Corvus Energy Ltd. v. 1169997 Ontario, Ltd. ( 2017 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
FOSS MARITIME COMPANY, No. 15-35859
Plaintiff,
D.C. No.
v. 2:14-cv-01243-
MJP
CORVUS ENERGY LIMITED,
Defendant-Appellant,
OPINION
v.
1169997 ONTARIO, LTD., DBA
Aspin Kemp & Associates, a
Canadian private limited company,
Third-Party-Defendant-Appellee.
Appeal from the United States District Court
for the Western District of Washington
Marsha J. Pechman, District Judge, Presiding
Argued and Submitted December 8, 2017
Seattle, Washington
Filed December 27, 2017
2 CORVUS ENERGY V. 1169997 ONTARIO
Before: Richard C. Tallman and Paul J. Watford, Circuit
Judges, and Roger T. Benitez,* District Judge.
Per Curiam Opinion
SUMMARY **
Admiralty
The panel affirmed the district court’s grant of summary
judgment in favor of the defendant in a third-party
contribution and indemnification action concerning fire
damage to a tugboat.
Foss Maritime Co., the vessel owner, brought tort and
contract claims against Corvus Energy Ltd., which
impleaded 11699997 Ontario Ltd. d/b/a Askin Kemp &
Associates (“AKA”). Foss added AKA as a defendant and
settled with AKA, releasing claims against Corvus for
liabilities arising from the actions or inaction of AKA.
Corvus then settled with Foss. AKA successfully moved for
summary judgment, seeking to dismiss Corvus’s third-party
contribution and indemnity action against AKA.
The panel held that Corvus could not seek indemnity
against AKA because Corvus settled with Foss and no fact-
finder made a determination of fault; Foss explicitly released
*
The Honorable Roger T. Benitez, United States District Judge for
the Southern District of California, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
CORVUS ENERGY V. 1169997 ONTARIO 3
all claims against Corvus related to AKA’s wrongdoing; and
allowing Corvus’s indemnity action would dissuade
settlement.
COUNSEL
Steven William Block (argued), Foster Pepper PLLC,
Seattle, Washington, for Defendant-Appellant.
Donald K. McLean (argued), Bauer Moynihan & Johnson
LLP, Seattle, Washington, for Third-Party-Defendant-
Appellee.
OPINION
PER CURIAM:
Appellant Corvus Energy Ltd. (“Corvus”) appeals from
the district court’s grant of summary judgment for 1169997
Ontario Ltd., d/b/a Aspin Kemp & Associates (“AKA”) in
its third-party contribution and indemnity action. We have
jurisdiction under 28 U.S.C. § 1291, and we review the
district court’s grant of summary judgment de novo. Colwell
v. Bannister, 763 F.3d 1060, 1065 (9th Cir. 2014).
In 2010, Foss Maritime Co. (“Foss”) and Corvus entered
into a contract for Corvus to design, build, and install a
hybrid power system on Foss’s vessel, the CAMPBELL
FOSS. Foss contracted with AKA to integrate the Corvus
hybrid power system into the existing diesel power system.
On August 20, 2012, the CAMPBELL FOSS suffered a
battery fire in one of the modules provided by Corvus.
Corvus alleges that the fire occurred because AKA
4 CORVUS ENERGY V. 1169997 ONTARIO
disregarded Corvus’s instruction regarding the proper
charging algorithm. AKA counters that Corvus wrote a
defective software algorithm for its battery system. An
investigation by a team of representatives of Foss, Corvus,
AKA, and the Coast Guard found both Corvus and AKA to
be at fault for the fire.
In 2014, Foss brought tort and contract claims against
Corvus for damage to its tugboat. After Corvus impleaded
AKA, Foss amended its complaint to include AKA as a co-
defendant. Foss and AKA thereafter settled with Foss
explicitly releasing all claims against Corvus “for liabilities
arising from the actions or inaction of [AKA].” Corvus then
settled with Foss. AKA successfully moved for summary
judgment seeking to dismiss Corvus’s third-party
contribution and indemnity action against AKA. We affirm.
On appeal, Corvus asserts that it should not be barred
from seeking indemnity because (1) Corvus and AKA are
not joint tortfeasors and AKA is wholly at fault; (2) Corvus
could still be held liable under contract and strict liability
theories regardless of fault; and (3) the equities lie with
Corvus. We find these arguments unavailing.
In McDermott, Inc. v. AmClyde, the Supreme Court
addressed the issue of whether non-settling defendants in
admiralty cases may seek contribution from a settling
defendant. 511 U.S. 202 (1994). Establishing that each co-
defendant only bears its own proportionate share of liability,
the Court held that “no suits for contribution from the
settling defendants are permitted, nor are they necessary,
because the nonsettling defendants pay no more than their
share of the judgment.” Id. at 209. In its decision, the Court
found “three considerations . . . paramount: consistency
with the proportionate fault approach of [earlier case law],
promotion of settlement, and judicial economy.” Id. at 211.
 CORVUS ENERGY V. 1169997 ONTARIO 5
We have not yet decided whether the AmClyde rule
applies to suits for indemnity. Corvus argues that it has a
right to tort indemnity, which is available if Corvus paid
damages for which it and AKA were jointly liable but which
were caused almost entirely by AKA, essentially rendering
Corvus liable for AKA’s actions. See Thomas J.
Schoenbaum, Admiralty and Maritime Law § 5-19(2)(a)
(5th ed. 2017); 2-1 Benedict on Admiralty § 13 (2017).
Contractual indemnity is unavailable because the parties
agree that there was no express indemnification agreement
between Corvus and AKA. Implied contractual indemnity
is generally unavailable outside of the context of personal
injury, see Knight v. Alaska Trawl Fisheries, 154 F.3d 1042,
1046 (9th Cir. 1998); Admiralty and Maritime Law § 5-9,
and this action involves only property damage.
Other courts have barred indemnity and contribution
actions by co-defendants in contexts where the proportionate
share approach governed the allocation of damages. See
Ondimar Transportes Maritimos v. Beatty St. Props., Inc.,
555 F.3d 184, 187 (5th Cir. 2009) (holding that AmClyde’s
proportionate liability scheme bars a settling tortfeasor from
seeking contribution from a non-settling tortfeasor);
Lexington Ins. Co. v. S.H.R.M. Catering Servs., Inc.,
567 F.3d 182, 185 (5th Cir. 2009) (holding that a settling
tortfeasor may not seek recovery from a non-settling
tortfeasor based on an assignment of the property damage
claim by the plaintiff); Murphy v. Fla. Keys Elec. Co-op.
Ass’n, Inc., 329 F.3d 1311, 1315 (11th Cir. 2003) (“No suit
for contribution will lie against a nonsettling defendant who
is not released from liability, because that defendant remains
liable for its proportionate share of damages regardless of the
terms of the settlement the other defendant made.”); Koppers
Co. v. Aetna Cas. & Sur. Co., 98 F.3d 1440, 1453 n.15 (3d
Cir. 1996) (“[T]he apportioned share set-off rule is superior
6 CORVUS ENERGY V. 1169997 ONTARIO
to a rule permitting (or requiring) suits for contribution and
indemnity because the former rule promotes both judicial
economy and settlement—while also avoiding collusive
settlement by placing the burden of a low settlement on the
plaintiff.”).
Here, the proportionate share approach governed the
damages Foss sought from AKA and Corvus. Fault-based
tort damages are apportioned by proportionate fault. See
AmClyde, 511 U.S. at 207–08; United States v. Reliable
Transfer Co., 421 U.S. 397, 411 (1975). We have held that
strict product liability damages are also apportioned by
proportionate fault in the personal injury context, see Pan-
Alaska Fisheries v. Marine Const. & Design Co., 565 F.2d
1129, 1138 (9th Cir. 1977), and we see no reason why that
rule should not extend to property damage. See GIC
Services v. Freightplus USA, 866 F.3d 649, 663–64 (5th Cir.
2017). Unlike in Evanow v. M/V Neptune, 163 F.3d 1108
(9th Cir. 1998), a case on which Corvus relies heavily, there
was no salvage contract here that determined the division of
damages and no judge- or jury-imposed damage award. See
id. at 1119.
Therefore, Corvus’s assertion that it is not at fault but
still could have been held liable under contract or strict
liability theories is not persuasive in the maritime context.
See Reliable Transfer Co., 421 U.S. at 411. Moreover, its
failure to litigate against Foss, as plaintiff, precludes Corvus
from disrupting AKA’s settlement with Foss for all claims
related to AKA’s wrongdoings. To hold otherwise, would
“discourage[] settlement and lead[] to unnecessary ancillary
litigation.” AmClyde, 511 U.S. at 211 (emphasis added).
Therefore, because (1) Corvus settled with Foss and no
fact-finder made a determination of fault, (2) Foss explicitly
released all claims against Corvus related to AKA’s
CORVUS ENERGY V. 1169997 ONTARIO 7
wrongdoing, and (3) allowing Corvus’s indemnity action
would dissuade settlement, contrary to the Supreme Court’s
rationale in AmClyde, we will not disturb the district court’s
ruling.
Costs are awarded to Appellee.
AFFIRMED.