• Texas Federal District Court Applies Unusually Low Threshold to Award Punitive Damages For Recklessly Mooring Barges in Preparation for Oncoming Storm
  • February 24, 2014 | Author: Stephen H. Clement
  • Law Firm: Jones Walker LLP - New Orleans Office
  • In Graham v. PCL Civil Constructors, Inc., PCL was hired to replace a deteriorating bridge spanning the Brazos River in Freeport, Texas. 2013 U.S. Dist. LEXIS 179688 (S.D. Tex. Dec. 23, 2013). In conjunction with this project, two barges holding bridge components were moored nearby to an H-beam piling by a single loop of two-inch thick mooring line. These barges remained in place for two to four weeks before eventually breaking free on March 5, 2011, during a storm with sustained winds of 30 m.p.h. After breaking free, the two barges drifted down river until colliding with the ANGELA C, a wooden reef-fishing vessel owned by the plaintiff. The ANGELA C sustained significant damages. At trial, PCL was found at fault for the faulty mooring, and the court awarded lost profits, compensatory damages, and punitive damages to the plaintiff.

    Citing Exxon Shipping v. Baker, the court noted that punitive damages are "aimed not at compensation but principally at retribution and deterring harmful conduct" and that a defendant must be guilty of "gross negligence, or actual malice, or criminal indifference which is the equivalent of reckless or wanton misconduct." Recklessness was then defined as conduct "worse than negligence, but it is not intentional or malicious, nor is it necessarily callous toward the risk of harming others, as opposed to unheedful of it." The court acknowledged that this maritime standard is a lower threshold than most state laws and that the evidence did not show that PCL "acted with malice, or even that its conduct was outrageous or showed wanton indifference to safety concerns." Further, the court noted that PCL did not have "actual knowledge of the extreme degree of risk [and did not] proceed with conscious indifference to the safety of others." However, the court did find that "PCL did not realize or appreciate the high degree of risk involved when a reasonable company in its position would do so" and that PCL's failure to take "easily available precautions demonstrated an indifference to the magnitude of the risks involved." Accordingly, the court concluded that PCL's conduct with regards to its inadequate moorings and weather preparations was reckless and that punitive damages were appropriate.

    The court's decision is of concern because of the precedent it creates with regards to this unusually low standard for punitive damages. While different legal standards can appear academic, they have real-world implications as seen in this case. By not requiring malice, intent, or even wanton indifference to the safety of others, the standard for punitive damages has never been lower. An appeal may vitiate this ruling. However, in the meantime, this case should put maritime companies on alert that they can be held liable for punitive damages for simply failing to "realize or appreciate" that which a reasonable company in its position would.