United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit

____________ FILED July 2, 2024 No. 23-20134 Lyle W. Cayce Clerk ____________

Wapiti Energy, L.L.C.,

Plaintiff—Appellant,

versus

Clear Spring Property and Casualty Company,

Defendant—Appellee. ______________________________

Appeal from the United States District Court for the Southern District of Texas USDC No. 4:22-CV-1192 ______________________________

Before Wiener, Willett, and Douglas, Circuit Judges. Jacques L. Wiener, Jr., Circuit Judge: Commonly embedded in protection and indemnity policies for maritime insurance are “wreck removal clauses” that obligate the insurer to cover wreck removal expenses when the removal of a covered vessel is “compulsory by law.” This appeal requires us to further define the contours of the “compulsory by law” standard that we established in Continental Oil Co. v. Bonanza Corp., 706 F.2d 1365, 1372 (5th Cir. 1983). Case: 23-20134 Document: 49-1 Page: 2 Date Filed: 07/02/2024

No. 23-20134

Plaintiff-Appellant Wapiti Energy, L.L.C. (“Wapiti”) owned a 155- foot tank barge, the SMI 315, that broke free of its permanent moorings and ran aground in marshland owned by a third party during Hurricane Ida. The vessel was insured under a marine package policy issued by Defendant- Appellee Clear Spring Property and Casualty Company (“Clear Spring”). It provided, inter alia, coverage for wreck removal expenses that are compulsory by law. Following limited discovery, Clear Spring moved for summary judgment, contending that the undisputed facts demonstrated that removal of the SMI 315 was not compulsory by law, so it was not obligated to reimburse the expenses that Wapiti incurred in removing the stranded vessel from the marshland. Because we conclude that removal of the SMI 315 was compelled by the Louisiana possessory action, we REVERSE and REMAND for further proceedings consistent with this opinion. I. The SMI 315 was used by Wapiti as a refueling station (or a “floating gas station”) in Plaquemines Parish, Louisiana. It was permanently moored near Myrtle Grove, Louisiana. The marine package policy covering the SMI 315, which was in effect from July 1, 2021, to July 1, 2022, contained two sections: (1) hull and machinery coverage, with a scheduled hull value on the SMI 315 of $350,000 (the “Hull Policy”); and (2) protection and indemnity coverage (the “P&I Policy”), which provided a combined single limit of $1 million per accident or occurrence. The P&I Policy contained a clause (the “Wreck Removal Clause”) that covered the “cost or expenses of, or incidental to, the removal of the wreck of the [SMI 315] when such removal is compulsory by law.” Shortly after the insurance coverage year began, Hurricane Ida made landfall in southern Louisiana, causing the SMI 315 to break free of its moorings and drift “some miles away from its berth” until partially running

2 Case: 23-20134 Document: 49-1 Page: 3 Date Filed: 07/02/2024

No. 23-20134

aground of marshland in Barataria Bay. At the time of its grounding, the SMI 315 was carrying approximately 6,000 barrels of crude oil in its