Standard Deviations...

more on the cport meeting....
At one point, a question was posed asking why C-PORT wasn't the logical forum for the industry to create some standards that would reflect what would be "fair and reasonable" salvage demands. This discussion was swiftly squashed as the executive director (correctly) pointed out that any discussion of prices or fees was strictly forbidden under anti-trust laws, and would jeopardize C-PORT's non-profit status.

I have some great news for Red Right Returning readers: this blog is not affiliated with C-PORT, and in fact I'm not even a member of C-PORT. I wish I could make money writing this blog, but I don't make a nickle. Even so, RRR is not subject to any laws that govern non-profit entities. Finally, since I don't own a towing company (any more), I'm free to discuss the subject with impunity, and I probably will in the near future. (Full disclosure: I am a summertime sub-contractor to a privately held towing and salvage company.)

But couldn't C-PORT at least cozy up to the issue by discussing some billing standards, or disseminating an industry wide lexicon, so we are all talking about the same thing when we use jargon like "soft-aground" or "Open Form."

The insurance industry would like to see us adopt some standards, right? OK, let's play a little game of "good for the goose, good for the gander". I say we contact the American Insurance Association , and propose that we jointly adopt the following:

C-PORT salvors will abide by the International Convention on Salvage-1989, as ratified by the United States of America, whenever applicable.
The insurance companies will refrain from ignoring or attempting to renegotiate international treaties, and instead recognize that as companies licensed to do business in the USA, they too are bound by the treaties signed by their government.

C-PORT salvors will document everything we can, with photos, video, audio, witness names and signed contracts.
The insurance companies agree that someone who has check writing authority will actually read/watch/listen to that stuff BEFORE they pass it on to an attorney.

C-PORT salvors will submit a written report detailing everything that occurred, and back up our details with the above mentioned documentation.
The insurance companies agree to submit any evidence - including verbal statements that contradict our version of the events - from their clients or witnesses to us in writing, with names and contact info for each.

C-PORT salvors agree to notify the insurance company within 24 hours after the vessel's redelivery (if not sooner) and request that a claim be opened.
Insurance companies agree to open a claim when they have knowledge of a salvage event, and provide all the parties a claim number when one is requested.

C-PORT salvors agree to submit a detailed salvage report within 15 days of the vessel's redelivery.
Insurance companies agree a supply a copy of the declaration page of the policy to the salvor within 5 business days after they receive notice that a salvage claim is pending.

C-PORT salvors agree that they are bound by the arbitration clause in signed salvage contracts.
Insurance companies agree that they are bound by the arbitration clause in salvage contracts signed by their clients.

Don't even get me started about Letters of Undertaking.

....I'm ready to duck.....let 'em fly.

Contemplating Values

photo: Ringo contemplates his contribution to the crew of Water Torture...

The salvage seminar at last week’s C-PORT conference included some discussion about “fair and reasonable” charges for salvage awards. I will argue about fair and reasonable in another post. Today, I want to correct what I feel was a serious error brought forth by the panel. This error was compounded when at least two members of the audience agreed with the underlying principal.

The error was this: a good way to determine if your salvage bill is fair and reasonable would be to consider how much that kind of service would be worth to you. To reinforce that idea, a panelist restated it this way: “How much would I be willing to pay for this salvage on my boat?” The implication is that if you feel the fee is more than you would be willing to pay, then it’s more than you should charge.

This thought process exhibits a failure to understand the underlying concept of salvage awards. The question is not how much is someone willing to pay for a service – the question is how much would you be willing to pay to prevent further damage or total destruction of your vessel. That is the essence of a salvage award. A salvage award is based more on what if, than it is on what happened. This is a critical distinction. Attendees of the seminar may be left with the mistaken idea that a salvor should wonder “how much would I have paid someone to toss me a line to keep my boat from hitting a bridge?”

Admiralty law poses a very different question – “what would the boat be worth if it did hit the bridge?” The real value of your effort is extracted from the answer to that question, and the final award may not always seem reasonable if you limit yourself to contemplating the value of services rendered.

The discussion further confused the issue by placing the cost burden on the boat owner instead of where it almost always falls: the insurance company. To be really precise, a well reasoned salvage award is based on this question: how much should the insurance company pony up to enjoy the fruits of your success? If you save a boat from hitting a bridge, it is well established in law that the insurance company is a direct beneficiary of your entire operation – the money you have invested in equipment, office space, your years of training and experience, your readiness and your skill - in addition to the value of your on-scene efforts. This is why professional salvors generally receive larger awards than Good Samaritans.

Considering how much you would pay for a job is an insufficient method for producing a well reasoned salvage demand, because it emphasizes what actually happened. A true salvor gets rewarded for what didn't happen.

What's in YOUR 401(k)?

This year's C-PORT convention is over. It was fairly well attended, although it seemed to me like too many yellow shirts dashed for the doors at the conclusion of their conference on Friday, just as C-PORT was getting started. In this photo, John Aydelotte uses his new spyglass to scan the hallways for wayward TowBees. ARRGH!

There are a few things that came up during the conference that I am compelled to comment on - especially the touchy subject that was on the agenda for Sunday morning: Salvage. I commend Terry Hill and the conference organizers for once again scheduling a topic that historically has potential to deteriorate from discussion to food fight. (I ducked some rotten apples myself a few years ago...)

The salvage panel included Mr. Doug Wager, a surveyor and insurance adjuster with many years of experience. During his closing remarks, he suggested that marine salvors perhaps expect too much for their work. He said "Too many salvors expect to retire off of one job," and he indicated that those kinds of invoices were unacceptable from his point of view (and, by association, from the insurance industry's point of view). The context of this remark was within his comments about ethics and our choice of the marine assistance industry to make our living. (Program note: nary a doughnut was tossed, not even a cracker!)

Now, I infer from these comments that Mr. Wager feels that a proper, i.e ethical salvage award would not be enough money for a guy to actually retire on. To this sentiment I have two words: Cherry Valley.

Skip Strong was the captain of the Cherry Valley, and his masterful seamanship saved a space shuttle fuel tank (and the tug that was towing it) from certain destruction. Indeed, he was so skilled that there was virtually no damage to any of the vessels involved. The story of this salvage is widely regarded as perhaps the penultimate example of a pure salvage in admiralty law, and the final figure of $4.7 million is probably the highest dollar amount ever awarded in any salvage case. The 25 crew members of the Cherry Valley shared $1,752,642 between them, in differing portions. Keystone, the company that owns the Cherry Valley, got the other $3 million. Captain Strong personally received about $287,000 for his share. The job took 2 days.

On the final page of his book, Captain Strong writes: "My wife Annie and I could now start to look for a house in earnest." Strong didn't retire, but his award made it possible for him to resign as a ship's captain, buy a house and he now works as a harbor pilot in Maine.

Does Mr. Wager thinks Captain Strong is a greedy pirate who was able to purchase a house with ill gotten gains? I don't know, but based on his comments to the C-PORT members, I have to wonder if he would object to the Cherry Valley award - 12.5% of salved value, a percentage that is quite common in our recreational salvage cases.

The story of Captain Strong's efforts to save a tug and her barge is one of skill, courage and extraordinary seamanship, and the salvage award that prevailed was argued, appealed and litigated at the highest levels of our courts. The case of the Cherry Valley is a modern affirmation of the concepts behind Blackwall and SalCon89. I don't see anything in there about retirement.
SalCon89

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Salvagers claim they've found world's most valuable wreck

Google search sent this to me:
Salvagers claim they've found world's most valuable wreck

Salvagers claim to have found the world's most valuable wreck - a British ship sunk by a German submarine while laden with a 2.6 billion pounds worth of cargo that included gold, platinum and diamonds.

In a project shrouded in secrecy, work is due to start on recovering the cargo, which was being transported to the United States to help pay for the Allied effort in the Second World War.

The scale of the treasure trove is likely to lead to a series of competing claims. Salvage laws are notoriously complex and experts say there could be years of legal wrangling ahead.

This should be entertaining, to say the least. Hey, if this money was meant for the US Gov't, maybe it should be lumped in with the bailout funds?

North Reef at Night

A few loyal readers have commented that they would like to see more video of my work out here at Block Island. Much of the footage I have isn't very dramatic, and frankly would bore most of the subscribers to RedRightReturning. But, they don't call me Captain Hollywood for nothing. I did find some video of a job I had last month. Before you watch this clip, let me set the stage so you'll understand what you are seeing.

The north end of Block Island tapers to a point, understandably named Sandy Point, and extending quite far out from there is the Block Island North Reef, which might have been more correctly name the Block Island Deadly, Narrow and Particularly Nasty Long Sand Bar. I guess North Reef fits better on the charts.

This sandbar is very narrow, and the west side is really almost an underwater cliff: it drops from ankle deep to twelve feet in less than a boat length. The east side is more like a traditional beach, with the depths gradually decreasing from ten feet deep about 200 yards to the east to the ankle deep bar itself. (This geography makes for some very strange seas, and even on this very calm night, you will notice some small breakers that look like they are coming towards my vessel, as if I was on the beach, when actually I'm in deeper water to the west the strand.) That long bar on the chart never really drys even at low tide. It lurks down there below the surface, waiting for the unwary boater or lazy navigator.

About 2100hrs one night, a sailboat calls Mayday and reports himself aground at the north end of Block Island. There was a bunch of thunderstorms rolling down Long Island Sound, but otherwise it was calm and clear. I was underway lickity-split, while the USCG directed all their rescue efforts to playing 20 questions with the mariner on the radio (they never did launch any physical assets to the area that I know of).

From the time I got underway to the time I arrived on scene was probably less than 10 minutes. When I had visual contact, I asked the boater if he had gone aground coming from the east or the west - the answer would make a difference to my approach and which direction I might pull him off. He thought he had come from the west, and as you will see, he was wrong. A boater who has run into an island at night is generally not your best source of reliable navigational information - but you gotta start somewhere...(look again at the chart, he was between the 9' and the 4' depths that straddle the reef just north of Sandy Point)

The video begins as I approach from the west (deeper and steeper side) of the reef, and I spin around in preparation to toss him a bridle. As you watch the video, you can actually see the reef just under my swim platform. In the backgound, the Block Island North Light blinks mockingly just behind the grounded boat.

I heard a few shells and stones rattling around in the jet, which is the boat's way of telling me it's time for Plan B. Fortunately, with the jet boat, running over hard shell and sand isn't the end of the world; it doesn't even really slow the job down.

I quickly zipped around to the other side of the reef. This eastern approach presents a few problems of its own. The depths on that side are very shallow, and when the current is running, it will set you towards the reef. As you can see, conditions were calm on this night, and I had no trouble backing up to his stern and practically handing him my bridle. The look on the faces of his family huddled in the cockpit tells a story about their experience.

As you will see, everything turns out fine, and we even beat those thunderstorms back to the harbor.

When Good Jobs Go Bad, Part 2

File Part 2 of this story under "I'd rather be lucky than good any day."

Here is a single frame of my video of the 3 boat raft-up adventure, just as I attempt to implement Modified Plan A. If you remember, this was the plan that sucked wind, and the guy's chain was just reeling out of the chain locker.

This little video clip begins just before the the towline gets sucked up into the port jet.





You can listen to me and the Harbormaster discuss the situation, and towards the end of the clip, my luck changes. Somehow, the anchor line that was fouled from the 4th boat magically get un-fouled, and I was able to tow the whole mess across the channel and grab a mooring. WHEW!

I pulled the 3 boats over to me, and then jumped in the water to access the damage. The guy's anchor was hanging about 8" below the grate of my port jet, still clipped in my snap hook! The chain had all run through the snap hook, and lifted the anchor right up to the bottom of my boat. (the launch boat with the fenders all around is the Harbormaster's boat)
The owners of the sailboats all showed up about this time, and they secured their boats on separate moorings.

I learned a long time ago that a job isn't finished until the boat is ready for the next job, so once I had the 3 boats secured on moorings, I still had to get the line out of my jet. Fortunately, a good friend and colleague of ours has a mooring service boat with a 2 Ton A-Frame crane. I had Ben from Edwards Marine meet me over at the mooring boat.

We had to lift the back of the towboat up about 15" to get the jet access plate above the water line, which was easily accomplished with a bridle attached to the D rings welded to my transom.

Once up in the air, we had the tedious task of cutting and hacking countless wraps of Amsteel and 3/4" nylon from the jet drive shaft. The Amsteel we use for towline is really cool stuff, until you have to cut it. We used 3 brand new knives making about 10 slices. Here is a picture of Ben taking a turn with the knife. And here is the remains of what we cut out.














So, this adventure began as a routine job and turned to total monkey dung, but the guardian angel of tow captains was on duty, my luck turned faster than a roulette wheel, and I made it to dinner before the kitchen closed.

When Good Jobs Go Bad, Part 1

File this story under: "Some days you're the windshield, some days you're the bug."

It all began quite routinely, as a thunderstorm approached Block Island on Wednesday. As this cloud passed, it started to rain, and the wind shifted from E @ 6 to W @ 15.

The weather caused a three boat raft-up of sailboats to drag anchor. At first, the Harbormaster and I sort of thought that they would fetch up, but it quickly became apparent that the three un-attended boats were heading for an innocent fourth boat anchored downwind, and we had to take some action to prevent a collision.

Sometimes, when a boat is dragging anchor, she is bearing down on other vessels, and there is no time to get aboard and haul her ground tackle - but you can't tow her with anchor still on the bottom. In those cases, a good option is to just hook on to her anchor rode with a big snap shackle at the end of your towline. When you begin to pull forward, the snap shackle will run down the rode and pull the anchor off the bottom, and you can then slowly tow the boat that way. In one quick step, you will lift the dragging anchor off the bottom, and create a makeshift towline to at least get the vessel out of a crowded anchorage to buy yourself some time and room to set up a more traditional tow. This technique is universally known as Plan A.

The trio of sailboats were all hanging on a single hook from the boat in the middle. Her chain rode was hanging over the bow roller, and I could see a nylon snubber off the starboard cleat. The chain hook on the snubber was a few feet below the surface, so I modified Plan A just a tad and opted to clip onto the chain at the bow roller, above the snubber - hoping to just pull the raft upwind a few yards and avoid the impending collision.

What's that saying? "Never change horses in mid stream." What happened was that the anchor chain was not secured in the chain locker, nor over the gypsy of the windlass, so as soon as I tried to pull, I was just pulling chain out of a chain locker, rather than towing the 3 boat raft upwind. Modified Plan A sucks wind. Now I was really running out of time, and I had to hustle back there and get a line on tout de suite!

I rushed back to the bow of the middle boat and quickly reconnected the tow line below the snubber, just as the Harbormaster informed me that the three boats were about to get T-boned by the bow of another vessel. With the tow line hooked up, time to get those jets in gear and implement Original Plan A.

WHAM! SCREECH! I cringed at the sound of my towline getting sucked up into my port jet, and wrapping around the impeller shaft at 1200rpm.....man, I hate that sound, don't you? Fortunately, it's a twin screw, so I can still maneuver. Maybe I can still pull this job off without too much drama....behind me, it looks like we've just missed that 4th boat, and I'm clear to implement Plan A, version 2.0 minus 1.

Except, as I pull the rafted boats away, the Harbormaster informs me that the 4th boat's rode is now snagged around the rudder of one of the boats that I'm towing.

Let's review: I've got one engine down. I've got a raft of 3 unmanned sailboats attached to my towboat in a manner that is probably not covered in the Hamilton Jet owner's manual, and I can't disconnect myself from the 3 sailboats because their anchor chain is now sucked up tight to my port intake. I'm not sure where the unmanned boat's anchor is except that it has to be somewhere between my jet intake and the bottom of the Pond (please, God, let it not be on the bottom!). And one of the 3 unmanned boats is now fouled over the anchor rode of yet a fourth boat. Did I mention that it's pouring rain and the winds are gusting around 20 kts. This job has pretty much turned to shit, don't you think?

....to be continued...

Article 7

There seems to be a rash of salvage claims being challenged by insurance companies on the grounds that the entire contract is void because it was signed "under duress or undue influence" - i.e. the boat owner was compelled to accept a salvage agreement because he felt he had no other choice.

Perhaps the insurance companies are confusing the "duress" of actual bodily harm with "marine peril" and its potential for physical damage to a vessel. IF a salvor has threatened to leave a crew to die or get injured aboard an imperiled yacht, that salvor is probably guilty of using "undue influence" to force a salvage contract. But to ask an otherwise healthy and un-injured crew to accept that a yacht in perilous circumstances should be covered under a salvage contract is acting completely within the spirit of Blackwall and SALCON 89.

Lets have a look at what SALCON 89 actually says about the influence of danger. Salcon 89, Article 7 states:

“A contract or any terms thereof may be annulled or modified if: (a) the contract has been entered into under undue influence or the influence of danger and its terms are inequitable; or (b) the payment under the contract is in an excessive degree too large or too small for the services actually rendered.” (bold emphasis mine)

The word and in part (a) is a key to understanding what Article 7 is about. During any true salvage situation, there is obviously going to be some danger. Indeed, every salvage is contingent on the presence of PERIL. And everyone who is on scene at the time is certainly going to be influenced by the presence of the dangers involved.

The authors of Article 7 were not suggesting that any agreement made while in the heat of a dangerous situation would be automatically void. The intent of Article 7 is to link the danger to equitable terms - that is why the word and is in part (a). To make an equitable agreement, the terms should fit the situation, which if covered by SALCON 89, is by definition a situation that involves danger (Article 1, para 1).

To claim that the presence of danger somehow voids a marine salvage contract is constructing an argument based some very torturous logic. How can you toss out a contract to resolve a perilous situation because there was danger present?

Furthermore, the challenge to the contract based on the influence of danger almost always includes the additional argument that there is no salvage because the peril so insignificant that it didn't even exist at all!

This is where they shoot themselves in the foot and the entire argument falls apart. If you are going to challange an agreement based on the presence of danger, don't go on later in your plea to downplay the danger and argue that it didn't exist.

Boat/US Press Release on Salvage

Well, those who have known me for a while know that I've bitched and moaned about the way salvage is portrayed in the press, and in particular I've singled out some Boat/US literature as guilty of too much hyperbole with phrases like "be warned", or "avoid salvage" and "avoid the high fees".

It was always my view that the Boat/US position could be boiled down to "salvage: BAD - towing: GOOD".

Yesterday's press release on this subject was a refreshing relief from past notices on the subject. [click here to read it all]

I think this piece is, as they say, "fair and balanced". Here is a quote:

Salvage cases are usually covered by insurance – or out-of-pocket if self-insured – and are much more expensive than a tow. Salvage continues to be the way to award a rescuer who maintains a 24-hour state of readiness to risk life, limb and vessel for others, and often results in a charge based on the length of the vessel saved or a request for a percentage of the boat's post-casualty value. While it’s a reward for extraordinary service, the dollar amount awarded factors in the degree of peril as well as the risk to the salvor and their crew. (emphasis mine)

That is the first time I've seen Boat/US express the concept that a salvor is rewarded for the service, rather than leaving the impression that a salvage is just a really high fee to be avoided.

The other thing I'm glad to see expressed is that it's the insurance company that will pay a salvage reward. Previous literature would always imply that the boater would be "hit with a huge bill", but of course nothing could be further from the truth. The truth is it's the insurance company that will be hit with a bill, and it's great to see that misconception finally corrected by one of the county's largest boat insurers, Boat/US.

Thanks Boat/US for presenting a well informed press release about towing verses salvage.

Its All About Peril

Two interesting cases were recently decided in court, and the decisions should act as a reminder to all salvors that rule number one in a salvage claim is the existance of a marine peril. Without peril, you got squat.

In the first case, Sea Tow Portland/Vancouver v. Yacht High Steaks, a tower took an unmanned yacht off the hands of a fire boat, and moved the yacht to a safe location away from a dock fire. The court found there was indeed some peril, even though a government rescue agency had already moved the yacht away from the fire, so a valid salvage claim was in force. The actual award was pretty small after the court took into account the remaining Blackwall factors.

The second case, Cape Ann Towing v. M/Y Universal Lady, the court found that no peril existed at the time the salvor showed up, because the yacht was already tied up to another yacht after running free as a hurricane passed over the area....and their $487,500 salvage claim was reduced to $2,706. OUCH.

You can read more details on these cases by [clicking here]. This link opens the current MLAUS (Maritime Law Association of the US) recreational boating newsletter. Scroll down to page 9. Past issues of the newsletter are also available here

Man Drills Hole, Goes Fishing...

Got this story via email from the west coast....still laughing my a## off!

Gentleman tried to cut a 2 inch hole (for a transducer) in the bottom of his 24' fiberglass center console fishing boat. The 3/8" pilot drill bit went all the way through, and he partially cut the 2" hole, but the 2" hole saw blade got dull and he couldn't cut all the way through. The owner plugged the 3/8" pilot hole with silicon sealer and took his friends fishing.

They got out to the 14 mile bank where a fleet of boats was chumming for Mako sharks, and stopped to drift for sharks. Pounding for 14 miles caused the 2" hole to break through. The boat promptly filled and capsized.

Fortunately the boat had a life raft. The owner and his friends got into the life raft, shot off some flares and were quickly rescued.

Capt Tyler Lee, Vessel Assist Dana Point, responded, located the capsized hull, wisely towed the boat away from the shark grounds before bagging the hull and towing it back into the harbor.

Lifeguards, Harbor Patrol perform salvage in California

Can you imagine if this was your contract area? The story below is from the SoCal boating newspaper The Log, and you can read it by clicking here, but I have pasted the entire story below.


Lifeguards, Harbor Patrol Officers Save Boat
Thursday, May 29, 2008 2:26:00 PM
Last updated: Thursday, May 29, 2008 2:26:00 PM

NEWPORT BEACH – Orange County Sheriff’s Harbor Patrol officers and Newport Beach Lifeguards worked to rescue a boat that drifted ashore April 30 on Corona del Mar State Beach.
Strong winds caused a 27-foot sailboat, one of many vessels anchored off Corona del Mar State Beach, to drag anchor and eventually be blown into shallow water and become grounded. By the time Newport Beach Lifeguards and Harbor Patrol officers reached the vessel, its keel was stuck in the sand. “With the lifeguards’ approval, we waited for the tide to come up, put a line on it, and it floated,” said Harbor Patrol Deputy Joel Monroe. Officers then impounded the vessel, which is required when a boat runs ashore, since it is considered a hazard, he explained. The vessel, Salubrious, currently has a broken rudder. Michael Juneau, a liveaboard who owns the boat, is in the process of getting the rudder fixed.

I love how the HarPats get the lifeguards' approval to wait for the tide. I wonder if anyone contacted the USCG? Did the HarPats have to provide a salvage plan to the USCG? Is it USCG policy to exempt Harbor Patrols from having and following a salvage plan?

If they waited for the tide (which is what they said they did), then how can this be anything other than a salvage? Unless CPORT gets deeply involved with this issue, I fear SoCal is a lost cause.

More Derelict Disposal News

Just another little news article about abandoned vessels, and what might be done.

Queens Chronicle - ‘Operation Clean Bay’ Aims To End Vessel Abandonment

....a task force — comprised of the National Park Service and U.S. Coast Guard, the NYPD, the state Department of Environmental Conservation and the city Department of Environmental Protection — to investigate the ownership of derelict boats.

Now, I'm guessing that none of those agencies are actually doing the disposal work. Getting these types of contracts is probably tough in NYC, but in more rural areas, there is potential for work, assuming you can reach the funding authorities. In some cases, they find the boat owner, and he has some time to solve the problem before the fines kick in. This is the best chance for you to get in the picture. Let all your local agencies know that you are equipped and able to handle derelict work, and they might even pass your phone number on to potential customers.

An interesting quirk of derelict disposal work is that the customer wants the boat destroyed, so you have no damage liability, and, the government wants the thing out of there, because they consider it pollution, so the USCG probably won't be breathing down your neck while you do the work.

If you are going to dispose of a boat, click here to see a copy of my old disposal contract. It might give you some ideas of how to write your own. The work isn't that hard; in general, just drain all the fluids, remove all the garbage, and have it trucked to the landfill. In some cases, you might have to remove the motors, but even those aren't too hard to get rid of.

There is a confluence of forces that I believe will result in a big increase in derelict disposals over the next decade. Whether you like it or not, the Democrats will control Congress for at least the next 5-6 years, and that means more dollars for environmental issues, like cleaning up the nations waterways. Meanwhile, as the economy softens, folks with older boats will find zero buyers for worn out boats, and may succumb to more sinister alternatives to get rid of the financial burden of owning a boat - especially if it is insured.

In the past year, I've seen signs that municipalities and state agencies are eager to step up enforcement of abandoned vessel laws, and are making real efforts to find the owners, who face hefty fines or even jail if they don't respond. Even the Block Island Harbor Master drafted up an abandoned vessel law over this past winter. People who can afford to own coastal property are demanding that local officials keep the rivers and beaches clean - they paid a lot of money for their view, and an old rusty boat wasn't part of the deal.

So, an increased willingness for enforcement, more federal dollars (used almost entirely for enforcment, or contracted clean-up), and an economic incentive for abandonment all spells more vessel disposal work. Someone is gonna do it, why not you?

Beating a Dead Horse

Well, if you read my blog about the Princess Gigi decision (and I hope you read the decision), then you probably got my point about how insurance companies are perhaps "predisposed" to fight a salvage claims. There is a misconception on the part of some members of our industry who continue to believe that the reason insurance companies will balk at paying a salvage claim, or even a large wreck removal invoice, is because a few bad apples have a long history of submitting exorbitant claims. I know I have whipped this horse before, but I want to beat this nag totally dead once and for all.

The misconception goes something like this: there are two kinds of salvage companies, those that send fairly priced bills (lets call them Base Hit Salvors) and those that send outrageously priced bills (we'll call them Home Run Salvors). Over the years, the Base Hit Salvors have found that many insurance companies continue to try and negotiate their invoices, or complain at the price even when the invoice was fairly priced in the first place. The Base Hitters feel that they are being forced to lower the totals of their invoices simply because of the history of the Home Run Salvors. In other words, The Base Hitters are paying a Home Run penalty.

To believe this, you have to believe that insurance companies have somehow adjusted their business practice to address this problem of Home Run Salvors, and now routinely quarrel with every salvage bill, no matter how reasonable the bill is, with the assumption that the bill must be too large. The blame for all the negotiating is placed on the Home Run Salvors, rather than on the insurance company, where it belongs.

If we are to accept that the Home Run Salvors have so much influence that their billing history has actually affected the way these huge insurance companies conduct their business, one must concede that insurance companies are comparing the salvage invoices they receive from Home Run companies with those invoices sent from Base Hit companies.

If they are not making this comparison, then the entire argument that one invoice could have an effect on another falls flat on it’s face, and this horse never left the barn. So, to buy into this theory that the huge claims make it hard to collect the small claims, you have to accept that insurance companies engage in invoice comparisons, if not between companies, then at least by looking back in time.

But wait a minute; wouldn’t the logical result of all this invoice comparing be that the insurance companies would recognize that the Base Hit invoices were more reasonable in comparison to the Home Runs? Wouldn’t the insurance company be more willing to pay those reasonable invoices, rather than less? (In which case Base Hitters would be thanking Home Runners for making their Base Hit prices look so good.)

And yet, this is not the case. Many of the Base Hit salvage claims are routinely challenged by the insurance companies; hence the complaints that it seems like insurance companies fight every salvage claim. The insurance companies are not more willing to pay the Base Hit invoices, and they continue to try and negotiate these invoices too.

We are left with only one conclusion: they are not comparing the huge, Home Run invoices to the Base Hit invoices they receive, and therefore the billing practices of the Home Run hitters is not logically the cause of all this contentious negotiating.

Perhaps there is some other theory that could account for all the negotiating, even when the invoices appear reasonable to the Base Hit Salvors?

I believe that the insurance companies should be attempting to negotiate practically every invoice they receive; especially those invoices that are by definition open to negotiations, like a salvage claim. They are large, publicly held corporations, and therefore their directors, managers and employees have a fiduciary, legally binding responsibility to do everything in their power to maximize the return to the shareholders. They are not in the business of paying claims, or to be friendly with outside contractors. Indeed, the large insurance companies have recognized the value of negotiations as evidenced by the rigorously and sometimes contentiously negotiated price lists for services like health care and automobile repairs. Allstate does not happily pay collision repair bills, they negotiate them: not because some repair shops always charge more than others, but because it is in the Allstate’s best interest to negotiate.

That is why the insurance companies try to negotiate lower prices; its good business.

Yacht Sinks, Insurance company sues: The Princess Gigi decision.

If you attended the 2007 C-PORT conference, you probably remember my somewhat abbreviated seminar on salvage and insurance. Once the session was aborted, there were some heated debates about why insurance companies fight salvage bills. Indeed, some of the participants singled out one company as primarily responsible for the industry's billing problems with the insurance industry in general. I believe the term (supposedly used in the derogatory) was "[They] always swing for the fences." In baseball, that would be a good thing, but somehow when salvage invoice negotiations are the topic, there is an assumption that the salvors and the insurance companies are on the same team. If you believe that, I have some news for you; insurance companies are always on their own team, and do not invite other to sit in their dugout.
In fact, I have argued that insurance companies are financially obligated to negotiate whenever they can. They have a fiduciary responsibility to their shareholders, after all, to maximize their profits, not to recruit teammates. So they put up a good fight, and that fact isn’t evidence that one company has been charging too much.

Another reason marine salvage cases seem to be so vehemently contested is that most insurance companies have very little admiralty experience; they treat a marine loss like it was an automobile or a house, and hence their arguments are colored by landlubber laws, rather than admiralty.

Probably the best reason to fight an insurance claim is to avoid paying out over $7.2 million. In a recent case, Federal Insurance Company (connected with Chubb Ins) didn’t want to pay a total loss claim on a Mega-yacht that sank in the Bahamas. They didn’t have a single reason to deny the claim, but that didn’t stop them from seeking a declaratory judgment in federal court, denying any liability for the loss. You can read the judges decision here.

The decision is 40 pages long, but it is very interesting reading. A variety of surveyors, at least two yacht builders, banks, brokers, insurance agents are all called on to offer their opinions as to whether the yacht Princess Gigi was actually covered at the time of the sinking.

Point by point, judge Rakoff finds that the insurance company's evidence is immaterial, and in almost every example, he further states that even if you consider that the evidence was material, it doesn't constitute a legal reason to deny coverage. On more than one occasion, the judge questions the veracity of Federal employee's sworn testimony:

"....the court does not credit their self-serving and largely conclusory testimony." (bottom of page 13)

I urge you to read the entire decision. In this case, an insurance company wrote a $7.2m yacht policy without requiring a survey, and when provided the survey, didn't even read it. Once the yacht sank, all of a sudden everything in the survey is important. By their own admission, waiting for surveys is bad for business.

Lest you think this is just an isolated incident, driven by recent hurricane losses or the huge dollar amount involved, here is a $60,000 case from 1971 where the same Federal Insurance Co. attempted to weasel out of paying a total loss claim: http://bulk.resource.org/courts.gov/c/old/F2/450/450.F2d.779.19381.html

Back to my original point: how is it that one salvage company that started "swingin' for the fences" in 1984 somehow accounts for the actions of the insurance industry in 1971? Of course it doesn't, and the idea is completely bankrupt. The billing practices of one or two small salvage companies, attempting to maximize their profits, have zero bearing on how insurance industry acts, or reacts, when faced with paying out claims. They hate to pay claims, they are not in the business of paying claims, and they will employ a variety of strategies to avoid paying claims.

Cape May: Where Boaters BeGone

Ok, sorry for the very bad play on words on SeaTow's new slogan, Where Boaters Belong. When some boaters in Cape May, NJ just abandoned their boats, Phil Risko of SeaTow Cape May decided to step up to the plate, or in this case, dive down into the mud.

Salvage company cleans up abandoned boats in Cape May Harbor

At first you might think "he's nuts! All that work for free?". But step back and really examine this for a minute. Say his actual hard costs to pull a couple of boats up and to the dock is about $1000 for a diver and fuel (maybe less if he does his own diving). You couldn't buy this kind of good will and publicity for $1000. Also, its good practice and training.

I'm with Phil on this one; sometimes you just gotta do something 'cause its the right thing to do.

Wreck Removal Coverage

I was snooping around on the Progressive Insurance website, when I came across this item about boat insurance:

Wreckage Removal coverage is automatically included with Comprehensive and Collision coverage. If you use Comprehensive or Collision coverage, Wreckage Removal pays for reasonable costs you incur for any attempted raising, removal or destruction of the wreckage of your insured boat or PWC. Wreckage Removal limits vary based on whether or not you are legally required to raise, remove or destroy a boat or PWC.

Comprehensive & Collision is what we would call hull insurance. I guess its hard for them to break out of the auto insurance vocabulary. The part I find so interesting is their statement that the "removal limits vary based on whether or not you are legally required to raise...."

Last summer, I had a case where a boat settled on top of a mooring anchor's shank. Thats right - a 500# mushroom anchor shank came right up through the bilge between the engines. Pictured here is the top of the shank in his bilge, surrounded by our Rule 8000 pumps and hoses. The hole was about 4" in diameter. The job was an adventure in its own right, but back to the wreck removal issue.

The boat owner was insured with Liability only insurance through Progressive (not Comp & Collision). The local Harbor Master wrote a letter (after the job) that said that the owner was liable to remove his vessel from the town mooring field. We charged a six figure fee to get this boat safely on to a trailer, and Progressive re-imbursed him the entire amount. Now that's a happy ending for everyone.

Can We Salvage Our Vocabulary?

Many years ago, the powers that be carefully laid out the distinction between salvage and towage. The U.S. Supreme Court may have been the very first to coin the term simple towage. Isn't it ironic that simple towage came into use precisely as a way to explain that most towing of disabled vessels is, in the eyes of the court, an act of salvage? In this case, the words were used to make the distinction clear. In more recent history, words have been used to muddy the waters and blur the distinction.

The national membership networks have added to the confusion, in particular with business plans that include a relentless campaign to market towing of disabled boats as completely separate from salvage, when in fact, under Blackwall and SalCon89, it should be considered contract salvage. But, the profit is the same to the provider of the assistance, so... whatever, right?

Now, I don't know if Boat/US is responsible for inventing the phrase Soft Aground, but their membership program has certainly contributed to its broad acceptance. The phrase is now so prevalent that it is in common usage by the USCG.[click here to listen to a short audio clip of what I'm talking about] While Boat/US doesn't want to cover salvage, their membership will cover the contract fees for Soft Ungrounding. And again, this service is marketed as somehow outside the definition of salvage. Low degree of peril, one boat, one towline...."simple", right? As in simple towage.

Who, though, can really argue that the act of ungrounding a vessel isn't actually an act of salvage under the Blackwall factors? I can imagine Justice Clifford (perhaps the father of modern salvage laws) rolling over in his grave every time someone utters the phrase soft aground. But, the profit is about the same to the provider of the soft ungrounding, so... whatever, right?

The point of all this is not to uncover some sinister conspiracy on Boat/US's part to circumvent the salvage laws, because I don't believe such a conspiracy exists. But you have to admit that their marketing and membership literature goes out of its way to draw a clear distinction between towing and salvage. Salvage is always something to be wary of, to be avoided whenever possible. Towing, on the other hand, is portrayed as so simple and carefree that one might look forward to it as one might look forward to getting a birthday cake. Don't forget to renew!

In this world of vocabulary gymnastics, contract salvage has morphed into simple towing -salvage from running aground has become a soft ungrounding service covered under the towing membership. When does it all end? Will boat fires become "extraordinarily warm cabin surfaces requiring only one man and one extinguisher to unwarm"... ?

You're laughing and thinking that once again, Doug has slipped his hawser. Well, this week, I received my Boat/US "eLine" membership email newsletter, which contains the following quote and photo:

9. If your boat sinks, we pay the cost to "unsink" it in addition to covering your boat. In other words, the cost of the salvage is not deducted from your repair funds, which leaves more money toward fixing or replacing your boat.

UNSINK? First of all, the picture clearly depicts a wreck removal. That boat will be totalled, so there will be no post salvage value to base any salvage award on. This job will be done either per-foot or time and materials. Maybe wreck removal is the only kind of salvage work that Boat/US doesn't want their customers to fear? Oh sure, I see that they used the word salvage in the second sentence, but the photo sure doesn't fit with the legal definition of salvage. The result continues to blur the lines. More muddy water.

Now, to be totally fair, this was not presented as part of the towing membership program. The unsinking story is part of a hull insurance sales pitch, so maybe I'm guilty of some apples to oranges comparisons. But, its all under the same Boat/US brand name. They certainly don't make an effort to distinguish between their membership and insurance divisions, so why should I?

Back to the salvage vocabulary: what's up with this new word: unsink? Can covered unsinking service be far behind? You know, one man, one boat, one pump...its not a salvage, it was a covered unsinking! Call it simple dewatering.

If Boat/US marketing hasn't invented yet another way to confuse the concept of salvage, why did they put the quotes around the word unsink?

But, whatever...right?

Coast Guard volunteer boat runs aground

Google found this story : Press-Telegram - Coast Guard volunteer boat runs aground

LONG BEACH - A 51-foot Coast Guard volunteer boat ran aground Saturday while on patrol in Long Beach Harbor, a Coast Guard official said. // The Moonlight Express, a pleasure vessel, ran aground near Island Grissom about 10:25 a.m. while conducting a Coast Guard Auxiliary patrol, said Lt. Andrew Munoz of the Coast Guard.

At a quick scan of the story, I didn't think much of it....just another grounding. But something kept quietly nagging in the back of my mind...."volunteer" boat. What the heck is a Coast Guard volunteer boat? I read the story a second time, and of course a volunteer boat is some one's idea of keeping the words Coast Guard Auxiliary out of the headline.


Here is a question for you: instead of running aground (on a well marked oil island in the middle of Long Beach Harbor in broad daylight), had the Moonlight Express rescued a lost swimmer, do you think the headline would read that a Coast Guard Volunteer Boat had conducted the rescue? I think the headline would read "Coast Guard Auxiliary Rescues Swimmer".


At this point, I don't know who the source of the headline or who chose the word Volunteer, but I've got a call into the newpaper and I'm trying to find out.

Can anyone explain why the Long Beach Beach Fire Department is attempting to pull this boat off? And the final sentence:

If all else fails, the Coast Guard may have to bring in a crane barge, he said

Huh?

Proof the K factor works

Remember this blog back in July where I posted a chart and the formula for calculating submerged weight? The chart shows a simple mulitplier, called the "K Factor". Well, Ham Gale and I had a perfect opportunity to prove out the theory back in October up in Annapolis. A Soling sank in about 30 feet of water. According to this spec sheet

the Soling displaces 2277 lbs. Because Soling's are usually dry sailed (stored on a trailer), they are equipped with four short cables that remain attached to the keel bolts, and the entire boat is designed to be lifted by these cables (how handy for us salvage divers, huh?). So, I was able to access the lifting cables down there in 30 feet of cloudy Chesapeake Bay, and attach a single 2000lb lift bag. Both Ham and I were pretty confident that the 2000# bag would bring the 2277# boat to the surface.

Guess what? Here it is, after the initial lift, hanging by one single 2000# lift bag, just barely submerged. Notice that the lift bag is well out of the water, which means that at this point it is generating significantly less than 2000# of lift. Solings do not have any internal floatation, other than two small compartments (one fore, one aft under the decks) that are supposed to be kept closed. The reason this boat sank is that the skipper had failed to close the forward one. They are not really water tight compartments; but it would take a while for water to seep in there in the event of a capsize. When we hauled the boat at the crane, we found both compartments totally flooded.

Lets do the math. Unfortunately, I don't find a seperate listing of how much ballast they carry, but lets say its 1/3 of the total, which means that the keel weighs about 750# The K Factor for lead is .91, so 750# of lead submerged will only need 682# of lift. Lets say the mast, boom & rigging weighs 200#. In the picture, you'll notice that virtually all the mast and rig is out of the water, so we'll leave its weight at 200#, because we're going to lift it completely out of the water.

Now, the remaining fiberglass hull would weigh 1327# dry. Multiply the K Factor for fiberglass of .33, and the hull only needs about 440# of lift.

Lets add it together: 440 for the hull, 682 for the lead keel, and 200 for the rig = 1322# of lift calculated to bring this mass to the surface. Look once again at the picture; doesn't it look like about one third of the bag is out of the water? That leaves two thirds of a 2000# bag creating lift. Lets see, two thirds of 2000 is 1320!

IT WORKS! (thanks to Capt Cory Deere of TowBoat/US Annapolis for the nice picture. And thanks Ham for the nice day's work!)