United States Court of Appeals

for the Fifth Circuit ____________

No. 23-20134

____________

Wapiti Energy, L.L.C., 

Plaintiff—Appellant, 

versus

Clear Spring Property and Casualty Company, 

Defendant—Appellee. 

______________________________

Appeal from the United States District Court 

for the Southern District of Texas

USDC No. 4:22-CV-1192

______________________________

Before Wiener, Willett, and Douglas, Circuit Judges.

Jacques L. Wiener, Jr., Circuit Judge: 

Commonly embedded in protection and indemnity policies for 

maritime insurance are “wreck removal clauses” that obligate the insurer to 

cover wreck removal expenses when the removal of a covered vessel is 

“compulsory by law.” This appeal requires us to further define the contours 

of the “compulsory by law” standard that we established in Continental Oil 

Co. v. Bonanza Corp., 706 F.2d 1365, 1372 (5th Cir. 1983). 

United States Court of Appeals

Fifth Circuit

FILED

July 2, 2024

Lyle W. Cayce

Clerk

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Plaintiff-Appellant Wapiti Energy, L.L.C. (“Wapiti”) owned a 155-

foot tank barge, the SMI 315, that broke free of its permanent moorings and 

ran aground in marshland owned by a third party during Hurricane Ida. The 

vessel was insured under a marine package policy issued by DefendantAppellee Clear Spring Property and Casualty Company (“Clear Spring”). It 

provided, inter alia, coverage for wreck removal expenses that are 

compulsory by law. Following limited discovery, Clear Spring moved for 

summary judgment, contending that the undisputed facts demonstrated that 

removal of the SMI 315 was not compulsory by law, so it was not obligated to 

reimburse the expenses that Wapiti incurred in removing the stranded vessel 

from the marshland. Because we conclude that removal of the SMI 315 was 

compelled by the Louisiana possessory action, we REVERSE and

REMAND for further proceedings consistent with this opinion. 

I.

The SMI 315 was used by Wapiti as a refueling station (or a “floating 

gas station”) in Plaquemines Parish, Louisiana. It was permanently moored 

near Myrtle Grove, Louisiana. The marine package policy covering the SMI 

315, which was in effect from July 1, 2021, to July 1, 2022, contained two 

sections: (1) hull and machinery coverage, with a scheduled hull value on the 

SMI 315 of $350,000 (the “Hull Policy”); and (2) protection and indemnity 

coverage (the “P&I Policy”), which provided a combined single limit of $1 

million per accident or occurrence. The P&I Policy contained a clause (the 

“Wreck Removal Clause”) that covered the “cost or expenses of, or 

incidental to, the removal of the wreck of the [SMI 315] when such removal 

is compulsory by law.” 

Shortly after the insurance coverage year began, Hurricane Ida made 

landfall in southern Louisiana, causing the SMI 315 to break free of its 

moorings and drift “some miles away from its berth” until partially running 

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aground of marshland in Barataria Bay. At the time of its grounding, the SMI 

315 was carrying approximately 6,000 barrels of crude oil in its storage tanks. 

Wapiti subsequently learned of the SMI 315’s displacement, contacted Clear 

Spring, and filed a notice of loss. Clear Spring then dispatched an 

independent marine surveyor to locate the vessel and assess the damage. 

The surveyor found the barge partially aground and partially afloat on 

Barataria Bay and conducted a preliminary inspection of the vessel, 

concluding that (1) “[t]here was no physical damage” to the SMI 315, (2) it 

was “loaded with approximately 6,000 barrels of crude oil,” and (3) the costs 

to salvage the oil and refloat the barge “should not exceed approximately 

$900,000.” Wapiti, in coordination with Clear Spring and the surveyor, then 

began the process of selecting an independent contractor for the wreck 

removal project. Thereafter, Wapiti was contacted by ConocoPhillips and 

informed that it owned the marshland on which the SMI 315 was stranded. 

Wapiti advised ConocoPhillips of its ongoing efforts to remove the barge 

from the marshland. At that time, ConocoPhillips simply requested that 

Wapiti keep it apprised of the progress of the recovery and salvage project. 

Wapiti selected a contractor to offload the oil and refloat the barge.

That project proceeded without the release of any oil into the waterway or 

marshland. Thereafter, the SMI 315 was successfully pulled from the marsh 

and ultimately towed to a slip in Batiste Bay. The whole project cost Wapiti 

$926,840.32. Following the recovery of the vessel, the parties executed a 

partial settlement agreement, which involved Clear Spring’s payment of 

$265,000 to Wapiti in satisfaction of coverage under the Hull Policy. Wapiti, 

however, continued to assert that the expenses it incurred in removing the

stranded barge were the liability of Clear Spring, pursuant to the Wreck 

Removal Clause of the P&I Policy or, alternatively, that policy’s Sue and 

Labor Clause. Clear Spring disagreed, taking the position that no additional 

coverage was owed under the policy.

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Litigation ensued. Wapiti asserted claims for breach of contract and 

violation of the Texas Insurance Code, which culminated in the parties filing 

cross-motions for summary judgment. The district court ruled in favor of

Clear Spring, concluding that removal of the SMI 315 was not compulsory by 

law and dismissing Wapiti’s claims. Wapiti timely appealed. 

II.

This court reviews a grant of summary judgment de novo, applying 

the same standard as the district court. Austin v. Kroger Tex., L.P., 864 F.3d 

326, 328 (5th Cir. 2017); Miss. River Basin All. v. Westphal, 230 F.3d 170, 174 

(5th Cir. 2000). Summary judgment is appropriate “if the movant shows that 

there is no genuine dispute as to any material fact and the movant is entitled 

to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “A genuine issue 

of material fact exists when the evidence is such that a reasonable jury could 

return a verdict for the non-moving party.” Austin, 864 F.3d at 328 (citation 

omitted). All facts and reasonable inferences are construed in favor of the 

nonmovant, and the court should not weigh evidence or make credibility 

findings. Deville v. Marcantel, 567 F.3d 156, 163-64 (5th Cir. 2009). The 

resolution of a genuine issue of material fact “is the exclusive province of the 

trier of fact and may not be decided at the summary judgment stage.” 

Ramirez v. Landry’s Seafood Inn & Oyster Bar, 280 F.3d 576, 578 n.3 (5th Cir. 

2002). “On cross motions for summary judgment, we review each party’s 

motion independently, viewing the evidence and inferences in the light most 

favorable to the nonmoving party.” Bitco Gen. Ins. Co. v. Monroe Guar. Ins. 

Co., 31 F.4th 325, 329 (5th Cir. 2022) (quoting Amerisure Ins. Co. v. 

Navigators Ins. Co., 611 F.3d 299, 304 (5th Cir. 2010)).

The central issue on appeal is whether the district court erred in 

concluding that, as a matter of law, the removal of the SMI 315 was not 

“compulsory by law” as that language appears in marine protection and

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indemnity policies. This is not the first time that we have had to consider the 

meaning of that phrase. We began to formulate the test for whether a wreck 

removal is compulsory by law, as that phrase appears in marine protection 

and indemnity policies, in Progress Marine, Inc. v. Foremost Insurance

Company, Grand Rapids, Michigan, 642 F.2d 816, 820–21 (5th Cir. 1981). 

There, we held that the phrase “compulsory by law” is to be interpreted 

pursuant to its plain meaning and concluded that that the wreck removal at 

issue there was compulsory because the owner of the vessel faced criminal 

penalties. Id. We departed from the Second Circuit’s narrow interpretation 

of the phrase, which considered wreck removal to be compulsory only when 

“an express direct order from a governmental body directs removal.” Id. at 

821. But, although we crafted a “more expansive interpretation” of the 

phrase than had the Second Circuit, see Grupo Protexa, S.A. v. All Am. Marine 

Slip, 954 F.2d 130, 138 (3d Cir. 1992) (Alito, J.), we declined to go so far as

“to say that removal occasioned by any ‘legal obligation’ is ‘compulsory by 

law.’” Progress Marine, 642 F.2d at 821 (emphasis added).

We did not have occasion to further delineate the contours of the 

“compulsory by law” standard until our en banc decision in Continental Oil 

Company v. Bonanza Corporation, 706 F.2d 1365 (5th Cir. 1983), when we 

explained:

The test we have adopted, like the one formulated in Progress 

Marine, makes removal compulsory when a reasonable owner, fully 

informed, would conclude that failure to remove would likely expose 

him to liability imposed by law sufficiently great in amount and 

probability of occurrence to justify the expense of removal. The 

compulsion of law is not restricted to a categorical duty, 

attended by criminal sanctions. It extends to a legal duty 

imposed either by statute or general maritime law, including 

those duties for whose non-performance the sanction is 

payment of damages to persons injured. Even thus interpreted, 

the policy nonetheless extends only to a duty to remove 

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“imposed by law.” Such a duty must be present and 

unconditional, not remote and contingent.

Id. at 1372 (emphasis added) (citation and footnote omitted). This test was 

succinctly described as a “cost-benefit analysis” by the Third Circuit, a 

characterization we deem to be accurate. Grupo Protexa, 954 F.2d at 138. 

Taken together with Progress Marine, we have recognized that removal 

of a wreck is compulsory in the following, admittedly overlapping, instances:

(1) criminal sanctions would be imposed for failure to remove; (2) a 

government order mandates removal; or(3) a cost-benefit analysis conducted 

by a fully informed, reasonable owner at the time of the incident 

demonstrates that the amount and likelihood of liability imposed by a failure 

to remove mandates removal of the wreck. See Progress Marine, 642 F.2d at 

820-21; Continental Oil, 706 F.2d at 1372–73. As with any risk assessment, 

the elements of probability and proportionality are central considerations in 

the cost-benefit analysis: “[R]emoval occasioned by a reasonable 

apprehension of slight consequences for inaction or by an unreasonable 

apprehension even of grave consequences is not compelled.” Continental Oil, 

706 F.2d at 1370. Thus, the cost-benefit avenue can only compel a vessel 

owner to remove a wreck when (1) the probability of incurring liability is 

sufficiently high, and (2) the amount of potential liability for inaction justifies 

the costs imposed by proactively removing the wrecked vessel. See id. at 1370 

(“To be compelling, the duty must be clear and the sanctions for its violation 

both established and sufficiently severe to be impelling, that is[,] to warrant 

the cost of removal.”).

Left unanswered by Continental Oil, and unaddressed by the scant 

caselaw applying the cost-benefit analysis developed in that case, is whether 

state law can be the source of potential liability sufficient to compel the 

removal of a wreck. We conclude that it does. This is because, “[a]bsent a 

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specific and controlling federal rule, cases involving marine insurance 

contracts are governed by state law.” N. Am. Specialty Ins. Co. v. Debis Fin. 

Servs. Inc., 513 F.3d 466, 470 (5th Cir. 2007); see also Barrios v. River Ventures, 

L.L.C., No. 21-30431, 2022 WL 1013848, at *3 (5th Cir. Apr. 5, 2022);

Elevating Boats, Inc. v. Gulf Coast Marine, Inc., 766 F.2d 195, 198 (5th Cir. 

1985). State law thus supplements the universe of theories of liability that 

may compel a reasonable vessel owner to remove a wreck. See Continental 

Oil, 706 F.2d at 1373 (holding that the compulsion of law “extends to a legal 

duty imposed either by statute or general maritime law, including those 

duties for whose non-performance the sanction is payment of damages to 

persons injured”).

III.

With those principles in mind, we turn to whether the Louisiana 

possessory action made removal of the SMI 315 compulsory by law.1 Wapiti 

cites to Terre Aux Boeufs Land Company, Inc. v. J.R. Gray Barge Company, to 

argue that removal of the SMI 315 was compelled because, under the 

possessory action, Wapiti would be required to restore ConocoPhillips to 

peaceful possession of its property. 803 So. 2d 86 (La. App. Ct. 2001). Here, 

says Wapiti, that would require removal of the stranded vessel from 

ConocoPhillips’s marshland. Clear Spring, on the other hand, insists that the 

facts of this case do not support the conclusion that Wapiti faced possessory 

action liability and that Terre Aux itself is inapposite because the court there 

was not resolving a dispute over wreck removal insurance coverage. In Terre 

_____________________

1 “The possessory action is one brought by the possessor or precarious possessor 

of immovable property or of a real right therein to be maintained in his possession of the 

property or enjoyment of the right when he has been disturbed, or to be restored to the 

possession or enjoyment thereof when he has been evicted.” La. Code Civ. Proc. art. 

3655.

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Aux, a barge broke free from her moorings during Hurricane Georges and was 

stranded on the plaintiff’s marshland property. 803 So. 2d at 88–89. The 

barge owner “claimed a constructive total loss of the barge . . . was 

indemnified by its underwriter,” and thereafter “abandoned” the vessel. Id.

at 89. The property owner filed suit to compel removal of the barge, and the 

trial court granted a preliminary injunction mandating its removal, despite 

that court’s conclusion that the vessel’s displacement was caused by an Act 

of God and thus was not caused by any fault of the vessel owner. Id. at 89–90. 

The appeals court affirmed the issuance of the injunction, but only on the 

basis that Louisiana’s possessory action could operate to require removal of 

the barge from the property. Id. at 96–97. That court expressly concluded 

that Louisiana tort law did not justify the issuance of an injunction because 

the vessel owner was not negligent because of the applicability of the Act of 

God defense. It reasoned that the decision to abandon the vessel on the third 

party’s property was unrelated to the Act of God (Hurricane Georges). Id.

The vessel owner was therefore required to remove the barge, but the court 

concluded that damages were not warranted because that “would be 

inconsistent with maritime principles that require liability for damages to be 

based on fault.” Id. at 102. 

Here, we agree with Wapiti that the Louisiana possessory action made 

removal of the SMI 315 compulsory by law. Assessing this at the time of the 

incident and from the perspective of a fully informed, reasonable owner, as 

we must, see Continental Oil, 706 F.2d at 1372–73, the stranding of the SMI 

315 on the property of a third party immediately exposed the vessel owner to 

at least the cost of the vessel’s removal under Louisiana’s possessory action. 

See Terre Aux, 803 So. 2d at 96–97. This is because the “presence of the 

barge” on a third party’s land (ConocoPhillips) “qualifie[d] as a ‘disturbance 

in fact’ for purposes of La. C.C.P. art. 3659.” Id. at 97. And, the possessory 

action entitles the possessor of the affected property to injunctive relief—

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here, that would entail removal of the stranded vessel from ConocoPhillips’s 

marshland. See La. Code Civ. Proc. art. 3663. Thus, at the time of the 

incident, the reasonable owner here knew that her barge was stranded on a 

third party’s property and that she therefore faced a high probability of 

having to comply with an injunction mandating the removal of the SMI 315 

from ConocoPhillips’s property—a court order not materially different from 

the types of government mandates we found to be sufficient—but not 

necessary—to satisfy the “compulsory by law” standard in Progress Marine 

and Continental Oil. See Progress Marine, 642 F.2d at 821; Continental Oil, 706 

F.2d at 1377. We think that Wapiti’s proactive removal of the vessel from 

ConocoPhillips’s marshland was warranted when, as here, it avoided the cost 

of litigating the removal of the SMI 315 imposed by a theory—the possessory 

action—that is established in both Louisiana’s jurisprudence and its code of 

civil procedure. See Continental Oil, 706 F.2d at 1377 (“Removal of a wreck 

is not compulsory by law unless there is a clear legal obligation to remove, 

imposed by statute or judicial decision, on the party who effects removal.”).

Under the instant circumstances, Wapiti’s obligation to remove the SMI 315 

from ConocoPhillips’s marshland was neither remote nor contingent under 

Louisiana’s possessory action. Therefore, on this basis, the district court 

erred in granting summary judgment in favor of Clear Spring.2

IV.

Because the Louisiana possessory action made removal of the SMI 315 

compulsory by law, the district court erred in granting summary judgment in 

Clear Spring’s favor. Thus, the judgment of the district court is 

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2 Given this holding, we need not address Wapiti’s alternative arguments for why 

summary judgment was improper here: (1) the Wreck Act, (2) traditional principals of 

maritime tort liability, and (3) the Sue and Labor Clause of the P&I Policy.

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REVERSED, and the case is REMANDED for proceedings consistent 

with this opinion. 

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