June 30, 2017 Practice Points

Fifth Circuit Rules in Oil Pollution Act Case

The court confirms that a responsible party under the OPA may recover purely economic losses from a jointly liable third party through contribution.

By Phil Brickman

The U.S. Fifth Circuit Court of Appeals recently tackled the issue of whether a responsible party may recover damages from a third party for purely economic losses by way of contribution from a third party that is also held liable in connection with the oil spill. In Re: Settoon Towing, 2017 WL 2486018 (5th Cir. 2017), the Fifth Circuit Court of Appeals took a close look at the Oil Pollution Act of 1990, 33 U.S.C. § 2701, et seq., and whether the designated responsible party can seek contribution from other third parties also deemed at fault for economic losses. In Settoon, one flotilla of barges encountered another flotilla on the lower Mississippi River and unsuccessfully attempted to avoid a collision. The two sets of barges collided and resulted in a substantial release of light crude oil in the Mississippi River. Because of the spill, a 70-mile stretch of the river was closed to vessels for approximately 48 hours for cleanup and recovery of the oil.

One flotilla was owned and operated by Settoon Towing and the other was owned and operated by Marquette Towing. Shortly after the collision, the U.S. Coast Guard identified Settoon as the responsible party and charged them with the initial cleanup and remediation of the oil. As a responsible party under OPA, Settoon had to pay for all expenses at the outset. Because of the oil spill, Settoon Towing filed for limitation of liability pursuant to 46 U.S.C. § 30501–30512.  Marquette Towing filed a claim against Settoon in the limitation action, and Settoon filed a counterclaim against Marquette seeking contribution under OPA and/or the general maritime law. At the conclusion of the bench trial, the district court determined that both parties were at fault for the collision and subsequent oil spill and apportioned 65 percent of the fault to Marquette and 35 percent to Settoon. A key issue at trial was whether Settoon, as the responsible party, was entitled to contribution for purely economic lost damages from a third party (Marquette) found to be partially liable. The district court held that Settoon did, as a matter of law, have a right to contribution against Marquette for economic loss damages and was subsequently affirmed by the Fifth Circuit.

In its analysis, the Fifth Circuit took a very close look at OPA as well as related case authority.  Marquette argued that any contribution it might owe to Settoon is based on general maritime law and therefore subject to Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303, 48 S. Ct. 134 (1927), which bars purely economic damages without some physical damage to a proprietary interest. Marquette further argued that the only way a responsible party can obtain contribution from another party is if that responsible party was not at fault, and the other parties were solely responsible for the discharge of oil. In addition, OPA provides that the responsible party is entitled to a right of subrogation if it can show that another party was at fault. Further, a responsible party has no rights under OPA with respect to contribution, but will be able to recover apportioned shares of the costs from others who are liable under other laws (for example, the general maritime law.)

The Fifth Circuit rejected Marquette’s arguments and reasoning and ultimately concluded that contribution is available under OPA. Economic losses are also allowed under OPA so long as the loss is due to injury, destruction, or loss of real property, personal property, or natural resources.  The Fifth Circuit suggested that contribution be defined as one tortfeasor’s right to collect from joint tortfeasors when, and to the extent that, the tortfeasor has paid more than his or her proportionate share. This is distinct from the concept of subrogation which is a substitution of one party for another whose debt the party had paid. Because the right of contribution arises under OPA and not general maritime law, purely economic losses are allowed and recoverable by the party seeking contribution.

This opinion makes it clear that where there are joint tortfeasors in connection with an oil spill, one party may recover from the other by way of contribution and including economic loss damages.

Phil Brickman is of counsel with Degan, Blanchard & Nash in New Orleans, Louisiana.

Copyright © 2017, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).