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HOJGAARD & SCHULTZ A/S v. TRANSAMERICAN S.S. CORP.

July 18, 1984

HOJGAARD & SCHULTZ A/S and BRUUN & SORENSON A/S, Plaintiffs, against TRANSAMERICAN STEAMSHIP CORP., ZODIAC MARINE, INC., and M/V REGAL SKY, her engines, boilers tackle, etc., Defendants.


The opinion of the court was delivered by: DUFFY

KEVIN THOMAS DUFFY, D.J.:

This is an action brought under the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. § 1301 et. seq., to recover for damage to a shipment of "knock down" and "stand up" or "erected" prefabricated housing units and "associated equipment," Complaint P6, that were transported from Baltimore, Maryland to Jeddah, Saudi Arabia by defendant aboard the M/V Regal Sky ("Regal Sky"), owned by defendant Transamerican Steamship Corporation ("Transamerican") and chartered by defendant Zodiac Marine, Inc. ("Zodiac"). I held a nonjury trial on April 9 and 10, and on May 18, 1984. The following shall constitute my findings of fact.

 Plaintiffs Hojgaard & Schultz A/S ("Hojgaard") and Bruun & Sorensen A/S ("Bruun") are Danish construction companies engaged in a joint venture involving the purchase and erection of a construction camp in Saudi Arabia. Danac, Inc. ("Danac"), acting as agent for plaintiffs, contracted with International Module Corporation ("IMC") for the purchase of a complete "camp" consisting of 26 erected units and 101 knock down units. The latter units were to be stacked on top of each other in groups of three during transportation to Saudi Arabia. See Plaintiff Exh. 2; Tr. 39 (testimony of John Lindsay).

 By letter dated February 24, 1978, a booking note for plaintiffs' cargo was forwarded to Transamerican for signature. It provided in part: "4. The goods to be loaded Under deck Bills of Lading-Under Deck/on Deck" with "On Deck" crossed out. Defendants' Exh. P. However, by letter dated March 7, 1978, Stephen H. Busch of Transamerican informed the Marine Freight Company, which acted as agent for Transamerican in booking plaintiffs' cargo, that the booking note was revised "to restore clause 4 to its original form, i.e., with no deletions." Id. Thus, the executed booking note recited that the "goods [were] to be loaded Underdeck Bills of Lading Under Deck/On Deck." Id. The booking note was then forwarded to the freight forwarder, Defendants' Exh. H, who forwarded it to Danac, Defendants' Exh. I. The president of Danac, Bent Nielsen, signed the note and returned the original to the freight forwarder and a copy to plaintiffs. See Defendants' Exh. J.

 Pursuant to contract, on April 10, 1978, IMC delivered the carbo FOB Baltimore, Maryland where it was to be loaded aboard the Regal Sky from flatbed trucks by IMC employees. Zodiac, as charterer, operated the Regal Sky between Baltimore and Jeddah. Plaintiffs' Exh. 41 (Deposition of Bent Nielsen) at 13-14, 27-28.

 Before the vessel's arrival, on April 10, 1978, Transamerican's port captain, John Lindsay, went to the pier in Baltimore where he saw the prefabricated housing that were to be loaded aboard the vessel. Tr. 38-39. At trial, Lindsay described the knock down units as "three homes laid flat, stacked in units of three . . . held together by a cross frame on the ends." Tr. 39. The base of the three stacked units was a steel frame. Id. Captain Lindsay testified that when he arrived at the pier on April 10, 1978, he saw that "[s]ome of the knock down units had been -- were listed over and weren't in good shape [and that the] frames were broken and buckled." Tr. 39.

 On April 11, 1978, a survey of the knock down and erected units was performed at Pier 4 in Baltimore, Maryland. Plaintiffs' Exh. 2 at 1. The surveyors reported that IMC had supplied a device to be used by the stevedores in moving the units from the flatbed trucks to the container lot but that after moving approximately eleven units from the flatbed on the first day, March 23, 1978, the device was abandoned and two forklift trucks were utilized to lift the units. Id; Plaintiffs' Exh. 41 at 54. Apparently, however, because the erected units were packed with appliances and other goods, stress was placed on the center of the units. Plaintiffs' Exh. 2 at 2; see Tr. 46. The surveyors reported that approximately thirteen of the units were damaged from stevedore handling and use of the forklifts. Plaintiffs' Exh. 2 at 14.

 On April 11, 1978, the vessel arrived. Lindsay testified that Bent Nielson of Danac assured him that repairs would be made on the units that were damaged. Tr. 42. Such repairs were ultimately made and plaintiffs withheld from IMC the cost of the repairs and depreciation. See Defendants' Exh. BB. The erected units were stowed on deck and the knock down units were stowed partially under deck and partially on deck. Plaintiff's Exh. 5 (stowage plan); Tr. 45; see also surveyors report, Plaintiff's Exh. 2 at 14 ("[O]f the 57 KÅ and Erected Modular Units loaded, only 14 of the KÅ Units went underdeck.")

 In loading the units aboard the Regal Sky, the Baltimore stevedores used a spreader bar, slings and a crane. Tr. 45. Lindsay testified that the slings were annexed to the unit "a few feet from each end." Tr. 46; see also Tr. 131 (testimony of Ronald Gentzel). With some difficulty, loading was completed on April 13, 1978, at approximately 8:00 p.m. Tr. 47.The Baltimore surveyors noted in their report and the photographs taken by one of the surveyors disclose that some of the units were damaged during the loading process. See Plaintiffs' Exh. 2 at 14; Plaintiffs' Exh. 4.

 As soon as the Regal Sky arrived in Jeddah on May 9, 1978, a cursory inspection was performed of the cargo on board. No photographs, however, were permitted by the Saudi officials while the cargo was in the port area. See Plaintiffs' Exh. 42 at 16. *fn1" In his deposition, Jorgen Vorsholt who in 1978 was Hojgaard's project manager in Jeddah, stated that the day after the vessel arrived in Jeddah he went on board and inspected the cargo. Plaintiffs' Exh. 42 at 10. He testified: "[w]e saw several units which had salt water, we saw several walls which had been displaced, we saw windows which were broken." Id. When the units were discharged, Vorsholt stated, water poured from them. Id. A survey was performed at the port in Jeddah and the cargo was inspected again after it was transported to the construction site "sixty kilometers north of the discharge port." Id. at 13.

 The discharge of the Regal Sky was performed by stevedores at Jeddah Port known as Phelsinports from the Phillipines. Plaintiffs' Exh. 17 at 3. *fn2" The stevedores in Jeddah attempted to discharge the cargo by using the vessel's center crane; after abandoning the use of the crane, the stevedores used IMC's spreader. Id. Apparently, because the stevedores had difficulty balancing the erected units, the discharge was time consuming. Id. at 4. Once the first unit was placed on the trailer, the surveyor noticed that a panel was dented, flashing was ripped and torn and the roof was bent. Id. The surveyor concluded that the "damage was relatively superficial but evidently caused by the chains linking the slings to the spreader." id. The survey report notes also that the sides of several containers had been "stoved in" as a result of wave damage during the voyage. Id. See also Plaintiffs' Exhs. 14, 15 (photographs). *fn3" Thus, it is apparent to me that much of the damage -- especially the water damage, ripped flashing and the stoving in of the sides of units -- resulted from exposure to rough weather conditions because they were transported on deck rather than below deck. There is no doubt, however, that some of the damage to the units was caused by the stevedores in Jeddah.

 The survey report also stated that the knock down units were missing side panels and had been damaged by salt water. Plaintiffs' Exh. 17 at 8. The surveyor noted that the "fibreglass insulation material" was "saturated." Id; Plaintiffs' Exh. 16, at 3-4. *fn4" The knock down units transported below deck had no water damage but instead were damaged slightly during discharge. Id. Finally, the stevedores in Jeddah dropped a kitchen unit which was regarded by the surveyors as a constructive total loss. Plaintiffs' Exh. 17 at 7. The survey stated that because Jeddah regulations do not permit the offloading of damaged cargo, the kitchen unit was loaded back on the Regal Sky. Id.

 Thereafter, plaintiffs notified IMC by letter of its dissatisfaction with the packaging of plaintiffs' cargo. See Defendants' Exhs. U, Y. Plaintiffs withheld payment of $22,111.09 due IMC, see Defendants' Exh. BB, and withheld $12,000.00 from the amount of freight due Transamerican, see Defendants' Exh. O. Plaintiffs had the damaged units repaired and obtained a substitute camp pending the completion of repairs on the IMC units. See Plaintiffs' Exhs. 42 at 26-37, 44-45.

 On June 19, 1981, plaintiffs commenced this admiralty action against Transamerican, Zodiac, and the vessel seeking $200,000.00 in damages.

 DISCUSSIO ...


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