The opinion of the court was delivered by: MOTLEY
Plaintiffs Seguros Banvenez (Seguros) and C.V.G. Electrificacion del Caroni (Edelca) have brought a motion for summary judgment against defendants S/S OLIVER DRESCHER, her engines, boilers, tackle, etc. (Drescher), Compania Anonima Venezolana de Navegacion (Venline), Containership Erich Drescher K.G. (Drescher), Containerline Joachim Drescher (Drescher), Reederei Joachim Drescher (Drescher), and Hansen & Tidemann, Inc. (Hansen & Tidemann). In addition, plaintiffs seek an award of punitive damages because they allege that defendants' conduct was wantonly and willfully fraudulent. Plaintiffs also have made a motion to dismiss Venline's counterclaim as frivolous. Defendants, in turn, have made a variety of motions. Venline has made a motion for partial summary judgment to limit plaintiffs' damages, if any, to $500.00. In addition, Venline has made a motion to stay the dispute between Venline and Drescher pending arbitration proceedings. Drescher has made a cross-motion for summary judgment against Venline. Hansen & Tidemann has made a motion for summary judgment against plaintiffs.
For the reasons set forth below, plaintiffs' motion for summary judgment against all the defendants on the issue of liability is granted. Their claim for punitive damages, however, is denied. Venline's counterclaim against plaintiffs is dismissed as frivolous, and Venline's motion to stay the proceedings is denied. Venline's motion for partial summary judgment also is denied. Motions for summary judgment by Drescher as well as Hansen & Tidemann are denied.
Edelca, A Venezuelan company, purchased five construction cranes which were to be shipped aboard the S/S OLIVER DRESCHER from Baltimore, Maryland to Matanzas, Venezuela. Seguros was the insurance carrier for Edelca. Venline served as the charterer for the S/S OLIVER DRESCHER. Hansen & Tideman served as an agent for Venline, by supplying blank Bill of Lading forms to all parties and by preparing the stowage plans for the shipment of these five cranes. Captain Alvarez, an employee of Venline, approved the stowage plans submitted by Hansen & Tidemann.
Despite the fact that the Bills of Lading and dock receipts specified underdeck stowage of the cranes, all five were stowed above deck on the ship. Moreover, the Bills of Lading specified a voyage departing from Baltimore and arriving in Matanzas. Sometime after the cranes were loaded, it was decided that the S/S OLIVER DRESCHER would make a geographical deviation to Searsport, Maine in order to load additional cargo.
While the ship was headed towards Maine, it encountered a severe storm, and the cranes were washed overboard. Plaintiffs claim damages in the amount of $1,196,354.11, plus interest, costs, attorneys' fees, and punitive damages. Seguros and Edelca allege that both the geographical and on-deck deviations were unreasonable; therefore, defendants are liable to plaintiffs as insurers. Plaintiffs further contend that defendants' actions constitute willful and wanton fraud, thus entitling plaintiffs to an award of punitive damages.
Venline contends that stowing the cranes on-deck was not an unreasonable deviation in light of the circumstances. That is, defendant suggests that custom or usage between the carrier and shipper may justify stowing cargo on-deck despite specific instructions to the contrary on the Bills of Lading and Dock Receipts.
In an opinion issued shortly after the passage of the Carriage of Goods by Sea Act of 1936, 46 U.S.C. § 1300-1315 (1976) (COGSA) this Court held that on-deck stowage was specified in the Bill of Lading. Jones v. The Flying Clipper, 116 F. Supp. 386, 389 (S.D.N.Y. 1953). Judge Weinfeld reasoned that:
A shipper has the right to assume that the carrier will not deviate and thereby subject the cargo to other than the known risks inherent in a normal route or underdeck stowage. The shipper protects himself by insurance commensurate with such calculated risks. But when the carrier deviates and enters upon "a different venture from that contemplated," he exposes the cargo to unanticipated and additional risks against which he has not protected himself. The shipper, in effect, has been lulled into a false sense of security by the carrier's actions.
. . .. Deck stowage where underdeck stowage is required is more than negligence -- it is a deviation with resulting abrogation of the contract.
Id. at 389 (footnotes omitted).
Judge Weinfeld's analysis was upheld by the Second Circuit in Encyclopaedia Britannica v. SS Hong Kong Producer, 422 F.2d 7, 18 (2d Cir. 1969), when the court rejected a shipowner's contention that habit constitutes a valid custom. In the absence of the shipowner's proof that a stowage deviation constituted a valid custom, the Second Circuit held that:
In consequence the bill of lading must be treated as a clean bill importing below deck stowage. The stowing of the six containers on the weather deck ...