United States v. Citgo Asphalt Refining Company , 718 F.3d 184 ( 2013 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
________________
No. 11-2576
________________
IN RE: PETITION OF FRESCATI SHIPPING
COMPANY, LTD., AS OWNER OF THE M/T
ATHOS I AND TSAKOS SHIPPING & TRADING, S.A.,
AS MANAGER OF THE ATHOS I FOR EXONERATION
FROM OR LIMITATION OF LIABILITY
________________
No. 11-2577
________________
UNITED STATES OF AMERICA,
Appellant
v.
CITGO ASPHALT REFINING COMPANY; CITGO
PETROLEUM CORPORATION;
CITGO EAST COAST OIL CORPORATION
________________
Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil Action Nos. 2-05-cv-00305 / 2-08-cv-02898)
Trial District Judge: Honorable John P. Fullam
District Judge: Honorable Joel H. Slomsky
________________
Argued September 20, 2012
Before: AMBRO, GREENAWAY, Jr.,
and O‘MALLEY, Circuit Judges
(Opinion Filed: May 16, 2013)
Amelia Carolla, Esquire
Reisman, Carolla & Gran
19 Chestnut Street
Haddonfield, NJ 08033
Stacy A. Fols, Esquire
R. Monica Hennessy, Esquire
Melanie A. Leney, Esquire
John J. Levy, Esquire
Montgomery, McCracken, Walker & Rhoads
457 Haddonfield Road
Liberty View, 6th Floor, Suite 600
Cherry Hill, NJ 08002

Judge Slomsky was assigned to this matter following the
retirement of Judge Fullam, who presided at trial and ruled on the
merits.

Honorable Kathleen M. O‘Malley, United States Court of
Appeals for the Federal Circuit, sitting by designation.
2
Leona John, Esquire
Alfred J. Kuffler, Esquire
John G. Papianou, Esquire
Tricia J. Sadd, Esquire
Timothy J. Bergere, Esquire
Montgomery, McCracken, Walker & Rhoads
123 South Broad Street, 28th Floor
Philadelphia, PA 19109
Jack A. Greenbaum, Esquire (Argued)
John D. Kimball, Esquire
Blank Rome
405 Lexington Avenue
The Chrysler Building
New York, NY 10174
Eugene J. O‘Connor, Esquire
George M. Chalos, Esquire
Chalos, O‘Connor and Duffy
366 Main Street
Port Washington, NY 11050
Counsel for Appellants
Frescati Shipping Company, Ltd.
Tsakos Shipping & Trading, S.A.
Tony West
Assistant Attorney General
Zane David Memeger
United States Attorney
Matthew M. Collette, Esquire
Anne Murphy, Esquire (Argued)
United States Department of Justice
3
Appellate Section, Civil Division
950 Pennsylvania Avenue, N.W.
Washington, DC 20530
Stephen G. Flynn, Esquire
Sarah S. Keast, Esquire
Sharon Shutler, Esquire
United States Department of Justice
Torts Branch, Civil Division
P.O. Box 14271
Washington, DC 20044-4271
Counsel for Appellant
United States of America
Frank P. DeGiulio, Esquire
Charles P. Neely, Esquire
Kevin G. O‘Donovan, Esquire
Richard Q. Whelan, Esquire (Argued)
Palmer, Biezup & Henderson
190 North Independence Mall West, Suite 401
Philadelphia, PA 19106
Michael B. McCauley, Esquire
Palmer, Biezup & Henderson
1223 Foulk Road
Wilmington, DE 19803
Robert B. Fisher, Jr., Esquire
Thomas D. Forbes, Esquire
Douglas L. Grundmeyer, Esquire
J. Dwight LeBlanc, Jr., Esquire
Jonathan C. McCall, Esquire
4
Ivan M. Rodriguez, Esquire
Derek A. Walker, Esquire
Charles P. Blanchard, Esquire
John L. Robert, III, Esquire
Daniel A. Tadros, Esquire
Chaffe McCall
1100 Poydras Street
2300 Energy Centre
New Orleans, LA 70163
Counsel For Appellees
Citgo Asphalt Refining Company
Citgo Petroleum Corporation
Citgo East Coast Oil Corporation
William J. Honan, Esquire
Chester D. Hooper, Esquire
Lissa D. Schaupp, Esquire
K. Blythe Daly, Esquire
F. Robert Denig, Esquire
Holland & Knight
31 West 52nd Street
New York, NY 10019
Counsel for Amici Appellants
George R. Zacharkow, Esquire
Mattioni Limited
399 Market Street, Suite 200
Philadelphia, PA 19106
Counsel for Amici Appellees
5
________________
OPINION OF THE COURT
________________
AMBRO, Circuit Judge
Table of Contents
I. Factual and Procedural Background ........................................ 9
A. The Tanker and Its Charters .......................................... 9
B. The Accident ................................................................ 12
C. The Cost of the Accident ............................................. 14
D. Control of the Waters .................................................. 15
E. The District Court Proceedings ................................... 18
II. Jurisdiction and Standard of Review ..................................... 20
III. Rule 52 ................................................................................... 21
IV. The Contractual Safe Berth Warranty ................................... 22
A. Was Frescati a Third-Party Beneficiary of the Safe
Berth Warranty? ......................................................... 23
B. The Scope of the Safe Berth Warranty ....................... 27
C. Was the Safe Berth Warranty Breached? ................... 33
D. The Named Port Exception......................................... 37
V. The Tort Claims .................................................................... 40
A. Negligence .................................................................. 41
i. The Scope of the Approach ............................... 42
ii. Was the Athos I Within the Approach to
CARCO‘s Terminal When the Accident
Occurred? ........................................................... 46
iii. Potential Breach of Duty to Maintain a Safe
Approach............................................................ 48
iv. Causation ........................................................... 50
B. Negligent Misrepresentation ....................................... 52
6
VI. Effect of the Government‘s Settlement With CARCO ......... 54
VII. Conclusion ............................................................................ 56
Appendix A ........................................................................... 58
As the oil tanker M/T Athos I neared Paulsboro, New Jersey,
after a journey from Venezuela, an abandoned ship anchor lay
hidden on the bottom of the Delaware River squarely within the
Athos I‘s path and only 900 feet away from its berth. Although
dozens of ships had docked since the anchor was deposited in the
River, none had reported encountering it. The Athos I struck the
anchor, which punctured the ship‘s hull and caused approximately
263,000 gallons of crude oil to spill into the River. The cleanup
following the casualty was successful, but expensive.
This appeal is the result of three interested parties
attempting to apportion the monetary liability. The first party
(actually two entities consolidated as one for our purposes)
includes the Athos I‘s owner, Frescati Shipping Company, Ltd., and
its manager, Tsakos Shipping & Trading, S.A. (jointly and
severally, ―Frescati‖). Although Frescati states that the spill caused
it to pay out $180 million in cleanup costs and ship damages, it was
reimbursed for nearly $88 million of that amount by the United
States (the ―Government‖)—the second interested party—pursuant
to the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq. In order
to recoup the unreimbursed losses, Frescati made claims in contract
and tort against the third interested party—a set of affiliates known
as CITGO Asphalt Refining Company, CITGO Petroleum
Corporation, and CITGO East Coast Oil Corporation (jointly and
severally, ―CARCO‖)—which requested the oil shipped on the
Athos I and owned the marine terminal where it was to dock to
unload its oil. Specifically, Frescati brought a contract claim for
CARCO‘s alleged breach of the safe port/safe berth warranty
(jointly and severally, ―safe berth warranty‖) it made to an
intermediary—Star Tankers, Inc.—responsible for chartering the
Athos I to CARCO‘s port, and alleged negligence and negligent
7
misrepresentation against CARCO as the owner of the wharf the
Athos I was nearing when it was holed. The Government, as a
statutory subrogee that stepped into Frescati‘s position for the $88
million it reimbursed to Frescati under the Oil Pollution Act, has
limited its claim for reimbursement from CARCO to Frescati‘s
contractual claim pursuant to a limited settlement agreement.
Following a 41-day bench trial, the District Court for the
Eastern District of Pennsylvania held that CARCO was not liable
for the accident under any of these theories. The Court, however,
made no separate findings of fact and conclusions of law as
required by Federal Rule of Civil Procedure 52(a)(1). That calls
for a remand to set out these mandated matters. However, for the
sake of efficiency, we discuss—and, to the extent necessary, make
holdings on—the legal issues appealed.
In regard to the contractual safe berth warranty, the Court
determined that Frescati (and the Government as a subrogee) could
not recover on their contractual claims. First, Frescati was not a
party to the agreement that contained the warranty between
CARCO and Star Tankers, and was not an intended beneficiary of
that agreement. Furthermore, even if Frescati could claim the
protection of the warranty, it was only a promise by CARCO to
exercise due diligence and not an unconditional guarantee;
moreover, sufficient diligence existed here. In any event, the
warranty was excused because CARCO specified the port ahead of
the Athos I‘s arrival, placing the burden on the Athos I‘s captain to
accept it as safe or reject it under what is called the ―named port
exception.‖
For reasons elaborated below, we disagree with all three of
these rulings. Instead, we hold that the Athos I—and by extension,
its owner, Frescati—was an implied beneficiary of CARCO‘s safe
berth warranty. We conclude as well that the safe berth warranty is
an express assurance of safety, and that the named port exception
to that warranty does not apply to hazards that are unknown to the
8
parties and not reasonably foreseeable. We cannot be sure,
however, that this warranty was actually breached, as the District
Court made no finding as to the Athos I‘s actual draft nor the
amount of clearance actually provided.
If on remand the District Court rules in favor of Frescati on
its contractual warranty claim, its negligence claim becomes
unnecessary. If this issue is reached, we do not agree with the
District Court‘s conclusion that CARCO cannot be liable in
negligence because the anchor lay outside the approach to
CARCO‘s terminal—the area in which CARCO had a duty to
exercise reasonable care in proving a safe approach. As such, the
District Court would need to resolve the appropriate standard of
care required, whether CARCO breached that standard, and if so,
whether any such breach caused the accident. Conversely, we find
no error with the Court‘s holding that CARCO‘s alleged
misrepresentation as to the depth of its berth was geographically
(and hence factually) irrelevant to the ultimate accident. In
addition, we conclude that the Government has waived reliance on
a partial settlement agreement with CARCO that, the Government
contends, precludes CARCO from making certain equitable
defenses to the Government‘s subrogation claims. In this context,
we affirm in part, and vacate and remand in part for additional
factfinding on the contractual (and possibly negligence) claims.
I. Factual and Procedural Background
A. The Tanker and Its Charters
At the heart of this dispute is the Athos I, a single-hulled oil
tanker measuring 748 feet long and more than 105 feet wide. It
was owned by Frescati at all relevant times. At the time of the
accident, however, the Athos I had been chartered into a tanker
pool assembled by Star Tankers, who is not a party to this
consolidated action. In order to transport a load of heavy crude oil
9
from Venezuela to its asphalt refinery in Paulsboro, New Jersey,
CARCO sub-chartered the Athos I from the Star Tankers pool.
In admiralty, these contracts for service are known as
―charter parties.‖1 In specific regard to Star Tankers, the Athos I
was enlisted into the tanker pool in October of 2001 pursuant to a
―time charter party.‖ ―Under a time charter, the owner [Frescati]
remains responsible for the navigation and operation of the vessel
and the charterer [Star Tankers] assumes responsibility for
arranging for the employment of the vessel, providing fuel and
paying for certain cargo-related expenses.‖ Terence Coghlin et al.,
Time Charters ¶ 1.59 (6th ed. 2008). The time charter party gave
Star Tankers, an intermediary or ―middleman,‖ the right to sub-
charter the Athos I although Frescati remained responsible for
keeping the vessel staffed and serviceable.
In contrast, CARCO‘s employment of the Athos I for the
specific voyage was pursuant to a ―voyage charter party‖ with Star
Tankers. Unlike a time charter party in which a ―vessel‘s
employment is put under the orders of . . . charterers‖ for a period
of time, under a voyage charter party the ship is hired ―to perform
one or more designated voyages in return for the payment of
freight.‖2 Julian Cooke et al., Voyage Charters ¶ 1.1 (3d ed. 2007).
1
The term ―charter party‖ may be confusing in that it does not refer
to an entity, but a document. This is due to its historical genesis,
deriving from the phrase ―charta partita, i.e., a deed of writing
divided.‖ Black’s Law Dictionary 268 (9th ed. 2009) (quoting
Frank L. Maraist, Admiralty in a Nutshell 44–45 (3d ed. 1996)).
The charta partita was literally a divided document, the owner and
the charterer each retaining one half of the agreement. Id.
2
It has been observed that
[t]he fundamental difference between voyage and
time charters is how the freight or ―charter hire‖ is
10
CARCO‘s particular voyage charter party, based on a standard
industry ASBATANKVOY form, contained what are customarily
known as ―safe port‖ and ―safe berth‖ warranties (already defined,
for convenience, as a ―safe berth warranty‖). It provided that
[t]he vessel . . . shall, with all convenient dispatch,
proceed as ordered to Loading Port(s) named . . . , or
so near thereunto as she may safely get (always
afloat), . . . and being so loaded shall forthwith
proceed, as ordered on signing Bills of Lading, direct
to the Discharging Port(s), or so near thereunto as she
may safely get (always afloat), and deliver said
cargo.
J.A. at 1222 (Tanker Voyage Charter Party, Part II, ¶ 1). It further
directed that ―[t]he vessel shall load and discharge at any safe place
or wharf, . . . which shall be designated and procured by the
Charterer [CARCO], provided the Vessel can proceed thereto, lie
at, and depart therefrom always safely afloat . . . .‖ Id. at 1222
(Tanker Voyage Charter Party, Part II, ¶ 9). We note that, in the
time charter party between Frescati and Star Tankers, the latter
contracted to provide a similar safe berth warranty, but this
warranty was qualified whereby Star Tankers obligated itself to
exercise ―due diligence to ensure that the vessel is only employed
between and at safe places . . . .‖ Id. at 1157 (Time Charter Party
calculated. A voyage charterparty specifies the
amount due for carrying a specified cargo on a
specified voyage (or series of voyages), regardless of
how long a particular voyage takes. A time
charterparty specifies the amount due for each day
that the vessel is ―on hire,‖ regardless of how many
voyages are completed.
David W. Robertson et al., Admiralty and Maritime Law in the
United States 335 (2d ed. 2008).
11
¶ 4). Following the accident, Frescati began arbitration with Star
Tankers regarding its claims for damage of the Athos I, but that
proceeding has been stayed pending the outcome of this case. Oral
Arg. Tr. 4:8–15, Sept. 20, 2012.
In preparation for the arrival in Paulsboro of the Athos I, its
3
master was provided with a copy of CARCO‘s Port Manual. This
Manual indicated that the allowable maximum draft at the
Paulsboro facility was 38 feet, but that this ―may change from time
to time and should be verified prior to the vessel‘s arrival.‖ J.A. at
1095 (CITGO Terminal Regulations for Vessels ¶ 2). On
November 22, 2004, four days before the Athos I arrived, CARCO
reduced this maximum draft to 36 feet. The Athos I was not
informed of this modification.
B. The Accident
On November 26, 2004, the Athos I was nearing its ultimate
destination, CARCO‘s asphalt refinery in Paulsboro, New Jersey.
When the Athos I reached the mouth of the Delaware River, only
80 miles remained of its 1,900-mile journey. Although Captain
Iosif Markoutsis was the ship‘s master, the seven-hour upriver
transit was aided by Delaware River Pilot Captain Howard Teal.
At approximately 8:30 p.m., while the Athos I was still navigating
up the River channel, Docking Pilot Captain Joseph Bethel boarded
the vessel (Captain Bethel was employed by non-party Moran
Towing of Pennsylvania). The Docking Pilot relieved the River
Pilot at about 8:40 p.m.
CARCO‘s Paulsboro facility sits on a jetty on the New
Jersey side of the Delaware River. Federal Anchorage Number
Nine (―the Anchorage‖ or ―Anchorage Number Nine‖) separates
the River channel from CARCO‘s port waters. As pictured in
3
A ship‘s master is its commander and captain. Black’s Law
Dictionary, supra, at 1065.
12
Appendix A to this opinion, the Anchorage‘s border runs
diagonally to CARCO‘s waterfront, ranging between 130 and 670
feet from the face of its ship dock. Across the Anchorage, the
River Channel begins less than 2,000 feet from CARCO‘s berth, a
little more than two-and-a-half lengths of the Athos I. Customarily,
a tanker of the Athos I‘s size would come up the River, make a
starboard (right) 180 turn into the Anchorage, and would then be
pushed sideways by tugs (i.e., parallel parked) into CARCO‘s pier.
The Athos I was following this procedure when, at 9:02 p.m., it
suddenly listed to the port (left) side, and oil became visible in the
water. It was later determined that an abandoned anchor had
punched two holes in the Athos I‘s hull, causing (as already noted)
roughly 263,000 gallons of crude oil to spill into the River. At the
time of the allision,4 the Athos I was only 900 feet from CARCO‘s
berth, approximately halfway through the Anchorage. The tide was
relatively low at the time of the accident after having reached its
lowest point only 50 minutes prior. J.A. at 2102.
The anchor was eventually exhumed. Inspection revealed
that it weighed roughly nine tons and measured 6ʹ8ʺ long, 7ʹ3ʺ
wide, and 4ʹ6ʺ high. J.A. at 2192 (United States Coast Guard
Marine Casualty Investigation Report). The Coast Guard further
reported that the anchor was ultimately found lying prone with its
blade reaching 54 inches above the floor of the River. Id. at 2196.
Although the District Court made no finding of fact as to the exact
position of the anchor at the time of the allision, it found persuasive
the testimony of oceanographer and ocean engineer Dr. Peter
Traykovski, who opined that the anchor was lying horizontal at the
time of the accident with a height of only 41 inches above the
bottom of the River. Traykovski Test., 24:25–25:13, Nov. 4, 2010.
The Court also did not make any finding as to the depth of the
4
An allision is ―[t]he contact of a vessel with a stationary object
such as an anchored vessel or a pier.‖ Black’s Law Dictionary,
supra, at 88.
13
Anchorage where the anchor lay, though the record before us
seems to indicate that the depth was between 40.3 and 41.45 feet
deep at low tide. Id. at 49:12–25; J.A. at 2196.
The District Court also did not make any finding as to the
draft of the Athos I—that is, the distance between the lowest point
of the ship and the waterline—but assumed, for purposes of
analysis, that it was drafting at 36ʹ7ʺ as represented by Frescati at
the time of the accident. The Court also failed to resolve the
anchor‘s depth or position, although it noted that there was
―persuasive evidence‖ that the anchor was lying down at the time
of the accident. In re Frescati Shipping Co., Ltd., Nos. 05-CV-
00305-JF, 08-cv-02898-JF, 2011 WL 1436878, at *7 (E.D. Pa.
Apr. 12, 2011). The parties, however, stipulated that the anchor
had been in the same approximate location for at least three years
because it was detectable from a sonar scan performed by the
University of Delaware in 2001 as part of an independent
geophysical study.5 The owner of the anchor has never been
determined, but the Court speculated that the anchor likely was
used for dredging operations at the time it was lost.
C. The Cost of the Accident
Frescati claims that the accident cost it, as the ―responsible
party‖ under the Oil Pollution Act, approximately $180 million in
clean-up costs and damages to the ship. (The Act was passed in the
wake of the Exxon Valdez accident in 1989, and was designed to
facilitate oil spill cleanups by requiring ―responsible parties‖ to pay
initially for removal costs and damages. See 33 U.S.C. § 2702(a).)
Because the Act sets liability limits for cooperative responsible
5
The stipulation suggests that the anchor was not mentioned in the
report ultimately issued by the University of Delaware professors.
See J.A. at 1310–12. Instead, it seems that it was not until after this
litigation began that the parties obtained the 2001 side scan sonar
data and agreed that it revealed the anchor‘s presence.
14
parties, see id. at § 2704(a), an incentive exists for responsible
parties to respond quickly and competently in order to limit the
extent of their financial exposure. See Unocal Corp. v. United
States, 222 F.3d 528, 535 (9th Cir. 2000) (―‗The purpose of [the
Oil Pollution Act] . . . was to encourage rapid private party
responses.‘‖ (quoting In re Metlife Capital Corp., 132 F.3d 818,
822 (1st Cir. 1997))). Responsible parties in compliance with the
Act may file a claim with the Oil Spill Liability Trust Fund,
controlled by the United States Government, for reimbursement of
costs beyond the liability limit. 33 U.S.C. § 2708(a)(2).
Specifically, Frescati was able to limit its liability for cleanup to
$45,474,000, thus allowing it to recover cleanup costs exceeding
that amount from the Fund.6 It was ultimately reimbursed for
approximately $88,000,000 of its cleanup costs, and the Fund
became subrogated as to that amount under 33 U.S.C. §§ 2712(f)
and 2715(a).
D. Control of the Waters
The casualty here occurred squarely within Anchorage
Number Nine. As the term implies, an anchorage ground is ―a
place where vessels anchor or a place suitable for anchoring.‖
Webster’s Third New Int’l Dictionary 79 (1971). Section 7 of the
Rivers and Harbors Act of 1915 authorizes the establishment of
―anchorage grounds for vessels in all harbors, rivers, bays, and
other navigable waters of the United States whenever it is
manifest . . . that the maritime or commercial interests of the
United States require such anchorage grounds for safe
6
In February 2007, Frescati applied to have its liability exonerated
pursuant to 33 U.S.C. § 2703(a)(3). That subsection directs that a
responsible party is not liable for the acts or omissions of a third
party. In this case, that third party would have been the unknown
anchor-dropper. It is unclear why Frescati withdrew this claim in
2008.
15
navigation . . . .‖ 33 U.S.C. § 471. By 1930, a ―lack of adequate
anchorage room‖ was creating a hazard on the Delaware River
between navigating vessels and those ―awaiting accommodation at
the wharves, or awaiting cargo or orders.‖ H. Doc. No. 71-304, 24
(1930). Anchorage Number Nine, also known as the Mantua Creek
Anchorage, was established in 1930. Pub. L. No. 71-520, 46 Stat.
918, 921 (1930). Today it runs for approximately 2.2 miles along
the Delaware River channel (see Appendix A) and provides a place
for ships to anchor so long as they do not ―interfere unreasonably
with the passage of other vessels to and from Mantua Creek.‖ 33
C.F.R. § 110.157(a)(10).
Anchorage Number Nine, though only a few hundred feet
from CARCO‘s pier, is neither controlled nor maintained by
CARCO. Instead, the federal Government‘s Army Corps of
Engineers (the ―Corps‖) conducts hydrographic surveys and
dredges as necessary in an attempt to maintain the Anchorage‘s
depth at 40 feet. The Corps also regulates any construction or
excavation within the navigable waters, including the issuance of
dredging permits, 33 U.S.C. § 403, and its regulatory jurisdiction
―extend[s] laterally to the entire water surface and bed of a
navigable waterbody, which includes all the land and waters below
the ordinary high water mark,‖ 33 C.F.R. § 329.11. The National
Oceanic and Atmospheric Administration conducts surveys on
occasion for various federal projects. No Government entity,
however, is responsible for preemptively searching all federal
waters for obstructions, and the District Court found that the
Government does not actually survey the Anchorage for hazards.
If, however, the Government is alerted to the presence of a threat,
the Corps will remove the obstruction if it is a hazard to navigation
and, if not removable, the Coast Guard will chart it. Ultimately,
the ―[p]rimary responsibility for removal of wrecks or other
obstructions lies with the [obstruction‘s] owner, lessee, or
operator.‖ 33 C.F.R. § 245.10(b).
16
CARCO maintains a self-described ―area of responsibility‖
directly abutting its Paulsboro terminal, ―a roughly triangular-
shaped area . . . comprising the waters of the berth footprint and the
immediate access area next to it where vessels enter and exit the
footprint.‖ CARCO‘s Br. at 19. This area, also set out in
Appendix A to this opinion, runs essentially the length of
CARCO‘s facility and extends offshore to the border of the
Anchorage. It is based on a permit to dredge for maintenance
purposes that was issued by the Corps to CARCO‘s predecessor in
1991. The scope of such a permit is derived from the initial
request; put another way, it is self-defined subject to approval by
the Corps. This area of responsibility is not large enough to rotate
the 748 foot-long Athos I.
In maintaining its area of responsibility, CARCO retained a
consulting engineering firm, S.T. Hudson Engineers, Inc., to
perform hydrographic surveys. While CARCO had inspected that
area for depth, it never specifically searched for debris or other
hazards. Hudson interpolated the area‘s depth from a grid of
pinpointed, single-beam sonar depth soundings at 50-foot intervals.
This particular procedure is poor at detecting sunken objects
because it is unlikely that any given hazard would fall within the
exact spot measured, and if it did, it would not necessarily indicate
that there was an object but only the depth of that object as
indistinguishable from the bottom of the waterway. Long Test.,
78:8–79:5, Nov. 17, 2010; Fish Test., 59:11–18, Sept. 29, 2010.
CARCO‘s Port Captain William Rankine estimated that
approximately 250 ships with a draft of 36ʹ6ʺ or greater either
entered or departed CARCO‘s port between 1997 and 2005.
Rankine Test., 22:25–23:15, Nov. 22, 2010. In specific regard to
arriving vessels, from the time the anchor was spotted by the
University of Delaware in August 2001 until the Athos I casualty,
the record reflects that 61 ships with a draft of 36ʹ6ʺ or greater
arrived at CARCO‘s facility. J.A. at 1788–94. The record does not
reflect at what time these ships docked, and high tide adds
17
approximately six feet of depth to the River. Moreover, Frescati
points out that—unlike the Athos I—21 of these ships would have
been required to dock within three hours prior to high-water due to
their excessive drafts.7 Id. at 1622–24.
E. The District Court Proceedings
In January 2005, Frescati filed in the District Court a
Complaint for Exoneration From or Limitation of Liability
pursuant to the Shipowner‘s Limitation of Liability Act, 46 U.S.C.
§ 30501 et seq. (formerly 46 App. U.S.C. § 181 et seq.). In that
Complaint, Frescati sought a declaration that it was not liable for
any losses stemming from the accident or, in the alternative, a
limitation of liability to the value of the Athos I and its pending
freight. CARCO was among the parties who asserted claims in that
action, seeking recovery against Frescati for its lost oil in an
amount in excess of $259,217. Frescati then filed a counterclaim
against CARCO for all costs incurred beyond those reimbursed by
the Fund.
In June 2008, the Government filed a separate suit against
CARCO seeking compensation on its subrogated right, pursuant to
33 U.S.C. §§ 2712(f) and 2715(a), to the approximately $88
million disbursed by the Fund. In a pretrial settlement agreement,
the Government waived its negligence claims against CARCO in
return for the latter‘s agreement not to pursue negligence claims
against the United States. The Government, believing that CARCO
7
The Docking Pilot Association (―DPA‖) Guidelines provide
directives for the appropriate docking times for vessels of different
sizes. The DPA Guidelines were developed after discussion with
CARCO‘s previous Port Captain and were based in part on
CARCO‘s desire to maximize the number of vessels that could
dock at its berth. J.A. at 1104; Quillen Dep. 11:12–20, Sept. 2,
2010.
18
was advancing against it negligence theories in violation of the
settlement agreement, moved for partial summary judgment against
CARCO‘s counterclaim for equitable recoupment. That motion
was denied.
As noted, these two actions were consolidated, and they
were tried over 41 days before Judge Fullam. After trial, the Court
issued an 18-page opinion holding that CARCO could not be held
responsible under contract or tort for any of the losses stemming
from the accident. See In re Frescati, 2011 WL 1436878.
On the contractual safe berth warranty, the Court determined
that Frescati had no standing for relief, as it was not a third-party
beneficiary to the voyage charter party between CARCO and Star
Tankers, and that, in any event, CARCO did not breach those
warranties because they are not unconditional guarantees but
instead ―‗impose[] upon the charterer a duty of due diligence to
select a safe berth,‘‖ a duty satisfied here. Id. at *6 (quoting
Orduna S.A. v. Zen-Noh Grain Corp., 913 F.2d 1149, 1157 (5th
Cir. 1990)). The Court further ruled that, even if a stricter warranty
applied, the naming of the port in advance precluded recovery
under the named port exception, which, as a general matter,
protects a charterer when the port is named ahead of arrival and the
master proceeds there without protest.
The Court also held that CARCO was not negligent in
failing to search for or detect the abandoned anchor that lay within
the Anchorage. As the Court deemed it outside the approach to
CARCO‘s berth, detection and notification to others of its presence
thus fell beyond CARCO‘s obligation to provide a safe entry to that
berth. The Court also held that there was no negligent
misrepresentation in CARCO‘s failure to alert the Athos I that—
only four days prior to its arrival—the allowable maximum draft at
CARCO‘s facility had been reduced from 38 feet to 36 feet. It
reasoned that this was an internal determination pertaining to the
19
area at the berth and outside the Anchorage, and therefore was
―factually irrelevant to the casualty.‖ Id. at *5.
In sum, the District Court concluded that the anchor-dropper
rather than any of the named parties was at fault, and rejected all of
Frescati‘s and the Government‘s arguments as to CARCO‘s
liability.
II. Jurisdiction and Standard of Review
The District Court had admiralty jurisdiction pursuant to 28
U.S.C. § 1333(1). We have jurisdiction over this appeal under 28
U.S.C. § 1291.
Findings of fact made during a bench trial are reviewed for
clear error, and will stand unless ―‗completely devoid of minimum
evidentiary support displaying some hue of credibility, or . . . bear
no rational relationship to the supportive evidentiary data.‘‖ In re
Nautilus Motor Tanker Co., 85 F.3d 105, 115 (3d Cir. 1996)
(alteration in original) (quoting Haines v. Liggett Grp. Inc., 975
F.2d 81, 92 (3d Cir. 1992)). Following a bench trial, we review de
novo a district court‘s conclusions of law. McCutcheon v. Am.’s
Servicing Co., 560 F.3d 143, 147 (3d Cir. 2009) (citation omitted).
―[C]onstruction of an unambiguous contract is a matter of law and
subject to plenary review.‖ Colliers Lanard & Axilbund v. Lloyds
of London, 458 F.3d 231, 236 (3d Cir. 2006) (citing U & W Indus.
Supply, Inc. v. Martin Marietta Alumina, Inc., 34 F.3d 180, 185 (3d
Cir. 1994)). Similarly, we exercise ―plenary review over the legal
question of ‗the nature and extent of the duty of due care . . . .‘‖
Andrews v. United States, 801 F.2d 644, 646 (3d Cir. 1986)
(quoting Redhead v. United States, 686 F.2d 178, 182 (3d Cir.
1982)).
20
III. Rule 52
Federal Rule of Civil Procedure 52(a)(1) provides that ―[i]n
an action tried on the facts without a jury or with an advisory jury,
the court must find the facts specially and state its conclusions of
law separately.‖ Fed. R. Civ. P. 52(a)(1). This is a mandatory
requirement. H. Prang Trucking Co., Inc. v. Local Union No. 469,
613 F.2d 1235, 1238 (3d Cir. 1980) (citing 9 Charles Alan Wright
& Arthur R. Miller, Federal Practice and Procedure § 2574, at 690
(1st ed. 1971)); Scalea v. Scalea’s Airport Serv., Inc., 833 F.2d
500, 502 (3d Cir. 1987) (per curiam). Typically, a Rule 52
violation occurs when a district court‘s inadequate findings render
impossible ―‗a clear understanding of the basis of the decision,‘‖ H.
Prang Trucking, 613 F.2d at 1238 (quoting Wright & Miller,
supra, § 2577, at 697), and those ―‗findings are obviously
necessary to the intelligent and orderly presentation and proper
disposition of an appeal,‘‖ Bradley v. Pittsburgh Bd. of Educ., 910
F.2d 1172, 1178 (3d Cir. 1990) (quoting Mayo v. Lakeland
Highlands Canning Co., 309 U.S. 310, 317 (1940)). See also
Berguido v. E. Air Lines, Inc., 369 F.2d 874, 877 (3d Cir. 1966)
(―If a full understanding of the factual issues cannot be gleaned
from the District Court‘s opinion, we would be obliged to remand
for compliance with Rule 52(a).‖). Although Rule 52 does not
require hyper-literal adherence, see Hazeltine Corp. v. Gen. Motors
Corp., 131 F.2d 34, 37 (3d Cir. 1942), ―an appellate court may
vacate the judgment and remand the case for findings if the trial
court has failed to make findings when they are required,‖ Giles v.
Kearney, 571 F.3d 318, 328 (3d Cir. 2009) (citing H. Prang
Trucking, 613 F.2d at 1238–39).
Instead of presenting his findings in accord with Rule 52,
the trial judge here elected to ―set forth in narrative fashion [his]
findings of fact . . . and conclusions of law.‖ In re Frescati, 2011
WL 1436878, at *1. Unfortunately, what followed leaves us
unable to discern what were his intended factual findings.
Moreover, in arriving at his particular legal conclusions, the trial
21
judge held back making many of the factual findings that would
support those conclusions, in effect going from first base to third
across the pitcher‘s mound. While we do not endorse or require a
panoply of extraneous factual findings, the overall dearth of clear
factual findings, much less those pertaining to the heart of this
matter—such as the draft of the Athos I—falls below what is
required by Rule 52.
Because we cannot derive a full understanding of the core
facts from the District Court‘s opinion, this was a violation of Rule
52 and itself a basis for remand. Giles, 571 F.3d at 328. In light of
the legal determinations set out below, factual clarification is
required in any event.
IV. The Contractual Safe Berth Warranty
CARCO‘s promise to Star Tankers that the Athos I would be
directed to a location that ―she may safely get (always afloat)‖ is a
provision known in context as either a safe port or safe berth
warranty (to repeat again, we use for shorthand ―safe berth
warranty‖). See Cooke et al., supra, ¶ 5.121 (citation omitted).
This language triggers two separate protections: a contractual
excuse for a master who elects not to venture into an unsafe port,
and protection against damages to a ship incurred in an unsafe port
to which the warranty applies. See 2 Thomas J. Schoenbaum,
Admiralty and Maritime Law § 11-10, at 32–33 (5th ed. 2011). In
this case, only the second benefit of the safe berth warranty is at
issue, as the Athos I was damaged in an allegedly unsafe port.
Specifically at issue are the scope and applicability of this
warranty, topics we explore below.
22
A. Was Frescati a Third-Party Beneficiary of the
Safe Berth Warranty?
―‗Before a stranger can avail himself of the exceptional
privilege of suing for a breach of an agreement, to which he is not a
party, he must at least show that it was intended for his direct
benefit.‘‖ Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303,
307 (1927) (quoting German Alliance Ins. Co. v. Home Water
Supply Co., 226 U.S. 220, 230 (1912)). As Frescati is not a party
to CARCO‘s promise to Star Tankers to provide a safe berth, there
must be some showing that it was nonetheless an intended
beneficiary. The District Court held that this was not the case
because the testimony at trial failed to reveal any intent by CARCO
to benefit Frescati. The Court, however, failed to inquire whether
the contract itself established a third-party beneficiary relationship,
a question of law. See Pierce Assocs. v. Nemours Found., 865 F.2d
530, 535 (3d Cir. 1988). We conclude that, although Frescati is not
a named beneficiary to the safe berth warranty within the charter
party between Star Tankers and CARCO, the Athos I benefits from
this warranty, and Frescati, as the vessel‘s owner, is thus a third-
party beneficiary.
Maritime contracts ―must be construed like any other
contracts: by their terms and consistent with the intent of the
parties.‖ Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 31 (2004).
―When a contract is a maritime one, and the dispute is not
inherently local, federal law controls the contract interpretation.‖
Id. at 22–23 (citing Kossick v. United Fruit Co., 365 U.S. 731, 735
(1961)). We typically look to the Restatement of Contracts for the
federal law on third-party beneficiaries. Doe v. Pennsylvania Bd.
of Prob. & Parole, 513 F.3d 95, 106 (3d Cir. 2008); see
Restatement (Second) of Contracts § 302 (1981). A third-party
may be a beneficiary to a contract of others where it is ―appropriate
to effect[] the intention of the parties,‖ and ―the circumstances
indicate that the promisee intends to give the beneficiary the
benefit of the promised performance.‖ Restatement, supra, §
23
302(1)(b); see also Cargill Int’l S.A. v. M/T Pavel Dybenko, 991
F.2d 1012, 1019 (2d Cir. 1993) (holding that a third-party
beneficiary to a charter party ―must show that ‗the parties to that
contract intended to confer a benefit on [it] when contracting; it is
not enough that some benefit incidental to the performance of the
contract may accrue to [it]‘‖ (alterations in original) (quoting
McPheeters v. McGinn, Smith & Co., 953 F.2d 771, 773 (2d Cir.
1992))).
In 1959, the Supreme Court held that vessels are automatic
third-party beneficiaries of warranties of workmanlike service
made to their charterers by stevedores who unload vessels at docks.
Crumady v. The Joachim Hendrik Fisser, 358 U.S. 423, 428
(1959). This is because ―[t]he warranty which a stevedore owes
when he goes aboard a vessel to perform services is plainly for the
benefit of the vessel whether the vessel‘s owners are parties to the
contract or not.‖ Id. This natural relationship between the entities
was ―enough to bring the vessel into the zone of modern law that
recognizes rights in third-party beneficiaries.‖ Id. (citation
omitted). A year later, the Supreme Court extended this rule a
logical step further in holding that ―[t]he owner, no less than the
ship, is the beneficiary of the stevedore‘s warranty of workmanlike
service.‖ Waterman S. S. Corp. v. Dugan & McNamara, Inc., 364
U.S. 421, 425 (1960).
Although these two Supreme Court cases aid Frescati‘s
position, they do so only by analogy. As CARCO points out, the
matter before us does not involve an implied warranty for
workmanlike service, but an explicit assurance of safety in a
document to which Frescati is not a party. The Court of Appeals
for the Second Circuit, however, has applied Crumady and
Waterman to a set of facts similar to the one before us. In Paragon
Oil Co. v. Republic Tankers, S.A., 310 F.2d 169, 171 (2d Cir. 1962)
(Friendly, J.), a vessel owner (Paragon Oil Co., Inc.) and voyage
charterer (Republic Tankers, S.A.) entered into a voyage charter
with a safe berth warranty. Republic had executed a contract of
24
affreightment (essentially a sub-voyage charter) with a third-party
that contained a safe berth warranty identical to the one it promised
in the voyage charter. Id. From this, the Second Circuit concluded
that Paragon (the owner) was ―the true party in interest‖ to the safe
berth assurance in the contract of affreightment even though it was
not explicitly named in the contract between Republic (the voyage
charterer) and the third-party. Id. at 175.
We agree that the Second Circuit‘s reasoning in Crumady
and Waterman counsel in favor of Frescati‘s third-party beneficiary
status. Specifically, we are convinced that a safe berth warranty
necessarily benefits the vessel, and thus benefits its owner as a
corollary beneficiary.8 ―[T]he circumstances indicate‖ that the
warranty is intended to endow the vessel with ―the benefit of the
promised performance.‖ Restatement, supra, § 302(1)(b). Because
the warranty explicitly covers the safety of the vessel, it would be
nonsensical to deprive the vessel‘s owner the benefits of this
8
Insofar as CARCO cites to Bunge Corp. v. MV Furness Bridge,
390 F. Supp. 603, 604 (E.D. La. 1974), it is unpersuasive, as its
conclusion that the owner was not a third-party beneficiary of the
sub-charterer‘s safe berth warranty is unsupported by any
reasoning. Further, this issue was abandoned when the Court later
resolved the merits of the claim and held that the sub-charterer had
―violated a legal duty [in tort] whether or not it also had a
contractual one.‖ Bunge Corp. v. MV Furness Bridge, 396 F. Supp.
852, 858 (E.D. La. 1975), rev’d, 558 F.2d 790 (5th Cir. 1977). On
appeal, the Court of Appeals for the Fifth Circuit agreed that the
issue of contractual liability was ―irrelevant‖ because none of the
parties could have intended to warrant complete safety of an
inadequately small wharf. 558 F.2d at 801–02.
25
promise, as the owner is ultimately the one most interested in the
vessel‘s status and is obligated to maintain its condition.9
Moreover, it would work an odd windfall if Star Tankers
were allowed to collect on CARCO‘s safe berth warranty but not
be required to pass on those remedial dollars to the ship‘s ultimate
owner. That illogical result could occur where the owner (Frescati)
received no safe berth warranty from the time charterer (Star
Tankers), or where—as in the case before us—Frescati received a
less comprehensive warranty from Star Tankers than Star Tankers
received from the voyage charterer (CARCO).10 This would
theoretically allow Star Tankers to collect for damages to the ship
that were actually paid by Frescati. While we are mindful of the
parties‘ ability to contract differently, there is no indication that
Star Tankers bargained for the potential of such an unearned
windfall—profiting from the mishaps of the vessels within its
tanker pool when it did not pay for the repair of those mishaps.
Instead, requiring warranties from voyage charterers like CARCO
is a way to insure against claims asserted by vessel owners. Per
this path, the promise made to protect a vessel flows through the
intermediary party(ies) to the ultimate party who bore the pain of
an unsafe port, here the vessel‘s owner.
We discount CARCO‘s suggestion that it was unaware of
Frescati‘s status as the true owner of the Athos I. CARCO had
9
Under the time charter, Frescati remained responsible for
insuring, maintaining, and restoring the Athos I throughout the term
of the charter. J.A. at 1447–48 (Time Charter Party ¶¶ 3, 6).
10
Although we ultimately conclude that the full safe berth warranty
from CARCO to Star Tankers is an express assurance made
without regard to the amount of diligence taken by the charterer,
see infra Part IV.B, Star Tankers only promised due diligence to
Frescati, J.A. at 1448 (Time Charter Party ¶ 4).
26
completed an internal vetting of the Athos I in October of 2004 that
identified Frescati as its owner. J.A. at 1318 (Citgo Vetting
Report). Regardless, even if the ultimate owner had been
undisclosed, CARCO expressly warranted to provide a safe berth,
which is a promise made ―plainly for the benefit of the vessel.‖
Crumady, 358 U.S. at 428. Thus we see no reason why the Athos
I‘s owner would be any less entitled to rely on this warranty,
whether it was identified or not. Frescati, as the owner of the Athos
I, may therefore rely on CARCO‘s safe berth warranty as a third-
party beneficiary.
B. The Scope of the Safe Berth Warranty
That Frescati may benefit from CARCO‘s safe port/safe
berth warranty requires that we delineate its comprehensiveness, a
question of first impression in our Circuit. Though the District
Court did not need to reach this legal issue after determining that
Frescati was not a third-party beneficiary, it nonetheless
concluded—as an alternate holding—that the safe berth warranty
was not breached because ―CARCO fulfilled its duty of due
diligence . . . .‖ In re Frescati, 2011 WL 1436878, at *6. We part
from this holding, as we believe the Court incorrectly relied on
Orduna S.A. v. Zen-Noh Grain Corp., 913 F.2d 1149, 1157 (5th
Cir. 1990), which held that the safe berth provision was not a full
warranty but required only due diligence.
A port is deemed safe where ―the particular chartered vessel
can proceed to it, use it, and depart from it without, in the absence
of abnormal weather or other occurrences, being exposed to
dangers which cannot be avoided by good navigation and
seamanship.‖ Cooke et al., supra, ¶ 5.137; Leeds Shipping v.
Societe Francaise Bunge (The Eastern City), [1958] 2 Lloyd‘s Rep.
127, 131 (same). Whether a port is safe refers to the particular ship
at issue, Cooke et al., supra, ¶ 5.68, and goes beyond ―the
immediate area of the port itself‖ to the ―adjacent areas the vessel
must traverse to either enter or leave,‖ Coghlin et al., supra,
27
¶ 10.124. In other words, a port is unsafe—and in violation of the
safe berth warranty—where the named ship cannot reach it without
harm (absent abnormal conditions or those not avoidable by
adequate navigation and seamanship).11
This formulation is deeply rooted. In 1888, the Supreme
Court held charterers liable for breach of a safe berth warranty in
insisting that a ship sail to Aalborg, Denmark, a port that was
impossible for the particular ship to reach due to a sand bar and the
absence of any reasonably safe place to anchor or discharge. The
Gazelle, 128 U.S. 474, 485–86 (1888). In a similar fashion, the
Supreme Court held in 1902 that charterers failed to provide a safe
dock where the ship in question could not reach it without damage.
Mencke v. Cargo of Java Sugar, 187 U.S. 248, 253 (1902).
Specifically, the charterers were aware that the ship‘s mast was too
tall to clear the Brooklyn Bridge when they designated a discharge
dock upriver from the Bridge. Id. at 250. The Court concluded
that this was a warranty violation by analogizing the overhead
obstacle to a submerged one: ―A ship could not be said to be
afloat, whether the obstacle encountered was a shoal or bar in the
port over which she could not proceed, or a bridge under or through
which she could not pass, nor could she be said to have safely
reached a dock if required to mutilate her hull or her permanent
masts.‖ Id. at 253; see also Carbon Slate Co. v. Ennis, 114 F. 260,
261 (3d Cir. 1902) (concluding that safe berth warranty was
violated where the ship ―was directed to load at a berth where a full
cargo, if taken aboard, would have made it impossible for her, at
any stage of water or at any time, to pass out over the harbor bar‖).
11
On the facts before us, we need not define the outer geographical
bounds of the safe berth/safe port warranty. At oral argument
CARCO conceded that the warranty—if applicable—―would
include the area in and around Paulsboro,‖ including the
Anchorage. Oral Arg. Tr. 62:18–64:3, Sept. 20, 2012.
28
The Court of Appeals for the Second Circuit has long held
that promising a safe berth effects an ―express assurance‖ that the
berth will be as represented. Cities Serv. Transp. Co. v. Gulf Ref.
Co., 79 F.2d 521, 521 (2d Cir. 1935) (per curiam), recognized this
principle in holding that a master was not liable for damages
incurred in reliance on a charter party‘s safe berth warranty at a
particular dock. In Park S.S. Co. v. Cities Serv. Oil Co., 188 F.2d
804, 806 (2d Cir. 1951) (Swan, J.), the same Court elaborated that
the purpose of the warranty was to memorialize the relationship
between the contracting entities: ―the charterer bargains for the
privilege of selecting the precise place for discharge and the ship
surrenders that privilege in return for the charterer‘s acceptance of
the risk of its choice.‖ Paragon continued this tradition in
contrasting the duty of a wharfinger (an admiralty term for an
―owner or occupier of a wharf,‖ Black’s Law Dictionary 1733 (9th
ed. 2009))—to exercise reasonable diligence in keeping its berth
safe for incoming vessels—with that of a charterer who is
contractually bound to provide ―not only a place which he believes
to be safe, but a place where the chartered vessel can discharge
‗always afloat.‘‖ 310 F.2d at 173 (citation and internal quotation
marks omitted). See also Venore Transp. Co. v. Oswego Shipping
Corp. 498 F.2d 469, 472 (2d Cir. 1974) (citing Park S.S. Co., 188
F.2d at 804) (sub-charterer had a non-delegable ―obligation to
provide a completely safe berth,‖ which was breached when it
permitted the ship to dock at a berth that it knew was unsafe).
Thus, prior to the Fifth Circuit‘s decision in Orduna, ―the
law concerning safe ports had a rather secure berth in maritime law
and it was well settled that a safe port clause in a charter
constituted a warranty given by a charterer to an owner.‖ Cooke et
al., supra, ¶ 5.124. Orduna created quite a splash in veering from
the view that a charterer warrants a ship‘s safety, and established
instead for the Fifth Circuit that a safe berth warranty merely
―imposes upon the charterer a duty of due diligence to select a safe
berth.‖ 913 F.2d at 1157. While Orduna acknowledged the
Second Circuit‘s contrary perspective, it dismissed that
29
interpretation in deference to critical commentators, namely
Professors Grant Gilmore and Charles L. Black. Id. at 1156 (citing
Grant Gilmore & Charles L. Black, The Law of Admiralty § 4-4, at
204–06 (2d ed. 1975)). We do not find their criticism so
compelling.12
Orduna concluded that ―no legitimate legal or social policy
is furthered by making the charterer warrant the safety of the berth
it selects.‖ Id. at 1157. Primarily, the Court reasoned that it is
more sensible to impose fault on the ―master on the scene‖ rather
than a far away merchant charterer.13 Id. at 1156 (citing Gilmore &
12
Gilmore‘s book has been described as being
more adapted for the teacher than for the active
lawyer or judge. As teachers, the authors are
interested in controversy. Wherever they can find it,
in the long past or in the nearer present, they stir it
up, and frequently label it ‗confusion.‘ . . . It is all
very interesting; but in the various admiralty fields—
except personal injury and death—most of the old
controversies have long been settled. Therefore, our
authors tend to give a picture which does not
resemble the daily grist of today. Sometimes indeed,
straining to keep old battle-fires ablaze, they sprinkle
harsh words on the judges who settled the old
disputes. . . . On the whole, this is a teaching book
rather than an office and courtroom work of
reference; and it must be read as such.
Arnold W. Knauth, Book Review, 58 Colum. L. Rev. 425, 426–28
(1958) (reviewing Grant Gilmore & Charles L. Black, Jr., The Law
of Admiralty (1957)).
13
Orduna also noted that a due diligence standard would not upset a
master‘s ability to rely on a safe berth warranty in rejecting an
30
Black, supra, § 4-4, at 204–06). The appeal of this construction
here is illusory. While an owner is liable for its master‘s
superseding negligence, see Cooke et al., supra, ¶ 5.151, we see no
policy reason why a master on board a ship would normally be in
any better position to appraise a port‘s more subtle dangers than the
party who actually selected that port. The ―commercial reality [is]
that it is the charterer rather than the owner who is selecting the
port or berth,‖ id. ¶ 5.126, and the charterer is more likely to have
at least some familiarity with the port it selected. After all,
charterers do not select ports without good reason (and, in the case
before us, CARCO was directly on the scene, as it had selected its
own berth). Messrs. Gilmore and Black (famous in other areas of
law—Gilmore on commercial law, including secured transactions,
and Black on constitutional law) acknowledged that their rationale
is undermined in those instances where a charterer has more
knowledge of a danger than the master (although they explain that
these situations could be remedied through tort liability14). We
unsafe port. 913 F.3d at 1156. This goes only so far, as it
addresses but half of the safe berth warranty‘s protection, which is
both to provide a master with a contractual excuse for avoiding an
unsafe port and to protect for damages actually sustained in unsafe
ports. Additionally, to the extent Orduna relied on Atkins v. Fibre
Disintegrating Co., 2 F. Cas. 78 (E.D.N.Y. 1868), aff’d sub nom.
Atkins v. The Disintegrating Co., 85 U.S. 272, 299 (1873), we are
similarly unpersuaded. While Atkins featured a safe berth
warranty, id. at 79, it was essentially an application of the named
port exception. See infra Part IV.D. As the ship‘s master made
outside inquiries and was fully aware of the port‘s dangers and yet
did not object, he waived his right to complain later for damage.
Id. at 79–80.
14
Specifically, Gilmore & Black would find an actionable wrong
for charterers directing ships to ports with known dangers, and
31
disagree. To any extent a charterer, however distant, bargains to
send a ship to a particular port and warrants that it shall be safe
there, we see no basis to upset this contractual arrangement.
We are persuaded that the Second Circuit‘s longstanding
formulation of the safe berth clause is the one we should follow.15
See 2 Schoenbaum, supra, § 11-10, at 32–33 (citing The Gazelle,
128 U.S. 474 (1888)) (―[I]f the ship reasonably complies with the
order and proceeds to port, the charterer is liable for any damage
sustained.‖); Stewart C. Boyd et al., Scrutton on Charter Parties
and Bills of Lading, Section IX, art. 69, at 127 (20th ed. 1996)
(same); 2A Michael F. Sturley, Benedict on Admiralty § 175, at
17–25 (7th ed. 2012) (same); Coghlin et al., supra, ¶ 10.110
(same). But see Gilmore & Black, supra, § 4-4, at 204–06.
Beyond the near consensus of these authorities, we are also
convinced that an ―express assurance‖ warranty is most consistent
with industry custom. See Park S.S., 188 F.2d at 806; Cities Serv.,
79 F.2d at 521. Vessel charters are formalized via ―highly
standardized forms,‖ 2 Schoenbaum, supra, § 11-1, at 4–5 (citation
omitted). That some forms explicitly adopt a due diligence
suggest that a charterer may sometimes be ―so situated as
reasonably to be charged with a duty of inquiry, particularly as to
berth.‖ Gilmore & Black, supra, § 4-4, at 205.
15
Though not dispositive, we also note that adhering to the Second
Circuit‘s view on this issue promotes uniformity of maritime law
along the mid-Atlantic seaboard. See Sea-Land Serv., Inc. v. Dir.,
Office of Workers’ Comp. Programs, 552 F.2d 985, 995–96 n.18a
(3d Cir. 1977) (noting deference pursuant to federal comity and
uniformity in maritime law to the Second Circuit, ―since [the Third
Circuit] shares appellate review with the Second Circuit over the
geographical area comprising one of the country‘s major east coast
harbor complexes‖).
32
standard16 suggests that the understood default is to impose liability
on the charterer without regard to the care taken. See Coghlin et
al., supra, ¶¶ 10.52, 10.54. Reading these warranties as dappled
with due diligence would make contractual language explicitly
adopting a due diligence metric pointless, and we disfavor contract
interpretation ―that ‗render[s] at least one clause superfluous or
meaningless.‘‖ Sloan & Co. v. Liberty Mut. Ins. Co., 653 F.3d 175,
181 (3d Cir. 2011) (alteration in original) (quoting Garza v. Marine
Transp. Lines, Inc., 861 F.2d 23, 27 (2d Cir. 1988)). Moreover, the
―always afloat‖ language plainly suggests an express assurance.
To the extent the Fifth Circuit in Orduna deviated from this well-
established standard, we are not persuaded by its reasoning and
decline to follow the course it charted.17 Hence we conclude that
the safe berth warranty is an express assurance made without
regard to the amount of diligence taken by the charterer.
C. Was the Safe Berth Warranty Breached?
As explained, a berth is deemed safe when a ship may
―proceed to it, use it, and depart from it without . . . being exposed
to dangers.‖ Coghlin et al., supra, ¶ 10.123. As noted above, see
supra note 11, CARCO conceded at oral argument that the safe
berth warranty—if applicable—―would include the area in and
around Paulsboro,‖ including the Anchorage, and we therefore
need not delineate the geographic sweep of this warranty. Thus
having determined that Frescati was a beneficiary of CARCO‘s
16
As already mentioned, the time charter party between Star
Tankers and Frescati contains such a standard, as it is predicated on
a Shelltime 4 form. See Coghlin et al., supra, ¶ 10.54.
17
We are also unpersuaded that this warranty applies only to
known hazards. This would effectively undermine the more strict
nature of the warranty by requiring some level of due diligence,
which, for the reasons above, we do not believe is the case.
33
safe berth warranty and that this warranty applies irrespective of a
charterer‘s diligence, we proceed to whether the warranty was
actually breached by the anchor‘s presence. Specifically, we need
to determine whether the anchor rendered CARCO‘s port unsafe
for a ship of the Athos I‘s agreed-upon dimensions and draft.
That the Athos I was injured by the anchor does not
automatically indicate that the warranty was breached. CARCO‘s
safe berth warranty was not a blank check; it did not warrant that
any ship would be safe at its port, but instead assured that the port
would be safe for the Athos I. Boyd et al., supra, Section IX, art.
69, at 129–30 (citations omitted) (―Whether a port is a ‗safe port‘ is
in each case a question of fact and degree and must be determined
with reference to the particular ship concerned . . . .‖); In re Lloyd’s
Leasing Ltd., 764 F. Supp. 1114, 1135 (S.D. Tex. 1990) (―The
safety of a port is to be determined with reference to the vessel and
the circumstances surrounding that vessel‘s use of the port.‖). In
this regard, the District Court correctly framed the ultimate issue as
whether it was possible for a ship of the Athos I‘s purported
dimensions to reach CARCO‘s berth safely. In re Frescati, 2011
WL 1436878, at *6.
The Court, however, neglected to make the necessary
factual findings to resolve whether the warranty was actually
breached. Instead, it concluded ―that the port and berth were
generally safe‖ due to ―the volume of commercial traffic that
passed without incident,‖ notwithstanding that it was impossible to
know how many of those ships had actually passed over the
anchor. Id. That similar ships had successfully berthed at the port
is irrelevant to whether the warranty was actually breached in this
case, as ―[a] dangerous place may often be stopped at or passed
over in safety.‖ The Gazelle, 128 U.S. at 485. Instead, the Court
should have evaluated whether the port was safe based on the facts
particular to the Athos I and its arrival.
34
From what we can glean from the record, it appears that
CARCO warranted a safe berth with the understanding that the
Athos I would be drafting as much as 37 feet of water upon its
arrival. The Voyage Instructions indicate that the vessel would be
filled with a quantity of crude oil ―always . . . consistent with a 37
[foot] or less [fresh water] sailing draft at loadport,‖ J.A. at 1242,
and Captain Markoutsis confirmed this directive, Markoutsis Test.
199:5–9, Oct. 13, 2010. He testified, moreover, that he was ―afraid
of that draft,‖ and opted to load the ship to only 36ʹ6ʺ.18 Id. at
200:7–25. This latter figure was confirmed by CARCO Port
Captain William Rankine, who testified that the Athos I reported
that it was drafting 36ʹ6ʺ, Rankine Test. 41:5–12, Nov. 22, 2010,
and also by Steamship Agent Stephen Carroll, Carroll Test. 63:2–4,
Oct. 7, 2010. In any event, the warranty made by CARCO appears
to have covered the Athos I up to a draft of 37 feet.19 Yet, as noted
throughout this opinion, the District Court made no finding on the
18
We note there is minor disagreement as to this particular figure.
While the record suggests that the Athos I was represented as
drafting 36ʹ6ʺ, Frescati explains that it was actually 36ʹ7ʺ. This
one-inch difference is on its face irrelevant to our analysis, as both
drafts are less than 37 feet.
19
Of course, this is ultimately a factual matter for remand. As
such, we also note that the Voyage Charter between CARCO and
Star Tankers indicates that the ―[l]oaded draft of Vessel on
assigned summer freeboard [is] 12.423 meters [40.76 feet] . . . in
salt water.‖ J.A. at 1220 (Tanker Voyage Charter Party, Part I.A).
While we understand this to mean that the Athos I could draft over
40 feet in salt water if filled to its summer capacity, the facts before
us appear to indicate that it was directed to arrive at CARCO‘s port
drafting 37 feet or less, and that this was the understood basis for
the safe berth warranty.
35
vessel‘s actual draft at the time of the accident. This needs to be
corrected on remand.20
If it is found that the Athos I was drafting 37 feet or less and
absent a determination of bad navigation or seamanship,21 that
finding would indicate that the warranty had been breached
because the ship sustained damage. What, if anything, under the
water may have caused that margin to be diminished is therefore
20
We note that there is record evidence suggesting that the
promised 37 feet of clearance was indeed afforded, namely that Dr.
Traykovski opined that there was—in his most conservative
estimate—between 37.2 and 37.8 feet of water not only above the
riverbed but the anchor itself (presumably at low tide). Traykovski
Test. 49:12–50:24, Nov. 4, 2010.
21
Although the warranty exception for abnormal weather
conditions is not at issue here, CARCO argues that the exceptions
for bad navigation and seamanship apply. CARCO‘s Br. at 77, 80;
see also Coghlin et al., supra, ¶¶ 10.148, 10.166 (citations
omitted); Cooke et al., supra, ¶ 5.151 (citation omitted); Paragon,
310 F.2d at 173–74 (quoting Constantine & Pickering S.S. Co. v.
W. India S.S. Co., 199 F. 964, 967–68 (S.D.N.Y. 1912)) (―It is true
that one liable for violating a safe berth clause ‗may lessen the
amount of damages for which he is responsible by showing
negligence, or even lack of diligence, on the part of the person
wronged, in failing to take steps to lessen certain or even probable
damages.‘‖).
CARCO argues that the vessel‘s master and the navigation
officer believed they were docking at high tide, and in fact were not
(as the tide at the time of the accident was rising but an hour
removed from low tide). However, we find no indication in the
record that the Athos I was attempting to dock at an inappropriate
time.
36
immaterial. It could have been the remnants of a shipwreck, a
range of rocks, a jutting reef, or a shoal. In this case, it happened to
be an abandoned anchor that protruded into the Athos I‘s hull. And
by its safe berth warranty, CARCO assumes liability for that
damage.
If the draft at the time of the accident cannot be determined,
or if the Athos I is found to have been drafting more than 37 feet, it
will be necessary to ascertain the amount of clearance that existed
above the anchor to conclude whether the promised 37 feet of
water depth was actually provided.22 Because it appears that
Frescati assured a safe berth for a ship drafting 37 feet or less, our
concern is whether 37 feet of clearance existed at the time of the
accident.
D. The Named Port Exception
CARCO exposes one additional limitation to the broad
protection generally afforded by the safe berth warranty—the
named port exception. In essence, ―[w]hen a charter names a port
22
If the vessel is found to have been drafting more than 37 feet,
this could potentially reduce CARCO‘s liability even if it were
determined that a safe berth was not provided. In this
circumstance, the commentators note a trend in which damages
resulting from both a breach of a safe berth warranty and the
master‘s negligence may appropriately be split between the parties.
Cooke et al., supra, ¶ 5.152; 2A Sturley, supra, § 175, at 17-26; see
also Ore Carriers of Liber., Inc. v. Navigen Co., 435 F.2d 549,
550–51 (2d Cir. 1970) (affirming an order dividing a ship‘s
damages between the owner and charterer where the charterer had
warranted a safe port, but the owner nonetheless proceeded ―with
full knowledge of the probable unavailability of tug assistance,‖
which was hazardous). In any event, these issues can also be
resolved on remand.
37
and the master proceeds there without protest, the owner accepts
the port as a safe port, and is bound to the conditions that exist
there.‖ Bunge Corp. v. M/V Furness Bridge, 558 F.2d 790, 802
(5th Cir. 1977) (internal quotation marks omitted) (quoting Pan
Cargo Shipping Corp. v. United States, 234 F. Supp. 623, 638
(S.D.N.Y. 1964), aff’d, 373 F.2d 525 (2d Cir. 1967)). The purpose
of the exception is to shift liability to the owner once a ship‘s
master has had ample opportunity to discover a port‘s hazards.23
As such, the exception may apply in instances in which a master—
without lodging any objection—is charged ―with full knowledge of
local conditions which make it unsafe for that particular voyage.‖
Coghlin et al., supra, ¶ 10.158; see also Cooke et al., supra, ¶
5.130 (―[T]he master‘s conduct in entering a port he considers
unsafe without raising a protest may result in a waiver of the safe
port warranty.‖).
This formulation is essentially an application of the above-
mentioned rule that negligent seamanship will nullify the safe port
warranty: once a particular risk becomes known, it is then the
master‘s responsibility to avoid it through competent seamanship
23
Although it never uses the term ―named port exception,‖ Atkins
v. Fibre Disintegrating Co., 2 F. Cas. 78 (E.D.N.Y. 1868), aff’d
sub nom. Atkins v. The Disintegrating Co., 85 U.S. 272, 299
(1873), is a paradigm for the exception. There, ―the peril of the
port was such that no vessel of [the ship‘s] size could get out
without making her safety from the reefs dependent entirely upon
the continuance of the breeze.‖ Id. at 79. Predictably, the breeze
failed, and the ship was damaged on the reef. Id. at 78. The trial
court concluded, however, that the master could not rely on the
agent‘s representation that the port was safe because he failed to
object to the port after having ―made inquiries . . . as to the
character of the port, which was, moreover, fully described in the
Coast Pilot [the official publication describing the coast].‖ Id. at
79–80.
38
or to declare the port unsafe. This application of the exception
does not apply to the case before us, however, as there is no
suggestion that anyone—much less the master of the Athos I—had
any inkling as to the anchor‘s existence in the River.
Instead, and more pertinent to the Athos I, the exception is
also triggered when a particular port is named in the charter party.
See Cooke et al., supra, ¶ 5.130 (―If the charter names the ports or
berths the vessel will call at, the general rule is that the ports or
berths will have been accepted by the owner as safe, such that the
safe port/safe berth warranty is deemed to have been waived.‖);
Coghlin et al., supra, ¶ 10.164 (same) (citations omitted). This
particular application of the exception is very broad and would
seem poised to swallow the rule, but frequently the voyage charter
will specify a range of ports, and thus the ―safe [berth] warranty
continues to play a role in voyage charters.‖ Cooke et al., supra, ¶
5.123. In fact, this is such a case; the voyage charterer (CARCO)
did not specifically name the discharge port in the voyage charter
party, but instead directed that the Athos I would transit to one or
two safe ports located somewhere on the United States Atlantic
Coast, Gulf Coast, or the Caribbean Sea. J.A. at 1225 (Tanker
Voyage Charter Party, Special Provision 2). CARCO nonetheless
maintains that this exception applies even where the port location is
not specifically named in the charter so long as some advance
notice of the designated port is given. It is unclear how much
notice would be required under CARCO‘s theory of the exception,
although CARCO argues that it applies here because there is
evidence that the master knew approximately two weeks before the
accident that the Athos I would be headed to Paulsboro, New
Jersey.
We need not address this issue of advance notice because
we conclude that the hazard of the submerged anchor was not the
sort contemplated by the exception. As explained above, the
purpose of the named port exception is to ―relieve[] the charterer of
liability for damage arising from conditions at that port so long as
39
those conditions were reasonably foreseeable.‖ Duferco Int’l Steel
Trading v. T. Klaveness Shipping A/S, 333 F.3d 383, 387 (2d Cir.
2003) (emphasis added) (citations omitted). Without at least an
opportunity to discover a particular port‘s specific pitfalls, the
identity of the port would be irrelevant. This would defeat the
purpose of naming the port, which is to excuse charterers for the
results of hazardous conditions known to the master, not to
exonerate them completely from all resulting liability.
In sum, here the particular hazard—the submerged anchor—
was unknown to the parties. As the naming of CARCO‘s port
ahead of time did not provide the Athos I with an opportunity to
accept this unknown hazard, the exception does not come into
play.24
V. The Tort Claims
Should its claim regarding CARCO‘s contractual liability
not succeed, Frescati argues in the alternative that CARCO is liable
as the owner of the terminal receiving the Athos I under two tort
theories: negligence and negligent misrepresentation. The District
Court held both theories inapplicable. Although we agree that the
negligent misrepresentation claim fails on these facts, we disagree
24
The District Court determined that although underwater hazards
are a well-known threat, none of the parties had any reason to
believe that Anchorage Number Nine was likely to conceal such a
menace. In re Frescati, 2011 WL 1436878, at *2. To the extent
the Court later determined that knowledge ―in general of lost or
abandoned objects in the river‖ was sufficient to trigger this
exception, id. at *7, that amounted to an error of law. This sort of
general knowledge cannot be used to impute knowledge of a
specific condition, and we see no evidence that the Delaware River
was known to be particularly treacherous in this regard.
40
with the Court‘s conclusion that Frescati‘s negligence claim is
necessarily precluded.
A. Negligence
Negligence in admiralty law is essentially coextensive with
its common law counterpart, requiring: (1) ―[t]he existence of a
duty required by law which obliges the person to conform to a
certain standard of conduct‖; (2) ―[a] breach of that duty by
engaging in conduct that falls below the applicable standard or
norm‖; (3) a resulting loss or injury to the plaintiff; and (4) ―[a]
reasonably close causal connection between the offending conduct
and the resulting injury.‖ 1 Schoenbaum, supra, §§ 5-2, at 252;
Pearce v. United States, 261 F.3d 643, 647 (6th Cir. 2001) (citation
omitted) (same).
Because this accident resulted in a clear loss, we address the
existence of a duty, the potential breach of that duty, and causation.
As discussed above, the wharfinger in this case—CARCO—
contracted to provide the Athos I a safe berth. In the tort context,
however, a wharfinger is not a guarantor of a visiting ship‘s safety,
but is ―‗bound to use reasonable diligence in ascertaining whether
the berths themselves and the approaches to them are in an ordinary
condition of safety for vessels coming to and lying at the wharf.‘‖
Smith v. Burnett, 173 U.S. 430, 436 (1899) (quoting, with approval,
The Calliope, [1891] A.C. 11 (H.L.) 23 (appeal taken from Eng.)).
This is not an unconstrained mandate to ―ensure safe surroundings
or warn of hazards merely in the vicinity.‖ In re Nautilus, 85 F.3d
at 116 (citing Trade Banner Line, Inc. v. Caribbean S.S. Co., S.A.,
521 F.2d 229, 230 (5th Cir. 1975)). Instead, a visiting ship may
only expect that the owner of a wharf has afforded it a safe
approach. Id. (citations omitted). In being invited to dock at a
particular port, ―a vessel should be able to enter, use and exit a
wharfinger‘s dock facilities without being exposed to dangers that
cannot be avoided by reasonably prudent navigation and
seamanship.‖ Id.
41
While CARCO has a duty to maintain a safe approach to its
terminal, we must determine the geographic scope of that duty.
i. The Scope of the Approach
The geographic scope of a safe approach has been largely
unaddressed by the courts. Frescati argues that the scope should be
inferred as a matter of custom and practice, and CARCO counters
that the approach should be a function of the wharfinger‘s exertion
of control. The District Court, in attempting to adopt a workable
method of analysis, was chiefly concerned about CARCO‘s lack of
control in the Anchorage and the absence of a limiting principle if
it were to define the approach as the waters that a ship ―naturally
would traverse.‖ In re Frescati, 2011 WL 1436878, at *4.
Accordingly, it opted to limit the approach to ―the area
‗immediately adjacent‘ to the berth or within ‗immediate access‘ to
the berth.‖ Id. (quoting Western Bulk Carriers v. United States,
No. S-97-2423, 1999 U.S. Dist. LEXIS 22371, at *20–21 (E.D.
Cal. Sept. 14, 1999)). Such immediacy, we believe, sets too
constricted a path to the berth. Instead, we hold that an approach
should be understood by its ordinary terms, and that its scope is
derived from custom and practice at the particular port in question.
Bouchard Transportation Co. v. Tug Gillen Brothers, 389 F.
Supp. 77 (S.D.N.Y. 1975), is helpful in defining the geographic
scope of an approach. It partially concerned a claim by a barge
owner against the terminal owner for negligence in failing to
maintain a safe approach and to warn of an unsafe condition. Id. at
79. The District Court there found that the approach began when
the barge—traveling mid-channel up the Hudson River—altered its
heading such that it was on a straight course to the terminal, which
was the normal practice for ships docking there. Id. at 80. While
executing this procedure, the barge grounded, its hull was
42
punctured, and oil was lost.25 Id. at 80–81. Bouchard concluded
that the terminal owner ―was negligent in failing to maintain the
approach to its terminal, in particular that area outside the river
channel and within its dominion and control, normally utilized as
the southerly approach to its ship dock, free of obstruction and safe
for vessels approaching said terminal.‖26 Id. at 81.
Less instructive, but still worth exploring, is P. Dougherty
Co. v. Bader Coal Co., 244 F. 267 (D. Mass. 1917). There, an
invitation to use a particular dock in a charter party was construed
to ―extend[] to the approaches to the dock, and to the water which
would naturally be traversed or used by a vessel discharging there.‖
Id. at 270 (citing Hartford & N.Y. Transp. Co. v. Hughes, 125 F.
25
The grounding in Bouchard occurred ―immediately adjacent to
the ballast dock,‖ approximately 50 feet away. 389 F. Supp. at 81.
This ―immediately adjacent‖ language, however, does not refer to
the beginning of the approach, but the location of the hazard within
the approach. The District Court in our case adopted this
language—citing Western Bulk Carriers, 1999 U.S. Dist. LEXIS
22371, at *20—as a ―reasonable definition of ‗approach.‘‖ In re
Frescati, 2011 WL 1436878, at *4. We believe this interpreted
Bouchard incorrectly.
26
CARCO argues that this reference to ―dominion and control‖ is a
prerequisite to Bouchard‘s holding. We do not view control as a
requirement, but as a fact of that case where the port was also
deemed negligent for failing to warn of shallow waters in an area
directly off its dock where it had previously dredged. 389 F. Supp.
at 80, 83. Instead, in relying primarily on Smith v. Burnett,
Bouchard held that the terminal owner simply ―had a duty to
ascertain any imminent dangers to [the ship] as it approached.‖ Id.
at 83. Further, to any extent Bouchard does suggest that control is
required, we disagree for the reasons explained below.
43
981 (S.D.N.Y. 1903)). Although P. Dougherty is of limited
usefulness on its facts (the Court was interpreting the parties‘
express agreement to use the dock), its conclusion that the
wharfinger‘s obligation covered ―individual approaches,‖
distinguished from ―the common channel,‖ is nonetheless helpful.
Id. More recently, MS Tabea Schiffahrtsgesellschaft mbH & Co.
KG v. Bd. of Com’rs of the Port of New Orleans, No. 08-3909,
2010 WL 3923168, at *2 (E.D. La. Sept. 29, 2010), aff’d, 434 F.
App‘x 337 (5th Cir. 2011), similarly defined the approach as ―the
area through which vessels travel in order to move from the main
channel of the river to the berth.‖ See also McCaldin v. Parke, 37
N.E. 622, 624 (N.Y. 1894) (determining that a cluster of rocks ―not
in any channel which had to be used to approach the wharf,‖ but
potentially ―in that part of the river used for general navigation,‖
was not within the approach).
In light of these cases, we are persuaded by the suggestion
in the maritime industry associations‘ amici brief that an approach
should be afforded its plain meaning. See Mar. Indus. Ass‘ns
Amici Br. at 20. As a noun, ―approach‖ is defined as ―a drawing
near in space or time,‖ and ―a way, passage, or avenue by which a
place or a building can be approached.‖ Webster’s Third New Int’l
Dictionary 106 (1971). This suggestion is persuasively illustrated
by amici’s reference to an airplane on final approach or a golf ball
approaching the green. Both examples capture the intuitive
meaning of the term as the beginning of a final, linear path to a
fixed point. In fact, Webster’s specifically incorporates those
examples into its definition, listing ―a golfing stroke from the
fairway for the green,‖ ―the steps and motion of a bowler before he
delivers the ball,‖ and the ―descent of an airplane toward a landing
strip.‖ Id.
What is an approach should be given its same plain meaning
in the maritime context; when a ship transitions from its general
voyage to a final, direct path to its destination, it is on an approach.
This is the most logical construction, and it comports with those
44
cases suggesting that an approach should be gleaned from actual
practice. See, e.g., Bouchard, 389 F. Supp. at 80–81 (concluding
that the approach began where vessels departed the channel on a
direct course to the receiving dock and defined it pursuant to the
area ―normally utilized‖). It also reflects the definition used in the
maritime industry. For example, The Mariner’s Handbook defines
―approaches‖ as ―[t]he waterways that give access or passage to
harbours, channels, and similar areas.‖ J.A. Petty, The Mariner’s
Handbook 226 (8th ed. 2004). Further, in most cases it will not
result in a line-drawing problem, a concern raised by CARCO and
shared by the District Court. Entire rivers, bays, and oceans will
not be transformed into approaches. Instead, in most instances the
approach will begin where the ship makes its last significant turn
from the channel toward its appointed destination following the
usual path of ships docking at that terminal. This analysis will
necessarily vary on the characteristics of a particular port, and there
will be close and difficult cases. Accordingly, we believe it may be
useful to analogize the final approach of a vessel to a port to that of
a driveway leading to a home from the public road.27 It is the last
27
In Smith v. Burnett, the United States Supreme Court quoted a
Massachusetts Supreme Court case making a similar comparison
where a defendant failed to warn a schooner of a rock it knew of
adjacent to its wharf.
This case cannot be distinguished in principle from
that of the owner of land adjoining a highway, who,
knowing that there was a large rock or a deep pit
between the traveled part of the highway and his own
gate, should tell a carrier, bringing goods to his house
at night, to drive in, without warning him of the
defect, and who would be equally liable for an injury
sustained in acting upon his invitation, whether he
did or did not own the soil under the highway.
45
segment of the voyage leading directly to the host‘s door. Marine
navigation is further complicated in that ships sometimes have the
luxury of approaching through a variety of different courses across
open water. Yet, so long as a ship is not approaching in an
illogical, unreasonable, or disallowed manner, it will be deemed
within its approach when it is within this final phase of its journey.
ii. Was the Athos I Within the Approach to
CARCO’s Terminal When the Accident
Occurred?
Fortunately, the case before us is not one of the difficult ones,
for the facts indicate that the Athos I was within the approach when
it struck the anchor. First, the vessel was following the usual path
for ships of its size docking at CARCO‘s terminal, having turned
away from the channel at the usual point and was being pushed by
two tugboats in a straight path toward CARCO‘s pier. Moreover,
there were other indicators that the Athos I had ceased navigating
generally and was within the final phase of its travel, namely that it
was rotated sideways and, as noted, assisted by tugs. While not
dispositive factors, these trappings indicate that the Athos I was no
longer voyaging, but was configured solely for docking.
To the extent CARCO argues that the sphere of control
exercised by it should be used to limit the scope of its duty, 28 we
173 U.S. at 434 (quoting Carleton v. Franconia Iron & Steel Co.,
99 Mass. 216, 219 (1868) (internal quotation marks omitted)).
28
In further support of this position, CARCO cites to Sonat Marine
Inc. v. Belcher Oil Co., 629 F. Supp. 1319 (D.N.J. 1985), aff’d, 787
F.2d 583 (3d Cir. 1986) (table). That case, however, does not
apply on its facts, and uses a wharfinger‘s assumption of control to
expand, rather than limit, the scope of its liability. Specifically,
that wharfinger took the initiative secretly to widen its approach
46
hold that a failure to exercise control over an area is not conclusive
in this analysis. The appeal of The Moorcock long-ago dispatched
this argument.29 [1889] 14 P.D. 64 (Eng.). The steamship
Moorcock was invited to be discharged and loaded at a particular
wharf where it would be moored alongside the wharfingers‘ jetty.
Id. at 64. Although the ship was expected to rest on the bottom of
the River Thames at low tide, the particular section of riverbed was
not actually under the wharfingers‘ control. Id. at 69. Even so, the
Court explained that it ―d[id] not follow that [the wharfingers] are
relieved from all responsibility. They are on the spot.‖ Id. at 70. It
continued:
No one can tell whether reasonable safety has been
secured except themselves, and I think if they let out
their jetty for use they at all events imply that they
have taken reasonable care to see whether the berth,
which is the essential part of the use of the jetty, is
safe, and if it is not safe, and if they have not taken
such reasonable care, it is their duty to warn persons
because ―it recognized that larger vessels had problems entering the
barge berth and required a greater margin of safety.‖ Id. at 1322.
Insofar as the terminal operator had ―assumed sufficient control
over that area to attempt to ensure a proper approach to the ship
and barge terminal,‖ id. at 1327, it was deemed negligent for
―fail[ing] to use means adequate[, such as side scans or wire drags,]
to ensure that the new area where it thought larger barges could
safely go was free of obstructions,‖ id. at 1325. Control aside, the
District of New Jersey Court also noted that a ―safe approach to the
berth had to include the additional . . . area.‖ Id. at 1326.
29
That the appeal of The Moorcock was operating under a theory
of an implied contractual warranty does not reduce its import for
purposes of this analysis. [1889] 14 P.D. 64 at 68 (Eng.).
47
with whom they have dealings that they have not
done so.
Id.; see also The Cornell No. 20, 8 F. Supp. 431, 433 (S.D.N.Y.
1934) (―However, it is clear that the obligation of the wharfinger is
not limited to the area of the land under water actually owned by
it. . . . It impliededly [sic] represents to the master of a vessel who
is induced to bring his vessel to its wharf that the berth and
immediate access to it are reasonably safe for the vessel.‖).
In addition, insofar as the sphere of responsibility exercised
by CARCO is a voluntary assumption of duty, it cannot be relied
on to restrict the scope of a port owner‘s duty as a matter of law.
Limiting a wharfinger‘s responsibility to areas in which it has
affirmatively assumed responsibility would allow it to define the
scope of its own liability regardless of the port‘s actual approach.
Such a construction plays poorly against a policy that places logic
and common sense over self-serving limitations of liability in the
tort context. Moreover, we are not convinced that CARCO was
actually precluded from extending its area of responsibility into the
Anchorage. The record reflects that permission to it was not
required for sonar scans, for example, and the record lacks an
indication that CARCO could not have obtained a dredging permit
for the Anchorage if it desired to do so.
We conclude that the Athos I was well within the approach
to CARCO‘s terminal when the casualty occurred, and that it
therefore had a duty to exercise reasonable diligence in providing
the Athos I with a safe approach.
iii. Potential Breach of Duty to Maintain a Safe
Approach
Having determined that the Athos I was within its approach
when it was damaged and that CARCO therefore owed it a safe
approach, did CARCO satisfy that duty by exercising the standard
48
of care required of a reasonable wharfinger under the
circumstances? Although the ―the nature and extent of the duty of
due care is a question of law,‖ factual issues predominate here as
they do in most negligence litigation. Redhead v. United States,
686 F.2d 178, 182 (3d Cir. 1982). Thus, we review findings of
negligence as factual findings for clear error. See In re Moran
Towing Corp., 497 F.3d 375, 377–78 (3d Cir. 2007); Andrews v.
United States, 801 F.2d 644, 646 (3d Cir. 1986). As noted, there
were no findings.
Negligence exists where there was a ―fail[ure] to exercise
that caution and diligence which the circumstances demanded, and
which prudent men ordinarily exercise.‖ Grand Trunk R.R. v.
Richardson, 91 U.S. 454, 469 (1875). The admiralty context is no
different, requiring ―reasonable care under the particular
circumstances.‖ 1 Schoenbaum, supra, § 5-2, at 253 (citation
omitted); see also Smith, 173 U.S. at 436 (remarking that
wharfingers are ―bound to use reasonable diligence‖ (citation and
quotation marks omitted)). In admiralty, the particular duty
required under any given circumstance can be gleaned from statute,
custom, or ―the demands of reasonableness and prudence.‖ 1
Schoenbaum, supra, § 5-2, at 253 (citing Pennsylvania R.R. v. S.S.
Marie Leonhardt, 202 F. Supp. 368, 375 (E.D. Pa. 1962), aff’d, 320
F.2d 262 (3d Cir. 1963)). Of course, ―the degree of care which the
law requires in order to guard against injury to others varies greatly
according to the circumstances of the case.‖ Richardson, 91 U.S.
at 469–70.
On the facts before us, we are insufficiently informed to
delineate the exact standard of care required by CARCO,30 let
30
In evaluating the specific nature of this duty, the parties point to
no statute on point and our research reveals none. As to custom, it
―is only evidence of a standard of care[,] and violation of custom or
adherence to it does not necessarily constitute negligence or lack of
49
alone whether there was a breach of that standard (a.k.a. duty).
That task rests with the District Court on remand should it need to
reach the negligence claim.
iv. Causation
On remand, the District Court will also need to determine
whether the failure, if any, to meet the standard of care proximately
caused the accident. ―Questions of causation in admiralty are
negligence.‖ In re J.E. Brenneman Co., 322 F.2d 846, 855 (3d Cir.
1963) (citations omitted); Norton v. Ry. Express Agency, Inc., 412
F.2d 112, 114 (3d Cir. 1969) (―Although not controlling, custom
and practice may be shown to establish the standard of care to
which the party charged with the wrongful act may be required to
conform.‖).
The District Court also determined that no industry custom
would have ―put CARCO on notice that it should scan into the
Anchorage.‖ In re Frescati, 2011 WL 1436878, at *4. It is unclear
if this apparent factual finding refers to other River terminals not
searching their full approaches, federal waters generally, or
Anchorage Number Nine specifically. Unfortunately, a review of
the record leaves us similarly adrift. While several trial witnesses
testified that they did not know of any Delaware River terminal
taking precautionary action within federal waters, the Chief of
Operations Division for the U.S. Army Corps of Engineers
suggested that at least one terminal had surveyed the federal waters
preceding its berth. See DePasquale Test. 104:20–105:13, Oct. 6,
2010. Ultimately, the record is unhelpful on this point because we
do not know if any of the terminals on the River had an approach
that also traversed federal waters like CARCO‘s did. Of course,
the only relevant consideration for custom would be similarly
situated terminals, and we are unable to make any meaningful
assessment of industry custom on these facts.
50
questions of fact.‖ Stolt Achievement, Ltd. v. Dredge B.E.
LINDHOLM, 447 F.3d 360, 367 (5th Cir. 2006); see also In re
Nautilus, 85 F.3d at 116 (reviewing, in admiralty, a district court‘s
determination as to causation for clear error).
The purpose of requiring proximate cause is ―to limit the
defendant‘s liability to the kinds of harms he risked by his
negligent conduct.‖ 1 Dan B. Dobbs et al., The Law of Torts § 198,
at 681 (2d ed. 2011) (citations omitted). Proximate cause is
something of a misnomer in that it ―is not about causation at all but
about the appropriate scope of legal responsibility.‖ Id. at 682.
Instead, ―proximate cause holds that a negligent defendant is liable
for all the general kinds of harms he foreseeably risked by his
negligent conduct and to the class of persons he put at risk by that
conduct.‖ Id. at 682–83; 1 Schoenbaum, supra, § 5-3, at 260–61
(―[T]he injury or damage must be a reasonably probable
consequence of the defendant‘s act or omission.‖).
CARCO argues that proximate cause is lacking on these
facts because the presence of an anchor in the anchorage was not
foreseeable, especially by virtue of other ships arriving unharmed
in the past. Once again, we decline to resolve this issue on the
record before us. CARCO further argues that proximate cause is
lacking on the basis that the anchor-dropper was the actual cause of
the accident. It is clear, however, ―‗that there may be more than
one proximate cause of an injury.‘‖ Serbin v. Bora Corp., 96 F.3d
66, 75 (3d Cir. 1996) (quoting Davis v. Portline Transportes Mar.
Internacional, 16 F.3d 532, 544 (3d Cir. 1994)).
More crucially, the issue is whether the accident would have
been prevented had CARCO exercised its duty to act as a prudent
wharfinger within the approach. At a minimum, this requires ―that
the injury would not have occurred without the defendant‘s
negligent act.‖ 1 Schoenbaum, supra, § 5-3, at 259. Here, the
causation inquiry turns on whether prudent behavior—had it been
exercised, a factual inquiry—would have prevented the injury. See
51
Dobbs et al., supra, § 184, at 620. In light of CARCO‘s invitation
that the Athos I arrive drafting 37 feet or less, see supra Part IV.C,
it may be that the anchor lay sufficiently deep such that it would
not have been detected even if CARCO had acted as a prudent
wharfinger. Conversely, it could be the case that—even if the 37
feet of contractual clearance were provided—CARCO‘s duty as a
wharfinger required something more. Should this be put in issue,
further inquiry must occur as to what diligence was required of a
prudent wharfinger, and only then can the District Court determine
whether a failure to implement those procedures proximately
caused the accident.31
Therefore, because factual issues remain to be resolved if
Frescati‘s negligence claim becomes relevant, we also remand for
further proceedings, as necessary, on this claim.
B. Negligent Misrepresentation
Frescati argues that CARCO‘s failure to inform the Athos I
of the reduction in maximum draft at its facility‘s ship dock prior to
the vessel‘s arrival was a negligent misrepresentation. The District
Court held otherwise, reasoning that ―the area of concern was not
the area where the casualty occurred and the draft at the berth was
factually irrelevant to the casualty.‖ In re Frescati, 2011 WL
1436878, at *5. We reach essentially the same result.
Negligent misrepresentation stems from a failure to exercise
reasonable care in supplying incorrect information during the
course of a business transaction. Coastal (Berm.) Ltd. v. E.W.
31
We note that the District Court was ―not convinced that had the
area been scanned the anchor would perforce have been
detected . . . .‖ In re Frescati, 2011 WL 1436878, at *4. We
interpret the Court‘s remark as contemplating the effort required to
detect the anchor absent an incident, as the anchor was in fact
discovered with the use of side-scan technology.
52
Saybolt & Co., Inc., 826 F.2d 424, 428 (5th Cir. 1987) (citing
Grass v. Credito Mexicano, S.A., 797 F.2d 220, 223 (5th Cir.
1986)). The receiving party must rely on that false information and
thereby suffer injury. Id. at 428–29 (citing same). This
formulation, set out by § 552 of the Restatement (Second) of Torts,
implicitly incorporates the standard elements of negligence: duty
of care, a breach of that duty, injury, and causation. See J.E.
Mamiye & Sons, Inc. v. Fid. Bank, 813 F.2d 610, 615 (3d Cir.
1987); 1 Schoenbaum, supra, § 5-2, at 252.
CARCO initially explained in its Port Manual that the
allowable maximum draft at its Paulsboro facility was 38 feet, but
this ―may change from time to time and should be verified prior to
the vessel‘s arrival.‖ J.A. at 1095 (CITGO Terminal Regulations
for Vessels ¶ 2). On November 22, 2004, four days before the
Athos I arrived, CARCO‘s Port Captain Rankine announced
internally that ―the maximum draft at Paulsboro berth #1 (ship
dock) has been reduced to 36-00 feet.‖ J.A. at 1702. No one
informed the Athos I of the change (and apparently its personnel
did not inquire). This meant that the Athos I would have to enter
CARCO‘s port under an exception to the maximum draft, and in
any event Port Captain Rankine was comfortable with this because
the Athos I would not be lying in the shallower area next to its dock
that motivated the draft reduction.32 Rankine Test. 41:22–42:3,
Nov. 22, 2010.
32
Rankine testified that such exceptions are common in the
industry, and that he was not concerned for the Athos I because a
ship drafting 37ʹ3ʺ had sat through low water just ten days before
without harm. Rankine Test. 38:22-23, 41:22–42:9, Nov. 22, 2010.
When the trial judge inquired about the rationale for making
regular exceptions, Rankine replied that he was required by the
guidelines to make the reduction, but that he did not ―have any
53
On its terms, the reduction was limited to CARCO‘s ship
dock. Although Frescati argues that the Athos I would not have
berthed at CARCO‘s facility (its actual ship dock, but not the
approach to it through the Anchorage) so early in the rising tide if
its crew had known of the reduction in maximum allowable draft,
this is irrelevant to its decision to enter Anchorage Number Nine—
the site of the submerged anchor.
In this context, any misrepresentation about the ship dock is
factually irrelevant to the accident because it did not occur at the
dock, but rather 900 feet out in the Anchorage. There was no
injury sustained that resulted from the failure to note the draft
reduction at or immediately adjacent to CARCO‘s dock. Frescati‘s
negligent misrepresentation claim thus fails on its merits as a
matter of law.
VI. Effect of the Government’s Settlement With CARCO
In its limited settlement agreement with the Government,
CARCO promised not to
demand that the court reduce or offset the damages
awarded to the United States against [CARCO] in the
Lawsuit based on evidence that the negligence or
fault of the United States in failing to detect, mark
and/or remove underwater obstructions to navigation
in the navigable waters of the Delaware River caused
or contributed to the ATHOS I Incident.
J.A. at 95 (Release ¶ 3.1(b)). It thus asks us to preclude CARCO
on remand from raising any equitable defense premised on the
Government‘s regulation of the Anchorage. CARCO responds that
it retained unspecified equitable defenses relevant to defending
worries about the depth of water in the area where the ship was
going to sit.‖ Id. at 45:18-25.
54
against, inter alia, the contractual claims, and that the Government
conflates defenses to these claims with violations of CARCO‘s
promise to forbear making claims against the Government
sounding in tort to reduce or offset damages awarded to it.33
The Government also argues that the District Court
mistakenly denied its earlier motion for summary judgment on
CARCO‘s defense of equitable recoupment,34 as that defense was
really just a disguised attempt for indemnity or contribution
payments. After hearing oral argument, the District Court denied
the Government‘s pretrial motion on the ground ―that the question
of subrogation defenses [by CARCO] is better resolved with the
benefit of a full trial record.‖ J.A. at 101. CARCO claims that the
Government failed to follow up at trial, and thus waived the issue.
We agree, as we see no indication that the Government renewed its
33
The Government argues that CARCO has attempted to
circumvent this partial settlement agreement by presenting against
it negligence claims couched as equitable defenses. CARCO
explicitly retained ―the right to raise affirmative defenses under any
theory or doctrine of law or equity, the right to assert setoff or
recoupment and the right to assert compulsory or non-compulsory
counterclaims other than a Claim for Contribution or
Indemnity . . . .‖ J.A. at 97 (Release ¶ 4.2). It was further agreed
that the partial settlement would have no force as to CARCO‘s suit
with Frescati. Id. at 97–98 (Release ¶ 4.3).
34
Equitable recoupment is ―[a] principle that diminishes a party‘s
right to recover a debt to the extent that the party holds money or
property of the debtor to which the party has no right.‖ Black’s
Law Dictionary, supra, at 618. The competing claims must arise
from the ―same transaction.‖ Phila. & Reading Corp. v. United
States, 944 F.2d 1063, 1075 (3d Cir. 1991) (quoting United States
v. Dalm, 494 U.S. 596, 608 (1990)).
55
argument at trial (or argued before us how the issue has not been
waived). Thus, we decline to preclude CARCO from revisiting any
previously raised equitable defense to the Government‘s
subrogation claims.
VII. Conclusion
Although remand is appropriate because the District Court
failed to set out separate findings of fact and conclusions of law as
required by Federal Rule of Civil Procedure 52(a)(1), our legal
conclusions also make it necessary to remand for factual findings.
We conclude that the Athos I, and Frescati as its owner, are
beneficiaries of CARCO‘s contractual safe berth warranty. This
was an express assurance that CARCO‘s port would be safe for the
Athos I within the scope of its invitation—that is, drafting 37 feet
or less. Therefore, on remand it will need to be determined
whether this amount of clearance was actually provided. This
analysis may require inquiries into the arriving draft of the Athos I
and, if the vessel was drafting more than the agreed-upon depth of
37 feet, the depth and positioning of the anchor.
CARCO‘s assertion of the named port exception is
unavailing. Even if it were eligible on the type of notice given to
the Athos I, its crew did not have an opportunity to accept a hazard
(the anchor) that was unknown to the parties prior to the accident,
and the exception is inapplicable.
We further conclude that, as this case is primarily a
contractual one, analysis of Frescati‘s negligence claim is required
only if the contractual safe berth warranty of CARCO is deemed
satisfied. In that event, because we conclude that the accident
occurred within the approach to CARCO‘s terminal, the District
Court would need to determine the appropriate standard of care,
whether it was breached, and, if so, was that breach a cause of the
spill. The negligent misrepresentation claim, however, fails for
56
lack of factual causation because the alleged misrepresentation
applied to an area unrelated to the accident.
Finally, we conclude that the Government has waived its
reliance on its partial settlement agreement in challenging
CARCO‘s defenses to liability.
We thus affirm in part, vacate in part the District Court‘s
judgment orders of April 12, 2011 against Frescati and the
Government, and remand for further proceedings consistent with
this opinion. Further appeals relating to this case will be referred to
the current panel.
57
Appendix A
58