Bender Shipbuilding and Repair, a company that is now defunct, has reached a settlement agreement with Caterpillar Marine worth $46 million. The settlement involved resolution of a lawsuit over a failed engine that burst into flames while under construction on the Mobile River. Bender was under contract to build six anchor handling tug supply vessels for Houma, La.-headquartered Seacor Marine. The M/V Sherman was the fourth under construction.

The May 2008 blaze burned for close to 24 hours at Bender’s facility. It should be noted that Signal Ship Repair now resides at that location after acquiring Bender in 2010. Bender sued Caterpillar Marine, a business unit of Peoria, Ill.-based Caterpillar Inc., in January 2010.

The $27 million ship, the M/V Sherman, exploded in May 2008 when one of its engines broke a rod, causing a fire that lasted 24 hours and burned the Sherman to its hull. The Plaintiffs claimed the engine was missing an oil plug about the size of a nickel in its crankshaft. Now-defunct Bender Shipbuilding & Repaid Co. Inc., entered bankruptcy in 2009. The lawsuit was filed in an Alabama state court. Caterpillar will pay Bender $12 million and Seacor Marine LLC, an international ship operator, $22 million. A motion was filed by Bender seeking approval of the settlement in Alabama bankruptcy court. Another $12 million from the settlement will go to six insurance companies, including St. Paul Fire and Marine Insurance Co., which underwrote the ship and had a subrogation claim.

The bankruptcy court has approved the settlement. Lucy E. Tufts of Cunningham Bounds, one of the lawyers for the Plaintiffs, said discovery revealed the Caterpillar engine was missing one of its eight oil plugs, depriving part of the engine of oil. The lack of lubrication caused added heat, which ignited oil vapors and exploded the engine, she said. Lucy said that it was pretty incredible that they found “such a tiny piece was missing and that the absence of such a tiny piece could cause such catastrophic damage.” GE Energy Power Conversions USA Inc. and Thompson Tractor Co. Inc., which were also defendants in the case, did not contribute to the settlement fund, but they will be dismissed from the suit.

The Plaintiffs were represented by George W. Finkbohner, Lucy E. Tufts and Steve Olen of the Mobile firm of Cunningham Bounds; Victory T. Hudson and William W. Watts of Pipes Hudson & Watts; and Craig Wolfe of Sheppard Mullin Richter & Hampton. These lawyers did an outstanding job in this very complicated case and got a tremendous result.

Sources: Mobile Press Register and Law360.com

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