United States v. Citgo Asphalt Refining Company
718 F.3d 184
| 3rd Cir. | 2013Background
- Athos I, owned by Frescati and managed by Tsakos, was hit by an abandoned anchor in Anchorage Number Nine, Delaware River, causing a large oil spill.
- CARCO’s port at Paulsboro provided a safe berth/port warranty via a voyage charter with Star Tankers; Frescati contends Frescati is a third-party beneficiary.
- Frescati reimbursed by the Oil Pollution Act funds and sought recovery from CARCO under contract and tort theories.
- District Court held CARCO not liable under contract or tort, and found no Rule 52 findings; this prompted remand for factual findings.
- Government settled with CARCO on a limited basis, subrogating to Frescati’s position for up to $88 million; Government seeks to offset damages.
- On appeal, the Third Circuit reverses certain contract and negligence conclusions, holds Frescati is a third-party beneficiary and remands for factual determinations on breach and causation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is Frescati a third-party beneficiary of CARCO’s safe berth warranty? | Frescati benefits from the warranty as vessel owner. | Frescati is not a party or intended beneficiary of CARCO-Star Tankers contract. | Yes; Frescati is an intended/beneficiary of the safe berth warranty. |
| What is the scope of the safe berth warranty? | Warranty is an express assurance covering the Athos I, not merely due diligence. | Orduna-style due-diligence interpretation applies; warranty is not an unconditional guarantee. | Express assurance; warranty coverage includes the Athos I within the port area. |
| Was the safe berth warranty breached by CARCO? | Anchor within the Anchorage breached the safe berth warranty if the Athos I could not safely reach its berth. | Anchor unknown and possibly outside the defined approach; no breach established. | Breach issue requires remand for factual findings (draft, clearance) to determine breach. |
| Does the named port exception apply to CARCO? | Exception does not apply because the hazard (anchor) was unknown to the parties. | If port was named, exception should apply to known hazards within the named port. | Not applicable; hazard unknown to parties, exception does not bar contractual claim. |
| Are the tort claims (negligence, negligent misrepresentation) precluded if contract claim exists? | Negligence may be viable if contractual warranty is satisfied or breached. | Misrepresentation rejected; negligence may be viable but requires standard-of-care findings. | Negligence remanded for fact-finding; negligent misrepresentation rejected on causation. |
Key Cases Cited
- The Gazelle, 128 U.S. 474 (1888) (safe berth/port warranties originate from historical precedent)
- Crumady v. The Joachim Hendrik Fisser, 358 U.S. 423 (1959) (workmanlike service warranty extends to vessel’s benefit)
- Waterman S. S. Corp. v. Dugan & McNamara, Inc., 364 U.S. 421 (1960) (owner is beneficiary of stevedore’s warranty of workmanlike service)
- Paragon Oil Co. v. Republic Tankers, S.A., 310 F.2d 169 (2d Cir. 1962) (owner/charterer/third-party beneficiary reasoning in safe berth context)
- Park S.S. Co. v. Cities Serv. Oil Co., 188 F.2d 804 (2d Cir. 1951) (expressive of safe berth as an express assurance to vessel owner)