Insurers Sue Over 2007 Cosco Busan Crash

SAN FRANCISCO (CN) - Insurers filed a federal complaint against the owner and operator of the Cosco Busan, which dumped 53,000 gallons of oil into San Francisco Bay after smashing into a bridge in 2007.

Lead plaintiff A.I. Marine Adjusters and nine other insurers claim that they had to post securities to obtain the return of their respective cargoes after the accident.

The April 10 complaint names as defendants Cosco Busan owner, Hong Kong-based Regal Stone; Fleet Management, which managed the ship and its crew; and pilot John Cota.

"Regal Stone's failure to provide a seaworthy vessel was a direct and proximate cause of the Cosco Busan's allision with the San Francisco Bay Bridge ... and precluded Regal Stone from declaring a 'general average event' and, therefore, from demanding security," the insurers say.

An allision is a moving object striking a stationary one.

After the ship struck the fender of a Bay Bridge tower on Nov. 7, 2007, the insurers say, Regal Stone called it a "general average event" and required owners of cargo or their insurers to pay a security to offset potential losses.

A general average event is a maritime law that requires owners of cargo or their insurance carriers to pay a proportional amount to offset financial losses from saving the ship and delivering its remaining cargo.

The insurers question the validity of the general average declaration by Regal Stone and say the shipping company caused the accident by manning the Cosco Busan with a crew incapable of operating it properly.

They claim Regal Stone and Fleet Management left the ship manned by a crew that had only two weeks of experience aboard the Cosco Busan, most of whom had difficulty speaking English.

"The crew was not adequately trained in the use of or familiar with certain vessel-specific navigational equipment," the insurers say. "Regal Stone had an obligation to supply an adequately trained and supervised crew."

The insurers also claim that the crew did not have a plan to navigate the passage through San Francisco Bay and that the pilot and ship's master failed to communicate adequately.

And they say the crew was not properly trained to use the ship's radar and electronic navigational charts.

With the U.S. Department of Justice reporting that the damaged Cosco Busan dumped more than 53,000 gallons of oil into San Francisco Bay, Regal Stone and Fleet Management paid a combined $44.4 million settlement in 2011.

The insurers seek declaratory judgment that the defendants are responsible for the accident, and want the court to nullify the general average event.

They are represented by Marisa Huber with Gibson, Robb & Lindh, who was not available for comment Tuesday.

Representatives of Regal Stone and Fleet Management could not be reached for comment.

CORRECTION: An earlier version of this article erroneously reported that the April 10 federal complaint against Fleet Management, Regal Stone and John Cota sought damages. Though the complaint does state the value of the various cargoes each plaintiff insured, each of five counts are for declaratory judgment. The article also mischaracterized the securities that the plaintiffs allegedly paid for the return of their cargoes. Courthouse News regrets the errors.

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