Opinion
Case No. C03-0727L.
November 24, 2003
ORDER GRANTING MOTION FOR PARTIAL SUMMARY JUDGMENT
I. INTRODUCTION
This matter comes before the Court on a motion for partial summary judgment (Dkt. # 14) filed by defendant Alaska Tanker Company, LLC ("Alaska Tanker"). Alaska Tanker seeks an order dismissing plaintiff BP West Coast Products' ("BP West Coast") claim for "excess demurrage." The Court grants Alaska Tanker's motion for the reasons set forth in this Order.
II. BACKGROUND
BP West Coast owns and operates an oil refinery located at Cherry Point, Washington. Alaska Tanker operates tank vessels that transport crude oil to oil refineries.
On December 14, 2001, the oil tanker OVERSEAS WASHINGTON, operated by Alaska Tanker, was discharging crude oil at BP West Coast's Cherry Point marine terminal. Although fault is disputed, adverse weather appears to have contributed to an accident that caused the OVERSEAS WASHINGTON suddenly to shift position at the marine terminal, damaging the terminal and two of three chiksan loading arms that were connected to the vessel.
As a result of the damage to the terminal and chiksan loading arms, the marine terminal was unavailable to receive crude oil for several days after the incident. During this time period two ships, the MARINE COLUMBIA and the WILLIAM E. CRAIN, were scheduled to discharge their cargos of crude oil at the Cherry Point terminal. BP Oil Shipping Company, USA ("BP Oil Shipping"), an affiliate of BP West Coast, had chartered the MARINE COLUMBIA from Alaska Tanker. (Bocko Decl. Ex. A). BP Oil Supply Company ("BP Oil Supply"), another affiliate of BP West Coast, had chartered the WILLIAM E. CRAIN from Chevron Texaco Transport Corporation. (Bocko Decl. Ex. B).
BP West Coast seeks to recover the "excess demurrage" charges arising from the incident. BP West Coast's affiliates, BP Oil Shipping and BP Oil Supply, were liable for demurrage charges pursuant to the charter agreements. Both parties agree that BP West Coast was not a party to the charter agreements.See Motion at 3; Response at 3. However, BP West Coast paid the $147,291.67 demurrage fee for the MARINE COLUMBIA and the $96,000 demurrage fee for the WILLIAM E. CRAIN. (Marvin Decl. ¶ 3). BP West Coast explains the reason it, rather than the affiliated charterers, paid those fees as follows:
"Demurrage" is the cost assessed by a vessel owner to the charterer of the vessel for delays in cargo loading or unloading beyond the "laytime" permitted for cargo operations under the charter. See Motion at 3 (citing St. Ioannis Shipping Corp. v. Zidell Explorations, Inc., 336 F.2d 194 (9th Cir. 1964).
Although demurrage fees are sometimes first paid by company-affiliated charterers, standard business operations require that those fees be reimbursed to the charterer by [BP West Coast] for the time in excess of that provided for in the relevant charter party agreement associated with loading or unloading at [BP West Coast] marine terminals, such as the dock at the Cherry Point Refinery.Id. ¶ 2.
III. DISCUSSION
Alaska Tanker contends that BP West Coast may not recover the demurrage fees pursuant to Robins Dry Dock Repair Co. v. Flint, 275 U.S. 303 (1927). In Robins Dry Dock, the defendant dry dock damaged a vessel's propeller. Due to a delay resulting from the damage, the charterer of the vessel was unable to use the vessel and sued the dry dock for lost profits. The Court reversed the lower court's award to the charterer. The Supreme Court explained:
[A]s a general rule . . . a tort to the person or property of one man does not make the tortfeasor liable to another merely because the injured person was under a contract with that other, unknown to the doer of the wrong. The law does not spread its protection so far.Robins Dry Dock, 275 U.S. at 309. "Thus, Robins Dry Dock established a general rule, which retains its vitality, against recovery of economic loss caused by a maritime tort to the person or property of another." Nautilus Marine, Inc. v. Niemela, 170 F.3d 1195, 1196 (9th Cir. 1999).
Citing three cases, BP West Coast argues that "it is well established that Robins Dry Dock does not prohibit entities from recovering economic losses that have been shifted from one party to another." (Response at 5 (citing Amoco Transp. Co. v. S/S MASON LYKES, 768 F.2d 659, 668 (5th Cir. 1985); Venore Transp. Co. v. M/V STUMA, 583 F.2d 708 (4th Cir. 1978); Showa Line, Ltd. v. Diversified Fuels, Inc., 1991 U.S. Dist. LEXIS 14662 (E.D. La. 1991)). Those cases do not demonstrate that theRobins Dry Dock rule should not apply here. For example, inAmoco, the MASON LYKES collided with an Amoco vessel, causing damage to the MASON LYKES that prevented it from delivering its cargo. The owner of the cargo sued both the MASON LYKES and Amoco. In upholding the cargo owner's recovery against Amoco, the Fifth Circuit court noted that "venerable" and "firmly established" maritime principles provide that cargo and vessel owners are bound together in a "common venture" resulting from the "Jason clause" in a bill of lading. Amoco, 768 F.2d at 667. Therefore, contribution is required by all participants in the "common venture" in the event of a loss. Id. The Court found that the "common venture sustained physical injury" due to the collision and therefore held that the Robins Dry Dock rule did not apply. Id. at 668. No such common venture is present here.
BP West Coast has cited no contract or other document that demonstrates it is responsible for its affiliates' demurrage costs, but rather explains that its apparently voluntary payment of demurrage charges is a matter of "standard business operations." (Marvin Decl. ¶ 2).
In Venore, the OSWEGO LIBERTY had collided with the STRUMA, precluding the charterer of the OSWEGO LIBERTY from using the vessel during the chartered period. Reasoning that "[i]t is only in a highly technical sense that the time charterer may be said not to be in possession of the vessel," the court held that, as the charterer, Venore's "interest in the vessel is sufficient to give it standing to claim damages." Venore, 583 F.2d at 711.
The Venore Court's holding is contrary to that of the Ninth Circuit in Nautilus Marine. In that case Nautilus Marine had chartered two ships to transport salmon from fishing vessels to shore. The crew of the NORQUEST appeared to have intentionally damaged those vessels by striking them with the NORQUEST. Damage to the chartered ships prevented Nautilus Marine from using the ships during the fishing season. Nautilus Marine sued the vessel, its owner, and its captain for lost profits. The court barred Nautilus Marine's claim on the basis of the Robins Dry Dock rule. The court stated:
In so holding, we recognize that the Robins Dry Dock rule has been subjected to thoughtful criticism over the years. . . . The rule leads to harsh results in some cases. It has been in place for many years, however, and those in the industry have had the opportunity to insure themselves accordingly. Founded as it is in a decision of the Supreme Court, the Robins Dry Dock rule is not for this court to change. Any relief in that direction must come from the Supreme Court or Congress.Nautilus Marine, 170 F.3d at 1197 (citations omitted).
BP West Coast voluntarily assumed its affiliates' demurrage costs allegedly incurred as a result of the incident. The Robins Dry Dock rule bars BP West Coast's recovery of those losses from Alaska Tanker.
IV. CONCLUSION
For the foregoing reasons, the Court GRANTS Alaska Tanker's motion for partial summary judgment regarding demurrage (Dkt. # 14). BP West Coast's claim against Alaska Tanker for demurrage charges incurred by its affiliates and paid by BP West Coast is dismissed. The Clerk of the Court is directed to send copies of this Order to all counsel of record.