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Maritime Update: What is a “Tow” to be Covered Under a P&I Insurance Policy?

Bill Schwartz - 

On February 15, 2018, the Fifth Circuit federal appeals court rendered its decision in CONTINENTAL INSURANCE COMPANY versus L&L MARINE TRANSPORTATION, INC. consolidated with P & I UNDERWRITERS, subscribing to Policy Number B0507M13PP07280 versus ATLANTIC SPECIALTY INSURANCE COMPANY. It is an interesting decision about what constitutes a “tow” for purposes of insurance coverage for damages.

Three tugs were towing a barge, with one designated as the “lead” tug and the other two as “assisting” tugs. One of the assisting tugs allided with a bridge fender system and sank. An insurance policy on the lead tug covered damage only to its “tow.” The district court held the assisting tug was the “tow,” because of a tort principle known as the “dominant mind” doctrine. The Fifth Circuit court reversed that decision and rendered in favor of the hull underwriter against the P&I insurer.

Three tugs – the M/V MISS DOROTHY, the M/V ANGELA RAE and the M/V FREEDOM – were travelling in the Mississippi River with a barge, FSB 101. The M/V ANGELA RAE was the lead tug responsible for coordination of the tow. The MISS DOROTHY allided with a portion of a bridge fender system and sank, resulting in her total loss. The MISS DOROTHY’s insurers, Continental Insurance Company (“Continental”), filed a complaint against the M/V ANGELA RAE’s owners, L&L Marine Transportation (“L&L”). According to Continental’s complaint, at the time of the allision, the M/V MISS DOROTHY was assisting the M/V ANGELA RAE and the M/V FREEDOM with the towage of FSB 101. Both the M/V ANGELA RAE and M/V FREEDOM were positioned behind FSB 101, pushing it down the river, and the M/V MISS DOROTHY was positioned at the head of FSB 101. This ultimately became a dispute between the hull and P&I underwriters of the M/V ANGELA RAE about whose policy covered the incident. Atlantic Specialty was the Hull & Machinery insurer of the M/V ANGELA RAE, while P & I provided Protection and Indemnity Insurance. Following the filing of the above complaint, Atlantic Specialty denied its policy covered any liability for the M/V MISS DOROTHY’s allision and sinking. In response, P & I filed a complaint against Atlantic Specialty claiming the hull policy did provide insurance coverarage.

Essentially, the Atlantic Specialty policy covered the following situations:

(1) the ANGELA RAE collided with something else,

(2) the ANGELA RAE stranded her tow,

(3) the ANGELA RAE caused her tow to come into collision with anything else, or

(4) the ANGELA RAE caused any damage to her tow or to her tow’s freight.

Atlantic Specialty maintained none of those situations occurred. The ANGELA RAE never collided with anything, nor was her tow stranded, subject to collision, or damaged in any way.

Conversely, P & I’s policy was noted to be much broader, indemnifying L&L for “[l]iability for loss of or damage to any other vessel or craft, or to property on such other vessel or craft . . . provided such liability does not arise by reason of a contract made by the assured.” Yet, P & I was suing because its policy covered only situations that Atlantic Specialty’s did not: “Notwithstanding anything to the contrary contained in this policy, no liability attaches to the Assurer [f]or any loss, damage, or expense which would be payable under the terms of the {Response} form of policy on hull and machinery.” There was no dispute that if Atlantic Specialty’s policy did not cover this incident, then P & I’s would so provide. Accordingly, P & I contended the loss of the MISS DOROTHY fell within the third situation covered by Atlantic Specialty’s policy, i.e. the ANGELA RAE caused her “tow” to come into collision with the fender system. P & I reasoned the MISS DOROTHY was the “tow” of the ANGELA RAE – despite being itself a tugboat – because the ANGELA RAE was the lead tug.

The district court agreed with P & I and granted it summary judgment. From that determination, Atlantic Specialty appealed to the Fifth Circuit.

The appellate court first evaluated the definition of a “tow” and looked to various sources. Following that, they concluded “…a dictionaries, cases, and treatises all point to a common understanding of ‘tow’: some ship or boat that is being provided extra motive power from another ship or boat by being pushed or pulled.” Under this plain-meaning approach, the court found the MISS DOROTHY was not the “tow” of the ANGELA RAE. There was no evidence the ANGELA RAE provided the MISS DOROTHY with any motive power or was pushing or pulling her in any way. Despite this conclusion, P & I urged the court to define “tow” as a vessel for whose safe navigation another vessel has responsibility. That is, P & I insisted the maritime tort law concept – the “dominant mind” doctrine – be applied to define “tow” in the insurance contract.

The dominant mind doctrine was noted to usually kick in where a flotilla – i.e. the tugs and tows as unit – caused damage to some third party. Typically, courts hold only the tug liable, given that it is usually in control of the operation, having the duty of reasonable navigation. Furthermore, the doctrine can absolve helper tugs of liability “if they are merely following instructions of the tug in charge.” Despite this, the Fifth Circuit noted this is merely a rebuttable presumption – the tow or helper tug may be liable if negligent, or the tow itself may be the dominant mind.

The appeals court pointed out, first, that there was little reason to think tort duties should govern the meaning of “tow” in Atlantic Specialty’s policy. Tort duties are precisely that: responsibilities that the parties owe to each other. But, there was no reason to think that these duties then define the meaning of “tow.” Instead, they point out “tow” has a plain and unambiguous meaning outside tort law or the dominant mind doctrine, as defined by the cases, dictionaries, and treatises reviewed by the court. As a result, they found little to no reason to think that the meaning of “tow” in an insurance contract should be derived from tort law as opposed to its ordinary definition.

Secondly, the dominant mind doctrine was noted to only address a presumption that “can be flipped” with the tow becoming the dominant mind. The word “tow,” then, could not be defined by the dominant mind doctrine in every case. And, if the word “tow” did not always follow the duties attached to the dominant mind, it was not clear to the Fifth Circuit why “tow” should ever be so defined.

In sum, “tow” as used in Atlantic Specialty’s policy was found to be defined by its plain, ordinary meaning: a vessel that is provided auxiliary motive power by being pushed or pulled. A tug remains a tug when it is tugging (i.e., pushing or pulling), and a tow is a tow only when it is being towed (i.e. being pushed or pulled). Here, because the MISS DOROTHY was not provided any extra motive power, it was not a tow. The court held that Atlantic Specialty’s policy did not apply and that the decision of the district court reversed.

The entire case can be found here.

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


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