Tanker Hygrade No. 18, Inc. v. United States

• Decision Date: 17 December 1975
• Docket Number: No. 439-73.,439-73.
• Citation: 526 F.2d 805
• Parties: TANKER HYGRADE NO. 18, INC. v. The UNITED STATES and Motor Tug Crusader, Inc., et al., Third-Party Defendants.
• Court: U.S. Claims Court

526 F.2d 805

TANKER HYGRADE NO. 18, INC. v. The UNITED STATES and Motor Tug Crusader, Inc.,^* et al., Third-Party Defendants.

No. 439-73.

United States Court of Claims.

December 17, 1975.

Stephen J. Buckley, New York City, atty. of record, for plaintiff and for third-party defendant Tanker Hygrade No. 24, Inc.; McHugh, Heckman, Smith & Leonard, New York City, of counsel.

Robert P. Whelan, New York City, atty. of record, for third-party defendants Clayton P. Kehoe Towing Co., Inc. and Martin J. Kehoe Towing Co., Inc.; Darby, Healey, Stonebridge & Whelan and Francis J. McCaffrey, Jr., New York City, of counsel.

Rosemary A. Denson, Washington, D.C., with whom was Asst. Atty. Gen. Rex E. Lee, for defendant.

Before DURFEE, Senior Judge, and NICHOLS and KASHIWA, Judges.

KASHIWA, Judge:

This is a suit by plaintiff against the United States to recover clean-up costs resulting from an oil spill on one of the navigable waterways of the United States. We deny plaintiff's claim and grant defendant's motion for summary judgment for reasons hereinafter stated.

Jurisdiction of this court over this action is founded upon 33 U.S.C. § 1161(i)(1) (1970), entitled "Control of pollution by oil."¹

Plaintiff is a corporation organized under the laws of the State of Delaware with offices at Brooklyn, New York. It is a wholly owned subsidiary of Ira S. Bushey & Sons, Inc. (hereinafter Bushey). It was the owner of the tank barge HYGRADE NO. 18, a non self-propelled vessel. On September 30, 1972, the barge HYGRADE NO. 18, loaded with a cargo of No. 6 fuel oil, was enroute from Rensselaer, New York, to Ticonderoga, New York, pushed by the tug JOAN KEHOE, owned and operated by Clayton P. Kehoe Towing Company, Inc., a company independent and not connected with Bushey in any way. At about 11:45 p. m. on that day the side of the barge HYGRADE NO. 18 came into contact with a rock formation at the bank of the New York State Barge Canal, as a result of which part of her cargo was discharged through a hole caused by that contact. Plaintiff alleges in its petition that, pursuant to the provisions of 33 U.S.C. § 1161 (1970), it promptly undertook to remove the discharged oil from the navigable waters of the United States of America and caused the same to be accomplished at a reasonable cost to plaintiff of $152,500. Plaintiff further alleges generally that the said discharge was caused solely by an act or omission of a third party or third parties. In its pre-trial submission, plaintiff has taken an alternative position that the tug JOAN KEHOE pushing barge HYGRADE NO. 18 caused the spill or that the tug SENECA, owned by Motor Tug Crusader, Inc., a Bushey subsidiary, was the cause of the oil spill. Plaintiff prays in its petition that by reason of the foregoing and pursuant to the provisions of 33 U.S.C. § 1161(i)(1) (1970) plaintiff is entitled to recover from the United States the sum of $152,500.

Plaintiff sued the United States as a sole-party defendant. The United States filed an answer denying liability and filed a timely third-party petition against the following third-party defendants:

1) Motor Tug Crusader, Inc.

2) Clayton P. Kehoe Towing Company, Inc.

3) Martin J. Kehoe Towing Company, Inc.

4) Tanker Hygrade No. 24, Inc.

The United States claims in the third-party petition:

That if any judgment be entered against the United States of America in favor of plaintiff Tanker Hygrade No. 18, Inc., herein, that a judgment be awarded in favor of the United States of America and against third-party defendant Motor Tug Crusader, Inc., third-party defendant Clayton P. Kehoe Towing Company, Inc., third-party defendant Martin J. Kehoe Towing Company, Inc., and third-party defendant Tanker Hygrade No. 24, Inc., requiring each of said third-party defendants, jointly and severally, to pay to the United States of America the amount of any such judgment and to indemnify and exonerate the United States of America against any and all liability herein; * * *. At pp. 4-5.

All of said third-party defendants were duly served and each of them answered the third-party petition of the United States, denying any liability. In addition to answers, the two Kehoe companies have filed a joint motion for summary judgment. We shall refer to this joint motion at the end of this opinion.

The United States in the meantime filed a motion for summary judgment against plaintiff, Tanker Hygrade No. 18, Inc. We quote from a memorandum attached to said motion (at pp. 2-4), stating the grounds for said motion:

Plaintiff, Tanker Hygrade No. 18, Inc. (hereinafter Hygrade 18) has filed its action under 33 U.S.C. 1161(i) of the Federal Water Quality Improvement Act of 1970 (Pet. Paragraph 1).

Title 33 U.S.C. 1161(i) provides in part:

"In any case where an owner or operator of a vessel * * * from which oil is discharged in violation of subsection (b)(2) of this section acts to remove such oil * * * such owner or operator shall be entitled to recover the reasonable costs incurred in such removal upon establishing * * * that such discharge was caused solely by an act or omission of a third party * * *." (emphasis added)

In its pretrial submission Hygrade 18 contends that the tug JOAN KEHOE was the cause of the oil spill (Pretrial Submission 1(c)(1). Title 33 U.S.C. 1161(i) requires that plaintiff prove that the discharge was caused solely by an act or omission of a third party.

The cause of the September 30, 1972 incident has already been decided in United States v. Ira S. Bushey & Sons, Inc., 363 F.Supp. 110, 115 (D.Vt.1973), aff'd 487 F.2d 1393 (2d Cir. 1973), cert. denied 417 U.S. 976 94 S.Ct. 3182, 41 L.Ed.2d 1146 (1974), and the findings in that case clearly preclude any recovery by plaintiff under 33 U.S.C. 1161(i).

Bushey found that the barge BLUE LINE 107, push towed by the tug SENECA, caused the oil spill from HYGRADE 18 on September 30, 1972, in the Lake Champlain Canal, Bushey, pp. 115-116. However, HYGRADE 18 now comes to the Court of Claims attempting to relitigate these findings and asserts that the spill was caused solely by the JOAN KEHOE. Query why HYGRADE 18 does not assert that the SENECA or BLUE LINE 107 caused the spill and support its claim with the findings in Bushey, pp. 115-116, 119.

The answer is glaringly revealed in Bushey where the court found that the public interest to preserve the environmental integrity of Lake Champlain — threatened by numerous Bushey oil spills — dictated that the corporate veil of Bushey should be pierced. Bushey, p. 119. The court found that the corporations owning HYGRADE 18, the SENECA and BLUE LINE 107 are wholly-owned subsidiaries of the same parent company, Ira S. Bushey & Sons, Inc., and that those three vessel-owning corporations were "mere corporate shells established for purposes of avoiding tort liability to the parent for the acts of the subsidiaries which are the alter egos of Bushey." Bushey, p. 119.

Under 33 U.S.C. 1161(i), HYGRADE 18 would have to prove that the spill was caused solely by an act or omission of a third party in order to be reimbursed for the money spent for cleaning up the oil spill. Since the SENECA and BLUE LINE 107 are not third parties in relation to HYGRADE 18 because of their "alter ego" relationship to Bushey, this action must fail.

On collateral estoppel we quote from Sea-Land Services, Inc. v. Gaudet, 414 U.S. 573, 593, 94 S.Ct. 806, 818, 39 L.Ed.2d 9 (1974), a recent case:

Collateral estoppel applies "where the second action between the same parties is upon a different cause or demand * * *. In this situation, the judgment in the prior action operates as an estoppel, not as to matters which might have been litigated and determined, but `only as to those matters in issue or points controverted, upon the determination of which the finding or verdict was rendered.' Cromwell v. County of Sac, 94 U.S. 351, 353, 24 L.Ed. 195. And see Russell v. Place, 94 U.S. 606 24 L.Ed. 214; Southern Pacific R. Co. v. United States, 168 U.S. 1, 48 18 S.Ct. 18, 27, 42 L.Ed. 355; Mercoid Corp. v. Mid-Continent Co., 320 U.S. 661, 671 64 S.Ct. 268, 273, 88 L.Ed. 376. Since the cause of action involved in the second proceeding is not swallowed by the judgment in the prior suit, the parties are free to litigate points which were not at issue in the first proceeding, even though such points might have been tendered and decided at that time. But matters which were actually litigated and determined in the first proceeding cannot later be relitigated." Commissioner of Internal Revenue v. Sunnen, 333 U.S. 591, at 597-598 68 S.Ct. 715, at 719, 92 L.Ed. 898. Emphasis supplied.

We shall first quote the district court's finding number 28 from United States v. Ira S. Bushey & Sons, Inc., 363 F.Supp. 110, 115-116 (D.Vt.1973), affirmed in toto without opinion in 487 F.2d 1393 (2d Cir. 1973), cert. denied, 417 U.S. 976, 94 S.Ct. 3182, 41 L.Ed.2d 1146 (1974):

28. On September 30, 1972, while under way between Locks 9 and 11 of Lake Champlain Canal, barge Hygrade No. 18, owned by the Tanker Hygrade No. 18, Inc., a wholly-owned Bushey subsidiary, was struck by the tank barge Blue Line No. 107 being pushed by the tug Seneca, both owned by corporations which are wholly-owned by Bushey subsidiaries. The resulting collision caused the Hygrade No. 18 to strike rocks on the bottom of the canal which caused No. 6 fuel oil to leak from Hygrade No. 18 into the canal. The canal flows north into Vermont waters of Lake Champlain, but there is no evidence that the oil spilled in the canal did so flow. But Hygrade No. 18 proceeded into Lake Champlain and toward Ticonderoga after the ramming and oil was seen to bubble out of it into the lake.

(A) Before the collision, the captain of the tug Kehoe, which was pushing tank barge Hygrade No. 18, was in radio communication with the captain of the tug Seneca, which was pushing the tank barge Blue Line No. 107. The captain of the tug Seneca agreed to hold back at Bray Terminal, which was

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