Claim at Issue:
This matter involved the recovery of $1,300,000.00 in expenditures necessary to replace a bridge protection cell located in an active waterway that an improperly navigated vessel destroyed when it struck the cell while pushing loaded barges.
Key Legal or Factual Issues:
A maritime company was operating a vessel that was pushing loaded barges past a railroad lift-span bridge in Illinois when the vessel lost control of its tow and struck a protection cell that was designed to protect one of the bridge's piers. The allision resulted in catastrophic damage to the cell requiring it to be replaced at a significant cost. KCM filed suit in the United States District Court for the Northern District of Illinois seeking to recover those costs.
Because the incident occurred in navigable waters, it was governed by admiralty law. Applying admiralty principles of law, including the Oregon Rule as leverage, we were able to convince the defendant to stipulate to liability. As a result, the primary issue in the litigation was the amount of recoverable damages. The protection cell was over fifty years old, had previously been struck by other vessels multiple times and received little maintenance over the years. The cell was also designed and built applying old standards that were no longer acceptable under modern engineering design standards.
The defendant's primary focus was to assert that 1) the cell was deteriorated and fully depreciated such that it had no remaining useful life; and 2) the cell was subject to significant betterment based on modifications to the cell's design that complied with modern standards. With respect to the first argument, we responded that the cell was an integral part of the bridge such that a deprecation analysis should not be applied. Therefore, the age and condition of the cell was irrelevant. In addressing the second argument, we had to concede a certain amount of betterment, but argued that the new design ware required to conform to modern AREMA standards.
KCM also engaged experts to support the damages the railroad was seeking to recover. We engaged an engineer who opined as to the reasonableness of the design selected to replace the protection cell, which conformed to current engineering standards. We also engaged a construction project management expert who opined as to the reasonableness of the cost of the replacement including both the cost of vendors and railroad forces (including burden). The defendant engaged three experts in the area of maritime construction and costs to support its position.
Initially, the defendant refused to engage in meaningful settlement discussions. Following aggressive questioning at the depositions of defendant's three experts, which pitted their theories against one another, the defendant relented and abandoned many of its defenses. The matter settled for a significant percentage of the costs the railroad was seeking to recover and the railroad was extremely pleased with the result.
The Oregon Rule provides that when a moving vessel collides with a stationary object, the moving vessel is presumed to have been at fault.