Court Opinion

ID: 9894140
Source: CourtListenerOpinion
Date Created: 2023-10-31 17:01:03.429268+00
Date Added: 2024-06-11T09:08:47.589428
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

WESTERN TOWBOAT COMPANY,                    Nos.   22-35195
                                                   22-35217
                Plaintiff-Appellant/
                Cross-Appellee,           D.C. No. 2:20-cv-
                                            00416-RSM
 v.

VIGOR MARINE, LLC,                            OPINION

                Defendant-Appellee/
                Cross-Appellant.

        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 Plaintiff-
Appellant.
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 non-
reimbursed 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.