Opinion
No. 98-1667 MMC, (Docket No. 91)
August 12, 2002, Decided . August 12, 2002, Filed. August 14, 2002, Entered in Civil Docket
For SANKO STEAMSHIP CO., Plaintiff: Keith R. Gillette, Kaye Rose & Partners LLP, San Francisco, CA. Eric M. Danoff, Emard Danoff Port & Tamulski, San Francisco, CA.
For USA, defendant: Stephen G. Flynn, Torts Branch, U.S. Department of Justice, San Francisco, CA.
For USA, Third-party Plaintiff: Stephen G. Flynn, Torts Branch, U.S. Department of Justice, San Francisco, CA.
For THOMAS S. MILLER, Third-party Defendant: Amy E. Sherburne, Dennis J. Kelly, Kelly Gill Sherburne & Herrera, San Francisco, CA.
For SACRAMENTO-YOLO PORT DISTRICT, Third-party Plaintiff: George W. Nowell, Paul B. Arenas, George W. Nowell Law Offices, San Francisco, CA. Nathan D. Ide, Law Offices of George W. Nowell, San Francisco, CA.
For THOMAS S. MILLER, Counter-claimant: Amy E. Sherburne, Dennis J. Kelly, Kelly Gill Sherburne & Herrera, San Francisco, CA.
For USA, Counter-defendant: Stephen G. Flynn, Torts Branch, U.S. Department of Justice, San Francisco, CA.
ORDER GRANTING IN PART AND DENYING IN PART THE UNITED STATES' MOTION TO DISMISS; GRANTING MOTION FOR SUMMARY JUDGMENT
Before the Court is defendant/third-party plaintiff United States of America's ("United States") motion to dismiss pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, or, in the alternative, for summary judgment pursuant to Rule 56. The matter came on regularly for hearing on May 31, 2002. Warren A. Schneider of the United States Department of Justice appeared on behalf of the United States. Eric Danoff of Emard, Danoff, Port & Tamulski, LLP appeared on behalf of plaintiff. Having considered the papers filed in support of and in opposition to the motion and the arguments of counsel, the Court rules as follows.
BACKGROUND
The following facts are undisputed or read in the light most favorable to plaintiff.
Plaintiff is the owner and operator of the M/V Sanko Prelude ("Prelude"), an oceangoing merchant cargo vessel, which grounded on a shoal, fn1 on March 8, 1997, in the Sacramento Deep Water Ship Channel ("DWSC"). (See Compl. P9.)
In late December 1996 and early January 1997, a series of severe storms struck central California and resulted in severe flooding throughout California. (See Schneider Decl. Ex. B, Governor's Flood Emergency Action Team ("FEAT" report).) As a result of the flooding, 44 counties in California were designated Federal Disaster areas, and subsequent high water levels caused a number of levee breaches in the Sacramento basin. (See Schneider Decl. Ex. C, United States Army Corps of Engineers, Sacramento District Situation Reports ("SITREP") at 24; Ex. B, Table IV; Appendix B.)
On or about January 3, 1997, the United States closed both the Sacramento and Stockton DWSCs to commercial vessels because the flooding had caused large amounts of debris from swelling rivers and damaged levees to wash into the channel. (See Compl. P6; Montoro Decl. P4.) The United States subsequently reopened the channels to daylight commercial traffic on January 14, 1997, and lifted all restrictions on commercial traffic on January 17, 1997. (See Montoro Decl. P9.)
On January 28, 1997, the M/V Aktea ("Aktea") grounded on a shoal at the juncture of the Stockton DWSC and the San Joaquin River. ( See Danoff Decl. Ex. 1 [Gaines Depo.] 283-4.) This raised concerns about possible shoaling in the Sacramento DWSC as well. (See id. at 289-90.) In particular, on February 7, Captain Kenneth O'Laughlin, the Acting Port Agent for the San Francisco Bar Pilots, wrote to the United States Army Corps of Engineers ("COE") to express concern about possible shoaling in both the Stockton and Sacramento DWSCs. (See Danoff Decl. Ex. 1 [Gaines Depo. Ex. 17].) Thereafter, on February 25, river pilot Captain Thomas Miller sent a facsimile to the COE requesting the sounding of the Sacramento DWSC because of fears of shoaling. (Schneider Decl. Ex. E [Miller Depo. Ex. 9].)
On February 24, the COE received an unconfirmed report of "severe shoaling" at lights 19 and 25 in the Sacramento DWSC. (See Danoff Decl. Ex. 1 [Gaines Depo.] 295:13 - 300:10.) As the COE's own personnel were still involved in the response to the damage caused by the floods, the COE determined that its officers were unavailable to perform soundings on the Sacramento DWSC. (See Schneider Decl. Ex H-1 [Sandner deposition] at 41:15-43:18; Ex. H-2 at 329:24-332:1.) The COE, therefore, contacted Sea Surveyors, a private corporation, and negotiated an agreement to have Sea Surveyors perform soundings in the Sacramento DWSC. The COE did not inform the United States Coast Guard ("USCG") that shoaling had been reported and no warnings were issued to Mariners. (See Sharpe Decl. PP7-8.)
On March 4, 1997, before any soundings were conducted, the Prelude proceeded up the Sacramento Channel from the San Francisco Bay to Sacramento without incident. On March 8, 1997, after picking up cargo in Sacramento, the Prelude set sail for San Francisco. At approximately 3:30 p.m., the Prelude ran aground between lights 21/22 and 23/24 on a shoal that had developed across the Sacramento DWSC. (Compl. P9.)
Plaintiff alleges that the grounding of the Prelude was the result of the United States' failure to exercise due care in the maintenance of the Sacramento DWSC and failure to issue appropriate warnings. The United States now brings this motion to dismiss for lack of subject matter jurisdiction or, alternatively, for summary judgment on the grounds that the damages claimed by plaintiff are not recoverable as a matter of law and that the United States did not breach a duty owed to plaintiff.
DISCUSSION
[*6]A. Immunity
The United States asserts, pursuant to Rule 12(b)(1), fn2 that the Court lacks jurisdiction over the instant action under the "discretionary function exception" to the Suits in Admiralty Act, ("SAA") 46 U.S.C. §§ 741-752, and the Federal Tort Claims Act ("FTCA"), 28 U.S.C. § 2674.
"The discretionary function exception insulates the Government from liability if the action challenged in the case involves the permissible exercise of policy judgment." See Berkovitz v. United States, 486 U.S. 531, 537, 100 L. Ed. 2d 531, 108 S. Ct. 1954 (1988). Courts apply a two-part test in determining whether the discretionary function exception applies. See id. First, courts consider "whether the action is a matter of choice for the acting employee." See id. "An action specifically prescribed by a 'federal statute, regulation, or policy' is not within an agent's discretion and therefore [is] not subject to the exception." See Marlys Bear Medicine v. United States, 241 F.3d 1208, 1213 (9th Cir. 2001). Second, courts consider whether "the kind of judgment involved is one of the kinds 'that the discretionary function exception was designed to shield,' i.e., the kind of judgment or choice that would be 'grounded in social, economic, and political policy.'" See Hughes v. United States, 116 F. Supp. 2d 1145, 1150 (N.D. Cal. 2000) (quoting Berkovitz, 486 U.S. at 537). "The burden of proving the applicability of the discretionary function exception is on the United States." See Marlys Bear Medicine, 241 F.3d at 1213.
In deciding whether or not the discretionary function exception applies, the court must examine separately each challenged act or omission. See Hughes v. United States, 116 F. Supp. 2d 1145, 1150 (N.D. Cal. 2000). Here, plaintiff challenges two omissions by the United States: the failure to sound the Sacramento Channel before March 8, 1997 and the failure to warn of shoaling therein.
1. Failure to Sound the Sacramento Channel
The United States asserts that its decision not to sound the Sacramento DWSC prior to March 8, 1997 is shielded by the discretionary function exception. According to the United States, the COE had the discretion to decide when to sound the channel pursuant to its regulations and operating procedures and its decision involved considerations of "social, economic, or political policy." See Berkovitz, 486 U.S. at 544.
The COE's internal operating manual provides that "sweep surveys shall be performed as necessary to locate underwater obstructions within the navigation channel limits" and that active waterways "shall be surveyed at a frequency sufficient to maintain adequate information on available project dimensions." (See Sandner Decl. Ex B [Engineering Regulations ("ER") 1130-2-520 at 8-2(e)(2); Ex. C [ER 8-7(a)(1)(a).) Such regulations require the engineers to exercise discretion in determining when surveys are "necessary" and "sufficient." Thus, the regulations allow the COE to exercise discretion in determining when to sound the Sacramento DWSC. See Canadian Pacific (Bermuda) Ltd. v. United States, 534 F.2d 1165, 1169-71 (5th Cir. 1976) (holding regulations did not impose a duty on COE to survey or dredge channel "at any particular time or place").
Further, the evidence demonstrates that the COE's decisions with respect to the sounding of the Channel required the consideration of social, economic and political policy. In responding to severe damage caused by the floods, the COE determined that there was a greater need for the COE's personnel and equipment in the effort to fight the flood waters and maintain levees than in the effort to monitor possible shoal formation in the Sacramento DWSC. (See Sandner Decl. P9.) This decision required the COE to weigh the social risks and benefits associated with each action, including the risk of loss of life and property if the levees along the Sacramento DWSC failed and the risk of economic damage from shoal formation in the Stockton and Sacramento DWSCs. (See Montoro Decl. PP6, 7; SITREPS Ex. C) As the COE's emergency response to the multiple problems facing the Stockton and Sacramento DWSCs required the exercise of discretion and required the COE to balance and prioritize various social, economic, and political objectives, the COE's decisions are immune from "second-guessing" by the Courts. See Berkovitz, 486 U.S. at 544.
Plaintiff asserts that genuine issues of material fact exist as to whether the COE's decision not to sound prior to March 8, 1997 represented a discretionary policy determination. (See Opp'n at 14.) Plaintiff, however, has neither pleaded facts nor offered evidence to suggest that the COE's equipment and personnel were not needed to fight the flood waters and maintain levees or that the COE did not exercise its discretion in determining that this effort was more important than sounding the Sacramento DWSC during the time period in question. Rather, the undisputed evidence demonstrates to the contrary. (See Montoro Decl. PP6, 7; SITREPS Ex. C at tabs 38, 39)
Accordingly, to the extent plaintiff's claim is based on the United States' decision not to sound the Sacramento DWSC prior to March 8, 1997, the discretionary function exception bars plaintiff's claim and plaintiff's claim is hereby dismissed.
2. Failure to Warn
The United States also asserts that its decision not to warn of the shoal formation is protected by the discretionary function exception. According to the United States, the regulations did not require the COE or USCG to issue any warnings under the facts presented in this case and the decision not to issue warnings required the balancing of social, economic and political factors. See Berkovitz, 486 U.S. at 544.
As a threshold matter, the parties dispute whether the United States had knowledge that a shoal had formed in the Sacramento DWSC prior to the grounding of the Prelude. (See Mot. at 16:21-23, 18:7-8; Opp'n at 14:2-11; Danoff Decl. Ex. 1 [Gaines Depo.] 295:13 - 300:10.) For the purposes of the United States' motion under Rule 12(b)(1), however, all factual disputes must be resolved in favor of plaintiff, the non-moving party. See Dreier, 106 F.3d 844 at 847. The Court, therefore, will assume for the purposes of the this motion that the United States had sufficient knowledge of the shoal in the Sacramento DWSC.
The discretionary function defense rarely applies when the Government fails to warn of a known potential danger because the decision usually "involves considerations of safety, not public policy." See Faber v. United States, 56 F.3d 1122, 1125 (9th Cir. 1995. "In cases where the government has allegedly failed to warn, the use of the discretionary function exception must be limited to those unusual situations where the government was required to engage in broad, policy making activities or to consider unique social, economic and political circumstances in the course of making judgments related to safety." See id.
Here, the United States has failed to demonstrate that this case is one of the "unusual situations" where the COE or USCG were required to "consider unique social, economic and political circumstances" when deciding whether to provide warning of the shoal. See id. To the contrary, Captain H. H. (Chip) Sharpe, the United States Coast Guard Captain responsible for providing notices to mariners, states that, except for official navigation chart corrections, he would "only issue notices to mariners about a hazard if [he] believed the notice would be accurate, relevant and timely, and that the hazard was one of significant danger and not likely known to the mariners who might be exposed to it." (See Sharpe Decl. P9.) He further states that these guidelines were his "own personal criteria" designed in part because he "did not want to make the [notices to mariners] lengthy compendiums of possible hazards . . . so as not to lessen their effectiveness." (See id.) Such considerations involve matters of safety and practicality, not public policy. See Faber, 56 F.3d at 1125 (holding discretionary function exception inapplicable to decision whether to post warning sign by waterfall because decision concerned matters of "safety, not public policy"). Although the discretionary function exception may apply in "unusual" cases where the decision not to warn is based on public policy considerations, such as the effect on relations between an Indian tribe and the United States or on national security interests, the United States has failed to demonstrate that similar policy considerations were present here. See Lesoeur v. United States, 21 F.3d 965, 970 (9th Cir. 1994) (applying discretionary function exception where warning would have affected relations between an Indian Tribe and the United States); In re Consolidated Atmospheric Testing, 820 F.2d 982, 990 (9th Cir. 1987) (holding discretionary function exception applicable to decision not to warn test participants of dangers associated with atomic weapons testing). Consequently, the United States has failed to demonstrate that the discretionary function exception bars this claim.
Accordingly, to the extent plaintiff's claim is based on the United States' failure to warn, the United States' is not entitled to dismissal under the discretionary functions exception and the Court retains jurisdiction over this claim.
B. Damages
The United States asserts that even if the Court has jurisdiction over plaintiff's claim, the United States is entitled to summary judgment on plaintiff's claim because the damages sought by plaintiff are not recoverable under general maritime standards. According to the United States, "plaintiff's claim runs squarely afoul of the rule enunciated in Robins Dry Dock v. Flint, 275 U.S. 303, 72 L. Ed. 290, 48 S. Ct. 134 (1927)." (See Mot. at 23.)
Robins Dry Dock created "an established doctrine in maritime tort law that disallows recovery in tort for economic damage without actual physical injury to person or property." See Channel Star Excursions v. Southern Pacific Transportation Company, 77 F.3d 1135, 1137-38 (9th Cir. 1996). Under this doctrine, "there is no claim in maritime tort for economic damages without actual physical injury." See id. at 1138; see also 8 Bendict on Admiralty § 4.03(B)(1)(b) (explaining general rule in admiralty that "no duty is owed under the law of negligence to a plaintiff that suffers only economic loss as a result of the alleged wrongful act and no personal injury or property damage.")
Here, plaintiff seeks economic damages for the "expenses of removing the Prelude from the strand, the expenses of transloading part of the cargo from the Prelude to the vessel Appollo and then back to the Prelude so that the Prelude could proceed over the shoal to its destination in Turkey, and damages for detention of the Prelude." (See Compl. P10.) The grounding of the Prelude did not cause damage to the ship or personal injury. (See Schneider Decl. Ex. D [Millalos Depo.] at 136:21-137:5.)
Plaintiff argues that the rule enunciated in Robins Dry Dock does not bar its claims for economic damages. Plaintiff asserts that the rule applies only to claims of "third parties, not to shipowner tort victims." (See Opp'n at 24.) Although Robins Dry Dock itself concerned a claim brought by a charterer rather than a shipowner, plaintiff's contention that the Robins Dry Dock rule looks only to the presence or absence of a proprietary interest is incorrect. See Channel Star, 77 F.3d at 1137-38 (holding shipowner's claim for damages barred under Robins Dry Dock rule where no physical injury to person or property); Barber Lines A/S v. M/V Donau Maru, 764 F.2d 50 (1st Cir. 1985) (discussing development and scope of Robins Dry Dock rule; barring shipowner's claim for additional labor, fuel, transport and docking costs).
Relying on Sekco Energy, Inc. v. M/V MARGARET CHOUEST, 820 F. Supp. 1008 (E.D. La 1993), plaintiff further argues that the Robins Dry Dock. rule is inapplicable where the claimant is a "direct tort victim," (see Opp'n at 23), regardless of whether the event in question results in personal injury or physical damage to the claimant's property. In Sekco, the plaintiff's drilling platform was struck by the defendant's vessel, causing no physical damage to the platform but requiring the plaintiff to shut down operations pending a pollution inspection. See id. at 1010-11. The district court, applying a "remoteness" test, allowed the platform owner to recover on its claim for purely economic losses. Plaintiff's citation to Sekco, however, is unavailing. The district court's reasoning in Sekco, has been expressly rejected by the Fifth Circuit, see Reserve Mooring, Inc. v. American Commercial Barge Line, LLC, 251 F.3d 1069, 1071 n.5 (5th Cir. 2001), and there is no indication the Ninth Circuit would find it more persuasive. See Channel Star, 77 F.3d at 1138 (declining to extend "limited exceptions" to Robins Dry Dock rule beyond commercial fishermen, "the favorites of admiralty law"); see also Louisiana ex rel Guste v. M/V TESTBANK, 752 F.2d 1019 (5th Cir. 1985) (discussing development and scope of Robbins Dry Dock rule).
Finally, plaintiff asserts that the Prelude "did suffer physical damage within the meaning of the Robins Dry Dock principle" because the "running aground should be considered sufficient physical injury for this purpose." (See Opp'n at 24.) Plaintiff fails to elaborate on this analogy. In particular, plaintiff fails to explain how, under Robins Dry Dock, the Prelude's "soft grounding," (see Mot. at 10), and inability to navigate the channel while fully loaded is distinguishable from similar losses of use for which plaintiffs traditionally have been denied recovery in maritime tort. See, e.g. Channel Star, 77 F.3d at 1136 (denying recovery where plaintiff's excursion boats unable to proceed up Sacramento River due to defendant's repeated failures to open swing-bridge); TESTBANK, 752 F.2d at 1021 n.2 (denying "claims of shipping interests suffering losses from delays or rerouting" where Mississippi River Gulf outlet closed to navigation for several weeks due to defendant's negligence); Reserve Mooring, 251 F.3d at 1070, 1071-72 (denying recovery where access to plaintiff's mooring facility blocked due to defendant's negligence). fn3
In essence, plaintiff is asking the Court to substitute a more general rule of foreseeability for "established doctrine in maritime tort law." See Channel Star, 77 F.3d at 1137 (citing Robins Dry Dock). Plaintiff, however, cites no authority to suggest that the Ninth Circuit has abandoned the "established" rule. Indeed, as one court has observed, the doctrine's limit on liability has "stood against a sea change in the tort law." See Petition of Cleveland Tankers, Inc., 791 F. Supp. 669, 672 (D. Mich. 1992). In TESTBANK, for example, the Fifth Circuit, sitting en banc, conducted an exhaustive review of the benefits and disadvantages of discarding the established rule in favor of a rule based on foreseeability and was "unpersuaded that [it] ought to drop physical damage to a proprietary interest as a prerequisite to recovery for economic loss." See TESTBANK, 752 F.2d at 1021; see also Reserve Mooring, 251 F.3d at 1071 (denying recovery absent physical damage; noting court in TESTBANK "considered and rejected just such a case-by-case foreseeability approach"). Concededly, as the court observed in TESTBANK , the rule "has the vice of creating results in cases at its edge that are said to be 'unjust' or 'unfair'." See TESTBANK, 752 F.3d at 1029. Irrespective of whether the instant case may be described as one of those cases, the rule nonetheless applies, and, accordingly, plaintiff's losses are not recoverable.
CONCLUSION
For the reasons stated above, the motion is GRANTED in part and DENIED in part as follows:
1. To the extent plaintiff's claim is based on a failure to sound, the motion to dismiss is hereby GRANTED and plaintiff's claim is hereby DISMISSED.
2. To the extent plaintiff's claim is based on a failure to warn, the motion to dismiss is hereby DENIED and the motion for summary judgment is hereby GRANTED.
This order terminates Docket No. 91.
The Clerk shall close the file.
IT IS SO ORDERED.
Dated: AUG 12 2002
MAXINE M. CHESNEY
United States District Judge
JUDGMENT IN A CIVIL CASE
Decision by Court. This action came to trial or hearing before the Court. The issues have been tried or heard and a decision has been rendered.
( Date) AUG 12 2002