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Argos Ports (Houston) LLC v. Kirby Inland Marine, LP

United States District Court, S.D. Texas, Houston Division

May 2, 2019




         Pending before the court are Third Party Defendant Terral River Service, Inc.'s Brief Supporting Rule 12(b)(6) Motion to Dismiss (Docket Entry No. 112) and Terral River Services Inc.'s Amended Motion to Dismiss (Docket Entry No. 115) (collectively, "Terral River's Motion to Dismiss") and Terral River Service, Inc.'s Motion for Separate Trials ("Terral River's Motion for Separate Trials") (Docket Entry No. 113).

         I. Factual and Procedural Background

          Kirby Inland Marine, LP ("Kirby") owns a barge-fleeing facility located along the Greens Bayou channel (the "Kirby Terminal") where it maintains a fleet of barges owned by third-parties including Ceres Barge Plan, LLC ("Ceres"), Ingram Barge Company ("Ingram"), Marquette Transportation Company, LLC ("Marquette"), and Terral River Services, Inc. ("Terral River") (collectively, the "Barge Owners").[1] When Hurricane Harvey made landfall, approximately 71 barges were moored at the Kirby Terminal.[2] Argosy Barge Lines, LLC and Argosy Transportation Group, Inc. (collectively, "Argosy") also maintained a barge fleet in Greens Bayou (the "Argosy Terminal") that was located upstream from the Kirby Terminal.[3] During the passage of Hurricane Harvey over Houston, four barges broke free from the Argosy Terminal.[4]Kirby alleges that Argosy's breakaway barges caused damage to barges and equipment at the Kirby Terminal, ultimately resulting in 71 barges from the Kirby Terminal breaking free from their moorings.[5] Kirby's unmoored barges then traveled downstream on Greens Bayou causing some barges to be partially capsized, fully capsized, or pinned down by other barges.[6] Some of Kirby's barges also allided with Argos Ports (Houston) LLC ("Argos")'s facility.[7]Ultimately, the collisions of the barges in Greens Bayou resulted in the Greens Bayou channel becoming impassable.[8] The "damming effect" caused by the sunken barges caused flooding and further destruction to facilities along the Greens Bayou channel, including Argos's facility.[9]

         After the breakaway of Kirby's fleet, Kirby engaged a salvage company, T&T Salvage, LLC ("T&T Salvage") to formulate a salvage plan and commence salvage operations on all of the affected barges in the Greens Bayou channel, including those owned by Ceres, Ingram, Marquette, and Terral River.[10] T&T Salvage conducted a salvage operation that took approximately 70 days and cost more than $7, 700, 000[11] Kirby paid T&T Salvage for its services.[12] All salvage rights that T&T Salvage possessed against the owners of the barges were assigned to Kirby by T&T Salvage.[13]

         This action was initially brought by Argos against Kirby and Greens Bayou Fleeting, LLC ("GBF") alleging that Kirby and/or GBF's negligence was responsible for the damages its facility sustained during the storm.[14] After Kirby filed its answer to Argos's Complaint, Kirby filed a Third-Party Complaint against Argosy asserting that Argosy's own negligence caused Argosy's barges to break free during the storm and travel downstream, impacting the barges in the Kirby Terminal and causing them to become unmoored, resulting in the ultimate allision of Kirby's barges with Argos's facility.[15] Argos subsequently amended its complaint to add claims against Argosy.[16] Kirby's Third-Party Complaint also alleged that the Barge Owners owe Kirby a salvage award for rescuing their barges after they were damaged during the storm.[17] The Barge Owners each filed counterclaims against Kirby and cross-claims against Argosy claiming that Kirby and/or Argosy's negligence caused the damage sustained by their barges.[18] Argosy subsequently filed a fourth-party complaint against several towing companies and vessels alleging that the breakaway of the Argosy fleet was caused by the fourth-party defendants' negligence.[19] The fourth-party defendants brought into this action by Argosy include Crosby Marine Transportation, LLC ("Crosby Marine") and E Squared Marine Service, L.L.C. ("E Squared"), among others.[20]

         In its Motion to Dismiss, Terral River argues that Kirby's claims against Terral River should be dismissed because Terral River does not owe any salvage award to Kirby as a matter of law. Terral River also requests that the court hold separate trials for Kirby's salvage claims against the Barge Owners and the fleet breakaway liability claims composing the rest of this action. For the reasons explained below, Terral River's Motion to Dismiss and Terral River's Motion for Separate Trials will both be denied.

         II. Terral River's Motion to Dismiss

          Terral River moves to dismiss Kirby's salvage claim, arguing that Kirby is not entitled to a salvage award because Kirby contracted with T&T Salvage for T&T Salvage to rescue Terral River's barges and Terral River did not agree to the contract. Kirby disagrees, arguing that its voluntary acts rescued Terral River's barges from a marine peril, entitling Kirby to a salvage award under both general maritime law and the Salvage Convention of 1989 (the "Salvage Convention").[21]

         A. Standard of Review

          The Federal Rules of Civil Procedure permit dismissal when a plaintiff fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). A Rule 12(b)(6) motion tests the formal sufficiency of the pleadings and is "appropriate when a defendant attacks the complaint because it fails to state a legally-cognizable claim." Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001), cert, denied sub nom., Cloud v. United States, 122 S.Ct. 2665 (2002). To defeat a motion to dismiss, a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corporation v. Twombly, 127 S.Ct. 1955, 1974 (2007). In ruling on a Rule 12(b)(6) motion, the court must "accept the plaintiff's well pleaded facts as true and view them in the light most favorable to the plaintiff." Chauvin v. State Farm Fire & Casualty Co., 495 F.3d 232, 237 (5th Cir. 2007).

         B. Applicable Law

         "An award of salvage is generally appropriate when property is successfully and voluntarily rescued from marine peril." Margate Shipping Co. v. M/V JA Orcreron. 143 F.3d 976, 984 (5th Cir. 1998) (citing The Sabine, 101 U.S. 384, 384 (1880)). This rule is "peculiar to maritime law, and utterly at variance with terrene common law." Id. "Because of the peculiar dangers of sea travel, public policy has long been held to favor a legally enforced reward in this limited setting, to promote commerce and encourage the preservation of valuable resources for the good of society." Id.

         Courts recognize two types of salvage: contractual salvage and pure salvage. To determine that a pure salvage was performed, a court must find three specific elements: "marine peril; service voluntarily rendered, not required by duty or contract; and success in whole or in part, with the services rendered having contributed to such success." B.V. Bureau Wiismuller v. United States, 702 F.2d 333, 338 (2d Cir. 1983) (citing The Sabine, 101 U.S. at 384) . The marine peril "must be present and impending, although it need not be immediate or absolute." Id. As long as the service was rendered voluntarily, the motive of the salvor is irrelevant --salvors who perform services with the expectation of monetary gain may claim salvage awards. Id. at 338-3 9. The salvor must have also contributed to an ultimate success -- lack of success in rescuing the imperiled vessel precludes the granting of a salvage award. Id. at 339. If the court finds that the three elements of pure salvage are met, the court will apply the factors articulated in The Blackwall. 77 U.S. 1 (1869), to determine the value of the salvage award: (1) the labor expended by the salvors in salvaging the vessel; (2) the promptitude, skill, and energy employed in rendering the service; (3) the value of the property employed by the salvors in rendering the service, and the danger to which such property was exposed; (4) the risk incurred by the salvors in rescuing the property from the marine peril; (5) the value of the property saved; and (6) the degree of danger from which the property was rescued. Id. at 14.

         A contractual salvage, on the other hand, is the "type of salvage service entered into between the salvor and the owners of the imperiled property, or by their respective representatives, pursuant to an agreement, written or oral, fixing the amount of compensation to be paid whether successful or unsuccessful in the enterprise." 3A Benedict on Admiralty § 159 (2019). The Supreme Court explained in The Camanche that "nothing short of a contract to pay a given sum for the services to be rendered, or a binding engagement to pay at all events, whether successful or unsuccessful in the enterprise, will operate as a bar to a meritorious claim for salvage." 75 U.S. 448, 477 (1869); see also Solana v. GSF Development Driller I, 587 F.3d 266, 271 (5th Cir. 2009) . A contract for salvage can therefore serve as a defense to a pure salvage claim. Evanow v. M/V Neptune, 163 F.3d 1108, 1115 (9th Cir. 1998) . The existence of a contract for salvage or to provide services to a distressed vessel precludes the necessary voluntariness required for a finding that a pure salvage was performed. Joseph v. J.P. Yachts, LLC, 436 F.Supp.2d 254, 266 (D. Mass. 2006).

         A salvor may seek a salvage award through an in personam action against the owner of the vessel or an in rem action against the vessel itself. The Sabine, 101 U.S. at 386 ("Suits for salvage may be in rem against the property saved or the proceeds thereof, or in personam against the party at whose request and for whose benefit the salvage service was performed."). Salvage awards are typically enforced through maritime liens. See id. at 386. "By performing a voluntary and successful act, the salvor obtains a maritime lien on the salved property, which he can enforce in rem in an admiralty court." Adams v. Unione Mediterranea Pi Sicurta, 220 F.3d 659, 670 (5th Cir. 2000) (internal quotations omitted).

         C. Analysis

         Terral River is the owner of some of the barges rescued by T&T Salvage pursuant to its contract with Kirby during the Greens Bayou cleanup. All salvage rights held by T&T Salvage were fully assigned to Kirby.[22] Kirby is the only party who claims that it is entitled to a salvage award: Kirby argues in its Third-Party Complaint that it "is entitled to recover the cost of salvage of the barges from Ceres, Ingram, Marquette, and Terral River under the law of marine salvage as well as the Salvage Convention of 1989 because it ...

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