NOT FOR PUBLICATION FILED

UNITED STATES COURT OF APPEALS FEB 15 2024

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

TUG CONSTRUCTION, LLC, a No. 22-36049 Washington limited liability company, D.C. No. 2:19-cv-00632-BAT Plaintiff-Appellee,

v. MEMORANDUM*

HARLEY MARINE FINANCING, LLC, a Delaware limited liability company,

Defendant-Appellant.

Appeal from the United States District Court for the Western District of Washington Brian Tsuchida, Magistrate Judge, Presiding

Argued and Submitted February 6, 2024 Portland, Oregon

Before: McKEOWN, BYBEE, and BRESS, Circuit Judges.

This appeal concerns the cost of repairs on five tugboats and which entity—

the owner or the charterer—should shoulder it. Tug Construction, LLC (“Tug”)

owned the newly constructed tugboats (“Vessels”) and chartered them to Harley

Marine Financing, LLC (“HMF”). The Bareboat Charter Agreements required

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. HMF to return the Vessels to Tug after the charter term “in the same good

condition . . . less ordinary wear and tear.” To determine the “same good

condition,” the Bareboat Charter Agreements required on-hire and off-hire surveys.

The “method” for the on-hire survey needed to include “written and photographic

documentation.” Tug claimed that HMF did not return the Vessels “in the same

good condition . . . less ordinary wear and tear.”

After a five-day bench trial, relying in part on the expert testimony of

William Kelley, the trial court found “that Defendant HMF breached each of the

Bareboat Charter Agreements by first failing to redeliver each of the Tugboats in

the condition required under the Bareboat Charter Agreements.”

We review the trial court’s factual findings for clear error. See Kohler v.

Presidio Int’l, Inc., 782 F.3d 1064, 1068 (9th Cir. 2015). The parties agree that the

clearly erroneous standard applies to the trial court’s determination that the Vessels

were not returned in the “same good condition . . . less ordinary wear and tear.”

“Special deference is paid to a trial court’s credibility findings.” Exxon Co. v.

Sofec, Inc., 54 F.3d 570, 576 (9th Cir. 1995), aff’d 517 U.S. 830 (1996).

The trial court’s determination that the parties conducted an on-hire survey

under the Bareboat Charter Agreements was not clearly erroneous. Both parties

agree that a representative for HMF, Brian Appleton, was present for the

construction and testing of the Vessels and documented his inspections with

2 photographs and reports. The Vessels were not, however, drydocked and further

inspected after being tendered to HMF. Tug argues that Appleton’s inspections and

documentation qualified as an on-hire survey; HMF argues that they did not. The

trial court agreed with Tug. Because the Bareboat Charter Agreements specified

only that the on-hire survey include written and photographic documentation, there

was no clear error in finding that Appleton’s inspections qualified as an on-hire

survey.

There was likewise no clear error in the trial court’s determination that HMF

failed to return the Vessels “in the same good condition . . . less ordinary wear and

tear.” Multiple witnesses testified that the inspections and testing of the Vessels

were more rigorous than typical on-hire surveys of mature or used tugboats. After

hearing all the testimony, the trial court found, “For newly constructed vessels that

have been accepted for bareboat charter following inspection during construction,

launch, and sea trials, another dry-dock inspection is normally not performed

following sea trials.” Further, HMF provides a weak alternative hypothesis that the

damage occurred as the Vessels were removed from the drydock after construction,

during sea trials, or in the weeks or months that the Vessels sat in the water before

being delivered to HMF. The trial court found this theory to be “unsupported.” We

find no clear error.

3 Nor did the trial court err by crediting Kelley’s testimony. HMF argues that

Kelley’s expert reports contained a false statement about HMF’s liability for

engine repairs on one of the tugboats, and, therefore, his testimony should have

been discredited in full. Yet, HMF was not ordered to pay the engine repair

damages because Tug abandoned the claim. Thus, the particular alleged falsehood

was not material to the decision below. HMF invokes the falsus in uno, falsus in

omnibus maxim. This allows a court to discredit a witness’s entire testimony, but it

does not require a court to do so. See Hughes v. Rodriguez, 31 F.4th 1211, 1219

n.2 (9th Cir. 2022). Here, the trial court expressly found that Kelley was credible.

Even accepting HMF’s characterization of Kelley’s allegedly false statement, we

find no error in the court’s reliance on Kelley’s opinions, which trial court found to

be well supported. Thus, we conclude that there was no reversible error.

AFFIRMED.

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