In re Kirby Offshore Marine Operating, LLC

• Decision Date: 19 May 2023
• Docket Number: 13-22-00377-CV
• Parties: IN RE KIRBY OFFSHORE MARINE OPERATING, LLC
• Court: Texas Court of Appeals

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IN RE KIRBY OFFSHORE MARINE OPERATING, LLC

No. 13-22-00377-CV

Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg

May 19, 2023

On Petition for Writ of Mandamus.

Before Justices Benavides, Silva, and Pena

MEMORANDUM OPINION

GINA M. BENAVIDES, JUSTICE ^[1]

Relator Kirby Offshore Marine Operating, LLC (Kirby) filed a petition for writ of mandamus through which it asserts that the trial court^[2] abused its discretion by granting a motion for new trial in favor of the real party in interest Southern Recycling, LLC (Southern). In summary, as will be explained in more detail Kirby sold Southern a tank barge and its towing vessel for scrap. During shipbreaking, the tank barge caught fire and caused personal injury and death to the employees involved in the work. After resolution of the personal injury and wrongful death claims, Kirby and Southern litigated breach of contract and related claims against each other. The gravamen of the dispute was whether Kirby met its obligation under the parties' agreement to appropriately clean the barge of hazardous materials prior to its sale.

Their claims were submitted to a jury, and the jury awarded damages to Kirby, but not to Southern. The trial court entered a take-nothing judgment against both Kirby and Southern, but later granted Southern's motion for new trial. Kirby contends that the trial court's articulated reasons for granting a new trial-that (1) there is an irreconcilable conflict in the jury's verdict, and (2) the verdict is not supported by legally and factually sufficient evidence-are not supported by the record.

After conducting a merits-based review of the order granting a new trial, we agree with Kirby. Accordingly, we conditionally grant the petition for writ of mandamus.

I. Background

In March of 2019, Kirby, which owns and operates a fleet of tug barges, decommissioned a tank barge, the DBL 134, and its towing vessel, the Viking. The tank barge was equipped with heating coils, or pipes, which encompassed the barge's cargo tanks. The heating coils had previously been used to keep cargo hot during transportation; however, leading up to the sale, the heating coils were not in use, and the barge was being used to transport other substances, such as gasoline. Southern's wholly owned subsidiary, International Shipbreaking LLC (ISL) specializes in scrapping or shipbreaking marine vessels for recycling, and Southern intended for ISL to scrap the DBL 134 and Viking.

Kirby and Southern executed a purchase and sale letter agreement in which Southern agreed to pay Kirby seventy percent of the estimated aggregate purchase price of $908,424.00, or $635,896.80, within three days from the date of the agreement, with the aggregate purchase price to be adjusted and the remainder thereafter based on deadweight surveys of the vessels. Kirby agreed to deliver the vessels to Southern. The agreement contains seven enumerated paragraphs which contain the following provisions that are directly relevant to the parties' dispute:

[Kirby] agrees that the Barge shall be delivered to [Southern] cleaned of all chemicals, petroleum products, and sludge. A Marine Chemist certificate will be sent to [Southern] where available.

[Southern] shall inspect the Vessels upon delivery by [Kirby], and, upon acceptance by [Southern], [Kirby] shall have no further obligation to [Southern] with respect to the Vessels, except as provided herein.

[Southern] specifically acknowledges that the Vessels are sold "as is, where is," without warranty of seaworthiness, condition, fitness for purpose or intended use, merchantability, or any other warranty whatsoever by [Kirby], except as set forth herein.

[Kirby] acknowledges that [Southern] is not a hazardous waste disposal company, and, therefore, upon discovery of any toxic or hazardous substances on or in the Vessels, [Southern] shall immediately notify [Kirby] in writing, and [Kirby] shall remove said substance at its cost. Should [Kirby] fail or otherwise refuse to remove the substance within five (5) days from the date of such notification, [Southern] may immediately remove and dispose of the substance in compliance with all applicable laws and regulations, all at [Kirby's] cost and expense.

Before Kirby delivered the barge to Southern, Kirby had the barge cleaned by Clean Water of New York, Inc. (Clean Water). After Clean Water's work on the barge, Austin Montanti, a marine chemist^[3] employed by Independent Testing &Consulting, Inc. (IT&C), inspected the barge and issued a marine chemist certificate stating that the barge was safe for shipbreaking.

Southern made the initial payment for the barge, and Kirby sent the barge and tug to a shipbreaking facility belonging to ISL pursuant to Southern's instructions. After the barge arrived at ISL's facility, ISL employed another marine chemist, James Bell, employed by Maritime Chemists Services of the Coastal Bend of Texas, Inc. (Maritime), to inspect the barge. Bell issued a marine chemist certificate which also stated that the barge was safe for shipbreaking.

On May 14, 2019, after ISL had been shipbreaking the DBL 134 for approximately two weeks, its employees Jorge Loredo and Nestor Aguilar, who were pumpers,^[4] were working on the barge in cargo tank 2-S. Other employees had been sent home due to poor weather conditions. Loredo and Aguilar were using a Sawzall, an electrical reciprocating saw, to cut through the heating coils in the tank when the Sawzall ignited vapors emanating from the heating coils. The resulting fire seriously injured both employees, and Loredo ultimately died as a result of his injuries. Subsequent investigations determined that remnants of gasoline in the heating coils ignited during the shipbreaking process.

The personal injury plaintiffs^[5] filed suit against Southern, Kirby, Clean Water, IT&C, Bell, and Maritime. They did not sue ISL, who employed Loredo and Aguilar, due to the workers compensation scheme. Southern and Kirby filed cross claims against each other. Southern sued Kirby for failing to adequately clean the vessel before delivering it to Southern seeking to recover: (1) the amount Southern paid to the personal injury plaintiffs in settlement ($8 million), (2) the attorney's fees and legal expenses that Southern incurred in defending the personal injury lawsuit ($1,271,156), and (3) the consideration Southern had paid Kirby for the vessel ($635,896.80). Kirby denied liability and counter-sued Southern for the remaining payment due for the sale of the vessels.

Ultimately, all defendants settled with the personal injury plaintiffs prior to trial, leaving only the causes remaining between Southern and Kirby.^[6] Southern and Kirby's case was submitted to a jury for trial over a two-week time span. The charge submitted to the jury contained extensive definitions and instructions regarding: the nature of the claims between the parties, breach of warranty, damages for breach of warranty, breach of contract, damages for breach of contract, promissory estoppel, and fraudulent concealment. The relevant portions of the charge to the jury and its verdict are summarized as follows:

• Kirby's failure to comply with a warranty was a proximate cause of damages to Southern; however, the jury did not award any damages to Southern after considering three specified elements of damages:

(1) Southern's reasonable cost to settle the claims asserted against it by the original plaintiffs which was a natural probable and foreseeable consequence of Kirby's failure to comply; (2) return of Southern's down payment of $635,896.80; and (3) attorney's fees in the amount of $1,271,156 incurred by Southern in defending the personal injury claims brought by the original plaintiffs.

• Kirby failed to comply with the purchase agreement for the barge; however, the jury did not award any damages to Southern after considering two specified elements of damages: (1) the reasonable cost to settle claims against it by the original plaintiffs; and (2) the return of Southern's down payment.

• Southern failed to comply with the purchase agreement for the barge; and the jury awarded Kirby $272,527.20 as damages caused by Southern's failure to comply.

• Kirby failed to comply with the purchase agreement first.

• Kirby committed fraud against Southern; however, the jury did not award any damages to Southern after considering two specified elements of damages: (1) the reasonable cost to settle claims against it by the original plaintiffs; and (2) for the return of Southern's down payment.

• The negligence of ISL, Southern, Clean Water, Bell, and Montanti caused the occurrence, and Kirby was thirty-one percent responsible; ISL was twenty-nine percent responsible; Southern was twenty-five percent responsible; Clean Water was three percent responsible; and Bell and Montanti were each six percent responsible.

Southern objected to the jury's verdict under Rule 295 of the Texas Rules of Civil Procedure and requested the trial court to require the jury to continue deliberations; however, the trial court overruled Southern's motion. See TEX. R. CIV. P. 295 (DELINEATING THE PROCEDURE FOR CORRECTING A DEFECTIVE VERDICT). SOUTHERN THEN FILED A MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT, OR ALTERNATIVELY, A NEW TRIAL. THE TRIAL COURT DENIED SOUTHERN'S MOTION.

On November 30, 2021, the trial court issued a take-nothing judgment against both Southern and Kirby and taxed costs of court against Southern. On or about December 16, 2021 Southern moved to modify the judgment seeking to reallocate the court costs. On February 11, 2022, the trial court sua sponte signed an order vacating its judgment and granting a new trial; however, its new trial order did not explain the court's rationale for...