A & S Transp. Co., Inc. v. Tug Fajardo

• Decision Date: 01 September 1982
• Docket Number: No. 81-1770,81-1770
• Citation: 688 F.2d 1
• Parties: A & S TRANSPORTATION CO., INC., et al., Plaintiffs, Appellees, v. The TUG FAJARDO, etc., et al., Defendants, Appellees, v. The UNITED STATES of America, Third Party Defendant, Appellee. PCI International, Inc., Plaintiff, Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 1

688 F.2d 1

A & S TRANSPORTATION CO., INC., et al., Plaintiffs, Appellees, v. The TUG FAJARDO, etc., et al., Defendants, Appellees, v. The UNITED STATES of America, Third Party Defendant, Appellee.

PCI International, Inc., Plaintiff, Appellant.

No. 81-1770.

United States Court of Appeals First Circuit.

Argued April 7, 1982.

Decided Sept. 1, 1982.

Nicolas Jimenez, with whom Jimenez & Fuste, San Juan, Puerto Rico, was on brief, for plaintiff, appellant.

William P. Kardaras, with whom Bigham, Englar, Jones & Houston, New York City, was on brief, for appellees.

Before FAIRCHILD, ^* Senior Circuit Judge, CAMPBELL and BOWNES, Circuit Judges.

LEVIN H. CAMPBELL, Circuit Judge.

Plaintiff PCI International, Inc. (PCI) seeks damages from Puerto Rico Lighterage Company and its underwriters for loss of use of a waste disposal barge of which it was the bareboat charterer. The barge was stranded, and became a total loss, while being towed by a tug (the "Fajardo") owned by Lighterage pursuant to a written agreement of towage with PCI. PCI asserts that the stranding was due to the carelessness of the tug, and that because of loss of use of the barge, and the difficulty of securing a suitable replacement, it was put to great expense in order to meet commitments to customers who had contracted for PCI to dispose of their chemical wastes at sea.

After the stranding, the underwriters of the barge determined that it was a constructive total loss, and reimbursed the owner, A & S Transportation Co., from whom PCI had chartered it, the full insured value of the hull (with certain adjustments) plus an additional sum under the sue and labor provisions of the policy. The owner, in return, assigned all its rights respecting the barge to the underwriters. The underwriters also reimbursed PCI, under the sue and labor provisions of the policy, PCI having been named in the policy as an additional insured, for certain amounts PCI had expended to preserve the wreck.

Thereafter PCI joined the owner and the barge's underwriters in this damages action against the tug, Lighterage, and their underwriters. Before trial, however, the barge's underwriters effected a settlement with defendants. As part of the settlement, they released defendants and assigned to them all rights of action, including all the rights which had been assigned to them by A & S.

After a trial, the district court sitting in admiralty rejected the owner's claims for damages in excess of the amount already received from its underwriters. The court held that the owner had effectively divested itself of any claims in the matter by its previous settlement and assignment to its own underwriters, who had thereafter settled with defendants. The owner has not appealed from this judgment.

The court also rejected appellant PCI's claims for consequential damages based on the uniqueness of the barge and alleged expenses incurred in procuring a substitute. Although PCI had not been a party to the settlement between the owner and the barge's underwriters, the court held that PCI, as a bareboat charterer, stood in the shoes of the owner. The court relied upon,

The well-settled rule where a ship is a total loss ... the aggrieved party may not recover compensation for contemplated profits or the loss of use of the ship. Damages are limited to the value of the ship, plus interest and the net freight pending at the time of the collision. The Umbria, 166 U.S. 404 (17 S.Ct. 610, 41 L.Ed. 1053) (1897); Barger v. Hanson, (426 F.2d 640, 641 (9th Cir. 1970) ).

The court acknowledged PCI's claims that the tug had been negligent as to it; that the tug's owner had committed a breach of duties owed to PCI individually under the towing contract; and, finally, that it had violated its implied warranty of workmanlike service owed to PCI under the towing contract. However, the court ruled that as bareboat charterer PCI was limited to the same damages an owner could have claimed in like circumstances, and that these would not have gone beyond the value of the totally lost vessel and of certain other items not material to PCI's claim. The court contrasted the situation with that which would have prevailed if the barge had been a partial, not a total, loss. In such case, the court said, the owner would have been entitled to lost earnings or to the cost of providing a substitute ship, citing The Emma Kate Ross v. Myers Excursion Nav. Corp., 50 F. 845 (3d Cir. 1892).

We sustain the judgment of the district court. Where a vessel is totally lost, the measure of damages is its value at the time of loss, plus interest and the net freight pending at the time of the collision. The Umbria, 166 U.S. 404, 421-22, 17 S.Ct. at 617 (1897). Loss of use is not allowable. Alkmeon Naviera, S.A. v. M/V Marina L, 633 F.2d 789, 797 (9th Cir. 1980); Ozanic v. United States, 165 F.2d 738, 743 (2d Cir. 1948); The Hamilton, 95 F. 844 (E.D.N.Y.1899). ¹ While termed a "collision" rule, courts have applied it where barges under tow have been damaged or lost because of the inattention of the tug, and we see no reason not to apply it where the barge was stranded by the tug as here. The June Ames, 66 F.2d 415, 416 (2d Cir. 1933) (tow damaged by hitting abutment of a bridge through negligence of tug; rule in issue followed); Mobile Towing & Wrecking Co. v. Dredge, 299 F.Supp. 358, 367 (N.D.Fla.1969) (tow sank as a result of tug's negligence; consequential damages denied). As the district court here recognized, damages for loss of use would have been recoverable had the loss been partial. E.g., The June Ames, 66 F.2d at 416; compare The Ames & Carroll No. 20, 66 F.2d 413, 415 (2d Cir. 1933) (demurrage recoverable for loss of use during repairs).

The only deviation from this rule which has come to our attention occurred in Barger v. Hanson, 426 F.2d 640 (9th Cir. 1970), where, after citing the rule in its full strength, the circuit court nonetheless upheld damages for one month's loss of use of a destroyed fishing vessel. The court declined to re-examine the rule in the...