Dillingham Tug & Barge v. Collier Carbon & Chemical

• Decision Date: 11 September 1981
• Docket Number: Civ. No. C-77-1654-WAI.
• Citation: 548 F. Supp. 691
• Court: U.S. District Court — Northern District of California
• Parties: DILLINGHAM TUG & BARGE CORPORATION, a corporation, Plaintiff, v. COLLIER CARBON & CHEMICAL CORPORATION, Defendant. UNION OIL COMPANY OF CALIFORNIA, Third-Party Plaintiff, v. NICKUM & SPAULDING ASSOCIATES, INC., The Salvage Association, Limited, and Todd Shipyard Corporation, Third-Party Defendants and Cross-Complainants.

548 F. Supp. 691

DILLINGHAM TUG & BARGE CORPORATION, a corporation, Plaintiff, v. COLLIER CARBON & CHEMICAL CORPORATION, Defendant.

UNION OIL COMPANY OF CALIFORNIA, Third-Party Plaintiff, v. NICKUM & SPAULDING ASSOCIATES, INC., The Salvage Association, Limited, and Todd Shipyard Corporation, Third-Party Defendants and Cross-Complainants.

Civ. No. C-77-1654-WAI.

United States District Court, N. D. California.

February 26, 1981.

Supplemental Finding September 11, 1981.

John R. Pascoe and Forrest Booth of Hancock, Rothert & Bunshoft, San Francisco, Cal., for plaintiff.

David Van Hoesen of Williams, Van Hoesen, Brigham & Epstein, San Francisco, Cal., Seth W. Morrison of Oles, Morrison, Rinker, Stanislaw & Ashbaugh, Seattle, Wash., Hans E. Menter and Dennis P. Codon, Los Angeles, Cal., for defendant and third-party plaintiff.

Samuel A. Keesal, Jr. and Scott T. Pratt of Keesal, Young & Logan, Long Beach, Cal., for Collier Carbon & Chemical Corp.

Norman B. Richards and Van H. Cline of McCutchen, Doyle, Brown & Enersen, San Francisco, Cal., for third-party defendant and cross-complainant Salvage Ass'n.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

DANIEL HOLCOMBE THOMAS, Senior District Judge, Sitting by Designation.

This action came on to be heard by the Court on September 16, 1980, and the Court makes the following Findings of Fact and Conclusions of Law:

FINDINGS OF FACT

1. Plaintiff Dillingham Tug & Barge Corporation (Dillingham), formerly Hawaiian Tug & Barge Co., Ltd. (HT&B), is the owner of the tug MOANA HOLO.

2. Defendant and Third-Party Plaintiff Collier Carbon & Chemical Corporation (Collier), a division of Union Oil Company of California (Union) was the owner of Barge 2506, known as the COLUMBIA.

3. Third-Party Defendant Nickum & Spaulding Associates, Inc. (Nickum & Spaulding) is a firm of naval architects and marine engineers practicing in Seattle, Washington, having performed professional services on behalf of Collier in connection with the preparation for the tow of the barge COLUMBIA from Galveston to Portland.

4. Third-Party Defendant, The Salvage Association, Limited (Salvage Association), is a firm of professional surveyors with offices throughout the world with the Houston Office of Salvage Association having performed services on behalf of Collier in connection with the tow of the COLUMBIA.

5. Third-Party Defendant Todd Shipyard Corporation (Todd) performed modifications specified by Nickum & Spaulding on the COLUMBIA on behalf of Collier in connection with the single ocean tow from Texas to Oregon through the Panama Canal.

6. In 1971, Collier purchased the HEDGES, an open-hopper river barge operating on the Mississippi River. The HEDGES carried two insulated tanks used for transporting anhydrous ammonia and was equipped with a cover for the tanks and hopper. Collier planned to use the HEDGES on the Columbia River. Collier arranged with Nickum & Spaulding to design modifications for the HEDGES so it could be towed from the Gulf through the Pacific to Portland, Oregon. After the modifications were completed, the HEDGES was successfully towed to the Columbia River by Foss Tug & Barge (Foss), a subsidiary of Dillingham.

7. In May 1976, Collier purchased another open-hopper river barge operating on the Mississippi River. This barge, the COLUMBIA, was designed and equipped similarly to the HEDGES. It was 300 feet in length and carried two insulated tanks, each 280 feet in length by 18 feet in diameter, but unlike the HEDGES, the COLUMBIA lacked a hopper cover.

8. On July 16, 1976, Collier retained Nickum & Spaulding to prepare plans and specifications for modification of the COLUMBIA to permit a one-time, no cargo ocean delivery tow from Galveston to Portland. This modification was required because the COLUMBIA was originally built for river traffic only and was not sufficiently structured to qualify for service as an ocean-going barge. Nickum & Spaulding completed its assignment in time for Collier to submit the project for bids on October 1, 1976. Nickum & Spaulding also completed an "Analysis of Longitudinal Strength and Intact and Damages Stability" which, with the modification plans, was submitted to the U. S. Coast Guard and the American Bureau of Shipping (ABS) for approval, which approval was obtained.

9. Collier received two bids for the modification of the COLUMBIA, which included adding a hopper cover. The lowest bid was $784,000, made by Todd. Collier, considering the bid to be excessive, sought to reduce the cost of modification by alteration of the modification. It consulted with Nickum & Spaulding on November 16, 1976, as to whether the proposed hopper cover could be eliminated to reduce modification cost.

10. After contacting the Coast Guard and the ABS, Nickum & Spaulding determined that neither of these organizations had any objection to the proposed tow proceeding without a cover. They also obtained conditional approval for the one-time tow from the Coast Guard.

11. Nickum & Spaulding undertook to calculate the effect on the barge's seakeeping performance that would be created by a flooding of the hopper, a possibility which could occur because of the elimination of the hopper cover. On November 19, 1976, they advised Collier that the hopper cover could be eliminated if additional tie-down straps were installed to insure that the barge would remain afloat even if the hopper became fully flooded with water. They never advised Collier that there was an increased risk by removing the cover nor did they advise Collier that the calculations were incomplete in any way or that proper calculations were not performed.

12. Because Collier needed approval of a salvage association in order to obtain insurance on the tow, they contracted with the Salvage Association to perform the insurance approval survey.

Collier's contract with the Salvage Association contained the following clause:

The Salvage Association London believes that the surveyor appointed by them is fully competent to carry out this survey but the resultant certificate will be issued on the express condition that neither the Salvage Association London nor the surveyor shall in any circumstances be responsible or liable to any person for any act or omission, default or negligence of the surveyor in the conduct of the survey or the contents of the certificate or for any situation or event which may occur subsequent to the issue of the certificate.

13. The Salvage Association undertook to determine whether or not the barge, the tug and the towing arrangements were satisfactory for the contemplated tow of the COLUMBIA from Galveston to Portland. They prepared instructions for Collier as to how to adequately prepare the COLUMBIA for the voyage and included instructions requiring that suitable calculations be made concerning the strength of the COLUMBIA in both "hopper dry" and "hopper flooded" conditions.

14. In December 1976, negotiations began between Collier and Dillingham for the tow of the COLUMBIA from Galveston to Portland by the newly constructed tug MOANA HOLO, then in the Gulf area, which would be in service in and around Hawaii after this initial tow. As a model for a contract for COLUMBIA tow, the companies used the 1971 HEDGES contract between Foss and Collier.

15. On January 19, 1977, Dillingham and Collier entered into a towage agreement by which Dillingham agreed to tow the COLUMBIA from Galveston to Portland. Under the terms of the contract, Collier agreed to pay Dillingham $125,000 for the towage service to "be deemed earned by HT&B upon the commencement of the towage service even though at any stage of the venture thereafter the barge be lost." The contract further "provided that HT&B shall have due regard to the recommendation of the Salvage Association." It also provided that "neither HT&B nor the tug shall be responsible for the loss of ... the barge ... arising from act, neglect or fault of the master ... or the servants of HT&B in the navigation or in the management of the tug, tow or towing equipment, ... and any other cause arising without the actual fault and privity of HT&B and without the fault or negligence of the agents or servants of HT&B."

16. Collier contracted to "indemnify, defend and hold harmless HT&B ... against all claims, liabilities, loss or expense, including costs and attorneys' fees arising out of or connected with ... loss of ... the barge unless such shall have been due to the sole fault of HT&B."

17. The towage contract also provided that "Collier shall maintain hull and machinery and protection and indemnity insurance on the barge to its full value in form and amount satisfactory to HT&B and such policies shall be endorsed with waiver of subrogation against HT&B and the tug and shall name HT&B as an additional assured (sic) with loss payable to Collier," with Collier looking "solely to its hull and machinery insurance for any loss (of) ... the barge."

18. Collier listed the COLUMBIA on Union's fleet policy, which policy had a $1,000,000 deductible, but was unable to name HT&B as an additional insured. It is disputed whether Collier advised HT&B of the deductible and of its inability to name HT&B as an additional insured during a telephone conversation on February 23, 1977, four days before the commencement of the tow. Collier did confirm these facts in a letter dated January 27, 1977, but it is contended by Dillingham that this letter did not arrive until after commencement of the tow on January 29, 1977.

19. The Salvage Association, in conducting its survey, undertook to review the plans and specifications designed by Nickum & Spaulding. They employed an independent naval architect to review the calculations to determine whether or not there was sufficient stability of the barge to successfully complete the tow.

20. The Salvage Association performed the survey and after being advised by their independent naval architect that the calculations of Nickum &...