In 2004, the tanker Athos I carried a cargo of crude oil from Venezuela to Paulsboro, N.J., and while approaching a terminal on the Delaware River, the ship’s hull was punctured by a submerged anchor just 900 feet from its berth.
(It is not known how the anchor, since recovered, got there. It turns out at least 250 ships were either lucky or shallow enough to call at the terminal between 2001 and 2004 without being punctured by the anchor. This was determined by terminal records and an image of the anchor that showed up in a sonar survey done in 2001 as part of a geophysical study by the University of Delaware. That sonar survey was discovered during litigation.)
A spill of 263,000 gallons of crude oil resulted. The owner of the ship, Frescati Shipping, and the manager, Tsakos Shipping & Trading, paid $180 million in cleanup costs.
They were reimbursed $88 million by the United States under the Oil Pollution Act of 1990, which creates incentives for companies to respond quickly and competently to spills by allowing them to limit the extent of their financial exposure and receiving reimbursement for clean-up costs.
Frescati made claims in a contract and tort against CITGO Asphalt Refining Co. (CARCO) and affiliated companies, which owned the Paulsboro terminal in order to recoup its unreimbursed losses.
Litigation ensued to apportion monetary liability among Frescati and Tsakos, the federal government and the CARCO companies.
Frescati claimed CARCO breached a safe port/safe berth warranty.
The District Court for the Eastern District of Pennsylvania held CARCO was not liable for the accident.
On appeal, the 3rd U.S. Circuit Court of Appeals held “Athos I — and by extension, its owner, Frescati — was an implied beneficiary of CARCO‘s safe berth warranty” and that a “named port exception” did not apply to hazards unknown to the parties and not reasonably foreseeable. (In RE: Petition of Frescati Shipping Company. 3rd Circuit. No. 11-2576, 11-2577. May 16.)
Since the district court made no finding as to the actual draft of Athos I or amount of clearance actually provided, the 3rd Circuit said it could not be sure if the warranty was breached and remanded the case to the district court.
“If this issue is reached, we do not agree with the district court‘s conclusion that CARCO cannot be liable in negligence because the anchor lay outside the approach to CARCO‘s terminal,” it said, adding “the district court would need to resolve the appropriate standard of care required, whether CARCO breached that standard, and if so, whether any such breach caused the accident.”
The master of Athos I was provided with a port manual which indicated the allowable maximum draft at the Paulsboro facility was 38 feet, but this depth might change from time to time and should be verified prior to the vessel‘s arrival. Four days before the accident, the maximum draft was reduced to 36 feet and Athos I was not informed of this modification.
But the district court found the change was geographically and factually irrelevant to the ultimate accident, and the 3rd Circuit found no error with that finding.
The 3rd Circuit also concluded the federal government had waived reliance on a partial settlement agreement in challenging CARCO defenses to liability.
Anchor case thrown back
