Opinion ID: 617714
Heading Depth: 2
Heading Rank: 2

Heading: GAIC’s Cross-Appeals

Text: GAIC challenges that (1) the district court improperly granted summary judgment in favor of the plaintiffs that it owed coverage on the Lisa E; (2) it owes no coverage for any cleanup costs following June 7, 2005; (3) it owes no coverage for any IEPA suits regarding remnant oil on the EMC 423; and (4) it owes no defense costs with respect to the IEPA’s suit against EMC and SWS for injunctive relief.
GAIC contends that the explosion did not implicate the policy on the Lisa E and the district court mistakenly granted summary judgment in favor of the plaintiffs. OPA90, it argues, only holds liable the vessel that spilled the oil—the EMC 423. OPA90 states: Notwithstanding any other provision or rule of law, and subject to the provisions of this Act, each responsible party for a vessel or a facility from which oil is discharged, or which poses the substantial threat of a discharge of oil, into or upon the navigable waters 28 Nos. 11-1266 & 11-1346 or adjoining shorelines or the exclusive economic zone is liable for the removal costs and damages specified in subsection (b) of this section that result from such incident. 33 U.S.C. § 2702(a). OPA90 defines “responsible party” as, “in the case of a vessel, any person owning, operating, or demise chartering the vessel.” 33 U.S.C. § 2701(32)(A). It defines vessel as “every description of watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water, other than a public vessel.” 33 U.S.C. § 2701(37).4 Because the Lisa E did not, itself, discharge any oil into the canal, GAIC maintains that the vessel is beyond the scope of coverage. Assuming arguendo that, despite the EMC 423’s de- pendence upon the Lisa E for propulsion and navigation, the two vessels may not be considered a single vessel for purposes of OPA90, GAIC ignores that OPA90 holds liable not only those vessels that discharge oil, but also that “pose[] the substantial threat of a discharge of oil” as well. 33 U.S.C. § 2702(a). The Lisa E satisfies OPA90’s definition of “vessel.” Furthermore, while the tug did not itself house the petro- 4 GAIC is correct that OPA90 separately defines “tank vessel” as “a vessel that is constructed or adapted to carry, or that carries, oil or hazardous material in bulk as cargo or cargo residue . . . .” 33 U.S.C. § 2701(37). However, it does not clearly articulate why this distinction is relevant for purposes of understanding liability under OPA90, which does not distinguish between a vessel and a tank vessel with respect to its elements of liability. See U.S.C. 33 § 2702(a). Nos. 11-1266 & 11-1346 29 leum cargo within its hull, it was attached to the EMC 423, which did. Specifically, the Lisa E was the sole means of propulsion and navigation for the EMC 423. By virtue of its propelling the EMC 423 and its petroleum cargo through Illinois’ waterways, the Lisa E posed a substantial threat of a discharge of oil and is, therefore, subject to liability under OPA90.5 Interpreting the statute as GAIC suggests and treating the Lisa E and EMC 423 as entirely separate entities for purposes of coverage yields a curious result. For purposes of OPA90, a vessel is a watercraft “used, or capable of being used, as a means of transportation on water.” 33 U.S.C. § 2701(37). Without the Lisa E, or another means of propulsion, the EMC 423 would not satisfy this definition: it would not be used or would be capable of being used as a means of transportation on water because it could not power itself or steer. The EMC 423 and its petroleum cargo would be exempt from liability under OPA90.6 This perverse result thwarts OPA90’s intent and suggests that the Lisa E, to the extent it subjects the EMC 423 to coverage and, by propelling the barge, 5 We note that OPA90 offers no further definition or elaboration for the term “substantial threat.” 6 One could argue that EMC 423 could satisfy OPA90’s definition of “facility,” which is “any structure, group of structures, equipment, or device (other than a vessel) which is used for one or more of the following purposes: exploring for, drilling for, producing, storing, handling, transferring, processing, or transporting oil,” 33 U.S.C. § 2701(9), but this is a definitional stretch not worth pursuing. 30 Nos. 11-1266 & 11-1346 threatens a discharge of oil, must be subject to liability under the statute. The district court appropriately granted summary judgment in favor of EMC and SWS on this point, and the explosion implicated the Lisa E’s $5,000,000 policy such that those funds are available to the plaintiffs.
Cleanup Costs Between June 7, 2005 and August 31, 2005 GAIC argues, first, that it owes no coverage after June 7, 2005 because, on that date, the Coast Guard announced recovery operations for the spill concluded. Second, it asserts that if it does owe coverage, the district court erred in awarding $355,569 in damages because it also held that EMC and SWS could not substantiate its costs, including those after June 7, 2005. As an initial matter, the district court did not clearly err when it found that GAIC owed coverage after June 7, 2005. See discussion supra at I.B.3. On appeal, GAIC reiterates its argument that the Coast Guard’s On-Scene Co- ordinator declared the spill over on June 7, 2005. It disputes the district court’s finding that EMC and SWS faced requests from the IEPA to continue its cleaning operations both in the canal and with respect to the EMC 423 after June 7 as based on heresay; however, it offers no new arguments or evidence to undermine the district court’s analysis. GAIC, in short, simply disagrees with the outcome. Nos. 11-1266 & 11-1346 31 As the district court acknowledged, determining GAIC’s exposure for EMC and SWS’s post-June 7 invoices is “difficult.” The parties never established and presently disagree about what amounts appropriately constitute EMC and SWS’s true costs. EMC and SWS claim they are owed the full amount they invoiced—$723,710—and GAIC asserts that it owes nothing. Confronted with circumstances like these, where the terms of an oral contract are ambiguous, New York law considers “the acts of the parties thereunder [as] of controlling importance in its true interpretation.” Johnsten v. Dahlgren, 62 N.Y.S. 1115, 1119 (N.Y. App. Div. 1900). In this case, the district court calculated that GAIC willingly paid 80% of EMC and SWS’s claimed costs prior to June 7, 2005, at which time it was already aware of the substantiation problems presented by their method of invoicing. It was not clear error, therefore, to infer that GAIC would and should pay 80% of the post-June 7 invoices, particularly since GAIC offered the district court no alternative calculation of what it owed for the post-June 7 invoices. We affirm the district court’s awarding EMC and SWS $355,569 in damages. 3. GAIC is Liable for the Consulting Costs Expended to Defend Against the IEPA’s Charges Regarding the Disposal of the Remnant Oil on the EMC 423 The district court awarded EMC and SWS $10,215 for consulting costs it incurred addressing the IEPA’s claim that its removal of the petroleum residue from the EMC 32 Nos. 11-1266 & 11-1346 423 violated the law. See discussion supra at I.A.2.d.i; I.B.3. GAIC argues that there is “no proof to suggest the removal of cargo from [EMC 423] after May 18[, 2005] as the result of the [Captain of the Port] Order to remove the cargo from the uncertified Barge had anything to do with avoiding an OPA90 or similar Illinois state statute. Nor does it involve a CERCLA exposure.” Based on the evidence before us, we hold that the district court did not commit clear error when it awarded EMC and SWS $10,215 in consulting costs to defend against these charges. The court reasonably concluded that the fees were covered by the policy, and we find no compelling reason to disturb its ruling. 4. GAIC is Liable for Legal Costs Incurred Defending Against the IEPA’s Claim for Injunctive Relief GAIC challenges that it is not responsible for any of EMC and SWS’s defense costs with respect to the IEPA suit, including the $32,840 awarded by the district court. See discussion supra at I.B.3. The district court reasonably determined that EMC and SWS incurred these costs as they confronted potential liability under OPA90 and its state-law equivalents. The costs are, therefore, covered by the policy such that GAIC owes indemnification. Based on the evidence before us, we conclude that the district court did not clearly err in so finding, and we decline the invitation to overturn its damage award. Nos. 11-1266 & 11-1346 33