Opinion
CIVIL ACTION NO. 01-12184-DPW, 00-12500-DPW, 01-12186-DPW
January 30, 2003
MEMORANDUM AND ORDER
This trio of actions presents claims arising out of a major oil spill in Boston Harbor and its subsequent clean-up. Motions for summary judgment have been presented in two of the cases.
In Civil Action No. 01-12184, plaintiff Seaboats, Inc. ("Seaboats"), seeks recovery under the federal Oil Pollution Act of 1990 (the "OPA"), 33 U.S.C. § 2701 et seq., the Massachusetts Oil and Hazardous Material Release Prevention and Response Act (the "Massachusetts Release Act"), Mass. Gen. Laws ch. 21E, and other state and general maritime law, for physical damage the oil spill allegedly inflicted upon two of its vessels. Seaboats also seeks economic losses allegedly suffered as a consequence. In its Complaint, Seaboats names as defendants the two parties responsible for the oil tanker that discharged oil into the harbor, the Posavina Shipping Company ("Posavina") and Sociedad Naviera Ultragas, Ltd. ("SNU"), and the two parties responsible for one of the tug boats that was assisting the tanker at the time, the Alex C Corp. ("Alex C") and the Bay State Towing Company, Inc. ("Bay State"). Seaboats now moves for partial summary judgment on the limited question whether defendants Posavina and SNU are liable for Seaboats' claims under the OPA.
Posavina and SNU have already satisfied the demands of other claimants and have covered removal costs and other damages in connection with the spill, pursuant to their designation as the "responsible parties" under the OPA.
In Civil Action No. 01-12186, plaintiffs Posavina and SNU allege that the Tug ALEX C, owned and operated by defendants Alex C and Bay State, was at fault for the spill, and seek recovery of Posavina and SNU's resulting damages, including both expenses paid out pursuant to the OPA and direct physical and economic damages.
I. BACKGROUND
A. Factual History
On June 8, 2000, while assisting in the undocking of the oil tanker M/T POSAVINA from an East Boston terminal, the Tug ALEX C collided with and punctured the hull of the tanker, causing some 60,000 gallons of fuel oil to spill into Chelsea Creek portion of Boston Harbor. The M/T POSAVINA was owned by Posavina and operated by SNU (collectively "Posavina/SNU"), both foreign entities. The ALEX C was owned by Alex C and operated by Bay State (collectively "Alex C/Bay State"), both Massachusetts corporations.
In the aftermath of the spill, Posavina/SNU undertook clean-up and recovery actions, reimbursed government expenses, and paid third-party damages, all pursuant to their designation as the "responsible parties" by the U.S. Coast Guard for purposes of the OPA. Taking direct damages Posavina/SNU allegedly sustained into account as well — including damage to the hull of the M/T POSAVINA, economic losses, and the loss of the fuel oil — Posavina/SNU allege that they have incurred approximately $6,000,000.00 in costs and damages as a result of the spill.
The OPA defines a "responsible party," liable for removal costs and damages in the immediate aftermath of an oil spill, as the owner or operator of the vessel or facility from which oil was discharged. 33 U.S.C. § 2701(32), 2702(a).
Additional costs are anticipated.
One third-party claim remaining is that of Seaboats, a Massachusetts corporation that owned and operated two vessels in the vicinity of the spill, the Tug CARL RAY and the Barge SAN JUAN. Seaboats alleges that both vessels were contaminated by fuel oil from the spill and consequently prohibited by the U.S. Coast Guard from departing from Chelsea Creek for some period of time. Seaboats seeks recovery for the physical damage, as well as various economic losses said to have been incurred as a result (including lost profits, lost charters, crew and operational expenses, demurrage, detention, and lost business opportunities). Seaboats submitted its claims to Posavina/SNU on or about September 20, 2000, and to Alex C/Bay State on February 28, 2001.
B. Procedural History
In Civil Action No. 00-12500, the initiatory law suit for this litigation, Alex C/Bay State filed for limitation of their potential liability for the oil spill to the value of the ALEX C itself ($241,000). In their Complaint, they sought to limit their liability pursuant to the Limitation of Shipowner's Liability Act of 1851 (the "1851 Limitation Act"), 46 U.S.C. App. § 181 et seq., as implemented by Rule F of the Supplemental Rules for Certain Admiralty and Maritime Claims ("Rule F"). On December 8, 2000, I entered an order, pursuant to Rule F, directing issuance of notice of Alex C/Bay State's limitation action, setting a schedule for claims to be filed, and restraining the prosecution of claims in any other fora. Both Posavina/SNU and Seaboats filed claims in Alex C/Bay State's limitation proceeding. On December 13, 2001, I entered an order noting the default of all other potential claimants.
Posavina/SNU's claim in the limitation proceeding sought recovery under the OPA, the Massachusetts Release Act, and general maritime law of their cumulative costs and damages arising from the oil spill. Posavina/SNU also sought to dismiss the limitation action with respect to its claims under the OPA and the Massachusetts Release Act, in order to lift the 1851 Limitation Act's cap on Alex C/Bay State's potential liability as to those claims.
Posavina/SNU reasoned that the OPA superceded the 1851 Limitation Act with respect to claims arising under the OPA or analogous state law, such as the Massachusetts Release Act. At the same time, Posavina/SNU conceded that the OPA and the Massachusetts Release Act only supported Posavina/SNU's recovery of amounts paid as the "responsible parties" for OPA purposes, which included removal costs, government expenses, and third-party damages. They conceded that the two acts did not support recovery for their direct physical and economic damages, which included damage to the hull of the M/T POSAVINA, consequent economic losses, and the loss of the fuel oil. Posavina/SNU further appeared to concede that recovery under general maritime law for their direct physical and economic damages remained subject to Alex C/Bay State's limitation proceeding.
At the hearing on November 21, 2001, Alex C/Bay State reversed their initial position and acknowledged that the 1851 Limitation Act does not apply to Posavina/SNU's claims for recovery of their removal costs and damages under the OPA, whether those claims were asserted by means of subrogation or contribution under the relevant OPA provisions. Accordingly, I directed Posavina/SNU to file a new complaint setting forth their claims for recovery of their removal costs and damages from Alex C/Bay State. Posavina/SNU have done so by commencing Civil Action No. 01-12186. At the same time, Posavina/SNU amended their Claim in Alex C/Bay State's limitation proceeding, Civil Action No. 00-12500, to focus on the direct physical and economic damages they allege they have sustained as a result of the spill.
At the hearing on November 21, I also considered the status of Seaboats' outstanding claims. Because Seaboats' third-party claims appeared properly focused on Posavina/SNU, the designated "responsible parties" under the OPA, I directed Seaboats to file a complaint setting forth its claims for recovery from Posavina/SNU. Seaboats' Complaint, Civil Action No. 01-12184, names as defendants both Posavina/SNU and Alex C/Bay State, and in addition to recovery for physical damage and economic losses seeks punitive damages, costs, and attorneys' fees.
C. Current Motions
1. In Civil Action No. 01-12184, Seaboats now moves for partial summary judgment on the limited question of Posavina/SNU's liability for Seaboats' claims under the OPA.
2. In Civil Action No. 01-12186, Alex C/Bay State has filed a partial motion for summary judgment and a motion to dismiss, and Posavina/SNU has filed a motion to strike an affirmative defense. The parties' cross-motions concern the proper legal support for Posavina/SNU's claims and what limitation, if any, applies to Alex C/Bay State's alleged liability.
Notwithstanding their prior representations, Posavina/SNU's Complaint not only seeks recovery under the OPA and the Massachusetts Release Act for removal costs and damages paid, but also seeks recovery under general maritime law for the direct physical and economic damages allegedly sustained by Posavina/SNU themselves. Posavina/SNU's claims for removal costs and damages paid also appear to be premised on broader grounds than previously suggested; they include not only claims under the OPA and the Massachusetts Release Act, but also on the Massachusetts contributory negligence statute, Mass. Gen. Laws ch. 231B, and on general maritime law. Posavina/SNU's Complaint seeks, first, recovery of removal costs and damages paid in the aftermath of the spill, on the basis of the OPA (Counts VI and VII), the Massachusetts Release Act (Count II), the Massachusetts contributory negligence statute (Count VIII), maritime law contribution (Count IX), and maritime law indemnity (Count X).
Second, the Complaint seeks recovery for the direct physical and economic damages they allege were sustained, on the basis of general maritime law theories of breach of contract (Count I), unseaworthiness (Count III), negligence (Count IV), and gross negligence (Count V).
Although Posavina/SNU characterize these latter causes of action as federal maritime law claims, they also state that they would have no objection to treatment of them as state common law claims instead.
Alex C/Bay State first move to dismiss all of Posavina/SNU's non-OPA causes of action, contending that the OPA governs Posavina/SNU's recovery of the amounts they paid as "responsible parties" under the OPA and that Posavina/SNU did not incur (and thus cannot recover costs associated with) any additional liability under Massachusetts law. Alex C/Bay State's motion does not directly address the question whether Posavina/SNU may seek recovery, outside of the limitation proceeding, for their alleged direct physical and economic damages.
Alex C/Bay State also move for partial summary judgment on the issue of their potential liability for removal costs and damages paid by Posavina/SNU under the OPA. The same question is posed from a different angle by Posavina/SNU's cross-motion to strike Alex C/Bay State's sixth affirmative defense, in which Alex C/Bay State assert that their liability is limited pursuant to § 2704 of the OPA.
II. THE OPA
Analysis of the issues must begin with a brief review of the OPA and its key provisions. The Act was the culmination of an extended congressional effort to address the problem of marine oil pollution, with the Exxon Valdez disaster serving as its immediate impetus. See generally Lawrence I. Kiern, Liability, Compensation, and Financial Responsibility under the Oil Pollution Act of 1990: A Review of the First Decade, 24 Tul. Mar. L.J. 481, 481-507 (2000). Frustration over the "fragmented" federal and state legal framework governing this area, and the resultant failure to compensate victims fully for the costs of oil pollution, greatly informed the legislation's drafting. See S. Rep. No. 101-94, at 2-3 (1989), reprinted in 1990 U.S.C.C.A.N. 722, 723-24.
The OPA's comprehensive compensation and liability scheme begins with the imposition of strict liability upon the "responsible party," 33 U.S.C. § 2701(32), for removal costs and damages, id. § 2702. Absent a finding of gross negligence, willful misconduct, or violation of an applicable federal regulation, § 2704(c), the responsible party's total liability under the OPA is limited to a predictable amount under § 2704, based on the weight of the vessel. If the sum of removal costs and damages paid by the responsible party under the OPA exceeds this limit, § 2708 entitles the responsible party to reimbursement of the difference from the Oil Spill Liability Trust Fund (the "Fund") established by the OPA pursuant to § 2712.
If the oil was discharged from a tank vessel, like the M/T POSAVINA, this amount is calculated with reference to the vessel's weight, and in particular is set at:
(1) . . . the greater of —
(A) $1,200 per gross ton; or
(B)(i) in the case of a vessel greater than 3,000 gross tons, $10,000,000; or (ii) in the case of a vessel of 3,000 gross tons or less, $2,000,000[.]33 U.S.C. § 2704(a)(1).
If the responsible party establishes that the oil spill was caused solely by a third party with whom it had no contractual relationship, then the responsible party is afforded a complete defense to liability under the OPA, and the third party will be treated as the responsible party for purposes of determining liability under the Act. 33 U.S.C. § 2702(d)(1)(A), 2703(a)(3).
The responsible party's complete defense to liability is subject to certain preconditions including, inter alia, that the responsible party had exercised due care with respect to the oil concerned, taken precautions against foreseeable acts or omissions of the third party, 33 U.S.C. § 2703(a)(3)(A-B), and, in the aftermath of the spill, provided "all reasonable cooperation and assistance requested by a responsible official in connection with removal activities," 33 U.S.C. § 2703(c)(2).
The OPA permits a responsible party that has paid out removal costs and damages under the Act to bring a civil action for contribution against any other party "who is liable or potentially liable under this Act or another law." 33 U.S.C. § 2709. The OPA also recognizes subrogation rights for a responsible party who has paid claimants pursuant to the OPA as to "all rights, claims, and causes of action" enjoyed by those claimants "under any other law." 33 U.S.C. § 2715.
Finally, the OPA expressly preserves state authority to impose additional liability and requirements "with respect to . . . the discharge of oil or other pollution by oil" within its boundaries, regardless of liability limits under the OPA or, for example, the 1851 Limitation Act. 33 U.S.C. § 2718(a), 2718(c).
The OPA also includes a savings provision directed at general admiralty and maritime law, stating that the Act does not affect this larger body of federal law "[e]xcept as otherwise provided." 33 U.S.C. § 2751(e).
III. CIVIL ACTION NO. 01-12184 The Seaboats Claims
As a third-party claimant under the OPA, Seaboats has sought recovery for the alleged physical contamination of two of its vessels by oil from the spill. Seaboats also seeks recovery for economic losses stemming from the U.S. Coast Guard's alleged prohibition against Seaboats' contaminated vessels leaving Chelsea Creek for some period of time after the spill. Both types of damage are compensable under the OPA. In particular, the Act supports compensation inter alia for "damages for injury to, or economic losses resulting from destruction of, real or personal property," § 2702(b)(2)(B), as well as for "damages equal to the loss of profits or impairment of earning capacity due to the injury, destruction, or loss of real property, personal property, or natural resources," § 2702(b)(2)(D). Having first presented its claims to Posavina/SNU, as the designated responsible parties, and been denied recovery, Seaboats is eligible under § 2713(c) to bring this action.
In opposing Seaboats' motion for partial summary judgment, Posavina/SNU offer two arguments that can be rejected outright. First, Posavina/SNU suggest that § 2702(b)(2) only addresses economic losses due to physical injury that prevents a vessel from sailing. The argument is made without any accompanying support, and I do not read the plain language of the statute to be constrained in this fashion. Second, Posavina/SNU contend that the First Circuit's interpretation of § 2702(b)(2) in South Port Marine, L.C. v. Gulf Oil Limited Partnership, 234 F.3d 58, 66-67 (1st Cir. 2000) limits the provision to damages resulting from "physical injury" to property and economic loss as a result of that injury. In South Port Marine, the First Circuit reinstated a jury verdict for lost profits resulting from a delay in the plaintiff's plans to expand the marina, parts of which had sustained physical damage as a result of an oil spill. Id. at 66. Here, Seaboats seeks recovery for lost profits resulting from its inability to utilize its contaminated vessels while they were being detained. I fail to see how the lost profits damages recognized in South Port Marine are distinguishable in any meaningful fashion from those asserted by Seaboats here.
Far more compelling is Posavina/SNU's argument that discovery regarding Seaboats' alleged physical and economic injuries remains incomplete. Given Seaboats' meager evidentiary submissions, consisting of the conclusory affidavit of the President of Seaboats, Donald C. Church, and some photographs of the hulls of Seaboats' two vessels after the spill, I agree that partial summary judgment in Seaboats' favor would be premature at this stage. Accordingly, I will deny Seaboats' motion for failure adequately to establish the existence of the damages claimed.
IV. CIVIL ACTION NO. 01-12186 The Posavina/SNU Claims
The parties' motions in this action raise the following questions: First, on the basis of which OPA provision(s) can Posavina/SNU seek recovery of removal costs and damages? Second, would Alex C/Bay State's potential liability in this regard be subject to the OPA's weight-based limitation provision, 33 U.S.C. § 2704, as applied to the tug ALEX C or as applied to the oil tanker M/T POSAVINA? Third, can Posavina/SNU seek recovery on non-OPA grounds of removal costs and damages they paid in the aftermath of the spill, and if so, with what, if any, limitations? I will consider each of these questions in turn, together with a fourth implicated but not expressly addressed in the submissions regarding Alex C/Bay State's motion to dismiss Posavina/SNU's non-OPA causes of action: can Posavina/SNU seek recovery, outside of Alex C/Bay State's still extant limitation proceeding, for alleged direct physical and economic damages?
A. What is the Statutory Basis for Posavina/SNU's OPA Claims?
In their Complaint, Posavina/SNU seek recovery of removal costs and damages paid on two separate OPA grounds: by contribution under § 2709 (Count VII), and by subrogation of claimants' rights under § 2715 (Count VI). As an initial matter, I must consider Alex C/Bay State's contention that Posavina/SNU's claims should instead proceed by means of subrogation of claimants' rights under § 2702(d)(1)(B).
Alex C/Bay State's apparent motivation in making this argument is not merely a concern with observing some technical distinction between §§ 2709 and 2715 and § 2702(d)(1)(B). The application of § 2702(d)(1)(B) to Posavina/SNU could potentially be a convenient stepping stone to a result limiting liability for Alex C/Bay State pursuant to § 2702(d)(2)(A). Alex C/Bay State seek to have their potential liability limited to an amount based on the weight of the ALEX C, as calculated under § 2704, rather than the weight of the larger M/T POSAVINA. If Alex C/Bay State fall under the third-party limitation of liability found in 2702(d)(2)(A), their liability would presumably be reduced to the less burdensome weight of the ALEX C. If the general contribution (§ 2709) or subrogation (§ 2715) provisions apply without such limitations, Alex C/Bay State's liability would be based on the more burdensome weight of the M/T POSAVINA under § 2702(d)(2)(B). Alex C/Bay State appear to argue for the application of § 2702(d)(1)(B) in the hopes that if (d)(1)(B) applies to them (d)(2)(A) will as well.
To return to preliminary matters, I begin analysis of this issue by recognizing § 2702(d)(1)(A) provides that if the designated responsible party can establish that the oil spill was caused solely by a third party with whom it had no contractual relationship, then that sole-cause third party will be treated as the responsible party for purposes of determining liability under the Act. In that situation, the initially designated responsible party qualifies for a complete defense from liability under the OPA. This provision is prefaced, however, with the qualifier "[e]xcept as provided in subparagraph (B)."
Section 2702(d)(1)(B) in turn provides that:
If the responsible party alleges that the discharge or threat of a discharge was caused solely by an act or omission of a third party, the responsible party —
(i) in accordance with [§ 2713], shall pay removal costs and damages to any claimant; and
(ii) shall be entitled by subrogation to all rights of the United States Government and the claimant to recover removal costs or damages from the third party or the Fund paid under this subsection.
The parties do not dispute that the ALEX C had been assisting the M/T POSAVINA pursuant to contractual arrangement prior to the spill. Thus, § 2702(d)(1)(A) clearly does not apply to this case. Alex C/Bay State contend, however, that § 2702(d)(1)(B) does apply, on the theory that it contemplates a broader class of sole-cause third parties, regardless of contractual privity with the discharging party. Alex C/Bay State read § 2702(d)(1)(B) as setting forth a general rule as to how initially designated responsible parties ought to proceed with respect to all manner of alleged sole-cause third parties, using § 2702(d)(1)(A) as a very narrow exception.
Posavina/SNU, for their part, argue that § 2702(d)(1)(A) and (d)(1)(B) apply to the same subset of sole cause third parties: those not in contractual privity with the responsible party. Under this reading, § 2702(d)(1)(A) applies where a responsible party "establishes" the third-party's role in the spill while (d)(1)(B) applies where a responsible party only "alleges" the third-party's involvement.
I note that one court has interpreted the OPA to suggest that a discharging vessel or facility may entirely avoid payment of removal costs and damages by quickly establishing, as opposed to merely alleging, that the oil spill was caused solely by a third party with whom it had no contractual relationship. See Marathon Pipe Line Co. v. LaRoche Industries, Inc., 944 F. Supp. 476, 479 (E.D.La. 1996).
Alex C/Bay State's reading of § 2702(d)(1) is supported neither by the text nor the legislative history of the Act. I find nothing in the plain language of § 2702 which suggests a reason to interpret sections (1)(A) and (1)(B) as applying to different subsets of third parties. That interpretation turns the qualifier to subsection (A) on its head by treating subsection (A) as an exception to subsection (B). Subsection (A)'s language of "[e]xcept as provided in subparagraph (B)" clearly directs the reverse.
Likewise, § 2702(d)(2)(A) applies to the same subset of third parties as § 2702(d)(1). Subsection (d)(2)(A) appears within § 2702(d), which permits a discharging party to either escape, under § 2702(d)(1)(A), or fully recoup, under § 2702(d)(1)(B), payment of removal costs and damages only on account of a sole-cause third party with whom it had no contractual relationship. That there are only two subsections in § 2702(d), and that the subsection on limitation of liability, section (d)(2), immediately follows a general discussion of liability of certain third parties in section (d)(1) also leads me to conclude that, without any textual indication to the contrary, sections (d)(1) and d(2) refer to the same subset of third parties. The OPA could have located § 2702(d)(2)(A) in a more independent context; alternatively, it could have cross-referenced the provision with the bases for Posavina/SNU's OPA claims in this case, §§ 2709 and 2715. It did neither and I find that was for the reason that the third-party limitation of § 2702(d)(2)(A) does not apply by terms to either § 2709 or § 2915. Cf. Marathon Pipe Line Co. v. LaRoche Industries, Inc., 944 F. Supp. 476, 478-79 (E.D.La. 1996) ("Throughout the OPA, Congress included cross-references between different provisions. . . . The Court can only conclude that where it did not include such a cross-reference in a particular provision, Congress did not intend for another provision to apply.").
Subsection 2702(d)(2)(B) provides just such a contrary textual indication with its prefatory heading "Other cases." The heading is followed by the introductory qualifier, "In any other case . . ." which I find is meant to distinguish that subsection from the principal concern of § 2702(d) with non-contracting sole-cause third parties.
The interpretation of the text of § 2702(d) as integrated and self-contained seems consistent with the House and Senate Conference Committee's explanation that "Subsection (d)(2) describes the liability of a third party under this section." H.R. Conf. Rep. 101-653, at 104, reprinted in 1990 U.S.C.C.A.N. 779, 782 (emphasis supplied). The third party under that section is the sole cause non-contracting third party. The Conference Committee Report also appears to anticipate a reading of § 2702(d)(1) as applying to a single subset of third parties by recognizing subsection (A) as setting forth a general principle of liability and subsection (B) as providing the practical mechanics. H.R. Conf. Rep. No. 101-653, at 104 (1990), reprinted in 1990 U.S.C.C.A.N. 779, 782 (explaining that under subsection (d) "a responsible party can establish that the removal costs and damages resulting from an incident were caused solely by the act or omission of a third party," but that "[i]n such a case, the responsible party is still required to settle claims in accordance with [§ 2713]," after which it "shall be entitled by subrogation, to the extent of any claim paid, to all rights of the claimant to recover costs or damages from the third party or the Fund." (emphasis supplied)). This reading, of course, advances the goal of "quick, efficient cleanup" that fairly can be said to have animated the passage of the OPA. See S. Rep. No. 101-94, at 2, reprinted in 1990 U.S.C.C.A.N. 722, 723.
The policy choice in support of a reading that treats § 2702(d)(1) as applying only to third parties who are not agents of or contracting with the responsible party is evident in the Senate Report accompanying the OPA, which explains that third-party defenses under the Act are limited to circumstances "only where the third party had not entered into a contractual relationship with the defendant." S. Rep. 101-94, at 13, reprinted in 1990 U.S.C.C.A.N. 722, 734. This constitutes a departure from the third-party liability provision of the Federal Water Pollution Control Act (the "FWPCA"), 33 U.S.C. § 1321(g), in order "to preclude" responsible party defendants "from avoiding liability by claiming a third party was responsible, when that third party had a contractual relationship with the defendant and was acting, in essence, as an extension of the defendant." S.Rep. 101-94, at 13, reprinted in 1990 U.S.C.C.A.N. 722, 734. To permit discharging vessels or facilities absolute recovery of removal costs and damages paid under the OPA — as § 2702(d)(1)(B)'s reference to the Fund suggests — even when in contractual privity with sole-cause third parties would nullify an important distinction made as part of a fully considered policy choice.
Accordingly, I find that Posavina/SNU's OPA claims for recovery of removal costs and damages paid by them in the aftermath of the spill may properly proceed on the grounds listed in their Complaint, under § 2709 for contribution and under § 2715 for subrogation, and are not within the scope of § 2702(d)(1)(B).
B. What is the Extent of Any Limitation on Alex C/Bay State's Potential Liability for Posavina/SNU's OPA Claim?
I turn next to the question whether Alex C/Bay State's potential liability for Posavina/SNU's OPA claims would otherwise be subject to the OPA's limitation provision, 33 U.S.C. § 2704. As a preliminary matter, I reiterate that Alex C/Bay State have conceded that Posavina/SNU's OPA claims are not subject to the 1851 Limitation Act or its implementing procedure. I briefly note that this view appears consistent with First Circuit precedent. See Metlife Capital Corp. v. M/V EMILY S., 132 F.3d 818, 822-24 (1st Cir. 1997).
Even if the 1851 Limitation Act does not apply to Posavina/SNU's OPA claims, however, Alex C/Bay State maintain that the OPA's own limitation provision does. In particular, Alex C/Bay State note that § 2702(d)(2)(A) provides that:
If the act or omission of a third party that causes an incident occurs in connection with a vessel or facility owned or operated by the third party, the liability of the third party shall be subject to the limits provided in [§ 2704] as applied with respect to the vessel or facility.
Looking, then, to § 2704(a)(2)'s weight-based limitation of liability, for a vessel like the ALEX C, Alex C/Bay State contend that their potential liability pursuant to Posavina/SNU's § 2709 contribution and § 2715 subrogation actions ought to be capped at $500,000.
Section 2704(a)(2) provides that, for any vessel other than a tank vessel, liability is capped at "$600 per gross ton or $500,000, whichever is greater."
As numerous commentators have observed, however, and as outlined in Section IV.A., supra, § 2702(d)(2)(A) does not appear on its face to have been directed to third-party liability outside of the context of the non-contracting sole-cause third party identified under § 2702(d)(1). See, e.g., 3 BENEDICT ON ADMIRALTY, ch. IX, § 112(a)(6) (7th ed. 1997) ("Curiously, [§ 2702(d) does] not specify whether the limits apply to any third party or only to a sole-cause third party. The legislative history sheds no light on this language."); Kiern, 24 Tul. Mar. L.J. at 528 ("[Certainly,] OPA's third-party liability provisions are not a model of clarity.")
The only reported decision that appears to have touched on this question is that of the district court in National Shipping Company of Saudi Arabia v. Moran Mid-Atlantic Corp., 924 F. Supp. 1436 (E.D.Va. 1996) ("National Shipping I"), which was affirmed in an unpublished decision by the Fourth Circuit at 122 F.3d 1062, 1997 WL 560047 (4th Cir. Sept. 9, 1997) ("National Shipping II"). In National Shipping I, the district court concluded that § 2702(d)(2)(A) does apply to a responsible party's contribution action under § 2709 — and by implication, to a subrogation action under § 2715 — directed at an alleged sole-cause third-party tug with whom it was in contractual privity. National Shipping I, 924 F. Supp. at 1446-47. Accordingly, the court capped the third-party tug's liability for the nearly $1,000,000 in removal costs and damages paid by the discharging party at $500,000, the limit set by the tug's weight. Id. The National Shipping I court did not engage in any textual analysis in this regard, however. It offered in support of its conclusion only that the OPA was designed to place "the greatest exposure upon those who are in a position to obtain the most benefit from maritime commerce." Id. at 1447 n. 6.
The Fourth Circuit's subsequent unpublished affirmance, for its part, found that § 2702(d)(2)(A) applied in the case on the basis of a mistaken supposition that the third-party tug's liability there was premised on § 2702(d)(1). National Shipping Co. of Saudi Arabia v. Moran Mid-Atlantic Corp., 122 F.3d 1062, 1997 WL 560047 at *2 (4th Cir. Sept. 9, 1997) ("National Shipping II"). That is not what the District Court concluded. National Shipping Co. of Saudi Arabia v. Moran Mid-Atlantic Corp., 924 F. Supp. 1436, 1446 n. 4 (E.D.Va. 1996) ("National Shipping I") ("[S]ection 2702(d)(1)(B) is not the proper vehicle for [the plaintiff's] recovery.").
The application of § 2702(d)(2)(A) in the National Shipping litigation has come under some criticism by commentators. See, e.g., Kiern, 24 Tul. Mar. L.J. at 528-29; John M. Woods, Third-Party Liability under OPA 90: Have the Courts Veered Off Course?, 73 Tul. L. Rev. 1863, 1869-73 (1999). On the other hand, a leading treatise had endorsed the application of § 2702(d)(2)(A) to all manner of third parties on the view that "[a] construction which creates OPA limits for a sole-cause third party but none for a joint-fault third party is both illogical and unfair." 3 BENEDICT ON ADMIRALTY, ch. IX, § 112(a)(6). Ultimately, this is the argument upon which Alex C/Bay State rely.
As set forth more fully in Section IV.A., supra, I construe § 2702(d)(2)(A) as by terms applying the § 2704 limitation of liability only to that class of third parties contemplated under § 2702(d)(1): sole-cause third parties not in contractual privity with the discharging party. I thus decline to follow in the wake of National Shipping I. The responsibility of a third party contracting with the responsible party cannot be fit by judicial tailoring to the Procrustean Bed of § 2702(d).
My reading is consistent to Congress's stated goal of precluding discharging parties from avoiding liability by claiming that a contractually related third party was responsible, S. Rep. 101-94, at 13, reprinted in 1990 U.S.C.C.A.N. 722, 734. Although this objective places third parties in contractual relationships with discharging parties at a comparative disadvantage with non-contractual sole cause third parties, the OPA's endorsement of indemnification agreements at § 2710 affords parties contemplating contractual arrangements with a tank vessel or oil facility a potential avenue to redistribute the costs of liability not available to the non-contracting sole cause third parties governed by § 2702(d). Perhaps even more disadvantaged are a class of third parties, not involved here: those who are neither in a contractual relation with the discharging party nor the sole cause of the discharge. These third parties may neither claim the limitation of § 2704 nor can they seek to make indemnification a part of a contractual arrangement.
I note that it may also have implications for the Oil Spill Liability Trust. Counsel for Posavina/SNU suggested at a status conference in this case on January 21, 2003, that in circumstances in which the discharging vessel originally paid out, as responsible party, monies in excess of what the sole cause third party can claim as limits, once responsible party status has shifted from the discharging tanker to the third party, the initially responsible tanker party could properly claim from the Fund all expenses paid in excess of the limitation provided for the sole cause third party. Whether initially responsible discharging parties would be able to claim from the Fund any shortfalls in recoveries from other classes of third parties is a question with substantial implications for the Fund.
A review of the expressed congressional purpose in setting the limitations on liability under § 2704 suggests concerns principally to ensure that the Oil Spill Liability Trust Fund would be sufficient to avoid diminishment in compensation over time and further to provide that among those vessels which carried oil there would be no competitive disadvantage established between different sized vessels.
According to legislative history of the OPA, "[t]he limits on liability provided in section 102[(a); § 2704(a)] are based on existing Federal law or limits contained in the conventions currently pending before the Senate. . . . In several of the existing Federal laws on oil spills, the liability limits have not been increased in 10 years so that, in real dollars, the liability limits have been decreasing over time. In order to prevent further diminution of compensation, section 102[(d)(4); 2704(d)(4)] requires the President to adjust the limits on liability by regulation not less often than every three years to take into account significant increases in the Consumer Price Index." S. Rep. 101-94, at 13, reprinted in 1990 U.S.C.C.A.N. 722, 735.
As to the reasoning behind subjecting tankers to higher limits on liability, the legislative history of the OPA provides: "The bill defines 'tankers' as vessels constructed or adapted for the carriage of oil in bulk or in commercial quantities as cargo. Higher liability limits then apply to tankers than apply to other vessels." S. Rep. 101-94, at 11, reprinted in 1990 U.S.C.C.A.N. 722, 733.
The House Conference Report on the OPA notes that the House and the Senate passed different dollar limits on liability, and the "Conferees retained the dollar limits in the House bill for tank vessels and other vessels but deleted the House language dividing liability between vessel owners or operators and cargo owners." H.R. Conf. Rep. 101-653, at 106, reprinted in 1990 U.S.C.C.A.N. 779, 784.
One of the federal laws upon which the limits of liability were based is section 311 of the Clean Water Act. See S. Rep. 101-94, at 4-5, reprinted in 1990 U.S.C.C.A.N. 722, 726. The legislative history of the OPA reviewed the limitations of liability under the Clean Water Act at the time of the passage of the OPA and sought to remedy past shortcomings in the CWA's level, extent and allocation of liability limits among vessels.
As the OPA legislative history noted, under the Clean Water Act as it then existed, "a vessel is liable up to $150 per gross ton (or $250,000 if that is more, where carrying oil or a hazardous substance as cargo); an inland oil barage [sic] is liable up to $125 per gross ton (or $125,000 if that is more), and a facility is liable up to $50 million. These amounts are only for removal costs, including restoration of natural resources damages. The new limits of liability under the reported bill include both removal costs and compensation for damages." S. Rep. 101-94, at 5, reprinted in 1990 U.S.C.C.A.N. 722, 726. See Federal Water Pollution Control Act (the "Clean Water Act" or "CWA") (Section 311(f) of the CWA), 33 U.S.C. § 1321(f). These particular dollar limits were added to the CWA in 1977. Pub.L. 95-217, 91 Stat. 1566 (1977).
Prior to 1977, the CWA had limited liability to "$100 per gross ton of such vessel or $14,000,000, whichever is lesser." See Pub.L. 95-217, 91 Stat. 1566 (1977). The legislative history for the CWA 1977 amendments reveals the reasoning behind this change:
The amendment removes the total dollar ceiling on liability for oil spills from vessels. The ceiling served no useful purpose, inadvertently subsidizing large tankers and thus enhancing their competitive position over smaller vessels. According to testimony, the $150 per ton limit should be adequate for cleanup of all but the most catastrophic spills. The $14 million limit in existing law is totally inadequate to deal with an oilspill of any magnitude from the size of tanker that is expected to be plying the waters of the United States. The committee also established a maximum liability for small vessels carrying oil as cargo of $150 per gross ton or $500,000, whichever is greater. Again, according to testimony from the Coast Guard (the agency charged with the responsibility for cleaning up oilspills) very often spills from small tankers and other sources are among the most difficult to clean up because they occur in areas where the water is moving and the urgency of the application of cleanup techniques is most pronounced. Additionally the first cost of any cleanup activity is the most costly. The per ton limit on smaller vessels is not adequate to provide liability commensurate with the costs of cleanup which have been experienced with such spills. The committee was particularly concerned with the soundness of the contingency fund. As a result of the 1970 act, $35 million was appropriated to that fund. Most of that has now been depleted. . . . The new minimum liability for smaller oil tankers and the removal of the upper limit should make the fund more sound. . . .
S. Rep. 95-379, at 64-65 (1977). The Senate version of the bill was subsequently altered to include a distinction between inland oil barges and other vessels with respect to the amount of liability, which it changed to $125 per gross ton, or $125,000, whichever is greater, for inland oil barges and "$150 per gross ton unless the vessel carries oil or hazardous substances in which case it is $250,000 whichever amount is the greater." H.Conf. Rep. 95-830, at 91, reprinted in 1977 U.S.C.C.A.N. 4424, 4466.
As the controversy among the commentators suggests, any choice of liability limits involves complex policy judgments. This is particularly so in calibrating liability limitations applicable to the several classes of third parties in contractual relationships with discharging parties.
As my discussion in Section IV.A. supra indicates, Congress appears to have established distinctive liability limits in § 2702(d) only for sole cause third parties not in contractual relationship with the responsible discharging party. At least one commentator has urged that courts should interpret "Section 2702(d)(2) as applying to all third parties." William M. Ducan, The Oil Pollution Act of 1990's Effect on the Shipowner's Limitation of Liability Act, 5 U.S.F.Mar. L.J. 303, 319 (1993). Lower court judges, however, "are not as free as the commentators to enact our policy preferences." Massachusetts v. Mosbacher, 785 F. Supp. 230, 235 n. 2 (D.Mass.) (3 judge court) rev'd on other grounds, sub. nom Franklin v. Massachusetts, 505 U.S. 788 (1992). As the First Circuit observed in South Port Marine, "the resolution of [the] difficult policy questions" in this area "is better suited to the political mechanisms of the legislature than to [the judiciary's] deliberative process." 234 F.3d at 66.
Consequently, I find that Alex C/Bay State's potential liability for Posavina/SNU's OPA claims is not subject to the OPA's limitation provisions under § 2704 calculated by the weight of the ALEX C. Rather under § 2702(d)(2)(B) Alex C/Bay State's potential liability is coincident with that of Posavina/SNU.
Accordingly, I will deny Alex C/Bay State's motion for partial summary judgment in this regard, and as a corollary grant Posavina/SNU's motion to strike Alex C/Bay State's sixth affirmative defense.
C. Are There Non-OPA Grounds for Posavina/SNU's Recovery of Removal Costs and Damages Paid?
Posavina/SNU also seek recovery of removal costs and damages paid by them in the aftermath of the spill on the basis of the Massachusetts Release Act, the Massachusetts contributory negligence statute, Mass. Gen. Laws ch. 231B, maritime law contribution, and maritime law indemnity.
To the extent that Posavina/SNU seek recovery on any of these grounds for removal costs and damages paid under the OPA, my preceding analysis renders the claims superfluous. Posavina/SNU have not, in any event, alleged that they have incurred any additional liability for removal costs and damages under state tort law. Whether they have incurred additional damages under the Massachusetts Release Act is a disputed issue of fact. If such damages are established, they may be pursued.
Again, I note the OPA's savings provisions preserve state authority to impose additional liability and requirements "with respect to . . . the discharge of oil or other pollution by oil" within its boundaries, without reference to liability limits derived from either the OPA or the 1851 Limitation Act. 33 U.S.C. § 2718(a), 2718(c); see also United States v. Locke, 529 U.S. 89, 104-07 (2000).
Accordingly, I will dismiss Posavina/SNU's Counts seeking recovery under Mass. Gen. Laws ch. 231B (Count VIII), maritime law contribution (Count IX), and maritime law indemnity (Count X), but not Count II, seeking recovery under the Massachusetts Release Act.
D. May Posavina/SNU Pursue Claims for Direct Physical and Economic Damages?
To the extent that Alex C/Bay State have also moved to dismiss Counts stating causes of action under general maritime law theories of breach of contract (Count I), unseaworthiness (Count III), negligence (Count IV), and gross negligence (Count V), I must consider whether the purpose apparently served by these Counts — namely, attempted recovery outside of Alex C/Bay State's still extant 1851 Limitation Act proceeding for the direct physical and economic damages that Posavina/SNU allege to have sustained — is a valid one. I undertake this inquiry notwithstanding the fact that Alex C/Bay State do not address this question in their memorandum in support of their motion to dismiss Posavina/SNU's non-OPA causes of action.
Posavina/SNU's rationale in support of recovery in this action for the direct physical and economic damages they allege is premised foremost on the OPA's savings provision for general admiralty and maritime law, § 2751 ("Except as otherwise provided in this chapter, this chapter does not affect — (1) admiralty and maritime law[.]"). That provision makes no mention of the 1851 Limitation Act, however, and can hardly be read to repeal that Act with respect to the universe of general admiralty and maritime claims. See Metlife, 132 F.3d at 822 (noting that the 1851 Limitation Act remains in force for general maritime claims arising from "an incident in which oil pollution occurs," such as "maritime tort actions for harms to persons or vessels.")
Accordingly, I will dismiss Counts I, III, IV, and V of Posavina/SNU's Complaint, noting that recovery of the physical and economic damages they allege under those theories remains subject to Alex C/Bay State's 1851 Limitation Act proceeding.
V. CONCLUSION
For the reasons set forth more fully above;
In Civil Action No. 01-12184, I DENY plaintiff Seaboats' motion for partial summary judgment with respect to defendant Posavina/SNU's liability for Seaboats' claims under the OPA, on the ground that Seaboats' claimed physical and economic damages are not adequately supported on the current state of the record;
In Civil Action No. 01-12186,
(1) I GRANT defendant Alex C/Bay State's motion to dismiss Counts I (breach of contract), III (unseaworthiness), IV (negligence), V (gross negligence), VIII (Mass. Gen. Laws ch. 231B), IX (maritime law contribution), and X (maritime law indemnity) of plaintiff Posavina/SNU's Complaint;
(2) I DENY defendant Alex C/Bay State's motion to dismiss Count II (Mass. Gen. Laws ch. 21E);
(3) I DENY defendant Alex C/Bay State's motion for partial summary judgment, on the ground that the potential liability of Alex C/Bay State for plaintiffs' OPA claims would not be subject to the OPA limitations of § 2704; and, for the same reason,
(4) I GRANT plaintiff Posavina/SNU's motion to strike defendants' sixth affirmative defense.
VI. PROCEDURAL ORDER
As I observed to counsel at the Scheduling Conference in this matter on January 21, 2003, I have found the process of determining the limitation of liability under the OPA available to the several classes of third parties to be exceptionally challenging. This is because I have concluded the OPA only provides a distinct limitation for a sole cause third party having no contractual relationship with a discharging vessel.
My best reading of the scope of the OPA limitations is as set forth above. Nevertheless, I am sufficiently concerned regarding this reading that I believe the parties and a legal representative of the Oil Spill Liability Trust Fund (whose legal interests may be implicated by the reading given the OPA, in particular, for example, in Note 10, supra, at 26) should be allowed to brief the matter further. Accordingly, my resolution of the limitation issue under the OPA as applies to Alex C/Bay State is made without prejudice to any party submitting a request for reconsideration within 45 days from the date of this Memorandum and Order. In addition, a legal representative of the Oil Spill Liability Trust Fund is hereby invited to submit a brief amicus curiae addressing the Fund's view with respect to the question of limitation of liability for third parties. I recognize that the effect of my determination is to some degree counterintuitive in that it leaves the partially responsible third party subject to greater potential liability than a solely responsible third party. Whether this is good policy is less the issue for a court than whether this is the policy Congress intended to adopt. It is as to this larger question whether the reading I give the statute embodies the enacted intention of the Congress that I invite the view of any party and the amicus curiae, after they have had the opportunity to reflect on the resolution provided in this Memorandum and Order.