Western Towboat Co. v. Vigor Marine, LLC

Vigor Marine, LLC (defendant), a commercial shipyard in Washington State, owned a deteriorating, 70-year-old dry dock. In 2015, Vigor sold the dry dock for scrapping to a shipyard in Ensenada, Mexico. Vigor hired Western Towboat Company (plaintiff) to tow the dry dock from Seattle to Ensenada pursuant to a standard towage agreement. The contract provided that Western would tow the dry dock for $142,800, plus the cost of fuel. This figure was based in part on Vigor’s promise to procure insurance. While off the coast of California, the dry dock was damaged in a storm. In an attempt to bring the dry dock to shelter in Monterey Bay, Western towed it into the Monterey Bay National Marine Sanctuary. While in the sanctuary, the dry dock capsized and sank. Because the dry dock sank in the sanctuary, the parties were exposed to liability under federal law. To mitigate damages, Vigor commissioned a survey to locate the sunken vessel and assess damages to the sanctuary. The survey cost $351,980.14. Combined with related expenses, Vigor’s total costs were $415,441.67. Vigor’s insurance company covered all these expenses except for a $100,000 deductible. Western brought suit against Vigor, seeking to recover its towing fee. Vigor counterclaimed for breach of contract and negligence. Following a trial, the court denied both parties’ contract claims and found both parties negligent, assigning 60 percent fault to Vigor and 40 percent to Western. In a posttrial ruling, the court declined to apply the collateral-source rule and limited Vigor’s recovery to 40 percent of its unreimbursed $100,000 deductible. Accordingly, the court awarded Vigor $40,000 in damages. Both parties appealed.