Angeles v. Citgo Asphalt Ref. Co. (In re Petition of Frescati Shipping Co.), CIVIL ACTION NO. 05-cv-305 (JHS)

Decision Date25 July 2016
Docket NumberCONSOLIDATED CIVIL ACTION NO. 08-cv-2898 (JHS),CIVIL ACTION NO. 05-cv-305 (JHS)
PartiesIn re Petition of FRESCATI SHIPPING COMPANY, LTD., as the Owner of the M/T ATHOS I, and TSAKOS SHIPPING & TRADING, S.A., as Manager of the M/T ATHOS I, for Exoneration from or Limitation of Liability UNITED STATES OF AMERICA, Plaintiff, v. CITGO ASPHALT REFINING COMPANY, et al., Defendants.
CourtU.S. District Court — Eastern District of Pennsylvania

In re Petition of FRESCATI SHIPPING COMPANY, LTD., as the Owner of the M/T ATHOS I,
and TSAKOS SHIPPING & TRADING, S.A., as Manager of the M/T ATHOS I,
for Exoneration from or Limitation of Liability

UNITED STATES OF AMERICA, Plaintiff,
v.
CITGO ASPHALT REFINING COMPANY, et al., Defendants.

CIVIL ACTION NO. 05-cv-305 (JHS)
CONSOLIDATED CIVIL ACTION NO. 08-cv-2898 (JHS)

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

July 25, 2016


TABLE OF CONTENTS

I. INTRODUCTION .............................................................................................................. 1

II. BACKGROUND ................................................................................................................ 1

A. Factual Background ............................................................................................... 1

B. Procedural History ................................................................................................. 4

C. Rule 63 Proceeding ................................................................................................ 6

D. Oil Pollution Act of 1990 ..................................................................................... 10

i. Provisions of the Oil Pollution Act of 1990 ("OPA") ............................... 11
ii. Subrogation Under OPA ............................................................................ 13
iii. Oil Spill Response Under OPA .................................................................. 14

Page 2

E. Third Circuit Opinion ......................................................................................... 18

i. Issues This Court Will Resolve .................................................................. 20
ii. Binding Third Circuit Conclusions ............................................................ 23

III. FINDINGS OF FACT ...................................................................................................... 25

A. The Tanker, the Parties, and the Charters ........................................................ 25

i. The Tanker ................................................................................................. 25
ii. The Parties ................................................................................................. 26
iii. The Charters ............................................................................................... 27
iv. Vetting the Athos I ..................................................................................... 29
v. Voyage Charter Party ................................................................................. 30
vi. Draft Restriction in the Voyage Charter Party ........................................... 31

B. Geography of the Delaware River ...................................................................... 33

C. Maintenance of Federal Anchorage Number Nine ........................................... 38

D. The Voyage ........................................................................................................... 46

i. Athos I's Departure Draft at Puerto Miranda, Venezuela .......................... 46
ii. Athos I's Passage from Puerto Miranda, Venezuela, to the Entrance to Delaware Bay ......................................................................... 48
iii. Draft of the Athos I at the Entrance to Delaware Bay ............................... 49
iv. Athos I's Voyage from the Entrance to Delaware Bay to Billingsport Range ..................................................................................... 50
v. Athos I's Passage from Billingsport Range into Federal Anchorage Number Nine ........................................................................... 56
vi. The Casualty .............................................................................................. 59

E. Investigating the Casualty ................................................................................... 60

i. Locating the Anchor .................................................................................. 60
ii. Anchor's Pre-Incident Orientation ............................................................. 62
iii. Anchor's Post-Incident Orientation ........................................................... 63
iv. Athos I's Allision with the Anchor ............................................................ 64
v. Athos I's Draft at the Time of the Allision ................................................ 68
vi. Athos I's Underkeel Clearance Before the Allision .................................. 70
vii. Post-Incident Inspection of the Athos I ..................................................... 71
viii. Allegations of Poor Navigation and Seamanship ...................................... 72
ix. Allegations of Spoliation ........................................................................... 80

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F. Oil Spill Response ................................................................................................ 80

G. Costs Incurred from the Casualty ...................................................................... 85

H. Prejudgment Interest ........................................................................................... 91

IV. CONCLUSIONS OF LAW ............................................................................................. 93

A. The Court Has Subject Matter Jurisdiction Over this Case ............................ 93

B. Breach of Contractual Warranty ....................................................................... 94

i. CARCO Agreed to a Safe Berth Warranty for the Athos I's Voyage from Puerto Miranda, Venezuela, to Paulsboro, New Jersey .................... 94
ii. Frescati Was a Third-Party Beneficiary of the Safe Berth Warranty ........ 95
iii. The Safe Berth Warranty Is an Express Assurance that the Port Is Deemed Safe for an Arriving Vessel ..................................................... 96
iv. CARCO Warranted a Safe Berth with the Understanding that the Athos I Would Be Drawing as Much as 37 Feet of Water Upon Its Arrival ........................................................................................................ 98
v. The Athos I Complied with the Draft Limitations of 37 Feet or Less ....... 99
vi. Exceptions to the Safe Berth Warranty for Poor Navigation and Seamanship Do Not Apply ...................................................................... 100
vii. CARCO Breached the Safe Berth Warranty by Failing to Provide Safe Passage for the Athos I, Which Was Drawing 36 Feet, 7 Inches, Upon Its Arrival ....................................................................................... 107

C. Negligence ........................................................................................................... 107

i. CARCO Was Negligent in Maintaining the Approach to Its Berth ......... 107
1. The Third Circuit Found that CARCO Had a Duty to Maintain a Safe Approach .................................... 108
2. The Standard of Care Required CARCO to Scan the Approach Periodically Using Side-Scan Sonar and to Remove or Warn Incoming Ships of Hazards to Navigation ..................... 110
a. Custom Does Not Establish the Standard of Care ........... 111

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b. A Standard of Care Based on the "Demands of Reasonableness and Prudence" Required CARCO to Periodically Scan the Approach for Hazards to Navigation Using Side-Scan Sonar and to Remove the Hazards or Warn Incoming Ships of Them ............... 114
3. CARCO Breached the Standard of Care By Failing to Search for Hazards to Navigation and By Failing to Remove Them or to Warn Incoming Vessels of Their Presence ............... 118
4. CARCO's Breach Was the Proximate Cause of Damage to the Athos I and of the Oil Spill ................................................ 118
ii. CARCO's Claim of Negligent Navigation and Seamanship Does Not Defeat Frescati's Negligence Claim ........................................ 120

D. The Pennsylvania Rule Does Not Afford CARCO Any Relief ...................... 120

E. CARCO's Spoliation and Best Evidence Motions .......................................... 128

F. CARCO's Equitable Defenses .......................................................................... 131

i. CARCO Is Not Precluded from Raising Equitable Defenses Against the Government by Virtue of the Government's Statutory Subrogation Claim under the Oil Pollution Act of 1990 ......................... 134
ii. CARCO's Defense of Equitable Recoupment Will Reduce the Amount of Reimbursement to the Government ................................. 136
iii. CARCO's Reimbursement to the Government Will Be Reduced by Fifty Percent ........................................................................................ 151
iv. CARCO's Theory of Equitable Estoppel Does Not Limit the Government's Recovery ........................................................... 152
v. CARCO's Theory of Unjust Enrichment Does Not Limit the Government's Recovery .................................................................... 155

V. DAMAGES .................................................................................................................... 157

A. Frescati Is Entitled Under Contract and Tort Law to All Damages Caused by the Incident ...................................................................................... 157

B. Frescati Has Carried its Burden of Proving All Damages ............................. 158

C. Damage Categories ............................................................................................ 159

i. OPA Removal Costs ................................................................................ 159

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ii. Non-OPA Response Costs ....................................................................... 159
iii. Settlement of Salem Nuclear Power Plant Claim .................................... 160
iv. Unrepaired Hull Damages ........................................................................ 161
v. Damages for
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