FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

WESTERN TOWBOAT COMPANY, 

Plaintiff-Appellant/

Cross-Appellee,

 v. 

VIGOR MARINE, LLC, 

Defendant-Appellee/

Cross-Appellant.

Nos. 22-35195 

22-35217

D.C. No. 2:20-cv00416-RSM 

OPINION

Appeal from the United States District Court

for the Western District of Washington

Ricardo S. Martinez, District Judge, Presiding

Argued and Submitted February 17, 2023

Seattle, Washington

Filed October 31, 2023

Before: William A. Fletcher, Richard A. Paez, and 

Lawrence VanDyke, Circuit Judges.

Opinion by Judge W. Fletcher;

Partial Dissent by Judge VanDyke
2 WESTERN TOWBOAT CO. V. VIGOR MARINE, LLC

SUMMARY*

Admiralty Law

The panel affirmed in all respects but one the district 

court’s judgment after a bench trial in an admiralty action 

brought by Western Towboat Co. against Vigor Marine, 

LLC; vacated an award of prejudgment interest; and 

remanded.

Vigor hired Western to tow a drydock, which was 

damaged in a storm off the coast of California. In an attempt 

to bring the drydock to shelter in Monterey Bay, Western’s 

tug towed the drydock into the Monterey Bay National 

Marine Sanctuary, where it capsized and sank. Western 

sued Vigor, seeking recovery of the towing fee under its 

contract with Vigor and a declaratory judgment that it would 

not be liable for any damages or penalty sought by the 

government under the National Marine Sanctuaries Act 

(NMSA). Vigor counterclaimed for breach of contract and 

negligence by Western.

The panel affirmed the district court’s grant of partial 

summary judgment to Vigor on the ground that Western was 

negligent as a matter of law in allowing the drydock to sink 

in the Sanctuary, and there were no material issues of fact 

regarding Western’s lack of awareness of the legal 

consequences of allowing the drydock to sink there.

After a trial on the remaining claims, the district court 

denied both parties’ contract claims and held that both had 

* This summary constitutes no part of the opinion of the court. It has 

been prepared by court staff for the convenience of the reader.
WESTERN TOWBOAT CO. V. VIGOR MARINE, LLC 3

been negligent. In a comparative negligence analysis, the 

district court found that Vigor was sixty percent negligent 

and Western was forty percent negligent, and it awarded 

Vigor $40,000. The panel affirmed the district court’s 

holding that Vigor was entitled to recovery from Western of 

only the $100,000 that Vigor was out of pocket after 

reimbursement from its insurance carrier for funds it spent 

in seeking to mitigate damages possibly owed to the federal 

government under the NMSA. The panel also affirmed the 

district court’s comparative negligence analysis.

Vacating the district court’s award of prejudgment 

interest on the $40,000 award against Western, the panel 

held that interest should run from the date of Vigor’s 

expenditures, rather than the date the drydock sank. The 

panel remanded to allow the district court to recalculate the 

prejudgment interest based on the correct date.

The panel held that Western waived additional 

arguments regarding a hold harmless provision and a 

percentage share provision in the tow agreement.

Dissenting in part, Judge VanDyke wrote that he agreed 

with the majority that Western waived its argument about 

being owed a partial contract fee. He disagreed with the 

majority’s holding that Western waived the argument that 

under the tow agreement the parties agreed to hold each 

other harmless for any portion of the other’s insurance 

deductible. Because Western’s argument was both correct 

and not waived, Judge VanDyke would hold that that 

Western did not owe Vigor any compensation for Vigor’s 

deductible payment, and he would not reach many of the 

remaining issues decided by the majority.
4 WESTERN TOWBOAT CO. V. VIGOR MARINE, LLC

COUNSEL

J. Stephen Simms (argued), Simms Showers LLP, 

Baltimore, Maryland; Anthony J. Gaspich, Gaspich Law 

Office PLLC, Bainbridge Island, Washington; for PlaintiffAppellant.

Molly J. Henry (argued), Schwabe Williamson & Wyatt PC, 

Seattle, Washington; David R. Boyajian, Noah Jarrett, and 

Adam P. Murray, Schwabe Williamson & Wyatt PC, 

Portland, Oregon; for Defendant-Appellee.

OPINION

W. FLETCHER, Circuit Judge:

Vigor Marine, LLC (“Vigor”) hired Western Towboat 

Co. (“Western”) to tow a drydock from Seattle, Washington, 

to Ensenada, Mexico, where it was to be broken down for 

scrap. While off the coast of California, the drydock was 

damaged in a storm. In an attempt to bring the drydock to 

shelter in Monterey Bay, Western’s tug towed the drydock 

into the Monterey Bay National Marine Sanctuary (the 

“Sanctuary”). While in the Sanctuary, the drydock capsized 

and sank. Because the drydock sank in the Sanctuary, the 

parties were exposed to liability under the National Marine 

Sanctuaries Act of 1972 (“NMSA”), 16 U.S.C. §§ 1431–

45c-1.

Western sued Vigor in federal district court in admiralty. 

Western sought to recover the towing fee under its contract 

with Vigor, and a declaratory judgment that it would not be 

liable for any damages or penalty sought by the government 
WESTERN TOWBOAT CO. V. VIGOR MARINE, LLC 5

under the NMSA. Vigor counterclaimed, claiming breach of 

contract and negligence by Western. 

The district court took great care in its handling of this 

case. The court determined that any decision on the issue of 

liability under the NMSA would be premature and dismissed 

for lack of subject matter jurisdiction all claims under the 

NMSA. Western Towboat Co. v. Vigor Marine, LLC

(Western Towboat I), 544 F. Supp. 3d 1100, 1113–16 (W.D. 

Wash. 2021). Neither party appeals that dismissal. The 

court granted partial summary judgment to Vigor, holding 

that Western had been negligent as a matter of law in

allowing the drydock to sink in the Sanctuary. Id. 1126–28. 

After a trial on the remaining issues, the court denied both 

parties’ contract claims and held that both had been 

negligent. In a comparative negligence analysis, the court 

found that Vigor was sixty percent negligent and Western 

was forty percent negligent. Limiting Vigor’s recovery to 

forty percent of the $100,000 not reimbursed by Vigor’s 

insurance, the district court awarded Vigor $40,000. 

Western Towboat Co. v. Vigor Marine, LLC (Western

Towboat III), 575 F. Supp. 3d 1318, 1339 (W.D. Wash. 

2021).

Both parties appealed. We affirm in all respects but one. 

We vacate the award of prejudgment interest to allow 

recalculation by the district court. 

I. Background

Vigor is a commercial shipyard in Washington State. It 

owned a drydock, YFD-70, constructed in 1945. A drydock 

is a floating enclosed basin that allows cleaning or repairing 

parts of a ship that would ordinarily be underwater. Dry 

Dock, International Maritime Dictionary (2d ed. 1961). The 

ship enters the drydock through open gates while the 
6 WESTERN TOWBOAT CO. V. VIGOR MARINE, LLC

drydock is partially submerged. The gates are then closed 

and the water is pumped out of the drydock, leaving the 

entire ship exposed. Id. 

In 2013, Vigor hired Heger Dry Dock, Inc. (“Heger”) to 

perform an ultrasonic gauging survey of YFD-70. An 

ultrasonic gauging survey evaluates the steel’s thickness. 

The purpose of the survey was to determine the drydock’s 

continuing commercial viability. The survey showed 

impaired longitudinal stiffeners and “heavy corrosion” of 

portions of the drydock. 

In 2015, the pump, two reach rods, and a valve broke on 

the drydock. Due to the cost of repair, Vigor determined it 

was no longer economical to maintain the drydock. Vigor 

sold the drydock to Amaya Curiel Corp. (“Amaya”) for 

scrapping at a shipyard in Ensenada, Mexico. Due to dock 

constraints in Ensenada, Amaya and Vigor agreed to have 

the drydock towed to Ensenada rather than transported on 

the deck of a ship.

YFD-70 could be towed in two different configurations. 

First, it could be towed in a single piece, without 

disassembling the drydock. Second, its end sections could 

be separated and stacked on the center section, resulting in a 

three-piece tow. If a drydock is towed in the open ocean, 

high waves cause structural stress—“hogging” and 

“sagging.” Such stress is reduced in a three-piece tow. U.S. 

Navy guidance specific to YFD-70 provides, “The dock has 

been designed to facilitate towing at sea. When towed, the 

end sections are stowed on the center section.” U.S. Navy, 

Floating Dry Docks YFD-68, YFD-69, YFD-70, YFD-71: 

General Information and Operating Manual 4 (1944). 

To replace YFD-70, Vigor arranged for a sister drydock 

that was subject to the same Navy guidance to be towed 
WESTERN TOWBOAT CO. V. VIGOR MARINE, LLC 7

through the ocean from Portland to Seattle. To determine 

whether that drydock, YFD-69, could be towed safely, Vigor 

hired Heger to conduct an engineering study. Heger did 

multiple computer simulations, towing YFD-69 in both the 

one-piece and three-piece configurations. Based on the 

simulations, Heger determined that YFD-69 could be towed 

in either configuration, with different restrictions depending 

on which configuration was used.

Western is a maritime towing company predominantly 

operating in Alaska and Washington. One of Vigor’s naval 

architects, Daniel Keen, contacted Western’s president, Bob 

Shrewsbury, for a price quotation to tow YFD-70 from 

Seattle to Ensenada. Despite the drydock’s condition, 

Shrewsbury testified that he felt Western could tow it “at the 

right time of the year and in decent conditions.”

Vigor and Western entered into a Standard Towage 

Agreement (the “Tow Agreement”). The agreement 

provided that Western would tow the drydock for $142,800 

plus the cost of fuel (the “contractual fee”). The agreement 

provided that the tow would start on or about October 7, 

2016. However, the agreement provided that the tow 

depended on favorable weather conditions. If favorable 

weather conditions did not exist by November 7, 2016, either 

party could reschedule the tow dates. 

Vigor prepared YFD-70 for towing. As part of the 

preparation, Vigor hired Captain Richard Shaw from 

Bowditch Marine, Inc. to conduct a marine warranty survey 

and provide tow recommendations. Shaw found that Vigor 

had improved YFD-70 structurally and had outfitted it with 

proper equipment in preparation for the tow. He concluded 

that the tug and drydock were suitable for an ocean tow from 
8 WESTERN TOWBOAT CO. V. VIGOR MARINE, LLC

Seattle to Ensenada if there were a favorable weather 

forecast.

Shaw recommended restrictions designed to minimize 

stress on the drydock. He recommended that the tow avoid 

seas with wave heights of greater than eight to ten feet, and 

that the tug not leave any safe port or sheltered water without 

first determining that the weather forecast conformed to 

these restrictions. Shaw made no recommendation whether 

the drydock should be towed in one or three pieces.

Shaw’s survey was the only examination of the drydock 

in preparation for the tow. Vigor did not tell Shaw about 

Heger’s 2013 ultrasonic gauging survey of the drydock. 

Neither Heger nor any other firm was asked to perform an 

engineering study on YFD-70 comparable to the study that 

had been performed on YFD-69 prior to its tow from 

Portland to Seattle. 

A tow plan provides recommendations to a tug captain 

on how to perform a voyage. Western created a tow plan for 

the YFD-70, which it amended after receiving Shaw’s 

report. The plan provided that an ocean-going tug, OCEAN 

RANGER, with Captain Stephen McGavock as master, 

would tow YFD-70 out of Puget Sound and past Cape 

Flattery, into the ocean. The tug would then go south along 

the coast to Mexico. McGavock testified at trial there were 

no realistic ports of refuge between Cape Flattery and San 

Francisco. 

After an initial delay due to unfavorable weather 

conditions, the OCEAN RANGER left Seattle on October 

17, 2016. On October 19 and 20, while near the mouth of 

the Columbia River, the tug and tow encountered winds of 

twenty-five knots and wave heights between ten and twelve 

feet. The tug and tow made it through this weather without 
WESTERN TOWBOAT CO. V. VIGOR MARINE, LLC 9

incident and continued south. On October 21 and 22, off the 

coast of southern Oregon, waves reached as high as thirteen 

to fifteen feet. The tug and tow again made it through 

without incident. On October 24, a “major wind event” 

occurred between Point Arena and Bodega Bay, north of San 

Francisco, with wind speeds of over thirty knots and waves 

heights more than eleven feet. On October 25, waves and 

wind remained high from Point Reyes to San Francisco.

On October 25, while slightly north of San Francisco, 

McGavock noticed that the drydock had a port bow list. He 

contacted Shrewsbury, who in turn consulted Keen, Vigor’s 

naval architect. Shrewsbury and Keen suggested that the 

best course of action might be to bring the drydock into San 

Francisco Bay. However, as the condition of the drydock 

deteriorated, McGavock believed it was unsafe to do so as it 

could sink and block the shipping channel into San Francisco 

Bay. 

McGavock also expressed concern to Shrewsbury about 

the drydock sinking in the Greater Farallones National 

Marine Sanctuary west of San Francisco Bay. The tug and 

tow left the Farallones Sanctuary in an attempt to reach 

Monterey, south of San Francisco Bay. On the evening of 

October 25, McGavock brought the tow into the Monterey 

Bay Sanctuary. Darkness and fog made it difficult to assess 

the condition of the drydock. McGavock maintained the 

OCEAN RANGER’s position in the Sanctuary that night, 

with a plan to assess the situation in the morning. At the 

time, McGavock believed the drydock would stay afloat 

until morning.

At about two in the morning of October 26, the fog 

cleared enough to allow the crew to see that the drydock’s 

condition had worsened. Soon thereafter, the drydock began 
10 WESTERN TOWBOAT CO. V. VIGOR MARINE, LLC

to capsize. McGavock dumped the tow line and released the 

drydock in order to save the OCEAN RANGER and its crew.

The drydock sank in the Sanctuary.

On January 19, 2021, the United States National Oceanic 

and Atmospheric Administration sent a letter to Vigor, 

Western, and Amaya informing them that YFD-70 had sunk 

in the Monterey Bay Sanctuary. According to the letter, the 

three could be responsible for damage to the Sanctuary, costs 

to assess the damage, and civil penalties under 16 U.S.C. 

§ 1437(d). 

In an attempt to mitigate damages, Vigor paid for a 

survey to locate the sunken drydock and assess damage to 

the Sanctuary. The survey cost $351,980.14. Combined 

with related expenses, Vigor calculated its costs to be 

$415,441.67. On advice of counsel, Western declined to 

cooperate with mitigation efforts. 

II. Procedural History

Western filed suit against Vigor in district court for the 

Western District of Washington in admiralty. Vigor 

answered and counterclaimed. 

The parties brought cross motions for summary 

judgment. Western claimed that Vigor breached the Tow 

Agreement by failing to render a seaworthy tow and failing 

to pay for services rendered. Vigor claimed that Western 

had breached the Tow Agreement by failing to render 

reasonable assistance when the drydock developed a list. 

The district court denied summary judgment on both claims, 

holding that there were disputed material facts that needed 

to be resolved. Western Towboat I, 544 F. Supp. 3d at 1117, 

1119. Vigor also argued that Western was negligent in 

allowing the drydock to sink in the Marine Sanctuary. The 
WESTERN TOWBOAT CO. V. VIGOR MARINE, LLC 11

court granted partial summary judgment on this issue, 

holding that Western had been negligent as a matter of law. 

Id. at 1125–28.

After a five-day bench trial, the district court ruled 

against Western on its claim for breach of contract, holding 

that Western had “breached its duty of prudent seamanship” 

in agreeing to perform the tow in mid-October. Western 

Towboat III, 575 F. Supp. 3d at 1337. The court also ruled 

against Vigor on its counterclaim for breach of contract, 

holding that Western had rendered reasonable assistance. Id. 

at 1338. The court further held that Vigor was negligent in 

failing to exercise diligence in rendering a seaworthy tow to 

Western. Id. at 1338–39. Applying comparative negligence 

analysis, the court found that Western was forty percent 

negligent because it had undertaken the tow in October and 

then allowed the drydock to sink in the Sanctuary rather than 

somewhere else. Id. at 1339. It found Vigor sixty percent 

negligent for failing to tender a seaworthy drydock. Id.

Vigor had been compensated by its insurance company 

for all of its mitigation expenditures except for a $100,000 

deductible. In a post-trial ruling, the district court declined 

to apply the collateral source rule, holding that Western was 

not liable for Vigor’s expenditures in excess of its nonreimbursed deductible. Western Towboat Co. v. Vigor 

Marine, LLC (Western Towboat II), 566 F. Supp. 3d 1095, 

1101 (W.D. Wash. 2021). The district court awarded Vigor 

$40,000, based on Western’s forty percent comparative 

negligence. Western Towboat III, 575 F. Supp. 3d at 1339.

Both parties appealed.
12 WESTERN TOWBOAT CO. V. VIGOR MARINE, LLC

III. Standards of Review

We review de novo summary judgment rulings. 

Devereaux v. Abbey, 263 F.3d 1070, 1074 (9th Cir. 2001) 

(en banc). Summary judgment is appropriate if, when 

“viewing the evidence in the light most favorable to the 

nonmoving party, there is no genuine dispute as to any 

material fact.” Zetwick v. Cnty. of Yolo, 850 F.3d 436, 440 

(9th Cir. 2017) (internal quotation marks omitted). Factual 

findings of a district court sitting in admiralty, including 

comparative negligence findings, are reviewed for clear 

error. In re White Cloud Charter Boat Co., 813 F.2d 1513, 

1517 (9th Cir. 1987). The application of the collateral source 

rule is reviewed de novo. United States v. City of Twin Falls, 

806 F.2d 862, 873 (9th Cir. 1986), rev’d on other grounds 

by Ass'n of Flight Attendants, AFL-CIO v. Horizon Air 

Indus., Inc., 976 F.2d 54, 551-52 (9th Cir. 1992). We review 

a district court’s award of prejudgment interest for abuse of 

discretion. Alkmeon Naviera, S.A. v. M/V Marina L, 633 

F.2d 789, 797 (9th Cir. 1980).

IV. Discussion

The parties raise a number of arguments on appeal. We 

analyze them in turn. 

A. Grant of Partial Summary Judgment to Vigor

The district court granted partial summary judgment 

against Western, holding as a matter of law that Western was 

negligent in allowing the drydock to sink in the Monterey 

Bay Marine Sanctuary. The district court wrote:

[T]he record only indicates Western’s 

intention that the OCEAN RANGER wait in 

deeper water until daylight, without regard to 
WESTERN TOWBOAT CO. V. VIGOR MARINE, LLC 13

where the vessel sat in relation to the 

boundaries of the Marine Sanctuary. Despite 

Western’s recognition that the Drydock was 

sinking as the OCEAN RANGER headed 

away from San Francisco Bay, the record 

reflects no understanding by Western that the 

Drydock was inside a marine sanctuary at the 

time it sank, nor any awareness as to the 

practical consequences—whether legal, 

environmental, or economic—of releasing 

the tow line in that location.

Western Towboat I, 544 F. Supp. 3d at 1127 (internal 

citations omitted).

On reconsideration, the district court recognized that 

there was evidence that McGavock knew he was in the 

Sanctuary. But it reaffirmed its holding that Western was 

unaware of the consequences of allowing the drydock to sink 

in the Sanctuary. It therefore left intact its partial summary 

judgment against Western. See Western Towboat Co. v. 

Vigor Marine, LLC, No. C20-0416-RSM, 2021 WL 

2584911, at *2 (W.D. Wash. June 23, 2021) (“[I]t remains 

undisputed that Captain McGavock failed to understand the 

hazards presented by that sanctuary to a tug towing a sinking 

drydock.”).

Western argues that there were material issues of fact 

that precluded the grant of partial summary judgment. We 

agree with the district court that there was no evidence in the 

record that anyone at Western, including McGavock, was 

aware of the legal consequences of allowing the drydock to 

sink in the Monterey Bay Marine Sanctuary. We therefore 

affirm the grant of partial summary judgment to Vigor.
14 WESTERN TOWBOAT CO. V. VIGOR MARINE, LLC

B. Collateral Source Rule

Vigor sought recovery of the $415,441.67 it spent in 

seeking to mitigate the damages that Vigor, Western, and 

Amaya might owe to the federal government under the 

NMSA. The district court held that claims relating to future 

potential damages and penalties owed to the government 

under NMSA were so speculative that the court had no 

subject matter jurisdiction over them. Western Towboat I, 

544 F. Supp. 3d at 1114–15. The parties do not dispute that 

conclusion. However, Vigor’s expenditures to mitigate 

damages were not speculative.

Vigor was reimbursed by its insurance carrier for all but 

$100,000 of its expenditures. Vigor argued under the 

collateral source rule that reimbursement from Western 

should be calculated based on the full $415,441.67. The 

district court held that the collateral source rule did not 

apply, and that any reimbursement from Western should be 

calculated based only on the $100,000 for which Vigor was 

out of pocket. Western Towboat II, 566 F. Supp. 3d at 1101. 

We agree. 

The collateral source rule allows a tortfeasor to be 

assessed the full amount of damages when the victim 

receives compensation from a source collateral to the 

tortfeasor. Gypsum Carrier, Inc. v. Handelsman, 307 F.2d 

525, 534 (9th Cir. 1962). The collateral source rule applies 

in admiralty cases. The Atlas, 93 U.S. 302, 310 (1876); 

Gypsum Carrier, 307 F.2d at 535. The rule applies only to 

money received from a “wholly independent” source. 

Dillingham Tug & Barge Corp. v. Collier Carbon & Chem. 

Corp., 707 F.2d 1086, 1091 (9th Cir. 1983) (internal 

quotation marks omitted). To determine if a source is wholly 

independent, we look to “‘the purpose and nature of the fund 
WESTERN TOWBOAT CO. V. VIGOR MARINE, LLC 15

and of the payments,’ and not merely at their source.” Russo 

v. Matson Nav. Co., 486 F.2d 1018, 1020 (9th Cir. 1973) 

(quoting Gypsum Carrier, 307 F.2d at 534 n.31).

Vigor’s insurance policy was not a wholly independent 

source. The Tow Agreement required Vigor to purchase 

insurance, and Western determined its contractual fee based 

in part on Vigor’s doing so. As the district court correctly 

noted, agreed payments to Vigor were calculated “pursuant 

to insurance policies that Vigor was required to procure 

under the Towing Agreement.” Western Towboat II, 566 F. 

Supp. 3d at 1101. The collateral source rule therefore does 

not apply.

C. Comparative Negligence

After trial, the district court held that neither Western nor 

Vigor could recover for breach of the Tow Agreement. 

However, with respect to Vigor’s $100,000 out-of-pocket 

expenditures in seeking to mitigate damages, it held that both 

Western and Vigor could be held liable for negligence. 

The district court held that both Western and Vigor were 

negligent. Western was negligent in two respects. First, 

“Western’s negligence led to the Drydock sinking inside the 

marine sanctuary when it breached its duty to navigate.” 

Western Towboat III, 575 F. Supp. 3d at 1338. Second, 

“Western’s negligence in agreeing to undertake the specialty 

tow in mid-October with only one realistic port of refuge 

after Cape Flattery contributed to the Drydock’s sinking.” 

Id. Vigor was negligent in failing to exercise diligence “in 

tendering a seaworthy vessel to Western.” Id. Vigor also 

“caused the Drydock to undertake a voyage where it would 

likely hit conditions in excess of weather conditions the 71-

year-old Drydock could withstand. Vigor’s decision 

therefore contributed to the Drydock’s sinking when it hit 
16 WESTERN TOWBOAT CO. V. VIGOR MARINE, LLC

the unpredicted storm on October 24.” Id. The court held 

that Western was forty percent negligent and that Vigor was 

sixty percent negligent. Id. at 1339.

Western and Vigor both argue that the district court erred 

in its comparative negligence analysis, but we find no clear 

error. 

D. Other Objections

1. Prejudgment Interest

The district court awarded prejudgment interest on the 

$40,000 award against Western, running from the date the 

drydock sank rather than from the date Vigor made its 

expenditures. Western Towboat III, 575 F. Supp. 3d at 1339. 

Western objects, contending that interest should run from the 

date of the expenditures. Vigor does not dispute that interest 

should run from the date of the expenditures. 

Instead, Vigor argues that the invited error doctrine 

applies on the ground that Western submitted the proposed 

final judgment containing the interest award to which it 

objects. See, e.g., Sovak v. Chugai Pharm. Co., 280 F.3d 

1266, 1270 (9th Cir. 2002). However, in its Findings of Fact 

and Conclusion of Law, the district court selected the wrong 

date for calculating prejudgment interest. After the district 

court did so, Western submitted its proposed final judgment 

using that date. Western thus did not invite the error. We 

vacate and remand to allow the district court to recalculate 

the prejudgment interest based on the correct date.

2. Hold Harmless Agreement

Section 8 of the Tow Agreement provided that the parties 

“shall be separately responsible for, and shall indemnify and 

hold harmless each other from and against . . . all loss, 
WESTERN TOWBOAT CO. V. VIGOR MARINE, LLC 17

damage, expenses, claims, liabilities and suits arising out of 

or relating to property owned by it.” The district court held 

that this provision requires the parties to hold each other 

harmless only for injury to “their own property.” Western 

Towboat I, 544 F. Supp. 3d at 1121. That is, “parties are 

responsible for claims arising out of or relating to their own 

property such that Vigor is barred from recouping loss of the 

Drydock, but not from recouping costs incurred as a result 

of Western’s negligent injury to third parties.” Id. 

Western argues to us that “the parties specifically agreed 

in the Tow Agreement not to seek a negligence recovery for 

any insurance deductible.” Vigor spent the non-reimbursed 

$100,000 in an attempt to mitigate damages potentially owed 

to the United States—a third party to the Tow Agreement. 

In making its hold harmless argument under the agreement, 

Western does not challenge the district court’s ruling that the 

hold harmless provision does not apply to claims brought by 

third parties. Western has therefore waived the argument 

that it cannot be required to reimburse Vigor for all or part 

of its $100,000 deductible. See Greenwood v. F.A.A., 28 

F.3d 971, 977 (9th Cir. 1994).

3. Percentage Share of Contractual Fee

Section 1(A) of the Tow Agreement provides Western 

shall be paid, even if the tow is lost, “except to the extent” 

the loss arises from Western’s negligence. Western argues 

that under this provision it is entitled to sixty percent of the 

contractual fee because it was only forty percent at fault. 

Western never made this argument to the district court. 

We generally do not entertain arguments on appeal that were 

not presented to the district court. Villanueva v. California, 

986 F.3d 1158, 1164 n.4 (9th Cir. 2021). Western has given 

no reason why we should do so in this case. 
18 WESTERN TOWBOAT CO. V. VIGOR MARINE, LLC

V. Conclusion

For the reasons provided above, we affirm the district 

court in all respects by one. We vacate the award of 

prejudgment interest and remand for calculation based on the 

correct date. The parties shall bear their own costs on appeal. 

See Fed. R. App. P. 39(a)(4). 

AFFIRMED in part, VACATED in part, and 

REMANDED.

VANDYKE, Circuit Judge, dissenting in part:

I agree with the majority that Western waived its appeal 

argument about being owed a partial contract fee. But the 

majority is incorrect that Western waived the argument that 

under the tow agreement the parties agreed to hold each 

other harmless for any portion of the other’s insurance 

deductible. As the majority acknowledges, Western argued 

in its opening brief that section 8 of the agreement requires 

the parties to “look solely” to their own insurance for 

coverage of “any” and “all” losses they might incur, 

including payment of their own insurance’s deductibles. 

Western’s argument that any and all deductible payments for 

a party’s insurance coverage were the “sole[]” responsibility 

of the party who purchased that insurance necessarily 

includes any deductible payments paid out because of claims 

brought by third parties. Because Western’s section 8 

argument is both correct and not waived, I would hold that 

Western does not owe Vigor any compensation for Vigor’s 

deductible payment and would not reach many of the 

remaining issues the majority unnecessarily decides. I thus 

respectfully dissent in part.
WESTERN TOWBOAT CO. V. VIGOR MARINE, LLC 19

I. Western Towboat Waived the Argument as to the 

Partial Recovery of the Contract Fee by Not 

Raising It Before the District Court.

The majority correctly concludes that Western waived its 

argument about recovering part of its contract fee. Western 

argued in district court that it is owed the entirety of its 

contract fee, and on appeal it now instead argues only that it 

is owed a portion of that fee comparable to Vigor’s share of 

the negligence that resulted in the drydock sinking. This is 

an entirely new argument made under section 1(A) of the 

agreement, and as the majority correctly observes, this court 

generally does not consider arguments raised for the first 

time on appeal. Villanueva v. California, 986 F.3d 1158, 

1164 n.4 (9th Cir. 2021).

II. Western Did Not Waive the Argument that It 

Cannot Be Required to Reimburse Vigor for All or 

Part of Its Insurance Deductible.

I disagree, however, with the majority’s conclusion that 

Western waived a challenge to the district court’s ruling that 

section 8 of the towing agreement holds the parties harmless 

only for injury to their own property, i.e., not for claims 

brought by third parties. Across four pages of its opening 

brief, Western argued that the district court was wrong, 

because section 8 contains a knock-for-knock provision that 

requires the parties to “look solely” to their insurances for 

coverage of any losses they might incur “rather than 

maintain claims against each other based on negligence or 

fault.” And Western specifically argued that this global 

reciprocal hold harmless rule expressly applies to 

“all ... deductibles ... applicable to such insurance.” 

(Emphasis added).
20 WESTERN TOWBOAT CO. V. VIGOR MARINE, LLC

The majority appears to find great import in the fact that 

Western argued that “the parties specifically agreed in the 

Tow Agreement not to seek a negligence recovery for any 

insurance deductible,” without expressly explaining that by 

saying “any insurance deductible” it really meant “any”—

and thus includes an insurance deductible paid out as a result 

of a claim brought by a third party. But finding waiver based 

on that is wholly unwarranted. If section 8 universally holds 

the parties reciprocally harmless for “any insurance 

deductible” paid by the other party, as Western expressly 

argued, it necessarily holds the parties harmless for the 

subset of insurance deductibles paid as a result of third-party 

claims. That is inherent in the plain meaning of “any,” which 

means “every” or “at all.” The Merriam-Webster Dictionary

47 (1990). Using the majority’s flawed and illogically 

parsimonious reasoning, one might just as well conclude that 

when Western made its universal argument about the 

contract’s allocation of responsibility for paying “any” 

deductible, it neglected to argue that “any insurance 

deductible” includes deductibles paid out on Tuesdays, or 

deductibles paid out if the drydock were to sink in water 

deeper than 100 feet. “Any” and “all” means what everyone 

knows those words mean, and Western therefore did not 

waive the argument that the district court erred in requiring 

Western to reimburse Vigor for part of Vigor’s deductible.

III.Because Section 8 Contains a Pertinent and 

Dispositive Knock-for-Knock Provision, I Would 

Hold that Western Owes Nothing to Vigor and 

Would Not Reach the Other Three Issues the 

Majority Decides.

Because the majority concludes that Western waived its 

argument about Vigor’s responsibility for its own insurance 

deductible, the majority never decides that argument. I 
WESTERN TOWBOAT CO. V. VIGOR MARINE, LLC 21

would, and I would conclude that Western is correct that 

section 8 holds it harmless for any portion of Vigor’s 

insurance deductible.

The plain text of section 8 allows for no other 

conclusion. Start with section 8(A), where the parties note 

that:

It is the intent of the parties that the insurance 

identified in this section cover all losses, 

damages, liabilities and suits incident to the 

services being provided, and that the parties 

shall look solely to such insurances ... rather 

than maintain claims against each other based 

upon negligence or fault. To that end, the 

parties agree to procure and maintain the 

following insurances, to promptly submit and 

prosecute all claims against such insurances, 

and to look solely to such insurances for 

recovery.

(Emphases added). Section 8(A) makes clear that the 

insurances identified in subsequent subsections should cover 

“all” losses incident to the drydock tow, and that the parties 

must “look solely” to those insurances for recovery of losses.

Section 8(B) then makes clear that the parties are each 

responsible for their own deductibles for the insurances they 

are required to purchase under the contract, including 

policies for “pollution and environmental liability insurance, 

including coverage for damages [and] cleanup and 

restoration costs.” Then section 8(B)(3) states clearly: the 

party “required to procure and maintain an insurance as 

above shall be solely responsible for the payment of all ... 

deductibles ... applicable to such insurance.” (Emphases 
22 WESTERN TOWBOAT CO. V. VIGOR MARINE, LLC

added). In other words, section 8(B) expressly provides that 

Vigor is solely responsible for all deductibles it might have 

to pay out under its own required environmental liability 

insurance policy that covered its site survey of the marine 

sanctuary.

The contract language is clear enough, and there is 

nothing inappropriate about the parties’ agreement thus 

allocating responsibility. Such knock-for-knock provisions 

have long been common in contracts for various risky 

maritime undertakings. See Graydon S. Staring, Meting out 

Misfortune: How the Courts Are Allotting the Costs if 

Maritime Injury in the Eighties, 45 La. L. Rev. 907, 917 

(1985). And because proper analysis of Western’s unwaived 

argument about Vigor’s insurance deductible disposes of 

many of the other issues addressed by the majority, 

rendering analysis of those issues superfluous, I would not 

decide those unnecessary issues in this published opinion.

First, the majority affirms in section IV(A) of its opinion 

the district court’s grant of partial summary judgment 

against Western on the issue of whether Western was 

negligent in allowing the drydock to sink in the marine 

sanctuary. But because the only money that Vigor is out of 

pocket is its $100,000 insurance deductible, and section 8 of 

the contract precludes Vigor from recovering compensation 

from Western for that deductible payment regardless of 

whether Western was negligent, the majority addresses that 

issue unnecessarily.

Second, the majority affirms in section IV(B) of its 

opinion the district court’s holding that the collateral source 

rule does not apply to all the roughly $415,000 Vigor spent 

seeking to mitigate any damages the United States might be 

owed under the National Marine Sanctuary Act, 16 U.S.C. 
WESTERN TOWBOAT CO. V. VIGOR MARINE, LLC 23

§ 1431, on the grounds that Vigor’s insurance proceeds were 

not wholly independent from Western. See Dillingham Tug 

& Barge Corp. v. Collier Carbon & Chem. Corp., 707 F.2d 

1086, 1088 (9th Cir. 1983).

The majority correctly notes that determining whether or 

not the proceeds are wholly independent requires this court 

to look to “the purpose and nature of” the proceeds, as well 

as to their “source.” See Russo v. Matson Nav. Co., 486 F.2d 

1018. 1020 (9th Cir. 1973). That typically includes 

examining at least whether the insurance policy provides for 

waiver of subrogation, lists the tower as a second insured, or 

contains other terms written for the tower’s benefit. 2 

Thomas J. Schoenbaum, Admiralty and Maritime Law 

§ 12:9 (2d ed. 2022); George W. Nowell, Subrogation: 

Selected Bars, Waivers and Pitfalls, 7 U. of S.F. Maritime 

L.J. 421, 459–60 (1995) (additional considerations). The 

examination of the policy language must be punctilious 

because public policy concerns unique to the towing industry 

strictly limit towers’ ability to offset any liability for their 

negligence via outside insurance. Bisso v. Inland Waterways 

Corp., 349 U.S. 85, 91 (1955); McLean v. Runyon, 222 F.3d 

1150, 1156 (9th Cir. 2000); see Charles S. Donovan, 

Exculpatory and Benefit of Insurance Clauses in Towage 

and Pilotage, 70 Tulane L. Rev. 605, 605–06 (1995).

Yet the parties agree that the record does not even 

identify the source of the proceeds, that is, which particular 

insurance policy paid Vigor. The district court sprang over 

that gap in the record with a “logical leap” to “surmise” that 

the paying policy must be one whose terms not only mirror 

what section 8 requires but are also limited in all relevant 

ways to only what section 8 requires. The majority adopts 

that same approach, but it need not do so. We need not even 

reach the question of whether the collateral source rule 
24 WESTERN TOWBOAT CO. V. VIGOR MARINE, LLC

applies here because the valid knock-for-knock provision in 

section 8 of the contract precludes Vigor from obtaining any 

compensation from Western. I therefore would not reach the 

issue. 

Third, the majority holds in section IV(C) of its opinion 

that the district court did not commit clear error when it 

apportioned liability for negligence with respect to Vigor’s 

deductible expenditure 40 percent to Western and 60 percent 

to Vigor. Again, that is unnecessary given that section 8 

renders any such division irrelevant. Whether Western is 99 

percent or 1 percent contributorily negligent, under the 

parties’ agreement it owes Vigor nothing for Vigor’s own 

insurance deductible. 

Finally, the majority’s conclusion that the district court’s 

erred in calculating prejudgment interest is correct. But it is 

also unnecessary, because if the majority had properly 

addressed the contract’s assignment of responsibility for 

paying insurance deductibles, Western would owe Vigor 

nothing, and thus owe no prejudgment interest.