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
- 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.
- Whether the district court correctly denied Western’s and Vigor’s competing contract claims under the towage agreement.
- Whether the district court clearly erred in allocating comparative fault at 60% to Vigor and 40% to Western.
- 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.
- 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.