Dillingham Tug & Barge Corp. v. Collier Carbon & Chemical Company

707 F.2d 1086, 1984 AMC 1990 (1983)

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Dillingham Tug & Barge Corp. v. Collier Carbon & Chemical Company

United States Court of Appeals for the Ninth Circuit
707 F.2d 1086, 1984 AMC 1990 (1983)

Facts

Collier Carbon & Chemical Company, a division of Union Oil Company (Union) (defendant) bought an inland barge in Texas for use in Oregon. The barge would only be seaworthy for ocean conditions if it was towed in accordance with certain restrictions, including reduced speed and promptly pumping out any water that the barge took on. Union hired Dillingham Tug & Barge Corp. (Dillingham) (plaintiff) to tow the barge to Oregon and informed Dillingham of the requirements for safely towing the barge. Dillingham essentially ignored these requirements, however, and the barge eventually took on water, floundered, and sank. The towage contract included a number of provisions through which Dillingham sought to avoid liability for any potential loss, including a clause that directly exculpated Dillingham for any negligence and insurance provisions that required a waiver of subrogation against Dillingham and for Union to look only to its insurance company for any loss. Finally, the contract included a provision requiring Dillingham to be paid $125,000 for the towage service, even if the barge was eventually lost. After the barge sank, Dillingham sued Union for payment of the $125,000 towage fee. Union countersued, alleging that Dillingham’s negligence caused the loss. The district court held that the exculpatory clause was unenforceable and that under the same public-policy concerns, Dillingham was not entitled to recover its towage fees. Dillingham appealed.

Rule of Law

Issue

Holding and Reasoning (Kenyon, J.)

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