United States v. Citgo Asphalt Ref. Co. (In re Petition of Frescati Shipping Co.)

Citation718 F.3d 184
Decision Date12 July 2013
Docket Number11–2577.,Nos. 11–2576,s. 11–2576
CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)
PartiesIn re Petition of FRESCATI SHIPPING COMPANY, LTD., as owner of the M/T Athos I and Tsakos Shipping & Trading, S.A., as manager of the Athos I for Exoneration from or Limitation of Liability Frescati Shipping Company, Ltd. and Tsakos Shipping and Trading, S.A., Appellants. United States of America, Appellant v. Citgo Asphalt Refining Company; Citgo Petroleum Corporation; Citgo East Coast Oil Corporation.

OPINION TEXT STARTS HERE

Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. Civil Action Nos. 2–05–cv–00305/2–08–cv–02898), Trial District Judge: Honorable John P. Fullam, District Judge: Honorable Joel H. Slomsky.*

Amelia Carolla, Esquire Reisman, Carolla & Gran, Haddonfield, NJ, Stacy A. Fols, Esquire, R. Monica Hennessy, Esquire, Melanie A. Leney, Esquire, John J. Levy, Esquire, Montgomery, McCracken, Walker & Rhoads, Cherry Hill, NJ, Leona John, Esquire, Alfred J. Kuffler, Esquire, John G. Papianou, Esquire, Tricia J. Sadd, Esquire, Timothy J. Bergere, Esquire, Montgomery, McCracken, Walker & Rhoads, Philadelphia, PA, Jack A. Greenbaum, Esquire, (Argued), John D. Kimball, Esquire, Blank Rome, New York, NY, Eugene J. O'Connor, Esquire, Chalos O'Connor, LLP, Port Washington, NY, for Appellants Frescati Shipping Company, Ltd. Tsakos Shipping & Trading, S.A.

Tony West, Assistant Attorney General, Zane David Memeger, United States Attorney, Matthew M. Collette, Esquire, Anne Murphy, Esquire, (Argued), United States Department of Justice Appellate Section, Civil Division, Washington, DC, Stephen G. Flynn, Esquire, Sarah S. Keast, Esquire, Sharon Shutler, Esquire, United States Department of Justice, Torts Branch, Civil Division, Washington, DC, Counsel for Appellant United States of America.

Frank P. DeGiulio, Esquire, Charles P. Neely, Esquire, Kevin G. O'Donovan, Esquire, Richard Q. Whelan, Esquire, (Argued), Palmer, Biezup & Henderson, Philadelphia, PA, Michael B. McCauley, Esquire, Palmer, Biezup & Henderson, Wilmington, DE, Robert B. Fisher, Jr., Esquire, Thomas D. Forbes, Esquire, Douglas L. Grundmeyer, Esquire, J. Dwight LeBlanc, Jr., Esquire, Jonathan C. McCall, Esquire, Ivan M. Rodriguez, Esquire, Derek A. Walker, Esquire, Charles P. Blanchard, Esquire, John L. Robert, III, Esquire, Daniel A. Tadros, Esquire, Chaffe McCall, New Orleans, LA, for Appellees Citgo Asphalt Refining Company, Citgo Petroleum Corporation, Citgo East Coast Oil Corporation.

William J. Honan, Esquire, Chester D. Hooper, Esquire, Lissa D. Schaupp, Esquire, K. Blythe Daly, Esquire, F. Robert Denig, Esquire, Holland & Knight, New York, NY, for Amici Appellants.

George R. Zacharkow, Esquire, Mattioni Limited, Philadelphia, PA, for Amici Appellees.

Before: AMBRO, GREENAWAY, Jr., and O'MALLEY,** Circuit Judges.

OPINION OF THE COURT

AMBRO, Circuit Judge.

+-----------------+
                ¦Table of Contents¦
                +-----------------¦
                ¦                 ¦
                +-----------------+
                
+-----------------------------------------+
                ¦I. ¦Factual and Procedural Background¦190¦
                +-----------------------------------------+
                
+------------------------------------------+
                ¦   ¦A.¦The Tanker and Its Charters    ¦190¦
                +---+--+-------------------------------+---¦
                ¦   ¦B.¦The Accident                   ¦192¦
                +---+--+-------------------------------+---¦
                ¦   ¦C.¦The Cost of the Accident       ¦193¦
                +---+--+-------------------------------+---¦
                ¦   ¦D.¦Control of the Waters          ¦193¦
                +---+--+-------------------------------+---¦
                ¦   ¦E.¦The District Court Proceedings ¦195¦
                +------------------------------------------+
                
+----------------------------------------------------------+
                ¦    ¦                                               ¦     ¦
                +----+-----------------------------------------------+-----¦
                ¦II. ¦Jurisdiction and Standard of Review            ¦196  ¦
                +----+-----------------------------------------------+-----¦
                ¦    ¦                                               ¦     ¦
                +----+-----------------------------------------------+-----¦
                ¦III.¦Rule 52                                        ¦196  ¦
                +----+-----------------------------------------------+-----¦
                ¦    ¦                                               ¦     ¦
                +----+-----------------------------------------------+-----¦
                ¦IV. ¦The Contractual Safe Berth Warranty            ¦197  ¦
                +----------------------------------------------------------+
                
+----------------------------------------------------------------------------+
                ¦     ¦A.  ¦Was Frescati a Third–Party Beneficiary of the Safe Berth ¦197    ¦
                ¦     ¦    ¦Warranty?                                                ¦       ¦
                +-----+----+---------------------------------------------------------+-------¦
                ¦     ¦B.  ¦The Scope of the Safe Berth Warranty                     ¦200    ¦
                +-----+----+---------------------------------------------------------+-------¦
                ¦     ¦C.  ¦Was the Safe Berth Warranty Breached?                    ¦203    ¦
                +-----+----+---------------------------------------------------------+-------¦
                ¦     ¦D.  ¦The Named Port Exception                                 ¦205    ¦
                +----------------------------------------------------------------------------+
                
+-----------------------------------+
                ¦  ¦                            ¦   ¦
                +--+----------------------------+---¦
                ¦V.¦The Tort Claims             ¦206¦
                +-----------------------------------+
                
+------------------------------------------+
                ¦   ¦A.¦Negligence                     ¦207¦
                +------------------------------------------+
                
+----------------------------------------------------------------------------+
                ¦     ¦    ¦i.  ¦The Scope of the Approach                           ¦207    ¦
                +-----+----+----+----------------------------------------------------+-------¦
                ¦     ¦    ¦ii. ¦Was the Athos I   Within the Approach to CARCO's    ¦209    ¦
                ¦     ¦    ¦    ¦Terminal When the Accident Occurred?                ¦       ¦
                +-----+----+----+----------------------------------------------------+-------¦
                ¦     ¦    ¦iii.¦Potential Breach of Duty to Maintain a Safe Approach¦211    ¦
                +-----+----+----+----------------------------------------------------+-------¦
                ¦     ¦    ¦iv. ¦Causation                                           ¦212    ¦
                +----------------------------------------------------------------------------+
                
+------------------------------------------+
                ¦   ¦B.¦Negligent Misrepresentation    ¦213¦
                +------------------------------------------+
                
+-----------------------------------------------------------+
                ¦    ¦                                                ¦     ¦
                +----+------------------------------------------------+-----¦
                ¦VI. ¦Effect of the Government's Settlement With CARCO¦214  ¦
                +----+------------------------------------------------+-----¦
                ¦    ¦                                                ¦     ¦
                +----+------------------------------------------------+-----¦
                ¦VII.¦Conclusion                                      ¦214  ¦
                +----+------------------------------------------------+-----¦
                ¦    ¦                                                ¦     ¦
                +----+------------------------------------------------+-----¦
                ¦    ¦Appendix A                                      ¦215  ¦
                +-----------------------------------------------------------+
                

As the oil tanker M/T Athos I neared Paulsboro, New Jersey, after a journey from Venezuela, an abandoned ship anchor lay hidden on the bottom of the Delaware River squarely within the Athos I's path and only 900 feet away from its berth. Although dozens of ships had docked since the anchor was deposited in the River, none had reported encountering it. The Athos I struck the anchor, which punctured the ship's hull and caused approximately 263,000 gallons of crude oil to spill into the River. The cleanup following the casualty was successful, but expensive.

This appeal is the result of three interested parties attempting to apportion the monetary liability. The first party (actually two entities consolidated as one for our purposes) includes the Athos I's owner, Frescati Shipping Company, Ltd., and its manager, Tsakos Shipping & Trading, S.A. (jointly and severally, “Frescati”). Although Frescati states that the spill caused it to pay out $180 million in cleanup costs and ship damages, it was reimbursed for nearly $88 million of that amount by the United States (the Government)—the second interested party—pursuant to the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq. In order to recoup the unreimbursed losses, Frescati made claims in contract and tort against the third interested party—a set of affiliates known as CITGO Asphalt Refining Company, CITGO Petroleum Corporation, and CITGO East Coast Oil Corporation (jointly and severally, “CARCO”)—which requested the oil shipped on the Athos I and owned the marine terminal where it was to dock to unload its oil. Specifically, Frescati brought a contract claim for CARCO's alleged breach of the safe port/safe berth warranty (jointly and severally, “safe berth warranty”) it made to an intermediary—Star Tankers, Inc.—responsible for chartering the Athos I to CARCO's port, and alleged negligence and negligent misrepresentation against CARCO as the owner of the wharf the Athos I was nearing when it was holed. The Government, as a statutory subrogee that stepped into Frescati's position for the $88 million it reimbursed to Frescati under the Oil Pollution Act, has limited its claim for reimbursement from CARCO to Frescati's contractual claim pursuant to a limited settlement agreement.

Following a 41–day bench trial, the District Court for the Eastern District of Pennsylvania held that CARCO was not liable for the accident under any of these theories. The Court, however, made no separate findings of fact and conclusions of law as required by Federal Rule of Civil Procedure 52(a)(1). That...

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