NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

TUG CONSTRUCTION, LLC, a 

Washington limited liability company, 

Plaintiff-Appellee, 

 v. 

HARLEY MARINE FINANCING, LLC, a 

Delaware limited liability company, 

Defendant-Appellant.

No. 22-36049 

D.C. No. 2:19-cv-00632-BAT 

MEMORANDUM*

Appeal from the United States District Court

for the Western District of Washington

Brian Tsuchida, Magistrate Judge, Presiding

Argued and Submitted February 6, 2024

Portland, Oregon

Before: McKEOWN, BYBEE, and BRESS, Circuit Judges.

This appeal concerns the cost of repairs on five tugboats and which entity—

the owner or the charterer—should shoulder it. Tug Construction, LLC (“Tug”) 

owned the newly constructed tugboats (“Vessels”) and chartered them to Harley 

Marine Financing, LLC (“HMF”). The Bareboat Charter Agreements required 

* This disposition is not appropriate for publication and is not precedent 

except as provided by Ninth Circuit Rule 36-3.

FILED

FEB 15 2024

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS
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HMF to return the Vessels to Tug after the charter term “in the same good 

condition . . . less ordinary wear and tear.” To determine the “same good 

condition,” the Bareboat Charter Agreements required on-hire and off-hire surveys. 

The “method” for the on-hire survey needed to include “written and photographic 

documentation.” Tug claimed that HMF did not return the Vessels “in the same 

good condition . . . less ordinary wear and tear.”

After a five-day bench trial, relying in part on the expert testimony of 

William Kelley, the trial court found “that Defendant HMF breached each of the 

Bareboat Charter Agreements by first failing to redeliver each of the Tugboats in 

the condition required under the Bareboat Charter Agreements.”

We review the trial court’s factual findings for clear error. See Kohler v.

Presidio Int’l, Inc., 782 F.3d 1064, 1068 (9th Cir. 2015). The parties agree that the 

clearly erroneous standard applies to the trial court’s determination that the Vessels 

were not returned in the “same good condition . . . less ordinary wear and tear.” 

“Special deference is paid to a trial court’s credibility findings.” Exxon Co. v.

Sofec, Inc., 54 F.3d 570, 576 (9th Cir. 1995), aff’d 517 U.S. 830 (1996).

The trial court’s determination that the parties conducted an on-hire survey 

under the Bareboat Charter Agreements was not clearly erroneous. Both parties 

agree that a representative for HMF, Brian Appleton, was present for the 

construction and testing of the Vessels and documented his inspections with 
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photographs and reports. The Vessels were not, however, drydocked and further 

inspected after being tendered to HMF. Tug argues that Appleton’s inspections and 

documentation qualified as an on-hire survey; HMF argues that they did not. The 

trial court agreed with Tug. Because the Bareboat Charter Agreements specified

only that the on-hire survey include written and photographic documentation, there 

was no clear error in finding that Appleton’s inspections qualified as an on-hire 

survey. 

There was likewise no clear error in the trial court’s determination that HMF 

failed to return the Vessels “in the same good condition . . . less ordinary wear and 

tear.” Multiple witnesses testified that the inspections and testing of the Vessels 

were more rigorous than typical on-hire surveys of mature or used tugboats. After 

hearing all the testimony, the trial court found, “For newly constructed vessels that 

have been accepted for bareboat charter following inspection during construction, 

launch, and sea trials, another dry-dock inspection is normally not performed 

following sea trials.” Further, HMF provides a weak alternative hypothesis that the

damage occurred as the Vessels were removed from the drydock after construction, 

during sea trials, or in the weeks or months that the Vessels sat in the water before 

being delivered to HMF. The trial court found this theory to be “unsupported.” We 

find no clear error.
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Nor did the trial court err by crediting Kelley’s testimony. HMF argues that 

Kelley’s expert reports contained a false statement about HMF’s liability for 

engine repairs on one of the tugboats, and, therefore, his testimony should have 

been discredited in full. Yet, HMF was not ordered to pay the engine repair 

damages because Tug abandoned the claim. Thus, the particular alleged falsehood 

was not material to the decision below. HMF invokes the falsus in uno, falsus in 

omnibus maxim. This allows a court to discredit a witness’s entire testimony, but it 

does not require a court to do so. See Hughes v. Rodriguez, 31 F.4th 1211, 1219 

n.2 (9th Cir. 2022). Here, the trial court expressly found that Kelley was credible. 

Even accepting HMF’s characterization of Kelley’s allegedly false statement, we 

find no error in the court’s reliance on Kelley’s opinions, which trial court found to 

be well supported. Thus, we conclude that there was no reversible error.

AFFIRMED.