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COMPLAINT OF TECOMAR S.A.
May 31, 1991
IN THE MATTER OF THE COMPLAINT OF TECOMAR S.A., AS OWNER OF THE M/V TUXPAN FOR EXONERATION FROM OR LIMITATION OF LIABILITY.
The opinion of the court was delivered by: Tenney, District Judge.
In February 1987, the M/V TUXPAN mysteriously disappeared
with her crew of twenty seven and cargo worth $22 million. She
had departed from Bremen, Germany, on February 16, 1987, to
travel across the North Atlantic for her destination, Vera
Cruz, Mexico. However, sometime between February 24 and
February 28, the ship disappeared leaving no wreckage, debris,
or survivors. The owner of the TUXPAN, Tecomar, S.A.
("Tecomar") petitions this court to limit its liability
pursuant to 46 U.S.C. App. §§ 181 et seq. (1988) ("Limitation
Act"). The cargo claimants ("Claimants") subsequently filed
claims against Tecomar pursuant to the United States Carriage
of Goods by Sea Act ("COGSA"), 46 U.S.C. § 1300 et seq.
(1982), and the International Convention for the Unification of
Certain Rules Relating to Bills of Lading at Brussels on August
25, 1924 ("The Hague Rules"), and their 1968 amendments ("The
Visby Amendments"), as interpreted by the laws of Germany and
Belgium. For the reasons set forth below, Tecomar's petition to
limit its liability pursuant to the Limitation Act is denied,
as are its claims for package limitation under the Hague Rules
and Visby Amendments. Claimants' claims are allowed subject to
future adjudication as to exact amounts and except to the
extent they are subject to a package limitation under COGSA, 46
U.S.C. App. §§ 1300 et seq. The following, including those
additional facts set forth in the Discussion, constitutes the
court's findings of fact and conclusions of law as required by
1. The TUXPAN was owned by Tecomar, a corporation which was
created in 1971 under the laws of Mexico and whose principal
place of business is in Mexico City, Mexico. Pretrial Order,
Joint Undisputed Facts ¶¶ 1, 21 [hereinafter PTO].
2. Claimants are comprised of 137 entities asserting 107
claims against Tecomar for damages in the aggregate amount of
$22,229,583.27. Id. at 2 ("Relief Prayed").
(a) Corporate and Operational Structure of Tecomar
3. Tecomar was, and still is, managed and controlled by the
"Council of Presidents," which establishes the general policies
of the company and gives specific management directions to the
heads of the various operational and administrative departments
within the corporation. Id. ¶¶ 25-26.
4. The day-to-day operations of Tecomar are handled by
various departments within the organization, such as the
Operations Department, the Technical Department, the
Administrative Department, and the Insurance Department.
Id. ¶ 26.
(b) Structure of Tecomar's Technical Department
5. The Technical Department is responsible for the
maintenance and repair of Tecomar's vessels. Id. ¶ 32. The
functions and procedures of this department are described in
the company's "Operations Manual." Id. ¶ 27.
6. The Technical Department is headed by the Technical
Director who has complete authority over the maintenance of all
Tecomar vessels, including the power to revise vessel schedules
in order to facilitate repairs. Id. ¶ 41. The Technical
Director also has plenary authority to dry-dock the vessels, if
he believes the repairs are necessary for the safety of the
vessel and its crew.*fn1 See id.
7. The Technical Director reports to three vice-presidents,
namely, Herman Stoldt, Carlos Viveros, and Helmut Muller.
Id. ¶¶ 27, 40. The Director reports to Stoldt with respect to
financial matters, to Muller regarding operations, and to
Viveros regarding day-to-day technical matters, discipline and
order of crew members, and union activities. Id. ¶ 39.
8. The Captains of the Tecomar vessels and their Chief
Engineers report directly to the Technical Director.
Id. ¶ 29. The day-to-day functions of the Technical Department
are performed by the port engineer section, which is
responsible for vessel maintenance and repair of Tecomar
vessels when they are in Mexican ports. Id. ¶¶ 28, 33.
9. The Technical Department coordinates with the Operations
Department regarding cargo operations, the maintenance of
Tecomar's vessels, and the scheduling of the vessels in light
of the maintenance or repairs that are required. Id. ¶ 31.
10. The Technical Department also coordinates with the
Insurance Department regarding claims relating to Tecomar's
vessels or their operations. Id. ¶ 30. The Insurance Department
reports directly to the Council of Presidents. Id.
11. Tecomar's broker for hull and machinery insurance, as
well as for Protection and Indemnity ("P & I") insurance, was
and continues to be the Fred S. James Company, Inc. of New
York. Id. ¶ 39.
12. Since the mid 1970s, three individuals have held the
position of Technical Director: Captain Jesus Morales ("Captain
Morales") (mid 1970s until October 1985); Captain Luis Perez
Hernandez ("Captain Perez") (October 1985 to December 1985);
and Rafael Lopez Ruiseco ("Lopez") (from December 1985 to
date). Id. ¶ 42.
13. From late 1980 through early 1985, Lopez served as Deputy
Technical Manager. Id. ¶ 43. Lopez's duties in this position
involved assisting Captain Morales in maintaining and repairing
the hull and machinery of Tecomar's vessels. Id. ¶ 44. During
the construction of the TUXPAN, Lopez acted as one of Tecomar's
representatives. Id. ¶ 45. For one voyage in 1982, Lopez sailed
aboard the TUXPAN as chief engineer. Id. ¶ 46. In early 1985,
Lopez left the employ of Tecomar, but was rehired as Tecomar's
Technical Director when Captain Morales' tenure ended in late
1985. Id. ¶ 43.
(c) Operation of Tecomar Vessels
14. Many of Tecomar's policies regarding the operations of
its vessels have been memorialized in two manuals: (1)
"Captain's Instructions, Part A and B" ("the Captain's
Manual"), and (2) "Staff Functions and Procedures" ("the Lopez
15. One of Tecomar's policies requires that its vessels at
sea report their noon positions on a daily basis. Id. ¶ 58.
These reports provide the following information: the number of
the telex message, the day and time the message was sent, the
latitude and longitude of the vessel, the vessel's course and
speed, the wind according to the Beaufort scale and the sea
state according to the Douglas scale,*fn3 the fuel
consumption, the engine revolutions per minute, and the
vessel's estimated time of arrival ("ETA") at its next port of
call. Id. ¶ 59.
16. It is also Tecomar's policy to require its captains to
obtain weather reports on a regular and timely basis, and to
inform the Technical Department of the daily wind and sea
conditions.*fn4 Id. ¶ 115. Furthermore, Tecomar requires that
the Technical Director be notified immediately of any emergency
arising onboard a Tecomar vessel. Id. ¶ 60.
17. Since 1982, Tecomar and its vessels have participated in
the United States Coast Guard's "Automated Mutual Assistance
Vessel Rescue" system ("AMVER"). Id. ¶ 70. Pursuant to the
rules of AMVER, Tecomar vessels are requested to report their
position, ETA, speed, and last encountered weather conditions
directly to AMVER every forty-eight hours. Id.
18. The TUXPAN was a registered vessel of the Republic of
Mexico, flying the Mexican flag, whose home port was Tuxpan,
Mexico. Id. The ship was built in Germany by the shipyard of
J.J. Sietas GmbH ("Sietas") between June 1981 and May 1982. Id.
¶ 3. In May 1982, the TUXPAN was delivered by Sietas with a one
year warranty.*fn5 See id. ¶¶ 3, 18.
19. Tecomar employed the following entities to assist in
maintaining the TUXPAN: the engine manufacturer, Krupp Mak
Maschinenbau GmbH ("MAK") to make any engine repairs in Bremen
and Antwerp; the firm of Peter Donjak ("Donjak") to make any
repairs to the hull or structural parts in Europe; and the
shipyards of Sietas, A.G. Weser, and Motorenwerke Bremerhaven
GmbH ("MWB") for other miscellaneous repairs. Id. ¶¶ 35, 37.
(a) Design & Construction
20. Throughout the designing and building of the TUXPAN,
Tecomar employed the firm of Peter Gast ("Gast") as a
supervising consultant. Id. ¶ 12. Gast was affiliated with a
naval architectural firm, Euroluk, which also supervised
construction of the TUXPAN on behalf of Tecomar. Id. ¶ 13.
Tecomar's Technical Director and Deputy Technical Manager
reviewed and discussed the building specifications with the
consultants from Gast. Id. ¶ 16.
21. Gast stationed three of its employees at the Sietas
shipyard to supervise the TUXPAN's construction. Id. ¶ 14. In
addition, several members of Tecomar's Technical Department
frequently traveled to the Sietas shipyard during the ship's
construction, and spent the last month of this period aboard
the vessel. Id. ¶ 15.
23. The customary trade route for both ships was between
Mexico (Vera Cruz and Tuxpan) and Northern Europe (Antwerp and
Bremen) via the United States (Houston, Texas).*fn7 PTO ¶ 67.
A round-trip voyage at the TUXPAN's normal speed of 15.5 to 16
knots took approximately forty-two days. Id. ¶¶ 68, 69.
24. The winter season for the North Atlantic along this trade
route is from November 1 to March 31. J. Exh. 730.
25. When designing an ocean-going vessel for worldwide
service, the customary practice of ship designers is to
anticipate voyages through geographical regions which will
expose the vessel to the greatest structural forces.
See J.Exh. 1327 at 7, 10, 32. Within the shipping industry, it
is commonly known that a vessel will experience the heaviest
weather — and thus be subjected to the greatest physical
forces — during the winter season in the North Atlantic.
J.Exh. 1327 at 7, 10; Tr. 334-36, 381-82, 1369-76, 91-92. One
of the most severe weather phenomena of the winter North
Atlantic is what is called a "meteorological bomb."*fn8 Such
bombs often produce significant wave heights*fn9 of thirty to
forty feet. Tr. 1367-76, 395; Cl. Exh. E. Thus, when designing
a vessel to traverse the winter North Atlantic, naval
architects take into account the probability that the vessel
will encounter significant wave heights of this
magnitude.*fn10 Tr. 2006-07.
26. The TUXPAN was designed and built for the carriage of
cargo packed in containers. PTO ¶ 3. The ship had three cargo
holds, each with the capacity of approximately 8,350 gross tons
and 4,520 net registered tons.*fn11 Id. ¶ 4.
27. The overall length of the ship was approximately 437
feet, the molded depth approximately thirty-seven feet, and the
breadth approximately sixty-six feet. Id.
28. The main engine, built by MAK, was a medium speed diesel
engine,*fn12 capable of producing 8,160 brake horsepower.
Id. ¶¶ 8, 9. During the TUXPAN's construction, Tecomar
requested Sietas to convert some of the ballast tanks*fn13
into fuel tanks, thereby enabling the ship to carry more fuel
rather than taking on fuel in European ports. Id. ¶ 17.
29. The hatchcover system*fn14 for the TUXPAN was designed
and built by MacGregor-Navire ("MacGregor"). Id. ¶ 10.
31. As a Type 114 vessel, the TUXPAN was an open ship with
extremely large hatch openings, thus making it more susceptible
to torsional and transverse stresses. See Tr. 1890, 2454-60;
32. The design of the Type 114 vessel is almost identical to
that of its predecessor, the Type 113. Tr. 2482. The Type 114,
however, is longer than the Type 113, and thus, is generally
subject to higher levels of stress. Tr. 1896-97, 2461.
33. Prior to the creation of the Type 114 series, GL
recommended several design modifications for the Type 113
series in order to reduce the stress levels on Type 113
ships.*fn15 See J.Exh. 350. However, even though both series
were almost identical, Tecomar did not incorporate any of the
modifications suggested for the Type 113 into the design of the
TUXPAN.*fn16 Tr. 2461-62. In addition, Tecomar introduced a
new tanktop arrangement on the TUXPAN, which included two 90
degree discontinuities in place of the Type 113's design of
gradually sloped tanktops.*fn17 Tr. 2473-74; see also Tr.
34. In spite of Tecomar's decision not to modify the TUXPAN's
design so as to incorporate the changes suggested for the Type
113, and its decision to change the ship's tanktop arrangement,
GL certified the TUXPAN as a vessel for unrestricted ocean
voyage. PTO ¶ 109; J.Exh. 1222.
35. In order to obtain weather reports, the TUXPAN was
equipped with a weather facsimile receiver and printer, and a
telex machine. PTO ¶ 110. The reports — issued every four
hours — contained updated information about the wind, wave and
weather developments in the area, as well as the conditions
along the anticipated route of the vessel. Id. ¶ 111.
36. The TUXPAN was equipped with three barometers and a
barograph, enabling the crew to obtain the current barometric
pressure and the history of the barometric pressure over a
particular period of time. Id. ¶¶ 111, 112. The ship also had
an anemometer that measured wind speed and direction. Id. ¶
37. The TUXPAN had a radio, telephone, and telegraph, all of
which enabled its captain and officers to communicate with
Tecomar, the Coast Guard, and other vessels within a large
geographical area. See id. ¶ 114. Communications between the
TUXPAN and Tecomar were sent through Radio Mexico and other
radio stations around the world. Tr. 1098-1104.
38. The TUXPAN received weather reports from the United
States National Weather Service ("the Weather Service"). The
Weather Service broadcasts wind and wave conditions every six
hours (at 0400, 1000, 1600 and 2200 hours Greenwich Mean
Time ("GMT")).*fn18 Id. ¶ 121. Each broadcast contains
"synopses" describing the observed wind and waves that existed
approximately four hours before the scheduled time of the
broadcast. Id. ¶ 122, Tr. 1360. In addition, each broadcast
contains a forecast of the conditions to be expected
approximately 36 hours after the observations were made. PTO ¶
39. Weather is also described by weather reporting vessels,
including the United States Coast Guard ("Coast Guard"), and
the Global Spectral Ocean-Wave Model ("GSOWM").*fn19 Tr.
199-200. In addition, a NASA satellite orbiting the Earth
("GEOSAT") records actual wave heights. Id. The wave heights
reported and forecasted by all of these sources are significant
wave heights. PTO ¶¶ 124-126. Among these three sources — ship
reports, GSOWM, and GEOSAT — ship reports are considered the
least accurate and GEOSAT the most accurate. Tr. 299-302, 1348,
40. The radio station onboard the TUXPAN was operated by the
ship's radio officer for at least fourteen hours per day,
usually between the hours of 0800 and 2200, local time.
Id. ¶ 107. The radio officer routinely received weather
information via telex, facsimile, voice radio, radio telephone,
and morse code, which he in turn relayed to the ship's Master,
who was responsible for evaluating all weather reports and
forecasts. Id. ¶¶ 108, 109, 118. Based on his evaluation of
these reports and other relevant information, the Master
determined the course and navigation of the ship. Id. at ¶ 120.
(c) Previously Experienced Weather
41. Prior to the winter of 1987, both the TUXPAN and the
TUMILCO had experienced winds of at least Force 11 on the
Beaufort scale and sea conditions of at least Force 8 on the
Douglas scale.*fn20 See Tr. 1270-75.
42. On five separate voyages, the TUXPAN encountered winds of
Beaufort Force 9-12 and seas of Douglas Force 7-8. J. Exhs.
948, 962, 965, 1000.
43. From May 1982 through July 1987, the TUMILCO experienced
at least three incidents of sea states of Douglas Force 8 and
two incidents of sea states of Douglas Force 9. J. Exhs. 731,
738, 739, 756, 757. On one occasion, while crossing the North
Atlantic in January 1984, the TUMILCO experienced hurricane
force winds (Beaufort Force 12) and "mountainous" seas of up to
66 feet (Douglas Force 9) for at least 12 hours. J.Exhs. 756,
731; Tr. 1275-76, 2387-89.
44. Both the TUXPAN and TUMILCO exhibited crack problems in
their tanktops, wing tanks, deck plating and hatch covers
almost immediately after they were delivered to Tecomar.*fn21
Many of these cracks appeared at the same time and in the same
location on both ships. Tr. 2343-44, 1597; Cl.Exhs. A1, A2, A5.
45. Over the course of its five year lifetime, the TUXPAN
118 cracks*fn22 to its tanktops, wing tanks, bulkheads, shell
plating, deck plating and hatch covers.*fn23 Tr. 2332-34,
2341, 2344-45; Cl.Exhs. A1, A2. During the same period, the
TUMILCO sustained approximately 65 to 85 cracks in its
tanktops, wing tanks, ballast tanks, bulkheads, shell plating,
deck plating and hatch covers. Tr. 2342-44, 2347-48; Cl.Exh.
A5. Many of the cracks sustained by both vessels were
discovered after the entrance of water and fuel oil into their
cargo holds and engine rooms while the vessels were at sea. Tr.
1571-86, 1600-33, 787-788; Cl.Exhs. B1, B6, A1, A2, A5; J.
Exhs. 33, 100, 101, 108, 775.1, 776, 847.
46. The rules of GL require that a shipowner report cracks
and other defects to GL's surveyors.*fn24 J.Exh. 913 at § 2, ¶
4.4. GL has the facilities and expertise to determine the cause
of a particular crack, whether it is serious, whether the
repairs made or contemplated are proper, and whether certain
phenomena (e.g., the same cracks appearing on a sister ship)
require additional investigation. Tr. 810-11, 813-14, 865, 871,
902-03. Furthermore, GL provides surveyors who regularly
inspect reported cracks and supervise their repair. Tr. 657-59,
663, 671, 814, 865, 873-75, 902-03; see J.Exhs. 869, 913 at §
3, ¶ 2.1.
47. If a shipowner fails to abide by GL's rules, GL has the
authority to temporarily suspend the vessel's regularly
scheduled service, or to permanently withdraw the vessel's
classification certificate. See J.Exh. 913 at § 2, ¶ 4.5,
J.Exh. 1330 at 56-58; Tr. 656, 870, 1084-87. Without a
classification certificate, a shipowner cannot obtain insurance
for the vessel, and thus, the vessel loses all commercial
value. J. Exh. 1330 at 56-58; Tr. 1084-87.
48. GL also requires a shipowner to obtain class renewals
every four to five years by submitting its ship for "special"
and "continual" surveys. Tr. 615-16. The special survey is
performed only at the end of the period when the ship is due
for class renewal, while the continual surveys are performed
throughout the classification period. Tr. 616. On the TUXPAN,
the engine received continual surveys, while the hull was
subject to the special survey system. Id.
49. The International Convention for the Safety of Life at
Sea ("SOLAS"), which Mexico ratified in 1983, also requires
that a shipowner report any defects or repairs made on the ship
to its surveyor or other maritime authority. Ch. 1, Part B,
Regs. 7(b)(ii), 11(c); Tr. 2799-2800.
50. In March 1983 — approximately ten days after Sietas
delivered the TUXPAN to Tecomar and while the ship was at sea
— the crew discovered cracked weldings between the bulkhead of
the watertight engine room and cargo hold # 3, located at a
seam where the bulkhead met the top of the fuel tanks.*fn25
Tr. 1571-72; J.Exh. 100.
52. During the construction of the TUXPAN and TUMILCO, Gast
advised Tecomar on several occasions about Sietas' poor
workmanship. J.Exhs. 520-22. Moreover, before construction had
commenced, Lloyd's Register informed Tecomar that Sietas'
proposed design did not meet the minimum requirements for that
classification society.*fn26 See Tr. 2054-57; J.Exhs. 320,
53. In September 1983, during an inspection of heavy weather
damage to the TUXPAN's bow area, Tecomar's Technical Department
discovered that four brackets*fn27 had not been built into the
vessel, even though they appeared in the original drawings. Tr.
1563-65, 1575; J.Exh. 329 at 4-5. Despite this departure from
the original construction drawings, Tecomar made no
investigation to discover the possibility of other
discrepencies between the drawings and the vessel as delivered.
Tr. 1563-65; J.Exhs. 329, 869, 893, 894.
54. Contrary to GL's rules and regulations, Tecomar failed to
inform GL that these brackets were missing, that the vessel's
drawings did not conform to its actual construction, and that
the vessel had sustained structural damage as a result of heavy
weather. Tr. 1564-65, 671-72; J.Exh. 329, 913 at § 2, ¶ 4.4.
55. In September 1984, the TUXPAN's crew discovered a crack
in the weld of one of the ship's wing tanks.*fn28 J.Exh. 33;
Tr. 1575-76. Although this crack was repaired, the ship's crew
reported on November 30, 1984, that it had reopened. J. Exh.
108; Tr. 1578-80.
56. On December 1, 1984, the crew discovered that a crack in
hold # 2 had caused five inches of water to accumulate inside.
J.Exh. 847; Tr. 1580-81. On December 6, 1984, another crack
— approximately six inches long — was found in the tanktop of
that same hold. J.Exh. 775.1; Tr. 1583-1584. Furthermore, that
same day, three arc-shaped cracks — each five to six inches
long — were found at three different frames. J.Exh. 776; Tr.
57. In September and December 1984, Tecomar's Technical
Director, Lopez, attempted to ascertain the cause of the cracks
in the area of the tanktop by investigating the TUXPAN's double
bottom tanks.*fn29 Tr. 1665-66. In doing so, Lopez observed
that the stiffeners below each lashing point were incorrectly
placed, thereby causing the containers which sat on the lashing
points to crack the tanktops.*fn30 Tr. 1666-67; see also
J.Exh. 317. Lopez concluded that in order to solve the cracking
problem, additional stiffeners needed to be placed under the
Tr. 1666-67; J.Exh. 317.
58. Despite Lopez's conclusions, Tecomar did not attempt to
repair the cracks created by the misaligned stiffeners on the
TUXPAN, even though the ship proceeded to dry dock in ...