Petition for Writ of Certiorari — Paragon Asset Company, Ltd., Petitioner v. American Steamship Owners Mutual Protection and Indemnity Association, Inc.
Supreme Court briefAug 27, 2024
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No. 24IN THE
Supreme Court of the United States
PARAGON ASSET COMPANY, LTD.,
Petitioner,
v.
AMERICAN STEAMSHIP OWNERS MUTUAL
PROTECTION AND INDEMNITY ASSOCIATION,
INCORPORATED
Respondents.
ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED
STATES COURT OF A PPEALS FOR THE FIFTH CIRCUIT
PETITION FOR A WRIT OF CERTIORARI
JOHN A. SCIALDONE
Counsel of Record
SCIALDONE LAW FIRM, PLLC
1319 24th Avenue
Gulfport, MS 39501
(228) 822-9340
MVFLDOGRQH#VOÀUPXVFRP
Counsel for Petitioner
332049
A
(800) 274-3321 • (800) 359-6859
i
QUESTIONS PRESENTED
The questions presented are:
1. Whether, under federal maritime law, the
unambiguous terms of a written maritime
contract cannot be altered by parol
evidence, as this Court has held, or can be
contradicted and nullified by parol evidence
where one party later claims certain terms
were ‘intended for its benefit’, as the Fifth
Circuit has now held.
2. Whether, under federal maritime law, a
shipowner facing a force majeure event has
a duty to exercise ordinary reasonable care,
as this Court has held, where hindsight
analysis cannot be used to determine the
reasonableness of the shipowner’s actions,
as held in the Eleventh Circuit and other
federal courts, or if this duty requires a
shipowner to act upon predictions only
verifiable through hindsight knowledge, a
new standard imposed by the Fifth Circuit.
ii
PARTIES TO THE PROCEEDING
Petitioners in this Court are Paragon Asset
Company, Limited; Paragon International Finance
Company; Paragon Offshore Drilling, L.L.C.; and
Paragon Offshore Limited. Respondents in this Court
are American Steamship Owners Mutual Protection
and Indemnity Association, Incorporated; and Signet
Maritime Corporation.
RULE 29.6 STATEMENT
Paragon Asset Company, Ltd. is not a
corporation, and is a wholly owned subsidiary of Borr
Drilling Limited (NYSE & OSE ticker “BORR”), a
public limited liability company.
Paragon Asset Company Ltd.’s affiliate
companies, Paragon Offshore Limited, Paragon
Offshore Drilling, LLC, and Paragon International
Finance Co., are also wholly owned subsidiaries of
Borr Drilling Limited.
RELATED CASES
Related cases to this proceeding are:
-
Paragon Asset Company Ltd, as Owner of
the Drillship DPDS1 v. Gulf Copper &
Manufacturing Corporation, et al., No.
1:17-cv-203, U.S. District Court for the
Southern District of Texas, Brownsville
division. Judgment entered March 9,
iii
2023.
-
Signet Maritime Corporation, as Owner of
the Tug SIGNET ENTERPRISE, its
engines, tackle, etc., in a cause of
exoneration from or limitation of liability,
No. 1:17-cv-247, U.S. District Court for
the
Southern
District
of
Texas,
Brownsville division. Judgment entered
March 9, 2023.
-
Signet Maritime Corporation, as Owner of
the Tug SIGNET ARCTURUS, its
Engines, Tackle, Etc., in a Cause of
Exoneration from or Limitation of
Liability, No. 1:18-cv-035, U.S. District
Court for the Southern District of Texas,
Brownsville division. Judgment entered
March 9, 2023.
-
Paragon Asset Company, Limited, as
Owner of the Drillship DPDS1 v.
American Steamship Owners Mutual
Protection and Indemnity Association,
Incorporated, No. 23-40209, U.S. Court of
Appeals for the Fifth Circuit. Judgment
entered April 24, 2024.
iv
TABLE OF CONTENTS
Page
QUESTION PRESENTED ......................................... i
PARTIES TO THE PROCEEDING ........................... ii
RULE 29.6 STATEMENT.......................................... ii
RELATED CASES ..................................................... ii
TABLE OF CONTENTS ........................................... iv
TABLE OF AUTHORITIES ................................... vii
PETITION FOR WRIT OF CERTIORARI .................1
OPINIONS BELOW ....................................................1
JURISDICTION ..........................................................1
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED .........................................2
STATEMENT OF THE CASE ....................................3
A. Legal Background ..................................................6
B. Factual Background ..............................................8
C. Proceedings Below ...............................................11
REASONS FOR GRANTING THE PETITION .......15
I. Under federal maritime law, parol evidence
v
cannot modify the written terms of a
maritime contract ...........................................15
A. The principles of general maritime
law governing interpretation and
enforcement of maritime contracts
are well-established ..................................16
B. The Fifth Circuit’s decision conflicts
with this Court’s precedent ......................20
C. The Fifth Circuit’s decision relied
on state law in contravention of
federal principles governing maritime
contracts, disrupting the uniformity
of general maritime law ............................25
D. The Fifth Circuit’s decision will
disrupt maritime commerce by
destabilizing maritime contracts ..............28
II. Under federal maritime law, a shipowner
facing a force majeure event is held to a
standard of ordinary reasonable care .................31
A. The principles of general maritime
law articulating the defenses governing
collisions and allisions are wellestablished by this Court and welldeveloped by the circuit courts .................32
B. The Fifth Circuit’s decision conflicts
vi
with this Court’s precedent governing
reasonable care and disregards wellestablished principles governing the
force majeure defense, creating a
split amongst the circuits .........................37
C. The Fifth Circuit’s decision creates
a circuit split and will disrupt both
the uniformity of general maritime law
and stability of maritime commerce .........41
CONCLUSION ..........................................................43
APPENDIX A - Opinion of the United States
Court of Appeals for the Fifth Circuit,
Dated April 24, 2024 .................................................1a
APPENDIX B - Amended Order and Opinion
of the United States District Court for the
Southern District of Texas, Brownsville
Division, Dated August 17, 2022 ............................29a
APPENDIX C - Final Judgment of the United
States District Court for the Southern District
of Texas, Brownsville Division,
Dated March 9, 2023 .............................................154a
APPENDIX D - Order Denying Petition for
Rehearing by the United States Court of
Appeals for the Fifth Circuit,
Dated May 29, 2024 ..............................................158a
vii
TABLE OF AUTHORITIES
CASES
Page
Am. Dredging Co. v. Miller,
510 U.S. 443 (1994) .....................................................7
Am. Marine Tech, Inc. v. World Grp. Yachting,
Inc., 2021 WL 4785888 (11th Cir. Oct. 14, 2021) .....19
Am. Roll-On Roll-Off Carrier, LLC v. P&O Ports
Baltimore, Inc., 479 F.3d 288 (4th Cir. 2007) ..........18
Atlanta-Schiffahrts v. United States,
299 F. Supp. 781 (E.D. La. 1969)..............................36
Capozziello v. Brasileiro,
443 F.2d 1155 (2d Cir. 1971) ....................................18
CITGO Asphalt Ref. Co. v. Frescati Shipping
Co., Ltd., 589 U.S. 348 (2020) ..... 17, 18, 19, 20, 24, 25
Corbitt v. Diamond M. Drilling Co.,
654 F.2d 329 (5th Cir. 1981) ...............................17, 19
Davis v. Valsamis, Inc.,
752 Fed. App’x. 688 (11th Cir. 2018) ........................17
Day v. Am. Seafoods Co. LLC,
557 F.3d 1056 (9th Cir. 2009) ...................................19
Exxon Co., U.S.A. v. Sofec, Inc.,
517 U.S. 830 (1996) ...................................................33
viii
Fischer v. S/Y Neraida,
508 F.3d 586 (11th Cir. 2007) ........... 32, 33, 34, 35, 41
Flores v. Am. Seafoods Co.,
335 F.3d 904 (9th Cir. 2003) ...............................17, 19
Fontenot v. Mesa Petroleum Co.,
791 F.2d 1207 (5th Cir. 1986) ...................................17
Foster Wheeler Energy Corp. v. An Ning Jiang
MV, 383 F.3d 349 (5th Cir. 2004) .............................18
Garrett v. Moore-McCormack Co.,
317 U.S. 239 (1942) .....................................................7
Garza v. Marine Transp. Lines, Inc.,
861 F.2d 23 (2d Cir. 1988) ........................................19
Great Lakes Ins. SE v. Raiders Retreat Realty
Co., LLC, 601 U.S. 65 (2024) ............................7, 8, 25
Hardy v. Gulf Oil Corp.,
949 F.2d 826 (5th Cir. 1992) .....................................29
In re Complaint of Bankers Trust Co.,
651 F.2d 160 (3d Cir. 1981) ......................................37
In re Marine Leasing Servs., Inc.,
328 F. Supp. 589 (E.D. La. 1971), aff’d,
471 F.2d 255 (5th Cir. 1973) .....................................26
In re United States,
425 F.2d 991 (5th Cir. 1970) ................... 33, 34, 35, 37
ix
Instone Travel Tech Marine & Offshore v. Int’l.
Shipping Partners, Inc., 334 F.3d 423
(5th Cir. 2003) ...........................................................27
Internaves de Mexico s.a. de C.V. v. Andromeda
S.S. Corp., 898 F.3d 1087 (11th Cir. 2018) ..............18
Johnson v. Structured Asset Servs., LLC,
148 S.W.3d 711 (Tex. App. 2004) ........................26, 27
Kossick v. United Fruit Co.,
365 U.S. 731 (1961) ...............................................7, 19
Ladner v. Bender Welding & Mach. Co.,
336 F. Supp. 1264 (S.D. Miss. 1971) ........................36
Lord & Taylor LLC v. Zim Integrated Shipping
Servs., Ltd., 108 F. Supp. 3d 197 (S.D.N.Y. 2015) ...35
Mamiye Bros. v. Barber S.S. Lines, Inc.,
241 F. Supp. 99, 108 (S.D.N.Y. 1965), aff’d,
360 F.2d 774 (2d Cir. 1966) ......................................34
Norfolk S. Ry. Co. v. Kirby,
543 U.S. 14 (2004) ....................................... 7, 8, 16, 25
Pope & Talbot, Inc. v. Hawn,
346 U.S. 406 (1953) ...................................................17
Progressive Rail Inc. v. CSX Transp., Inc.,
981 F.3d 529 (6th Cir. 2020) .....................................19
x
Puerto Rico Fast Ferries LLC v. SeaTran Marine,
LLC, 102 F.4th 538 (1st Cir. 2024)...........................19
S. Pacific Co. v. Jensen,
244 U.S. 205 (1917) ......................................... 7, 16, 28
Simmons v. Berglin,
401 Fed. App’x 903 (5th Cir. 2010) ...........................35
Stolt Achievement v. Dredge B.E. Lindholm,
447 F.3d 360 (5th Cir. 2006) .....................................33
Swenson v. The Argonaut,
204 F.2d 636 (3d Cir. 1953) ......................................34
Texas A&M Research Found. v. Magna Transp.,
Inc., 338 F.3d 394 (5th Cir. 2003) .............................29
The Charles H. Sells,
89 F.2d 631(2d Cir. 1937) .........................................34
The Clarita,
90 U.S. (23 Wall.) 1 (1874) ........................................33
The Grace Girdler,
74 U.S. (7 Wall.) 196 (1868) .......................... 33, 35, 41
The Lottawanna,
88 U.S. (21 Wall.) 558 (1874) ......................................7
The Louisiana,
70 U.S. (3 Wall.) 164 (1865) ................................32, 33
xi
The Virginia Ehrman,
97 U.S. 309 (1877) .....................................................33
United Geophysical Co. v. Vela,
231 F.2d 816 (5th Cir. 1956) .....................................35
United States v. Lykes Bros. S.S. Co.,
511 F.2d 218 (5th Cir. 1975) .....................................35
United States v. Reliable Transfer Co.,
421 U.S. 397, 411 (1975) ...........................................32
Valley Line Co. v. Musgrove Towing Serv., Inc.,
654 F. Supp. 1009 (S.D. Tex. 1987) ..........................36
Varibus Corp. v. South Hampton Co.,
623 S.W.2d 157 (Tex. App. 1981) ..............................27
Weathersby v. Conoco Oil Co.,
752 F.2d 953 (5th Cir. 1984) .....................................17
Weyerhaeuser Co. v. Atropos Island,
777 F.2d 1344 (9th Cir. 1985) ...................................34
Yamaha Motor Corp., U.S.A. v. Calhoun,
516 U.S. 199 (1996) .....................................................7
Young v. Merrill Lynch & Co.,
658 F.3d 436 (5th Cir. 2011) .....................................20
xii
CONSTITUTION & STATUTES
U.S. Const. art. III, § 2, cl. 1 .......................................2
28 U.S.C. § 1333(1)..................................................2, 3
OTHER AUTHORITIES
1 Thomas J. Schoenbaum, Admiralty and Maritime
Law (6th ed. 2018) ............................................7, 8, 27
1
PETITION FOR WRIT OF CERTIORARI
Paragon Asset Company, Ltd. (hereinafter
“Paragon”) respectfully petitions for a writ of
certiorari to review the judgment of the United States
Court of Appeals for the Fifth Circuit in this case.
OPINIONS BELOW
The opinion of the court of appeals (App. A, pp.
1a-28a) is reported at Paragon Asset Company, Ltd. v.
American Steamship Owners Mutual Protection and
Indemnity Association, Inc., 99 F.4th 736, 738-750
(5th Cir. 2024). The court of appeals’ order denying
Paragon’s petition for rehearing en banc (App. D, pp.
158a-161a) is unreported.
The opinion of the district court (App. B, pp.
29a-153a) is reported at Paragon Asset Company Ltd.
v. Gulf Copper & Manufacturing Corp., et al., 622
F.Supp.3d 360, 371-426 (S.D. Tex. 2022).
JURISDICTION
The court of appeals issued its opinion on April
24, 2024. App. A, pp. 1a-28a. Paragon’s timely
petition for rehearing was denied on May 29, 2024.
App. D, pp. 158a-161a. This Court has jurisdiction
under 28 U.S.C.A. § 1254(1).
2
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED
The judicial Power shall extend to all
cases, in Law and Equity, arising under
this Constitution, the laws of the United
States, and Treaties made, or which
shall be made, under their authority;—
to all Cases affecting Ambassadors,
other public Ministers and Consuls;—to
all cases of admiralty and maritime
jurisdiction; to Controversies to which
the United States shall be a Party;—to
Controversies between two or more
States; between a State and Citizens of
another State, between Citizens of
different States,—between Citizens of
the same State claiming Lands under
Grants of different States, and between
a State, or the Citizens thereof, and
foreign States, Citizens or Subjects.
U.S. Const. art. III, § 2, cl. 1 (emphasis added).
The district courts shall have original
jurisdiction, exclusive of the courts of the
States, of:
(1) Any civil case of admiralty or
maritime jurisdiction, saving to
suitors in all cases all other remedies to
which they are otherwise entitled.
3
(2) Any prize brought into the United
States and all proceedings for the
condemnation of property taken as prize.
28 U.S.C. § 1333(1) (emphasis added).
STATEMENT OF THE CASE
The Fifth Circuit’s decision doubly threatens
the stability of maritime commerce. Paragon Asset
Co., Ltd. v. Am. S.S. Owners Mut. Prot. & Indem.
Ass’n, Inc., 99 F.4th 736, 738-750 (5th Cir. Apr. 24,
2024) (App. A).
First, contrary to this Court’s longstanding
precedents governing the interpretation of maritime
contracts, the Fifth Circuit sanctioned the use of parol
evidence to contradict and subvert the plain,
unambiguous terms of a written maritime contract.
A drafter may now selectively insert subjective
intent to unilaterally nullify a contract’s express
written terms to escape its application, to grant itself
“rights” found nowhere in its written terms, and to
retroactively sanction its own actions otherwise
prohibited by the contract’s written terms.
The Fifth Circuit’s judgment permits a party
belatedly to claim that a provision is “for its benefit”
in order to avoid said provision, even though the
contract’s written terms expressly prohibit it. And a
party may accomplish this by adducing subjective
4
parol evidence to support a meaning found nowhere
in the contract’s four corners.
Hence, the Fifth Circuit has held that federal
maritime law permits the unilateral waiver of a
written contractual provision.
The Fifth Circuit’s decision violates the
standards for maritime contract interpretation
articulated by this Court. Moreover, it provides an
unsound method of contract interpretation and
maritime policy. Undisturbed, this decision will
undermine the national uniformity of federal
maritime law and destabilize maritime commerce.
This rule will open all maritime contracts to
parol evidence and subjective intent and deny
commercial parties the ability to rely on the
negotiated plainly written terms of a contract.
In nuce, the Fifth Circuit now permits a drafter
to defeat the plain written terms of a contract via the
drafter’s subjective intent. This is opposed by law and
logic, and will render written contracts meaningless.
Second, contrary to this Court’s longstanding
precedent governing maritime negligence and the
force majeure defense, the Fifth Circuit has
transformed the duty of care owed by a shipowner
from one of ordinary reasonableness to one of
perfection.
5
To reach this result, the Fifth Circuit condoned
the district court’s use of hindsight analysis to
evaluate
the
shipowner’s
actions,
forever
compromising the viability of force majeure as a
defense in maritime cases by imposing a duty to
accurately predict and respond to future unknowable
events squarely outside of its control.
Such an analysis – originally decried by the
Fifth Circuit itself almost 70 years ago – remains
verboten in the other Circuit courts.
But the Fifth Circuit has now held “prudent
shipowners foresee” unforeseeable situations, and
make plans which assume any possible “sudden
changes in circumstances.”
It is impossible to reconcile the Fifth Circuit’s
holding with this Court’s 150-year-old standard of
ordinary reasonable care.
Furthermore, the Fifth Circuit’s requirement
to “foresee” any and all potential events by thirdparty vessels, port authorities, the United States, or
the weather – over which it has no control –effectively
eliminates seventy years of consistency among the
Circuit courts prohibiting hindsight analysis in
determining whether a shipowner acted reasonably in
responding to a force majeure threat.
The Fifth Circuit’s sanction of hindsight is not
only unreasonable, but dangerous. It creates a rule
where, to be considered ‘ordinarily reasonable,’
6
shipowners must execute an evacuation from port if
its location falls within a potential “cone of
uncertainty.” In this case, that encompassed a 600
mile stretch of coastline spanning two countries – the
majority of which was ultimately unaffected by the
storm. The Fifth Circuit’s standard will result in
mass evacuations, chaos, unnecessary loss of life and
property as vessels depart port into unknown
conditions as to the actual path of the storm.
And it creates a circuit split in a literal sense –
dividing the Gulf of Mexico in half – separating ports
in Texas, Louisiana, and Mississippi from the rest of
the United States.
In short, it requires sheer luck, essentially
foreclosing the force majeure defense for any
overwhelmed vessel – no matter her efforts – and is
akin to strict liability for the shipowner.
This case presents the ideal vehicle to resolve
the newly created conflict among the circuits and
articulate a uniform standard applying to the force
majeure defense.
A. Legal Background
This case presents an important issue of
federal maritime law that warrants this Court’s
review, particularly in light of this Court’s vital role
in shaping rules of admiralty and safeguarding
maritime commerce.
7
Article III, Section 2, Clause 1 of the United
States Constitution extends the federal judicial power
to “all Cases of admiralty and maritime
Jurisdiction.”1
This grant of power - “the only instance where
the Constitution delegates jurisdiction over an entire
subject matter to the federal judiciary”2 “contemplates a system of maritime law coextensive
with, and operating uniformly in, the whole country.”3
Thus, “[t]he policy reason for this important
and unique doctrine is the need for uniformity, which
is an overriding value in admiralty law,”4 and “[t]he
Seizing upon this grant of authority, Congress enacted the
Judiciary Act of 1789, which vested the district courts of the
United States “exclusive original cognizance of all civil causes of
admiralty and maritime jurisdiction ....” 1 Thomas J.
Schoenbaum, Admiralty and Maritime Law § 3:1 (6th ed. 2018)
(citations omitted). This congressional grant of judicial power
has been carried through to today’s 28 U.S.C. § 1333.
2 Schoenbaum, supra § 3:1 (emphasis added).
3 Great Lakes Ins. SE v. Raiders Retreat Realty Co., LLC, 601
U.S. 65, 69 (2024) (citation and internal quotation marks
omitted). This principle has been consistently reinforced and
upheld by this Court. See, e.g., The Lottawanna, 88 U.S. (21
Wall.) 558 (1874); S. Pacific Co. v. Jensen, 244 U.S. 205 (1917);
Garrett v. Moore-McCormack Co., 317 U.S. 239 (1942); Kossick
v. United Fruit Co., 365 U.S. 731 (1961); Am. Dredging Co. v.
Miller, 510 U.S. 443, 451 (1994); Yamaha Motor Corp., U.S.A. v.
Calhoun, 516 U.S. 199 (1996); Norfolk S. Ry. Co. v. James N.
Kirby, Pty Ltd., 543 U.S. 14 (2004); Great Lakes, 601 U.S. 65.
4 Schoenbaum, supra § 4:1 (emphasis original).
1
8
purposes of that uniform system include promoting
‘the great interests of navigation and commerce ....’”5
Indeed, “[f]rom earliest times, maritime law
[has been] shaped by the practical needs of those
engaged in maritime commerce.”6 And as this Court
has instructed, “[t]he ‘fundamental interest giving
rise to maritime jurisdiction is “the protection of
maritime commerce.’”7
B. Factual Background
This case involves claims for damages arising
after the breakaway of an unmanned and unpowered
drillship (the “DPDS1”) during the landfall of Hurricane
Harvey on Friday, August 25, 2017.
Prior to and during Hurricane Harvey’s landfall,
DPDS1, owned by Paragon, was cold-stacked and
moored at a dock in Port Aransas, Texas.
On Monday, August 21, Paragon put Signet (a
local harbor tug company) on notice that it might need
tow-out services for DPDS1, depending upon the
then-unnamed storm’s development, which Paragon
was monitoring.
5 Great Lakes, 601 U.S. at 69 (quoting 3 J. Story, Commentaries
on the Constitution of the United States § 1666 (1st ed. 1833)).
6 Schoenbaum, supra § 1:1.
7 Norfolk S. Ry., 543 U.S. at 15, 25 (citations omitted, emphasis
original).
9
The morning of Wednesday, August 23,
although no official advisories had been issued at the
time, Paragon informed Signet that DPDS1 would be
towed out to open sea to evade the hurricane. The
parties began contract negotiations under a master
charter agreement, and port authorities scheduled
DPDS1 as first in line to be towed out of port the
morning of Thursday, August 24.
Port authorities had scheduled two warmstacked, manned vessels to be towed out on
Wednesday, prior to DPDS1’s Thursday departure.
After the first of those vessels suffered mechanical
breakdowns and delays, the port authorities moved
the second vessel’s tow-out to take place during the
first slot on Thursday, bumping DPDS1’s departure
to the second slot.
The morning of Thursday, August 24, that
second vessel (which now occupied DPDS1’s former
slot) began its tow-out. DPDS1, next in line, was
ready and waiting only for Signet’s tugs to come
retrieve her. But just before DPDS1’s departure - in
response to the rapid intensification of the storm
overnight - port authorities abruptly closed the port
to facilitate the evacuation of military vessels and
cancelled all remaining tow-outs - including DPDS1’s,
forcing the vessel to remain in port.
Only after the tow-out’s cancellation was
Harvey first officially forecast to make landfall as a
“major” hurricane. And only three-and-a-half hours
after the port’s closure, the Coast Guard ordered all
10
personnel remaining at the dock to evacuate. During
that window, Paragon fortified DPDS1’s moorings,
had a marine surveyor inspect the lines, and enlisted
tugs to support the lines during the storm.
Concerned whether DPDS1’s moorings could
withstand the now-major hurricane (which Paragon
reasonably believed could withstand low-category one
conditions), Paragon and Signet (the tug company
originally hired to tow DPDS1 out, and the only tug
company in operation at the time) agreed that Signet
would provide two harbor tugs, ARCTURUS and
ENTERPRISE, to remain alongside DPDS1 during
the storm. The tugs would apply motive power to help
keep the vessel moored during the storm and attempt
to control DPDS1 if she broke free.
After the port’s closure, Signet and Paragon
briefly discussed these tug services over the phone,
including the rate and nature of the services. Later
that afternoon, in the midst of a mandatory civilian
evacuation, Signet’s in-house counsel emailed
Signet’s Ingleside Tariff to Paragon’s in-house
counsel, merely stating the attached document would
govern the services. Paragon acknowledged the email.
The morning of Friday, August 25, Signet’s
tugs secured themselves to DPDS1. For at least ten
hours, DPDS1’s moorings withstood progressively
strengthening tropical storm and hurricane-force
winds as Hurricane Harvey advanced towards the
Texas coast. Two hours after the Category-4 eyewall
began to pass over Port Aransas, the winds started
11
pushing DPDS1 away from the dock. This
overwhelmed the moorings and, around 11:00 p.m., at
the height of the storm, DPDS1 broke free.
Signet’s tugs, unable to control DPDS1’s
movement in near-100 mph winds, were pushed into
two nearby drilling rigs, their towlines snapping.
ENTERPRISE sank and ARCTURUS was damaged,
but no crew were injured.
DPDS1, now free-floating in the midst of the
hurricane, was driven into the ship channel, and
eventually grounded near the bank.
The next morning, Paragon retained Signet to
provide a tug to monitor the grounded vessel until she
could be salvaged. This arrangement continued until
the evening of August 28, when DPDS1 refloated and
began drifting, eventually alliding with a nearby
university research pier. Afterwards, Signet’s tug
pinned DPDS1 to the shore. Signet subsequently
provided additional tugs to hold DPDS1 to the shore
until the drillship could be towed to another dock to
be scrapped.
C. Proceedings Below
Three Complaints in Limitation ensued, filed
by Paragon (as owner of DPDS1) and Signet (as owner
of ARCTURUS and ENTERPRISE). Both parties filed
counterclaims, and Paragon made claims against
Signet’s insurer (“American Club”).
12
The owners of the dock, the two adjacent
drilling rigs, and the research pier filed claims for
property damages, respectively. Paragon and Signet
each independently settled all of these claims prior to
trial.
In July and August of 2021, the district court
held a five-day bench trial on the claims remaining
between Paragon, Signet, and American Club.
On August 17, 2022, the district court filed an
amended order and opinion (App. B, p.p. 29a-153a) in
which it ruled that Paragon was solely responsible for
the August 25, 2017 breakaway of DPDS1 and liable
for all damages resulting from the immediate
aftermath of that event. The district court also ruled
that Paragon and Signet were equally liable for
damages resulting from the refloating and allision.
The district court rejected Paragon’s force
majeure defense, holding Paragon acted unreasonably
by failing to issue an evacuation order on Monday,
August 21 and by relying on inaccurate engineering
reports regarding its mooring system. The district
court reasoned that, as of Monday afternoon, Paragon
should have anticipated the future breakdowns,
delays, and evacuations of other vessels and the port’s
eventual closure on Thursday (the combination of
which resulted in the cancellation of DPDS1’s tow), as
well as the storm’s future rapid intensification into a
on Thursday, which overwhelmed DPDS1’s moorings.
13
The district court did not evaluate Signet’s
conduct under towage law, holding that, because
Signet did not undertake to transport DPDS1,
Signet’s duties under towage law were inapplicable.
Ascribing no duty to Signet under these
circumstances, the district court did not engage in an
analysis under comparative fault. It reasoned that
Paragon was the only party who had any duty.
The district court accepted Signet’s parol
evidence and ignored the Tariff’s written terms to
find Signet unilaterally waived certain provisions for
its benefit, despite the Tariff’s written terms to the
contrary. Partially invoking Texas law despite the
Tariff’s governance by general maritime law, the
district court held that, because Signet impliedly
waived the Tariff’s written provisions prohibiting its
application to a deadship or during heightened port
conditions, the Tariff governed the parties’
relationship. As a direct result, Signet was able to
seek (and was subsequently awarded) both indemnity
for its separate, pretrial settlement agreement and
attorney’s fees from Paragon.
On April 24, 2024, the Fifth Circuit affirmed
the district court’s opinion in its entirety. (App. A, p.p.
1a-28a).
The Fifth Circuit rejected Paragon’s argument
that, under general maritime law, the Tariff should
be construed according to its written terms, which
prohibited its application, and Signet should not be
permitted to alter the plain meaning of those terms
14
after-the-fact via parol evidence. Against wellestablished principles of maritime contract
interpretation, the Fifth Circuit held that the Tariff’s
language “explicitly excluding ‘assistance to a
deadship’ or services during ‘heightened Coast Guard
port conditions’ was for the benefit of Signet and could
be waived unilaterally under federal maritime and
Texas law.”
The Fifth Circuit rejected Paragon’s argument
that, under general maritime law, a shipowner
responding to a force majeure event is held to a
standard of ordinary reasonable care, not a standard
of perfection, and that its decisions should not be
examined under facts knowable only through
hindsight. Against well-established principles of
general maritime law governing the force majeure
defense, the Fifth Circuit held Paragon “failed to show
that it ‘took reasonable precautions under the
circumstances as known or reasonably to be
anticipated’”,
endorsing
the
district
court’s
conclusions that “a prudent shipmaster would [not
merely] anticipate” future mechanical failures of
other vessels, future delays of other vessels, future
evacuations of Naval vessels, future rapid
intensification of the storm, and future closure of the
port less than 24-hours before landfall, but also
“anticipate” and accurately respond to these events
almost four days before any of them even began to
transpire.
The Fifth Circuit rejected Paragon’s argument
that, under general maritime law, Signet, as a tug
15
company providing tug services, should be judged
according to its obligations under towage law.
Instead, the Fifth Circuit created a “voyage” test,
holding that tugs providing tug services to a vessel,
but not literal transportation from ‘point A’ to ‘point
B’, are not bound by the traditional duties of a tug
under general maritime law, including a tug’s
responsibility to protect itself. Declining to articulate
any duty owed by a tug under these circumstances,
the Fifth Circuit affirmed the district court’s
allocation of total liability to Paragon for damages to
Signet’s tugs during the breakaway, the very risk
Signet was hired to face.
The court of appeals subsequently denied
rehearing en banc. (App. D, p.p. 158a-161a).
REASONS FOR GRANTING THE PETITION
I.
Under federal maritime law, parol
evidence cannot modify the written
terms of a maritime contract.
The Fifth Circuit’s departure from principles
federal general maritime law governing the
enforcement and interpretation of maritime contracts
warrants this Court’s review. See Sup. Ct. R. 10(a),
10(c).
The Fifth Circuit has created a new rule of
maritime contract interpretation which conflicts with
the precedent established by this Court and other
circuit courts.
16
The effects of this departure will be felt beyond
this case and will be detrimental to maritime
commerce, and it is vital that this Court grant review
to ensure the consistent application and continued
uniformity of the federal general maritime law.
A.
The principles of general maritime
law governing interpretation and
enforcement of maritime contracts
are well-established.
The principles of general maritime law
governing the interpretation of maritime contracts
are well-established. The tenets articulated by this
Court have been consistently followed the courts of
appeal, including the Fifth Circuit – until this case.
First, federal common law controls the
interpretation of a maritime contract. See, e.g.,
Norfolk S. Ry. Co., 543 U.S. at 22-23 (“When a
contract is a maritime one ... federal law controls [its]
interpretation.”) (citation omitted); Har–Win, Inc. v.
Consol. Grain & Barge Co., 794 F.2d 985, 987 (5th
Cir. 1986).
Second, state law principles may only be
applied insofar as they do not contravene general
maritime law or disrupt the uniformity of maritime
law. See, e.g., Jensen, 244 U.S. at 216 (prohibiting
application of state law which “works material
prejudice to the characteristic features of the general
maritime law or interferes with the proper harmony
17
and uniformity of that law”); Pope & Talbot, Inc. v.
Hawn, 346 U.S. 406 (1953).
Third, a maritime contract must be construed
by its terms and consistent with the intent of the
parties. See, e.g., CITGO Asphalt Ref. Co. v. Frescati
Shipping Co, Ltd., 589 U.S. 348, 355 (2020)
(“Maritime contracts must be construed like any other
contracts: by their terms and consistent with the
intent of the parties.”) (citation and internal
quotation marks omitted); Fontenot v. Mesa
Petroleum Co., 791 F.2d 1207, 1214 (5th Cir. 1986) (a
“contract should be read as whole, and a court should
not look beyond the written language ... to determine
the intent of the parties”) (citing Weathersby v. Conoco
Oil Co., 752 F.2d 953, 955 (5th Cir. 1984); Corbitt v.
Diamond M. Drilling Co., 654 F.2d 329, 332-33 (5th
Cir. 1981)).
Fourth, a maritime contract should be read in
toto, and its clear, unambiguous terms should be
given their plain meaning. See, e.g., CITGO, 589 U.S.
at 355 (“Where the words of a contract in writing are
clear and unambiguous, its meaning is to be
ascertained in accordance with its plainly expressed
intent.”) (citation and internal quotation marks
omitted); Weathersby, 752 F.2d at 955 (“A maritime
contract ... should be read as a whole and its words
given their plain meaning”) (citation and internal
quotation marks omitted); Starrag v. Maersk, Inc.,
486 F.3d 607, 616 (9th Cir. 2007); Flores v. Am.
Seafoods Co., 335 F.3d 904, 910 (9th Cir. 2003); Davis
18
v. Valsamis, Inc., 752 Fed. App’x. 688, 692 (11th Cir.
2018).
Fifth, a maritime contract should be
interpreted so that all its terms are consistent with
each other, and no terms are rendered meaningless or
superfluous. See, e.g., CITGO, 589 U.S. at 361-62
(“Perhaps the dissent says it best: We must ‘reject
[this] interpretation that ... se[ts] up ... two clauses in
conflict with one another.’”) (citation and internal
quotation marks omitted, alterations in original);
Capozziello v. Brasileiro, 443 F.2d 1155 (2d Cir. 1971)
(“an interpretation [which] would not only create an
internal redundancy in the clause but [ ] also render
the clause meaningless .... should be avoided”)
(citations omitted); Am. Roll-On Roll-Off Carrier,
LLC v. P&O Ports Baltimore, Inc., 479 F.3d 288, 293
(4th Cir. 2007) (“maritime contracts, like other
contracts, should be interpreted as so to give effect to
each provision of the contract”) (citation omitted);
Foster Wheeler Energy Corp. v. An Ning Jiang MV,
383 F.3d 349, 354 (5th Cir. 2004) (“[f]ederal courts
sitting in admiralty adhere to the axiom that ‘a
contract should be interpreted so as to give meaning
to all of its terms—presuming that every provision
was intended to accomplish some purpose, and that
none are deemed superfluous’”) (citation and internal
quotation marks omitted; Internaves de Mexico s.a. de
C.V. v. Andromeda S.S. Corp., 898 F.3d 1087 (11th
Cir. 2018).
Sixth, where a maritime contract’s terms are
unambiguous, they cannot be varied by extrinsic
19
evidence, and the parties’ intent is determined from
the face of the agreement. See, e.g., CITGO, 589 U.S.
at 355; Puerto Rico Fast Ferries LLC v. SeaTran
Marine, LLC, 102 F.4th 538, 546 (1st Cir. 2024);
Garza v. Marine Transp. Lines, Inc., 861 F.2d 23, 2637 (2d Cir. 1988) (“The purpose and essence of the
[parol evidence] rule is to avoid the possibility that
fraud might be perpetrated if testimony as to
subjective intent could be substituted for the plain
meaning of a contract. In the absence of ambiguity,
the effect of admitting extrinsic evidence would be to
allow one party to substitute his view of his
obligations for those clearly stated; Corbitt, 654 F.2d
at 332-33; Progressive Rail Inc. v. CSX Transp., Inc.,
981 F.3d 529 (6th Cir. 2020); Day v. Am. Seafoods Co.
LLC, 557 F.3d 1056, 1058 (9th Cir. 2009); Flores, 335
F.3d at 910.
Seventh, an oral maritime contract is valid if
there is a meeting of the minds on all essential terms
and obligations of the agreement. See, e.g.,
Kossick, 365 U.S. at 734 (“oral contracts are generally
regarded as valid by maritime law”); Fuesting v.
Lafayette Parish Bayou Vermilion Dist., 470 F.3d 576,
580 (5th Cir. 2006); Am. Marine Tech, Inc. v. World
Grp. Yachting, Inc., 2021 WL 4785888, at *3 (11th
Cir. Oct. 14, 2021).
In a non-maritime context, the Fifth Circuit
has cautioned that courts “may neither rewrite, under
the guise of interpretation, a term of the contract
when the term is clear and unambiguous, nor redraft
a contract to accord with its instinct for the
20
dispensation of equity upon the facts of a given case.”
Young v. Merrill Lynch & Co., 658 F.3d 436, 448 (5th
Cir. 2011) (citation omitted); see CITGO, 589 U.S. at
364 (“Neither tort principles nor policy objectives,
however, override the ... clause’s unambiguous
meaning.”).
B.
The Fifth Circuit’s decision
conflicts with this Court’s
precedent.
Despite foundations of contract interpretation,
the Fifth Circuit held that the Tariff’s language
“explicitly excluding ‘assistance to a deadship’ or
services during ‘heightened Coast Guard port
conditions’ was for the benefit of Signet and could be
waived unilaterally under federal maritime and
Texas law.” See App. A, p.p. 19a-28a.
That holding permitted extrinsic evidence to
override the Tariff’s written terms, thereby rendering
multiple portions of the Tariff’s language
meaningless, and allowed one party’s subjective
intent to override the Tariff’s plain language.
This decision and line of reasoning directly
conflicts with this Court’s precedent and the rules
followed by the other circuit courts.
First, the Tariff’s language expressly excludes
services to a deadship or during heightened port
21
conditions.8 Nowhere does the Tariff state or indicate
that this provision is intended for Signet’s benefit.
Second, the Tariff’s language mandates that
any services to a deadship or under heightened port
conditions “... shall be governed by the terms and
conditions of a suitable contract used by Signet for
such Services.”9 On its face, the terms indicate Signet
intended for a contract other than the Tariff to apply.
As the drafter, Signet could have included a “right” to
waive this section if it so desired, but instead
expressly stated the opposite, mandating that the
Tariff would not apply. By accepting extrinsic parol
evidence, the Fifth Circuit rendered this provision
meaningless.
Third, the Tariff’s language provides that “...
Signet shall have the right at any time, upon thirty
(30) days’ advance notice to Owners, to ... adjust terms
or conditions.”10 These terms indicate Signet intended
for any amendment to be predicated by 30-days
advance notice to a shipowner. By permitting Signet
to alter the Tariff’s terms less than 24-hours prior to
the commencement of services, the Fifth Circuit
rendered this provision meaningless.
Fourth, the Tariff’s language provides that
“[a]ll notices under this Tariff shall be in writing ....”11
8 See Section 5, ROA.14301.
9 See Id. The Fifth Circuit did not discuss this portion of Section
5 in its Opinion.
10 See Section 21(a), ROA.14308.
11 See Id.
22
These terms indicate that, in addition to requiring 30days’ advance notice, any such notice adjusting the
contract’s terms must be in writing. By permitting
Signet to alter the Tariff’s terms orally and/or
impliedly, the Fifth Circuit rendered this provision
meaningless.
Fifth, the Tariff’s language provides that “[t]his
Tariff supersedes all previous contracts of whatsoever
kind or nature, and constitutes the final, entire,
complete, and integrated agreement between or
among the parties ....”12 Allowing Signet to
incorporate oral and/or implied amendments to the
Tariff, and holding that the Tariff was incorporated
into a prior oral agreement between the parties by
reference, the Fifth Circuit rendered this provision
meaningless.
Sixth, the Tariff’s language provides that “[a]s
between the parties, no oral statements or prior
written material not specifically incorporated herein
shall be of any force and effect.”13 Allowing Signet to
incorporate oral and/or implied amendments to the
Tariff, and holding that the Tariff was incorporated
into a prior oral agreement between the parties by
reference, the Fifth Circuit rendered this provision
meaningless.
See Section 21(b), ROA.14308. The Fifth Circuit did not
discuss this portion of Section 21(b) in its Opinion.
13 See Id. The Fifth Circuit did not discuss this portion of Section
21(b) in its Opinion.
12
23
Seventh, the Tariff’s language provides that
“[t]he parties specifically acknowledge that, in
agreeing to this Tariff, each is relying solely upon the
representations and agreements contained in this
Tariff and no others.”14 Allowing Signet to incorporate
oral and/or implied amendments to the Tariff, and
holding that the Tariff was incorporated into a prior
oral agreement between the parties by reference, the
Fifth Circuit rendered this provision meaningless.
Eighth, the Tariff’s language provides that
“[a]ll prior representations or agreements, whether
written or oral, not expressly incorporated herein, are
superseded.”15 By allowing Signet to incorporate oral
and/or implied amendments to the Tariff, and holding
that the Tariff was incorporated into a prior oral
agreement between the parties by reference, the Fifth
Circuit rendered this provision meaningless.
Ninth, the Tariff’s language provides that
“[t]his Tariff shall not be amended, modified, or
waived unless and until made in writing and signed
by each party hereto.”16 This provision is self-evident,
and nowhere does the Tariff state or indicate that a
provision may otherwise be orally or impliedly
altered. Yet the Fifth Circuit accepted extrinsic parol
evidence directly contradicting this provision,
substituting subjective intent for plain meaning. By
14 See Id. The Fifth Circuit did not discuss this portion of Section
21(b) in its Opinion.
15 See Id. The Fifth Circuit did not discuss this portion of Section
21(b) in its Opinion.
16 See Id.
24
allowing Signet to orally and/or implied alter the
Tariff, the Fifth Circuit rendered this provision
meaningless.
In sum, the Tariff’s terms prohibited both its
application under the instant circumstances, and any
implied waiver of its terms. It also excluded any
exception to these provisions, whether intended for
Signet’s benefit or otherwise. The Tariff’s written,
mandatory terms foreclosed any argument that
Signet had an implied “right” to impliedly waive the
terms of Section 5. Yet the Fifth Circuit held Signet
did have such a right, and permitted Signet to
circumvent the written terms via the use of parol
evidence.
Through its acceptance of extrinsic evidence,
and in disregard of this Court’s precedents and the
general maritime law, the Fifth Circuit altered the
Tariff’s unambiguous, written provisions via parol
evidence; disregarded the plain meaning of the
Tariff’s language;17 disregarded four instances of the
word “shall”;18 rendered multiple terms meaningless
17 See Green v. Biddle, 21 U.S. (8 Wheat) 1, 89-90 (1823) (“where
the words of a ... contract, have a plain and obvious meaning, all
construction, in hostility with such meaning, is excluded”).
18 As this Court has explained, use of the term “shall” in a clause,
which “usually connotes a requirement,” should “foreclose[ ] the
... permissive view” that the clause merely indicates an “elective
right”, as such interpretation would “sidestep[] the ... clause’s
plain terms.” See CITGO, 589 U.S. at 1088 n.3 (internal
quotation marks and citations omitted).
25
and superfluous; and rendered multiple provisions
contradictory.19
C.
The Fifth Circuit’s decision relied
on state law in contravention of
federal principles governing
maritime contracts, disrupting the
uniformity of general maritime
law.
This Court has long instructed that federal
common law controls the interpretation of maritime
contracts, and that state law which conflicts with
general maritime law cannot apply.20 Furthermore,
the Tariff’s provisions expressly mandated that its
interpretation “shall” be governed by the general
maritime law.21
Against this Court’s precedent and the Tariff’s
own instructions, the Fifth Circuit “borrowed” state
law which conflicted with the general maritime law,
applying it to the exclusion of established principles
of contract interpretation. Relying on state law, the
Fifth Circuit held that, under federal maritime law, a
As this Court has explained, “[w]e must ‘reject [this]
interpretation that ... se[ts] up ... two clauses in conflict with one
another.’” CITGO, 589 U.S. 348 at 361-62 (quoting Thomas, J.,
dissenting).
20 See Great Lakes, 601 U.S. at 86 (Thomas, J., concurring)
(“Litigants and courts should heed our instruction that general
maritime law applies in maritime contract disputes unless they
‘so implicate local interests as to beckon interpretation by state
law.’”) (quoting Norfolk S. Ry., 543 U.S. at 27).
21 See Section 20(a), ROA.14308.
19
26
party may unilaterally waive a contract provision
intended for its benefit.
Unclear is where the Fifth Circuit found any
maritime authority articulating, supporting, or
lending itself to such a rule.
While the Fifth Circuit did cite one federal case
in support of this supposed rule of federal maritime
law, the dicta it relied upon lends no support to its
sweeping and vague ‘waiver rule.’22 Unlike the
circumstances surrounding the Fifth Circuit’s
decision in this case, Stauffer Chemical Co. v.
Brunson concerned mutual waiver of a written term
by both parties for the mutual benefit of both parties,
and there was no mention of a written term
prohibiting such waiver. 380 F.2d 174 (5th Cir. 1967).
The only other case relied upon by the Fifth
Circuit, a Texas state court case, similarly fails to
support the existence of a unilateral waiver rule.23
Unlike the present case, the non-maritime contract
at-issue in Johnson v. Structured Asset Services, LLC
did not contain a provision prohibiting unilateral or
implied waivers. 148 S.W.3d 711 (Tex. App. 2004).
Even if this did support the Fifth Circuit’s decision,
the court’s reliance on it would be impermissible
under federal maritime law.
22 See App. A, p.p. 25a (citing Stauffer Chem. Co. v. Brunson, 380
F.2d 174 (5th Cir. 1967)).
23 See App. A, p.p. 25a (citing Johnson v. Structured Asset Servs.,
LLC, 148 S.W.3d 711 (Tex. App. 2004)).
27
Furthermore, the Fifth Circuit relied on
Johnson to the exclusion of Texas law directly
contradicting its decision and unilateral waiver rule.
For example, the contract at-issue in Varibus Corp. v.
South Hampton Co. contained a written provision
prohibiting verbal amendments. 623 S.W.2d 157 (Tex.
App. 1981). The court rejected the notion that either
party could verbally or unilaterally waive a term,
even if intended only for that party’s benefit, and held
that any such waiver “would amount to a unilateral
modification of the contract in violation of” its own
provisions. 623 S.W.2d 157, 160 (Tex. App. 1981); see
Instone Travel Tech Marine & Offshore v. Int’l.
Shipping Partners, Inc., 334 F.3d 423, 428 (5th Cir.
2003) (“Texas law requires us to peruse the complete
document to understand, harmonize, and effectuate
all its provisions.”) (citation and internal quotation
marks omitted).
Thus, the Fifth Circuit has created a new rule
that under general maritime law, the drafter of a
contract may unilaterally waive a written provision
intended for its benefit, despite the contract’s written
terms expressly prohibiting same.
Nothing in the Fifth Circuit’s decision explains
how this is or why this should be a rule of general
maritime law.24
24 See Schoenbaum, supra § 4:4 (“Although the federal judiciary
has the power to announce new principles of general maritime
law, this is done very infrequently and only when there is a
compelling need to fashion new rules.” ).
28
The Fifth Circuit’s new rule means that a
written contract’s plain, unambiguous terms may be
nullified by extrinsic parol evidence which contradicts
those terms and supplies subjective intent. This
violates established principles of maritime contract
interpretation discussed earlier, and “interferes with
the proper harmony and uniformity of” the general
maritime law.25
As the Fifth Circuit’s unilateral waiver rule
conflicts with general maritime principles of contract
interpretation, and the court of appeals applied this
rule to the exclusion of those principles, it is unclear
which rule should prevail. Courts are left to wonder
how to determine whether the unilateral waiver rule
or another rule of construction should prevail.
That a contract’s terms will be enforced as
written in one circuit, but may be altered by
subjective, extrinsic evidence in another circuit will
lead to the sort of inconsistency in federal law that
this Court typically grants certiorari to prevent.
D.
The Fifth Circuit’s decision will
disrupt maritime commerce by
destabilizing maritime contracts.
This decision will void the true enforceability of
written terms prohibiting unwritten or unilateral
amendments. This core principle – pervasively
common to maritime contracts and many other areas
25 See Jensen, 244 U.S. at 216.
29
of interstate commerce – will become obsolete if one
party can unilaterally decide to waive certain
provisions of a contract which that party subjectively
believes to be for its own benefit, and where that
modification is not communicated to the other party –
let alone reduced to writing and acknowledged by the
signature of both parties, as required by the contract’s
written terms.
Here, Signet introduced parol evidence in
circumvention of the Tariff’s express provisions
prohibiting its application. The court allowed this
parol evidence to imply a waiver of those provisions,
despite language expressly prohibiting such
amendment. Signet then asserted the remainder of its
Tariff should be strictly enforced by its written terms:
namely, those allowing it to recover indemnity and
attorney’s fees from Paragon, which were never
bargained for. The Fifth Circuit affirmed the district
court’s erroneous acceptance of this assertion, thereby
disregarding two additional principles of general
maritime law, and affording Signet remedies to which
it would not otherwise be entitled.26 Stated another
way, the court’s means to a desired result in this
specific case is no justification for undermining the
integrity of all written maritime contracts through a
sweeping new rule.
26 See Hardy v. Gulf Oil Corp., 949 F.2d 826, 834 (5th Cir. 1992)
(discussing contractual indemnity); Texas A&M Research
Found. v. Magna Transp., Inc., 338 F.3d 394, 405-06 (5th Cir.
2003) (discussing attorney’s fees).
30
Where the only evidence of a provision being for
a party’s benefit is derived from parol evidence, a
party could advance almost any provision as being
intended for its benefit, and thereby be permitted
waive or invoke same despite contrary written terms.
How are courts to determine whether a
provision is intended for a party’s benefit? If a
contract’s written terms may not be enforced as
written, how can a party ever be on notice of those
terms? If a contract contains unspoken rights and
remedies, how can there ever be a meeting of the
minds?
Perhaps of greatest concern, it will be
impossible for two parties to a written contract to
eliminate the uncertainty created by this ruling, since
even a written commitment not to amend terms
without reducing that change to a bilaterally signed
writing is unenforceable, as even that provision can
be waived by one party if that party believes the
waiver applies to a provision intended only for its
benefit.
The Fifth Circuit’s decision will undermine the
integrity of every form of maritime contract, as every
written maritime contract is now open for challenge
based on one party’s subjective belief and intent,
including marine insurance, charter parties,
indemnity clauses, contracts of affreightment, and
bills of lading. Parties will be held to terms unseen
and never bargained for, left to the mercy of the
other’s subjective intent.
31
II.
Under federal maritime law, a
shipowner facing a force majeure event
is held to a standard of ordinary
reasonable care.
The Fifth Circuit’s departure from the
established principles of federal general maritime law
governing the duty owed by a shipowner responding
to a force majeure event warrants this Court’s review.
Sup. Ct. R. 10(a), 10(c).
The Fifth Circuit has placed an impossible
burden of “reasonable” conduct on shipowners which
conflicts with this Court’s precedent and rejects
general maritime law principles followed by the other
circuit courts. By imposing a requirement to not only
accurately predict future decisions by other
shipowners, but also their potential mechanical
issues or evacuation plans; to not only accurately
predict and plan in advance for “sudden changes and
circumstances”, but also the actions of the United
States and the weather; and by imposing a
requirement that shipowners accurately act in
advance of same, the Court has functionally
eliminated a prohibition against hindsight analysis
and limited viability of the force majeure defense.
If this standard is applied in the future, these
criteria for “reasonable” conduct will defeat a force
majeure defense in every case. Reasonable conduct
does not require perfection and it certainly does not
demand omniscience.
32
The effects of the Fifth Circuit’s reasoning will
reach beyond this case and be detrimental to
maritime commerce, as it will essentially impose
strict liability upon any vessel overwhelmed by a
hurricane, effectively nullifying the force majeure
defense.
A.
The principles of general maritime
law articulating the defenses
governing collisions and allisions
are well-established by this Court
and well-developed by the circuit
courts.
An analysis of the force majeure defense begins
with the standards governing a shipowner’s duty of
care in allision or collision cases.
In The Louisiana, this Court articulated the
presumption that when a drifting vessel allides with
a stationary object, the drifting vessel is presumed to
be at fault. 70 U.S. (3 Wall.) 164, 173 (1865). There
are three ways in which a shipowner may rebut this
presumption.
First, the shipowner may demonstrate that the
allision “was the fault of the stationary object,”
similar to a contributory negligence27 defense. See
Fischer v. S/Y Neraida, 508 F.3d 586, 593 (11th Cir.
2007). Second, the shipowner may demonstrate that
27 See United States v. Reliable Transfer Co., 421 U.S. 397, 411
(1975).
33
it “acted with reasonable care,” similar to a denial of
negligence. See Fischer, 508 F.3d at 593. Third, the
shipowner may demonstrate that the allision was an
“unavoidable accident” (also referred to as a force
majeure or “Act of God”), similar to a superseding
causation28 defense. See Fischer, 508 F.3d at 593.
While the analysis of the second and third
defenses can overlap, “[e]ach independent argument,
if sustained, is sufficient to defeat liability.” Id.
In The Louisiana and similar cases, this Court
established that the standard of care in admiralty is
“reasonable care under the circumstances” – and not
a higher standard. See, e.g., The Virginia Ehrman, 97
U.S. 309 (1877); The Clarita, 90 U.S. (23 Wall.) 1
(1874); The Grace Girdler, 74 U.S. (7 Wall.) 196
(1868).
In keeping with this Court’s precedent, the
former Fifth Circuit articulated that the standard for
determining whether the shipowner is free from fault
is whether the shipowner “took reasonable
precautions under the circumstances as known or
reasonably to be anticipated.” In re United States, 425
F.2d 991, 995 (5th Cir. 1970).
See Exxon Co., U.S.A. v. Sofec, Inc., 517 U.S. 830, 837-38
(1996). Superseding cause “applies where the defendant’s
negligence in fact substantially contributed to the [] injury, but
the injury was actually brought about by a later cause of
independent origin that was not foreseeable.” Stolt Achievement
v. Dredge B.E. Lindholm, 447 F.3d 360, 367-68 (5th Cir. 2006).
28
34
The other circuit courts, in turn, have also
adhered to the reasonable care standard. See, e.g.,
Fischer, 508 F.3d at 594 (“We find no authority and
discern no reason now to impose upon defendants in
allision cases a higher standard of care than ordinary
reasonableness.”); Weyerhaeuser Co. v. Atropos
Island, 777 F.2d 1344, 1348 (9th Cir. 1985); Mamiye
Bros. v. Barber S.S. Lines, Inc., 241 F. Supp. 99, 108
(S.D.N.Y. 1965), aff’d, 360 F.2d 774 (2d Cir. 1966);
Swenson v. The Argonaut, 204 F.2d 636 (3d Cir. 1953);
The Charles H. Sells, 89 F.2d 631, 633 (2d Cir. 1937)
Importantly, as the Eleventh Circuit has
instructed, “[a]though what ‘reasonable care’ requires
changes with the circumstances, the standard
recognizes the existence in every case of something
more that could be done – and perhaps would be
legally required under a ‘highest degree of caution’
standard – but that reasonable care does not
demand.” Fischer, 508 F.3d at 595.
In the context of a force majeure event, the
shipowner must prove both that the weather was
“heavy”29 and that the shipowner “took reasonable
precautions under the circumstances as known or
reasonably to be anticipated.” In re United States, 425
F.2d 991, 995 (5th Cir. 1970); see Fischer, 508 F.3d at
596.
In the present action, it was established that Hurricane
Harvey was a force majeure event; therefore, the analysis
focused on whether Paragon acted reasonably under the
circumstances.
29
35
Accordingly, “[i]f those responsible for the
[vessel] were reasonable in their anticipation of the
severity of the impending storm and undertook
reasonable precautions in light of such anticipation,
then they are relieved of liability.” In re United States,
425 F.2d at 995. “The highest degree of caution that
can be used is not required” of the shipowner. See The
Grace Girdler, 74 U.S. (7 Wall.) 196 (1868).
Crucially, the shipowner’s conduct cannot be
viewed through the lens of hindsight, or “through
some sort of nautical rear view mirror.” See United
Geophysical Co. v. Vela, 231 F.2d 816, 818-19 (5th Cir.
1956); see also United States v. Lykes Bros. S.S. Co.,
511 F.2d 218, 225 (5th Cir. 1975).
Instead, the shipowner’s actions are examined
against information “known” at the time or that it
“reasonably should have anticipated” at the time. In
re United States, 425 F.2d at 995; see Simmons v.
Berglin, 401 Fed. App’x 903, 908 (5th Cir. 2010)
(rejecting “hindsight speculations about what could
have been done”); Lord & Taylor, 108 F. Supp. 3d at
226 (rejecting plaintiff’s speculations “based on a
Monday-morning-quarterback assessment ... not on
the information known to [the defendant]”).30
30 Consistent with the prohibition on hindsight, courts generally
begin their examination of a shipowner’s actions from the point
when it is reasonably certain a storm’s landfall will affect the
vessel’s location, which usually coincides with the issuance of the
first official storm watch or warning for that location, often 2472 hours prior to landfall. See, e.g., Fischer, 508 F.3d 586; Lord
& Taylor LLC v. Zim Integrated Shipping Servs., Ltd., 108 F.
36
This makes sense. If courts examined the
shipowner’s actions against information which the
shipowner had no way of knowing, or which did not
exist, the shipowner’s burden would be impossible,
and the defense would be nullified.
There is no vision which is as clear as
hindsight. Images come into almost
perfect focus through the evidentiary
microscope of a lawyer’s hindsight. After
thousands of daily and weekly
occurrences of maritime life are
discarded, the lawyer can isolate a few
incidents for examination with such a
microscope to document things such as
privity or knowledge. This process
proceeds as if a reasonable person had
no other responsibilities or phenomena
or events to observe other than those
incidents now carefully isolated and
focused on through this hindsight
perspective. If life were so simple,
foreseeability under the law would be
the equivalent of omniscience.
Supp. 3d 197 (S.D.N.Y. 2015); Valley Line Co. v. Musgrove
Towing Serv., Inc., 654 F. Supp. 1009 (S.D. Tex. 1987); In re
Marine Leasing Servs., Inc., 328 F. Supp. 589 (E.D. La. 1971),
aff’d, 471 F.2d 255 (5th Cir. 1973); Ladner v. Bender Welding &
Mach. Co., 336 F. Supp. 1264 (S.D. Miss. 1971); AtlantaSchiffahrts v. United States, 299 F. Supp. 781, 783 (E.D. La.
1969).
37
In re Complaint of Bankers Trust Co., 651 F.2d 160,
170 (3d Cir. 1981).
B.
The Fifth Circuit’s decision
conflicts with this Court’s
precedent governing reasonable
care and disregards wellestablished principles governing
the force majeure defense, creating
a split amongst the circuits.
The Fifth Circuit has placed the responsibility
on the shipowner to exhibit clairvoyance in order to
be considered reasonable, departing from this Court’s
precedent. The result is an elimination of the
longstanding rule against hindsight analysis, and
sharply conflicts with the standards established by
the Eleventh Circuit and followed by other district
courts.
The Fifth Circuit held that “Paragon has failed
to show that it ‘took reasonable precautions under the
circumstances as known or reasonably to be
anticipated.’” See App. A, p.p. 19a (citing In re United
States, 425 F.2d 991, 995 (5th Cir. 1970)).
The Fifth Circuit reasoned that the district
court “did not use ‘hindsight’ but rather applied the
judgment that the other drillship owners employed at
the time of the storm” and, furthermore, that “the
district court’s holdings about what a prudent
shipmaster would anticipate ... are not contrary to
law.” See App. A, p.p. 19a.
38
In concluding Paragon failed to take
reasonable precautions under the circumstances, the
Fifth Circuit affirmed the district court’s conclusions
that Paragon was unreasonable on relying on a portscheduled evacuation slot because it (1) “did not have
a reasonable basis on which to gauge the strength of
its mooring system”; (2) should have anticipated
vessel breakdown and delays on Wednesday, August
23; (3) should have anticipated the Navy’s evacuation
on Thursday, August 24; (3) should have anticipated
the Port’s closure on Thursday, August 24; and (4)
should have anticipated the storm’s rapid
intensification on Thursday, August 24, among other
things.
While reviewing the issue the Fifth Circuit
noted:
Considering these facts, the District
Court rejected Paragon’s argument that
the delays on Thursday morning were
unforeseeable, because “prudent ship
masters foresee such situations and
factor them into their decision making
timetable.” The District Court held that
a prudent shipmaster would recognize
that Navy ships would have priority over
commercial ships in an evacuation, and
that “[a] prudent shipmaster cannot rely
on the plan that assumes the best-case
scenario with no sudden changes in
circumstances.”
39
App. A, p.p. 18.
It seems Fifth Circuit had its reservations in
affirming the district court’s conclusion but relented
under the belief that it was factual in nature.
As a reviewing court, we have a clear
mandate. “Even though we might have
weighed the evidence differently had we
been sitting as trier of fact, we must
accept the district court’s findings as
long as they are plausible in light of the
record viewed in its entirety.” Perlman v.
Pioneer Ltd. P’ship, 918 F.2d 1244, 1247
(5th Cir. 1990).
App. A, p.p. 19.
But this is not a matter of “weighing” the facts.
The Fifth Circuit sanctioned the district court’s
reliance on facts only knowable through hindsight to
reach its conclusion. As each of those findings
necessarily relied on hindsight, the Fifth Circuit’s
endorsement of the district court’s reasoning is
erroneous as a matter of law.
In fact, a closer look at the district court’s
assignment of fault would show that virtually all of
the elements were influenced by a standard of care
that required an accurate prediction of categorically
unknowable events that were under the control of
third parties with a variable nature of the storm itself.
40
The district court’s conclusion that Paragon
should have made the decision to evacuate DPDS1 “no
later than the afternoon [of] Monday, August 21”
demonstrates the gravity of the Fifth Circuit’s error.
See App. B, p.p. 97a. Had Paragon made its decision
on Monday and disaster had later struck in the Gulf,
the district court could have utilized this same
forecast to conclude that Paragon should have waited
for a more certain forecast before making its decision.
It is the totality of the Fifth Circuit’s approach
which results in a complete cancellation of the force
majeure defense by redefining the standard of
reasonableness to require actions based on knowledge
only ascertainable in hindsight, and after the events
have already occurred.
The Fifth Circuit’s standard for reasonable
care in anticipation of a force majeure event is an
application of hindsight, departure from analysis of
every other circuit, and disruption of the fundamental
standard for reasonableness applied in collision cases.
This case presents the opportunity for this
Court to establish a uniform standard among the
circuits that will apply to bedrock concepts of
reasonableness, duty of care and the exceptionally
important maritime defense of force majeure.
41
C.
The Fifth Circuit’s decision creates
a Circuit split and will disrupt both
the uniformity of general maritime
law and stability of maritime
commerce.
The Fifth Circuit’s standard of “reasonable
care” is unsound as a matter of maritime policy, and
would create total instability and chaos in the
maritime industry.
Against this Court’s precedent, the Fifth
Circuit not only required “[t]he highest degree of
caution that can be used” from the shipowner, but has
established a level of accurate prediction that is
unsustainable. In this manner it has rejected this
Court’s standard of “reasonable care under the
circumstances,” eliminating the viability of the force
majeure defense under any conceivable circumstance.
See The Grace Girdler, 74 U.S. (7 Wall.) 196; see also
Fischer, 508 F.3d at 594 (11th Cir. 2007) (explaining
that the standard of care is
“ordinary
reasonableness”).
According to the Fifth Circuit, a “reasonable”
shipowner must foresee a potential storm’s strength
and path at landfall before the meteorologists do,
must foresee every other vessel’s mechanical
breakdowns before their owners do, must foresee
every potential delay in port traffic before the port
authorities do, must foresee any evacuation of United
States vessels before the United States Navy does,
must foresee the closure of the port before the United
42
States Coast Guard does, must foresee the mandatory
evacuation of a town before its mayor does, and must
foresee the cancellation of its tow-out before its tug
company does.
Moreover, the resulting conflict between the
Fifth Circuit and Eleventh Circuit (both prominent in
developing federal maritime law) warrants this
Court’s review. It not only divides the Gulf of Mexico
in half, but isolates ports in the Fifth Circuit from the
rest of the nation.
Hurricanes make landfall along the entire
southern and eastern coasts of the United States
(with increasing frequency) each year, and this lack of
uniformity coupled with the uncertainty and
unfairness created by the Fifth Circuit’s standard will
eventually lead to absurd consequences. For example,
if a storm makes landfall over Mobile Bay, shipowners
to the East will be held to a standard of ordinary
reasonableness, whereas shipowners to the West will
be held to a standard of virtual clairvoyance, and a
requirement to immediately evacuate at the first
indication of any potential tropical threat in order to
avoid liability.
This will result in public chaos in ports and
place shipowners at great risk, with the inevitable
result of vessels attempting to outrun a storm with no
idea where to go.
43
This is an unworkable standard which sets a
dangerous precedent by promoting mass public chaos,
placing vessels and seamen at grave risk.
CONCLUSION
Wherefore, Paragon prays that certiorari be
granted.
Respectfully submitted,
JOHN A. SCIALDONE
Counsel of Record
Scialdone Law Firm, PLLC
1319 24th Avenue
Gulfport, MS 39501
(228) 822-9340
jscialdone@slfirmus.com
Counsel for Petitioner
August 27, 2024
APPENDIX
i
TABLE OF APPENDICES
Page
APPENDIX A — OPINION OF THE UNITED
STATES COURT OF APPEALS FOR THE
FIFTH CIRCUIT, FILED APRIL 24, 2024 . . . . . .1a
APPENDIX B — AMENDED ORDER AND
OPINION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF TEXAS, BROWNSVILLE
DIVISION, FILED AUGUST 17, 2022 . . . . . . . . . .29a
A PPEN DI X C — F I NA L J U D GM EN T
OF THE UNITED STATES DISTRICT
COURT FOR THE SOU THERN
DISTRICT OF TEXAS, BROWNSVILLE
DIVISION, FILED MARCH 9, 2023 . . . . . . . . . .154a
A P PEN DI X D — ON PET I T ION F OR
R EH E A RI NG EN BA NC OF T H E
UNITED STATES COURT OF
APPEALS FOR THE FIFTH CIRCUIT,
FILED APRIL 24, 2024 . . . . . . . . . . . . . . . . . . . . .158a
1a
APPENDIX A — Appendix
OPINIONAOF THE UNITED
STATES COURT OF APPEALS FOR THE
FIFTH CIRCUIT, FILED APRIL 24, 2024
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 23-40209
PARAGON ASSET COMPANY, LIMITED,
AS OWNER OF THE DRILLSHIP DPDS1,
Plaintiff—Appellant
v.
AMERICAN STEAMSHIP OWNERS
MUTUAL PROTECTION AND INDEMNITY
ASSOCIATION, INCORPORATED,
Defendant—Appellee
v.
PARAGON OFFSHORE LIMITED,
Defendant—Appellant
PARAGON INTERNATIONAL FINANCE COMPANY,
Third Party Defendant—Appellant
2a
Appendix A
PARAGON OFFSHORE DRILLING, L.L.C.,
Counter-Claimant—Appellant
v.
SIGNET MARITIME CORPORATION,
Claimant—Appellee
IN THE MATTER OF THE COMPLAINT OF
SIGNET MARITIME CORPORATION,
AS OWNER OF THE TUG SIGNET ENTERPRISE,
ITS ENGINES, TACKLE, ETC., IN A CAUSE
OF EXONERATION FROM OR
LIMITATION OF LIABILITY,
Plaintiff—Appellee
SIGNET MARITIME CORPORATION,
AS OWNER OF THE TUG SIGNET ENTERPRISE,
ITS ENGINES, TACKLE, ETC., IN A CAUSE
OF EXONERATION FROM OR
LIMITATION OF LIABILITY,
Plaintiff—Appellee
v.
PARAGON ASSET COMPANY, LIMITED,
Counter-Claimant—Appellant
3a
Appendix A
IN THE MATTER OF THE COMPLAINT OF
SIGNET MARITIME CORPORATION,
AS OWNER OF THE TUG SIGNET ARCTURUS,
ITS ENGINES, TACKLE, ETC., IN A CAUSE
OF EXONERATION FROM OR
LIMITATION OF LIABILITY,
Plaintiff—Appellee
SIGNET MARITIME CORPORATION, AS OWNER
OF THE TUG SIGNET ARCTURUS, ITS ENGINES,
TACKLE, ETC., IN A CAUSE OF EXONERATION
FROM OR LIMITATION OF LIABILITY,
Plaintiff—Appellee
v.
PARAGON ASSET COMPANY, LIMITED,
Appellant
Argued: February 5, 2024
Decided and Filed: April 24, 2024
No. 23-40209 On Appeal from the United States
District Court for the Southern District of Texas,
Brownsville Division
Nos. 1:17-CV-203, 1:17-CV-247, 1:18-CV-35—
Fernando, MI Rodriguez, Jr. District Judge
4a
Appendix A
OPINION
Before: HIGGINBOTHAM, SMITH, and HIGGINSON, Circuit
Judges.
HIGGINSON, Circuit Judge:
This is an appeal of an Opinion and Order issued by the
district court concerning liability in a series of maritime
casualties caused by the breakaway of a drillship in Port
Aransas, Texas during and after Hurricane Harvey.
Appellant Paragon Asset Company (“Paragon”) owned
the vessel, the DPDS1—an unmanned and unpowered
drillship—which was docked at Port Aransas prior to
Hurricane Harvey’s arrival to the area on August 25,
2017. After its evacuation effort failed, Paragon hired two
tugs owned by Signet Maritime Corporation (“Signet”) to
apply power throughout the storm in an attempt to help
keep the vessel moored to the dock.
On August 25, 2017, at the height of the storm, the
DPDS1 broke from its moorings, alliding with both Signet
tugs and sinking one. The DPDS1 then ran aground in
the Corpus Christi ship channel, but on August 28, 2017
LWUHÁRDWHGDQGDOOLGHGZLWKDQHDUE\UHVHDUFKSLHURZQHG
by the University of Texas (“UT”). Applying maritime
negligence law, the district court found Paragon alone to
be liable for the August 25 breakaway. Because Signet had
supplied a third tug to monitor the DPDS1’s movement
after the storm, and that tug failed to stop the vessel’s
allision with the UT pier, the district court concluded that
Signet and Paragon were equally liable for the damages
suffered by UT.
5a
Appendix A
Paragon appeals, asking that we apply a “towage
law” standard of duty to Signet’s provision of its services
to Paragon. Paragon further contests the district court’s
determination that a force majeure defense was not
available to Paragon, and asks us to reverse the district
court’s determination regarding which contract between
the parties governed Signet’s services. Having reviewed
WKHUHFRUGDQGUHOHYDQWODZZHÀQGWKDWWKHGLVWULFWFRXUW
GLG QRW HUU LQ LWV ÀQGLQJ RI IDFWV RU FRQFOXVLRQV RI ODZ
Accordingly, we AFFIRM.
I.
On Wednesday, August 23, 2017, Paragon and Signet
began discussions regarding the hiring of Signet tugs to
tow the DPDS1 out to open sea before Hurricane Harvey
made landfall. On Thursday, August 24, 2017, after delays
and the closure of the port foiled the DPDS1’s evacuation
effort, Signet agreed to provide Paragon with two tugs,
the ARCTURUS and the ENTERPRISE, to aid in
keeping the DPDS1 moored to the Port Aransas dock
during the storm. At around 11:00 P.M. on August 25,
2017, the DPDS1 broke free of its moorings and propelled
the ARCTURUS and the ENTERPRISE into nearby oil
rigs. The ENTERPRISE sank, and the ARCTURUS and
the oil rigs sustained damage. The ENTERPRISE crew
was rescued the next morning.
The DPDS1 continued into the Corpus Christi ship
channel, where it remained grounded for three days.
During this time, Paragon retained Signet to provide a tug
to monitor the grounded vessel. On August 27, 2017, the
6a
Appendix A
tug CONSTELLATION began monitoring the DPDS1,
but because the DPDS1 had loose lines hanging from it,
and because Hurricane Harvey was projected to return
to Corpus Christi, the crew of the CONSTELLATION
did so from a nearby dock rather than next to the vessel
LWVHOI2Q$XJXVWWKH'3'6UHÁRDWHGDQGDOOLGHG
into the UT research pier. The CONSTELLATION was
unable to stop the allision with the UT pier, but afterwards
it pinned the DPDS1 to the shore. Signet subsequently
provided three more tugs to hold the DPDS1 to the shore
until the drillship could be towed to another dock.
$IWHUDÀYHGD\EHQFKWULDOWKHGLVWULFWFRXUWIRXQG
that Paragon alone was liable for the August 25, 2017
breakaway of the drillship, and rejected its force majeure
defense as well as its argument that Signet assumed the
risk by agreeing to help keep the vessel moored. In doing
so, the trial court rejected Paragon’s argument that it had
no duty to Signet under maritime law of towage, holding
that Signet did not undertake the tow of the DPDS1 or
take control of it, so towage law was inapplicable. The
district court held that, under maritime law of negligence,
Paragon was liable for the breakaway incident because it
unreasonably relied on reports about the strength of its
mooring system, which it knew were not based in fact,
and because Paragon’s leadership failed to call for an
evacuation when it became clear that was the prudent
course of action. The district court found the parties—
Paragon and Signet—each to be 50% liable for the damage
to the UT research pier.
7a
Appendix A
Finally, the parties debated whether a Master
Charter Agreement (“MCA”) or Signet’s Tariff (“the
Tariff”) governed Signet’s provision of tugboats to
Paragon. The district court ruled in favor of the Tariff,
ÀQGLQJWKDW6LJQHWKDGH[SUHVVO\UHIXVHGWRDJUHHWRWKH
terms of the MCA for the provision of services, pointing
to the course of dealing in the summer of 2017, when
Paragon had engaged Signet tows to hold the drillship
multiple times and had paid the Tariff rate. The district
court rejected Paragon’s arguments that the MCA
governed, including its contention that the Tariff could
not govern because it contained explicit language that it
did not cover Signet’s services to vessels “aground or in
distress, including assistance to a deadship . . . , or when
Services are performed during heightened Coast Guard
port conditions.”
Paragon appeals on three issues: first, it argues
that the trial court should have applied towage law, thus
shifting to Signet some duty owed to keep the drillship
from harming others’ property. Second, it argues that the
trial court erred in rejecting its force majeure defense,
“impermissibly” holding Paragon “to a standard of
perfection and infallible judgment by viewing its actions
through the lens of post hoc knowledge.” Third, it argues
WKDWWKHWULDOFRXUWHUUHGLQÀQGLQJWKDW6LJQHW·V7DULII
governed the interactions between the two parties,
because Signet unilaterally and orally amended the Tariff.
Rather, under general maritime and Texas law, the district
court should have held the relationship to be “at law” or
governed by the MCA, and Signet should not have been
allowed to seek indemnity or attorney’s fees from Paragon.
8a
Appendix A
II.
“The standard of review for a bench trial is well
HVWDEOLVKHG ÀQGLQJVRIIDFWDUHUHYLHZHGIRUFOHDUHUURU
and legal issues are reviewed de novo.” One Beacon Ins.
Co. v. Crowley Marine Servs., Inc., 648 F.3d 258, 262
(5th Cir. 2011) (italics omitted) (quoting Water Craft
Mgmt. LLC v. Mercury Marine, 457 F.3d 484, 488 (5th
&LU :H ZLOO ÀUVW FRQVLGHU ZKHWKHU WKH GLVWULFW
court incorrectly applied maritime negligence law, before
turning to Paragon’s arguments regarding the force
majeure defense and the governing contract.
Paragon contends that the district court erred when
it applied general maritime negligence law rather than
towage law. Paragon argues not that it would be released
from liability if the district court recognized Signet’s
activities on August 25, 2017 as a tow; rather, it asserts
that the application of towage law would re-orient the
inquiry about Paragon’s duty to Signet and Signet’s
duty to Paragon so as to reduce Paragon’s fault. At trial,
Paragon situated its law of towage argument within a
larger contention that Signet assumed the risk that the
DPDS1 might break free when Signet agreed to the task
of helping keep the DPDS1 at the dock—and, therefore,
that Signet forfeited any right to recover from Paragon
when it failed to mitigate the risk it was hired to guard
against. The district court rejected this argument, and
Paragon does not pursue its general assumption of risk
argument on appeal.
Here, Paragon has retained its claim that the law of
maritime towage should apply. The district court rejected
9a
Appendix A
the towage law standard that Paragon proposed because
“Signet never undertook the tow of the DPDS1, and at
no point did Paragon relinquish custody of the DPDS1 to
the Signet tugs.” Helping keep the DPDS1 moored to the
dock did not constitute a tow, the district court held, and
“Paragon did not shift to Signet the duties that Paragon
owed to ensure that the drillship was properly moored to
prevent allision with objects within the scope of danger
should the mooring system fail.”
Instead, the district court found that the incidents
during Hurricane Harvey should be governed by the
standard for negligence articulated within general
maritime law. “To establish maritime negligence, ‘a
plaintiff must demonstrate that there was [1] a duty
owed by the defendant to the plaintiff, [2] breach of
that duty, [3] injury sustained by the plaintiff, and [4] a
causal connection between the defendant’s conduct and
the plaintiff’s injury.’” GIC Servs., L.L.C. v. Freightplus
USA, Inc., 866 F.3d 649, 659 (5th Cir. 2017) (alteration
in original) (quoting Canal Barge Co. v. Torco Oil Co.,
220 F.3d 370, 376 (5th Cir. 2000)). A shipmaster has a “a
special duty to take all reasonable steps consistent with
safety to [a] ship and her crew, to avoid or minimize the
chance of harm to others.” Boudoin v. J. Ray McDermott
& Co., 281 F.2d 81, 85 (5th Cir. 1960). The Supreme Court
has stated that, if a ship drifts from her moorings and
causes a collision, “she must be liable for the damages
FRQVHTXHQW WKHUHRQ XQOHVV VKH FDQ VKRZ DIÀUPDWLYHO\
that the drifting was the result of inevitable accident,
or a vis major, which human skill and precaution, and a
proper display of nautical skill could not have prevented.”
10a
Appendix A
The Louisiana, 70 U.S. (3. Wall.) 164, 169 (1865) (internal
italics omitted).
The district court also cited our court’s decision in
In re United States, 425 F.2d 991, 995 (5th Cir. 1970)
to articulate the responsibility of a shipowner during a
storm: “If those responsible for the [barges that broke free
and caused allisions] were reasonable in their anticipation
of the severity of the impending storm and undertook
reasonable preparations in light of such anticipation, then
they are relieved of liability.” Id. $QG VSHFLÀFDOO\ ZLWK
regard to docked vessels, the trial court relied on the rule
expressed in the Carroll Towing case:
Since there are occasions when every vessel will
break from her moorings, and since, if she does,
she becomes a menace to those about her; the
owner’s duty, as in other similar situations, to
provide against resulting injuries is a function
of three variables: (1) The probability that she
will break away; (2) the gravity of the resulting
injury, if she does; (3) the burden of adequate
precautions.
United States v. Carroll Towing Co., 159 F.2d 169, 173
(2d Cir. 1947). Under the caselaw regarding maritime
negligence, the district court concluded that Paragon
ZDV QHJOLJHQW ÀUVW ´FRPSDQ\ GHFLVLRQ PDNHUV NQHZ
or should have known that they possessed inaccurate
information about the mooring system installed to keep
the DPDS1 docked,” because the reports on the strength
RIWKHPRRULQJV\VWHPFRPPLVVLRQHGE\3DUDJRQUHÁHFWHG
11a
Appendix A
projected combinations of mooring lines and ropes—not
any real mooring system that had actually been put in
place. Second, the district court found that Paragon
FRPSDQ\RIÀFLDOVZHUHXQUHDVRQDEOHLQWKHLUDVVHVVPHQW
of the strength and potential danger of Hurricane Harvey,
and in their choice to wait until Wednesday, August 23, to
choose to evacuate the drillship even though they received
weather reports at 9:00 A.M. the morning of Monday,
August 21 that showed Corpus Christi in the storm’s
cone of uncertainty. Testimony supported the trial court’s
IDFWXDOÀQGLQJWKDWWKH'3'6·VHYDFXDWLRQZRXOGPRUH
likely have been successful if Charles Yester, Paragon’s
Senior Vice President of Operations, had called in the
evacuation order earlier, and the trial court found that
a reasonable captain would have planned for potential
exigencies, including the sources of delay that accrued on
Thursday before the port closed.
Paragon argues that the district court was mistaken
in its reliance on the normal negligence standard for
maritime torts. Rather, it argues that Paragon “owed
Signet no duty to provide a vessel which would not
break away during Hurricane Harvey, as this was the
precise reason Signet undertook the job of holding it.”
Reasoning that the DPDS1 was a “dead” vessel, Paragon
relies on caselaw that emphasizes the duty of a tug owner
to guard against hazards, even those caused by the
unseaworthiness of the vessel being towed. See Bisso v.
Waterways Transp. Co., 235 F.2d 741, 743 (5th Cir. 1956)
(“To be sure, there was a strong current . . . but this was
well known and its imminence was the reason the owners
of [the vessel] agreed expressly with [the tug] to provide
a local assisting tug of adequate power.”).
12a
Appendix A
The threshold question, therefore, is whether the
relationship between Signet and Paragon involved a tow
at all. As an initial matter, treatises and caselaw state
generally that towage law is applicable when one vessel
acts to “aid the propulsion or to expedite the movement
of another vessel.” 2 T. Schoenbaum, Admiralty and
Maritime Law § 12:1 (West 6th ed. 2023); see also Stevens
v. The White City, 285 U.S. 195, 200 (1932) (“The supplying
of power by a vessel, usually one propelled by steam, to tow
or draw another is towage. Many vessels, such as barges
and canal boats, have no power of their own and are built
with a view to receiving their propelling force from other
sources. And vessels having motive power often employ
auxiliary power to assist them in moving about harbors
and docks.”).
By contrast, Paragon cites four cases that it says stand
for the proposition that “[t]owage law’s application does
not require a tug’s provision of motive power to a vessel
in transit” Canadian Aviator, Ltd. v. United States, 324
U.S. 215 (1945); Stevens v. E. W. Towing Co., 649 F.2d
1104 (5th Cir. 1981); Tebbs v. Baker-Whiteley Towing Co.,
407 F.2d 1055 (4th Cir. 1969); and River Pars. Co. v. M/V
FLAG ADRIENNE, 2002 WL 1453826 (E.D. La. Jul. 2,
2002). Signet counters that each of these cases “involved
an actual or contemplated voyage or movement” rather
than an “assist” designed to keep a vessel from moving.
Signet is correct. Three of these cases—Stevens,
Tebbs, and River Parishes Co.—involved accidents that
happened while a tug was trying to fasten itself to the
side of a vessel so that it could embark on a tug or tow of
13a
Appendix A
a vessel. See Stevens, 649 F.2d at 1109; Tebbs, 407 F.2d at
1057; River Parishes Co., 2002 WL 1453826, at *3. And in
Canadian Aviator, the tow was not attached to the tug,
but the tug was guiding it through waters when the tow
was grounded. 324 U.S. at 228.
More importantly, each of these cases took place in a
context that is dissimilar to the one at issue here: Stevens
involved a personal injury of a deckhand on a tug, which
occurred due to a shifting current and the negligence of
tug employees. 649 F.2d at 110. In River Parishes Co. the
tug grounded itself. 2002 WL 1453826, at *1. In Tebbs
the tug was attaching to its tow and nudged the tow into
another vessel. 407 F.2d at 1057. The tug in Canadian
Aviator ran its tow aground. 324 U.S. at 217. Each of
these cases, then, involves an action by the tug or its crew
that resulted in an injury, allision, or grounding. None of
these is analogous to what occurred here, where the tugs
applied their power to the DPDS1 but could not hold the
drillship after the DPDS1’s own mooring system failed.
Furthermore, the other cases cited by Paragon to
support its position—In re TT Boat Corp., 1999 WL
123810, at *6–7 (E.D. La. Mar. 2, 1999) and Bisso v.
Waterways Transp. Co., 235 F.2d at 743—both involved
a tug towing a vessel. In TT Boat Corp, a tug was towing
a manned barge, and the barge allided with an offshore
platform. TT Boat Corp., 1999 U.S. Dist. LEXIS 2754, at
*6–7. In Bisso, a tug was towing a vessel into the entrance
of the Southwest Pass of the Mississippi River. 235 F.2d
at 743. The tug attempted to swing its tow into the turn,
and due to the current the tow continued straight, then
14a
Appendix A
moved west, causing the tug and tow to be grounded. Id.
In both instances, too, a tug was acting in its capacity as
mover of other vessels and was in control of the navigation
on a journey. These cases are not analogous to the facts
here, where there was no journey—just the application
of the force of the tugs to prevent the improperly moored
DPDS1 from breaking free of the dock.1
Additionally, Paragon claims that the district court
was inconsistent because, while it did not apply towage
law to the August 25, 2017 events, it did apply towage law
when it considered the August 28, 2017 incident involving
the CONSTELLATION and the UT research pier. But
this is not a correct characterization of the district court’s
RSLQLRQ7KHGLVWULFWFRXUWVSHFLÀFDOO\VWDWHGWKDWWKH´ODZ
of tug and tow does not govern” the second allision because
“Signet did not undertake a tow of the DPDS1” when
it agreed to monitor the DPDS1 and then hold it to the
shore after it hit the UT research pier. The district court
did draw on towage law cases to describe Signet’s duties
as “neither a bailee nor an insurer of the tow” but held
that Signet remained “obligated to provide reasonable
care and skill ‘as prudent navigators employ for the
performance of similar services.’” King Fisher Marine
Serv., Inc. v. The NP Sunbonnet, 724 F.2d 1181, 1184 (5th.
Cir. 1984) (quoting Stevens, 285 U.S. at 202)); Even if the
employment of this terminology to describe Signet’s duties
to Paragon were erroneous, it was harmless because it did
1. The trial court pointed to the report of Signet’s mooring
expert, who concluded that given the wind conditions, the two
tugboats reduced the tension of the mooring lines by only three
percent.
15a
Appendix A
not meaningfully change the district court’s analysis of
the responsibilities of Signet and Paragon under maritime
QHJOLJHQFHODZUHVXOWLQJLQWKHWULDOFRXUW·VÀQGLQJHDFK
party 50% responsible for the damage to the UT pier.
Finally, Paragon positions the applicability of
towage law as a factor that would diminish its liability
meaningfully. That is not the case. As the district court
noted, even if towage law applied, Signet would be unable
to “complain about a condition of unseaworthiness or
other weakness that caused the loss if it knew of the
condition and failed to use reasonable care under the
circumstances.” King Fisher, 724 F.2d at 1184. But, as
the district court found, Signet had no opportunity to
determine whether the DPDS1’s mooring system would
be adequate to withstand the hurricane—so even a
KHLJKWHQHGGXW\IRU6LJQHWZRXOGQRWUHVXOWLQDÀQGLQJ
that Paragon was not negligent.
III.
Second, Paragon argues that the trial court erred in
its holding that Paragon could not rely on a force majeure
defense because its “delayed decision and inadequate
mooring system represented unreasonably deficient
actions by Paragon.” Paragon argues that the trial court
erred by holding it to a standard of “perfection” rather
than reasonability, and by evaluating Paragon’s decisions
“through some sort of nautical rear view mirror.” United
Geophysical Co. v. Vela, 231 F.2d 816, 819 (5th Cir. 1956).
The district court correctly articulated and applied
the standard for a force majeure defense, which may
16a
Appendix A
be invoked by a showing that an “Act of God,” such
as a hurricane, occurred and that a shipmaster “took
reasonable precautions under the circumstances as known
or reasonably to be anticipated.” See In re United States,
425 F.2d at 995. The district court also correctly noted
that “the party asserting the defense bears the burden of
proof.” See In re Marine Leasing Servs., 471 F.2d 255, 257
(5th Cir. 1973); see also In re United States, 425 F.2d at 995
(“The burden of proving inevitable accident or Act of God
rests heavily upon the vessel asserting such defense.”).
The parties did not dispute that Hurricane Harvey
ZDVDQ$FWRI*RGVXIÀFLHQWWRDFWLYDWHDIRUFHPDMHXUH
defense. However, with regard to the second factor—
reasonable precautions, the trial court cited Boudoin,
LQZKLFKRXUFRXUWDIÀUPHGDGLVWULFWFRXUW·VUXOLQJWKDW
an appellee was liable for its vessel’s breaking free of its
moorings and causing damage to a nearby dock during
Hurricane Audrey. 281 F.2d at 88. In that case, our court
found that, even though Audrey was a hurricane, the
appellee failed to meet its burden to show that “the tug
master had no reason to anticipate that Audrey would
strike with the fury which she had and where the [vessel]
ZDVPRRUHGµVXIÀFLHQWWRH[FXVHKLVIDLOXUHWRHYDFXDWH
the vessel. Id.
Paragon argues that, while the tug master in Boudoin
did not attempt to evacuate his vessel, Paragon did try to
evacuate the DPDS1 and was foiled in its attempts to do
so. However, the district court considered this argument
and concluded that “Paragon’s delay in deciding to tow
the DPDS1 out to sea ultimately caused the drillship to
17a
Appendix A
remain at the dock,” particularly considering what it knew
RUVKRXOGKDYHNQRZQDERXWWKHGHÀFLHQFLHVRIWKHPRRULQJ
system. The district court found the following facts:
1. On August 2, 2017, Aldert Schenkel, Vice President
of Engineering, recommended in an email that the DPDS1
should depart 3 days before an approaching storm that
had a wind speed of 63 mph or more.
2. On Monday, August 21, Paragon received two
weather reports. One, released at 4:00 A.M., reported
that the tropical system would reach winds of 65 mph. A
report later that morning put Port Aransas in the cone
of uncertainty, though it anticipated maximum winds to
be at 57 mph. At that time Schenkel (Vice President of
Engineering) told Michael Koenig (Marine Operations
Manager) that “we don’t have to do anything yet” and
they had about 24 hours to make a decision.
.RHQLJWHVWLÀHGWKDWKHWKRXJKWWKH\VKRXOGKDYH
“immediately” decided to move the vessel, but that he
deferred to decisionmakers.
4. A weather report on Monday, August 21, at 4:00
P.M. stated the maximum wind speeds were predicted
to be 70 mph.
5. At least one company, Rowan Companies, decided
no later than Monday to evacuate and it contacted
the A ransas-Corpus Christi Pilots Association to
communicate its decision.
18a
Appendix A
6. Paragon was aware that the Genesis Engineering
reports estimating the strength of the mooring system
were incorrect because it relied on a series of lines that
were hypothetical and not actually in place on the vessel.
7. Captain Jay Rivera, of the Aransas-Corpus Christi
3LORWV $VVRFLDWLRQ WHVWLÀHG WKDW D 0RQGD\ HYDFXDWLRQ
order would result in a “pretty good chance and a high
likelihood” that the DPDS1 would have been towed to sea
before the arrival of Hurricane Harvey.
7KH'3'6ZDVWKHRQO\GULOOVKLSRIÀYHGRFNHG
along the Texas Gulf Coast, that did not evacuate before
Hurricane Harvey.
9. While Charles Yester, Senior Vice President of
Operations, took some steps to prepare for an evacuation
DV HDUO\ DV 0RQGD\ KH GLG QRW ÀOH WKH 'HDGVKLS 7RZ
Application or communicate with port authorities.
3DUDJRQGLGQRWLVVXHLWVRIÀFLDORUGHURIHYDFXDWLRQXQWLO
Wednesday.
Considering these facts, the district court rejected
Paragon’s argument that the delays on Thursday were
unforeseeable, because “prudent shipmasters foresee
such situations and factor them into their decisionmaking timetable.” The district court held that a prudent
shipmaster would recognize that Navy ships would have
priority over commercial ships in an evacuation, and
that “[a] prudent shipmaster cannot rely on a plan that
assumes a best-case scenario with no sudden changes in
circumstances.”
19a
Appendix A
As a reviewing court, we have a clear mandate. “Even
though we might have weighed the evidence differently
had we been sitting as trier of fact, we must accept the
GLVWULFWFRXUW·VÀQGLQJVDVORQJDVWKH\DUHSODXVLEOHLQ
light of the record viewed in its entirety.” Perlman v.
Pioneer Ltd. P’ship, 918 F.2d 1244, 1247 (5th Cir. 1990).
The facts found by the district court are “plausible in light
of the record,” see id.DQGLQIDFWUHÁHFWLQSDLQVWDNLQJ
detail the accounts given in the testimony of Paragon’s
RZQRIÀFLDOV7KH'3'6ZDVWKHRQO\GULOOVKLSRIÀYH
moored there, that did not successfully evacuate from
Port Aransas before the storm. This indicates that the
trial court did not use “hindsight” but rather applied
the judgment that the other drillship owners employed
at the time of the storm. The district court’s holdings
about what a prudent shipmaster would anticipate, and
its determination that Paragon did not take “precautions
under the circumstances as known or reasonably to be
anticipated” are not contrary to law. Paragon has failed
to show that it “took reasonable precautions under the
circumstances as known or reasonably to be anticipated,”
In re United States, 425 F.2d at 995, and therefore a force
majeure defense is not available to Paragon.
IV.
Finally, Paragon contends that the trial court erred in
its ruling that the Tariff governed and asks that this court
reverse the district court and hold that the MCA governed
Signet’s services to Paragon during Hurricane Harvey.
20a
Appendix A
A s backg round on this dispute, in June 2015
Paragon and Signet established the MCA to streamline
future vessel-chartering negotiations. Each party was
represented by in-house counsel: Jay Oliver, Assistant
General Counsel for Paragon, and Scott Reid, General
Counsel for Signet. The MCA served as a template for
VSHFLÀFSURMHFWVDOORZLQJTXLFNÀQDOL]DWLRQRIGHWDLOVOLNH
rates and locations. The MCA includes three documents:
the document spelling out the agreement, along with two
parts of the Baltic & International Maritime Council
SUPPLYTIME 2005 Uniform Charter Party for Offshore
Service Vessels (“BIMCO”). Part I of the BIMCO
DJUHHPHQWZDVDIRUPZLWKER[HVWREHÀOOHGLQZLWK
details regarding each job, which would be completed
by business representatives rather than counsel. Part II
included contractual provisions tied to each of the boxes
in Part I. The main document of the MCA states that the
agreement “shall control and govern in all situations in
which Owners [(Signet)] charter to Charterers [(Paragon)]
a vessel or vessels, and the terms and conditions of this
Agreement shall be deemed incorporated by reference.”
While “activities” and “voyages” are referenced in the
MCA, hold-in-place services like those provided by Signet
on August 24, 2017 are not.
In August 2016, Signet introduced a Tariff establishing
terms and conditions for tug services in its Ingleside
division, applicable to customers within the Corpus Christi
port area. 2 As is discussed below, Signet billed Paragon
2. The district court found that Signet’s competitors in
Corpus Christi also published tariffs that showed set rates and
conditions for services provided within the harbor.
21a
Appendix A
according to the Tariff for services it provided earlier
that year, in June of 2017, when the DPDS1 had drifted
from its moorings and Signet sent tugs to hold it in place.
The parties agree that a maritime contract is reviewed
de novo. See Weathersby v. Conoco Oil Co., 752 F.2d 953,
955 (5th Cir. 1984) (“A maritime contract . . . should be read
as a whole and its words given their plain meaning unless
the provision is ambiguous.”). Paragon argues that Signet
proposed using the Tariff during Hurricane Harvey
without an arm’s-length negotiation, and that no evidence
supports the existence of an oral agreement between
Signet and Paragon to apply the Tariff. Paragon argues
that the only reference to the Tariff before Hurricane
Harvey’s landfall came from Signet’s General Counsel,
Scott Reid, in which he claimed that management agreed
to use the Tariff. Even accepting that the Tariff is valid,
Paragon contends, the only existing version was the Signet
Ingleside Tariff posted on Signet’s website and therefore
Paragon did not have the ability to review it.
Most problematic, Paragon posits, are the terms in the
Tariff that disallow unilateral, unwritten amendments and
exclude the kind of services rendered during Hurricane
Harvey. In this instance, Signet provided services to a
deadship during heightened port conditions—and each
circumstance was excluded from the Tariff, according to
Section 5, which reads:
This Tariff does not cover Services to vessels
aground or in distress, including assistance to a
deadship . . . , or when Services are performed
during heightened Coast Guard port conditions.
22a
Appendix A
Further, Paragon points to the contract language of
§ 21(a) and (b) of the Tariff. Section 21(a) gives Signet
the right to “adjust terms or conditions” with “thirty (30)
days’ advance notice to Owners” and states that these
adjustments “shall be in writing.” And § 21(b) provides
WKDWWKH´7DULIIVKDOOQRWEHDPHQGHGPRGLÀHGRUZDLYHG
unless and until made in writing and signed by each party
hereto.” Paragon argues that the trial court overlooked
the Tariff’s prohibition against unilateral waivers under
§§ 21(a) and (b). Paragon contends that the trial court’s
ruling is contrary to federal maritime and Texas law
principles by allowing a unilateral waiver of a provision
LQWHQGHGIRURQHSDUW\·VEHQHÀWDQGLQGRLQJVRUHQGHULQJ
a clause of the contract meaningless.
Finally, Paragon argues that the district court’s
GHFLVLRQXQGHUPLQHVWKH0&$·VVLJQLÀFDQFHDVDEODQNHW
contract between the parties to be applicable to multiple
transactions. Paragon contends that Signet’s refusal to
apply the MCA to the new services on the morning of
August 24 occurred “at the 11th hour” when there was not
“opportunity to discuss or negotiate.” Further, Paragon
maintains that negotiations between in-house counsels
were ongoing, indicating an agreement on material terms.
Paragon argues that despite not executing Section I of the
MCA, the information was never in dispute between the
parties and so it governed services Signet offered during
Hurricane Harvey. It asserts that the MCA, established
in June 2015, remained in effect and encompassed the
VHUYLFHVSURYLGHGGXULQJWKDWSHULRG,QVHHNLQJVSHFLÀF
evidence that Signet agreed to provide services under
the MCA, Paragon contends, the district court “ignored
evidence that the MCA always governs.”
23a
Appendix A
In its Order and Opinion, the district court rejected
Paragon’s argument that the MCA should govern Signet’s
services during Hurricane Harvey, ruling that the MCA,
signed in 2015, provided a “framework” for potential
VHUYLFHV EXW ODFNHG VSHFLÀF SHUIRUPDQFH REOLJDWLRQV
The district court found that, because the terms of the
MCA explicitly did “not obligate” Signet “to charter their
vessels to Paragon,” or vice versa, it was Paragon’s task to
prove at trial that Signet agreed the MCA would govern
the services provided during Hurricane Harvey.
Based on trial testimony the district court concluded
that negotiations between corporate counsels began on
Wednesday, August 23, in anticipation of the tow Signet
originally planned to complete before the DPDS1’s
evacuation was canceled. At that time, e-mails between
the two representatives primarily focused on the essential
terms within the MCA’s Part II, such as insurance and
indemnity provisions, emphasizing the uncommon risks
posed by Hurricane Harvey. But the Coast Guard’s closure
of the port on the morning of August 24 and the failure
RIWKH'3'6·VHYDFXDWLRQOHGWRDVLJQLÀFDQWFKDQJHLQ
services: rather than towing it to the sea, the Signet tugs
would now be hired to help keep the DPDS1 moored to
the dock. At that point, the district court found, “Signet
expressly refused” to provide the new services under the
MCA. At trial, Barry Snyder—the President and owner
RI6LJQHW³WHVWLÀHGWKDWLQDSKRQHFDOOZLWK6FKHQNHOKH
told Schenkel that it would be “very dangerous” to use the
MCA for the hold-in-place services. During a deposition,
6FKHQNHOWHVWLÀHGWKDWKHFRXOGQRWUHPHPEHULIKHKDG
spoken with Snyder about whether the MCA would govern
24a
Appendix A
the hold-in-place services. Accordingly, the district court
held that Paragon could not demonstrate that Signet
agreed that the MCA would govern Signet’s assistance
at the dock.
The district court cited other factors for its holding
that the MCA did not govern Signet’s services during
Hurricane Harvey: First, while they discussed and
agreed on the MCA terms for the tow-out services,
after it became clear that Signet would instead provide
hold-in-place services, the parties did not complete the
MREVSHFLÀF0&$IRUPV7KLVVLJQDOHGDQXQGHUVWDQGLQJ
that the MCA did not cover the new services Signet would
provide. Second, the district court held that Paragon’s
focus on MCA’s Paragraph 1.3—which stated the MCA
“shall control and govern in all situations in which [Signet]
charter[ed] to [Paragon] a vessel or vessels”—overlooked
WKHEURDGHUFRQWH[WRIWKH0&$DV3DUW,,VSHFLÀHGWKDW
its application was to “offshore activities” and “voyages.”
While towing the DPDS1 out to sea would have fallen
under this contract, the district court held, the actual
services rendered during Hurricane Harvey did not.
We agree with the district court that the parties’
past conduct demonstrates that these services were
governed by the Tariff, while MCA discussions arose
when considering “offshore activities.” For example,
Signet billed Paragon according to the Tariff for the
services it provided during the water surges in June of
2017, and no party presented evidence that there had
been discussion under the MCA. After Hurricane Harvey,
Signet tugs held the DPDS1 stationary on the shore of
25a
Appendix A
the ship channel, and Signet billed Paragon for Tariff
rates, while later talks about a tow to Brownsville for
the drillship to be scrapped occurred under the MCA.
This consistent pattern illustrated the parties’ practical
distinction between services governed by the Tariff and
“voyages” or “offshore activities” that were conducted
under the aegis of the MCA.
The course of dealing is also persuasive evidence
that the Tariff did in fact govern Signet’s provision of
services during Hurricane Harvey. Federal maritime
law permits oral agreements to incorporate the terms of
a written document, such as the Tariff. Kossick v. United
Fruit Co., 365 U.S. 731, 734 (1961). And the course of
dealing between Paragon and Signet—in which Signet
provided services, Signet invoiced under the Tariff,
and Paragon paid without complaint—established a
common understanding consistent with industry customs.
We agree with the district court that the language of
Paragraph 5 of the Tariff explicitly excluding “assistance
to a deadship” or services during “heightened Coast Guard
SRUWFRQGLWLRQVµZDVIRUWKHEHQHÀWRI6LJQHWDQGFRXOG
be waived unilaterally under federal maritime and Texas
law. See Stauffer Chem. Co. v. Brunson, 380 F.2d 174, 182
WK&LU ´:HUHFRJQL]HWKDWDOWHUDWLRQPRGLÀFDWLRQ
or waiver of contract provisions may be implied from the
acts and circumstances surrounding the performance
of such contract.”); Johnson v. Structured Asset Servs.,
LLC, 148 S.W.3d 711, 722 (Tex. App. 2004) (“A party can
waive contract provisions that are in the contract for his
EHQHÀWµ FLWLQJJoiner v. Elrod, 716 S.W.2d 606, 609 (Tex.
App. 1986))).
26a
Appendix A
The trial record supports the district court’s conclusion
that both parties understood that the Tariff would be the
contract under which Signet’s provision of services during
Hurricane Harvey would be governed, despite contrary
language that appeared within the Tariff—and that
Paragon was not forced to accept these terms. Similarly,
Paragon fails to show that the trial court misapplied
contract law in its holding that Signet’s waiver of its right
to draft separate agreements in scenarios such as risky
weather was permissible. Paragraph 5 of the Tariff was
GHVLJQHGIRU6LJQHW·VEHQHÀWEHFDXVHLWDOORZHGÁH[LELOLW\
in assigning tug services without individual negotiations
and gave Signet the opportunity to provide alternate
terms or ask for higher prices in case it provided riskier
services. Because Signet expressly agreed to perform
services under the Tariff on August 24, Signet waived
the restrictions outlined in Paragraph 5 for that instance.
The district court also rejected Paragon’s duress and
unconscionability defenses, holding that The Elfrida, 172
U.S. 186, 192 (1898), does not support Paragon’s claim
of unconscionable bargains under extreme conditions.
The Tariff’s consistent terms, accepted by both parties
in previous transactions, demonstrate its enforceability.
Furthermore, Paragon’s argument of immediate danger
fails, as it sought Signet’s services to support its mooring
system, and it was not in a “helpless condition” when
it hired Signet. The district court found that Paragon
failed to demonstrate that the Tariff is a contract of
DGKHVLRQEHFDXVHWKHUHZDVQRVLJQLÀFDQWRQHVLGHGQHVV
or procedural unconscionability—both parties are
“sophisticated commercial enterprise[s]” represented
27a
Appendix A
by counsel. On August 24, Paragon’s counsel, Jay Oliver,
sent an email to Scott Reid in response to Reid’s own
email advising him that the commercial teams had
agreed that the hold-in-place would take place under the
Tariff. Oliver’s email read “Thanks for the update—much
appreciated.” The district court concluded that the Tariff
continued to govern services through the August 28
incident, with Signet’s invoicing Paragon on August 31,
2017, and Paragon’s paying without objection.
Upon examination of the law and the record, the trial
court did not err in its holding that the Tariff rather than
the MCA governed the provision of tugs during Hurricane
Harvey. Important facts led the trial court, and lead
us, to the conclusion that the parties all agreed that the
Tariff governed: First, the uncontroverted testimony
of Barry Snyder was that he and Schenkel agreed to
the use of the Tariff. 3 Second, Scott Reid’s August 24
message clearly stated that “[b]ecause we will not be
towing, but instead will be holding the DPDS1 in place,
Signet’s work will be governed by our Ingleside Tariff.”
Paragon’s General Counsel responded, “Thanks for the
update—much appreciated.” Third, course of dealing
evidence showed that Signet billed Paragon according
to the Tariff on multiple occasions for hold-in-place
activities and that Paragon had paid these bills without
complaint, while discussions about tows out of the harbor
involved negotiations under the MCA. Fourth, Signet also
billed Paragon under the Tariff on August 31, 2017, for
3. Schenkel testified that he could not remember the
conversation.
28a
Appendix A
the services it provided during Hurricane Harvey, and
Paragon paid without objection.4
Taken together, the evidence presented at trial
indicates that the Tariff rather than the MCA governed
the hold-in-place services that Signet provided when it
became clear that its tugs would no longer be towing the
DPDS1 to Port Aransas after the failed evacuation.
V.
+DYLQJUHYLHZHGWKHIDFWVDQGUHFRUGZHÀQGWKDW
the district court did not err in applying maritime
negligence law, in holding that the force majeure defense
was not available to Paragon, or in concluding that the
Tariff governed the services that Signet provided during
Hurricane Harvey. Therefore, we AFFIRM the rulings
of the district court’s Opinion and Order.
4. See One Beacon Ins. Co., 648 F.3d at 266 (ruling against
DOLWLJDQWWKDW´UDWLÀHGWKHLUFRXUVHRIGHDOLQJ>ZLWKWKHDGYHUVH
party] by submitting an invoice for the work on the barge without
objecting to the terms and conditions”).
29a
B ORDER AND
APPENDIX B —Appendix
AMENDED
OPINION OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF
TEXAS, BROWNSVILLE DIVISION,
FILED AUGUST 17, 2022
UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
BROWNSVILLE DIVISION
CONSOLIDATED
No. 1:17-cv-00203
PARAGON ASSET COMPANY LTD,
AS OWNER OF THE DRILLSHIP DPDS1
v.
GULF COPPER & MANUFACTURING
CORPORATION, et al.
No. 1:17-cv-00247
SIGNET MARITIME CORPORATION,
AS OWNER OF THE TUG SIGNET ENTERPRISE,
ITS ENGINES, TACKLE, ETC., IN A CAUSE
OF EXONERATION FROM OR
LIMITATION OF LIABILITY
30a
Appendix B
No. 1:18-cv-00035
SIGNET MARITIME CORPORATION,
AS OWNER OF THE TUG SIGNET ARCTURUS,
ITS ENGINES, TACKLE, ETC., IN A CAUSE
OF EXONERATION FROM OR
LIMITATION OF LIABILITY
Filed: August 17, 2022
AMENDED ORDER AND OPINION1
Judge Rodriguez
On August 25, 2017, Hurricane Harvey made landfall
near Corpus Christi as a Category 4 hurricane. In nearby
Port Aransas, the drillship DPDS1 lay docked, with no
crew, but with two tug boats alongside to help keep her
in place during the storm. Shortly before 11:00 p.m.,
the DPDS1 broke free from her moorings. The drillship
immediately propelled the two tug boats into adjacent
semisubmersible oil rigs, damaging those vessels and
sinking one tug boat and impairing the other. The DPDS1
itself moved into and grounded in the ship channel, but
UHÁRDWHGWKUHHGD\VODWHUWUDYHOLQJDFURVVWKHFKDQQHODQG
1. This Amended Order and Opinion supersedes the Order
and Opinion (Doc. 461) that the Court issued on March 31, 2022.
The Amended Order and Opinion takes into consideration the
arguments that the parties presented in Signet’s Motion to
Supplement and Modify the Court’s Order and Opinion (Doc.
463), Paragon’s Motion to Amend or Clarify (Doc. 464-1), and the
UHODWHGEULHÀQJ
31a
Appendix B
alliding with and damaging a research pier. The alleged
damages total well over $10,000,000.
7KUHH&RPSODLQWVLQ/LPLWDWLRQHQVXHGÀOHGE\WKH
respective owners of the DPDS1 (Paragon) and the two
WXJ ERDWV 6LJQHW (DFK SDUW\ ÀOHG FRXQWHUFODLPV DQG
the owner of the semisubmersible oil rigs (Noble) and the
UHVHDUFKSLHU 7KH8QLYHUVLW\RI7H[DV ÀOHGFODLPVIRU
the damage to their property. Gulf Copper, which owned
WKHSLHUWRZKLFKWKH'3'6KDGEHHQGRFNHGDOVRÀOHGD
claim for damage to that pier. And Paragon made claims
against Signet’s insurer, American Club. 2
The parties completed extensive discovery and motion
practice, and in the process settled the claims that Noble,
WKH8QLYHUVLW\RI7H[DVDQG*XOI&RSSHUÀOHG,Q-XO\
DQG$XJXVWRIWKH&RXUWKHOGDÀYHGD\EHQFKWULDO
on the claims remaining between Paragon, Signet, and
$PHULFDQ&OXE$WWULDO ZLWQHVVHVWHVWLÀHGDQGWKH
Court admitted over 1,200 exhibits. 3
2. Several parties possess a complex corporate structure,
which the parties do not dispute and which they set out as
Admissions of Fact within the Joint Pretrial Order. (Joint Pretrial
Order (“JPO”), ¶¶ 1–4, 6, (Doc. 314, 35–40)) The Court adopts those
admitted facts and for convenience will refer to the respective
corporate parties as Paragon, Signet, American Club, Noble, Gulf
Copper, and the University of Texas.
3. The parties also presented 16 witnesses by deposition.
See P.Ex.45–P.Ex.56 (Docs. 446-1–12); S.Ex.331–S.Ex.334 (Docs.
431-2–5). The Court accepted the deposition excerpts as if the
ZLWQHVVHVKDGWHVWLÀHGDWWULDO
32a
Appendix B
In this Order and Opinion, based on the voluminous
trial record and the applicable law, the Court renders its
ÀQGLQJVRIIDFWDQGFRQFOXVLRQVRIODZDVWRWKHGDPDJHV
caused by the relevant events, and the comparative liability
for those damages as between Signet and Paragon.
I.
Findings of Fact
A.
The History of the DPDS1
In 1979, the Dynamically Positioned Drillship Number
1 (“DPDS1”) began operating as a 449-foot, Liberian
ÁDJJHG GHHS ZDWHU GULOOLQJ VKLS 7KH YHVVHO SRVVHVVHG
thrusters that enabled it to remain dynamically positioned
over a drilling site in deep water. Over the decades,
various owners maintained and upgraded the drillship.
For example, in 2008, the owners fully refurbished the
vessel at an estimated cost of $350-500 million.
In 2010, Noble, Paragon’s parent company at the time,
acquired the DPDS1. Over the next few years, Noble
added new equipment and otherwise improved the vessel
in preparation for work off the Brazilian coast. Aldert
Schenkel, Paragon’s Vice President of Engineering,
oversaw this work and stated that the DPDS1 “was in
really good shape” at that time.4
In 2014, Noble spun off Paragon, which became
the sole owner of the DPDS1. The drillship continued
4. Schenkel Dep. (Vol. II), 180:12–13, P.Ex.45 (Doc. 446-1,
129).
33a
Appendix B
operations in Brazil. The following year, a downturn
in the crude oil market decreased the demand for deep
water drilling ships. As a result, Paragon decided to move
the vessel to Port Arthur, Texas, and the drillship never
again had commercial working ventures. By no later than
mid-August 2017, Paragon intended to scrap the DPDS1. 5
Between 2015 and 2017, the DPDS1 remained “cold
stacked”—i.e., the vessel was essentially shut down
without a crew onboard—at two separate locations in
Texas: Port Arthur and Port Aransas. During these years,
four Paragon employees held primary responsibility
for the DPDS1’s management and care: Charlie Yester
(Senior Vice President of Operations), Aldert Schenkel
(Vice President of Engineering), Michael Koenig (Marine
Operations Manager), and Jason Petten (Technical Marine
0DQDJHU 7KH\HDFKSRVVHVVHGVLJQLÀFDQWH[SHULHQFHLQ
the maritime drilling industry, although they possessed
limited experience preparing for hurricane season in the
Gulf of Mexico.
B. Paragon and Signet Business Relationship
1.
The Master Charter Agreement (“MCA”)
In June 2015, Paragon and Signet began their
business relationship by jointly creating a Master Charter
Agreement (MCA) to govern at least some of their
business dealings. Within the industry, companies who
plan to repeatedly work together commonly use an MCA to
5. Koenig Day 2 Tr., 19:15–24 (Doc. 448).
34a
Appendix B
“pre- negotiate such things as the indemnities, warranties,
[and] governing law”.6 Each company assigned an inhouse counsel—Jay Oliver, Assistant General Counsel for
Paragon, and Scott Reid, General Counsel for Signet—to
represent its respective interests in the negotiations.
The parties ultimately signed the MCA.7 This
successful conclusion, however, did not create an
enforceable contract. Rather, the signed document solely
provided a form to shorten the negotiation and drafting
process when Paragon required vessel-chartering
services for specific projects. The MCA established
a standard base of legal terms for certain work that
Paragon might contract in the future from Signet, and
allowed the companies’ respective commercial teams to
ÀQDOL]HLQGLYLGXDOYHVVHOKLUHVPRUHTXLFNO\E\SURYLGLQJ
RQO\WKHGHWDLOVQHHGHGIRUWKHYHVVHOVSHFLÀFDWLRQVVXFK
as the rate, time, and pick up and redelivery locations.
5HLG WHVWLÀHG WKDW RQH RI 6LJQHW·V SULPDU\ PRWLYDWLRQV
for entering into the MCA was that the company viewed
Paragon as a desirable customer in the Gulf of Mexico.
The MCA contained three sections: (1) a three-page
manuscript outlining the intent of the agreement; (2)
Part I of the Baltic & International Maritime Council
(BIMCO) SUPPLYTIME 2005 Uniform Charter Party
for Offshore Service Vessels; and (3) Part II of the BIMCO
form, which contained detailed provisions that would
govern all services provided. The BIMCO form functioned
6. Oliver Day 2 Tr., 297:8–18 (Doc. 448).
7. Master Charter Agreement, P.Ex.4 (Doc. 409-2).
35a
Appendix B
as a towage contract. Part I contained 35 blank boxes
WKDWWKHSDUWLHVÀOOHGZLWKHDFKMRE·VVSHFLÀFFRPPHUFLDO
terms, such as the services to be provided, the vessel that
would be supplied, the time and place of delivery, and the
rates. Such terms varied from project to project, and the
companies’ business representatives, rather than in-house
FRXQVHO ZRXOG DJUHH XSRQ WKHP 2OLYHU WHVWLÀHG WKDW
absent completion of Part I, “you don’t have a charter.”8
Within Part II, Section 1.3 indicated that the MCA
“shall control and govern in all situations in which Owners
[(Signet)] charter to Charterers [(Paragon)] a vessel or
vessels, and the terms and conditions of this Agreement
shall be deemed incorporated by reference”.9 At the same
time, other sections of Part II noted that the contract
applied to “offshore activities” and “voyages”,10 and no
section referenced hold-in-place or in-harbor services.
2.
The Signet Tariff
In August 2016, Signet published its tariff terms and
conditions for the Ingleside division of its operations, a
document referred to as the “Tariff ”.11 The agreement
applied to tug services that Signet provided to customers
within the greater Corpus Christi port area.
8. Oliver Day 2 Tr., 310:24–311:9 (Doc. 449).
9. Master Charter Agreement, P.Ex.4 (Doc. 409-2, 1).
10. Id. at 11 (Section 6(a)).
11. Signet 2016 Ingleside Tariff, S.Ex.1 (Doc. 414).
36a
Appendix B
Tug companies in United States ports commonly
use tariffs, which establish the terms of service, such as
the applicable rate and indemnity obligations, so that all
HQWLWLHVUHFHLYHWXJVHUYLFHVZLWKLQDVSHFLÀFSRUWRQHTXDO
terms. During the relevant period, Signet’s competitors
within the Greater Port of Corpus Christi maintained
tariffs with set rates, terms, and conditions. Signet
delivered its Tariff to customers every January and after
VLJQLÀFDQWPRGLÀFDWLRQV
The parties did not provide evidence as to whether or
when Signet delivered the Tariff to Paragon before August
2017. At the same time, Paragon does not dispute that it
could have accessed the Tariff, as Signet had published it.
C.
The DPDS1 in Port Arthur, Texas
In 2015, Paragon cold stacked the DPDS1 at the Gulf
Copper berth in Port Arthur, Texas. The vessel had no
permanent crew onboard, but a mooring crew and Paragon
employees regularly performed inspections. The DPDS1
DOZD\VUHPDLQHGDÁRDWDQGPDLQWDLQHGLWVQDYLJDWLRQDO
aids, including battery-operated lights. Paragon also
installed a RigStat GPS system to track small movements
by the rig and to detect any leakage on the vessel through
level sensors on the bilges. At least once a week, Koenig
would check on the DPDS1 to do “whatever needed to be
done”.12
In early 2017, however, the dock owners in Port Arthur
decided to convert the dock’s use. This decision forced
Paragon to relocate the DPDS1.
12. Koenig Day 1 Tr., 162–63 (Doc. 448).
37a
Appendix B
Koenig oversaw the site-selection process for the new
location, and he ultimately chose to dock the DPDS1 at
Port Aransas. He considered several potential sites along
the Gulf Coast, factoring in water and land access points,
potential hazards beneath the water’s surface, the quality
of the dock bollards, and the potential effect that adjacent
VKLS WUDIÀF FRXOG KDYH RQ GHYLVLQJ D VXLWDEOH PRRULQJ
arrangement. He considered each site’s proneness to
hurricanes, weighing the potential berth’s location and
possible hurricane landfalls. This analysis included
reviewing studies of the historical tracks of hurricanes
approaching the Texas coastline. Koenig did not detail
WKHVSHFLÀFKLVWRULFDOLQIRUPDWLRQWKDWKHUHYLHZHGEXW
6LJQHW·V ZHDWKHU H[SHUW -RVHSK 6SDLQ WHVWLÀHG WKDW
between 1951 and 2020, 23 hurricanes passed or made
landfall within 50 nautical miles of Port Aransas. He
explained that in a ten-year period, a 41.1% chance exists
of a major hurricane striking the Texas coast, and that in
his opinion, “in any given year,” a vessel owner along this
coastline “[has] to be prepared for a major hurricane.”13
Paragon maintained a general written hurricane
plan, but prepared such plans for individual vessels only
if local laws required it. In Port Aransas, no laws or local
authorities imposed such a requirement for a docked
vessel.14 Still, Paragon understood that when tropical
weather activity posed a threat to a docked vessel,
13. Spain Day 5 Tr., 90:18–20 (Doc. 452).
14. In contrast, when Paragon docked a drillship in Puerto
Rico, local laws required a written hurricane plan for the vessel,
so Paragon prepared one. Koenig Day 2 Tr., 36:4–16 (Doc. 449).
38a
Appendix B
Paragon had to choose between leaving the vessel docked
during the storm or towing the vessel out to sea. In
making this decision, Paragon would weigh the potential
ULVNVEHQHÀWVDQGFRVWVRIHDFKRSWLRQ
To track potential threats, Paragon monitored tropical
weather activity by receiving daily weather reports,
principally from WeatherOperations (“WeatherOps”),
which reported a storm’s current intensity, conditions,
location, and anticipated landfall. In addition, Paragon
PRQLWRUHG WKH JHQHUDO DQG VSHFLÀF KXUULFDQH ZHDWKHU
reports from the National Hurricane Center (“NHC”).
Although Koenig testified about the analysis he
undertook during the site-selection process, no Paragon
UHSUHVHQWDWLYHWHVWLÀHGDERXWZKDWWKHFRPSDQ\OHDUQHG
from that assessment. For example, Schenkel could not
UHFDOODQ\VSHFLÀFUHSRUWVWKDW.RHQLJ RUDQ\RQHHOVHDW
Paragon) generated from the analysis.15
Ultimately, Paragon decided to moor the DPDS1 at the
Gulf Copper dock in Port Aransas. On May 30, Paragon
had the DPDS1 towed to its new berth. Before the tow,
Paragon hired Hugh Gallagher with Dutton’s Navigation,
DQ RXWVLGH PDULQH VXUYH\ ÀUP WR LQVSHFW WKH '3'6
*DOODJKHUFHUWLÀHGWKDWWKHGULOOVKLSZDVLQJRRGFRQGLWLRQ
for the tow.16
15. Schenkel Dep. (Vol. I), 168:14–25, 172:22, 173:1–9, P.Ex.45
(Doc. 446-1, 44–45).
16. Gallager Dep., 81:1-8, P.Ex.50 (Doc. 446-6, 22).
39a
Appendix B
D.
Port Aransas, May–July 2017
For the move to Port Aransas, Paragon required the
services of tug boats to tow the DPDS1 from Port Arthur
to Harbor Island, near the port of Corpus Christi. Paragon
negotiated with Signet under the MCA for the services
of its tugs. The parties agreed on Part I of the BIMCO,
but never executed the document for these services.
Paragon ultimately chose another tow service provider,
which towed the DPDS1 to Harbor Island. From that
point, Paragon hired four Signet tugs to assist the DPDS1
to the Gulf Copper dock. For these services, the parties
never discussed the MCA, and Signet invoiced Paragon
in accordance with the Tariff.
On May 30, the DPDS1 arrived at her new berth. The
vessel lay bow in to the slip, with the dock to her port, and
with the Noble semisubmersible oil rigs moored across
the slip to the DPDS1’s starboard.
Schenkel, Koenig, and Petten designed the mooring
system for the drillship at this location. To evaluate the
strength of the system, Paragon hired the consulting
company Genesis Engineering. The first evaluation
occurred in late May, before the DPDS1 reached the Gulf
Copper dock. Paragon provided Genesis with the line
types, which included 10 three-inch Dyneema ropes and
10 three-inch polyester ropes. In general, different lines
exhibit varying breaking strengths and elasticity. The
Dyneema lines represented class two ropes, possessing
higher breaking strength and lower elasticity. Class one
40a
Appendix B
ropes, such as polyester lines, exhibit higher elasticity, but
possess lower breaking strength. In addition, the tension
on the ropes, and the evenness of the tension across all
the lines, can impact the overall strength of a mooring
system. For its initial report, Genesis applied assumed
WHQVLRQ PHWULFV $OWKRXJK 3DUDJRQ UHFHLYHG WKH ÀUVW
Genesis report, it is apparent that Paragon never utilized
the mooring system depicted in that analysis.
Shortly after docking the DPDS1 at the Gulf Copper
dock, an issue arose regarding the mooring system. On
DWOHDVWÀYHRFFDVLRQVEHWZHHQ0D\DQG-XQHODUJH
tanker vessels passing near the docked DPDS1 caused
“surge incidents”, in which a tanker vessels’ passage
caused the water level to rise and fall rapidly. Several
mooring lines holding the DPDS1 in place parted, and
metal mooring components called double bits or double
bollards broke away from their welded bases on the
vessel’s deck. The DPDS1 never broke away from the dock,
but on numerous occasions, Paragon hired Signet tugs to
come alongside the vessel to ensure that it remained in
place.
In response to the surge incidents, Paragon took steps
to strengthen the mooring system, including installing
new bollards and upgrading at least some of the mooring
ropes from polypropylene to higher-quality Dyneema
lines. Paragon also replaced all the bits on the drillship’s
port side, regardless of whether they had broken during
the surge incidents. Additionally, Paragon installed chains,
which were “heavy-duty steel wire/chain combinations”
41a
Appendix B
that absorbed the energy of the surges.17 Koenig explained
that Paragon used “two different class[es] of rope” to
create “a more balanced system”.18 He estimated that the
overall improvements and the analysis cost approximately
$500,000.
After Paragon completed the improvements, Petten
conferred with Genesis to re-evaluate the mooring system.
Paragon again informed Genesis of the line types, which
consisted of thirteen lines, including six three-inch
Dyneema lines, two wire-chain-wire combinations, and
ÀYHWKUHHLQFKSRO\HVWHUOLQHV,QLWV-XQHUHSRUW*HQHVLV
concluded that the mooring system could withstand
sustained winds of approximately 75 miles per hour
without exceeding industry recommended stress levels on
each mooring line.19 Standard mooring-marine guidelines
recommend that the lines possess a minimum factor of
safety (“FOS”) of 2.0, which means that the tension on the
rope is half of its minimum breaking strength. 20 As the
17. Koenig Day 2 Tr., 203 (Doc. 449); Yester Day 2 Tr., 57
(Doc. 449); Schenkel Dep. (Vol. I), 71:21–72:23, (Vol. II),
229:3–230:11, P.Ex.45 (Doc. 446-1, 20, 142).
18. Koenig Day 1 Tr., 203:19–205:25 (Doc. 448) (“[I]f you’re
mooring up to stay for a while, like we were, that’s important to
have a balanced system and one that’s analyzed by an engineering
company.”).
19. Genesis Engineering Report, June 26, 2017, S.Ex.160
(Doc. 423-13). Various sources utilize both knots per hour and
miles per hour when reporting wind speeds. For consistency, the
Court converts all wind speed measurements to miles per hour.
20. Greiner Day 4 Tr., 279:7-8 (Doc. 451).
42a
Appendix B
factor of safety decreases, the probability that the mooring
line will fail increases. The Genesis reports consistently
reported conclusions based on a 2.0 FOS.
The improvements resolved the issue of the surge
incidents.
In July, Genesis conducted another analysis, again
relying upon the line types that Paragon provided. In this
evaluation, Genesis assumed a mooring system composed
of eleven lines, including four three-inch Dyneema lines,
ÀYHWKUHHLQFKSRO\HVWHUOLQHVDQGWZRZLUHFKDLQZLUH
combinations. 21 Not only did the total number of lines
decrease by two as compared to the June report, but the
placement of the lines between the available anchor points
shifted. The record does not make clear what prompted
Paragon to request this analysis, or whether the changes
UHÁHFWHGDFWXDOPRGLÀFDWLRQVWRWKHPRRULQJV\VWHP,Q
this July report, Genesis concluded that the depicted
mooring system could withstand sustained wind speeds of
approximately 77 to 80 miles per hour, which represents
a low-level Category 1 hurricane. 22
In early August, based on the Genesis reports,
Paragon representatives communicated regarding the
conditions that would require the DPDS1’s evacuation.
21. Genesis Engineering Report, July 3, 2017, S.Ex.161 (Doc.
423-14).
22. See 6DIÀU6LPSVRQ +XUULFDQH :LQG 6FDOH GHÀQLQJ D
Category 1 hurricane as possessing sustained winds between 74
and 95 miles per hour).
43a
Appendix B
Petten concluded that the mooring analysis “show[ed]
the facility could stay on location up to a Category
1 hurricane”. 23 Koenig reached the same conclusion,
and he intended to order the DPDS1’s evacuation if
a predicted storm threatened to exceed the mooring
system’s capacity.24 Schenkel recommended a conservative
approach: “[T]o be sure we leave port in time, the word
‘hurricane’ needs to be broadly interpreted as a severe
storm.” 25 He continued: “Due to the uncertainty in the
predictions the DPDS1 should depart (10 days prior land
fall) when a storm is approaching with a predicted wind
speed of approx. [63+ miles per hour] which is equivalent
to a BF 10 storm (range [55 to 63 miles per hour]).” 26
Shortly after this communication, he followed up to clarify
that the vessel would “leave port 3 days prior to landfall”
and would spend 10 days offshore. 27
Consistent w ith these email communications,
6FKHQNHOWHVWLÀHGWKDW3DUDJRQDOZD\VSODQQHGWRWRZWKH
DPDS1 into the Gulf of Mexico in advance of a storm. 28 As
a result, he was not concerned that the mooring system
was incapable of withstanding more severe hurricane
23. Petten Day 2 Tr., 175:23–25 (Doc. 449).
24. Koenig Day 1 Tr., 147–49, 209 (Doc. 448).
25. Schenkel Email, S.Ex.271 (Doc. 429-10, 1–2).
21).
26. Id.; Schenkel Dep. (Vol. I), 77:9–21, P.Ex.45 (Doc. 446-1,
27. Schenkel Email, S.Ex.271 (Doc. 429-10, 1).
28. Schenkel Dep. (Vol. I), 193:1–21, P.Ex.45 (Doc. 446-1, 50).
44a
Appendix B
conditions. In other words, Paragon had designed its
system to withstand no more than the winds of a Category
1 hurricane, intending to evacuate the DPDS1 from the
port in the event of a stronger storm.
At trial, Koenig and Yester described the competing
risks involved in the decision to keep a drillship such as
the DPDS1 in port or to tow it out to sea when a storm
approached. Koenig emphasized the safety risks posed
by towing a cold-stacked vessel like the DPDS1 out to
sea. The tugboat crew would face inherent threats. For
example, the fact that the drillship would have no crew
meant that if a tow line became unattached while at sea,
no one would be onboard to reattach the line. In addition, if
the vessel collided with an offshore oil platform or another
vessel in the Gulf of Mexico, the tugboat would need to
cut loose from the vessel or potentially be damaged. In
addition, the drillship itself could sink and hit a pipeline,
causing environmental damage.
Yester explained that in general, he would “wait as
long [as he could] to make the decision” of whether to
remain in port or tow the DPDS1 out to sea, because of the
unpredictable nature of tropical weather events, combined
with the slow speed at which a vessel must be towed. 29 As
he explained, taking a drillship to sea could inadvertently
place the vessel directly in the storm’s path. 30 In addition,
towing a vessel out to sea entailed a cost ranging from
$300,000 to $900,000.
29. Yester Day 1 Tr., 65:1–2 (Doc. 448).
30. Id. at 64:13–66:19.
45a
Appendix B
E. Hurricane Harvey
1.
Thursday and Friday, August 17–18, 2017
On Thursday, August 17, the NHC issued an advisory
for Potential Tropical Cyclone Nine, reporting that the
storm had strengthened into Tropical Storm Harvey
and lay east of the Caribbean Sea. 31 The WeatherOps
report for the same day forecasted that the storm would
travel in a westward direction and reach Honduras and
Guatemala within three and four days, respectively.
WeatherOps noted that “some model guidance does
continue to strengthen the system to a low-end Category
1 Hurricane just before it reaches Belize.”32 At the same
WLPHWKHUHSRUWFODULÀHGWKDWEHFDXVHRI´ORZFRQÀGHQFH
in the intensity forecast beyond 36 hours”, WeatherOps
did not forecast that Tropical Storm Harvey would become
a hurricane. 33
On Friday, August 18, the WeatherOps report
maintained Tropical Storm Harvey on a westwardly
track, with little to no change in trajectory as compared
to the previous day’s forecast. 34 The report continued to
31. NHC Potential Tropical Cyclone Nine Forecast/Advisory
1, P.Ex.13 (Doc. 410-14, 7).
32. WeatherOps Active Storm Advisory # 9, P.Ex.13 (Doc.
410-14, 13).
33. Id.
34. WeatherOps Active Storm Advisory # 10, P.Ex.13 (Doc.
410-14,21).
46a
Appendix B
predict that the storm would not reach hurricane strength.
The NHC advisory reported that “slow strengthening is
possible during the next 48 hours.” 35
Both Paragon and Signet received these reports.
Signet personnel believed that Tropical Storm Harvey’s
“current predictions should have her clear of all Signet
Vessels” in the Port Aransas area. 36 Paragon employees
noted the storm, but when they “left work Friday, it was,
well, let’s see Monday what’s going on. Because it was on
the other side of Mexico, . . . and we didn’t know what was
going to happen.” 37
2.
Saturday and Sunday, August 19–20
At 4:00 p.m. on Saturday, August 19, 38 the NHC
advised that Tropical Storm Harvey had weakened to
a tropical depression. 39 WeatherOps predicted that the
storm would make landfall over the Yucatan Peninsula
and was unlikely to reach the Texas coast. 40 By late
35. NHC Tropical Storm Harvey Advisory 3A, P.Ex.13 (Doc.
410-14, 23).
36. Signet E-mail, P.Ex.13 (Doc. 410-14, 47).
37. Yester Day 1 Tr., 69:23–70:3 (Doc. 448).
38. Various exhibits utilize different time zones. For
convenience, the Court converts all time references to Central
Daylight Time.
39. NHC Tropical Depression Harvey Advisory # 10, P.Ex.13
(Doc. 410-14, 66).
40. WeatherOps Atlantic Tropical Daily Planner, P.Ex.13
(Doc. 410-14, 64).
47a
Appendix B
Saturday evening, the NHC advised that the “Remnants
of Harvey” had degenerated into a “Tropical Wave,” and
that the NHC would not release another public advisory on
the system “unless regeneration occurs”.41 Similarly, the
WeatherOps report indicated that “Harvey has weakened
below tropical depression level and is no longer considered
a threat.”42
During the early hours of Sunday, August 20,
WeatherOps continued to monitor the situation, noting
that while the system had “weakened into an open wave”,
the “remnants may reintensify toward the end of the
week over the Bay of Campeche”. 43 By mid-morning,
WeatherOps reported that the remnants had “become
better organized” and that a “moderate potential
[existed] for restrengthening into a minimal depression or
tropical storm prior to reaching northern Honduras and
the Yucatan peninsula.”44 The accompanying graphical
“Forecast Track” depicted a path that would have the
storm make landfall as a tropical storm near Tampico,
Mexico, with the cone of uncertainty possibly reaching into
41. NHC Remnants of Harvey Advisory # 11, P.Ex.13 (Doc.
410-14, 71).
42. WeatherOps Active Storm Advisory – Tropical Depression
Harvey 18, P.Ex.13 (Doc. 410-14, 72).
43. WeatherOps Atlantic Tropical Daily Planner, P.Ex.13
(Doc. 410-14, 75).
44. :HDWKHU2SV6LJQLÀFDQW7URSLFDO'LVWXUEDQFH$GYLVRU\
– Harvey 9, P.Ex.13 (Doc. 410-14, 76).
48a
Appendix B
deep south Texas, but not as far north as Port Aransas.45
Yester testified that he understood that the cone of
uncertainty meant that the storm’s track could fall within
any portion of the cone.46 Six hours later, the next report
communicated similar information.47
That Sunday evening, WeatherOps reported that
the storm remained likely to develop, at most, into a
tropical storm.48 )RU WKH ÀUVW WLPH KRZHYHU WKH ORQJ
range (i.e., 120-hour) cone of uncertainty included the
Port Aransas area.49 The new projection meant that a
tropical storm could make landfall near the DPDS1 by the
HQGRIWKHZHHN.RHQLJWHVWLÀHGWKDWDWVRPHSRLQWRYHU
the weekend, the storm “got my attention and I started
letting [Schenkel] and [Yester] know that we needed to
watch [] the weather [] and consider moving the DPDS1
out of port.”50
The storm also captured the attention of at least
one other vessel owner, Noble, which had two drill ships
45. WeatherOps Tropical Disturbance Harvey Advisory # 19,
P.Ex.13 (Doc. 410-14, 77).
46. Yester Day 1 Tr., 139:5–21 (Doc. 448).
47. WeatherOps Tropical Disturbance Harvey Advisory # 20,
P.Ex.13 (Doc. 410-14, 80).
48. WeatherOps Tropical Disturbance Harvey Advisory # 21,
P.Ex.13 (Doc. 410-14, 83).
49. Id.
50. Koenig Day 1 Tr., 227:1–15 (Doc. 448); see also Yester
Day 1 Tr., 80–81 (Doc. 448).
49a
Appendix B
docked further south in Port Isabel, Texas. On Sunday,
the WeatherOps projected track for the weather system
placed Port Isabel slightly outside the cone of uncertainty’s
northern boundary, with the storm’s landfall projected
for Friday, August 25, south of Tampico, Mexico, with
maximum sustained winds of 70 miles per hour. 51 Based
on its severe weather plan, Noble immediately began
evacuating its drill ships. 52
3.
Monday, August 21
By 10:00 a.m. on Monday morning, WeatherOps had
UHOHDVHG WZR PRUH UHSRUWV ZKLFK SURYHG VLJQLÀFDQW
The storm remained a tropical disturbance and was
“generally not well- organized”.53 In the 4:00 a.m. report,
WeatherOps predicted that on August 25, Harvey would
reach maximum wind speeds of 65 miles per hour. 54 Six
hours later, WeatherOps reduced this forecast, indicating
that maximum winds on August 25 would reach only 60
miles per hour. 55 In both reports, the forecasted track
51. WeatherOps Tropical Disturbance Harvey Advisory # 20,
P.Ex.13 (Doc.410–14, 80).
52. Report for the SIGNET ARCTURUS, S.Ex.29 (Doc.
416-3, 5–9).
53. WeatherOps Tropical Disturbance Harvey Advisory
# 23, P.Ex.13 (Doc. 410-14, 89).
54. WeatherOps Tropical Disturbance Harvey Advisory
# 22, P.Ex.13 (Doc. 410-14, 86).
55. WeatherOps Tropical Disturbance Harvey Advisory
# 23, P.Ex.13 (Doc. 410-14, 89).
50a
Appendix B
KDGVKLIWHGVLJQLÀFDQWO\QRUWKZDUGSODFLQJ3RUW$UDQVDV
well within the long-term cone of uncertainty. At the
same time, the predicted landfall remained in northern
Mexico. 56
At 11:05 a.m. that morning, Schenkel communicated
to Koenig that while concern existed, they had time before
PDNLQJDGHÀQLWLYHGHFLVLRQUHJDUGLQJWKH'3'6
The storm Harvey is moving in and get[ting]
closer to the DPDS1 (within 96 hours) than
anticipated and will be at [60 miles per hour]
within 96 hours (reduced over the last 6 hours).
The max allowable wind speed for the DPDS1
[to tow out to sea] was set at [72 miles per hour]
and notice period for readiness 72 hours. We
have to make a decision within the next 24 hours
about the next step since the speed is close to
the acceptable speed of [63 miles per hour] to
start preparing departure. It seems we don’t
have to do anything yet. 57
A few minutes later, Yester forwarded the WeatherOps
reports to Schenkel, opining that he did not “see where
we are in any danger unless something causes a drastic
56. :HDWKHU2SV6LJQLÀFDQW7URSLFDO'LVWXUEDQFH$GYLVRU\²
Harvey # 24, S.Ex.74 (Doc. 419-8, 41–46) (“The GFS and ECMWF
are in rather good agreement, bringing Harvey as a tropical storm
to a position just south of Brownsville by Friday afternoon.”).
57. Schenkel Email, S.Ex.271 (Doc. 429-10, 4).
51a
Appendix B
turn to the North.”58 Koenig disagreed, testifying that
based on these reports, he recommended that morning
that Paragon evacuate the DPDS1. 59 Paragon chose to
ZDLWEHIRUHPDNLQJDGHÀQLWLYHGHFLVLRQ
At the same time, Yester “decided to start whatever
process it took to get port clearance and tugboats and
everything ready to go” to prepare for the possibility
that the storm would take a turn to the North.60 He
recognized that he had to start the process as soon as
possible because it required two to three days to obtain
the necessary approvals and secure the required logistical
support. Late that morning, he called Patrick McTigue
of Signet to reserve tugs to tow the DPDS1 into the Gulf
of Mexico in the event that Paragon decided to evacuate
WKHYHVVHO.RHQLJWHVWLÀHGWKDW6LJQHWZDVJRLQJWREH
the only vendor to assist the DPDS1 with an evacuation,
meaning that Signet would provide both the harbor tow
and offshore tow services. McTigue provided a “Scope
of Work Estimated Cost Analysis” shortly after Koenig
called him.617KHVDPHGD\.RHQLJEHJDQWRÀOORXWWKH
applications for the United States Coast Guard and port
authorities and contacted Dutton’s Navigation to have a
VXUYH\RUYLVLWWKHYHVVHOWRREWDLQDFHUWLÀFDWLRQDSSURYLQJ
the towing gear and towing arrangement. He took these
58. Yester Email, P.Ex.17-A-Part 1 (Doc. 410-31, 252).
59. Koenig Day 2 Tr., 41:11–13 (Doc. 449).
60. Yester Day 1 Tr., 71:7–9 (Doc. 448).
61. Signet’s “Scope of Work Estimated Cost Analysis”,
P.Ex.17-A-Part 1 (Doc. 410-31, 1–2).
52a
Appendix B
steps “while we were seeing the storm progress and people
above [him]” made the decisions regarding the vessel.62
That afternoon, at 4:00 p.m., WeatherOps released its
next report, forecasting that Harvey would make landfall
“just south of Brownsville” on Friday, August 25, with
maximum winds of 70 miles per hour.63 Corpus Christi
lay well within the cone of uncertainty. The projected
track had shifted to the north, and WeatherOps explained
that certain factors “may result in additional northward
adjustments.”64
Six hours later, in its final report for Monday,
WeatherOps indicated “[n]o significant changes . . .
regarding the track or intensity forecast”.65 The report
forecasted that Harvey would “make landfall over
northern Mexico or the Lower Texas Coast as a strong
tropical storm or hurricane between 72 and 96 hours.”66
The maximum sustained wind speeds for Friday, August
25 were still predicted to be 70 miles per hour. Paragon
representatives do not appear to have commented upon
either of these latest revised forecasts.
62. Koenig Day 1 Tr., 230:20–23 (Doc. 448).
63. WeatherOps Tropical Disturbance Harvey Advisory
# 24, P.Ex.13 (Doc. 410-14, 93).
64. Id.
65. WeatherOps Tropical Disturbance Harvey Advisory
# 25, P.Ex.13 (Doc. 410-14, 96).
66. Id.
53a
Appendix B
At least one company, Rowan Companies, decided
by no later than Monday to evacuate the Port Aransas
port. Rowan contacted Captain Jay Rivera, the presiding
RIÀFHURIWKH$UDQVDV&RUSXV&KULVWL3LORWV$VVRFLDWLRQ
to express the company’s intent to evacuate.67
4.
Tuesday, August 22
The early Tuesday morning report from WeatherOps
made significant changes to the storm’s forecasted
track and strength. The storm remained a “Tropical
Disturbance”, but was now expected to strengthen into
a Category 1 hurricane with sustained wind speeds of 75
miles per hour by Friday, August 25.68 The most likely
path had again shifted northward, projecting landfall just
south of Corpus Christi as a tropical storm. The system
also had slowed, so that landfall was predicted for early
morning on Saturday, August 26.
At around 6:00 a.m. that morning, Yester forwarded
the report to Koenig and Schenkel, asking, “What Now?”69
Schenkel responded at 6:51 a.m., noting that the storm’s
intensity had increased, but opining that “the storm . . .
might move up North East even more and clear the DPDS1
on the clean side within 84 hours (might know within 6 to
67. Rivera Day 3 Tr., 256:19–257:16 (Doc. 450) (testifying that
the initial call occurred on either Sunday or Monday).
68. WeatherOps Tropical Disturbance Harvey Advisory
# 26, P.Ex.13 (Doc. 410-14, 99).
69. Yester Email, P.Ex.17-A-Part 1 (Doc. 410-31, 253).
54a
Appendix B
12 hours).” 70 He asked about certain preparations: “Mike
[Koenig] is talking to Signet for Tug and port Captain
about the preparations (yes/no?).”71 A few minutes later,
Koenig responded, commenting that “[t]he forecaster is
FRQÀGHQWWKHWUDFNZLOOJRPRUHWRWKHQRUWK7KLVSXWVWKH
DPDS1 on the clean side.”72 When referencing “clean side”,
Yester meant that in Port Aransas, the DPDS1 would be
on the storm’s west wall, which would deliver less intense
winds and surges.73 In essence, Yester read the forecast as
predicting that the storm would make landfall well north
of Port Aransas, with the center of the storm passing to
the east. As moving the DPDS1 out to sea meant traveling
eastward—i.e., into the stronger side of the storm—“we
ZRXOGKDYHDELWRIDKDUGWLPHÀQGLQJDQ\ZKHUHWRJRµKH
WHVWLÀHG74 In addition, given that the storm’s winds blew
in a counterclockwise rotation, Yester’s interpretation of
the WeatherOps report meant that “the winds would be
pushing the vessel against our bulkhead and not pulling
it away from the bulkhead, which would be good news for
us if that’s what happened.” 75 Yester responded to both
of these emails separately. To Schenkel, he recommended
that “[w]e should start some preparations but hold off
for another 12–24 hours, unless [Koenig] has another
70. Schenkel Email, P.Ex.17-A-Part 1 (Doc. 410-31, 254).
71. Id.
72. Koenig Email, P.Ex.17-A-Part 1 (Doc. 410-31, 253).
73. Yester Day 1 Tr., 83:15–20 (Doc. 448).
74. Id. at 83:25–84:1.
75. Id. at 84:3–7.
55a
Appendix B
view.” 76 Simultaneously, in a message to both Koenig and
Schenkel, he merely noted, “OK–we’ll see what happens.”77
At 10:00 a.m., WeatherOps released Advisory # 27,
again shifting the forecasted path slightly northward.
The “consensus forecast” was “for a strong tropical storm
or category one hurricane to reach the central Texas
coast Friday.” 78 Three hours later, WeatherOps released
Advisory # 27A, which reported that “recently available
forecast guidance continues to indicate significant
LQWHQVLÀFDWLRQRQ7KXUVGD\DQG)ULGD\µ 79
At 1:00 p.m. on Tuesday, the Coast Guard Captain
for Port Aransas set “Port Condition WHISKEY” for
the ports of Brownsville, Corpus Christi, and Victoria.
This alert level meant that the Coast Guard anticipated
sustained gale force winds (39 to 54 miles per hour) at
the port from a tropical or hurricane force storm within
72 hours. Signet advised its captains that “several of our
customers are making plans to activate their Hurricane
Response Plans within the next 24 to 36 hours” and
directed captains to “ensure all crew members are made
aware of these potential operations and all vessels are
readied should the orders begin to come in.”80
76. Yester Email, P.Ex.17-A-Part 1 (Doc. 410-31, 253–54).
77. Id. at 255.
78. WeatherOps Tropical Disturbance Harvey Advisory # 27,
P.Ex.13 (Doc. 410-14, 105).
79. WeatherOps Tropical Disturbance Harvey Advisory
# 27A, P.Ex.13 (Doc. 410-14, 108).
80. Gibson Email, P.Ex.23 (Doc. 439-43).
56a
Appendix B
At 4:00 p.m., WeatherOps projected that the storm
would make landfall in 72 hours (i.e., Friday afternoon)
as a Category 1 hurricane with sustained wind speeds
of 80 miles per hour and with the center of the storm
striking just north of the Corpus Christi area. 81 Shortly
after this report issued, a Signet employee reported that
´6HFWRU&RUSXV&KULVWLKDVEHHQQRWLÀHGWKDWWKH\DUHLQ
&RQGLWLRQ;5D\ KRXUV DQGYHVVHOWUDIÀFLVVWDUWLQJ
to leave the area.”82
5.
Wednesday, August 23
On Wednesday at 4:00 a.m., WeatherOps reported “[a]
slight shift northward in the forecast track . . . where the
center makes landfall over the Middle Texas Coast. The
intensity forecast still has Harvey becoming a tropical
storm or possibly a hurricane over the western Gulf prior
to landfall.”83
About four hours later, Yester formally notified
Paragon employees of the decision to evacuate the DPDS1:
“Due to the impending arrival of Tropical Storm ‘Harvey’
81. WeatherOps Tropical Disturbance Harvey Advisory # 28,
P.Ex.13 (Doc. 410-14, 111).
82. Johnson Email, P.Ex.13 (Doc. 410-14, 113). Hurricane
Port Condition X-RAY means that the weather advisories indicate
sustained gale force winds (39 to 54 miles per hour) from a tropical
or hurricane force storm are predicted to impact the port within
48 hours.
83. WeatherOps Tropical Disturbance Harvey Advisory # 30,
P.Ex.13 (Doc. 410-14, 124).
57a
Appendix B
we are compelled to move the DPDS1 out of its mooring
to open water.” 84 He reported that Paragon intended
to “move the rig this evening or tomorrow morning,
depending upon timing of port clearance and harbor tugs
to assist with the movement.”85 Schenkel responded almost
immediately, asking Paragon employees to “inform DNV
about the planned move”. 86 He echoed Yester’s message
that the vessel’s departure would occur “this afternoon or
early in the morning”, with Signet tugs assisting with the
dead tow. 87 Over the next few hours, Paragon’s employee,
5D\ &DUUHUD QRWLÀHG YDULRXV DJHQFLHV DQG FRPSDQLHV
about Paragon’s decision, although he noted his “sense
. . . that this storm will not be too bad.”88
By late morning, Paragon learned that the DPDS1’s
GHSDUWXUH ZRXOG QRW RFFXU WKDW GD\ GXH WR VKLS WUDIÀF
EXWZDV´SODQQHGIRUWRPRUURZDWÀUVWGD\OLJKWµ89 A few
hours later, the anticipated departure time was delayed
again, to Thursday afternoon.
At some point on Wednesday, in-house counsel for
Paragon and Signet began discussions regarding the
contract that would govern Signet’s provision of tug
84. Yester Email, P.Ex.17-A-Part 2 (Doc. 410-32, 2).
85. Id.
86. Schenkel Email, P.Ex.17-A-Part 2 (Doc. 410-32, 1).
87. Id.
88. UT Email, P.Ex.28-D (Doc. 441-31, 1).
89. Koenig Email, P.Ex.17-A-Part 1 (Doc. 410–31, 3).
58a
Appendix B
services for towing the DPDS1 out to sea. Signet’s
counsel (Reid) and Paragon’s counsel (Oliver) exchanged
YDULRXVHPDLOVWKURXJKRXWWKHGD\IRFXVLQJRQÀQDOL]LQJ
the terms of Part I and Part II of the Master Charter
$JUHHPHQW 7KH QHJRWLDWLRQV À[DWHG RQ WKH LQVXUDQFH
DQG LQGHPQLÀFDWLRQ SURYLVLRQV ZLWKLQ 3DUW ,, %\ ODWH
afternoon, Paragon had accepted Signet’s revisions to
3DUW ,, ´H[FHSW IRU WKH PRGLÀFDWLRQV ZH PDGH WR \RXU
proposed insurance revisions.”90 Paragon acknowledged
that the amendments to Part II of the MCA placed
greater exposure on Paragon and would cause it to be
responsible for any damage to a Signet tug in a salvagetype operation or loss to third-party property, and any
costs associated with cleanup. The terms of the insurance
were also amended to require Paragon to name Signet
as an additional insured on its insurance policies.91 By
late afternoon, Signet “agree[d] that the changes to
the insurance addendum are acceptable”.92 Late in the
evening, Paragon requested that Signet prepare Part I
and Part II for signature.
During the afternoon, the situation regarding the
DPDS1’s tow out worsened. Port authorities gave priority
to U.S. Navy vessels “departing en-masse from [Corpus
Christi]”,93 and Tropical Storm Harvey “appear[ed] to be
90. Oliver Email, P.Ex.17-A-Part 2 (Doc. 410-32, 9).
91. 0RGLÀHG 3DUW , Master Charter Agreement, AC.Ex.9,
(Doc. 436-7, 5).
92. Oliver Email, P.Ex.17-A-Part 1 (Doc. 410–31, 272).
93. Snyder Email, P.Ex.17-A-Part 2 (Doc. 410-32, 11).
59a
Appendix B
headed straight to” the area.94 Signet advised Paragon
that it would attempt to tow the DPDS1 out to sea after
the priority vessels departed, “if the port has not been
closed” by that time.95 If the port closed, Signet would
ask Captain Gibson, one of its local tug boat operators,
“to put a tug or two onto DPDS1 to hold her to the dock
at Gulf Copper”, but the ultimate decision would remain
WKH FDSWDLQ·V DV DQRWKHU FRPSDQ\ KDG D ULJKW RI ÀUVW
refusal for his services.96 At 5:12 p.m., Schenkel forwarded
Signet’s communication to Yester, warning him that the
DPDS1 “might not be able to leave the port anymore”.97 He
noted that they had “to work on a plan B which consist[ed]
of keeping the rig at the current berth and using 2 Signet
tugs to stabilize the rig.” 98 Later that evening, Koenig
responded that “[d]epending on the forecast in the
morning it might be best to stay in the berth with two
tugs rather than go outside and possibly be in the middle
of the storm.” 99
6.
Thursday, August 24
At 4:00 a.m. on Thursday morning, the NHC issued
DQRIÀFLDO6WRUP6XUJHDQG+XUULFDQH:DUQLQJIRUWKH
94. Id.
95. Id.
96. Id.
97. Schenkel Email, P.Ex.17-A-Part 2 (Doc. 410-32, 10).
98. Id.
99. Koenig Email, P.Ex.17-A-Part 2 (Doc. 410–32, 10).
60a
Appendix B
Port Aransas area. In this advisory, the NHC forecasted
+DUYH\WRVWUHQJWKHQLQWRDKXUULFDQHIRUWKHÀUVWWLPH100
/HVVWKDQDQKRXUODWHU6LJQHW·VFRXQVHOFRQÀUPHG
that he would “generate the BIMCO agreement for today’s
tow”.101 It is unclear whether Signet actually prepared
WKHÀQDOIRUPRIWKHFRQWUDFWEXWWKHSDUWLHVDJUHHWKDW
neither side signed such a document.
And by early morning, the issue became moot. Around
8:00 a.m., Signet’s Captain Gibson informed Snyder that
he had just been advised that the DPDS1 would not be
allowed to leave the port; the Coast Guard was closing the
Port of Corpus Christi. Captain Gibson agreed “with the
need to have hold tugs at Harbor Island with the [DPDS1]
to keep her alongside at Gulf Copper.”102 Minutes later,
Snyder informed Paragon of the development. And at 9:30
a.m., Paragon communicated to stakeholders that the
DPDS1 “will not be towed out and will remain in port.”103
Shortly after these communications, Snyder e-mailed
his Signet colleagues that the company desired to provide
the new services under the Tariff: “We need to pass
100. NHC Tropical Storm Harvey Advisory # 15, P.Ex.13
(Doc. 410-14, 173); NHC Tropical Storm Harvey Intermediate
Advisory # 15A, P.Ex.13 (Doc. 410-14, 177).
101. Reid Email, P.Ex.17-A-Part 1 (Doc. 410-31, 273).
102. Gibson Email, P.Ex.17-A-Part 2 (Doc. 410-32, 23).
103. Carrera Email, P.Ex.17-A-Part 2 (Doc. 410–32, 13)
(emphasis in original).
61a
Appendix B
onto [Paragon’s representatives] we’ll operate under our
tariff for this.”104 Later that morning, Snyder spoke with
Schenkel to discuss the situation. According to Snyder,
Schenkel requested that Signet provide two z-drive tug
boats to remain with the DPDS1 during the hurricane.105
Snyder agreed, but expressly indicated that the services
would be performed under the Tariff. At trial, Snyder
recounted the exchange they had on the matter:
And [Schenkel] said, Barry, is that the best you
can do, I don’t care to use the tariff, I’d prefer
to use the old contract.
I said, absolutely not, sir, it’s very dangerous
to use that.
He said, all right, is that the best you can do?
I said, yes, Aldert, we’ve been friends a long
time, this is protecting both of us.
He said, all right, get it done.106
6FKHQNHO WHVWLÀHG WKDW KH FRXOG QRW UHFDOO WKH SKRQH
conversation with Snyder, and that it may or may not have
occurred.107
104. Snyder Email, S.Ex.125 (Doc. 421-22, 30).
105. Schenkel Day 5 Tr., 202:3-6 (Doc. 452). A “z-drive” refers
to a propulsion system that can rotate 360 degrees, enabling the
tug boat to direct thrust in any direction. Id. at 140:16–18.
106. Snyder Day 5 Tr., 203:1–10 (Doc. 452).
107. Schenkel Dep. (Vol. I), 57:1–18, P.Ex.45 (Doc. 446-1, 16).
62a
Appendix B
After the phone call, Snyder instructed Signet’s
attorney (Reid) to communicate with Paragon’s counsel
(Oliver) about using the Tariff for the revised assignment.
That afternoon, Reid e-mailed Oliver, advising him
that “[b]ecause we will not be towing, but instead will
be holding the DPDS1 in place, Signet’s work will be
governed by our Ingleside Tariff ”, which he attached to
the message.108 Reid noted his understanding that the
companies’ respective commercial teams had agreed to
this contractual arrangement. In response, Oliver wrote,
“Thanks for the update—much appreciated.”109
By hiring Signet’s services, Paragon believed that
the tug boats pushing the DPDS1 against the mooring
side would “reduce the tension on the mooring lines”. In
addition, if the DPDS1 broke lose, “there would be two
tugboat[s] tied to the ship that could sort of keep it under
some kind of control”, and could help keep the drillship
from alliding with other objects and vessels in the port.110
In addition to hiring the Signet tugs, Paragon also
bolstered the DPDS1’s mooring system. Koenig was at
the dock that morning, and he consulted with the surveyor
he had previously contacted—Hugh Gallagher of Dutton’s
Navigation—whose task changed from certifying the
DPDS1 for a tow out to inspecting the mooring system
108. Reid Email, S.Ex.125 (Doc. 421-22, 32).
109. Oliver Email, S.Ex.125 (Doc. 421-22, 33).
110. Koenig Day 1 Tr., 244-45 (Doc. 448); see also Yester Day
1 Tr., 73-74 (Doc. 448).
63a
Appendix B
for a hold-in-place operation. Koenig and his crew of six to
HLJKWPHQ´XVHGHYHU\WKLQJKHFRXOGÀQGµWRVWUHQJWKHQ
the mooring system.111 They located three additional lines
in a nearby warehouse and added them, using Koenig’s
pick- up truck to tighten the lines.112 As to the condition of
WKHVHQHZURSHV*DOODJKHUWHVWLÀHGWKDWWKH\ORRNHGOLNH
weaker polypropylene lines, were deteriorated, and would
part easily due to their condition.113 Koenig conceded that
WKHPRRULQJOL
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