a decade ago, and an award of prejudgment interest is warranted in this case. Both Frescati and CARCO acknowledge, but dispute, the method of calculating prejudgment interest. Frescati's expert, Dr. William Dunkelberg, and CARCO's expert, Dr. Kenneth Boudreaux, offered opinions on the appropriate prejudgment interest rate to be used here, based in part on which entity they believed ultimately paid for the cost of the cleanup, and the rate at which this entity would borrow funds to cover this expense. Dr. Dunkelberg assumed that either Frescati or Tsakos paid for the cost of the cleanup, and opined that the United States Prime Rate was the most accurate rate to be applied. (Dunkelberg Tr., 30:3-31:3, 32:17-19, Mar. 26, 2015.) He was not clear on how he arrived at the assumption that Frescati or Tsakos paid for the cleanup. He stated, "I think I knew that the payment was made by the P&I Club. But when you ask who makes the payment, it's the members of the club who sent their contributions to the P&I Club." (Dunkelberg Tr., 54:4-7, Mar. 26, 2015.)
223. Conversely, Dr. Boudreaux explained that he had not seen evidence of payments, but he was told that the United Kingdom P&I Club and the International P&I Club made payments for more than 90% of the cleanup efforts. (Boudreaux Tr., 34:23-35:12, Apr. 9, 2015.) Dr. Boudreaux noted that "P&I Clubs are . . . mutual associations that fund themselves by draws . . . or calls on their members to contribute to the reserves . . . . Being mutual companies, they don't go outside to borrow money the way we are talking about here. If they needed money, they would issue a call to their members." (Boudreaux Tr., 38:15-22, Apr. 9, 2015.) Dr. Boudreaux conceded that he had not been provided with any "concrete evidence about who paid what and when with respect to Frescati or Tsakos." (Boudreaux Tr., 30:22-23, Apr. 9, 2015.)
224. The most likely entity to have paid ultimately for the cleanup effort was the International Group of P&I Clubs as a mutual association which would indemnify its members, in this case Tsakos and Frescati. However, no documentation was provided to demonstrate that this entity borrowed funds to pay for the cleanup or related expenses.
225. CARCO asserts that if prejudgment interest should be awarded at all, it should be calculated in one of two ways. First, CARCO argues that the interest rate should be the United States Treasury Rate set forth in 28 U.S.C. § 1961(a).
226. CARCO and the Government stipulated that, in the event the Government is entitled to any recovery and prejudgment interest, the interest will be calculated using the rate set in OPA, 33 U.S.C. § 2705(b)(4).
227. Because the record does not definitively reflect which entity finally paid for the cleanup and associated costs (i.e., whether it was Frescati or a P&I Club), apart from the Government's reimbursement, the Court will not use the United States Prime Rate or the LIBOR plus 0.5% rate. Instead, the Court finds that Frescati is entitled to an award of prejudgment interest at the United States one-year Treasury Rate specified in 28 U.S.C. § 1961(a). The interest is to be compounded annually pursuant to 28 U.S.C. § 1961(b).
Since this consolidated action is an admiralty case, this Court has jurisdiction pursuant to 28 U.S.C. § 1333(1).
CARCO and Star Tankers agreed to a safe berth warranty, in which CARCO promised that the Athos I would be directed to a location that "she may safely get (always afloat)."
The safe berth warranty states as follows:
(Voyage Charter Party, Ex. P-357, Part II, ¶ 1). It further provides:
(
The purpose of the safe berth warranty is to protect a vessel that agrees to deliver cargo to a charterer's port, "memorializ[ing] the relationship between the contracting entities."
Although the safe berth warranty was contained in the voyage charter party between CARCO and Star Tankers, the Third Circuit held that Frescati was a third-party beneficiary to the agreement.
To determine whether the safe berth warranty was breached, the scope of the safe berth warranty must be examined. The Third Circuit explained that "[a] port is deemed safe where `the particular chartered vessel can proceed to it, use it, and depart from it without, in the absence of abnormal weather or other occurrences, being exposed to dangers which cannot be avoided by good navigation and seamanship.'"
The Third Circuit found that the "safe berth warranty is an express assurance made without regard to the amount of diligence taken by the charterer."
188 F.2d at 806. When designating certain ports in a contract, charterers will often know more about the port and its particular dangers than the vessel owner.
After considering the Third Circuit's conclusion that Frescati was a third-party beneficiary to the voyage charter party between CARCO and Star Tankers, and that the safe berth warranty contained in the contract was an express assurance that the Athos I could arrive safely at the Paulsboro facility, this Court must determine whether the uncharted anchor, the existence of which was unknown to the parties in this case, rendered CARCO's port unsafe for a ship of the Athos I's agreed-upon dimensions and draft.
The Third Circuit held that this Court must determine whether the uncharted anchor rendered the Paulsboro port unsafe for a ship of the Athos I's agreed-upon dimensions and draft.
As noted in the Findings of Fact, this Court agrees with the Third Circuit that, from the record, "CARCO warranted a safe berth with the understanding that the Athos I would be drawing as much as 37 feet of water upon its arrival."
CARCO argues that the Athos I had a draft that was more than the allowable 37 feet, due to problems with the ship and poor navigation. However, the Court disagrees. From the record, the Athos I had a draft of 36 feet, 7 inches during its approach to the Paulsboro facility. The Athos I was loaded to a draft of 36 feet, 6 inches in Puerto Miranda. (Markoutsis Tr., 198:18-199:3; 200:7-201:13, Oct. 13, 2010.) By the time the ship arrived in the Delaware Bay, the mean draft was about 36 feet, 4 inches. (Bowman Tr., 7:21-8:22, Mar. 10, 2015.) Burning fuel and other factors caused this decrease in the ship's draft toward the aft of the ship. (Bowman Tr., 9:7-12, Mar. 10, 2015.) This resulted in the ship being trimmed by the bow. (Bowman Tr., 9:7-12, Mar. 10, 2015.) To bring the ship back to an even keel, the Athos I took on approximately 510 metric tons of ballast. (Bowman Tr., 10:1-7, 12:25, Mar. 10, 2015.)
CARCO has alleged that problems with the Athos I's ballast system caused the vessel to take on more ballast than anticipated, increasing the draft beyond 37 feet. However, the Court has found that the Athos I did not take on extra ballast. Mr. Bowman, Frescati's expert witness in naval architecture, testified that he "could not find any evidence of unreported ballast on the vessel." (Bowman Tr., 61:8-16, Mar. 10, 2015.) Mr. Hall, the maritime surveyor who inspected the Athos I after the casualty, explained that the crew properly sounded the ballast tanks. (Hall Tr., 137:19-24; 152:12-13, Mar. 4, 2015.) Most significantly, on the morning after the casualty, Mr. Hall entered the Number Six Port ballast tank, which is adjacent to Number Seven Port ballast tank, and found that it was dry. (Hall Tr., 147:4-25, 152:9-25, Mar. 4, 2015.) He testified that "[t]here were no indications of ballast . . . or recent ballast being present in the tank." (Hall Tr., 152:12-13, Mar. 4, 2015.) The Athos I did not take on extra ballast before or on the day of the spill. (Hall Tr., 137:19-24, 152:9-20, 156:5-23, 178:9-16, Mar. 4, 2015.)
Once the Athos I reached the Paulsboro terminal, tugboats had to push the vessel into the docking area to reach the berth. CARCO argued that, when the Athos I was being pushed by tugboats towards the berth, this force caused the vessel to heel
From the record, the Athos I had a draft of 36 feet, 7 inches during its approach to the Paulsboro facility. For this reason, Frescati complied with CARCO's maximum allowable draft of 37 feet.
The Third Circuit explained that the fact that "the Athos I was injured by the anchor does not automatically indicate the warranty was breached."
Frescati argues that CARCO has the burden of proving poor navigation and seamanship because it was raised as an affirmative defense. On the other hand, CARCO asserts that this is not an affirmative defense, and that Frescati has the burden of proving that there was no poor navigation and seamanship. Regardless of which party has the burden of proving poor navigation and seamanship, or its absence, Frescati has met its burden of proof by demonstrating that any problem relating to seamanship and navigation of the vessel did not expose the Athos I to dangers that caused or contributed to the allision.
CARCO argues that the Athos I crew and pilots engaged in poor navigation and seamanship sufficient to void the safe berth warranty. First, CARCO alleges that the Athos I was attempting to dock at an inappropriate time. The Court disagrees. The Third Circuit has already stated that it found "no indication in the record that the Athos I was attempting to dock at an inappropriate time."
Second, CARCO alleges that the Athos I crew and pilots engaged in such poor navigation and seamanship that the ship was in an unseaworthy condition that it negated the safe berth warranty. Historically, a seaworthy vessel is one that is "so tight, staunch, and strong" as to meet the perils of the sea.
362 U.S. at 550. The vessel must be fit for carrying the particular cargo the owner has contracted to transport.
In addition to the common law "reasonably fit" standard, most charters include a warranty with language requiring the owner to use due diligence to make the vessel seaworthy. 8
Most significantly, a determination that the ship is unseaworthy is relevant only if it is related to the loss of or damage to cargo. 2A
Under both the reasonably fit and due diligence standard, the Athos I was seaworthy. Even if the Athos I had problems endemic to an aging ship, any purported issues with the vessel did not proximately cause or contribute to the cause of the oil spill.
Here, as noted, CARCO asserts that the Athos I was unseaworthy, and that this unseaworthiness caused the casualty, thereby negating the safe berth warranty. In particular, CARCO alleges that the following problems made the Athos I unseaworthy:
Athos I unseaworthy. (
A few months prior to the oil spill, the Athos I was dry docked in Dalian, China for inspection and maintenance. Extensive repairs were completed at this time, including repairs to the vessel's ballast lines. Moreover, the Athos I was able to take on the 510 metric tons of ballast to bring the ship to an even keel near the entrance to the Delaware Bay. (Bowman Tr., 9:7-10:7, 12:25, 13:13-22, Mar. 10, 2015.) Had extra ballast been added during the voyage from that point to the Paulsboro terminal because the ballast system was not maintained, it would not have occurred symmetrically throughout the vessel, and the Athos I would have been listing to one side before and upon its arrival in the channel near Paulsboro. It was not listing. (Teal Tr., 85:18-22, Mar. 16, 2015; Bethel Tr., 51:2-3, 52:16, Mar. 17, 2015.) Furthermore, on the morning after the oil spill, Mr. Hall inspected the ballast tanks and found that they were dry. (Hall Tr., 147:4-6, 150:7-152:20, Mar. 4, 2015.) It was virtually impossible for the ballast tanks to be completely dry had extra, unanticipated ballast leaked aboard prior to the allision. (Hall Tr., 178:9-16, Mar. 4, 2015; 75:2-21, Mar. 6, 2015.) Finally, there is no credible evidence that ballast increased the ship's draft beyond 37 feet. Therefore, any arguably compromised ballast lines did not proximately contribute to or cause the oil spill. In any event, the Court finds that any defective condition in the ballast system did not result in the addition of ballast to the extent that it would cause or contribute to the cause of the allision.
Next, CARCO alleges that Frescati failed to maintain a proper safety management system in violation of the SOLAS standards, the ISM code, and other U.S. regulations, which rendered the vessel unseaworthy. (Doc. No. 867 at 199.) However, this argument also is unpersuasive. As the manager of the Athos I, Tsakos ensured that ships under its management implemented both mandatory and voluntary tanker safety systems and assessment programs. (Hajimichael Tr., 21:3-15, 44:8-15, Oct. 19, 2010.) Tsakos ensured that the Athos I was certified under the International Safety Management ("ISM") code. It had established a comprehensive safety management system, which regulated every aspect of tanker management. Tsakos' quality and safety management system included a planned maintenance system that covered all mechanical components of the ship. (Ex. P-332.) Tsakos inspectors regularly visited ships under its management, including the Athos I. Even if violations were uncovered or these regulations were not specifically followed, these purported violations did not proximately cause or contribute to the casualty.
CARCO also alleges that Frescati failed to man the Athos I with a well-trained and competent crew and monitor their performance, which rendered the vessel unseaworthy. (Doc. No. 867 at 201.) Tsakos retained full management of the Athos I during the voyage in question and ensured its crew members were properly licensed and trained in accordance with the Convention on Standards for Training Competency and Watch Keeping. While the Athos I was dry docked at Dalian, Tsakos trained the ship's crew on its procedures and ensured that the crewmembers would continue to receive training while underway. (Athos I Inspections & Audits, Ex. P-1310.) The Athos I's master and navigational crew were properly licensed and experienced. (Ex. P-286; Ex. P-289; Ex. P-295; Ex. P-298; Ex. P-301.) Only a few months before the casualty, Tsakos' quality and safety department conducted an internal audit of the Athos I, which ensured that the crew was complying with Tsakos' safety management system. After the casualty, Mr. Hall even watched the Athos I crew properly perform tasks, such as sounding the ballast tanks correctly. (Hall Tr., 136:9-137:22, Mar. 4, 2015; 73:24-74:4, Mar. 6, 2015.) For these reasons, this Court finds that Frescati maintained a well-trained and competent crew on the Athos I.
In sum, the Athos I was seaworthy. It was reasonably fit to carry the cargo for its intended voyage. The Athos I was a Panamax-size vessel that could transport the oil cargo. There were no weather patterns or navigational conditions that rendered the ship unfit. There was nothing about the character of the voyage that would alert anyone that a potential hazard to navigation in the approach to the Paulsboro terminal existed. The Athos I's crew exercised due diligence in ensuring the vessel's seaworthy condition.
CARCO's reasons why the Athos I was unseaworthy are not credible, and they did not proximately contribute to or cause the casualty. Because the Athos I was in a seaworthy condition and not exposed to dangers that were avoidable by good navigation and seamanship, the safe berth warranty was not negated. The safe berth warranty applied to the entirety of the Athos I's voyage, including its approach to CARCO's Paulsboro berth.
The Third Circuit explained that "[i]f it is found that the Athos I was drawing 37 feet or less and absent a determination of bad navigation or seamanship, that finding would indicate that the warranty had been breached because the ship sustained damage."
This Court has found that CARCO breached its safe berth warranty. For this reason, Frescati is entitled to recover damages on the breach of warranty claim. According to the Third Circuit Opinion, if this finding is made, rendering a decision on Frescati's negligence claim becomes unnecessary.
The Court of Appeals has set forth the elements of negligence in admiralty law:
The Third Circuit held that CARCO had "a duty to maintain a safe approach to its terminal."
Over 100 years ago, the United States Supreme Court described the duty a wharfinger owes to ships invited to its berth. As set forth in
173 U.S. 430, 436 (1899). "[T]here is a duty on the part of the owner of the wharf to those whom he invites to come alongside that wharf, and a duty in which the condition of the bed of the river adjoining that wharf may be involved."
More specifically, "[t]his duty includes the duty to ascertain the existence of underwater obstacles and to remove or adequately warn of such obstacles."
The Third Circuit held, "[w]hat is an approach should be given its same plain meaning in the maritime context; when a ship transitions from its general voyage to a final, direct path to its destination, it is on an approach."
Accordingly, the Athos I was within the approach to CARCO's terminal when the accident occurred in the Anchorage, and CARCO "had a duty to exercise reasonable diligence in providing Athos I with a safe approach."
As noted, the Third Circuit left to this Court on remand to decide what standard of care a reasonably prudent wharfinger in CARCO's circumstances should have followed to fulfill its duty of care as a wharfinger.
"Negligence exists where there was a `fail[ure] to exercise that caution and diligence which the circumstances demand, and which prudent men ordinarily exercise.'"
The Third Circuit noted that industry custom may be defined in this case by the actions of similarly situated terminals.
CARCO asserts that the "absence of custom and statutory duty is relevant to establish the required standard of care." (Doc. No. 866 at 118; Doc. No. 867 at 264.) CARCO contends that, because no statute, regulation, custom, or practice required private terminals to survey for hazards to navigation outside of their permitted berthing area, it did not have a duty to survey the Anchorage. (Doc. No. 866 at 119.) CARCO relies on the testimony of Richard Long and William Rankine in support of this assertion. Marine Consultant and Engineer Richard Long testified that S.T. Hudson worked on thirty-one facilities on the Delaware River, which included the majority of terminals on the Delaware River.
Initially, the Court notes that the thirty-one facilities surveyed by S.T. Hudson cover only a portion of the terminals on the Delaware, as there could be over forty marine terminals on the Delaware River. (Long Tr., 141:11-142:23, May 26, 2015.) Furthermore, Captain Rankine's testimony regarding his knowledge of what other terminal operators were doing or not doing was based on hearsay. CARCO did not present testimony from any other terminal owner to establish a custom.
But custom is only one consideration in determining the duty of care. As the Third Circuit noted, custom "is only evidence of a standard of care[,] and violation of custom or adherence to it does not necessarily constitute negligence or lack of negligence."
692 F.2d 412, 426 (6th Cir. 1982).
Here, industry custom does not define what is required of a reasonably prudent wharfinger under the circumstances. The paucity of evidence on custom failed to establish that private terminals did not have a duty to search for obstructions outside their berthing area. Moreover, a failure to meet a duty of care cannot be excused because it is customary in the industry. As will be explained below, "the demands of reasonableness and prudence" required more from CARCO in this case and set the standard of care.
The third basis for a standard of care identified by the Third Circuit is "the demands of reasonableness and prudence."
173 U.S. at 436 (quotation omitted).
One recognized method for determining reasonableness and prudence, or to put it another way, "reasonable diligence in ascertaining, whether the berths themselves, and the approaches to them, are in an ordinary condition of safety for vessels coming to and lying at the wharf,"
Here, the probability of harm multiplied by the gravity of the harm exceeds the burden of the precautions taken by CARCO. First, the probability of harm to ships was high and was made higher in 1999 when CARCO convinced the Docking Pilots Association ("DPA") to open the berthing window four hours earlier. In 1999, at CARCO's request, the DPA established a docking window for the Paulsboro facility to maximize the number of vessels that could dock at CARCO's berth. (Quillen Tr., 11:10-12:9, Sept. 2, 2010; DPA Memo, Ex. P-50; Ex. P-52.) This window allowed vessels with a maximum draft of 37 feet, 6 inches to dock at CARCO's berth "from the beginning of [the] flood current until the time of one (1) hour after high water, Billingsport Range," and that "[a]ll vessels shall be docked head to the current." (Ex. P-52; Quillen Tr., 11:10-26:3, Sept. 2, 2010.) This change reduced the underkeel clearance of ships drawing 37 feet 6 inches or less by four feet. (Rankine Tr., 181:16-23, May 27, 2015.) Further, this change in the docking window increased the foreseeable risk and the probability of harm to ships heading to CARCO's berth.
Next, the gravity of harm if a ship struck an object and an accident occurred was high. From 1997 to 2004, approximately 673 vessels anchored in Federal Anchorage Number Nine. (Rankine Tr., 62:14-64:3, May 27, 2015.) From 2001 to 2004, 241 of those vessels proceeded to CARCO's Paulsboro berth. (Rankine Tr., 64:8-71:4, May 27, 2015; Ex. D-1859). These vessels carried crude oil or other toxic liquids. (Rankine Tr., 162:1-7, 162:14-21, May 27, 2015). Some of these ships, like the Athos I, were single-hulled ships. (Rankine Tr., 146:11-21, May 27, 2015.) The potential environmental and financial loss from an oil spill was considerable.
Finally, the burden of taking precautions to prevent the harm was less than the other two factors considered together or separately. Given the volume of ships entering the Anchorage, and even when only considering the number that went to CARCO's Paulsboro berth, the burden of surveying with periodic side-scan sonar to determine if there were hazards to navigation was low. More specifically, the cost of a periodic inspection for obstructions and hazards would be small in comparison to the gravity and probability of harm. (Doc. No. 859-1 ¶ 75.) Mr. Fish, an underwater search and surveyor, estimated that in 2004, he would have charged "somewhere between $8,000 to $11,000" to survey CARCO's approach area using side-scan sonar to search for obstructions. (Fish Tr., 210:20-21, Mar. 19, 2015.) Further, Mr. Capone, a hydrographer, estimated the cost of performing a side-scan sonar survey of CARCO's approach to be between $7,500 to $11,000. (Capone Tr., 200:19-24, Mar. 18, 2015.) In fact, side-scan sonar detected the anchor after the allision that holed the Athos I. (Fish Tr., 140:20-24, Mar. 19, 2015.) The cost of side-scan sonar was less than a single day's demurrage charge for a ship like Athos I.
After considering the specific facts of this case and the demands of reasonableness and prudence, the Court is able to make a finding on the standard of care applicable here. The standard of care is that a reasonably prudent terminal operator should periodically scan the approach to its dock for hazards to navigation as long as ships are being invited there. In this case, the standard would require that side-scan sonar be used to search the approach for obstructions that are potential hazards to navigation.
Here, on average, about 84 ships entered Federal Anchorage Number Nine per year, and about 60 ships docked yearly at CARCO's terminal. Despite this traffic, CARCO did not search at all for any potential hazards.
Thus, CARCO breached its standard of care because it has admitted that it did not search the approach for obstructions and did not remove or warn incoming vessels of obstructions. The Third Circuit determined that CARCO "never specifically searched for debris or other hazards."
Having found that CARCO breached its duty, this Court must determine whether the breach proximately caused the accident. The question is "whether the accident would have been prevented had CARCO exercised its duty to act as a prudent wharfinger within the approach. At a minimum, this requires `that the injury would not have occurred without the defendant's negligent act.'"
Initially, CARCO alleges that it acted prudently because it could not have foreseen that the Athos I would have collided with the unknown, abandoned anchor in Federal Anchorage Number Nine. (Doc. No. 866 ¶ 359.) But, given the circumstances, the kind of harm the Athos I suffered as a result of the submerged anchor was foreseeable and resulted from CARCO's failure to conduct side-scan sonar searches of the approach to its terminal.
Next, because CARCO was inviting oil tankers with drafts of 37 feet or less to cross the approach to its terminal at potentially low stages of the tide, CARCO's failure to conduct side-scan sonar surveys of the approach put these tankers at risk of being damaged by striking an obstruction and hazard to navigation in the approach. The Athos I was within the class of ships that CARCO put at risk by its negligent conduct.
Finally, performing side-scan sonar searches would have prevented the accident from occurring because it would have led to the discovery of the hazard or obstruction before the Athos I journeyed to CARCO's terminal. The parties have stipulated that the abandoned anchor that struck the Athos I had been in the same location within the approach for at least three years prior to the accident.
As stated in the Conclusions of Law regarding breach of the safe berth warranty, Frescati and its crew did not engage in poor navigation and seamanship. For this reason, CARCO's contention that this conduct amounts to a superseding cause of the accident is without merit.
Moreover, to prevail on the claim of a superseding cause, CARCO is required to prove that "the defendant's negligence in fact substantially contributed to the plaintiff's injury, but the injury was actually brought about by a later cause of independent origin that was not foreseeable."
The accident here was not brought about by any alleged conduct of the Athos I crew or Frescati. It was proximately caused only by the negligent conduct of CARCO. No negligent navigation or seamanship was the superseding cause of this accident. Thus, Frescati is entitled to a judgment in its favor on the negligence claim.
CARCO contends that a rule known as the "Pennsylvania Rule" applies in this case and would bar Frescati from recovering. The Pennsylvania Rule, established long ago in the case
If the Pennsylvania Rule applies, the violator may rebut the presumption that the fault, if not the sole cause, was at least a contributory cause of the disaster. There are several ways to do so. First, "a violator of a navigational statute may not be held liable under the Pennsylvania Rule if the other party to the accident is found to be solely responsible." 2 Schoenbaum,
The Pennsylvania Rule "applies only to violations of statutes that delineate a clear legal duty, not regulations that require judgment and assessment of a particular circumstance."
CARCO alleges that Frescati has violated various federal regulations and international maritime conventions by failing to meet the requirements for voyage planning, calculation of underkeel clearance, and the master-pilot exchange. (Doc. No. 867 at 123.) First, CARCO alleges a violation of 33 C.F.R. § 157.455(a)-(b), which is a special single-hull tanker regulation issued by the Coast Guard. CARCO argues that Frescati violated this regulation by failing to plan the vessel's voyage in advance from berth to berth, failing to include updated and correct anticipated minimum underkeel clearance, failing to consider estimated times of arrival, failing to set forth the details of the voyage plan, and failing to closely monitor and revise the plan based on changed circumstances. (Doc. No. 866 ¶ 126.) As noted above, 33 C.F.R. § 157.455(a)-(b) provides:
Frescati did not violate 33 C.F.R. § 157.455(a)-(b). This Court has found that the vessel's voyage was planned adequately in advance, the Athos I had at least 5 feet of underkeel clearance at the time of the casualty, the ship docked at the correct time, and the master-pilot exchanges were conducted properly. Specifically, as already discussed, Captain Howard Teal, a Delaware River Pilot, and Captain Markoutsis, the Captain of the Athos I, before the casualty had conversations about the conditions of the river, the anticipated draft of the ship, and other pertinent matters. (Teal Tr., 51:12-52:18, 160:11-15, Mar. 16, 2015.) Captain Teal also signed a pilot card indicating the draft and other conditions of the Athos I. (Teal Tr., 59:10-23, Mar. 16, 2015; Pilot Card, Ex. P-466.) Captain Bethel, the docking pilot, also engaged in appropriate exchanges. Because the Court finds that the voyage was adequately planned, there was sufficient underkeel clearance, the docking time was correct, and the master-pilot exchanges were conducted properly, there was no violation of 33 C.F.R. § 157.455(a)-(b).
Second, CARCO alleges that the Athos I was not equipped with a wheelhouse poster as required by single-hull tankers in violation of 33 C.F.R. § 157.450. This regulation provides that "[a] tankship owner, master, or operator shall comply with [International Marine Organization (IMO)] Resolution A.601(15), Annex sections 1.1, 2.3, 3.1, and 3.2, with appendices." IMO Resolution A.601(15) provides in relevant part:
IMO Resolution A.601(15) (emphasis added).
Frescati was not in violation of 33 C.F.R. § 157.450. Captain Betz testified that it was not customary for a river pilot to review the wheelhouse poster or the voyage plan. (Betz Tr., 24:4-19, Mar. 18, 2015.) He explained that "the information that is contained [on a wheelhouse poster], some of it is also typically contained on the pilot card, such as the maneuvering characteristics of the ship, the RPMs, the engine power, things of that nature. . . . The rest of the information that is on the wheelhouse poster is not information that I need to do my job." (Betz Tr., 24:9-16, Mar. 18, 2015.) As previously stated, Captain Teal testified that he signed this pilot card. Additionally, Captain Bethel testified that the information that would have been on the wheelhouse poster is passed on to him when he boards the ship, and that he asks the Captain essentially everything he needs to know. (Bethel Tr., 71:3-23, Mar. 17, 2015.)
In addition, although it states in 33 C.F.R. § 157.450 that there shall be compliance with IMO Resolution A.601(15), this Resolution is replete with the words "recommend," "recommended," and "should encourage." The Resolution therefore has discretionary elements, rendering it suggestive rather than mandatory. In any event, even without a wheelhouse poster, an experienced captain and pilots navigated the Athos I before the allision, and they had sufficient knowledge and expertise to maneuver and dock the ship. Finally, there has been no evidence presented that the Athos I posed "a hazard due to unusual dimensions or characteristics." Thus, Frescati was not in violation of 33 C.F.R. § 157.450. Moreover, CARCO's claims of alleged violations were not the proximate cause of the allision.
Third, CARCO alleges a violation of IMO Resolution A.893(21) for failing to prepare a voyage plan. IMO Resolution A.893(21)(3.1) provides in relevant part, "On the basis of the fullest possible appraisal, a detailed voyage or passage plan should be prepared which should cover the entire voyage or passage from berth to berth, including those areas where the services of a pilot will be used." The Resolution also provides factors which should be included in the voyage or passage plan, including but not limited to the following:
IMO Resolution A.893(21). This Court has already determined that Captain Markoutsis, as well as Pilots Bethel and Teal, had an adequately planned voyage when they had primary responsibility for navigating the ship. In fact, Captain Teal testified that he did not rely on charts when undertaking navigation, but instead relied on a mental chart or his own personal knowledge and experience. (Teal Tr., 19:4-9, Mar. 17, 2015.) Additionally, Captain Betz determined that the master-pilot exchanges between Captain Markoutsis and Pilots Teal and Bethel were adequate and appropriate. (Betz Tr., 22:8-23:4, 26:1-27:16, 47:3-23, Mar. 18, 2015.) Thus, this Court finds no violation of IMO Resolution A.893(21).
Fourth, CARCO also alleges a violation of IMO Resolution A.741(18) and 33 C.F.R. § 96.220-250, which direct ship owners to implement a written safety management system, to comply with international and national regulatory requirements, and to have in place procedures to detect and correct any non-compliance or maintenance failures. Again, the Court finds that, based on the Findings of Fact and the knowledge and expertise of the crewmembers, master, and river pilots, no violation of either of these regulations has been proven that would be a proximate cause of the allision.
Fifth, CARCO alleges a violation of Regulation 34 of the amended Chapter V of the SOLAS Convention. This Regulation provides, in relevant part:
Again, this Court has determined that Captain Markoutsis and Pilots Bethel and Teal had an adequately planned voyage. There is no evidence that Frescati prevented or restricted them from making a decision necessary for safe navigation and protection of the environment. Thus, Frescati did not violate Regulation 34 of the amended Chapter V of the SOLAS Convention.
Finally, CARCO alleges that Frescati's master-pilot exchange was in violation of 33 C.F.R. § 164.11, which was a general navigation regulation that applied to all vessels in 2004. This regulation provides:
The owner, master, or person in charge of each vessel underway shall ensure that:
33 C.F.R. § 164.11. No credible evidence was presented that this regulation was violated. The master-pilot exchanges were performed in the proper manner, and all necessary information was exchanged. The crew of the Athos I and the River Pilots performed their duties adequately. This Court finds no violation of 33 C.F.R. § 164.11.
Thus, Frescati did not violate any of the foregoing regulations or guidelines. As noted, several of the statutes and regulations are suggestive and allow for interpretation or judgment on the part of Frescati and its crew. In addition to the language that has been pointed out in the IMO Resolution A.601(15), other regulations leave it to the discretion of the master or pilot to ensure that certain conditions are met. Even though the regulations use the words "shall ensure," they still convey discretionary decision-making because ships, routes, and conditions will vary. For this reason, experienced captains and pilots are critical to a ship's seaworthiness and navigation. The Athos I had the benefit of experienced navigators.
It appears that CARCO has relied in this case on every maintenance failure and statutory violation it could find, and contends that the statutes were not followed by Frescati or its crew or the Delaware River pilots. But the Athos I was seaworthy and navigable and operated by an experienced team. No alleged statutory or regulatory violation caused or contributed to the allision with the anchor despite the considerable effort of CARCO to shift blame.
Lastly, Frescati has proven that the Athos I's seaworthiness did not contribute to the accident, and the crew did not engage in poor navigation and seamanship. Therefore, Frescati has made a clear and convincing showing that any alleged violation of a statute or regulation was not the proximate cause of, and did not contribute to, the collision.
Frescati has overcome any reasonable presumption that its conduct was the cause of, or contributed to, the accident. CARCO's negligence, and not any violation of a statute or regulation by Frescati, caused this accident. For all these reasons, the Pennsylvania Rule will not afford CARCO any relief in this case.
CARCO has alleged that Frescati spoliated evidence, and therefore has moved this Court for an order either dismissing this case or drawing an adverse inference against Frescati. (Doc. No. 754.) CARCO alleges that Frescati lost, destroyed, or altered the following documents: the original voyage plan of the Athos I, the rough deck log, the cargo control room log, the pump room patrol logs, the wheelhouse poster, and the original Anko Loadicator data.
Spoliation occurs when relevant evidence in a party's control has been suppressed or withheld from the other side.
Shortly after the accident, Captain Hajimichael, President of Tsakos, instructed Captain Markoutsis to preserve all documents that might be relevant to this case, including handwritten notes. (Hajimichael Tr., 122:4-123:8, 137:2-10, Oct. 18, 2010.) In addition, Frescati searched for and collected the documents from the Athos I for preservation and retention before the vessel was passed out of its control. (Hajimichael Tr., 123:9-124:2, Oct. 18, 2010.) To the extent that CARCO has made requests for documents relating to the Athos I allision, Frescati has produced the documents it has located. Frescati has sent over 100,000 pages of documents and other materials to CARCO over the course of this litigation. (Doc. No. 765 at 2.)
Addressing CARCO's specific allegations, with regard to the voyage plan, the evidence shows that it was standard practice onboard the ship to finalize the draft voyage plan form at the end of the voyage and to retain only the final form. The final form was produced. With regard to the rough deck log and cargo control room log, copies and photographs of pages from the log books have been produced. CARCO argues that pages are missing and the original complete log books have not been produced. However, there is no evidence that pages were removed or alterations were made intentionally or in bad faith. Additionally, CARCO alleges that the bridge log book did not contain an entry for ballasting operations on November 26, 2004. Lack of an entry does not indicate that the bridge log book was altered or spoliated.
With regard to the pump room patrol log, the log was requested by CARCO in late 2005 after the ship had been sold, and despite a search, the log was not recovered. With regard to the wheelhouse poster, there is evidence that one did not exist and was not on the ship. With regard to the Anko reports, the reports were merely reprinted with the correct date, and there is no evidence of any changes to the data.
Furthermore, regarding the photographs of the ballast system taken two weeks prior to the incident, they were emailed to a personal account and were never on the company server. Initially, CARCO has only made vague allegations regarding emails alleged to have been withheld. The photographs relate to a suggestion by CARCO that there was extra ballast on board, but there is no evidence to support that assertion. The testimony of Messrs. Bowman and Hall shows that the photographs are also irrelevant because the ballast tanks were dry. Furthermore, while the photographs are missing, there is no evidence to satisfy the bad faith requirement.
Frescati did not intentionally or in bad faith lose, alter, or destroy evidence relevant to this case. The documentation that is missing did not lead to any events that caused or contributed to the casualty. For this reason, this Court will not draw an adverse inference against Frescati, and will rely on the testimony of witnesses who testified at the Rule 63 proceeding and other evidence that properly may be considered. Moreover, the testimony and exhibits presented at the Rule 63 proceeding did not violate the best evidence rule. Consequently, CARCO's spoliation and best evidence motions will be denied.
CARCO argues that its liability for the casualty should be limited by three equitable defenses. They are equitable recoupment, equitable estoppel, and unjust enrichment. (Doc. No. 867 at 219-51.) CARCO does "not request affirmative relief, [but] has asserted its equitable rights and defenses solely for the purpose of offsetting or reducing the Government's subrogation claim." (
Over a century ago, the Supreme Court noted in
Courts are now inclined to grant equitable relief in admiralty disputes. 1
599 F.2d 10, 16 (1st Cir. 1979),
In granting equitable relief when justice so requires, a court may apportion damages or determine the scope of such relief based on equitable principles. In
This Court has already concluded that CARCO breached the safe berth warranty by failing to provide a safe approach for the Athos I, which was sailing with a draft of less than 37 feet. As a result, CARCO is fully liable to Frescati for breach of the safe berth warranty. The Government, as a statutory subrogee, stands in the shoes of Frescati on the breach of the safe berth warranty. For the reasons that follow, however, this Court finds that the Government's conduct warrants an equitable finding that CARCO is not fully liable to the Government on its nearly $88 million reimbursement claim.
Initially, the Government contends that by virtue of its position as Frescati's statutory subrogee pursuant to the terms of OPA, CARCO is precluded from raising equitable defenses to its subrogation claim. (Doc. No. 864 at 65.) In particular, the Government argues that its right to subrogation under OPA displaces equitable principles. (
Under the provisions of OPA, the Government may assume the position of a subrogee to pursue claims against a person responsible for oil pollution. Subrogation occurs when "`one person is allowed to stand in the shoes of another and assert that person's rights against' a third party."
33 U.S.C. § 2715(a).
OPA has another provision that can make the Government a subrogee. Under 33 U.S.C. § 2712(f), "[p]ayment of any claim or obligation by the Fund under this Act shall be subject to the United States Government acquiring by subrogation all rights of the claimant or State to recover from the responsible party." Once the Fund has compensated a claimant, it is subrogated to all rights the claimant has under any law. 33 U.S.C. § 2715(a).
The Government's right to subrogation under OPA does not preclude all equitable defenses. As the savings provision of OPA explains,
Except as otherwise provided in this Act, this Act does not affect—
33 U.S.C. § 2751(e). The Government contends that the language "except as otherwise provided" in this Section preempts equitable defenses. (Doc. No. 864 at 65.) Specifically, the Government argues, "the savings clause may not be used to limit rights established by OPA." (
The partial settlement agreement between the Government and CARCO and the directives in this case from the Third Circuit indicate that CARCO is not barred from raising equitable defenses against the Government.
Second, the Third Circuit expressly stated that it "decline[d] to preclude CARCO from revisiting any previously raised equitable defense to the Government's subrogation claims."
CARCO argues that the equitable defense of recoupment limits the Government's recovery for the cleanup expenses resulting from the Athos I oil spill.
Recoupment allows a defendant to assert a defense that might otherwise be barred if it was brought in a separate action. For example, recoupment can be asserted, and sovereign immunity is waived, when the Government brings suit.
The Government also asserts that CARCO is barred from asserting the equitable defense of recoupment because it was not raised as a separate, quantifiable "claim." (Doc. No. 864 at 60.) Rather, it asserts that recoupment was raised solely as a defense to CARCO's liability. (
CARCO is pursuing its equitable rights pursuant to the limited settlement agreement with the Government. (Doc. No. 340-1.) The settlement agreement provides, in part:
(
In addition, recoupment may be pled either as a claim or as a defense. Although it may be better practice to assert recoupment as a counterclaim under Rule 13(a) of the Federal Rules of Civil Procedure, recoupment may also be pled as a defense. The Supreme Court has recognized that "it is not clear whether set-offs and recoupments should be viewed as defenses or counterclaims."
Regardless of whether CARCO raised a "claim" or "defense" in asserting recoupment, this Court will resolve the issue of recoupment on the merits. In this regard, the Third Circuit expressly stated that it "decline[d] to preclude CARCO from revisiting any previously raised equitable defense to the Government's subrogation claim."
Recoupment against the United States Government must "arise[] out of the same transaction or occurrence as the main suit and the relief sought neither exceeds nor is different from that demanded by the sovereign."
First, the Government's subrogation claim and CARCO's defense arise out of the same transaction or occurrence—the Athos I oil spill. The Government's subrogation claim seeks reimbursement for expenses associated with the oil spill cleanup response. Likewise, CARCO's recoupment defense seeks to limit the Government's reimbursement costs associated with the Athos I oil spill response. Because both the Government's subrogation claim and CARCO's recoupment defense arise out of the same transaction or occurrence—the Athos I oil spill—the first element of recoupment is satisfied.
Second, the Government and CARCO seek the same kind of relief; they both seek equitable relief. A statutory mandate to pay specific monies can be considered equitable relief.
Here, the Government seeks reimbursement of funds distributed to Frescati for the Athos I oil spill response. By seeking reimbursement for the cleanup, the Government is pursuing equitable relief. Similarly, CARCO is raising recoupment as an equitable defense. Like the Government, CARCO is seeking equitable relief. Therefore, this second element of recoupment is also satisfied.
Third, CARCO has raised recoupment as part of its equitable rights and defenses and does not seek affirmative relief. As noted, the Third Circuit has recognized that recoupment "seeks to diminish a claim or to defeat recovery rather than to share in it."
Since CARCO has shown that all three elements of recoupment exist in this case, it is entitled to seek limitation of the Government's subrogation claim against it. In assessing recoupment as a defense, the court examines the transaction as a whole to determine whether facts in the full record warrant applying the equitable remedy.
The Government contends that it is not responsible for maintaining Federal Anchorage Number Nine. In making this argument, it references the Third Circuit Opinion, in which the court stated, "No Government entity, however, is responsible for preemptively searching all federal waters for obstructions."
The facts in this full record present troubling aspects of the Government's position. The Government represents in many ways that it maintains federally controlled waters, including Federal Anchorage Number Nine, through the actions of the Army Corps of Engineers, NOAA, and the Coast Guard. Among other things, the Government represents that it maintains federally controlled waterways by intermittently surveying these areas, managing all navigational markers, and regularly notifying the maritime community of any changes to water conditions or hazards to navigation. The Government periodically surveyed Federal Anchorage Number Nine. (DePasquale Tr., 24:3-19, Mar. 19, 2015; Long Tr., 73:1-5, May 26, 2015; Rankine Tr., 26:1-9, May 27, 2015.) The Government also regularly updated the navigational charts on the Anchorage and routinely notified mariners of any known, underwater obstructions. (DePasquale Tr., 26:15-20, Mar. 19, 2015.) Facility owners and mariners alike rely on Government assertions that it monitors and cares for these federally controlled waterways.
The Government statutorily created the federal project waters over which it exercises control, including Federal Anchorage Number Nine. Congress passed the Rivers and Harbors Act of 1915, which authorized the establishment of "anchorage grounds for vessels in all harbors, rivers, bays, and other navigable waters of the United States whenever it is manifest . . . that the maritime or commercial interests of the United States require such anchorage grounds for safe navigation." 33 U.S.C. § 471. As the Third Circuit explained, "By 1930, a `lack of adequate anchorage room' was creating a hazard on the Delaware River between navigating vessels and those `awaiting accommodation at the wharves, or awaiting cargo or orders.'"
The Government agrees that it was responsible for controlling and maintaining Federal Anchorage Number Nine through statutes and regulations.
Moreover, the Corps of Engineers makes a presentation at every Mariners' Advisory Committee ("MAC") meeting regarding dredging. (DePasquale Tr., 48:25-49:18, Mar. 19, 2015.) A question and answer period follows each presentation by the Corps, and attendees have the opportunity to report problems to the Corps. (DePasquale Tr., 49:24-50:9, 69:9-19, Mar. 19, 2015.) MAC meetings are attended by many constituents of the maritime community, including the Corps, the Coast Guard, NOAA, Delaware river and docking pilots, facility owners and operators, terminal representatives, the Maritime Exchange (an industry group that facilitates communication between shipping and the Government), tugboat owners and operators, the Philadelphia Regional Port Authority, and architect engineering firms. (DePasquale Tr., 48:1-17, Mar. 19, 2015; Ratcliffe Tr., 64:1-65:1, Mar. 16, 2015; Rankine Tr., 72:6-10, May 27, 2015;
NOAA is statutorily involved in surveying the Delaware River and providing information to the public. Like the Corps, NOAA conducts hydrographic surveys of the Delaware River, including Federal Anchorage Number Nine. It is primarily responsible for preparing and updating navigational charts used by mariners, which include notifications about potential obstructions to navigation. NOAA's charts provide mariners with information about water depths, and the location and depth of obstructions to navigation. NOAA's charts also show the location of aids to navigation, anchoring areas, and other navigational features. (Ex. D-1535.) Obstructions are indicated on the charts by the abbreviation "Obstn." (Ex. D-1354.) Federal Anchorage Number Nine was displayed on NOAA Chart 12313. (NOAA Nautical Chart 12313, Ex. D-1354.) NOAA also maintains an Automated Wreck Obstruction Information System ("AWOIS") database, which publishes information on the location of known or suspected submerged wrecks and obstructions. The AWOIS website includes more than 10,000 reports, and as part of its hydrographical survey duties, NOAA reviews the AWOIS reports, determines which objects warrant field investigation, and assigns those objects to NOAA survey boats for investigation.
In addition, NOAA occasionally conducts surveys of the surrounding waterways for various federal projects. In fact, in 1981, NOAA surveyed Federal Anchorage Number Nine. (Ex. D-1517.) Additionally, in 2002, NOAA performed a hydrographic survey of the Delaware River using side-scan and multi-beam sonar. (Ex. D-1520; Ex. D-1525.) In 2004, NOAA maintained a fleet of hydrographic survey vessels that were equipped with side-scan and multi-beam sonar. (Doc. No. 555.)
Along with the Corps and NOAA, the Coast Guard is statutorily responsible for monitoring federal waterways, including Federal Anchorage Number Nine. The Coast Guard maintains all aids to navigation (buoys, lights, etc.), enforces regulations pertaining to vessels, and recommends and establishes navigable water boundaries. 33 U.S.C. § 471; 33 C.F.R. § 62.1. It is tasked with marking obstructions to navigation, including submerged structures. The Coast Guard maintains a warning communication system known as "Notice to Mariners," which is published weekly and notifies mariners of any changes and discrepancies from the charts of navigable waterways, including shoaling and the location of newly discovered hazards to navigation. 33 C.F.R. § 72.01-10. Together, these agencies are responsible for ensuring that information concerning any changes in navigable waterways is promptly made public for the benefit of the maritime community. 33 C.F.R. § 209.325.
Collectively, these agencies represent that they maintain Federal Anchorage Number Nine.
The Corps and the Coast Guard are responsible for handling hazards to navigation through a coordinated wreck removal system. The relevant federal regulation establishes the general policy for removal of obstructions in navigable waterways. 33 C.F.R. § 245.10. It states:
33 C.F.R. § 245.10. The Corps, NOAA, and the Coast Guard work together in removing obstructions that pose a hazard to navigation and in alerting the public to an unsafe area.
The Government relies upon the provisions of 33 C.F.R. § 245.10 for the proposition that it has no responsibility for locating obstructions. Although the regulation states that the primary responsibility for removing obstructions is on the owner, lessee, or operator of the obstruction, that regulation is silent on primary responsibility when the owner, lessee, or operator is unknown and no party is aware of the presence of the obstruction. If the Government is aware of the obstruction and the owner cannot be found, it may remove the obstruction. But this regulation does not absolve the Government from all responsibility when the owner and the obstruction are unknown, as in the case here. There is a void in the regulation, and on this full record, like CARCO, the Government could have taken steps to locate the anchor and to have avoided the allision.
Most significantly, the Government never suggested to CARCO that private wharfingers were responsible for surveying Federal Anchorage Number Nine for obstructions. (Rankine Tr., 182:15-19, 182:23-183:18, May 26, 2015.) In fact, the Government apparently never instructs wharfingers to inspect federal anchorages for obstructions. (Rankine Tr., 77:5-13, May 27, 2015.) Therefore, before the Athos I spill, CARCO did not do a search. (Long Tr., 74:11-20, May 26, 2015; Rankine Tr., 50:24-25, May 27, 2015.)
Richard Long, who has performed single-beam hydrographic surveys for thirty-one marine terminal facilities on the Delaware River, testified that he surveyed only the permitted berth area for each terminal. (Long Tr., 13:11-22, 14:2-4, 20:1-5, 74:11-20, 141:11-142:23, May 26, 2015.) These surveys did not extend to inspect federally controlled waterways such as anchorages. (Long Tr., 14:23-15:2, May 26, 2015.) Mr. Long explained that if he needed information about a federally controlled waterway, including the controlling depths and the existence of hazards, he would contact the Corps. (Long Tr., 74:6-10, May 26, 2015.) The Government even owned side-scan sonar equipment commonly used for locating underwater obstructions. (DePasquale Tr., 36:12-37:8, Mar. 19, 2015.)
After assessing the Government's representations and actions with respect to Federal Anchorage Number Nine, the Court finds on this full record that the Government should be limited in its recovery from CARCO under the equitable principle of recoupment. Had the Government known about the anchor at the bottom of Federal Anchorage Number Nine, it would be prevented from any recovery from CARCO, because it would have knowingly failed to alert mariners to the danger. However, neither the Government nor CARCO knew of the anchor's presence. But the Government's statutory and regulatory representations and conduct led wharfingers to believe that Federal Anchorage Number Nine was being maintained and scanned for underwater hazards by the Government. As such, the area was not searched by CARCO, creating a hazardous condition that led to the casualty at issue in this case. Therefore, based on the forgoing, the Court concludes that the Government will be limited in its recovery against CARCO.
Since both the Government and CARCO could have taken steps to locate the unknown anchor in the Federal Anchorage, and given the above findings and conclusions on equitable recoupment, the amount CARCO is required to reimburse the Government will be reduced by fifty percent (50%). The facts in this case warrant an equitable result which compels this reduction. One half of $87,989,157.31 is $43,994,578.66, which is the amount the Court is ordering CARCO to reimburse the Fund.
Finally, by the Court agreeing that the Government was in a position to avoid the loss for purposes of equitable recoupment, it should be clear that the Court is not finding that CARCO had no responsibility to search Federal Anchorage Number Nine for hidden obstructions. CARCO also could have done the search through side-scan sonar and, as the Court has already found, it breached the safe berth warranty to Frescati, and to the Government as a subrogee. CARCO also was negligent for failing to search and is liable to Frescati for its negligence. Moreover, the Court is not holding that the Government has an affirmative duty to search for hazards to navigation or obstructions in all federal waterways going forward. Rather, based on the facts in this case, the Court finds that the Government took actions which led CARCO to believe that the Government was maintaining Federal Anchorage Number Nine such that it would be inequitable to hold CARCO fully responsible to reimburse the Fund for the entire amount paid to Frescati from the Fund.
For all the above reasons, the Government is limited in recovering the amount that CARCO will be reimbursing the Fund. The Court finds that, on the full record, the Government's subrogation claim against CARCO should be reduced by 50%.
CARCO also contends that its liability to the Government is precluded in whole or in part through the doctrine of equitable estoppel. (Doc. No. 867 at 242.) Equitable estoppel may bar or limit a claim upon a showing that a plaintiff made a material misrepresentation on which the defendant reasonably relied to its detriment.
CARCO alleges here that the Government misrepresented that it was maintaining and safeguarding federal project waters, including Federal Anchorage Number Nine. (Doc. No. 867 at 242.) CARCO contends that it reasonably relied on the Government's misrepresentation that it was maintaining and safeguarding Federal Anchorage Number Nine and that the misrepresentation was material. For this reason, it did not survey the Anchorage for obstructions and did not locate the anchor that caused the Athos I casualty. (
The parties dispute whether a defense of equitable estoppel raised against the Government should be treated differently than an ordinary equitable estoppel claim raised against private litigants. On one hand, CARCO asserts that by acting as a private party, the Government is subject to ordinary equitable estoppel standards. (
On the other hand, the Government asserts that an equitable estoppel defense asserted against it should be treated differently. (Doc. No. 864 at 62.) In the Third Circuit, it is well settled that the Government may not be estopped on the same terms as any other litigant.
In
The Third Circuit has adopted this heightened burden of showing affirmative misconduct to succeed on an equitable estoppel claim against the Government.
The Court concludes that CARCO has not met the heightened standard for equitable estoppel against the Government; therefore, this defense will not limit the Government's subrogation claim. To reiterate, equitable estoppel will bar or limit a claim against the Government upon a showing that the Government made a material misrepresentation upon which the defendant reasonably relied to its detriment, and that the Government engaged in some affirmative misconduct in making this misrepresentation.
In this case, CARCO has not met its burden of establishing equitable estoppel for several reasons. First, the Government did not make a material misrepresentation to CARCO.
Second, the Government did not engage in affirmative misconduct. It never affirmed that it would search the Anchorage for obstructions. Although its conduct here could have led CARCO to believe that it did so, there is no evidence that Government regulatory personnel engaged in misconduct. For these reasons, CARCO's defense of equitable estoppel is unavailing.
CARCO alleges that the Government would be unjustly enriched if it were able to collect the nearly $88 million in cleanup expenses it reimbursed Frescati. (Doc. No. 867 at 245.) Because CARCO paid into the Fund over $103 million in taxes on imported barrels of oil, it argues that the Government is not entitled to collect an additional $88 million. CARCO contends that any reimbursement would amount to unjust enrichment.
Under federal admiralty law, a party may bring a claim for unjust enrichment.
136 F.Supp.3d 654, 676 (E.D. Pa. 2015) (quoting Restatement (Third) of Restitution and Unjust Enrichment § 1 cmt. b (2011)). The concern is not "with unjust enrichment in any such broad sense, but with a narrower set of circumstances giving rise to what might more appropriately be called
As noted, CARCO claims that the Government will be unjustly enriched if CARCO is required to reimburse the Government the nearly $88 million because it has already paid to the Fund over $103 million in taxes on imported oil. This argument misconstrues how the Fund works. Congress has provided that the Fund collects income in several ways. First, the Fund collects income through a per-barrel tax on oil. 26 U.S.C. § 9509(b)(1). Second, it receives income through recovery under OPA for damages to natural resources. 26 U.S.C. § 9509(b)(2). Third, the Fund collects income by pursuing removal costs as a statutory subrogee of a claimant of the Fund. 26 U.S.C. § 9509(b)(3). Thus, the Government has a legal basis, under 26 U.S.C. § 9509(b), to receive income from one party both for a per-barrel tax on imported oil and for any claims it pursues as a statutory subrogee. Because the Government is permitted to receive reimbursement from CARCO pursuant to this latter ground, CARCO's unjust enrichment defense is without merit.
There are four components of Frescati's damages claim: (1) damages for six categories of claims made by Frescati and the date and amount of three principal reductions; (2) the rate of prejudgment interest; (3) the start date for accrual of interest; and (4) whether the interest is compounded.
Because CARCO breached its safe berth warranty and was negligent in maintaining the approach to its berth, Frescati is entitled to a total of $55,497,375.95 in damages under both contract and tort law. "The damage rule in admiralty cases generally does not differ from ordinary contract rules."
The Court of Appeals has made clear that "a negligent defendant is liable for all the general harms he foreseeably risked by his negligent conduct and to the class of persons he put at risk by that conduct."
Frescati has met its burden of proving that it is entitled to an award of damages in the amount of $55,497,375.95. Frescati had the burden to prove the amount of its damages to a reasonable degree of certainty.
Donna Hellberg, the Lead Claims Manager for the National Pollution Funds Center ("NPFC"), testified that in the course of adjudicating this claim, the documents she reviewed were "probably in excess of 5 feet, truthfully, in magnitude" (Hellberg Tr., 134:7-9, Mar. 24, 2015), and "[Frescati] supplied in excess of 53,000 pages of documentation" (Hellberg Tr., 87:6-12, Mar. 24, 2015). Ms. Hellberg stated, "I determined that they were entitled to recover approximately [$]88 million over and above their limitation of liability, which was [$]45.4 million." (Hellberg Tr., 64:18-20, Mar. 24, 2015.)
In addition to the testimony of Donna Hellberg and the documentation, through the testimony of Ben Benson, the Qualified Individual under the Athos I's vessel response plan, and Roger LaFerriere, the Commanding Officer of the Coast Guard Atlantic Strike Team, Frescati has shown that its damages claim is reasonable and precise. On this record, Frescati also has proven with precision the reasonableness of the damages of nearly $88 million, which the Government seeks to recover as a subrogee, but which has been reduced by the Court, and the balance Frescati claims that CARCO is liable to pay.
Frescati is entitled to damages totaling $55,497,375.95 for its losses. The damages fall into the following six categories, as discussed below.
First, Frescati is entitled to damages in the amount of $45,317,511 for the cost to clean up the oil, or "removal costs" as required by OPA, 33 U.S.C. § 2701(31) (2013). As stated in the Findings of Fact, Frescati was able to limit its liability to this amount pursuant to 33 U.S.C. § 2704. As a result, the NPFC reimbursed Frescati $87,989,157.31, and the United States Government became subrogated to Frescati's claim against CARCO for that amount. Additionally, Frescati was able to reduce its OPA removal damages by $156,489 by selling equipment it used for the cleanup. Thus, after the NPFC's reimbursement and the sale of cleanup equipment, Frescati is entitled to $45,317,511 for its OPA removal costs. (Ex. P-1419.)
Frescati is entitled to $1,541,597.79 for expenditures made in the course of its response to the spill, which the NPFC deemed not "OPA compensable." These expenses included costs incurred to manage third-party claims, to decontaminate recreational boats oiled by the spill, and to remove the anchor and pump casing from the riverbed. These were reasonable expenses actually incurred as a direct consequence of the incident, and are recoverable.
Additionally, Frescati is entitled to damages in the amount of $1,500,000 to recover the amount it paid to settle the claim of the Salem Nuclear Power Plant. (Ex. P-1422 at ATHOS 78119.1-78128, 78232, 78424.) Frescati may recover from CARCO indemnity for settlement with this third party claimant if it shows: (1) potential liability to a third party; (2) that "the settlement is reasonable"; and (3) that "the indemnitor has sufficient notice in which to object to the settlement terms."
Frescati established all of the necessary elements to warrant recovery. The Salem Nuclear Power Plant initially submitted claims to the NPFC for lost profits and other costs incurred due to the emergency shutdown of reactors when oil from the spill appeared in the Plant's water supply intakes. Frescati's witness, Roger LaFerriere, the Commanding Officer of the Coast Guard Atlantic Strike Team, testified that the Salem Nuclear Power Plant had to be shut down for several days, which created serious concerns for Southern New Jersey in obtaining energy. (LaFerriere Tr., 16:4-8, Mar. 23, 2015.)
As a result, the NPFC adjudicated and settled the power plant's claims for $33,125,017.17, not including interest. Subsequently, in November 2008, the Salem Nuclear Power Plant asserted a claim against Frescati for $4,695,950.87, representing the interest that the NFCP had not paid because the NPFC is not statutorily obligated to pay interest on its claim awards. On March 27, 2009, Frescati tendered the defense of the claim to CARCO, but on May 28, 2009, CARCO rejected the tender offer, leaving Frescati to resolve the claim itself. (Ex. P-1422.) In October 2009, Frescati settled this interest claim for $1,500,000 in exchange for a complete release for itself and CARCO. The settlement was reasonable, and CARCO was given the opportunity to defend or resolve the claim. Therefore, Frescati is entitled to $1,500,000 in damages for its settlement with the Salem Nuclear Power Plant.
Frescati is entitled to damages in the amount of $438,542.25 for the estimated cost of repairs to the vessel's hull that were never completed. Indeed, "vessel repairs are not a prerequisite to an award for physical damages caused by a collision."
Here, the Court finds that Frescati is entitled to the estimated cost of repairs of the ship's hull in the amount of $438,542.25. (Doc. No. 518; Ex. P-1417.) As stated in the Findings of Fact, Frescati was unable to repair damages to certain hull plates at the Mobile, Alabama dry dock because the dry dock facility did not have the proper accommodations to perform the repair work. However, Frescati was not required to repair the vessel hull to be awarded damages on the estimated cost of repairs. Therefore, Frescati is entitled to damages in the amount of $438,542.25 for the estimated cost of the unrepaired hull damage.
Next, Frescati has carried its burden of proving $50,642.01 in damages for vessel and miscellaneous port expenses. (Exs. P-1415; P-1416; P-1429.) As stated in the Findings of Fact, between November 26, 2004 and February 3, 2005, Frescati incurred $15,796 in damages to supply the vessel with stern tube oil and stores during detention. Frescati also incurred $34,846.01 for BMT Salvage's marine survey and salvage work related to the casualty. CARCO did not contest the amount of either of these expenses. Thus, in total, Frescati is entitled to $50,642.01 for vessel damages and miscellaneous port expenses. (Exs. P-1415; P-1416; P-1429.)
In the category of Stipulated Damages, Frescati is entitled to damages in the amount of $6,649,082.90. As previously noted, Frescati and CARCO have stipulated to the amount of the final three expenses: Hull Damage,
CARCO did not carry its burden of proving the affirmative defense that Frescati failed to mitigate its damages. "Once a plaintiff proves its damages, a defendant has the burden to show the damages award should be limited because the plaintiff failed to take reasonable measures to mitigate its loss."
To be sure, "`reasonableness' here does not require `infallibility or exactness of mathematical formula.'"
The Court "`will allow [Frescati] a wide latitude in determining how best to deal with the situation' because `the necessity of decision-making was thrust upon [it] by the defendant, and judgments made at the time of crisis are subject to human error.'"
Here, Frescati was faced in its cleanup efforts with unique and challenging circumstances, including the time of year that the incident occurred, the nature of the Delaware River, and the sheer magnitude of the spill itself. Frescati was compelled to make difficult business judgments with respect to equipment, personnel, organization, and process. For example, Mr. Benson testified that he had approximately 1,800 individuals working in response to this incident. He continued, "And you stand 1,800 people up within a five-day period, you are actually building a company and you have to manage that as a company. You have to use sound business principles when it comes to operations, planning, logistics, and more importantly the finance aspects of that." (Benson Tr., 193:17-22, Mar. 23, 2015.) In addition, Mr. LaFerriere stated, "So this spill, in particular, is the one I'm the most proud of. This spill had the best use of the incident command system I have seen in all the spills I have been involved in." (LaFerriere Tr., 81:7-10, Mar. 23, 2015.)
Frescati was not required to take on the risk of potential liability or added expenses by attempting to reduce its damages.
Frescati is entitled to an award of prejudgment interest at the United States one-year Treasury Rate, set in 28 U.S.C. § 1961(a), while the Government is entitled to prejudgment interest at the rate set in OPA, 33 U.S.C. § 2705(b)(4), to which the Government and CARCO stipulated. "The rule in admiralty is that prejudgment interest should be awarded unless there are exceptional circumstances that would make such an award inequitable."
Prejudgment interest should be awarded unless exceptional circumstances exist that would make the award inequitable. Exceptional circumstances exist when the party requesting the interest "has (1) unreasonably delayed in prosecuting its claim, (2) made a bad faith estimate of its damages that precluded settlement, or (3) not sustained any actual damages." Del. River &
Moreover, prejudgment interest is considered part and parcel of the damages award, and "must be compensatory rather than punitive."
CARCO argues that Frescati is not entitled to prejudgment interest because it unreasonably delayed resolving this matter by requesting a stay of litigation from 2005 to 2008 while it pursued limitation and recovery from the Oil Spill Liability Trust Fund. (Doc. No. 856 at 31.) CARCO maintains that this Court should deny prejudgment interest when a plaintiff unreasonably delayed the pursuit of its claim or delayed resolving the case.
In
Frescati is entitled to interest on all damages it incurred as a result of the casualty. Frescati, however, is not seeking an award of prejudgment interest on the category of Unrepaired Hull Damage because it did not actually incur that expense. (Doc. No. 863 ¶ 243.) As such, Frescati is entitled to prejudgment interest on all damages categories except the category of Unrepaired Hull Damage.
No exceptional circumstances existed that would make the award of interest inequitable. Frescati has not "(1) unreasonably delayed in prosecuting its claim, (2) made a bad faith estimate of its damages that precluded settlement, or (3) not sustained any actual damages."
Frescati is entitled to prejudgment interest at the United States one-year Treasury Rate, specified in 28 U.S.C. § 1961(a).
In the maritime property damage case
The interest rate specified in 28 U.S.C. § 1961(a) may be awarded as prejudgment interest in cases where the court does not find, "on substantial evidence, that the equities of a particular case require a different rate."
Accordingly, the interest rate specified in 28 U.S.C. § 1961(a) is a reasonable guidepost and a more appropriate rate than any other rate advocated by the parties. Based on the foregoing, Frescati is entitled to prejudgment interest, which will be awarded at the United States one-year Treasury Rate set in 28 U.S.C. § 1961(a).
The Government is entitled to prejudgment interest on its limited subrogation damages at the rate specified in OPA, 33 U.S.C. § 2705(b)(4), because this is the rate to which the Government and CARCO have stipulated. (Doc. No. 492.) As such, CARCO will owe the Government prejudgment interest on $43,994,578.66. Section 2705(b)(4) provides that interest "shall be calculated at the average of the highest rate for commercial and finance company paper of maturities of 180 days or less obtaining on each of the days included within the period for which interest must be paid to the claimant, as published in the Federal Reserve Bulletin." 33 U.S.C. § 2705(b)(4). Because the parties have stipulated to this interest rate, prejudgment interest will be awarded to the Government at this rate.
The appropriate period of accrual for prejudgment interest is from April 1, 2005 to the date of judgment on the monies awarded by the Court. "Prejudgment interest begins to run from the date the damaged party loses the use of its funds,
CARCO argues that Frescati is not entitled to prejudgment interest because it delayed the litigation three years by moving to stay the case in 2005 to assert a claim for limitation and recovery from the NPFC. (Doc. No. 858 ¶ 33.) The Court has already found this argument to be without merit. Thus, with the exceptions noted, the appropriate period of accrual for prejudgment interest is from April 1, 2005 to the date of this judgment.
Annual compounding is a reasonable and appropriate computation factor for Frescati's prejudgment interest. 28 U.S.C. § 1961(b) provides, "Interest shall be computed daily to the date of payment . . . and shall be compounded annually." 28 U.S.C. § 1961(b).
This litigation involves an attempt by three parties to apportion monetary liability for the Athos I casualty. The first party includes the owner of the Athos I, Frescati Shipping Company, Ltd., and its vessel manager, Tsakos Shipping & Trading, S.A. ("Frescati"). Frescati alleges that it incurred more than $143 million in expenses from oil spill cleanup efforts and in damages. The second party is the United States Government, which reimbursed Frescati $87,989,157.31 pursuant to the provisions of OPA. Both Frescati and the Government seek reimbursement for their costs from the third party to this litigation—entities known as CITGO Asphalt Refining Company, CITGO Petroleum Corporation, and CITGO East Coast Oil Corporation (together referred to as "CARCO"). CARCO contracted to have the Athos I deliver crude oil to its refinery in Paulsboro, New Jersey.
Frescati brought a contract action against CARCO for breaching the safe berth warranty included in the contract that CARCO made with Star Tankers, Inc., the intermediary that chartered to CARCO the Athos I for delivery of oil to its Paulsboro berth. Frescati is covered by the safe berth warranty as a third-party beneficiary. The safe berth warranty was an express assurance that the Athos I would reach the Paulsboro berth safely, provided that it maintained a draft of 37 feet or less. The record demonstrates that the Athos I was drawing less than 37 feet at the time of the casualty. This Court finds that CARCO breached the safe berth warranty. This Court also finds that Frescati did not negate the safe berth warranty through poor navigation or seamanship. As a result, CARCO is liable to Frescati on the breach of contract claim in the amount of $55,497,375.95 for cleanup costs and damages, plus prejudgment interest. Prejudgment interest will be calculated at the rate set in 28 U.S.C. § 1961(a) and compounded annually.
The Government, as a statutory subrogee, has entered into a partial settlement agreement with CARCO, limiting its claim for reimbursement from CARCO to Frescati's contractual claim under the safe berth warranty. The Government does not have a negligence claim against CARCO. As a statutory subrogee, the Government stands in the shoes of Frescati on the breach of contract claim. The evidence warrants, however, an equitable finding that CARCO is not fully liable to the Government on the $87,989,157.31 subrogation claim. The Government may only recover on this claim 50% of the $87,989,157.31, or $43,994,578.66, plus prejudgment interest. Prejudgment interest will be awarded at the rate set in 33 U.S.C. § 2705(b)(4).
In addition to the breach of contract claim, Frescati brought a negligence claim against CARCO. The Third Circuit has held that CARCO had a duty to exercise reasonable diligence in maintaining a safe approach to its Paulsboro berth for the Athos I. To fulfill this duty, the standard of care required CARCO under the facts of this case to periodically scan the approach to its dock to search for hazards to navigation. In addition, if CARCO found a hazard, CARCO was required to either remove it, mark it, or warn incoming ships of its presence. CARCO breached this duty by failing to conduct side-scan sonar surveys of the approach. This failure to search for underwater hazards within the approach proximately caused the casualty. Had CARCO searched for underwater obstructions within the approach, the anchor would have been discovered and the oil spill would not have occurred. Therefore, CARCO was negligent and is liable to Frescati on this claim in the amount of $55,497,375.95 for cleanup costs and damages, plus prejudgment interest compounded annually.
CARCO contends that Frescati's conduct contributed to the casualty because the Athos I crew negligently navigated the vessel and the vessel was unseaworthy. No credible evidence shows that any poor navigation or seamanship proximately caused or contributed to the casualty, or that the Athos I was unseaworthy. Moreover, the Pennsylvania Rule does not limit Frescati's recovery.
The amount of $55,497,375.95 is being awarded to Frescati on both the breach of warranty and negligence claims. Frescati is being awarded the $55,497,375.95 independently on each count, but is entitled to a total award only in this amount.
Over the past twelve years, this litigation has generated about seventy (70) days of testimony plus numerous days of other proceedings and appeals; the devoted commitment of an army of lawyers and experts from the Government and the private sector; and the study of vast amounts of information to uncover the cause of, and culpability for, the allision. At some point, the Athos I was scrapped. Its only remnant, a cut-out section of the hull displaying two unique holes with jagged edges, remains in a shed in Baltimore, Maryland, near a rusted anchor with a fluke that has an evenly curled bent tip. The story of the final voyage of the Athos I and the reasons why it came to rest prematurely may be in the minds of the maritime community for years to come. But in this Court, for now, its legal journey will conclude here.
Appropriate Orders follow.
Fed. R. Civ. P. 52(a)(1). There is no right to a jury trial in admiralty litigation. Fed. R. Civ. P. 38(e). The trial is before a judge.
33 U.S.C. § 2704(a)(1). A "tank vessel" includes a vessel that carries oil in bulk as cargo, and that operates on the navigable waters, or transfers oil in a place subject to the jurisdiction of the United States. 33 U.S.C. § 2701(34). For any other vessel, the limitation of liability is $950 per gross ton or $800,000, whichever is greater. 33 U.S.C. § 2704(a)(2).
33 U.S.C. § 1321(j)(5)(D).
33 U.S.C. § 403. The Corps does not allow a private party to alter or modify a federally maintained waterway on its own accord.
33 C.F.R. § 320.2(b).
33 C.F.R. § 245.10.
Initial message to include:
(Voyage Instructions, Ex. P-360.)
33 C.F.R. § 157.455(a)-(b). In addition to this regulation on underkeel clearance, CARCO asserts that Frescati violated IMO Resolution A.893(21) and Regulation 34 of Chapter V of the Safety of Life at Sea ("SOLAS") Convention, for allegedly failing to prepare a voyage plan. The IMO resolution provides that, "on the basis of the fullest possible appraisal, a detailed voyage or passage plan should be prepared which should cover the entire voyage or passage from berth to berth, including those areas where the services of a pilot will be used." IMO Resolution A.893(21). Similarly, the SOLAS Convention provides:
SOLAS ch. V, reg. 34.
IMO Resolution A.601(15) (emphasis added).
IMO is a United Nations agency headquartered in London, England. It sponsors most international conventions that deal with pollution of the sea. It has no enforcement authority, but it serves the important function of "coordinating the uniformity of ship regulations and inducing cooperation among nations with regard to the economic and technical aspects of maritime commerce." 2 Thomas J. Schoenbaum,
IMO Resolution A.741(18) has recommendations for safe operation of ships and for pollution prevention, and strongly urges governments to implement the ISM Code. IMO Res. A.741(18). For example, IMO Resolution A.741(18) Annex 1.4 provides:
IMO Res. A.741(18) Annex 1.4.
(Benson Tr., 160:12-18, Mar. 23, 2015.)
Fed. R. Civ. P. 8(c). In discussing Rule 8(c), Judge (then Dean) Charles E. Clark, one of the architects of the federal rules, noted that:
5 Charles Alan Wright & Arthur R. Miller,
33 U.S.C. § 1. The Secretary of the Army has further delegated specific responsibilities to the Corps, NOAA, and the Coast Guard.
