Insurance Co. of North America v. Board of Com'rs of Port of New Orleans, 82-3390

• Citation: 733 F.2d 1161,1985 A.M.C. 1460
• Decision Date: 11 June 1984
• Docket Number: No. 82-3390,82-3390
• Parties: INSURANCE COMPANY OF NORTH AMERICA and Allstate Insurance Company, Plaintiffs-Appellees Cross-Appellants, v. BOARD OF COMMISSIONERS OF the PORT OF NEW ORLEANS, Plaintiff-Appellee, v. JOHN J. BORDLEE CONTRACTORS, INC., Defendant-Appellant Cross-Appellee, v. ATLANTIC MARINE TRANSPORT CORP., Defendant-Appellant, and Southern American Insurance Co., Defendant-Appellee Cross-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 1161

733 F.2d 1161

1985 A.M.C. 1460

INSURANCE COMPANY OF NORTH AMERICA and Allstate Insurance

Company, Plaintiffs-Appellees Cross-Appellants, v. BOARD OF COMMISSIONERS OF the PORT OF NEW ORLEANS, Plaintiff-Appellee, v. JOHN J. BORDLEE CONTRACTORS, INC., Defendant-Appellant Cross-Appellee, v. ATLANTIC MARINE TRANSPORT CORP., Defendant-Appellant, and Southern American Insurance Co., Defendant-Appellee Cross-Appellant.

No. 82-3390.

United States Court of Appeals, Fifth Circuit.

June 11, 1984.

Gelpi, Sullivan, Carroll & Laborde, Gerard T. Gelpi, Cliffe F. Laborde, Robert P. McCleskey, Jr., New Orleans, La., for defendants-appellants.

Clayton G. Ramsey, Vivienne Monachino, New Orleans, La., for Atlantic Marine.

James A. Cobb, Jr., New Orleans, La., for St. Paul.

Camp, Carmouche, Palmer, Barsh & Hunter, Donald A. Hoffman, Robert I. Siegel, New Orleans, La., for Insurance Co. of North America and Allstate Ins. Co.

Burke & Mayer, Jos. P. Tynan, New Orleans, La., for Board of Com'rs of the Port of New Orleans.

Monroe & Lemann, Richmond Eustis, Nigel E. Rafferty, New Orleans, La., for Southern American Ins. Co.

J.Y. Gilmore, Jr., New Orleans, La., for Underwriters at Lloyd's.

Robert M. Contois, Jr., Robert T. Lemon, II, New Orleans, La., for American Commercial Lines, Inc.

Thomas J. Grace, New Orleans, La., for Twin City Barge Lines, Inc.

Benjamin W. Yancey, Rufus C. Harris, III, New Orleans, La., for Ina and Allstate.

Ralph E. Smith, New Orleans, La., for Van Reekum Paper.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before POLITZ, JOHNSON and WILLIAMS, Circuit Judges.

POLITZ, Circuit Judge:

This appeal presents the question of the extent of insurance protection afforded John J. Bordlee Contractors, Inc., by virtue of insurance policies on its vessel the M/V MR. PETE which was involved in a collision with the M/T PINA in the Mississippi River at New Orleans. Bordlee appeals, claiming coverage: (1) under a hull policy issued by Insurance Company of North America (INA) and Allstate Insurance Company (Allstate), (2) under a protection and indemnity policy (P & I) issued by INA and Allstate, and (3) under an excess liability policy issued by Southern American Insurance Company (Southern). In addition Bordlee contends that INA, Allstate and Southern should be estopped to deny coverage because of their post-casualty actions. Finding no reversible error, we affirm.

Facts

At approximately 9:00 p.m. on December 19, 1979, the PINA, a Liberian tankship which was loaded with 60,000 barrels of light Arabian crude oil was upbound the Mississippi enroute to Good Hope, Louisiana. The PINA, under the command of its master, was piloted by a member of the New Orleans-Baton Rouge Steamship Pilots Association. No bow or anchor lookout was posted. Simultaneously, the M/V MR. PETE, a pushboat owned and operated by John J. Bordlee Contractors, Inc., was downbound pushing two tandem set barges to an intended docking at the Poydras Street Wharf. The crew of the MR. PETE consisted of two men, neither of whom possessed the Coast Guard license required by law to operate the MR. PETE.

On the night of the casualty, the sky was clear, there were no adverse weather conditions and visibility was unrestricted. Both vessels were equipped with radar and VHF-FM radios. The radios were set to monitor river traffic. The vessels were properly lighted. The PINA displayed a white stern light, red and green lights on the port and starboard, a white masthead light and a white range light. The MR. PETE carried the traditional white stern and red and green side lights, and also displayed two white lights on the masthead to signify a vessel towing.

The captain of the MR. PETE had angled his tow and was maintaining a course parallel to the east bank, the left descending bank of the river, to take advantage of river conditions as he perceived them. As it proceeded upbound the PINA was holding approximately forty percent off the east bank. When he first observed the PINA, the captain of the MR. PETE intended a starboard-to-starboard passing although he conceded a port passing was the norm for that area of the river. The captain and pilot of the PINA failed to notice that the MR. PETE had barges in tow despite the clearly visible towing light signal.

The vessels were not using their radar. Had the PINA done so it would have been aware of the tow. Attempts to communicate by radio were unsuccessful. In such instances, ship-to-ship communications are normally made by whistle. The record fairly reflects that neither vessel attempted to communicate by whistle. When the collision was imminent both vessels undertook evasive manuevers which were to no avail. The bow of the lead barge collided with the port bow of the PINA, cutting a 60 foot gash and spilling oil which immediately ignited and enveloped the PINA's port and spread across the river surface.

The district court, 532 F.Supp. 774, found both vessels violated navigational rules and were at fault. This finding is not seriously contested on appeal. In the opinion of the district court "this collision resulted from a total failure of communication and a complete disregard of the dangers posed by such failure on the part of both vessels." The pilot of the PINA assumed a port passing, the captain of the MR. PETE assumed a starboard passing, neither communicated his intention. In addition, despite inadequate lighting on the barges, ¹ the PINA ignored the clearly visible tow light signals on the masthead. The record fully supports the trial judge's factual analysis.

The final part of the factual scenario pertinent to this appeal relates to the captains of the MR. PETE. Bordlee employed three captains, but only one possessed the license required by the Coast Guard for piloting a pushboat on the Mississippi. ² The men worked two weeks and were off one week on a rotating basis. As a consequence of the rotation, during one week out of every three there was no licensed captain aboard the MR. PETE. In addition, 46 U.S.C. Sec. 405(b)(2) prohibits a work tour in excess of twelve hours except in emergencies. Consequently, even during the two-week period when a licensed captain was aboard, when the licensed captain was off watch and away from the bridge the MR. PETE was not under the supervision of an authorized captain.

The Insurance

The MR. PETE was insured by three separate insurance policies. INA and Allstate jointly issued a primary hull policy, the American Institute Tug Form AMW 1723. INA and Allstate also jointly issued a protection and indemnity policy, standard form SP-23, AMW 1724. Southern issued a policy providing excess coverage over the hull and P & I policies.

The hull policy contained the following language:

The Underwriters shall not be liable for any loss, damage or expense arising out of the failure of the Assured to exercise due diligence to maintain the Vessel in a seaworthy condition after the attachment of this Policy; the foregoing, however, not to be deemed a waiver of any warranty of seaworthiness implied at law.

The P & I policy contained a provision which read: "Notwithstanding anything to the contrary contained in this policy, no liability attaches to the Assurer: ... For any loss, damage, or claim arising out of or having relation to the towage of any other vessel or craft." It carried an endorsement which declared:

Notwithstanding anything contained herein to the contrary, it is understood and agreed that as respects the above vessels [one of which is MR. PETE], this policy provides Excess Collision and Towers Liability, as provided by lines 78 through 111 of the American Institute Tug Form (2/1/76) 53R-1.

Discussion

The trial court found that the hull policy was void because Bordlee had breached the policy's implied warranty of seaworthiness by manning the MR. PETE with unqualified personnel. The trial court also found that the endorsement on the P & I policy providing excess collision and tower's liability was excess hull coverage and not an additional P & I enumeration. The court further found that the excess policy applied only to the extent that the primary policies were effective. We affirm each finding and conclusion.

A. The Hull Insurance

There is no dispute that the language of the collision and tower's liability provision of the hull policy would have extended coverage to the collision between the PINA and the MR. PETE if the policy were found applicable to the casualty. The district court interpreted the language of limitation quoted above as "an exclusion which purports to deny coverage in situations wherein there has been a breach of the continuing negative warranty of seaworthiness implied by law." We agree.

A warranty of seaworthiness by the owner is implied in every hull insurance policy unless expressly waived. Saskatchewan Government Insurance Office v. Spot Pack, 242 F.2d 385 (5th Cir.1957). The warranty is a continuing obligation that "the owner, from bad faith or neglect, will not knowingly permit the vessel to break ground in an unseaworthiness condition.... The consequence of a violation of this 'negative' burden is merely a denial of liability for loss or damage caused proximately by such unseaworthiness." Id. at 388.

The trial court found that Bordlee did not maintain the vessel in a seaworthy condition after the attachment of the hull policy because the boat was staffed with unlicensed captains. The court further found that the unseaworthy condition was a proximate cause of the collision. As a consequence, the court held that the policy limitation barred coverage for the collision. This factual and legal finding is consistent with the long standing rule of admiralty that when a ship violates a statutory rule of navigation intended to prevent collisions, "the burden rests on the ship of showing not merely that her fault might not have been one of the causes, or that it probably was not, but that it...