Western Towboat Company v. Vigor Marine, LLC

85 F.4th 919 (9th Cir. 2023)

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Nature of the Case

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Facts

D hired P to tow a drydock. While off the coast of California, the drydock was damaged in a storm. D's tug towed the drydock into the Monterey Bay National Marine Sanctuary (Sanctuary). While in the Sanctuary, the drydock capsized and sank. Because the drydock sank in the Sanctuary, the parties were exposed to liability under the National Marine Sanctuaries Act of 1972 (NMSA). P sued D in federal district court in admiralty. P sought to recover the towing fee under its contract with D, and a declaratory judgment that it would not be liable for any damages or penalty sought by the government under the NMSA. D counterclaimed, claiming breach of contract and negligence by P. The court granted partial summary judgment to D, holding that P had been negligent as a matter of law in allowing the drydock to sink in the Sanctuary. The court denied both parties' contract claims and held that both had been negligent. D sought recovery of the $415,441.67 it spent in seeking to mitigate the damages that P, D, and Amaya might owe to the federal government under the NMSA. The district court held that claims relating to future potential damages and penalties owed to the government under NMSA were so speculative that the court had no subject matter jurisdiction over them. D was reimbursed by its insurance carrier for all but $100,000 of its expenditures. D argued under the collateral source rule that reimbursement from P should be calculated based on the full $415,441.67. The district court held that the collateral source rule did not apply and that any reimbursement from P should be calculated based only on the $100,000 for which D was out of pocket. In a comparative negligence analysis, the court found that D was sixty percent negligent and P was forty percent negligent. D had been compensated by its insurance company for all of its mitigation expenditures except for a $100,000 deductible. The district court declined to apply the collateral source rule, holding that P was not liable for D's expenditures in excess of its non-reimbursed deductible. Limiting D's recovery to forty percent of the $100,000 not reimbursed by D's insurance, the district court awarded D $40,000. Both parties appealed.