Taira Lynn Marine Limited Number 5, LLC v. Jays Seafood, Inc.

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
March 23, 2006
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
No. 04-31069
In Re: In the Matter of the Complaint of TAIRA LYNN MARINE
LIMITED NUMBER 5, LLC, as Owner of the M/V MR. BARRY for
Exoneration From or Limitation of Liability
TAIRA LYNN MARINE LIMITED NUMBER 5, LLC; ET AL.,
Plaintiffs-Appellants,
versus
JAYS SEAFOOD, INC.; ET AL.,
Defendants,
E. J. MASON, Individually
and doing business as Mason Seafood,
Defendant - Claimant - Third Party Plaintiff -Appellee,
COASTLINE MARINE, INC.; MARINE TURBINE TECHNOLOGIES, LLC; MTT
PROPERTIES, LLC; MTT MANUFACTURING, LLC; MORTON INTERNATIONAL,
INC.; CVD, INC., doing business as Rohm & Haas Advanced
Materials; TWIN BROTHERS MARINE; COY REEKS, Individually
and doing business as Riverfront Seawalks and Bulkheads; TWIN
BROTHERS MARINE, CORP.; BAGALA’S QUALITY OYSTERS, INC.; DOUGLAS
OLANDER, Individually and doing business as Big D’s Seafood;
CRYSTAL OLANDER, Individually and doing business as Big D’s
Seafood; IVO JURISICH, Individually and doing business as Blue
Gulf Seafood, Inc.; TOMMY KLEINPETER, Individually and on behalf
of Cajun Wireline, Inc.; NORTH AMERICA SALT CO.; CAREY SALT, CO.;
PAM DORE, Individually and on behalf of Cove Marina; LEGNON
ENTERPRISES, INC.,
Defendants - Claimants - Cross Claimants -Appellees,
versus
WATER QUALITY INSURANCE SYNDICATE,
Defendant-Claimant-Appellant,
LOUISIANA DEPARTMENT OF TRANSPORTATION AND DEVELOPMENT,
Defendant-Counter Defendant-Cross Defendant-Appellant,
KIRBY INLAND MARINE LP, formerly known as Kirby Inland Marine, Inc.,
Third Party Defendant-Cross Defendant-Appellant.
In Re: In the Matter of the Complaint of Kirby Inland Marine,
LP, formerly known Kirby Inland Marine, Inc., as Owner of the T/B
Kirby 31801 for Exoneration From or Limitation of Liability
KIRBY INLAND MARINE, formerly known as Kirby Inland Marine, Inc.
as owner of the T/B Kirby 31801,
Plaintiff - Cross Defendant - Appellant,
versus
DAVID J. ANDRAS, JR.; ET AL.,
Defendants,
E. J. MASON, Individually and doing business as Mason Seafood,
Defendant - Claimant - Appellee,
COASTLINE MARINE, INC.; MARINE TURBINE TECHNOLOGIES, LLC.; MTT
PROPERTIES, LLC; MTT MANUFACTURING, LLC; MORTON INTERNATIONAL, INC.;
CVD, INC., doing business as Rohm & Haas Advanced Materials; TWIN
BROTHERS MARINE, INC.; COY REEKS, Individually and doing business
as Riverfront Seawalks and Bulkheads; TWIN BROTHERS MARINE, CORP.;
BAGALA’S QUALITY OYSTERS, INC.; DOUGLAS OLANDER, Individually and
doing business as Big D’s Seafood; CRYSTAL OLANDER, Individually
and doing business as Big D’s Seafood; IVO JURISICH, Individually
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and doing business as Blue Gulf Seafood, Inc.; TOMMY KLEINPETER,
Individually and on behalf of Cajun Wireline, Inc.; NORTH AMERICA
SALT CO.; CAREY SALT CO.; PAM DORE, Individually and on behalf of
Cove Marina; LEGNON ENTERPRISES, INC.,
Defendants - Claimants - Cross Claimants -Appellees.
Appeal from the United States District Court
for the Western District of Louisiana
Before BENAVIDES, STEWART, and OWEN, Circuit Judges.
CARL E. STEWART, Circuit Judge:
The primary issue on appeal is whether claimants who suffered no physical damage to a
proprietary interest can recover for their economic losses as a result of a maritime allision. Fourteen
businesses and business owners brought claims under the general maritime law, the Oil Pollution Act
of 1990 (OPA), 33 U.S.C. §§ 2701-2761 (2000), the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA), 42 U.S.C. §§ 9601-9675 (2000), and state law. The
appellants filed motions for partial summary judgment to dismiss these claims, which the district court
denied. We reverse.
I. FACTUAL AND PROCEDURAL BACKGROUND
On June 19, 2001, the M/V MR. BARRY and its tow, the T/B KIRBY 31801, allided with
the Louisa Bridge in St. Mary Parish, Louisiana. Kirby Inland Marine, L.P. (“Kirby Inland”) owned
the barge; Taira Lynn Marine, Inc. (“Taira Lynn”) owned and operated the tug; and the Louisiana
Department of Transportation and Development (“the State”) owns the bridge. The cargo on the
barge, a gaseous mixture of propylene/propane, discharged into the air as a result of the allision.
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Consequently, the Louisiana State Police ordered a mandatory evacuation of all businesses and
residences within a certain radius of the Louisa Bridge.
Taira Lynn initiated the underlying litigation under the Limitation of Liability Act, 46 U.S.C.
app. § 183 (2000), in which several hundred claims were filed. The original proceeding also
consolidated two declaratory judgment actions involving insurance coverage issues. Fourteen
businesses and business owners (collectively, “Claimants”) that are parties to this appeal filed claims
in the limitation action seeking to recover damages under the general maritime law, OPA, CERCLA,
and state law.
Because of the complexity of the case, the district court referred discovery to the magistrate
judge who limited the initial phase of discovery to the claims alleging solely economic loss. Taira
Lynn, Kirby Inland and the State then filed motions for partial summary judgment on the grounds that
Claimants’ recovery for economic losses unaccompanied by damage to a proprietary interest is barred
by Louisiana ex. rel. Guste v. M/V TESTBANK, 752 F.2d 1019, 1023 (5th Cir. 1985) (en banc).
Those claims alleging direct property damage and/or personal injury as well as economic loss were
not included in the motions.
The district court concluded that it was “foreseeable that an allision between a barge and the
Louisa swing bridge would disrupt the only means of ingress and egress to Cypremore [sic] Point.”
In re Taira Lynn Marine Limited No. 5, 349 F. Supp. 2d 1026, 1032 (W.D. La. 2004). Reasoning
that the claims were confined to a limited geographic region and that Claimants were making
commercial use of the bridge, the court endorsed a “geographic exception” to the rule barring
recovery for economic losses absent physical damage and concluded that the claimants alleging solely
economic losses should have an opportunity to present their claims in court. Id. at 1035. The court
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concluded that not all of the claimants alleged purely economic losses and thus, those claims survived
the motion for summary judgment. Accordingly, the court denied the motions for partial summary
judgment as to each of the fourteen claimants. The court also concluded that the OPA and CERCLA
claims were not ripe for summary judgment because they raised genuine issues of material fact and
were outside of the scope of discovery. Taira Lynn, Kirby Inland, the State, and Water Quality
Insurance Syndicate (collectively, “Appellants”) appeal the district court’s rulings. The district court
certified the judgment as appealable pursuant to 28 U.S.C. § 1292(b) and this court granted
permission to appeal.
Before we address the claims at issue, we find it necessary to emphasize what is not before
us. Appellants’ motion for summary judgment did not include claims involving personal injury,
physical damage, or the claims of commercial fishermen. Thus, the only claims before this court are
claims for purely economic losses.
II. STANDARD OF REVIEW
This court reviews a district court’s summary judgment decision de novo, applying the same
legal standards as the district court. Am. Home Assurance Co. v. United Space Alliance, LLC., 378
F.3d 482, 486 (5th Cir. 2004). “A summary judgment motion is properly granted only when, viewing
the evidence in the light most favorable to the nonmoving party, the record indicates that there is no
genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of
law.” Id. (citing Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)).
III. CLAIMS PURSUANT TO GENERAL MARITIME LAW
A. Applicable Law
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It is unmistakable that the law of this circuit does not allow recovery of purely economic
claims absent physical injury to a proprietary interest in a maritime negligence suit. In Robins Dry
Dock & Repair v. Flint, 275 U.S. 303, 309 (1927), the Supreme Court held that a tortfeasor is not
liable for negligence to a third person based on his contract with the injured party. In Louisiana ex.
rel. Guste v. M/V TESTBANK, 752 F.2d 1019, 1023 (5th Cir. 1985) (en banc), this court concluded
that Robins is a pragmatic limitation on the doctrine of foreseeability. We reasoned that “[i]f a
plaintiff connected to the damaged chattels by contract cannot recover, others more remotely situated
are foreclosed a fortiori.” 752 F.2d at 1024. Accordingly, we reaffirmed the rule that there can be
no recovery for economic loss absent physical injury to a proprietary interest. Id.
B. Summary of the Claims
Because of the number of parties involved in this appeal, we find it helpful to briefly
summarize the underlying claims. Cajun Wireline, Inc. (“Cajun”), a full service slick wireline provider,
claims that three of its jack up boats could not perform their duties due to the allision and subsequent
evacuation. Coastline Marine, Inc. (“Coastline”), a pile driving business, claims it was unable to
perform work on its contracts as a result of the evacuations. Pam Dore, doing business as Cove
Marina (“Cove Marina”), claims loss of revenues and sales from a convenience store as a result of
the evacuation. Legnon Enterprises (“Legnon”) claims lost charter revenues and lost sales and
revenues due to the evacuation. Coy Reeks, doing business as Riverfront Seawalls and Bulkheads
(“Riverfront”), claims he had to leave his equipment on the island during the evacuation and as a
result could not work for one week. Twin Brothers Marine (“Twin Brothers”), a fabrication and dock
facility, claims it was forced to halt work in progress for two construction projects. Marine Turbine
Technologies (“MTT”) claims that it suffered physical damage in the form of toxic gas permeation
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on its property. North American Salt Company/Carey Salt Company (“North American”) claims it
had to suspend operations due to the discharge of the gas into the air. Morton International
(“Morton”) claims it began to shut down operations before the evacuation order was issued and that
its whollyowned subsidiary, CVD Incorporated d/b/a Rohm & Haas Advanced Materials (“Advanced
Materials”), suffered physical damage. Advanced Materials is a chemical vapor deposition facility that
manufactures material used to make specialty lenses for military equipment and other purposes. It
claims that two of its manufacturing runs had to be prematurely terminated and the company lost the
materials in those runs and could not sell the products. Big D’s Seafood (“Big D’s”), Blue Gulf
Seafood, Inc. (“Blue Gulf”), and Bagala’s Quality Oysters (“Bagala’s”) claim lost revenues from their
wholesale fishing operations. Mason Seafood (“Mason”) claims it lost eighty-eight boxes of dressed
crabs that spoiled in a freezer when law enforcement officials shut off the electricity during the
evacuation.
C. Analysis
1. Claimants alleging no physical damage
The district court concluded that Cajun, Coastline, Cove Marina, Legnon, Riverfront, and
Twin Brothers suffered no physical damage; however, the court endorsed a geographic exception to
the TESTBANK rule and concluded that the claimants should have the opportunity to prove that their
damages were foreseeable and proximately caused by the allision. The court concluded that Blue
Gulf, Big D’s and Bagala’s either suffered physical damage or satisfied the commercial fishermen
exception1 to TESTBANK, and denied summary judgment as to those claims as well. The district
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Relying, inter alia, on the Ninth Circuit’s decision in Union Oil Co. v. Oppen, 501 F.2d 558 (9th
Cir. 1974), the district court in TESTBANK, denied summary judgment as to the commercial
fishermen who “were exercising their public right to make a commercial use of those waters.”
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court concluded that MTT’s and North American’s claims of physical damage in the forms of the
presence of gas on their properties satisfied TESTBANK; accordingly, it denied summary judgment.
The court also concluded that Morton, along with Advanced Materials, satisfied the physical damage
requirement. (Advanced Materials’s claims are addressed below.)
Appellants’ argue that the district court erred in denying their motions for partial summary
judgment because these claimants did not suffer physical damage to a proprietary interest, and thus,
their claims for economic loss are barred by our decision in TESTBANK. Claimants make several
arguments in support of the district court’s denial of summary judgment. Cajun, Coastline, Cove
Marina, Legnon, Riverfront and Twin Brothers argue that their claims should be subject to traditional
foreseeability/proximate cause evaluations, asserting that their businesses are located in close
proximity to the accident site and that they all worked and/or resided within the evacuated area. They
also argue that this case is distinguishable from TESTBANK because that case involved forty-one
lawsuits, whereas here, fourteen claims are the subject of these motions for summary judgment. Blue
Gulf and Big D’s argue they sustained physical impact and damage from the allision and that they had
to destroy or decontaminate their products and equipment. North American and MTT allege they
suffered physical damage because the gaseous cargo became physically present on their properties.
Louisiana ex rel. Guste v. M/V TESTBANK ,524 F. Supp. 1170, 1173-74 (E.D. La. 1981). On
appeal, we recognized the argument in favor of an exception for commercial fishermen, but left the
contours of such an exception for another day because the claims of the commercial fishermen were
not before us. See TESTBANK, 752 F.2d at 1027 n.10.
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North American and Morton2 claim that they shut down operations in order to prevent damage to
their equipment and products.
Contrary to the district court’s conclusion, twelve of the fourteen businesses that are parties
to this appeal suffered no physical damage attributable to the allision and thus, their claims are barred
by TESTBANK. There is no geographic exception to the TESTBANK rule and there is no exception
based on the number of claimants. The TESTBANK court expressly rejected the case-by-case
approach urged by Claimants, and adopted by the district court in the case at bar. In Reserve
Mooring Inc. v. American Commercial Barge Line, LLC, 251 F.3d 1069, 1071-72 (5th Cir. 2001),
this court reversed the district court’s conclusion that TESTBANK “is merely an application of the
general requirement that damage be foreseeable to be recoverable in tort,” and concluded that
“physical injury to a proprietary interest is a prerequisite to recovery of economic damages in cases
of unintentional maritime tort.” Additionally, as we explained above, Bagala’s, Big D’s and Blue
Gulf’s claims, if any, as commercial fishermen were not included in the motions for partial summary
judgment; only their claims as wholesale fishermen were included. Accordingly, the district court
erred in concluding that these claimants satisfied the commercial fishermen exception to TESTBANK.
Their claims are for economic losses from their wholesale operations, and thus, they are barred by
TESTBANK. While other jurisdictions may have abandoned or relaxed the bright line rule of Robins
and TESTBANK, this circuit “has not retreated from TESTBANK’s physical injury requirement,”
Reserve Mooring, 251 F.3d at 1071. Therefore, the district court erred in denying Appellants’
motions for partial summary judgment as to Cajun, Coastline, Cove Marina, Legnon, Riverfront,
2
Because we conclude that the district court erred in denying Appellants’ motions for summary
judgment as to Advanced Materials’s claims, we need not address Morton’s argument based on its
ownership of its Advanced Materials’s facilities.
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Twin Brothers, Blue Gulf, Big D’s and Bagala’s. These claimants have not suffered physical damage;
therefore, their claims are barred by our decision in TESTBANK.
Likewise, the district court erred in concluding that MTT, North American, and Morton
suffered physical damage sufficient to satisfy TESTBANK. MTT’s and North American’s arguments
that the physical presence of the gas on their property satisfies TESTBANK’s physical damage
requirement are unpersuasive. These claimants have not raised an issue of fact as to whether the gas
physically damaged their property nor caused any personal injury; indeed, as noted above, such claims
were not subjects of Appellants’ motions for partial summary judgment. Nor are we persuaded by
North American’s and Morton’s arguments that they mitigated damages by shutting down their
operations.
In Corpus Christi Oil & Gas Co. v. Zapata Gulf Marine Corp., 71 F.3d 198 (5th Cir. 1995),
an allision between a barge and a platform damaged a gas riser, owned by Houston Pipeline
Company, which was connected to the platform owned by Corpus Christi. Realizing the allision was
about to occur, workers on the Corpus Christi platform shutdown operations to prevent fire or
explosion. During the two weeks it took to repair Houston Pipeline’s gas riser, Corpus Christi flared
gas to prevent loss of its wells. This court concluded that “[e]xcept for its acts in mitigation, Corpus
Christi would have suffered great physical damages to its wells.” Id. at 202. Accordingly, the court
affirmed the district court’s award of damages for the costs incurred in flaring the gas. Id.
Nevertheless, the court disallowed Corpus Christi’s damages resulting from the inability to produce
and sell its gas during the repair period, reasoning that “[t]he additional economic losses that Corpus
Christi seeks to recover occurred solely and only because of the physical damage that was done to
Houston’s property,” and that “Corpus Christi lost its gas sale profits because it could not use the
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pipeline, not because it was flaring its own gas.” Id. Unlike the plaintiffs in Corpus Christi, North
American and Morton did not lose any of the salt in their mines and they are not claiming costs of
mitigation. Instead, their claims are for lost revenues caused by the inability to use their facilities; such
claims are not recoverable. See id. at 202. Accordingly, the district court erred in denying Appellants’
motions for partial summary judgment as to MTT, North American, and Morton.
Finally, we note that Claimants may not recover under state law. See IMTT-Gretna v. Robert
E. Lee SS, 993 F.2d 1193, 1195 (5th Cir. 1993) (“Maritime law specifically denies recovery to non
proprietors for economic damages. To allow state law to supply a remedy when one is denied in
admiralty would serve only to circumvent the maritime law’s jurisdiction.”), supplemented by, 999
F.2d 105 (5th Cir. 1993). These twelve claimants have simply not raised an issue of fact as to whether
their economic losses resulted from physical damage to their proprietary interests. Accordingly, the
district court erred in denying Appellants’ motions for partial summary judgment.
2. Claimants alleging physical damage
As noted above, Mason and Advanced Materials claim to have suffered physical damage.
Mason claims it lost eighty-eight boxes of dressed crabs that spoiled in a freezer when law
enforcement officials shut off the electricity during the evacuation. Advanced Materials claims that
two manufacturing runs had to be prematurely terminated and the company lost the materials in those
runs and could not sell the products. The district court concluded that Mason’s and Advanced
Materials’s damages met the physical damage requirement of TESTBANK. Appellants argue that even
if Mason and Advanced Materials suffered damage, the damage was not directly caused by the allision
and was unforeseeable. Accordingly, they contend the district court erred in denying their motions
for summary judgment as to these claims as well. Mason and Advanced Materials argue that their
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damages were foreseeable and that foreseeability should not be determined on a motion for summary
judgment.
Contraryto the district court’s conclusion, neither of these claimants suffered physical damage
as a result of the allision. Mason’s crabs spoiled because the electricity was turned off during the
evacuation, not because of contact with the barge, the bridge, or the gaseous cargo. Likewise,
Advanced Materials claims losses from its inability to sell products that were in the process of being
manufactured; it is not claiming that its property was damaged as a direct result of the allision.
Claimants’ reliance on Consolidated Aluminum Corp. v. C.F. Bean Corp. (Consolidated I), 772 F.2d
1217 (5th Cir. 1985) is misplaced. There, a dredge struck and ruptured a pipeline, which caused a
reduction in gas pressure and supply to Consolidated’s power plant. We held that TESTBANK did
not bar recovery because Consolidated suffered physical damage to its equipment. Id. at 1222. Unlike
the circumstances presented in Consolidated I, here, the allision did not physically cause the
disruption in electrical power nor did it physically impact Advanced Materials’s facilities.
Accordingly, Advanced Materials and Morton have not raised a genuine issue of material fact as to
whether they suffered physical damage to a proprietary interest as a result of the allision.
Moreover, even if we were to conclude that Mason’s and Advanced Materials’s inability to
sell their products qualified as physical damage for purposes of TESTBANK, they would not be
entitled to recover because their damages were not foreseeable. In Consolidated Aluminum Corp.
v. C.F. Bean Corp. (Consolidated II), 833 F.2d 65, 68 (5th Cir. 1988), we stated:
We perceive a harm to be the foreseeable consequence of an act or omission if harm
of a general sort to persons of a general class might have been anticipated by a
reasonably thoughtful person, as a probable result of the act or omission, considering
the interplay of natural forces and likely human intervention.
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We reasoned that injury to property and persons from the escaping gas or from a fire were examples
of foreseeable consequences of negligent dredging. Id. Therefore, we concluded that, even though
Consolidated suffered physical damage, the physical damage was unforeseeable. Id. In the instant
case, as in Consolidated II, the foreseeable harms as a result of escaping gas would likely be damage
to property and people from the gas or from a fire. Further, in the case at bar, the connection between
the loss of electricity and the allision is even more remote than that between the reduction in gas
supply and the negligence in Consolidated II. In Consolidated II, the negligent dredging damaged
a gas pipeline which disrupted the flow of gas to electric turbines causing them to shut down. Here,
the barge allided with a bridge, causing the release of gas, which resulted in a mandatory evacuation
during which the law enforcement officials turned off the electricity. The spoiling of Mason’s crabs
and the premature shut down of Advanced Materials’s manufacturing run due to the evacuation and
loss of electricity were simply not foreseeable results of the release of the gaseous cargo.
Accordingly, the district court erred in denying Appellants’ motion for partial summary judgment as
to the claims of Mason and Advanced Materials.
IV. CLAIMS PURSUANT TO CERCLA
CERCLA provides a remedy to a claimant seeking to recover response costs for removal and
remediation of hazardous substances released into the environment. 42 U.S.C. §§ 9601-9675. To
establish a prima facie case of liability under CERCLA, a plaintiff must prove: (1) that the site in
question is a “facility” as defined in § 9601(9); (2) that the defendant is a responsible person under
§ 9607(a); (3) that a release or threatened release of a hazardous substance has occurred; and (4) that
the release or threatened release has caused the plaintiff to incur response costs. Amoco Oil Co. v.
Borden, Inc., 889 F.2d 664, 668 (5th Cir. 1989). “In enacting CERCLA, Congress intended ‘to
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facilitate the prompt cleanup of hazardous waste sites and to shift the cost of environmental response
from the taxpayers to the parties who benefitted from the wastes that caused the harm.’” Burlington
N. & Santa Fe Ry. Co. v. Poole Chem. Co., 419 F.3d 355, 364 (5th Cir. 2005) (quoting OHM
Remediation Servs. v. Evans Cooperage Co., 116 F.3d 1574, 1578 (5th Cir. 1997).
The district court concluded that the CERCLA claims were not ripe for summary judgment
because the claims raised genuine issues of material fact and were outside the scope of discovery.
Appellants assert that private causes of action under CERCLA are limited to response costs and that
Claimants did not incur any response costs recognized by CERCLA because they did not act to
remove contamination or remedy the direct effect of contamination. Claimants argue CERCLA
confers a private right of action on any person who has incurred the necessary costs of response
consistent with the national contingency plan. They argue the evacuation was ordered by the State
Police and the Sheriffs of two parishes and that the evacuation was related to the clean up activities.
Claimants have not raised a genuine issue of material fact as to whether they are entitled to
recover under CERCLA. “To justifiably incur response costs, one necessarily must have acted to
contain a release threatening the public health or the environment.” Amoco Oil, 889 F.2d at 669-70.
The claims at issue here are for economic losses resulting from the evacuation. None of the claimants
has even alleged that it incurred costs in acting to contain the gaseous cargo; therefore, none of the
claimants is entitled to recover under CERCLA. The district court erred in denying Appellants’
motions for partial summary judgment as to the claims brought pursuant to CERCLA.
V. CLAIMS PURSUANT TO OPA
OPA provides that “[n]otwithstanding any other provision of law . . . each responsible party
for a vessel or a facility from which oil is discharged . . . into or upon the navigable waters or
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adjoining shorelines . . . is liable for the removal costs and damages specified in subsection (b) of this
section that result from such incident.” 33 U.S.C. § 2702(a). Section 2702(b)(2)(B) allows recovery
of “[d]amages for injury to, or economic losses resulting from destruction of real or personal
property, which shall be recoverable by a claimant who owns or leases that property.” Section
2702(b)(2)(E) provides recovery of “[d]amages equal to the loss of profits or impairment of earning
capacity due to the injury, destruction, or loss of real property, personal property or natural
resources, which shall be recoverable by any claimant.”
The district court concluded that the OPA claims were not ripe for summary judgment
because the claims raised genuine issues of material fact and were outside the scope of discovery.
Appellants argue that OPA is inapplicable. Further, they contend that if OPA were applicable,
Claimants could not recover because they have sustained no physical damage to their property and
their economic damages were not the direct result of property damaged by an OPA event. Claimants
respond that OPA is applicable because the gaseous cargo was a propylene/propane mix and that
OPA does not require that the injury result from direct contact with a hazardous substance.
In order to recover under § 2702(b)(2)(B) a plaintiff must show that her property was
damaged as a result of a release or threatened release of oil. Claimants have not raised an issue of fact
as to whether the gaseous cargo caused damage to their property; accordingly, they are not entitled
to recover under § 2702(b)(2)(B). This, however, does not end our inquiry because § 2702(b)(2)(E)
allows a plaintiff to recover for economic losses resulting from damage to another’s property. See
Ballard Shipping Co. v. Beach Shellfish, 32 F.3d 623, 631 (1st Cir.1994) (“The House Conference
Report makes clear that, under section 2702(b)(2)(E), ‘[t]he claimant need not be the owner of the
damaged property or resources to recover for lost profits or income.’” (alteration in original) (citing
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H.R. Conf. Rep. No. 101-653, 101st Cong., 2d Sess. 103 (1990), U.S. Code Cong. & Admin. News
1990, p. 722.)). Contra In re Cleveland Tankers, Inc., 791 F. Supp. 669, 678-79 (E.D. Mich. 1992),
(interpreting subsection (E) to require that the injury be to the claimant’s property). Accordingly, we
must decide whether Claimants’ damages are recoverable under § 2702(b)(2)(E). Appellants contend
that Claimants may not recover because the property damage was not caused by the gaseous cargo.
Because we have not yet had occasion to consider this issue, we find the decision of the Fourth
Circuit in Gatlin Oil Co. v. United States, 169 F.3d 207 (4th Cir. 1999), instructive.
In Gatlin Oil, vandals opened some of Gatlin Oil’s above-ground fuel storage tanks causing
an oil spill. Vapors from the oil ignited a fire that destroyed a warehouse, plant, inventory and other
property. In order to prevent further discharge of oil, federal officials instructed Gatlin Oil to remove
oil from storm ditches and surface waters and to take other preventative measures. Gatlin Oil
presented a claim to the Oil Spill Liability Trust Fund for payment of uncompensated removal costs
and damages, claiming damages resulting from the discharge of oil and the ensuing fire. The Coast
Guard determined that Gatlin Oil’s damages were limited to those caused by the discharge and the
measures ordered by the federal officials to prevent discharge. The court held that as a matter of law
Gatlin Oil could not recover compensation for fire damage because the evidence did not establish that
the fire caused the discharge of oil into navigable waters or posed a threat to do so, as required by
section 2702(a). Gatlin Oil, 169 F.3d at 212.
Claimants argue that Gatlin Oil is inapplicable because it involved a claim for recovery from
the Oil Spill Liability Trust Fund, not a responsible party; however, the Fourth Circuit noted, “[t]he
principal dispute between Gatlin and the Coast guard pertains to the damages that are compensable
within the meaning of section 2702,” id. at 210. Indeed, the court stated, “We hold that the removal
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costs and damages specified in section 2702(b) are those that result from a discharge of oil or from
a substantial threat of a discharge of oil into navigable waters or the adjacent shoreline.” Id. at 211.
We agree. Even assuming arguendo that OPA applies, none of the claimants has raised an issue of
fact as to whether any property damage was caused by the pollution incident, i.e., the release of the
gaseous cargo. A party is liable under OPA if, inter alia, the claimant’s damages “result from such
incident,” i.e., the discharge or threatened discharge of oil. See 33 U.S.C. § 2702(a) (emphasis
added); Gatlin Oil, 169 F.3d at 210-11 (“The Coast Guard has interpreted the Act to provide that
only removal costs and damages that ‘result from such incident’ are compensible [sic].” (emphasis
in original) (citing § 2702(a))). Any property damage upon which Claimants must rely to recover
under § 2702(b)(2)(E) did not result from the discharge or threatened discharge of oil. Claimants
have not raised an issue of fact as to whether their economic losses are due to damage to property
resulting from the discharge of the gas. Therefore, Claimants cannot recover under OPA and the
district court erred in denying Appellants’ motions for partial summary judgment.
VI. CONCLUSION
For the foregoing reasons we REVERSE the district court’s denial of Appellants’ motions
for partial summary judgment.
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