## Facts

- Vigor Marine, LLC, a Washington shipyard, owned a deteriorating, roughly 70-year-old drydock.
- In 2015, Vigor sold the drydock to a shipyard in Ensenada, Mexico to be broken down for scrap.
- Vigor hired Western Towboat Company to tow the drydock from Seattle, Washington to Ensenada under a standard towage agreement.
- The agreement set Western’s compensation at $142,800 plus fuel costs, with pricing based in part on Vigor’s commitment to obtain insurance.
- While off the California coast, the drydock was damaged during a storm.
- Western towed the drydock toward shelter in Monterey Bay and brought it into the Monterey Bay National Marine Sanctuary.
- The drydock capsized and sank while inside the Sanctuary, exposing the parties to potential federal liability under the National Marine Sanctuaries Act (NMSA).
- To reduce potential exposure and evaluate conditions, Vigor retained a survey to locate the wreck and assess impacts; the survey cost $351,980.14.
- With related expenses, Vigor’s mitigation expenditures totaled $415,441.67.
- Vigor’s insurer reimbursed all mitigation expenses except Vigor’s $100,000 deductible.
- Western sued Vigor in admiralty seeking the towing fee and a declaratory judgment that it had no NMSA liability; Vigor counterclaimed for breach of contract and negligence.
- The district court dismissed the NMSA declaratory-judgment claims as premature (not appealed), granted partial summary judgment that Western was negligent as a matter of law for allowing the drydock to sink in the Sanctuary, and after a bench trial denied both parties’ contract claims.
- After trial, the district court found both parties negligent, allocated fault 60% to Vigor and 40% to Western, rejected Vigor’s collateral-source argument, limited Vigor’s recovery to 40% of its unreimbursed $100,000 deductible ($40,000), and awarded prejudgment interest.
- Both parties appealed.

## Issues

1. Whether the district court properly held on summary judgment that Western was negligent as a matter of law for allowing the drydock to sink within the Monterey Bay National Marine Sanctuary.
2. Whether the district court correctly denied Western’s and Vigor’s competing contract claims under the towage agreement.
3. Whether the district court clearly erred in allocating comparative fault at 60% to Vigor and 40% to Western.
4. Whether Vigor’s recoverable mitigation damages could include amounts reimbursed by insurance under the collateral-source rule, or were limited to Vigor’s unreimbursed $100,000 deductible.
5. Whether the district court correctly calculated prejudgment interest.

## Decision

- Affirmed the grant of partial summary judgment holding Western negligent as a matter of law for allowing the drydock to sink in the Sanctuary.
- Affirmed the post-trial denial of both parties’ contract claims.
- Affirmed the finding of comparative negligence and the allocation of fault (60% Vigor / 40% Western).
- Affirmed limiting Vigor’s recoverable damages to its out-of-pocket loss (the $100,000 deductible), resulting in a $40,000 award after applying comparative fault.
- Vacated the prejudgment interest award and remanded for recalculation.

## Legal Principles

- In admiralty, a tug and tow operator must use reasonable care under the circumstances; where material facts are not genuinely disputed, negligence may be decided as a matter of law.
- Negligence turns on an objective standard of reasonable maritime care; a party’s claimed lack of awareness of the legal consequences of an act does not by itself avoid a negligence finding.
- Maritime comparative fault allows apportionment of damages between negligent actors; appellate review of the district court’s fault allocation is deferential.
- In this mitigation-and-insurance setting, the court approved measuring recoverable damages by the claimant’s net out-of-pocket loss, and upheld limiting recovery to the uninsured deductible rather than amounts fully reimbursed by insurance.
- Prejudgment interest is generally available in admiralty, but the award must be calculated correctly; a miscalculation warrants vacatur and remand.

## Conclusion

The Ninth Circuit left intact the district court’s rulings that Western was negligent as a matter of law, that neither side recovered on the towage contract, that fault was properly split 60% to Vigor and 40% to Western, and that Vigor’s damages were limited to 40% of its unreimbursed $100,000 deductible ($40,000), while sending the case back only to recalculate prejudgment interest.


Western Towboat Co. v. Vigor Marine, LLC, 85 F.4th 919, 2023 WL 7140146 (2023)