Evergreen International, S.A. v. Norfolk Dredging Co.

Citations: 531 F.3d 302; 2008 A.M.C. 1678; 2008 U.S. App. LEXIS 13378; 2008 WL 2514187Docket: 07-1879, 07-1944

Court: Court of Appeals for the Fourth Circuit; June 25, 2008; Federal Appellate Court

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Evergreen International, S.A. appealed a decision from the U.S. District Court for the District of South Carolina regarding a negligence claim under general maritime law stemming from an allision between its container ship, the M/V Ever Reach, and a submerged dredge spoil pipeline owned by Norfolk Dredging Company. The district court ordered Norfolk to pay Evergreen $898,975.42, plus prejudgment interest, but Evergreen contended this judgment was inadequate and sought to challenge the district court's findings regarding fault and damages under the Oil Pollution Act of 1990 (OPA). Specifically, Evergreen requested a reassessment of fault that would favor its position and an increase in Norfolk’s damages cap under the OPA.

On cross-appeal, Norfolk disputed the district court’s finding that it was ten percent at fault for the allision, asserting it bore no fault and sought a complete reversal of the judgment. Additionally, Norfolk questioned the calculation of its damages cap under the OPA, requesting that if the fault finding was upheld, the damages cap be lowered in line with its interpretation of the statutory requirements.

The case arose from a contract awarded to Marinex Construction Company by the U.S. Army Corps of Engineers for dredging work in the Cooper River, which required minimal obstruction to navigation and adherence to safety standards. The court ultimately affirmed the district court's judgment in full.

The Contract and Corps’ Manual stipulate that a submerged pipeline must rest on the channel bottom when crossing a navigation channel, with its top not exceeding the required project depth. Marinex subcontracted Norfolk for the Dredging Project, mandating adherence to U.S. Army Corps of Engineers Plans and Specifications. Norfolk utilized the Dredge Charleston, a 250-foot hydraulic dredge, to create dredge spoil, which was then pumped through floating and submerged pipelines to a disposal area.

On September 19, 2002, after dredging to the specified depth, Norfolk laid a 120-foot, 24-inch diameter steel submerged dredge spoil pipeline across the federally marked navigational channel of the Cooper River, beginning near Navy Pier "U." The pipeline connected to a supply line at "cable tight," located outside the channel's red side. Daily position reports were issued by Norfolk, detailing the Dredge Charleston’s operations. There were no legal requirements for marking the properly laid pipeline.

From September 19 to September 30, 2002, the submerged pipeline operated without incident, with at least twenty-three vessels, including the M/V Ever Reach, navigating over it safely. On September 30, 2002, dredging occurred on the green side of the Daniel Island Bend, with an anchor deployed across the red side of the channel, marked by a buoy with a flashing yellow light and associated with a crane barge named the Didapper. At around 3:00 a.m. on September 30, the M/V Ever Reach approached Charleston Harbor.

Pilot Stephen Swan, Jr. boarded the M/V Ever Reach to assist in navigating the Cooper River under Captain Liu's command, with an assist tug attached. At approximately 4:00 a.m., Pilot Swan inquired about the location of the Dredge Charleston, receiving confirmation from Leverman Jan Hewitt that a swinging anchor was positioned safely out of the way on the "red" side of the channel. Hewitt requested a fifteen-minute notice to adjust the Dredge Charleston's position for the M/V Ever Reach. Despite emphasizing the need for space due to the vessel's size, Pilot Swan did not request the movement of the Didapper, which was located closer to the middle of the channel than expected.

As the M/V Ever Reach neared the Dredge Charleston, Pilot Swan discovered the Didapper's unexpected position, estimating it was about 375 feet away at the time of the allision. The vessel turned into Clouter Creek Reach, inadvertently moving fifty feet outside the red side of the federal channel and grounding on a soft promontory, damaging the hull and breaching a fuel tank, resulting in the spillage of thousands of gallons of oil into the Cooper River. The allision also damaged Norfolk's submerged dredge spoil pipeline. To address the incident, Evergreen has incurred costs for repairs, oil removal, and third-party claims related to the spill. Subsequently, on September 24, 2004, Evergreen filed a negligence claim against Norfolk in district court under admiralty jurisdiction, alleging negligent placement of the Dredge Charleston and related equipment in navigable waters.

Evergreen alleged negligence on the part of Norfolk for improperly marking the Dredge Charleston and its equipment, as well as failing to accurately inform Pilot Swan about the location of the dredging equipment, specifically the Didapper. This negligence was claimed to have caused the allision between the M/V Ever Reach and the submerged dredge spoil pipeline. Evergreen sought compensation for hull repairs, oil spill cleanup, third-party settlements, and other losses related to the incident. The district court found that there was sufficient space (375 feet) in the navigational channel for a safe maneuvering of the M/V Ever Reach. Evergreen also named Marinex as a defendant, but claims against Marinex were dismissed due to Norfolk's status as an independent contractor without Marinex's control. Norfolk countered that the allision was partly caused by the negligence of the M/V Ever Reach's captain and Pilot Swan, asserting that Evergreen should be liable for its damages and claiming damages for the pipeline. After a six-day trial, the court determined that Evergreen was 90% at fault for failing to determine the location of the Didapper and not altering course sooner, while Norfolk was found 10% at fault for inadequate communication about the dredging equipment's location. The court ordered Norfolk to pay Evergreen $898,975.42 in damages plus interest. Both parties appealed. The findings of fact from the bench trial are subject to a "clearly erroneous" review standard, particularly regarding questions of negligence, causation, and fault apportionment. The case is governed by U.S. general maritime law, which mandates comparative fault for collisions and allisions.

In Folkstone Maritime, Ltd. v. CSX Corp., the elements of a maritime negligence claim align closely with land-based negligence principles, yet must avoid inappropriate common law applications. Evergreen contests the district court's determination that Norfolk correctly placed and marked its submerged dredge spoil pipeline, asserting that Norfolk's failure to confine the pipeline to a dredged area violated a contractual obligation to minimize navigation obstruction. Evergreen argues that "navigation" encompasses the entire width of the Cooper River, not just the marked channel, and claims the district court erred in finding Pilot Swan negligent for navigating outside the federally marked channel.

However, the court cited precedent stating that a dredge engaged in lawful activities is not at fault if there is sufficient navigable water available. The district court found that the M/V Ever Reach had ample clearance (375 feet) in the marked channel to maneuver safely without obstruction, and Evergreen failed to demonstrate error in this finding. Furthermore, Evergreen's reference to Marine Contracting, Towing Co. is deemed inappropriate due to significant factual differences. In that case, the contractor did not properly mark a submerged pier that posed a navigation hazard, but the court emphasized that a contractor cannot excuse negligence based on incorrect assumptions about vessel sizes using a navigable area. Thus, Evergreen's arguments against the district court's findings lack merit.

The district court determined that the tugboat pilot was not negligent in navigating outside the dredged channel, as the tug and barge had the right to use the full navigable stream, which was considered safe based on the relevant U.S. Coast and Geodetic Chart. In contrast, there was no evidence indicating that the area where the M/V Ever Reach collided with Norfolk’s submerged dredge spoil pipeline was safe for vessels with a draft of thirty-six feet, eleven inches. Consequently, Marine Contracting, Towing Co. did not provide sufficient grounds to challenge the district court's findings on comparative fault.

Evergreen argued that the district court mistakenly did not apply the Pennsylvania Rule, which shifts the burden of proof to a ship that violates a statutory rule intended to prevent collisions. This rule applies equally to allisions, and while it does not establish fault, it requires the violating party to demonstrate that their violation did not contribute to the incident. Evergreen claimed entitlement to this rule's application, asserting that Norfolk breached the Contract and the Corps’ Safety Manual by allowing its submerged pipeline not to rest flat on the channel bottom while crossing the federally marked navigational channel. Additionally, Evergreen contended that Norfolk failed to minimize obstruction to navigation as required by the Contract. Evergreen sought to connect these contractual obligations to federal regulations mandating compliance with the Corps’ Safety Manual in relevant dredging contracts.

Evergreen's appeal regarding the Pennsylvania Rule is deemed meritless. The contractual provisions cited by Evergreen do not qualify as statutes or federal regulations, rendering them ineffective for invoking this rule. Additionally, Evergreen fails to provide legal authority for extending the Pennsylvania Rule to noncompliance with the Corps’ Safety Manual, which constitutes contractual terms rather than federal regulations. The district court determined that Norfolk complied with the relevant contract provisions, thus excluding the Pennsylvania Rule from the fault apportionment in the allision case.

Furthermore, Evergreen's argument against Norfolk’s entitlement to limit liability under the Oil Pollution Act of 1990 (OPA) is also without merit. The OPA allows for liability caps based on a vessel's net tonnage, but this benefit is forfeited if an oil spill results from a violation of applicable federal regulations. Since Evergreen did not prove any violation by Norfolk that would invoke the Pennsylvania Rule, it cannot succeed in claiming Norfolk is ineligible for the OPA's damages cap.

On cross-appeal, Norfolk challenges the district court's finding of ten-percent fault for the allision. The court attributed this fault to Leverman Hewitt's negligent communication regarding the dredging equipment's location. Norfolk argues that Hewitt's descriptions were accurate and that Pilot Swan retained primary navigational responsibility. Alternatively, Norfolk contends that any potential negligence by Hewitt was overshadowed by Pilot Swan's actions. The district court, however, found that the allision was primarily due to Pilot Swan's misunderstanding of the equipment's location, which was influenced by Norfolk’s inadequate descriptions. The court emphasized that Pilot Swan had a right to rely on the information provided and deemed the descriptions misleading, affirming the allocation of fault.

The district court determined that Evergreen acted reasonably and promptly to prevent a collision once the equipment's location was identified. Norfolk sought to challenge the district court's factual findings on comparative fault, but there was no evidence to support a conclusion of clear error in those findings. The doctrine of superseding cause was deemed inapplicable since the injuries were not caused by an independent, unforeseeable event. The court noted that Pilot Swan's negligence contributed to the incident but did not supersede Leverman Hewitt’s negligence; Pilot Swan employed all reasonable measures to avoid a collision once the risk became apparent. Consequently, the court upheld the finding that Norfolk was ten percent at fault for the allision. Additionally, in its cross-appeal, Norfolk contended that the district court improperly calculated its damages cap under the Oil Pollution Act (OPA) by including the weight of the Didapper and the dredge spoil pipeline. However, Norfolk acknowledged that if its ten percent fault was upheld, this challenge would be moot, as the damages it was held liable for fell within the OPA cap calculated solely on the Dredge Charleston's tonnage. The judgment of the district court was affirmed in its entirety.