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Kirby Offshore Marine Pacific LLC v. Emerald Services Inc.

United States District Court, W.D. Washington, Seattle

March 26, 2018

KIRBY OFFSHORE MARINE PACIFIC, LLC, Plaintiff,
v.
EMERALD SERVICES, INC., Defendant.

          MEMORANDUM OF DECISION

          Robert S. Lasnik United States District Judge

         This matter was heard by the Court in a three day bench trial commencing on February 5, 2018. Plaintiff, Kirby Offshore Marine Pacific, LLC, filed this lawsuit seeking to recover losses associated with cargo contamination aboard the tank barge KAYS POINT from defendant Emerald Services, Inc., which had recently cleaned the tanks. Plaintiff has asserted claims of negligence, breach of implied and express warranties of workmanlike performance, and breach of contact.

         FINDINGS OF FACT

         By a preponderance of the evidence, the Court finds as follows:

         In the spring of 2016, plaintiff intended to install a barrel rack on the deck of the KAYS POINT above tanks 4S and 5S. Because the related welding work had the potential to breach the decking, plaintiff hired defendant to clear twelve cargo tanks of gas. When defendant's crew arrived at the KAYS POINT, the supervisor spoke to the tankerman and confirmed that defendant was to make the tanks safe for entry and safe for hot work. This type of cleaning involves pressure washing the floor and first plate (approximately six to eight feet up the side walls) with soapy water and vacuuming out the debris and water. Loose scale, sediment, and imperfections in a tank can hold petroleum-based contaminants and flammable materials: the cleaning crew's goal when working toward a gas free certification is to minimize any remaining scale and residue. When the supervisor thinks the tank is sufficiently clean, the marine chemist tests the atmospheric conditions in the tank. Whether defendant has adequately performed the services for which it was hired is objectively verifiable when the assignment is to clean for hot work: the chemist either certifies that the tank is safe for workers and for hot work, or he does not.[1]

         In this case, the marine chemist, who was known to defendant's crew as something of a stickler, requested that defendant remove and clean the deep well inspection blinds in the bottom of the tanks. Defendant had, on one or two prior occasions since 2010, been requested to open the blinds. One of the two supervisors defendant had on site, Serey Rath, was aware that plaintiff had recently instituted a policy that precluded the tankerman, Brian McDonald, from going into the tanks until they had been certified as safe for entry.[2] Rath therefore requested that McDonald provide the tools defendant would need to open the blinds. Defendant opened the blinds, returned the tools to McDonald's tool box, cleaned the tanks, and waited for the marine chemist to complete his testing. Neither of the supervisors entered the tanks to check on the work, but the crew on the KAYS POINT had almost 100 years of combined experience, and the leads understood what needed to be done. The chemist certified that the tanks were safe for workers and safe for hot work. The chemist noted on the certificate, which McDonald signed and posted on board the vessel, that the inspection blinds remained open. Defendant removed its equipment from the barge and departed. McDonald closed and secured the cargo tanks. McDonald did not go or look into the tanks before securing them.

         Between April 10 and April 16, plaintiff transited the barge to another location in Tacoma to do the hot work and delivered the barge for the 2016 season to Crowley Petroleum Distribution, Inc. under a long term charter agreement. On April 16 and 17, the barge shuttled between Seattle and Tacoma, where various fuel products were loaded into the twelve uncoated steel tanks. McDonald, as the tankerman, oversaw the loading of the barge and the testing of the product. The tanks were never opened during the loading process, but representatives from Crowley and plaintiff looked through the sight glasses at the top of the tanks with a flashlight. They did not notice anything unusual. The fuel products were tested at three points in the loading process. A header sample was taken as the product moved from the storage unit to the vessel in order to make sure the source is not contaminated. As each tank was filled to a depth of approximately two feet, the loading process was stopped and a sample was taken for testing. Only after those “first in” samples came back satisfactorily did loading resume. Once the tanks were filled, another sample was taken and sent out for testing. That testing regimen took longer, approximately 155 minutes. The tanks that were filled in Seattle passed all three tests. The four tanks that were filled with JP-8 (military grade jet fuel) in Tacoma passed the header and first-in tests, but had an issue with the long-term test. When new samples were taken and retested, they passed. The KAYS POINT departed Tacoma en route to Dutch Harbor, Alaska.

         At some point during the journey, Crowley informed plaintiff that the JP-8 had tested positive for particulate contamination. The barge was redirected to Valdez for further testing and unloading/reloading if necessary. When opened, three of the four tanks that contained JP-8 failed a visual inspection (all three had visible particulate contamination and one also had water contamination). When sampled, all four tanks -- 2P, 2S, 5P, and 5S -- failed. All of the jet fuel on the barge, including the Jet-A fuel contained in tank 4P, was offloaded. In the process, the tankerman noticed that the fuel levels in tank 6P, which held ultra low sulfur diesel (“ULSD”), were dropping and a vacuum was being created. The offloading was stopped while potential explanations for this occurrence were investigated. Plaintiff was fairly certain that the barge's pipes were in good working condition, so it contacted defendant to ask whether the inspection blinds had been closed. Defendant's district manager checked with the crew that had worked on the KAYS POINT and reported that they had not closed the inspection blinds.

         When the JP-8 was removed from the tanks, half-inch deep deposits of particulates were found on the floor of tanks 2P, 2S, and 5S, with some debris (a broken sample bottle and a wire brush) and particulates in the well sump of tank 5P. Significant scale deposits were also found on the bottom of tank 4P, where the Jet-A fuel had been stored.[3] Crowley and plaintiff expended significant funds as a result of the particulate contamination of the JP-8 and the mingling of the ULSD and JP-8 through the open inspection blinds. Crowley demanded that plaintiff reimburse it. Despite having a number of potential defenses under the terms of the Time Charter Agreement, plaintiff settled Crowley's claim and brought this lawsuit against defendant. Plaintiff suffered losses of $808, 326.89 as a result of the jet fuel contamination and $145, 437.47 in additional expenses arising from the open blinds.

         CONCLUSIONS OF LAW

         A. Negligence

         Negligence under maritime law involves the same elements as common law negligence, namely the existence of a duty, its breach, proximate cause, and damages. 1 Thomas J. Schoenbaum, Admiralty and Maritime Law 5-2, at 170 (3d ed. 2001). Plaintiff has the burden of proving negligence by a preponderance of the evidence. Marquette Transp. Co., Inc. v. La. Mach. Co., Inc., 367 F.3d 398, 402 (5th Cir. 2004). If the court finds that both plaintiff and defendant were negligent, damages will be allocated between the parties “proportionately to the comparative degree of their fault.” U.S. v. Reliable Transfer Co., Inc., 421 U.S. 397, 411 (1975).

         Plaintiff alleges that defendant was negligent in failing to adequately clean the tanks and failing to replace the inspection blind covers.

         Defendant undoubtedly had a duty to use reasonable care in performing the services for which it was hired. Plaintiff has not, however, shown that the duty was breached. Defendant was hired to clean the tanks on the KAYS POINT so that they were gas free and could be certified as safe for hot work by a marine chemist. It did just that. The tanks were pressure washed with soapy water up to a certain height, loose scale was sprayed off and ...


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