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GE v. SS "NANCY LYKES"

April 15, 1982

GENERAL ELECTRIC COMPANY, International Sales Division, Plaintiff,
v.
SS "NANCY LYKES", her engines, boilers, etc., and Lykes Bros. Steamship Co., Inc., Defendants



The opinion of the court was delivered by: LASKER

General Electric Company International Sales Division ("GE") sues to recover for two locomotive cabs which were shipped by Lykes Bros. Steamship Company ("Lykes") via its liner service aboard the vessel the S.S. Nancy Lykes from New Orleans, Louisiana, destination Keelung, Taiwan. The locomotives were lost at sea on May 5, 1978, when the vessel encountered gale winds and rough seas off the coast of California.

The relevant voyage of the Nancy Lykes commenced in Mobile, Alabama on April 10, 1978, and proceeded to New Orleans, its first port of call. The advertised itinerary for the vessel listed Yokohama, Japan ("Kobe") as the next port of call, with an estimated arrival date of May 11, 1978. Instead of proceeding directly to Kobe after passing through the Panama Canal, however, the vessel next went to San Pedro, California, to secure fuel (bunkers). San Pedro was not listed on the published itinerary of the voyage. Lykes candidly acknowledges that the stop was made to take advantage of the low fuel prices then available at San Pedro and that its operations department directed the master to make the stop while the vessel was still in the Gulf area.

I.

 GE contends that the bunkers call at San Pedro constituted an unreasonable deviation from the published itinerary of the vessel and that the deviation caused the vessel to encounter the gales which precipitated the loss of the locomotives. In addition, GE alleges that the locomotives, which were stowed on deck, were not properly secured.

 GE's weather routing expert, Robert Raguso, *fn1" testified that by proceeding to San Pedro rather than along the ordinary direct route to Kobe the Nancy Lykes ran a substantially higher risk of encountering unfavorable weather. According to Raguso, the first weather risk would be confronted as the vessel moved from the Panama Canal up the coast of California toward San Pedro. Such a route necessitated passing through the Gulf of Tehuantepec where, Raguso testified, there are many local gales or high winds during the winter and spring months. (Tr. at 60-62). In addition, Raguso testified that the stop at San Pedro also entailed confronting a second weather risk off the coast of California after leaving San Pedro. According to Raguso, mariners and meteorologists are generally familiar with winds which are indigenous to the California coast, some of which are known as Santa Anna winds, some Chinook winds, and others Boras winds. These winds regularly occur off the coast of California during the winter and spring months, and it is these winds which Raguso believes the Nancy Lykes faced on May 5th. He testified that it was evident from May 1, 1978, that northerly winds were dominating the California coast in a corridor between 43 degrees north latitude down to 32 or 30 degrees north latitude in the coastal region. (Tr. at 79). Utilizing weather reports from vessels published in the Mariner's Weather Log for the past ten years, Raguso estimated that there is a five to six percent probability of gales occurring off the California coast during the month of May. (Tr. at 84-85). According to Raguso, he treats a probability of unfavorable weather of above one-half of one percent as a potential adverse condition to take into consideration in routing a vessel. (Tr. at 136).

 Raguso testified that the usual trade route from the Panama Canal to Japan would be within the area between 33 degrees north latitude and 16 or 17 degrees north latitude at 150 degrees northwest longitude on the southern side and that, had the Nancy Lykes stayed within this usual route area on the particular voyage, it would not have encountered the gale winds which ultimately caused it to lose the locomotives. (Tr. 94-95-96). Moreover, it was Raguso's opinion that, in view of the fact that the vessel was carrying such heavy cargo on deck, he would have considered safety to be the paramount factor in routing the vessel and he testified that he would have recommended the southernmost route within the customary area in view of the fact that favorable conditions generally exist on the southern tack. Raguso researched this route for the time when the voyage actually occurred and found that favorable conditions would have in fact obtained had the vessel proceeded along that route.

 Raguso also researched the weather encountered by two other Lykes vessels which had made bunkers stops in San Pedro on the way to the Far East from the Panama Canal. He found that the Dolly Thurman had encountered heavy winds in the Gulf of Tehuantepec in late March, 1978, as it made its way toward San Pedro, and that the Brinton Lykes had encountered unfavorable conditions in April, 1978, soon after leaving San Pedro. (Tr. at 88-93). In Raguso's opinion, had these vessels taken a more direct and ordinary route from the Panama Canal to the Far East, they would not have encountered such unfavorable weather. (Tr. at 93-94).

 GE's next witness, Charles Kohler, Jr., a bunkers broker for approximately thirty years, testified that bunkers were readily available in the Gulf ports of the United States as well as in the ports of Balboa and Cristobal, Panama, in April and May of 1978. Kohler also testified that in his years as a bunkers broker he had never been asked by a liner service operator to acquire bunkers at a port that was not a regularly scheduled port of call for the particular line. Kohler believed that the reason that liner operators do not seek bunkers at ports other than ports of call is that they ordinarily are emphatic that the vessel not be delayed and a diversion for bunkers would normally delay the vessel. (Tr. at 145-46). Kohler further stated that it is not the custom for berth line operators not to advertise their bunkering stops since they take on bunkers at their ports of call. (Tr. at 148).

 Captain Richard Patterson, a former master with United States Lines with over fifty years of maritime experience, testified that in his opinion the locomotives aboard the Nancy Lykes were not properly secured because only five or six chains of five ton capacity each were tied around the locomotive creating only a thirty ton restraining capacity while the locomotives weighed fifty-two to fifty-three tons each. He expressed the opinion that the locomotives should have been secured with more chains and that the chains should have been crossed to create a diagonal or horizontal restraint. (Tr. at 168). Patterson also testified that, in view of the on deck cargo being carried, he would have protested directions to take a more northerly route to Kobe if he had been the vessel's master. He stated that the time saved by alternative routes would have made up for any savings in bunkers costs gained by bunkering at San Pedro. Patterson stated, finally, that on two voyages out of six he had made along the coast of California in the spring, he encountered Santa Anna winds.

 The remaining GE witness, Dale Werner, manager of cost estimating and analysis for GE, testified that the two identical replacement locomotives provided to make up for the lost locomotives cost $ 1,638,000 to produce and $ 71,000 to ship.

 II.

 Lykes contends that it is customary for liner services to stop for bunkers in ports that are not advertised in their published itineraries; that Lykes established a custom beginning in 1978 of using San Pedro as a bunkers only port; that the bill of lading liberty clause encompassed such a step; that the locomotives were properly secured on the deck of the Nancy Lykes; and that the diversion to San Pedro did not involve a substantial risk of encountering unfavorable weather.

 Ralph Lacher, assistant manager of Lykes' operating division, testified that on a few occasions in his past experience on liner service vessels he had stopped for bunkers at ports not advertised as ports of call. According to Lacher the decision to use San Pedro as a bunkering stop for Lykes' liner service vessels going from the Gulf to the Far East was made in early 1978 because at that time it became clear that San Pedro had the lowest cost bunkers. The first such vessel to stop there was the Dolly Turman in March, 1978, followed by the Brinton Lykes in late March and the Nancy Lykes in early May. Ten additional Lykes vessels made the stop after the Nancy Lykes in 1978, 21 in 1979, and 50 in 1980. Approximately $ 25,000 in fuel costs were saved by the Nancy Lykes by bunkering at San Pedro. (Tr. at 216-30).

 William Kaciak, *fn2" Lykes' weather routing expert and the actual weather router utilized for the voyage of the Nancy Lykes at issue, disagreed with Raguso's testimony in critical respects. First, he testified that gales in Gulf of Tehuantepec are infrequent and, in any event, are forecastable two days in advance. Relying on data from the Climatological and Oceanographic Atlas, compiled by the United States Weather Service and the United States Hydrographic Office, Kaciak estimated the frequency of force 7, or near gale, winds in the area at about 4 percent in March (the month of the Dolly Thurman voyage), and the frequency of force 8, or gale, winds in March at about 1 percent. In April, he estimated the probability ...


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