Bouchard Seeking $18 Million Insurance Payout on Exploded B255 Barge

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October 5, 2018

A Corpus Christi Fire Department vessel extinguishes a fire onboard a barge approximately three miles from the Port Aransas, Texas, jetties Oct. 20, 2017. U.S. Coast Guard photo.

(Clearview Post) – The owners of an oil barge that exploded off the coast of Texas in 2017 might make $12 million more on their insurance claim for the damaged vessel than they have to pay the families of two seamen killed in the disaster, according to court filings.

It’s a common scenario under an archaic U.S. law that protects the shipping industry from full financial responsibility at the expense of victims, according to two maritime experts.

It happens in “almost every total loss marine casualty,” Lawrence Brennan, professor of maritime law at Fordham University, said.

“It’s normal and very egregiously unfair,” Martin Davies, professor of maritime law at Tulane University, agreed.

The case involves the explosion of a loaded oil barge owned by Bouchard Transportation of Melville, New York. Two deckhands were blown off the barge into the Gulf of Mexico.

The families of Zachariah Jackson, 28, of Salt Lake City, and Du’jour Vanterpool, 26, of Houston, have sued Bouchard for wrongful death.

Full Coverage: Bouchard Barge No. 255 Hearing

Jackson’s family claims the barge was “improperly maintained, dangerous, unseaworthy, and otherwise unfit for the purpose they were being used for at the time the explosion occurred,” according to the complaint filed by Kurt Arnold of Arnold & Itkin in Houston.

Bouchard placed a value of $5.9 million on its tugboat, barge and pending freight in a 2017 court filing under the Limitation of Liability Act of 1851 which can limit a ship owner’s financial liability to the residual value of the vessel and its cargo.

The company is asking the court to limit the amount of money the families can collect to the $5.9 million valuation under the 167-year-old law.

Meanwhile, in a new lawsuit filed in September 2018, Bouchard is seeking an $18 million payout on an insurance policy it bought on the barge hull four months before the explosion.

If Bouchard succeeds in both court actions, the company would collect three times more money than it has to pay the victims.

Neither Morton Bouchard III, president of the company, nor Noe Hamra of Blank Rome in New York, who is representing the company in its lawsuit against Travelers Property Casualty Company, could be reached immediately for comment. A Travelers spokeswoman said the company doesn’t comment on pending litigation.

Under the terms of the limitation act, Brennan and Davies said, the company gets to keep the insurance payment.

“It does not have to put that money back into the kitty for the claimants,” Davies said.

Brennan said the limitation act has long been criticized, including by former U.S. Supreme Court justice Hugo Black who described it as a largely outmoded subsidy for the shipping industry paid by injured victims.

“If shipowners really need an additional subsidy, Congress can give it to them without making injured seamen bear the cost,” Black wrote in a 1954 dissent in a case from Louisiana involving the drowning deaths of five seamen in a towboat accident.

In the 2017 Texas accident, Bouchard’s 38-year-old B255 barge was loaded with 140,000 barrels of crude oil when it exploded. An engineer on the Buster Bouchard tugboat which was hinged to Barge No. 255 testified at a U.S. Coast Guard hearing that he watched as blue flames suddenly encircled Jackson and Vanterpool on the barge deck just as the anchor was being lifted for a trip from Port Aransas to a refinery in Corpus Christi.

Jackson’s body was never found. Vanterpool’s body washed ashore four days later.

The Coast Guard’s investigation into the cause of the accident is continuing.

The explosion occurred Oct. 20, 2017. One day later, Bouchard filed its “Complaint for Exoneration from or Limitation of Liability” in the U. S. District Court in the Southern District of New York. Included in the complaint were appraisals of the vessels and cargo totaling $5.9 million.

The complaint alleges that Bouchard was not at fault or negligent and sought protection under the limitation act.

To overcome the limits on Bouchard’s liability, the Jackson and Vanterpool families must prove that Bouchard had knowledge of problems with the barge that lead to the disaster.

The Coast Guard hearing included seamen’s perception of Bouchard’s ship maintenance and testimony that two captains of a different Bouchard barge walked off the job within days of the B255 explosion over maintenance and safety concerns.

The limitation act is controversial in modern times but supported by shippers, ship owners and the cruise industry. It was written in an era before wireless communications and comprehensive insurance to protect ship owners from decisions made by captains on the high seas that were out of the owner’s control.

Davies said attempts to change the law have been beaten back by arguments that its elimination would negatively impact the economy by increasing insurance costs and, thus, the cost of shipping goods.

In practice, Davies and Brennan said, few ship owners ultimately benefit from the limitation act. In most cases, the accident victims either prove negligence on the part of the ship owner or reach settlement agreements.

The limitation act previously has been invoked in fatal accidents involving personal pleasure boats, tourist boats, jet skis, the Staten Island ferry, the Deepwater Horizon offshore oil rig, the El Faro cargo ship that went down in a hurricane in 2015 off the coast of Florida and a U.S. Navy ship collision in 2017 in the Straits of Singapore.

The most famous application of the law occurred in 1912 after the sinking of the Titanic when damages were limited to $92,000 – or $41 for each living or dead passenger – based on the value of a few salvaged life boats and earnings from the voyage.

The article was originally published by The Clearview Post, a non-profit foundation that aims to educate the public regarding the role of the civil trial court and the importance of trial by jury in American society.

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