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May 31, 1991


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 Fed.R.Civ.P. 52(a).


A. The Parties

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 Manual").*fn2

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.

B.  The Vessel

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.

22. Both the TUXPAN and its sister ship, the M/V TUMILCO, were designed, built, and certified as ocean-going vessels for worldwide trading service. Tr. 1104; J.Exh. 3.*fn6 The two ships were designed with virtually identical specifications, and were built for Tecomar at the same time, for the same trade routes, and with the same materials. J. Exh. 3.

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; Cl.Exh. Z.

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. 2492-94.

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.

(b) Equipment

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. ¶ 113.

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 ¶ 123.

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, 1390-93.

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.

(d) Crack History

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 sustained approximately 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, 321, 322.

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. 1583-85.

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 tanktop areas.*fn31 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 ...

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