W. Towboat Co. v. Vigor Marine, LLC

85 F.4th 919

WESTERN TOWBOAT COMPANY, Plaintiff-Appellant/Cross-Appellee, v. VIGOR MARINE, LLC, Defendant-Appellee/Cross-Appellant.

Nos. 22-35195

22-35217

United States Court of Appeals, Ninth Circuit

Argued and Submitted February 17, 2023 Seattle, Washington

Filed October 31, 2023

Appeal from the United States District Court for the Western District of Washington, Ricardo S. Martinez, District Judge, Presiding, D.C. No. 2:20-cv-00416-RSM

J. Stephen Simms (argued), Simms Showers LLP, Baltimore, Maryland; Anthony J. Gaspich, Gaspich Law Office PLLC, Bainbridge Island, Washington; for Plaintiff-Appellant.

Molly J. Henry (argued), Schwabe Williamson & Wyatt PC, Seattle, Washington; David R. Boyajian, Noah Jarrett, and Adam P. Murray, Schwabe Williamson & Wyatt PC, Portland, Oregon; for Defendant-Appellee.

Before: William A. Fletcher, Richard A. Paez, and Lawrence VanDyke, Circuit Judges.

OPINION

W. FLETCHER, Circuit Judge:

Vigor Marine, LLC ("Vigor") hired Western Towboat Co. ("Western") to tow a drydock from Seattle, Washington, to Ensenada, Mexico, where it was to be broken down for scrap. While off the coast of California, the drydock was damaged in a storm. In an attempt to bring the drydock to shelter in Monterey Bay, Western's tug towed the drydock into the Monterey Bay National Marine Sanctuary (the "Sanctuary"). While in the Sanctuary, the drydock capsized and sank. Because the drydock sank in the Sanctuary, the parties were exposed to liability under the National Marine Sanctuaries Act of 1972 ("NMSA"), 16 U.S.C. §§ 1431-45c-1.

Western sued Vigor in federal district court in admiralty. Western sought to recover the towing fee under its contract with Vigor, and a declaratory judgment that it would not be liable for any damages or penalty sought by the government under the NMSA. Vigor counterclaimed, claiming breach of contract and negligence by Western.

The district court took great care in its handling of this case. The court determined that any decision on the issue of liability under the NMSA would be premature and dismissed for lack of subject matter jurisdiction all claims under the NMSA. Western Towboat Co. v. Vigor Marine, LLC (Western Towboat I), 544 F. Supp. 3d 1100, 1113-16 (W.D. Wash. 2021). Neither party appeals that dismissal. The court granted partial summary judgment to Vigor, holding that Western had been negligent as a matter of law in allowing the drydock to sink in the Sanctuary. Id. 1126-28. After a trial on the remaining issues, the court denied both parties' contract claims and held that both had been negligent. In a comparative negligence analysis, the court found that Vigor was sixty percent negligent and Western was forty percent negligent. Limiting Vigor's recovery to forty percent of the $100,000 not reimbursed by Vigor's insurance, the district court awarded Vigor $40,000. Western Towboat Co. v. Vigor Marine, LLC (Western Towboat III), 575 F. Supp. 3d 1318, 1339 (W.D. Wash. 2021).

Both parties appealed. We affirm in all respects but one. We vacate the award of prejudgment interest to allow recalculation by the district court.

I. Background

Vigor is a commercial shipyard in Washington State. It owned a drydock, YFD-70, constructed in 1945. A drydock is a floating enclosed basin that allows cleaning or repairing parts of a ship that would ordinarily be underwater. Dry Dock, International Maritime Dictionary (2d ed. 1961). The ship enters the drydock through open gates while the drydock is partially submerged. The gates are then closed and the water is pumped out of the drydock, leaving the entire ship exposed. Id.

In 2013, Vigor hired Heger Dry Dock, Inc. ("Heger") to perform an ultrasonic gauging survey of YFD-70. An ultrasonic gauging survey evaluates the steel's thickness. The purpose of the survey was to determine the drydock's continuing commercial viability. The survey showed impaired longitudinal stiffeners and "heavy corrosion" of portions of the drydock.

In 2015, the pump, two reach rods, and a valve broke on the drydock. Due to the cost of repair, Vigor determined it was no longer economical to maintain the drydock. Vigor sold the drydock to Amaya Curiel Corp. ("Amaya") for scrapping at a shipyard in Ensenada, Mexico. Due to dock constraints in Ensenada, Amaya and Vigor agreed to have the drydock towed to Ensenada rather than transported on the deck of a ship.

YFD-70 could be towed in two different configurations. First, it could be towed in a single piece, without disassembling the drydock. Second, its end sections could be separated and stacked on the center section, resulting in a three-piece tow. If a drydock is towed in the open ocean, high waves cause structural stress—"hogging" and "sagging." Such stress is reduced in a three-piece tow. U.S. Navy guidance specific to YFD-70 provides, "The dock has been designed to facilitate towing at sea. When towed, the end sections are stowed on the center section." U.S. Navy, Floating Dry Docks YFD-68, YFD-69, YFD-70, YFD-71: General Information and Operating Manual 4 (1944).

To replace YFD-70, Vigor arranged for a sister drydock that was subject to the same Navy guidance to be towed through the ocean from Portland to Seattle. To determine whether that drydock, YFD-69, could be towed safely, Vigor hired Heger to conduct an engineering study. Heger did multiple computer simulations, towing YFD-69 in both the one-piece and three-piece configurations. Based on the simulations, Heger determined that YFD-69 could be towed in either configuration, with different restrictions depending on which configuration was used.

Western is a maritime towing company predominantly operating in Alaska and Washington. One of Vigor's naval architects, Daniel Keen, contacted Western's president, Bob Shrewsbury, for a price quotation to tow YFD-70 from Seattle to Ensenada. Despite the drydock's condition, Shrewsbury testified that he felt Western could tow it "at the right time of the year and in decent conditions."

Vigor and Western entered into a Standard Towage Agreement (the "Tow Agreement"). The agreement provided that Western would tow the drydock for $142,800 plus the cost of fuel (the "contractual fee"). The agreement provided that the tow would start on or about October 7, 2016. However, the agreement provided that the tow depended on favorable weather conditions. If favorable weather conditions did not exist by November 7, 2016, either party could reschedule the tow dates.

Vigor prepared YFD-70 for towing. As part of the preparation, Vigor hired Captain Richard Shaw from Bowditch Marine, Inc. to conduct a marine warranty survey and provide tow recommendations. Shaw found that Vigor had improved YFD-70 structurally and had outfitted it with proper equipment in preparation for the tow. He concluded that the tug and drydock were suitable for an ocean tow from Seattle to Ensenada if there were a favorable weather forecast.

Shaw recommended restrictions designed to minimize stress on the drydock. He recommended that the tow avoid seas with wave heights of greater than eight to ten feet, and that the tug not leave any safe port or sheltered water without first determining that the weather forecast conformed to these restrictions. Shaw made no recommendation whether the drydock should be towed in one or three pieces.

Shaw's survey was the only examination of the drydock in preparation for the tow. Vigor did not tell Shaw about Heger's 2013 ultrasonic gauging survey of the drydock. Neither Heger nor any other firm was asked to perform an engineering study on YFD-70 comparable to the study that had been performed on YFD-69 prior to its tow from Portland to Seattle.

A tow plan provides recommendations to a tug captain on how to perform a voyage. Western created a tow plan for the YFD-70, which it amended after receiving Shaw's report. The plan provided that an ocean-going tug, OCEAN RANGER, with Captain Stephen McGavock as master, would tow YFD-70 out of Puget Sound and past Cape Flattery, into the ocean. The tug would then go south along the coast to Mexico. McGavock testified at trial there were no realistic ports of refuge between Cape Flattery and San Francisco.

After an initial delay due to unfavorable weather conditions, the OCEAN RANGER left Seattle on October 17, 2016. On October 19 and 20, while near the mouth of the Columbia River, the tug and tow encountered winds of twenty-five knots and wave heights between ten and twelve feet. The tug and tow made it through this weather without incident and continued south. On October 21 and 22, off the coast of southern Oregon, waves reached as high as thirteen to fifteen feet. The tug and tow again made it through without incident. On October 24, a "major wind event" occurred between Point Arena and Bodega Bay, north of San Francisco, with wind speeds of over thirty knots and waves heights more than eleven feet. On October 25, waves and wind remained high from Point Reyes to San Francisco.

On October 25, while slightly north of San Francisco, McGavock noticed that the drydock had a port bow list. He contacted Shrewsbury, who in turn consulted Keen, Vigor's naval architect. Shrewsbury and Keen suggested that the best course of action might be to bring the drydock into San Francisco Bay. However, as the condition of the drydock deteriorated, McGavock believed it was unsafe to do so as it could sink and block the shipping channel into San Francisco Bay.

McGavock also expressed concern to Shrewsbury about the drydock sinking in the Greater Farallones National Marine Sanctuary west of San Francisco Bay. The tug and tow left the Farallones Sanctuary in an attempt to reach Monterey, south of San Francisco Bay. On the evening of October 25, McGavock brought the tow into the Monterey Bay Sanctuary. Darkness and fog made it difficult to assess the condition of the drydock. McGavock maintained the OCEAN RANGER's position in the Sanctuary that night, with a plan to assess the situation in the morning. At...