Buffalo Marine Services, Inc. v. USA

Nov 23: In the U.S. Court of Appeals, Fifth Circuit, Case No. 10-41108. Appealed from the United States District Court for the Eastern District of Texas. The appeal arises out of an oil spill on the Neches River. Appellants challenge the National Pollution Funds Center's (NPFC's) final claim determination denying reimbursement for costs arising from the spill. The district court rejected appellants' challenge to the Agency's claim determination and the Appeals Court affirmed the decision.

 

    By way of background, Buffalo Marine's barge collided with the TORM MARY, rupturing the vessel's skin and adjacent fuel-oil tank. As a result of the rupture, approximately 27,000 gallons of heavy fuel oil spilled into the Neches River. Buffalo Marine, the Torm, and their insurers coordinated the clean-up effort, assessed at a cost of $10.1 million.

 

    The Appeals Court said in part, "Given the evidence on record and the concessions of the parties, we find no error in the NPFC's conclusion that the claimants failed to establish by a preponderance of evidence that the acts or omissions of Buffalo Marine's barge in approaching and colliding with the TORM MARY were other than those occurring in connection with a contractual relationship with the responsible party for the TORM MARY. Because the claimants failed to demonstrate by a

preponderance of evidence that the sole cause of the spill was a third-party act or omission that did not occur in connection with any contractual relationship with the responsible party, the Torm's third-party affirmative defense could not succeed. Thus, we also find no error in the NPFC's failure to decide whether the claimants could satisfy the additional requirements in § 2703(a)(3)(A) and (B)."

 

    In its conclusion, the Appeals Court said, "We conclude that the NPFC's interpretation of 33 U.S.C. § 2703 is entitled to deference and that appellants have not demonstrated that the NPFC's denial of the Torm's third-party affirmative defense claim should be overturned under the standard set forth in the APA."

 

    Access the complete opinion (click here). [#Remed, #CA5]

 

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Egan Marine Corporation v. Great American Insurance Co. of NY

Nov 23: In the U.S. Court of Appeals, Seventh Circuit, Case Nos. 11-1266 & 11-1346. Appealed from the United States District Court for the Northern District of Illinois, Eastern Division. Egan Marine Corporation (EMC) and Service Welding and Shipbuilding, LLC (SWS) are embroiled in a contract dispute with their insurance company, Great American Insurance Company of New York (GAIC). The dispute centers on the terms and scope of the plaintiffs' insurance policy, which indemnifies them against liability under several Federal environmental protection laws or those laws' state-law equivalents. EMC and SWS attempted to invoke their policy for up to $10 million in coverage following an explosion on one of their vessels that resulted in an oil spill in the Chicago Sanitary and Ship Canal. They intended to apply that amount against any legal liability and costs they incurred as a result of the incident. GAIC contends that, under the terms of the policy, the spill rendered available only $5 million in coverage.

 

    Additionally, the parties disagree about the amount GAIC owes EMC and SWS pursuant to a post-explosion agreement between them that EMC and SWS would provide cleanup and spill management services on their own behalf -- a function contractually designated to GAIC. Under this arrangement, EMC and SWS agreed to charge GAIC at "cost," but each party disputes the other's understanding of and method of calculating "cost." The Appeals Court affirmed the judgment of the district court.

 

    In this complicated and detailed case, the district court granted GAIC judgment on the pleadings with respect to the following: (1) it owed $5,000,000 per vessel, per incident and had fully honored the policy with respect to the EMC 423; (2) it owed no

coverage for either the Lisa E or the EMC 423 for in rem liability ["with respect to the thing itself" (i.e., the collateral)]. It denied any further judgment on the pleadings. The district court then granted EMC and SWS's motion for summary judgment on their breach of contract claim, finding that GAIC owed $5,000,000 in coverage for the Lisa E, was obligated to pay defense costs up to that amount, and had breached its contract by not doing so. It denied summary judgment on their claim that GAIC breached its duty of good faith and fair dealing.

 

    Access the complete opinion (click here). [#Remed, #CA7]

 

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