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KEARNY BARGE CO. v. GLOBAL INS. CO.

September 13, 1996

KEARNY BARGE CO., INC., Plaintiff,
v.
GLOBAL INSURANCE COMPANY, ALBANY INSURANCE COMPANY, AMERICAN HOME ASSURANCE COMPANY, AMERICAN MOTORISTS INSURANCE COMPANY, ATLANTIC MUTUAL INSURANCE COMPANY, COMMERCIAL UNION INSURANCE COMPANY, THE CONTINENTAL INSURANCE COMPANY, FIREMAN'S FUND INSURANCE COMPANY, GENERALI-U.S. BRANCH, GREAT AMERICAN INSURANCE COMPANY, HARTFORD FIRE INSURANCE COMPANY, THE HOME INSURANCE COMPANY, INSURANCE COMPANY OF NORTH AMERICA, NEW YORK MARINE AND GENERAL INSURANCE COMPANY, PHOENIX INSURANCE COMPANY, RELIANCE INSURANCE COMPANY, ROYAL INSURANCE COMPANY OF AMERICA, and ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Defendants. ALBANY INSURANCE COMPANY, AMERICAN HOME ASSURANCE COMPANY, AMERICAN MOTORISTS INSURANCE COMPANY, ATLANTIC MUTUAL INSURANCE COMPANY, COMMERCIAL UNION INSURANCE COMPANY, THE CONTINENTAL INSURANCE COMPANY, FIREMAN'S FUND INSURANCE COMPANY, GENERALI - U.S. BRANCH, GREAT AMERICAN INSURANCE COMPANY, HARTFORD FIRE INSURANCE COMPANY, THE HOME INSURANCE COMPANY, INSURANCE COMPANY OF NORTH AMERICA, NEW YORK MARINE AND GENERAL INSURANCE COMPANY, PHOENIX ASSURANCE OF NEW YORK, RELIANCE INSURANCE COMPANY, ROYAL INSURANCE COMPANY OF AMERICA, ST. PAUL FIRE AND MARINE, as their interests may appear as subscribers to Water Quality Insurance Syndicate Number 7426-04, Third-Party Plaintiffs, v. KUEHNE CHEMICAL COMPANY, Inc., Third-Party Defendant, GLOBAL INSURANCE CO., S.A., Third-Party Plaintiff, v. KUEHNE CHEMICAL COMPANY, Inc., Third-Party Defendant,



The opinion of the court was delivered by: LECHNER

 LECHNER, District Judge

 Kearny Barge Company ("Kearny Barge") instituted this Admiralty action against Defendants Global Insurance Company ("Global"), and against Albany Insurance Company, American Home Assurance Company, American Motorists Insurance Company, Atlantic Mutual Insurance Company, Commercial Union Insurance Company, The Continental Insurance Company, Fireman's Fund Insurance Company, Generali -- U.S. Branch, Great American Insurance Company, Hartford Fire Insurance Company, The Home Insurance Company, Insurance Company of North America, New York Marine Insurance Company, Phoenix Insurance Company, Reliance Insurance Company, Royal Insurance Company of America and St. Paul Fire and Marine Insurance Company, collectively as subscribers or members of the Water Quality Insurance Syndicate ("WQIS"). Kearny Barge seeks to "recover insurance payments for damages and expenses incurred in connection with the capsize and salvage of the barge CYNTHIA M" (the "Casualty"). Complaint, P 1.

 Kearny Barge specifically seeks a judgment against Global "for the payment of the Kuehne Chemical cargo damage claim in the amount of $ 163,328.00 plus interest." Complaint, Ad damnam clause, P (a). In addition, Kearny Barge seeks judgments against Global, in the amount of $ 282,252.86, and WQIS, in the amount of $ 216,755.13, for payment of the liabilities arising from the Casualty apportioned to it by an adjustment prepared by Windward International, Inc. ("Windward"). Id., Ad damnam clause, PP (b)-(c). On 13 September 1995, Kearny Barge filed a motion to amend its complaint to include claims against Global and WQIS for attorney fees pursuant to Rule 4:42-9(a)(6) of the Rules Governing the Courts of the State of New Jersey ("Rule 4:42-9(a)(6)"). Subsequently, by an order filed 13 September 1995, the complaint was amended to include Kearny Barge's claims for attorney fees.

 WQIS has filed a Third-Party Complaint against Kuehne Chemical Co., Inc. ("Kuehne Chemical") alleging the negligent acts of Kuehne Chemical and its employees were responsible for the Casualty. WQIS Third-Party Complaint, P 10. WQIS "demands that [Kuehne Chemical] defend, save the (sic) hold WQIS harmless against Kearny[] [Barge's] claim." Id., Ad damnum clause. WQIS further seeks judgment against Kuehne Chemical for all sums which may be adjudged against WQIS in favor of Kearny Barge, together with all costs, expenses and attorneys fees and all sums expended by WQIS as a result of the Casualty. Id., P (i), (iii).

 Global filed an Answer on 7 June 1995 and an Amended Answer and Third-Party Complaint against Kuehne Chemical on 20 June 1995, alleging the negligent acts of Kuehne Chemical and its employees were responsible for the Casualty and seeking indemnification or, in the alternative, contribution. Global Amended Answer and Third-Party Complaint, PP 13-16. Global's counsel, however, filed a motion on 17 January 1996 requesting they be relieved as counsel for Global in the instant matter (the "Motion to be Relieved"). *fn1" Counsel for Global informed the court Global had ceased paying its bills and had broken off communication. Hourican Aff., PP 4-6. Prior to making the Motion to be Relieved, Counsel for Global, pursuant to the court's instructions, informed Global that they would move to withdraw and that Global's failure to appear at trial may result in a judgment "against Global for [Kearny Barge's] claim of approximately $ 470,000.00 plus costs and attorneys' fees." Id., P 7. The Motion to be Relieved was granted by an order, dated 31 January 1996; Global failed to appear at trial.

 This matter was tried before the bench on 16 January, between 5-8 February and on 1 March 1996. Jurisdiction is based on 28 U.S.C. ยง 1333 and Rule 9(h) of the Federal Rules of Civil Procedure and is uncontested. *fn2"

 I. Findings of Fact4

 A. The Parties

 
1. Kearny Barge is a corporation with its principal place of business in Kearny, New Jersey. Complaint, P 2. Kearny Barge owns and operates "two barges, specifically outfitted to carry liquid chemicals." Goetzel C-1A, P 4. At all times relevant to this action, Kearny Barge owned the Tanker Barge CYNTHIA M (the "CYNTHIA M"). Goetzel C-2A, P 3.
 
2. At all relevant times, Kuehne Chemical was a New Jersey corporation with its principal place of business in Kearny, New Jersey; Kuehne Chemical operated a chemical production facility. Goetzel C-2A, PP 2, 7.
 
3. While not corporately-related, Kearny Barge and Kuehne Chemical are inter-related by virtue of their operations; the two companies, moreover, have the same shareholders and senior officers. Goetzel C-1A, P 3; C-2A, PP 8-11. At all relevant times, Peter Kuehne ("Kuehne") was the president and Roger Goetzel ("Goetzel") was the vice president of Kearny Barge; they also "owned sufficient shares of Kearny Barge to determine its activities." Goetzel C-2A, PP 8-9. Kuehne and Goetzel were also the president and vice president of Kuehne Chemical and owned sufficient shares of Kuehne Chemical to determine its activities as well. Id., PP 10-11.
 
4. At all relevant times, Global was a foreign marine insurance corporation. Second Amended Answer and Third-Party Complaint of Global Insurance, P 2. Global issued Kearny Barge two policies of insurance for the operation of the CYNTHIA M, a "Hull and Machinery" policy and a "Protection and Indemnity" policy. Keller C-6, P 34.
 
5. WQIS "is a pool of 17 major insurance companies comprising most of [the] American marine insurance market. It was formed under the laws of New York ... in 1971[.]" Document 35; Hobbie C-13, P 3. WQIS insures pollution liabilities arising from an insured's legal liability in connection with the ownership or operation of scheduled vessels. Hobbie C-13, P 3. WQIS issued an indemnification policy to Kearny Barge covering Kearny Barge's exposure to pollution liability in connection with its operation of the CYNTHIA M. Document 244.

 B. Background

 
7. Kearny Barge performs most of its work with the CYNTHIA M for Kuehne Chemical. Goetzel C-1A, P 6; Cunha C-3, P 12. Kearny Barge uses the CYNTHIA M to deliver raw materials, such as caustic soda, to Kuehne Chemical's facility in Kearny, New Jersey and to transport finished products to Kuehne Chemical's customers. Goetzel C-1A, P 7; Cunha C-3, P 13.
 
8. When Kearny Barge delivers raw materials, it attaches a hose, which is a permanent element of the CYNTHIA M's equipment, to Kuehne Chemical's on-shore intake manifold and, using the barge's pump, pumps the cargo through the manifold into Kuehne Chemical's pipe system. Goetzel C-1A, P 8; Cunha C-3, P 14.
 
9. When Kuehne Chemical delivers finished product to Kearny Barge, the process reverses, and Kuehne Chemical uses its pump to send chemicals through a discharge manifold, and the barge's hose, into the barge's hold. Goetzel C-1A, P 9; Cunha C-3, P 15.
 
10. By agreement between Kearny Barge and Kuehne Chemical, Kearny Barge is responsible both for its barges and for Kuehne Chemical's cargo until the barges deliver raw material to Kuehne Chemical's intake manifold and once Kuehne Chemical's product leaves the discharge manifold. Goetzel C-1A, PP 7-10, C-2A, P 12; Cunha C-3, PP 14-16. Each company insured its risks on that basis. Goetzel C-1A, P 11, C-2A, P 13.
 
11. At the time of the Casualty, Kearny Barge had one salaried employee, a tankerman, or barge operator, named John Woods ("Woods"). Goetzel C-1A, P 12, C-2A, P 14-17; Cunha C-3, P 17. Woods is licensed as a tankerman by the Coast Guard. Cunha C-3, P 18. Woods performed the tasks necessary to load and unload Kearny Barge's barges, including the CYNTHIA M, and tended to the barges during voyages. Goetzel C-1A, P 13, C-2A, PP 18-20; Cunha C-3, P 19.
 
12. In November 1993, Kearny Barge and Kuehne Chemical determined an additional employee was needed to assist Woods with his job responsibilities. Goetzel 2-A, P 25. Kuehne Chemical provided Kearny Barge with Arthur Henry ("Henry"), a Kuehne Chemical employee, to assist Woods, and to replace him on occasions when he was ill or otherwise unavailable. Goetzel C-1A, P 14, C-2A, PP 25-26; Cunha C-3, P 20. Henry was assigned to work on the CYNTHIA M by Manuel Cunha, Kuehne Chemical's plant superintendent. Henry C-5, P 7; see Cunha C-3, PP 20, 21.
 
13. Henry was paid by Kuehne Chemical for the work he performed for Kearny Barge, however, Kearny Barge reimbursed Kuehne Chemical for Henry's services. Goetzel C-1A, P 17, C-2A, PP 34, 35.
 
14. Henry received training from Woods in his responsibilities in loading and unloading barges for Kearny Barge. Woods C-12, PP 15-17; Henry C-5, PP 11-16. Henry's training was primarily on the job training but included studying "written material"; Henry also passed "written examinations" and received a "certification" to operate the CYNTHIA M. Henry C-5.1, PP 24-25. The training Henry received from Woods qualified him to operate the CYNTHIA M without supervision. Id., P 26; Woods C-12.1, P 36.

 C. The Casualty

 
15. On the night of 14 March 1994 or in the early morning of 15 March 1994, Henry prepared the CYNTHIA M to be towed from Kuehne Chemical's dock in South Kearny to an anchorage at Stapleton, Staten Island, New York. Henry C-5, P 20, C-5.1, P 34.
 
16. Henry remained on board and tended to the CYNTHIA M while it was towed to the anchorage. Henry C-5, P 26.
 
18. The CYNTHIA M was loaded with a cargo of caustic soda under the Henry's supervision. Henry C-5, P 28, C-5.1, P 35. Approximately 310,000 gallons of caustic soda were loaded in CYNTHIA M's interior tanks. Document 5 at 2.
 
19. After the loading operation was completed, Henry secured the CYNTHIA M and made it ready to be towed back to Kuehne Chemical's dock. Henry C-5, P 29. Henry, however, was unable to close two of the CYNTHIA M's cargo valves for the tow back to the dock. Id., PP 21-23. These valves had become similarly "frozen" in the past. Id., P 22. The open valves, however, did not pose a danger because the cargo could not travel from one compartment to another with only these valves open; two additional sets of valves would have to be opened for this to occur. Id., P 25. Henry, moreover, was aware of methods of "unfreezing the valves" if it became necessary. Id., P 23. The tow back to the Kuehne Chemical dock was uneventful. Id., P 31.
 
20. The CYNTHIA M arrived back at the Kuehne Chemical dock at approximately 3:30 a.m. on 15 March 1994; after arrival, Henry, aided by members of the Tugboat's crew secured the CYNTHIA M to the Kuehne Chemical dock. Henry C-5.1, P 36. Henry then opened all of the cargo transfer valves, commonly referred to as butterfly valves (the "Butterfly Valves"), and unsecured the CYNTHIA M's hatch covers to prepare for unloading the barge. Henry C-5, PP 36-39. When closed, the Butterfly Valves compartmentalize the CYNTHIA M's internal tanks. Id., P 38; Cunha C-3, P 27. Henry's opening of the Butterfly Valves permitted the cargo of caustic soda to flow freely from one side of the barge to the other. Henry C-5.1, P 39; Woods C-12.1, P 39. This flow of the cargo may cause the barge to become unstable and, therefore, the Butterfly Valves should have remained closed until the time the cargo was to be off-loaded. Woods C-12.1, P 41.
 
21. It is unclear whether Henry was specifically instructed not to open the Butterfly Valves prior to discharging; Henry testified he was not so instructed, Henry C-5, P 40; Woods testified, however, he had advised Henry not to open the valves in this manner, Woods C-12, P 16. There were no Coast Guard rules or regulations prohibiting the opening of the Butterfly Valves prior to discharging. Document 2, unnumbered p. 9. No one instructed Henry, however, to open the Butterfly Valves in this manner; he apparently did so on his own initiative. See Henry C-5, P 34. It appears, moreover, Henry was aware that opening the Butterfly Valves in this manner allowed the caustic soda to "move from one compartment to another." Id., P 25.
 
22. For safety reasons, Kearny Barge unloads its barges only during daylight hours, Goetzel, C-2A P 36, therefore, at 3:30 a.m., after securing the CYNTHIA M to the Kuehne Chemical dock and opening the Butterfly Valves and hatch covers, Henry left the barge and waited for Woods' arrival. Henry C-5 P 34. Kearny Barge intended to begin unloading the CYNTHIA M at approximately 6:00 a.m. Henry, C-5.1, PP 40-41.
 
23. Between 3:30 a.m. and 6:00 a.m., while tied to the Kuehne Chemical dock, the CYNTHIA M developed a seventy degree list to port. Document 9. The CYNTHIA M did not sink because the water at the dock was too shallow; her port side, however, came to rest "solidly on [the] bottom." Document 10. According to Coast Guard estimates, approximately 106,000 gallons of caustic soda were released as a result of the Casualty. Document 22.
 
25. Upon discovering the CYNTHIA M had capsized, Woods notified the U.S. Coast Guard. Woods C-12, P 21.
 
26. On 15 March 1994, a Coast Guard diving team conducted an underwater survey of the exposed bottom plating of the CYNTHIA M and reported that there was no visible damage to the hull. Document 5 at 2. The Coast Guard's testing of the water surrounding the CYNTHIA M, however, confirmed that caustic soda was leaking from the vessel. Id. The Coast Guard's tests were confirmed by the New Jersey Department of Environmental Protection. Id.
 
27. Kearny Barge quickly contracted with Randive, Inc. ("Randive"), a professional diving company, "to assist with the closure of all tank openings and cargo valves." Document 5 at 2. On 16 March 1996, Randive's divers succeeded in closing all tank openings and cargo valves, stopping the leaking of caustic soda from the CYNTHIA M. Id. at 2-3. From 16 March 1994 until completion of the salvage of the CYNTHIA M on 1 April 1994, there was no further release of caustic soda from the barge except for a minor escape during the refloating operation, too small to require any cleanup. Stoll C-14, PP 5, 27, 29.
 
28. WQIS arranged for its cleanup contractor, S&D Environmental Services, Inc. ("S&D Environmental"), to respond to the Casualty and to address the pollution threat. Stoll C-14, P 6. After arrival on the scene of the Casualty, however, S&D Environmental maintained a standby response because, after Randive's closing of the tank valves and cargo openings, the CYNTHIA M "was secure in its submerged condition, and no pollution was occurring." Id., P 7. S&D Environmental remained on the scene of the Casualty until it was released by the Coast Guard on 19 March 1994. Id., PP 6, 9. As directed by the Coast Guard, WQIS also had S&D Environmental return on 1 April 1994, the day of refloating, to be prepared to address any further pollution incident during the refloating of the vessel. Id., P 26.
 
29. Kuehne Chemical employees, acting on behalf of Kearny Barge, contacted two salvage companies -- Weeks Jamestown Marine Co., Inc. ("Weeks") and Donjon Marine Co., Inc. ("Donjon"). Cunha C-3, PP 41-42; Swift C-9, P 18. On the advice of John Swift ("Swift"), a marine surveyor, acting on the behalf of the "Hull and Machinery" underwriters, both Weeks and Donjon were asked to submit salvage proposals on a "lump sum, no cure, no pay" basis for the raising of the CYNTHIA M. Documents 224, 225, 226 and 228; Swift C-9, P 20; Cunha C-3, P 42.
 
30. On 17 March 1994, Weeks and Donjon submitted salvage proposals on a "lump sum, no cure, no pay" basis. Documents 40, 41. Donjon offered to raise the CYNTHIA M for $ 279,000.00. Document 41. Weeks offered to raise the CYNTHIA M for $ 114,600.00. Document 40. Both proposals, however, were rejected because of various technical questions. Document 5 at 3.
 
31. On 18 March 1994, Weeks and Donjon submitted revised proposals. Document 5 at 3. Weeks now proposed to raise the CYNTHIA B for $ 160,400.00. (the "Weeks Proposal") while Donjon proposed to raise the CYNTHIA M for $ 239,500.00 (the "Donjon Proposal"). Id.
 
32. The Weeks Proposal called for the pumping of the caustic soda, either internally from port to starboard tanks, or off the CYNTHIA M. Documents 40, 42. Kearny Barge, although preferring the less expensive Weeks Proposal, recognized its technical problems, including concerns about the amount of time it would take to pump the caustic soda from the port side to the starboard side and the fact that the caustic soda may have been frozen, as the properties of caustic soda are such that the mixture present in the CYNTHIA M's port tanks had a freezing point of approximately 50 degrees Fahrenheit. Document 34. Kearny Barge recognized the Weeks Proposal would not work if the caustic soda was frozen. Id. ; Tr. at 66.
 
33. The Coast Guard refused to approve the Weeks Proposal because it was not satisfied with, among other things, the lifting capacity of Weeks' crane. Documents 202, 227, 261; Cunha C-3, P 35. The Coast Guard was also not satisfied with Weeks' stability calculations, its proposed method of removal of the cargo, storage of the cargo and timetable. Document 202; Cunha C-3, P 35.
 
34. On 21 March 1994, Captain T.H. Gilmour, the U.S. Coast Guard Captain of the Port of New York issued a "Captain of the Port Order" informing Kearny Barge that the Coast Guard was not satisfied with Kearny Barge's efforts to develop and implement a salvage plan. Document 227 (the "Captain of the Port Order"). Id. Kearny Barge was directed to submit a suitable salvage plan by 6:00 p.m. on 22 March 1994. Id. The Captain of the Port Order further provided the Coast Guard would "initiate steps to federalize the response to prevent further discharge of caustic soda solution into the Hackensack River and eliminate a substantial threat to the environment." Id.
 
35. The Weeks Proposal was abandoned and Kearny Barge chose Donjon as its salvor. Document 34; Swift C-9, P 30; Cunha C-3, PP 44-45. The Coast Guard ultimately approved the revised Donjon Proposal. Document 14; Swift C-9, P 33.
 
36. There was a delay, however, in the execution of the salvage contract between Kearny Barge and Donjon. Cunha C-3 P 46; Stoll C-14, P 21. On 25 March, because of the delay, the Coast Guard "federalized" the salvage operation. Documents 15, 231; Swift C-9, P 35; Cunha C-3, P 47. The Coast Guard believed that federalization was "necessary to eliminate the threat of release posed by the remaining cargo on board." Document 16. At the same time, the Coast Guard raised its budget for the operation to $ 400,000.00 "due to switch from monitoring activities to conducting removal actions on scene." Id.
 
37. The Coast Guard contacted the United States Navy's Supervisor of Salvage ("SUPSALV") to conduct the salvage operation. Document 16. SUPSALV then prepared to hire Donjon as its salvor under the "federalized" salvage operation. Id.
 
38. Kearny Barge, however, was able to conclude its negotiations with Donjon, Document 17; Swift C-9, P 36, and on 30 March 1994, the Captain of the Port returned the salvage operation to Kearny Barge's control. Document 26; Cunha C-3, P 52. The Coast Guard directed Kearny Barge to conduct the salvage of the CYNTHIA M in a safe and expeditious manner. Document 26.

 D. The Salvage Operation

 
39. On 1 April 1994, in a one day operation, Donjon righted and refloated the CYNTHIA M with the use of two cranes. Documents 19, 20. Although a minor amount of caustic soda was released during the salvage operation, no pollution cleanup was required. Stoll, C-14, 27. At 6:45 p.m., the Coast Guard released S&D Environmental. Id., P 28.
 
40. Following the successful salvage of the CYNTHIA M, the caustic soda, which had become contaminated, was pumped from the barge into one of Kuehne Chemical's storage tanks. Cunha C-3, P 57. Because a portion of the caustic soda remaining on board the CYNTHIA M had frozen, Kuehne Chemical was required to heat the cargo prior to pumping it off the CYNTHIA M. Documents 2; 21. In fact, an estimated 28,000 gallons of caustic soda solution were frozen and it was not until 6 April 1994 that the heating of the cargo, using the "internal steam coils," returned the last of the caustic soda to a "pumpable liquid state." Document 21. Kuehne Chemical subsequently treated the contaminated caustic soda by mixing it with uncontaminated caustic soda. Cunha C-3, P 61.
 
41. Kuehne Chemical incurred damages of $ 241,147.69 as a result of the lost and contaminated cargo of caustic soda; it was able, however, to offset a portion of these losses and its net losses as a result of the Casualty were $ 163,328.00. Cunha C-3, PP 65-67. Kuehne Chemical filed a claim against Kearny Barge for the value of these losses. Id., PP 68-69. Kearny Barge passed the claim to Global, as its P&I insurer, but Global apparently has refused to pay the claim. Kearny Barge Summation at 22, P 137.

 E. The Salvage Costs

 
42. Kearny Barge appointed Windward to be its Average Adjuster for the Casualty. Keller C-6, P 16. Average Adjusters apportion losses, damages and expenses among various parties, including the vessel owner, the cargo owner and the insurance companies insuring the "various vessel and cargo risks." Id., P 9. Average Adjusters rely on marine surveyors "to determine if services that have been billed have actually been performed and whether those bills are fair and reasonable." Id., P 26.
 
43. Windward hired Marine Consultants, Inc. ("Marine Consultants"), from a pre-approved list of marine surveyors, to be the marine surveyors for Global. Document 110; Swift C-9, PP 6, 7; Keller C-6, PP 36-38.
 
44. Marine Consultants retained Swift to assist in its marine survey work. Keller C-6, P 42. At the time of the Casualty, Swift had very little marine salvage experience. Tr. at 120. Before the Casualty, he had neither worked in salvage nor received training in salvage. Id. at 147. Swift's work on the Casualty was the first time he had ever served as a marine surveyor on a casualty involving the capsizing of a barge upon a navigable river. Id. at 148.
 
45. As indicated, Donjon was awarded the salvage contract and was paid $ 239,400.00 by Kearny Barge. Keller C-6, P 53. After Kearny Barge submitted its expenses to Windward, David Keller, Windward's Vice President ("Keller"), contacted Swift and asked him to "estimate the cost of rasing the [CYNTHIA M] if there had been no 'hazardous material' on board." Id., P 58-59.
 
46. On 25 April 1994, Swift completed Survey Report No. 94047 (the "Swift Survey") which concluded, in his opinion, "if there had not been a cargo on board which was considered hazardous, i.e. ballast water, or no cargo at all, the cost of the salvage operation would have been approximately $ 70,000.00." Document 5 at 6-7. The Swift Survey consists of a summary of the events of the salvage operation. Id. at 1-6. Aside from Swifts' conclusory statement that the "salvage efforts and costs associated with them were greatly influenced by the restrictions placed upon the salvors as a result of the environmental requirements imposed upon the operation by the governmental authorities due to the nature of the cargo," the Swift Survey provides no basis for the proposition that government pressure because of the pollution threat influenced the salvage costs. Id. Swift testified that he had never prepared an estimate like the Swift Survey and that he consulted Johan van Grieken, the principal of Marine Consultants, for assistance in preparing the estimate. Tr. at 162-63.
 
47. Swift failed to ascertain accurate per diem charges on the salvage equipment prior to making his cost estimate and the Swift Survey, therefore, understates the cost of the equipment and labor used in salvage operations. Tr. at 157-59. While Swift testified that "lump sum, no cure, no pay" salvage contracts are common in the marine industry and are preferred by owners and hull underwriters in most circumstances, he prepared the Swift Survey based on a time and materials basis and assumed that no complication would occur during the hypothetical salvage operation. Swift C-9, PP 23, 38-47. The Swift Survey should have assumed a salvage contract on a "lump sum, no cure, no pay basis." Tr. at 163. A "lump sum, no cure, no pay" salvage contract would have been more expensive because the salvor would have to assume all known and unknown risks and would not be paid if the salvage is not successful. Swift C-9, P 21.
 
48. Having had the benefit of Swift's trial testimony and having reviewed the evidence, it is clear that Swift was not a credible witness. As indicated, his background does not appear to qualify him to estimate the costs of a hypothetical salvage operation. His "estimate," moreover, is based upon an unrealistic set of circumstances and was improperly calculated. The Swift estimate was no more than an uneducated guess at the costs of a hypothetical salvage operation.
 
49. Henk van Hemmen ("van Hemmen") testified as an expert at trial for Kearny Barge; he has been engaged in marine operations since 1951. van Hemmen C-8, P 1. He is an experienced engineering and marine consultant. Document 60. van Hemmen rendered an opinion that the Swift Survey estimate of $ 70,000.00 to raise the CYNTHIA M in the absence of the pollution risk was "realistic, fair and reasonable based on the question posed, plus or minus $ 5,000." van Hemmen, C-8, P 16. In rendering his opinion, van Hemmen assumed: (1) no Coast Guard interference; (2) the salvage operations could be carried out in a ...

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