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Maritime Update: OPA Grants a Right to Contribution for Purely Economic Damages for Liable Third Party


SUMMARY: In Settoon Towing, L.L.C. v. Marquette Transportation Company, L.L.C., decided by the U.S. Court of Appeals for the Fifth Circuit on June 9, 2017, it held for the first time that a “Responsible Party” under the Oil Pollution Act of 1990 (“OPA”) has a statutory claim for contribution to recover purely economic damages from a partially liable third party.

FACTS:

On February 22, 2014, the M/V HANNAH C. SETTOON, towing two crude oil tank barges, and the M/V LINDSAY ANN ERICKSON, towing twenty-one loaded grain barges, were both heading downstream on the lower Mississippi River. At some point prior to the HANNAH completely passing the LINDSAY, the LINDSAY began reversing into the river to start her top-around. However, her stern collided with the portside bow of a crude-oil barge towed by the HANNAH. Approximately 750 barrels of light crude oil were discharged into the Mississippi River. As a result, a 70-mile stretch of the river was closed to vessels for approximately 48 hours for cleanup and recovery.

Settoon was named the strictly liable “Responsible Party” by the United States Coast Guard pursuant to the OPA. That phrase is a term of art; i.e. Settoon carried out its statutory responsibilities related to cleanup, remediation and third-party claims for damages. Settoon subsequently filed Limitation of Liability proceedings pursuant to 46 U.S.C. §§ 30501–30512 in the Eastern District of Louisiana. Marquette also filed a claim. Settoon brought a counterclaim against Marquette seeking contribution under the OPA, the general maritime law, or both.

At the conclusion of a four-day bench trial on the issue of liability, the  district court determined both parties were at fault and apportioned 65% of the fault for the collision to Marquette and 35% to Settoon. The district court also considered a question for which, surprisingly, there is little authority: Is a Responsible Party entitled to contribution for purely economic damages from a third party found to be partially liable? The district court answered that such contribution is permitted. From that determination, Marquette filed its appeal with the Fifth Circuit.

APPEAL AND DECISION:

The principal issue on appeal was whether Settoon could receive contribution under the OPA from Marquette for its payment of purely economic damages, i.e., for the cleanup costs. The Fifth Circuit Court concluded that the OPA clearly says, “yes.” The district court below had allowed contribution and determined the percentage of fault of each party. In rendering its decision, the Fifth Circuit agreed and affirmed the lower court judgment.

The Court of Appeals held that contribution is available under the OPA. However, they noted that OPA did not define the scope of the contribution. As required when interpreting a statute, if any limitation is to be placed on the types of damages for which contribution may be recovered under the OPA, the limit must be in the statute. In reviewing the statute, the appeals court did not find any limitation from the manner in which the separate concept of subrogation was explained. As a result, they then examined how the Clean Water Act (CWA) treated liability for oil pollution. In other words, they asked the same question of the CWA as we have of the OPA — does it create or just preserve a right of contribution? The appeals court had already answered the question as to the CWA in a non-precedential opinion, where they held that Section 1321(h) did not create a right to contribution. Instead, they had concluded the CWA had been described as preserving the right of contribution without serving as its source.

The Fifth Circuit went on to conclude that the most reasonable interpretation of the language of the OPA, as confirmed by the Act’s legislative history, granted to an OPA Responsible Party the right to receive contribution from other entities who were partially at fault for a discharge of oil. Specifically, a Responsible Party may recover from a jointly liable third party any damages it paid to claimants, including those arising out of purely economic losses. While the court did not provide a detailed explanation for its apportionment of fault, it made the requisite allocation of fault based on the facts before it. As a result, the lower court decision was affirmed in all aspects.

If you have any questions regarding this matter, please contact Bill Schwartz at (504) 569-2900 or wschwartz@bhbmlaw.com.


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