Totem Marine Tug & Barge v. Alyeska Pipeline Service Company

Facts

Totem is a closely held Alaska corporation which began operations in March of 1975. Richard Stair was vice-president of Totem. In June of 1975, Totem entered into a contract with Alyeska under which Totem was to transport pipeline construction materials from Houston, Texas, to a designated port in southern Alaska, with the possibility of one or two cargo stops along the way. To carry out this contract, which was Totem’s first, Totem chartered a barge and an ocean-going tug. These charters and other initial operations costs were made possible by loans to Totem from Richard Stair individually and Pacific, Inc., a corporation of which Stair was principal stockholder and officer, as well as by guarantees by Stair and Pacific. By the terms of the contract, Totem was to have completed performance by approximately August 15, 1975. From the start, however, there were numerous problems which impeded Totem’s performance of the contract. The three vessels finally arrived in the vicinity of San Pedro, California, where Totem planned to change crews and refuel. On Alyeska’s orders, however, the vessels instead pulled into port at Long Beach, California. At this point, Alyeska’s agents commenced off-loading the barge, without Totem’s consent, without the necessary load survey, and without a marine survey, the absence of which voided Totem’s insurance. After much wrangling and some concessions by Alyeska, the freight was off-loaded. Thereafter, on or about September 14, 1975, Alyeska terminated the contract.