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July 23, 1991


The opinion of the court was delivered by: Cedarbaum, District Judge.


Plaintiff Toyomenka Pacific Petroleum, Inc. ("Toyomenka") is a California corporation. Defendant Hess Oil Virgin Islands Corp. ("Hess") is a U.S. Virgin Islands corporation. Toyomenka brings this diversity action to recover demurrage for Hess's delay in taking delivery of a cargo under a contract for the sale of crude oil. Both parties have moved for summary judgment. Because the material facts are not in dispute and I conclude that Hess's delay is excused by the force majeure clause of the contract, Hess's motion for summary judgment is granted and Toyomenka's motion is denied.


The following facts are undisputed except where noted.

Hess owns an oil refinery on St. Croix with a terminal for receiving crude oil. On September 11, 1989, Toyomenka contracted to sell crude oil to Hess and to deliver the oil by ship to Hess's St. Croix terminal between October 25 and November 7, 1989. (Contract, Cl. EEE.)*fn1 Toyomenka provided the wording of the Contract. (Toyomenka Rule 3(g) Counterstatement, ¶ 2.)

The Contract provided that Hess would pay demurrage for the ship's laytime at the terminal. (Contract, Cl. JJJ, KKK.) The Contract fixed the rate of demurrage "as per charter party demurrage rate." (Contract, Cl. KKK.) On September 15, 1989, Toyomenka chartered the Edenburgh Fruid ("Fruid") to deliver the oil to Hess under a charter party which set daily demurrage at $17,500. (Toyomenka Ex. 2, Part I, Clause I.)

The Contract also included a force majeure clause, Clause QQQ, which reads as follows:

    Neither seller nor buyer shall be liable for
  damages or otherwise for any failure or delay in
  performance of any obligation hereunder other than
  the obligation to make payment, where such failure
  or delay is caused by force majeure, being any
  event, occurrence or circumstance reasonably
  beyond the control of the party claiming force
  majeure, including without prejudice to the
  generality of the foregoing, failure or delay
  caused by or resulting from acts of God, strikes,
  labor disputes, fires, floods, wars (whether
  declared or undeclared), riots, destruction of the
  product, delays of carriers due to breakdown or
  adverse weather, perils of the seas, embargoes,
  accidents, restrictions imposed by any
  governmental authority (including allocations,
  priorities, requisitions, quotas and price
  controls). The party claiming force majeure shall
  give written notice thereof to the other party
  within forty-eight (48) hours of the occurrence
  thereof, stating in reasonable detail the cause
  and the expected duration. The affected party
  shall use reasonable diligence to remove the force
  majeure situation as quickly as possible. . . .
  The time of the seller to make or buyer to receive
  delivery hereunder shall be extended during any
  period in which delivery shall be delayed or
  prevented by reason of any of the foregoing
  causes, up to a total of thirty (30) days. If any
  delivery hereunder shall be so delayed or
  prevented for more than thirty (30) days, either
  party may terminate this contract with respect to
  such delivery

  upon written notice to the other party.

(Contract, Cl. QQQ.)

On September 17 and 18, 1989, Hurricane Hugo passed over St. Croix, causing damage to Hess's terminal and refinery. Toyomenka does not dispute that its personnel "were in nearly daily contact with [Hess] following the hurricane, were apprised of this circumstance," and that "information regarding the condition of the refinery was communicated to them as such became available." (Hess Rule 3(g) Statement, ¶ 14.)

On September 26, 1989, Hess telexed a notice to Toyomenka which read:

    As you know, as a consequence of Hurricane Hugo
  which devastated St. Croix, USVI, our facility
  there suffered substantial damage and is
  completely inoperative.
    Following our survey of the facility, it has
  been determined that we are unable to receive or
  process captioned cargo, and we are presently
  unable to advise as to the duration and
  consequence of this force majeure event. We shall
  advise you when we are in a position to do so.
    Regrettably, under the circumstances of this
  force majeure event, and in accordance with Clause
  QQQ of captioned contract, please accept this as
  our notice of such force majeure.

(Toyomenka Ex. 3A.)

Two days later, on September 28, Hess again telexed Toyomenka, this time stating that it appeared that the harbor's ship channel would be reopened on October 3 and that Hess "can discharge crude oil into our refinery to be held in storage until some future date when the refinery will process same." Hess concluded: "In view of the above, it appears now, and we will make our best ...

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