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Marine & Energy News Alert: The Fifth Circuit Defines "Tow" Under Marine Insurance Policies

March 05, 2018

On February 15, 2018, the United States Court of Appeals for the Fifth Circuit issued a significant opinion in which the Court reversed a district court’s holding that an “assisting” tug was part of the lead tug’s “tow” according to the tort principle known as the “dominant mind” doctrine.

Specifically, three tugs, the M/V MISS DOROTHY, the M/V ANGELA RAE, and the M/V FREEDOM were collectively navigating the Mississippi River with one barge in tow when the MISS DOROTHY allided with a bridge fender system. As a result of the allision, the MISS DOROTHY sank and resulted in a total loss. MISS DOROTHY’s insurer, Continental Insurance Company, subsequently filed suit against the owner of the ANGELA RAE alleging that the ANGELA RAE was negligent and that as the “lead” tug she was responsible for the overall coordination of the tow.

Following the above complaint, the ANGELA RAE’s hull and machinery insurer Atlantic Specialty Insurance Company denied that its policy covered any liability for the MISS DOROTHY. Thereafter, the ANGELA RAE’s P&I Underwriters sued Atlantic Specialty claiming the policy did provide coverage.

The Atlantic Specialty policy provided coverage under four scenarios: (1) the ANGELA RAE collided with something else, (2) the ANGELA RAE stranded her tow, (3) the ANGELA RAE caused her tow to come into collision with anything else, or (4) the ANGELA RAE caused any damage to her tow or to her tow’s freight. On the other hand, the P&I policy was much broader and covered any situation not covered by the Atlantic Specialty policy. The P&I Underwriters alleged that this particular incident fell within the third situation covered under the Atlantic Specialty policy because the ANGELA RAE was the “lead” tug such that the MISS DOROTHY was part of the “tow” and was caused to allide with the fender system. The district court agreed with the P&I Underwriters’ reasoning and granted it a summary judgment. Atlantic Specialty appealed.

On appeal, the Fifth Circuit examined whether the MISS DOROTHY was part of the ANGELA RAE’s “tow” for purposes of the Atlantic Specialty policy. First, the Fifth Circuit looked at the plain meaning of “tow” and determined that the common understanding of “tow” is “some ship or boat that is being provided extra motive power from another ship or boat by being pushed or pulled.” Importantly, the “tow” may have its own power but can only be designated as the “tow” if a ship or boat “receives auxiliary motive power from the tug or towing vessel.”

Based upon this definition of “tow,” the Fifth Circuit concluded that the MISS DOROTHY could not be characterized as the “tow” of the ANGELA RAE because there was no indication that the ANGELA RAE provided the MISS DOROTHY with any motive power or that she was pushing or pulling her in any way.

Additionally, the Fifth Circuit examined the P&I Underwriters’ argument that the court should apply the maritime tort law concept of the “dominant mind” doctrine to define “tow” under the Atlantic Specialty policy. Specifically, the P&I Underwriters alleged that the ANGELA RAE was the dominant mind of the entire flotilla such that the rest of the flotilla, including the MISS DOROTHY, must be viewed as its “tow.” The Fifth Circuit rejected the P&I Underwriters’ argument and noted that using tort duties to define contractual terms of an insurance policy would be “wholly inappropriate.”

First, the dominant mind doctrine is only a presumption and reasoned “it would be absurd to say that the tug is the ‘tow’ of the tow.” So, “tow” could not be defined by the dominant mind doctrine in every case. Second, the Fifth Circuit noted that the dominant mind doctrine simply helps fact-finder allocate fault, and it was entirely possible for the “assisting” tug to be more negligent with regard to duties of safe navigation.

In sum, the Fifth Circuit ultimately held that “tow” should be defined by its ordinary meaning such that the MISS DOROTHY was not part of the ANGELA RAE’s tow and the Atlantic Specialty policy does not apply. The district’s court holding was reversed and judgment was rendered for Atlantic Specialty.

The case discussed is Continental Insurance, Co. v. L&L Marine Transportation, Inc. Click here to read the entire decision.