759 F.2d 280 (3rd Cir. 1985), 83-5824, East Coast Tender Service, Inc. v. Robert T. Winzinger, Inc.

Docket Nº:Market, in No. 83-5824.
Citation:759 F.2d 280
Party Name:EAST COAST TENDER SERVICE, INC., v. ROBERT T. WINZINGER, INC., Utah Home Fire Insurance Company, Great Atlantic Insurance Company, Various Underwriters as their Interests May Appear in the Term British Markets. and ROBERT T. WINZINGER, INC., Appellee/Cross-Appellant, v. UTAH HOME FIRE INSURANCE COMPANY; Great Atlantic Insurance Company; Various Und
Case Date:April 11, 1985
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit
 
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Page 280

759 F.2d 280 (3rd Cir. 1985)

EAST COAST TENDER SERVICE, INC.,

v.

ROBERT T. WINZINGER, INC., Utah Home Fire Insurance Company,

Great Atlantic Insurance Company, Various

Underwriters as their Interests May

Appear in the Term British Markets.

and

ROBERT T. WINZINGER, INC., Appellee/Cross-Appellant,

v.

UTAH HOME FIRE INSURANCE COMPANY; Great Atlantic Insurance

Company; Various Underwriters as Their Interests

May Appear in the Term British Market,

Appellants/Cross-Appellees.

Appeal of UTAH HOME FIRE INSURANCE COMPANY, Great Atlantic

Insurance Company, Various Underwriters as Their

Interests May Appear in the Term British

Market, in No. 83-5824.

Appeal of ROBERT T. WINZINGER, INC., in No. 83-5846.

Appeal of EAST COAST TENDER SERVICE, INC., in Nos. 83-5847

and 84-5408.

Nos. 83-5824, 83-5846, 83-5847 and 84-5408.

United States Court of Appeals, Third Circuit

April 11, 1985

Argued Dec. 3, 1984.

As Amended April 18, 1985.

Page 281

[Copyrighted Material Omitted]

Page 282

William B. McGuire, William J. Prout, Jr. (argued), James T. O'Halloran, Tompkins, McGuire & Wachenfeld, Newark, N.J., Brendan J. Connolly, Mendes & Mount, New York City, for appellants in No. 83-5824.

Edward V. Cattell, Jr. (argued), Cattell & Keating, Haddonfield, N.J., for appellant in No. 83-5846.

George J. Koelzer (argued), Clarkson S. Fisher, Jr., Evans, Koelzer, Osborne & Kreizman, Red Bank, N.J., for appellant in Nos. 83-5847 & 84-5408.

Before ALDISERT, Chief Judge, BECKER, Circuit Judge and CAHN, District Judge [*].

OPINION

BECKER, Circuit Judge.

This litigation arises out of a February 1979 ice storm on the Delaware River at Penns Grove, New Jersey, which damaged two barges that were linked together and used as a pier. The barges were owned by appellee/cross-appellant East Coast Tender Service, Inc. ("East Coast") and were chartered to appellee/cross-appellant Robert T. Winzinger, Inc. ("Winzinger"). Appellants cross-appellees Utah Home Fire Insurance Company, Great Atlantic Insurance Company and various other insurance underwriters ("Underwriters") had issued Hull insurance and Protection and Indemnity ("P & I") insurance on the barges, naming East Coast and Winzinger as insureds, for the period from April 1, 1978, to March 31, 1979. Although the backs of the barges were broken by the storm and they began to sink in the river within the coverage period of these insurance policies, the barges continued to be operated for profit under a state issued license long after the coverage period expired. Ultimately, the barges sank and Winzinger received formal notice to remove them.

While a number of issues are presented in these appeals, see infra pp. 282-283, we consider in detail only one of them; whether the Underwriters are liable for the costs of removing the wrecked barges under the wreck removal provisions of the P & I policy that make the Underwriters liable for the costs of wreck removal that is "compulsory by law." The district court denied recovery. Before we reach this question, however, we will set out in more detail the relevant facts and procedural history of the case, and dispose of several preliminary issues.

For the reasons that follow, we will affirm the district court's judgment in all its particulars, including its denial of liability for the removal costs, except that we will vacate its award of prejudgment interest for the period from April 1, 1979, until September 30, 1979.

I.

In November 1976, Winzinger chartered and took possession and control of two barges owned by East Coast under a bareboat charter agreement. Winzinger then obtained a license from the New Jersey Department of Environmental Protection ("DEP"), Division of Marine Services, to operate the barges as a temporary loading facility at Penns Grove. The barges were dug into the sand on the river bank and then locked together to form a pier over which large amounts of gravel were conveyed to waiting vessels for transportation to an electric power plant under construction nearby.

In February 1979, there was a break in the ice upriver from the barges. A solid wall of ice broke loose, traveled downstream,

Page 283

and struck the barges. 1 The tremendous force of this ice caused one barge to "flop on top" of the other, breaking the backs of both barges.

Although the ice storm that damaged the barges occurred in February 1979, and the barges thereafter gradually sank into the river, Winzinger continued to operate the barges as a pier until September 11, 1979, when its contract with the United States Army Corps of Engineers for exclusive use of the Penns Grove property expired. On January 3, 1980, Winzinger cancelled its license with the DEP and, on April 29, 1980, Winzinger received formal notice from the DEP to remove the barges. The sunken barges have not yet been removed.

This litigation commenced when East Coast filed suit against Winzinger for failure to pay charter hire after September 30, 1979. Winzinger then sued the Underwriters for a declaratory judgment as to the latter's obligation under the P & I policy to pay for the costs of removing the wrecked barges. Both East Coast and Winzinger asserted claims for compensatory damages against the Underwriters on the ground that, as a result of the ice storm, the barges became constructive total losses in February 1979, when the policy was still in force. They also sought punitive damages, fees, and costs. The Underwriters defended their refusal to honor the claims of East Coast and Winzinger under the policy on several grounds: (1) the barges were not vessels under the general maritime law; (2) the insureds misrepresented the use to which the barges were put, materially affecting the risk that was being underwritten; (3) the damage to the barges resulted from ordinary wear and tear and was not the result of a fortuitous event or a peril of the sea; and (4) the barges did not become constructive total losses.

After a trial on the merits, the district...

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