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IN RE MOLAI SHIPPING CORP.

August 4, 1983;

In the Matter of the Complaint of MOLAI SHIPPING CORPORATION, as Owner of the M/V GEORGIOS G, for Exoneration from or Limitation of Liability; BRUNO CAPPELLINI, as Administrator of the Estates of Jose Ramon Jiminez Fernandez, Jose Del Carmen Mendez Tamerez, Jaillal Kisson, Luis M. DeLeon Pichardo, Francisco Nicarnor Ramirez Espinosa, Agustin Compusano Diaz, Reinaldo Enrique Cardona, Rafael Berroa, Enrique Mendez Ascencio, decedents, Plaintiff, against BRADFORD SHIPPING CORP. and STARLIGHT TRADING CO., INC., Defendants.


The opinion of the court was delivered by: WEINFELD

OPINION FINDINGS OF FACT AND CONCLUSIONS OF LAW

EDWARD WEINFELD, D.J.

 These two consolidated actions center about a disaster in the Caribbean Sea when the captain, officers and other members of a 27-man crew and one stowaway went to a watery grave. Their vessel, the M/V Georgios G, disappeared off the coast of the Dominican Republic during the most severe hurricane ever recorded to have passed south of the island of Hispaniola (Haiti and the Dominican Republic). The only trace of the vessel, after an intensive search by the United States Coast Guard and others, was the discovery of a self-inflating life raft belonging to the M/V Georgios G Several days after its last communication with another vessel. Those who perished in the disaster were eight Dominicans, seven Hondurans, five Columbians, four Greeks, two Guatamalans, one Chilean and one Guyanan.

 Molai Shipping Corporation ("Molai" or "petitioner"), a Panamanian corporation, the owner of the M/V Georgios G, petitioned this Court for exoneration from or limitation of liability. *fn1" Relatives or dependents ("claimants") of ten deceased seamen asserted claims in the limitation proceeding. *fn2" All the claimants are residents and citizens of the Dominican Republic and are represented by the Public Administrator of the Surrogate's Court, New York County. The Administrator denied that Molai was entitled to exoneration or limitation of liability upon the ground that the M/V Georgios G was not a seaworthy vessel; that she could not withstand the sea and weather conditions prevailing prior to and at the time of the vessel's loss; that the master and others in charge of the vessel were negligent in putting her to sea under the then prevailing conditions and were further negligent during its operation thereafter; and that petitioner had privity or knowledge of unseaworthiness or negligence. The petitioner denied the allegations and in addition, set up an affirmative defense that the claimants had executed general releases upon payment of fair and reasonable amounts in settlement of their respective claims. The Administrator, in response thereto, charged that the releases were void because they were not executed freely, without deception and with full understanding of their import.

 Thereafter the Administrator commenced a separate action in this Court under the Jones Act *fn3" and Death on the High Seas Act *fn4" on behalf of the same claimants. The defendants in that action are Starlight Trading Co., Inc. ("Starlight"), the time charterer of the vessel, and Bradford Shipping Corp. ("Bradford"). The complaint alleges that each defendant was the operator of the M/V Georgios G and employed the crew; that the disaster was due to the negligence of those defendants and their failure to provide the crew with a seaworthy vessel. Damages in the sum of $750,000 are claimed on behalf of the next of kin and dependents of each deceased seaman. Starlight and Bradford deny liability. The limitation proceeding and the Jones Act action were consolidated and tried to the Court.

 We first consider petitioner's claim for exoneration from or limitation of liability. While the rule is that a crew member or the representative of a deceased crew member seeking damages against the owner of a vessel has the burden of proving that the ship was unseaworthy or the owner was negligent and that such unseaworthiness or negligence was in fact a cause of injury or death, petitioner here as an initial matter in the limitation proceeding assumed the burden of establishing a prima facie case that the vessel was seaworthy and that there was no negligence in its operation from the time it left the port of Rio Haina until it disappeared. *fn5" And if it fails and unseaworthiness or negligence is established, the petitioner, has the burden of proof that its officers and managing agents lacked privity or knowledge. *fn6"

 The M/V Georgios G, a Panamanian registered, 4636 gross ton vessel, was Japanese built in 1965 as a log carrier for rough weather Pacific trade. She was 355 feet long, well designed, inherently stable and tight -- basically, a seaworthy, steel bulk carrier. She had four holds and four hatches covered by wooden hatch boards and was equipped with radar, radio direction finder, echo sounder and recorder, gyrocompass, illuminated magnetic compass and VHF radio. The ship had five double bottomed tanks port and starboard for seawater ballast and forepeak and afterpeak tanks for potable water and fresh water ballast, with total ballast capacity of 1,762.52 tons. Using her own valves and pumps, she could completely ballast herself with seawater in four hours both while stationary and while underway.

 Molai bought the Georgios G in 1978. While under charter to Starlight and until her demise she was mostly on a "milk run" of one month round trip voyages carrying fertilizer from the United States Gulf ports to the Dominican Republic, and after unloading of that cargo, there picking up sugar cargo for delivery at a United States Gulf port. During her ownership by Molai the vessel was certified by Bureau Veritas, an international survey inspection agency, and was fully classed according to its highest standards. Survey reports in April, May and June 25, 1980, the last six weeks before the vessel went down, established that the Georgio G's appurtenances, machinery, boiler and safety equipment were in class -- that is, in good working condition and that the vessel was seaworthy.

 Rio Haina is an open port on the southern coast of the Dominican Republic. It is exposed to wind and waves and dangerous for ships during a tropical storm. It was a common practice for ships to leave Rio Haina before an approaching hurricane because it was deemed safer to leave the port than to remain there and risk damage to vessels and to the port. Several months prior to the incident at issue a severe hurricane had washed two ships into the town of Rio Haina. In earlier years the port experienced several bad accidents and vessels sank.

 On August 2, 1980, the Georgios G was at the port of Rio Haina, having by noon of that day discharged her cargo of fertilizer and shifted her berth to allow another vessel to unload, waiting orders from Starlight, her charterer. There were two other vessels in the port, the M/V Anastasia II, a 7600 deadweight ton, 14 knot speed ship under the command of Grigorios Kotzamanoglov, a licensed Greek captain, and the M/V Barahona, a 10,100 gross ton vessel, under the command of Captain Jose P. Zulueta, Jr., a Phillipine licensed officer. The depositions of both were read into the trial record.

 On August 3 at 0.00 *fn7" hours a tropical storm which became Hurricane Allen was 962 miles east of Rio Haina. Commencing at that time a series of advisories were issued every few hours from the National Hurricane Center at Miami, Florida, advising of a tropical storm with a track of 280 degrees at various speeds which increased as reported in each advisory until it reached hurricane status. It was first called Hurricane Allen in Advisory No. 8 issued at 1500 hours on August 3.

 The captain of the Anastasia II on August 3 decided to ride out the storm in port, but his decision was of no avail. On August 4 at noon the Dominican Haiti island was put on hurricane "watch" by the National Hurricane Center. *fn8" The storm then had maximum sustained winds of 120 knots per hour, gusting to 140 knots per hour. At about that time the Rio Haina harbor master ordered the captains of the three vessels to leave the port. The Barahona, after bunkering, left the port at 1712 hours. The Georgios G, secured for sea but high out of water because it had no cargo, departed next at 1810 hours. Within ten minutes she was followed by the Anastasia II with 800 to 1,000 tons of fertilizer still aboard. Both the Georgios G and the Anastasia II headed south and slightly west in an effort to cross ahead of the track of the oncoming hurricane and into the safe navigable south semicircle. The Barahona took a course to Puerto Rico. An advisory issued at or about the time the vessels departed placed the movement of the hurricane west or 280 degrees at 18 knots, diameter of eye eight nautical miles, maximum sustained winds 130 knots and gusts to 150 knots.

 The details of events that followed are based upon the testimony of Captain Kotzamanoglov of the Anastasia II. The Anastasia II was in VHF voice communication with the Georgios G following departure from the port of Rio Haina, which contact continued until 0500 hours August 5.

 After leaving Rio Haina on August 4, the reported and relative positions of Anastasia II and the Georgios G were by dead reckoning. *fn9" These were based upon the length of time the Anastasia II steered her courses multiplied by its estimated 15 knot speed determined by the number of her engine revolutions. At first the two ships continued southwesterly, occasionally altering course more to the west to take greater advantage of the winds. But at 0100 hours on August 5, after receiving a weather report which indicated to him that he could not successfully cross ahead of the track of the hurricane into the south semicircle, the captain of the Anastasia II reversed course and proceeded northward. The Georgios G did the same. At 0300 hours August 5 the captain of the Anastasia II radioed weather reports to the Georgios G, having learned that her radio officer was sick. The Georgios G was then twenty miles off the starboard beam of the Anastasia II at 150 degrees. The Anastasia II then was overtaking the Georgios G. Between 0300 and 0500 hours the captain of the Georgios G informed the captain of the Anastasia Ii that his vessel was pitching and rolling but he did not say it was in trouble.

 At 0500 hours the last communication occurred. The Georgios G, which then was south of the Anastasia II and closer to the eye of the hurricane, reported that because of the weather she could not steer and altered her course to 140 degrees, which was toward the hurricane eye and the most intense part of the storm. At this time, according to records, the wind speeds were at an all time high for Caribbean hurricanes -- sustained wind speed of 172 miles an hour with gusts that reached 196 miles an hour.

 Petitioner and claimants relied upon expert testimony with the usual difference of opinion. Petitioner's expert estimated the force of a 196 mile per hour wind on the vessel as 800,000 pounds, or a pressure of 90 pounds per square foot. The significant wave height was twenty feet. *fn10" The petitioner's expert, applying a more conservative estimate of 60 pounds per square foot, was of the view that the force could readily blow the bridge apart and blow out the port holes. His judgment was that the vessel might have been hit by a tornado, filled with water and capsized. It was also his opinion that the combined effect of record high winds and strong wave action with waves breaking on the ship contributed to the capsizing of the vessel; that the lack of cargo gave maximum effect to the wind and waves by exposing more of the ship's surface areas to these forces. He also thought the ship was subject to the "Bernouilli" effect -- that is, that the winds blowing alongside the ship created regions of low pressure outside the ship leading to explosions inside the ship where the air was at normal pressure. He was of the view that if the ship had not lost its steering it could have steered away from the storm with a good likelihood that the vessel would have weathered the storm.

 The claimant's theory based upon its expert's opinion is that the Georgios G was unseaworthy when it left Rio Haina in that she had no cargo in her holds, which was extremely dangerous in hurricane weather because it made the ship unstable and difficult to steer since the propeller and rudder were not sufficiently submerged, rendering the vessel unmanageable in a hurricane.

 When the Rio Haina harbor master ordered the captains of the three vessels to leave the port, their decisions were limited. The choices were to refuse the harbor master's order and face arrest and imprisonment, which would have left the vessel without command and exposed it to the hazards of the oncoming hurricane, or to sink the vessel at the pier with the prospect of its being salvaged after the hurricane subsided, or to comply with the order and leave the port and head for sea. As to sinking the vessel, this presented other problems, since it required knowledge of the depth of the bottom, whether it was mud, whether other submerged vessels or derelicts were there, and finally required equipment from the shore, which it was unlikely the authorities would supply, having ordered the vessel to leave. The claimant's expert conceded that under the circumstances of the three options, the master of the Georgios G chose the best, *fn11" and made a prudent judgment in deciding to obey the order. Indeed, he acknowledged that since it was a "tough decision" even if the master had made the wrong choice, he could not be faulted for negligence. *fn12" Having decided to leave port, the master had to take the vessel to sea as she was, even though without cargo. The expert, accepting that the master was competent, did not dispute that during the more than four hour period that elapsed from the time the master was ordered out of port until the vessel's departure, as a prudent master, he would have utilized the time to completely ballast the ship and that there was no evidence presented upon the record that the ship's ballast pumps were incapable of performing their function. The expert also testified that the Georgios G was basically seaworthy, well built, well designed and inherently stable. *fn13" There is no basis upon which to hold the vessel qua vessel unseaworthy at the time of departure from the port, and under all the circumstances, it was not negligence for the master to proceed to sea.

 Claimants' expert also contended that the ship was seaworthy to encounter Hurricane Allen in that it had wooden hatch covers which were not watertight and probably became loosened by the intense wind, thus enabling water to run into the holds. The expert charged that loose water in the holds would create a "free surface" effect whereby, as the ship pitched and rolled due to the action of the wind and waves, the inertial effect of the loose water in the holds would exacerbate the degree to which the ship tilted until at some point the ship could no longer right itself and capsized suddenly. This theory, however, is based upon an assumption that the Georgios G's hatch covers were not watertight. The evidence showed that the wooden boards which covered the hatches were fastened securely and covered with tarpaulins to make them watertight as follows: The boards lay fore and aft across each hatch with their midportions resting on athwartship strongbacks and their ends in the flanges of athwartship beams. Tarpaulins covered the boards at each hatch and were secured with wedges hammered into cleats on the coaming of the hatches to make them watertight. A net was placed over the tarpaulins and tied to studs to protect the tarpaulins. The captain of the Anastasia II testified that he observed that the Georgios G's hatches were covered with canvas when she left Rio Haina and also that the Georgios G's crew had secured the ship for sea before it left port. Thus there is no reason to assume that the hatch covers were not fully secured and watertight to encounter the storm.

 Moreover, there were inconsistencies that undermined the testimony of claimants' expert as to the wooden hatch covers. Thus he conceded that the ship had been originally outfitted with wooden rather than steel hatch covers by the Japanese for good reasons of design and construction, due to the extra large hatches on the ship and that in its original Pacific log trade the ship would have been expected to encounter severe heavy weather. Another inconsistency is his disavowal of any contention that petitioner should have replaced the wooden hatch boards with steel hatch covers. Indeed, he conceded that to have done so would have, to some extent, decreased the ship's inherent stability.

 The evidence further established that it is not uncommon for ships to be fitted with wooden hatch boards; that ships so equipped have gone through hurricanes without sinking; and that many ships with hatchboards have been surveyed by Bureau Veritas and declared seaworthy. Under all the circumstances, the Court finds that the ship was not seaworthy due to the wooden hatch covers.

 Upon a word-by-word re-reading of the trial transcript, a study of the numerous exhibits, reference to the Court's trial notes made during the progress of the trial, and an appraisal of the demeanor of the expert witnesses, the Court concludes that the vessel before and during the storm was seaworthy and that it was not negligently operated. The disaster could not have been avoided. Hurricane Allen was the sole and proximate cause of the loss of the Georgios G. *fn14" The Court does not accept the conceptual theories advanced by the claimants' expert, *fn15" who with respect to some matters indicated that the area of inquiry was "very speculative" and "a guess."

 This disposition terminates not only the petitioner's proceeding but necessarily the action on behalf of the claimants against Starlight and Bradford, who upon the entire record are also entitled to judgment in their favor. However it is desirable *fn16" to consider and dispose of the claimants' contention, to which much testimony was also directed, that the general releases executed by them in settlement of their claims were void because they were not executed freely and with full understanding of their import.

 Our Court of Appeals recently held the rule, applicable to a seaman as a ward of the court, that subjects his release to strict judicial scrutiny and puts the burden of proof upon the shipowner to establish its validity, does not apply to members of his family, who are "land based" with ready access to the advice of friends and the guidance of counsel. *fn17" Petitioner's trial counsel, with commendable candor, questioned whether the announced rule will be upheld by highest authority and undertook the burden of proving that the releases were validly executed. *fn18"

 The petitioner urges that in view of a substantial issue of seaworthiness and negligence, choice of law problems, doubt in a number of instances that the claimed dependent of a seaman was in fact a dependent, the uncertainty of the amounts allegedly contributed by a deceased seaman to the alleged dependent, that under these and all the circumstances, in each instance, the amount paid in settlement was fair and reasonable and there was no overreaching of those who executed the releases.

 Liability was by no means clear. Indeed upon the facts there could be no certainty of judgment as to this issue without a judicial determination. Ultimately, as the ruling herein indicates, the shipowner, the charterer and the operator of the vessel did prevail on the basic liability issues. The uncertainty of result upon a trial obviously is an important consideration in evaluating the settlement value of a claim.

 So, too, the choice of law to be applied was the subject of sharp dispute. The particular applicable law significantly affects the value of a claim. The only law significantly affects the value of a claim. The only item the lawyers agreed upon was that federal law governed the basic issue of liability both in the limitation proceeding and the wrongful death claims but differed as to other matters. The claimants' lawyer contended, post trial, that Dominican law governed damages and also that Dominican law barred the limitation proceeding. *fn19" On the other hand petitioner's lawyer contended that United States law applied to all issues; however, if Dominican law applied, then the Dominican Republic would apply Panamian law, the law of the flag, under which recovery is limited to payments due under the Workmen's Compensation statute, which in each instance would be considerably less than the amounts paid to the dependents under the releases. *fn20" The dispute as to these contentions could not be resolved absent a judicial ruling upon a trial.

 Against that background of conflicting contentions we turn to the release issue. After the Georgios G was lost, Bradford, the operator, retained Freehill, Hogan & Mahar ("Freehill"), the New York attorneys for Molai's protection and indemnity association, West of England, to undertake settlement of all potential claims arising out of the disaster. Freehill engaged Raul Santigo ("Santigo"), a Miami based investigator of maritime claims who had formerly practiced law in Cuba and is fluent in Spanish and English, to determine the identities and whereabouts of the deceased crewmen's dependents in the Spanish speaking countries of the Caribbean area. In August 1980, Santiago went to the Dominican Republic. He located the families of the decedents and visited them in their homes, introducing himself as a lawyer for or representative of the shipowner. He informed the families that the shipowner wished to pay for the loss of the ...


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