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General Electric Co. v. Lykes

decided: April 20, 1983.


Appeal from a judgment of the United States District Court for the Southern District of New York, Morris E. Lasker, Judge, awarding the plaintiff $1,709,000 in damages for the loss of cargo washed overboard from the defendant's vessel during the course of an unreasonable deviation.

Lumbard and Cardamone, Circuit Judges, and Zampano, District Judge.*fn*

Author: Lumbard

LUMBARD, Circuit Judge:

Carrying on its deck three 50 to 52 ton locomotive cabs shipped by General Electric Company International Sales Division ("GE") to Taiwan, the S.S. Nancy Lykes, on a voyage from the Gulf Coast to Kobe, Japan and the Far East, ran into heavy seas and winds soon after leaving the port of San Pedro-Long Beach, California on May 4, 1978. In the early morning of May 5, 1978, two of the locomotive cabs broke their bindings and were washed overboard.

Invoking admiralty jurisdiction, GE commenced this action against the vessel and its owner, Lykes Bros. Steamship Company ("Lykes"), on June 13, 1980. GE asserted that the call at San Pedro was a deviation from the Nancy Lykes' published itinerary and from the customary routes taken by vessels traveling from the Gulf to the Far East via the Panama Canal and that the deviation led to the vessel's encounter with the adverse weather which caused the loss of the locomotive cabs. Arguing that the Nancy Lykes ran a substantially higher risk of adverse weather conditions by proceeding to the Far East from San Pedro rather than along the customary routes to Kobe, GE asserted that the deviation was not reasonable under the circumstances and thus constituted a breach of the contract of carriage under the terms of § 4(4) of the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. § 1304(4)(1976).

On April 15, 1982, after a three day bench trial, Judge Lasker, finding that the vessel's call at San Pedro did not constitute a reasonable deviation allowed by terms of § 4(4) of COGSA, held Lykes liable for the full amount of the loss, including the cost of shipping replacement cabs to Taiwan.*fn1 536 F. Supp. 687 (S.D.N.Y. 1982). Essential to this holding was Judge Lasker's determination that the stop of the Nancy Lykes at San Pedro was a deviation which unjustifiably exposed the vessel and its cargo to significantly greater risks of adverse weather, thereby rendering the deviation unreasonable.

Lykes asserts that Judge Lasker erred in finding an unreasonable deviation, and that, in any event, Judge Lasker improperly held that recovery was not limited to the $500 per package liability limitation contained in the contract of carriage and in § 4(5) of COGSA, 46 U.S.C. § 1304(5)(1976).

We agree with Judge Lasker's thorough decision and thus affirm the judgment.


The basic facts are not in dispute. On April 16, 1978, three locomotive cabs manufactured by GE were loaded onto the deck of the Nancy Lykes in New Orleans pursuant to a bill of lading which provided for shipment to Keelung, Taiwan. The locomotive cabs were 56 feet long, 10 feet wide, 13 feet high, and weighed between 50 and 52 tons. The bill of lading, which incorporated the provisions of COGSA, allowed the locomotive cabs, which could not be stowed below deck because of their great bulk, to be secured and stowed on deck. The bill of lading also contained in paragraph 3 a standard "liberties" clause, which defined the scope of the voyage as including "usual, customary, or advertised ports, whether herein named or not, and ports in or out of the advertised, geographical, or usual route or order," and specifically allowed the vessel to "call at any port . . . [to] take fuel oil. . . ."

Kobe, Japan was to be the Nancy Lykes' first port of call in the Far East, with an estimated arrival date of May 11, 1978. Prior to departure of the vessel from the Gulf Coast, Lykes decided to send the Nancy Lykes to the port of San Pedro to obtain the more than 12,000 barrels of bunker fuel ("bunkers") necessary to complete the voyage to Kobe.

San Pedro, approximately 2,900 miles north of the Panama Canal, was not an advertised port on the Nancy Lykes' published itinerary, and the decision to send the vessel there was never communicated to GE or otherwise made known to the shipping community. Lykes acknowledges that in making the decision to send the Nancy Lykes to San Pedro, it never considered any factor other than the advantage of less expensive fuel prices that had become available at that port in early 1978, and it concedes that there was an ample supply of slightly more expensive bunker fuel at New Orleans and at other ports on the Nancy Lykes' route from the Gulf to the Panama Canal.

In fact, the Nancy Lykes had never before bunkered at San Pedro while voyaging from the Gulf Coast to the Far East, and of Lykes' forty or more vessels, only two had ever previously stopped at San Pedro solely to take on bunker fuel during such a voyage: the S.S. Dolly Thurman on March 22, 1978 and the S.S. Brinton Lykes on March 30, 1978. Moreover, although at least 30 of GE's locomotive cabs had previously been transported by Lykes' vessels to the Far East, GE was not informed of the routes taken by these vessels and had no knowledge whether they called at ports other than those specified in their published itineraries.

Pursuant to Lykes' instructions, the Nancy Lykes, after transiting the Panama Canal, voyaged to San Pedro and there obtained 12,877 additional barrels of bunker fuel. On May 4, 1978, the vessel departed San Pedro on a route that took it to the north of that port and soon encountered rough waters and gale force winds which measured between 8 and 10 on the Beaufort Scale.*fn2 At 0430 on May 5, 1978, two of the three locomotive cabs broke their lashings and were washed overboard within three minutes of each other. The loss occurred at 34 degrees N to 35 degrees N and 121 ...

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