Bp Exploration & Oil v. Moran Mid-Atlantic Corp.

• Decision Date: 28 June 2001
• Docket Number: No. CIV. A. 97-5059.,CIV. A. 97-5059.
• Parties: BP EXPLORATION & OIL, INC., Plaintiff, v. MORAN MID-ATLANTIC CORP., et al., Defendants.
• Court: New Jersey Supreme Court

147 F.Supp.2d 333

BP EXPLORATION & OIL, INC., Plaintiff, v. MORAN MID-ATLANTIC CORP., et al., Defendants.

No. CIV. A. 97-5059.

United States District Court, D. New Jersey.

June 28, 2001.

COPYRIGHT MATERIAL OMITTED

Stuart M. Goldstein, Lynne M. Parker, Hollstein Keating Cattell Johnson & Goldstein P.C., Marlton, NJ, Attorneys for Plaintiff.

John Mattioni, Paul A. Kettunen, Mattioni LLP, Westmont, NJ, Attorneys for Defendants.

CONCLUSIONS OF LAW

RODRIGUEZ, District Judge.

I. Introduction

A more detailed discussion of the facts of this case can be found in this Court's Findings of Fact, issued even date. For the purposes of understanding these Conclusions of Law, this brief recitation of the facts will suffice.

On or about 6:00 A.M. on April 3, 1994, the GRACE MORAN, a tugboat owned and operated by defendants, Moran Mid-Atlantic Corp., and Moran Towing Company (collectively "Moran"), with its mate on watch asleep in the wheelhouse, crashed through a portion of the outer dock and walkway structure of a dock facility on the Delaware River in Paulsboro, New Jersey, owned and operated by BP Exploration & Oil, Inc. ("BP"). The tug then proceeded to crash into and through the inner walkway and associated piping and continued through this area until it ran aground on the shoreline. This is referred to herein as the Incident.

At the time of the Incident, Frank Auerswald, the mate, was on watch at the wheel of the GRACE MORAN. He had been at watch for more than twelve hours in the twenty-four period preceding the Incident, though not all of that time on watch had been spent at the wheel. He was still on watch at the time of the Incident because he had chosen to let the captain, Joseph Killian, remain sleeping. Neither Auerswald nor Killian knew the working hour requirements, under federal law, for time spent on watch. Moran had no official policy in place regarding the number of hours worked by the captain or the mate. Instead, Moran relied upon the captain to conform to federal law, but did not provide training on federal law to the captains.¹

In the Findings of Fact, this Court examined BP's damages as a result of the Incident. BP claimed to have incurred $154,931.99 in Emergency Response Costs, which included charges for, among other items, oil product loss, security, emergency contractors, and two surveys (a damage survey and a condition survey) by Hudson Engineers. BP was not entitled to a claimed expense of $5,774.88 for use of its equipment.

After the crisis had ended, portions of some of the pipes at the dock facility were determined to have been destroyed. Additionally, a portion of the Outshore Walkway, a portion of the Inshore Walkway, and Barge Cluster Six had been destroyed. BP claimed $228,750.00 for damages to the walkways, $4,367.00 for damages to the electrical components, $307,872.00 for damage to the pipelines, $9,500 for permit applications, $6,190.00 for permit fees, $14,127.00 for bid package preparation, and $800.00 for a material take-off estimate.

This Court determined that the Outshore Walkway had exhausted 12% of its useful life, the Inshore Walkway and Barge Cluster Six had exhausted 80% of their useful lives, that certain pipelines had been abandoned prior to the Incident, and that the remaining five pipelines had exhausted 44% of their useful lives.

While BP replaced the portion of the Outshore Walkway that was destroyed in the Incident, it did not replace the destroyed portion of the Inshore Walkway or Barge Cluster Six. Instead, a new portion of Outshore Walkway was added to the dock facility. The five pipelines that were not abandoned were replaced by BP, though in a different configuration.

Early on, the parties were all involved in the emergency response to the Incident and in the assessment of the damages. Soon, the parties developed some fundamental disagreements, and the assessments and negotiations dragged on until BP filed this suit in October 1997. While Moran eventually conceded liability for the Incident, the parties were unable to agree on damages. A bench trial on the issue of damages was conducted from February 24, 2001 to March 13, 2001. The following are the Court's Conclusions of Law in accordance with Federal Rule of Civil Procedure 52(a).

II. Jurisdiction

1. BP is an Ohio Corporation, with a principle place of business in Cleveland, Ohio.

2. Moran Mid-Atlantic Corporation was at the times relevant hereto a Delaware Corporation, with a principle place of business in Baltimore, Maryland.

3. Moran Towing of Pennsylvania was at the times relevant hereto a division of Moran Mid-Atlantic Corporation, with a

principle place of business in Philadelphia, Pennsylvania.

4. This Court has jurisdiction over this civil admiralty claim pursuant to 28 U.S.C. § 1333. Venue is proper in this Court.

III. Conclusions of Law

A. Compensatory Damages

5. BP and Moran have argued extensively on the law of damages in admiralty cases. This Court notes that it would have helped the parties to prepare their trial presentations if they had moved this Court, prior to trial, for an interpretation of the conflicting case law on this topic. It would also have facilitated settlement discussions. This was not done.

6. The general rule for recovery of damages due to the negligence of others in admiralty cases is restitutio in integrum; the damaged party is entitled to be put in as good a position pecuniarily as he was in prior to the damage to his property occurring. The Baltimore, 75 U.S. (8 Wall.) 377, 385-86, 19 L.Ed. 463 (1869); Standard Oil Co. v. S. Pac. Co., 268 U.S. 146, 155, 45 S.Ct. 465, 69 L.Ed. 890 (1925).

7. If the plaintiff suffers a total loss, either actual or constructive, he or she may recover the value of the property lost just before the damage. If there is not a complete loss and repairs are feasible, the cost of repair is the measure of damages. But, if those costs exceed the value just before the damage, then the plaintiff is limited to the value just before the damage. See Standard Oil, 268 U.S. at 155-56, 45 S.Ct. 465; Gaines Towing and Transp., Inc. v. Atlantia Tanker Corp., 191 F.3d 633, 635-36 (5th Cir.1999); Orange Beach Water, Sewer, and Fire Prot. Auth. v. M/V Alva, 680 F.2d 1374, 1383-84 (11th Cir.1982); Bunge Corp. v. Am. Commercial Barge Line Co., 630 F.2d 1236, 1241 (7th Cir.1980); Hewlett v. Barge Bertie, 418 F.2d 654, 657 (4th Cir.1969); The Manhattan, 85 F.2d 427, 428 (3d Cir. 1936); Pillsbury Co. v. Midland Enters., 715 F.Supp. 738, 764 (E.D.La.1989).

8. It does not matter that a plaintiff chooses to build a different facility instead of replacing a facility with identical property, a defendant is still liable for the damages incurred by the destruction of the original facility. See Bunge Corp., 630 F.2d at 1241-42.

9. The burden is on BP to prove the extent of its damages, including the actual value of any item damaged at the time just prior to damage. See Servicios-Expoarma, C.A. v. Indus. Mar. Carriers, Inc., 135 F.3d 984, 994 (5th Cir.1998); Pizani v. M/V Cotton Blossom, 669 F.2d 1084, 1088 (5th Cir.1982); Pinto v. M/S Fernwood, 507 F.2d 1327, 1331 (1st Cir. 1974); O'Brien Bros. v. The Helen B. Moran, 160 F.2d 502, 504-05 (2d Cir.1947); In re Boat Demand, Inc., 174 F.Supp. 668, 673 (D.Mass.1959).

10. If Moran asserts that value is less than the cost of repairs, Moran has the burden of establishing that fact. See Hewlett v. Barge Bertie, 418 F.2d 654, 657 (4th Cir.1969).²

11. Even though a defendant has the burden of demonstrating that a plaintiff could have mitigated its damages, this "does not affect the ordinary rule that an injured party has the burden of proving the damages he has actually suffered." See O'Brien Bros., 160 F.2d at 504.

12. In a recent article in the Oregon Law Review, the author described two conflicting fundamental principles of remedies. See James E. Beard, Comment, A Tale of Boats, Bridges, Barges, and Automobiles: Restoring the Injured Party's Rightful Position in Cases Involving Loss of Used Property, 76 Or. L.Rev. 1049 (1997).

The first fundamental rule of compensatory damages is to restore the injured party, as nearly as possible, to her rightful position.... The second fundamental principle of compensatory damages is that, while the injured party is entitled to be restored to her rightful position, the wrongdoer is usually entitled to have plaintiff made whole in the least expensive way.

Id. at 1050-51; see also Michael A. Snyder, Maritime Collision Damage to Vessels and Fixed Structures, 72 Tul. L.Rev. 881 (1997). Here, BP argues that the first principle, and BP's favored cases, militate against a reduction from any damage award for depreciation or betterment. Moran, of course, cites only cases that apply depreciation and betterment, arguing for the second principle.

13. In J.W. Paxson Co. v. Board of Chosen Freeholders, 201 F. 656 (3d Cir. 1912), the Third Circuit addressed the appropriate damages after a tug crashed into a draw bridge, knocking a piece of the bridge into the river. It was determined that a span of the bridge and a fender needed to be replaced. While the court allowed the amount of damages awarded to replace the fender to be reduced for depreciation, the plaintiff was allowed the full replacement cost for the span of the bridge.

The plaintiff was compelled, by the negligence of the defendant, to build a new structure, which, as a new structure, was possibly, though not certainly, more valuable than the old one. But the old structure sufficed for the purposes of the plaintiff, and the plaintiff was damaged by being compelled to procure a new structure in place of the old one, for the contract price of which it was obliged to pay. The sufferer by the negligence of the defendant cannot be compelled to perform the impossible task of recreating the old span, without buying a new one, or make a nice computation of the difference in value between the old one and the new. The plaintiff did...