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Ergon-St. James, Inc. v. Privocean M/V

United States District Court, E.D. Louisiana

October 17, 2018


         SECTION: "A" (3)



         The following motions are before the Court: Motion for Modification and/or Reconsideration of Court's Findings of Fact and Conclusions of Law (Rec. Doc. 479) filed by Ergon - St. James, Inc., Ergon Refining, Inc., and Magnolia Transport Co. (collectively “Ergon”) and their Underwriters;[1] Motion to Limit Recovery of Ergon and Certain of Its Underwriters (Rec. Doc. 480) filed by Privocean Shipping, Ltd. and Bariba Corp., as owners and managing owners respectively of the M/V PRIVOCEAN.

         Both motions are opposed. The motions, noticed for submission on September 19, 2018, are before the Court on the briefs without oral argument.


         Ergon[2] moves the Court to reconsider its determination that Ergon's recovery should be reduced by $1, 856, 926.00. This is the amount of damages that the Court attributed to Ergon's negligence in pushing the BRAVO completely over MD-4 at the lower end of the Ergon ship dock. Ergon argues that it was inconsistent for the Court to find the PRIVOCEAN liable for the destruction of the lower ship dock and MD-4 while at the same time holding Ergon responsible for the damages to the BRAVO's lower port side hull- damages that the Court found to be caused by the BRAVO being pushed over MD-4.

         For the detailed reasons given in the Court's Findings of Fact and Conclusions of Law (Rec. Doc. 476), it was the tugs acting alone that pushed the BRAVO over MD-4, causing significant damage to the vessel's lower hull. The PRIVOCEAN was clear of the BRAVO when this occurred. Any perceived inconsistency in the findings derives from the Court's conclusion that Privocean should pay for the cost to replace MD-4. As the Court explained in its findings, it was possible that the need to replace MD-4 (as opposed to simply repairing it) was attributable to the BRAVO passing over MD-4, an act that was caused by Ergon's own negligence. On the other hand, it was also possible that MD-4, which clearly sustained some amount of damage even before the BRAVO passed over it, would have required replacement no matter what. The Court resolved the dispute in Ergon's favor by casting Privocean with the cost of replacing that dolphin.[3] The motion for reconsideration is therefore denied except insofar as the Court does agree that the BRAVO repair costs should not be “deducted” from Ergon's judgment against Privocean but rather should form the basis of a separate judgment in favor of Privocean and against Ergon. The final judgment will reflect this point.


         Privocean moves the Court to give recognition to the settlement that it reached with some of Ergon's underwriters (“the Settling Underwriters”) prior to trial. Privocean contends that Ergon and the Underwriters are only entitled to recover 54.5% of the damages found by the Court at trial. Although Privocean has styled its motion as one to “limit” Ergon's recovery, Privocean's motion raises the issue of whether Ergon and its Underwriters (hereafter “the Non-Settling Underwriters”) actually own 100% of the claim that was tried to the Court. The issue further boils down to whether the Settling Underwriters were subrogated to Ergon's rights against Privocean.[4]

         The “subrogated” underwriters split their claim against Privocean into two parts: 1) the claim jointly asserted by Ergon and the Non-Settling Underwriters, and 2) the claim separately asserted by the Settling Underwriters, who undisputedly insured 45.5% of the risk on Ergon's property damage policy. For reasons that remain unknown, the full complement of the underwriters that insured the risk on Ergon's property damage policy declined to pursue their subrogation rights against Privocean together or to be represented by the same counsel.[5]

         As noted above, the actual issue before the Court is whether and to what extent the Settling Underwriters were subrogated to Ergon's rights against Privocean. Ergon and its co-plaintiffs, the Non-Settling Underwriters, deny that the Settling Underwriters were actually subrogated to pursue Ergon's claims against Privocean. Thus, their position is that Privocean settled with a party with no rights in the litigation.

         The Court finds this argument to be a specious one given that the Non-Settling Underwriters have asserted claims in this litigation-claims in which Ergon has joined- solely by virtue of the fact that they claim subrogation in their favor. Ergon and the Non-Settling Underwriters point to nothing to suggest that the Settling Underwriters are positioned differently than the Non-Settling Underwriters for purposes of subrogation. If the Non-Settling Underwriters are entitled to subrogation-an issue that Ergon has judicially admitted-then the Settling Underwriters are also entitled to subrogation. Having failed to point to anything that would suggest that the Settling Underwriters are not similarly situated to the Non-Settling Underwriters' rights, Ergon and the Non-Settling Underwriters might very well be estopped from even arguing that the Settling Underwriters have no subrogation rights in this matter.

         The policy contains a subrogation clause: “In the event of any payment under this policy, Insurers shall be subrogated to the extent of such payment to all the Insured's rights of recovery there from.” (Rec. Doc. 480-6, Exhibit 5) (emphasis added). It further states: “If any amount is recovered, after deducting the costs of such recovery, such amount shall be divided between the interests concerned in the proportion of their respective interests.” (Id.) (emphasis added).

         Ergon has received at least $12, 910, 918.43 dollars from its underwriters.[6] Ergon argues that its underwriters were never subrogated to its rights against Privocean because Ergon was not fully compensated or “made whole” following the Privocean incident. Ergon advises that as of the time of trial its insurers had not paid Ergon in full for all of the insured and uninsured losses. (Rec. Doc. 483-2, Exhibit 2 Ezell decl. ¶¶ 23, 24). Relying on Mississippi law (as explained in Hare v. State of Mississippi, 733 So.2d 277 (Miss. 1999)), which governs the policy, Ergon ...

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