Some Limitations May Apply

In re Supreme Towing Co, 2010 WL 11561150 (E.D. La. August 12, 2020)
In re Supreme Towing Co., 2010 U.S. Dist. LEXIS 158046 (E.D. La. August 12, 2020)

By: Joshua Robin

This case of In re Supreme Towing Co. deals with the issues involving the Oil Pollution Act of 1990 (OPA) and the Limitation of Shipowners’ Liability Act (Limitation Act. On July 28, 2007, the M/V CAPTAIN BRENNAN owned by Supreme Towing Co, Inc. (“Supreme Towing”) allided with an unmanned oil well then owned by Bois d’Arc Offshore, Ltd (“Bois d’Arc”) but eventually succeeded by Stone Energy Offshore, LLC (“Stone Energy”). The court addressed several legal issues: first, whether the OPA presentment requirement applies to Stone Energy's claims against the owner of the offending vessel, second, if Supreme Towing is liable to Stone Energy under the OPA, whether Supreme Towing will be able to limit its liability under the OPA or whether Supreme Towing was grossly negligent; and third, whether Supreme Towing is liable to Stone Energy under maritime law, to the extent it applies, and, if it is so liable, whether it will be able to limit its liability under the Limitation of Shipowners' Liability Act.

Regarding the first issue, OPA claims are limited to damages resulting from a discharge of oil or from a substantial threat of discharge of oil into a navigable water or adjacent shoreline. The court found that this case involved the discharge into Breton Sound, a “navigable water” and therefore the OPA applies to this matter. However, the court held that the OPA only preempts the Limitation Act in part regarding damages that are actually available under the OPA. In the instant case, the OPA applied to Stone Energy’s removal costs, as those were incurred as a result of the discharge of oil. The OPA does not apply to Stone Energy’s claims for physical damage because they were not a result of a discharge of oil. Stone Energy can recover damages under the OPA caused by a discharge of oil. Any other damages not caused by a discharge of oil will fall under the Limitation Act and other applicable maritime law.

For the second issue, the OPA only applies to the Responsible Party which is the source of the discharge of oil. However, an initial Responsible Party such as Stone Energy can demonstrate that the discharge was caused solely by a third party, that third party becomes a “responsible party,” but only for the purposes of liability. As the original “responsible party” for the spill, to show that Supreme Towing was the true responsible party, Stone Energy had to establish that 1) the Cap. Brennan was the sole cause of the discharge, 2) no contractual relationship existed between the parties, and 3) that they exercised due care and took precautions against foreseeable consequences. The court held that Stone Energy’s pre-trial order requesting the OPA be used as the proper remedy because Supreme Towing was a Responsible Party as envisioned by the OPA. Regarding the limitations of liability under OPA 90 requested by Supreme Towing, the court noted that the liability limits of the OPA do not apply when the discharge was caused by either gross negligence or the violation of any applicable Federal Safety, construction, or operating regulation by the Responsible Party. The trial judge found that the allision and the resulting discharge of oil were proximately caused by Supreme Towing’s failure to adhere to several applicable Federal safety rules and operating regulations which amounted to gross negligence, stripping Supreme Towing of the liability limit of the OPA.

Finally, Stone Energy filed the original action pursuant to the Shipowner’s Limitation of Liability Act and general maritime law. To succeed under the Limitation Act, a claimant must first prove that negligence or unseaworthiness caused an accident and then the shipowner must prove that it lacked “privity or knowledge” of the dangerous condition. The court found that the Capt. Brennan was unseaworthy when it failed to equip the ship with current navigation charts, did not distribute local notices to the crew, the electronic chart was outdated, that the ship was not equipped with a coast pilot book, and the captain’s line of sight was partially obstructed. The trial judge found that the Capt. Brennan’s unseaworthiness was the cause of the allision. Additionally, Judge Zaney determined there was evidence that Supreme Towing had actual and constructive knowledge of the unseaworthiness of its vessel and held Supreme Towing liable for the damage to the well but it could not limit its liability under the Limitation Act because the ship was unseaworthy, which was the proximate cause of the accident, and Supreme towing had privity and knowledge of the unseaworthy condition.