Maritime and Industry Injury Cases Quite Complex (Continued)

In Catalyst Old River Hydroelectric Limited Partnership v. Ingram Barge Co.; American River Transportation Co., the 5th Circuit revisits the decision made by the U.S. Supreme Court in Robins Dry Dock Co. v. Flint, 275 U.S. 303(1927): a foundational precedent for both maritime law specifically, and modern negligence law, generally. In Robins, the Supreme Court articulated a rule that has endured to this day and has significantly influenced general negligence jurisprudence; namely “there can be no recovery for economic loss absent physical damage to or an invasion of a proprietary interest.” In TESTBANK (1985) the 5th Circuit reaffirmed the Robins rule that the court has consistently applied whenever circumstances necessitate doing so. After reviewing the rules from Robins and TESTBANK, the court in Catalyst applies these rules to the facts of the case.

On December 24, 2007, two tug boats with barge tows collided on the Mississippi River 2.5 miles upriver from the intake channel to the Sidney A. Murray hydroelectric plant. M/V Dan McMillan and its tow was operated by Defendant ARTCO, and M/V John Donnelly and its tow was operated by Defendant Ingram Barge Co. Several barges broke free from the tow of the Dan McMillan, including Barge TILC-37. Barge TILC-37 then drifted down river into the intake channel of Catalyst’s facility and became grounded on the east bank of the intake channel, lodged against the station and abutment. The physical presence of Barge TILC-37 obstructed the intake channel which provides water to the turbine/generators of the electric power generation facility.”
Because of the location of the barge, Catalyst had to reduce the flow of water in the intake channel to the turbines; and thus its output of electricity. This was necessary to prevent the barge from sinking and to allow safe access to the barge for its removal. Catalyst had to shut down six of the turbines and reduce the output of the remaining two because of the decrease of water coming into the intake channel. This allowed for the safe removal of the barge. Catalyst restored normal capacity to the plant at 6:30 p.m. on the 25th.

It is important to note that the power station is located “in a channel off the river. Catalyst owns the station and the surrounding property necessary for its operation. This includes the banks of the Mississippi River, the intake channel and the abutment on which the dam structure sits. The intake channel and a small island located in the mouth of the intake channel where it meets the Mississippi River are functional elements of the hydroelectric facility, acting as a pipe would to direct water into the station’s eight turbines in order to produce electricity.”
Catalyst filed a suit in Louisiana state court seeking damages for the value of the electrical power it was unable to generate due to the intrusion of the barge. The Defendants removed the case to federal district court. The defendants motioned for summary judgment and it was granted. Catalyst appealed and the 5th Circuit decided the appeal.

The Defendants’ argued that Catalyst did not suffer any physical harm, and cited Reserve Mooring Inc. v. American Commercial Barge Line 251 F. 3d 1069 (5th Cir. 2001) as a controlling precedent. In Reserve a barge sank while anchored to a midstream mooring facility on the Mississippi River, blocking the site and rendering it unavailable for use by other vessels for 3 months. Reserve sued seeking lost revenue. “Because the sunk barge only interfered with Reserve’s business expectancy by preventing other vessels from mooring at the facility for a period of time, this court (5th Circuit) concluded that Reserve’s claim for purely economic damages must be denied.”

The main thrust of the Defendant’s argument is that there was no physical damage done to the intake channel or the rest of Catalyst’s facility. Thus, they argue that Catalyst did not suffer any physical injury to a proprietary interest which is the requirement for recovery of economic losses. Also, the Defendants “presented no evidence that the barge did not disrupt the water flow, which everyone agrees is critical to Catalyst’s operations”, nor did they contest “the basic facts of the ownership and design of the facility”: both of which are essential features of the support for Catalyst’s claim.

Catalyst argued that its facility did suffer physical damage because “the presence of the barge in the intake channel, which is a functional component of Catalyst’s hydroelectric facility interfered with the unobstructed continuous flow of water in the channel, impairing the ability of the facility to operate as designed.” The following from an answer by Catalyst in the Defendant’s Statement of Uncontested Material Facts sums up the reasons that Catalyst suffered property damage to a proprietary interest.

“The intake channel is Old River’s private leasehold property and is the conduit portion of the facility which directs water into the turbines which power the Old River Station. The barge’s physical entry into Old River’s private leasehold property, its running aground on Old River’s leasehold property, the physical recovery effort to secure and remove the barge from Old River’s private leasehold property obstructed the conduit, thereby damaging it and physically preventing Old River from using its only source of power for its generators”

The court recognized that the interference with the water flow to the intake channel, hindered Catalyst’s use of the facility. The court also recognized the recovery effort as a reason to support Catalyst’s claim of damages. Remember, the water had to be restricted to the degree that six turbines were shut down and the remaining two reduced in power output so that the barge could safely be recovered by a tug boat. The decision states “the physical recovery effort to secure and remove the barge from the intake channel required a reduction in the flow of water necessary for the turbines to operate properly and generate the power they were designed to generate.” A rule distilled from these facts was articulated by the court in the following: “Acts taken in mitigation to prevent permanent physical damage can serve as the physical damage requirement in the TESTBANK rule.” Also, “costs incurred to mitigate damages satisfy the physical damage requirement of TESTBANK.”

The court decided for Catalyst and concluded “that the entry of ARTCO’s barge into Catalyst’s privately owned hydroelectric facility caused physical damage to Catalyst’s property and invasion of its proprietary interest. As co-licensees of the Sidney A Murray hydroelectric plant, the people of the town of Vidalia should be happy with the decision.