COMPLAINT OF HARBOR TOWING CORPORATION

• Decision Date: 10 November 1971
• Docket Number: Civ. A. No. 71-20.
• Citation: 335 F. Supp. 1150
• Parties: Complaint of HARBOR TOWING CORPORATION, Owner of the Barge SHAMROCK For Exoneration From or Limitation of Liability.
• Court: U.S. District Court — District of Maryland

335 F. Supp. 1150

Complaint of HARBOR TOWING CORPORATION, Owner of the Barge SHAMROCK For Exoneration From or Limitation of Liability.

Civ. A. No. 71-20.

United States District Court, D. Maryland.

November 10, 1971.

Randall C. Coleman, John T. Ward and Ober, Grimes & Shriver, Baltimore, Md., for Harbor Towing Corp.

Lewis A. Noonberg and Paul V. Niemeyer, Baltimore, Md., for claimant, Humble Oil & Refining Company (Richard P. Delaney, and Piper & Marbury, Baltimore, Md., of counsel).

Eugene I. Glazer and Barry R. Glazer, Baltimore, Md., for claimants, Ronald O'Bitz and Betty Jane O'Bitz.

George E. Brown, Jr., Baltimore, Md., for claimant, Cottage Grove Beach, Inc.

Francis B. Burch, Atty. Gen., Warren K. Rich, Thomas M. Downs, and Thomas Kenney, Jr., Asst. Attys. Gen. of Maryland for claimant, State of Maryland, Dept. of Natural Resources and the Maryland Port Authority.

NORTHROP, Chief Judge.

Harbor Towing Corporation has filed a petition in this court pursuant to 46 U.S.C. § 185, for limitation of liability that it may incur as a result of an oil spillage in the Baltimore harbor. In the present motions, two claimants, the State of Maryland, Department of Natural Resources and the Maryland Port Authority, and Humble Oil & Refining Company, seek a ruling that their claims for monies expended in clean-up operations should not be subject to limitation.

Briefly stated, the facts as they are now alleged, appear as follows: At 12:30 a. m. on July 12, 1970, petitioner's tug Indian towed the barge Shamrock, also owned by petitioner, to Humble Oil's Clinton Street terminal for loading with 7,000 barrels of heavy fuel oil. During the loading process, either through the negligence of Harbor Towing and/or Humble Oil, 68,000 gallons of oil were discharged into the harbor. As a result of this spill, substantial damage was done to the harbor, aquatic life and shoreline properties, and a large amount of money was expended by the State of Maryland and Humble Oil in clean-up operations. The present claims against Harbor Towing are as follows:

1. Maryland Port Authority, $26,365.91 for clean-up expenses;

2. Department of Natural Resources, $2,000 for mortality to aquatic life;

3. Humble Oil, $425,000, of which $170,000 represents reimbursement for clean-up expenses;

4. Cottage Grove Beach, Inc., $19,700.37 for property damage and loss of income; and

5. Betty Jane O'Bitz and Ronald O'Bitz, $50,000 compensatory and $1,000,000 punitive for property damage. Both Harbor Towing and Humble Oil were prosecuted by the State and fined for breach of Md.Ann.Code art. 96A, § 29.

Harbor Towing then filed in this court a petition for exoneration from or limitation of liability, as above. After this court issued an ad interim stipulation in the sum of $33,352.67, the value of the barge and its freight, Humble Oil made a motion to increase the security by including the value of the tug. This court granted that motion in an opinion dated April 26, 1971.

Presently, the State has filed a "Motion to Disallow Limitation Liability or Alternatively to Exclude the State of Maryland's Claim from the Limitation Fund." Humble Oil has followed suit, asserting the State's position, since they will necessarily benefit thereby, and asserting that the expenses incurred by them in the clean-up should likewise not be subject to limitation.

Article 96A, § 29 of the Maryland Code clearly makes it a criminal offense to discharge oil into Maryland waters. Section 29B of the same article provides the State with a civil remedy to recover the costs of clean-up expenses:

The Maryland Port Authority and the Department of Natural Resources shall charge and collect a compensatory fee from the person responsible for the oil spillage. This fee shall cover the cost of labor, equipment operation, and materials necessary to eliminate the residue of oil spillage and shall be retained by the agency charging the fee.

Section 29D of that same article empowers the Department of Natural Resources "to require the repair of any damage done and the restoration of water resources," including mortality to fish and other aquatic life.

The potential bar to the State's claim is 46 U.S.C. § 183 et seq. (1964), the Limitation of Liability Act. The language of that statute would appear to mandate limitation in every case "for any act, matter, or thing, loss, damage, or forfeiture, done, occasioned, or incurred . . ." with the exception of the situation where the loss occurs with the privity or knowledge of the owner. The movants have chosen not to rely on this exception. Rather, they have sought imposition of a narrow judicial exception at this stage of the proceedings, analogizing from cases decided under the Wreck Statute, 33 U.S.C. § 409 (1964), and arguing that the State's civil remedies impose on the owner a personal, non-delegatable obligation which is not protected by the limitation statute and that the limitation statute is inapplicable where the statute violated is of a criminal nature. Because the Wreck Statute is so critical to the State's position, it will be set out in part:

It shall not be lawful . . . to voluntarily or carelessly sink, or permit or cause to be sunk, vessels or other craft in navigable channels; . . .. And whenever a vessel, raft, or other craft is wrecked or sunk in a navigable channel, accidentally or otherwise, it shall be the duty of the owner of such sunken craft to immediately mark it with a buoy or beacon during the day and a lighted lantern at night, and to maintain such marks until the sunken craft is removed or abandoned, and the neglect or failure of the said owner so to do shall be unlawful; and it shall be the duty of the owner of such sunken craft to commence the immediate removal of the same, and prosecute such removal diligently, and failure to do so shall be considered as an abandonment of such craft, and subject the same to removal by the United States . . . .

Any violation of this section is to be enforced by criminal sanctions imposed by § 411 of Title 33.

The State has taken great care to set forth the cases which have held the Wreck Statute immune from limitation, and almost without exception they have followed a similar factual pattern: for a reason outside the knowledge or privity of the owner, the vessel is sunk; at this point, there appears to be little question but that limitation would apply; then, with knowledge of the sinking, the owner takes no steps to mark or remove the wreck; at this point, when an innocent vessel collides with it or where the owner refuses to remove the hulk, limitation is not allowed.¹

Two rationales have resulted in this conclusion. The first is illustrated by In re Berwind-White Coal Mining Co., 80 F.Supp. 125 (S.D.N.Y.1948), in which three ships collided with a barge sunk by the owner's negligence, after the owner took no steps to effect removal. The court reconciled the two statutes, saying,

Therefore liability is not limited when the duty to police the wreck or buoy it as required by the Wreck Statute has not been fulfilled, since the duty to buoy attaches only to an informed owner and the duty to police, . . . was its also and found its origin too in its knowledge. 80 F.Supp. at 132 Emphasis added.

Since the Limitation Statute is not available to an owner informed of the condition causing the loss, under this theory, conflict between the two statutes may never arise. If the owner has knowledge of the wreck, then any loss sustained subsequently to his gaining that knowledge must be deemed to have arisen within the exception announced in the Limitation Statute, and, consequently, limitation is not available. This theory is perhaps better explained by the Court in In re Pacific Far East Line, Inc., 314 F.Supp. 1339 (N.D.Cal.1970), where two ships, the Guam Bear and the Esso Seattle, collided in Apra Harbor, Guam, as a result of their joint negligence. The Navy subsequently removed the Guam Bear from the harbor and sank it. The Court held that the owners were jointly liable for the removal of the wreck and that the owner of the Guam Bear was not entitled to limitation against the removal expenses, saying:

the statutory duty to diligently remove the wreck is a mandatory obligation personal to the owner and the failure to so remove is within the privity and knowledge of the owner. 314 F.Supp. at 1349 Emphasis added.

Once again, while disallowing limitation, the Court operated consistently with the Statute. See also Wyandotte Transportation Co. v. United States, 389 U.S. 191, 88 S.Ct. 379, 19 L.Ed.2d 407 (1967); In re Midland Enterprises, Inc., 296 F. Supp. 1356 (S.D.Ohio 1968).

This rationale may not be applied to the Maryland Statute vis-à-vis the Limitation Statute, for two reasons. The first is that, notwithstanding the knowledge of the owner, civil liability is imposed by Article 96A, § 29B. The conflict between the federal and the state law is apparent. In the present case, the owner was apparently unaware of the condition causing the loss. Looking at each statute in a vacuum, it appears that while the owner would be liable under the Maryland scheme, he would be expressly allowed limitation under the federal scheme. Any conflict of this sort must naturally be resolved in favor of the federal pronouncement by virtue of the Supremacy Clause. See Robins Dry Dock & Repair Co. v. Dahl, 266 U.S. 449, 45 S.Ct. 157, 69 L.Ed. 372 (1925); Frame v. City of New York, 34 F.Supp. 194 (S.D.N.Y.1940); In re Highland Navigation Corp., 24 F.2d 582 (S.D.N.Y. 1927); Gilmore and Black, The Law of Admiralty 43 (1957).

Secondly, it is obvious that, critical to the State's theory is the creation by the Wreck Statute of the personal, non-delegatable duty to perform an affirmative act, an act entirely separate and distinct from the original act causing the loss, the failure to do which results in the unlimited liability. Analogy to the Maryland statute is non-existent because that statute provides no...