Towage Law Standard Not Applicable In Drillship Breakaway During Hurricane Harvey

Paragon Asset Co. v. Am. S.S. Owners Mut. Prot. & Indem. Ass'n, 2024 U.S. App. LEXIS 9982 (5th Cir., Apr. 24, 2024).

            Paragon Asset Company (Paragon) is the owner of the unmanned and unpowered drillship, DPSI, which was docked at Port Aransas when Hurricane Harvey hit the area in 2017. Having failed to evacuate the area, it hired to tugs owned by Signet Maritime Corporation to keep the drillship in place at the dock.[1] During the storm, the DPSI broke away collided with the tugs and sank one but then ran aground in the Corpus Christi ship channel.[2] Thereafter, it refloated and allided with a pier owned by the University of Texas.[3]

            After a trial on the merits, the trial judge held Paragon solely liable for the damage to the Signet tugs but divided fault between Paragon and Signet for the damage to the pier as Paragon had contracted a Signet tug to monitor the drillship after the storm.[4] Paragon appealed asserting the trial court failed to apply a towage law standard of duty to Signet and that force majeuere was not a viable defense.[5]

            The appellate court first assessed whether the relationship between the drillship and the tugs constituted a tow.[6] The law of towage applies when one vessel “acts to ‘ "aid the propulsion or to expedite the movement of another vessel.’”[7] Judge Higginson, writing for the unanimous panel, distinguished the jurisprudence on which Paragon relied to support its argument. In each of the cases Paragon cited, (Stevens v. E.-W. Towing Co., 649 F.2d 1104 (5th Cir. 1981); Tebbs v. Baker-Whiteley Towing Co., 407 F.2d 1055 (4th Cir. 1969); and River Pars. Co. v. M/V Flag Adrienne, 2002 U.S. Dist. LEXIS 12232, 2002 WL 1453826 (E.D. La. Jul. 2, 2002), the facts were inapposite to those in the case at bar.[8]

             In those cases, actions of the crews of the tugs resulted in injury, allision or grounding. Here, the tug was holding the drillship fast but was unable to prevent it from breaking away from its moorings.[9] Additional cases cited by Paragon were also dissimilar[10] as these involved situations in which the tugs were actually towing the vessels.[11] But even if towage applied, Signet had no opportunity to determine the adequacy of the mooring system of the drillship.[12] Thus, the trial court did not err in applying the General Maritime Law of negligence rather than towage law. Likewise, the trial court was not in error when it held Signet also 50% at fault for the damage to the UT pier.[13]

            With respect to the force majeure defense, though all parties agreed that the hurricane was of sufficient force to invoke the defense,[14] Paragon failed to take reasonable precautions under the circumstances and delayed removing the vessel from the area when “it knew or should have known about the deficiencies of the mooring system.”[15]

            Finally, Paragon appealed the decision that the Tariff rather than the MCA between Signet and Paragon covered the relationship between them. The appeal court reviewed the history of the Tariff and MCA and affirmed the district court stating: “[T]he parties' past conduct demonstrates that these services were governed by the Tariff….”[16] The trial court’s judgment was affirmed in all respects.[17]

            A copy of the opinion is available here.

[1] 2024 U.S. App. LEXIS 9982 at *3.

[2] Id.

[3] Id.

[4] Id.

[5] Id.

[6] 2024 U.S. App. LEXIS 9982 at *12.

[7] Id. at *12-13 (quoting 2 T. Schoenbaum, Admiralty and Maritime Law § 12:1 [West 6th ed. 2023]).

[8] Id. at *14.

[9] Id.

[10] Id (citing In re TT Boat Corp., 1999 U.S. Dist. LEXIS 2754, 1999 WL 123810, at *6-7 (E.D. La. Mar. 2, 1999); Bisso v. Waterways Transp. Co., 235 F.2d at 743.).

[11] 2024 U.S. App. LEXIS 9982 at *14.

[12] Id. at *16.

[13] Id.

[14] Id. at *17.

[15] Id. at *18.

[16] 2024 U.S. App. LEXIS 9982 at *28.

[17] Id. at *32.