Shipyard Sues Bank to Recoup Princess Louise Salvage Loss

A Terminal Island shipyard has filed suit against the Bank of San Pedro, seeking more than $6 million in damages from the former owner of the ill-fated cruise ship Princess Louise, which mysteriously capsized at the shipyard last October.

The lawsuit by Southwest Marine Inc. claims that the shipyard lost $5 million in potential work because the sunken vessel occupied a berth at the shipyard for eight months. In addition, the suit alleges that the shipyard is owed $1 million for salvaging and removing the vessel, and another $131,933 for repairs on the ship before it sank Oct. 30.

The cruise liner, built in 1921, is now resting in deep water outside San Pedro’s main channel. It sank again June 20 en route to an ocean dump site off Santa Catalina Island.

Southwest Marine’s lawsuit, filed two weeks ago, had been expected since the bank sued the shipyard in May for allegedly sloppy repair work on the vessel. Bank President Lance Oak said Thursday that he considers the shipyard’s lawsuit groundless.

“We presented them with a ship that floated for more than 60 years, and while it was in their care and custody, it sank and became a total loss,” Oak said. “So I find it hard to believe the bank should be held liable for any expenses, for any problems they caused themselves.”

Officials of the San Diego-based Southwest Marine and its attorney in the lawsuit, Daniel B. MacLeod of San Diego, declined comment Thursday.

The shipyard’s lawsuit says that last Aug. 22, the bank solicited bids for repair work on the Princess Louise. The once-popular floating restaurant had been repossessed by the bank after its owner declared bankruptcy. Bank officials have said the repairs were necessary to sell the vessel.

On Sept. 11, the lawsuit says, the bank and Southwest Marine entered into a contract for the repairs, with additional work added to the contract through the middle of October. The total bill for that work was $431,933, according to the lawsuit.

Since Nov. 9, when the cost of repairs was invoiced, the lawsuit says, the bank has paid the shipyard only $300,000.

The balance still owed to the shipyard does not include Southwest Marine’s other charges for wharfage, security, fire watch and other expenses associated with berthing the vessel, according to the lawsuit. No estimate of those charges was included in the lawsuit.

In addition, the shipyard has alleged that the bank owes Southwest Marine for the $1,050,000 charged by a salvage firm to raise the Princess Louise and remove it from its berth at the shipyard.

The lawsuit alleges that the bank was required to insure the vessel during repairs but did not, forcing the shipyard to cover the cost of salvage under its own insurance policy.

“After the sinking of the vessel, the bank refused to do anything or incur any expense or responsibility for salvaging the vessel or removing it” from the shipyard, the lawsuit says. Instead, it says, Southwest Marine paid for the salvage and removal of the ship.

Finally, the lawsuit alleges that Southwest Marine lost an estimated $5 million in business while the Princess Louise occupied a repair berth at the shipyard for eight months. During that time, according to the lawsuit, Southwest Marine “lost the use of a major component of its ship repair facility” on Terminal Island.

Hours after the 330-foot vessel was finally towed away from the shipyard, it sank in the outer San Pedro Channel, far short of its intended destination off Catalina.

After its sinking, officials at the Environmental Protection Agency said they wanted the vessel’s salvager, Trinav Shipping Ltd. of Vancouver, Canada, to move the vessel to another location because it sank too close to an ocean dump site under the federal agency’s jurisdiction.

Since then, however, EPA spokeswoman Lois Grunwald said the agency has made no final determination on what to do with the vessel. Likewise, she said, the EPA has not determined whether the ship could have been prevented from sinking until it reached Catalina.

The EPA’s inquiry is continuing, Grunwald said.