the 4 days the cargo was being discharged. (Id. at 29-30.) He saw bevel ends being banged against the bulkhead, catching on the coaming and hit up against the wing into the coaming.
Cargo underwriters paid GTS's insurance claim of $ 201,196.36 in repair cost, plus $ 11,630.76 in survey fees for a total of $ 212,827.12, which plaintiff seeks to recover from defendants.
The parties have stipulated that plaintiff is the real party in interest entitled to bring this action on its own behalf and on behalf of its subrogated cargo insurers. The governing contract of carriage in this case is the charter party, and, therefore, the burden of proving damage as well as the cause of the damage remains always with the plaintiff. Associated Metals & Minerals Corp. v. S/S Jasmine, 983 F.2d 410, 414 (2d Cir. 1993) (citing Commercial Molasses Corp. v. New York Tank Barge Corp., 314 U.S. 104, 110-11, 86 L. Ed. 89, 62 S. Ct. 156 (1941)). A charter party is merely a contract, subject to all the rules and requirements of contract law. Grant Gilmore & Charles L. Black, Jr., The Law of Admiralty, § 4-1 at 195 (2d ed. 1975). The charterer must establish that the damage for which he seeks recovery was proximately caused by the carrier's breach of a one or more of the terms of the charter party. Associated Metals & Minerals Corp., 983 F.2d at 414 (citing Commercial Molasses Corp., 314 U.S. at 110).
The cargo was loaded at Dunkirk on April 2 and 3, 1991. The shipment of steel pipes, as described by the surveyor, Michel de Chalvron in a preshipment conditions survey, was in good condition and the bevel ends of the pipes were not damaged. There was some damage to the external polyethylene coating of the pipes. Thirteen (13) pipes with the damage to the coating 3mm deep or more were repaired on the spot, and some 20 pipes were repaired with an adhesive wraparound polyethylene tape. There were also ten bare, rusty pipes in the shipment. Some 17 damaged pipes were not repaired and shipped to Philadelphia, subject to a protest by the ship's master, noted on the bill of lading.
The bill of lading notes only the ten bare pipes and the 17 damaged pipes. Defendants argue that since immediate repairs were performed on coating with damage of 3mm or more in depth the cargo departed with coating damage of less than 3mm in depth. There is no evidentiary support for this contention. The bill of lading and the Chalvron survey indicate that except for the 17 damaged and ten bare pipes, the cargo when it left Dunkirk aboard the M/V Havtjeld bound for Philadelphia, was in good condition. There is no evidence of any damage occurring during the loading or stowage of the pipes. Indeed, Captain Aakerman, on hand throughout the loading and stowage process, operated on the assumption that it was the ship's officers and his responsibility to supervise the loading and stowage process. He observed nothing untoward during the loading or stowage of the cargo, and on inspecting the cargo before the ship's departure from Dunkirk found it to be in good condition.
Plaintiff has made a prima facie showing that except for the indicated exceptions, the cargo left Dunkirk in good condition.
The charter party, clause 2, places responsibility on the defendants for any loss or damage to the cargo "caused by any improper or negligent stowage of the goods . . . or by personal want of due diligence [by defendants] to make the vessel in all respects seaworthy . . . ." (Pl. Ex. 23.)
Clause 5 (b) is a FILO provision placing on the plaintiff charterer the task of bringing "the cargo into the holds, loaded and stowed . . . free of any risk, liability and expense whatsoever to the owners". (Id.) A FILO provision makes the shipper responsible for loading the cargo and paying the stevedores and other personnel needed for this task and the carrier responsible for discharging the cargo and for paying for those services. Sumitomo Corp. of America v. M/V "Sie Kim", 632 F. Supp. 824, 834 (S.D.N.Y. 1985) (citations omitted) (Gagliardi, J.).
Clause 5 (b) is headed "F.I.O. and free stowed/trimmed" which ordinarily shifts the risks and expense of loading, stowing and discharging cargo on the shipper. Associated Metals & Minerals Corp. v. M/V Arktis Sky, 978 F.2d 47, 49-50 (2d Cir. 1992). However, in the body of the clause the reference to the shipper's responsibility for discharging cargo is crossed out, leaving on the shipper only the burden of loading and stowage of the cargo without risk to defendants. This makes this a FILO provision.
Clause 2 of the charter party, which places responsibility for proper stowage on the carrier, and clause 5(b), which could be interpreted as placing that obligation on the shipper, appear to be in conflict. Evidently, Captain Aakerman and the ship's officers operated in the belief that Clause 2 was controlling since the ship's officers and he, as representative of the defendants, supervised the loading and stowing of the cargo.
If this case were governed by the Carriage of Goods by Sea Act ("COSGA"), 46 U.S.C. App. § 1300-1375 (1988), as defendants originally contended, the carrier would remain liable for improper stowage, since COGSA does not permit the carrier to divest itself of the duty to insure the proper stowage of the cargo. Associated Metals & Minerals Corp. v. M/V Arktis Sky, 978 F.2d 47, 50 (2d Cir. 1992); Nichimen Co. v. M. V. Farland, 462 F.2d 319, 330 (2d Cir. 1972). However, if the parties agree to hold the vessel owner free of liability for improper stowage, their private agreement controls, not COGSA. Associated Metals & Minerals Corp. v. S/S Jasmine, 983 F.2d at 412-13.
Defendants urge the admission of parole evidence to establish that the stowing of the cargo was the plaintiff's responsibility as agreed to by the parties. The matter appears to be moot, however, since there was no evidence of damage resulting from improper stowage of the cargo.
Defendants also seek parole evidence to show that the parties meant the FIO labelling of clause 5(b) to be controlling. Since the verbiage in the body of the clause is clear and unambiguous, parole evidence is not warranted. "Extrinsic (parole) evidence regarding the terms of [an] agreement [is] properly excluded in . . . the absence of any ambiquity." Sharma v. Skaarup Ship Management Corp., 916 F.2d 820, 828 (2d Cir. 1990), cert. denied, 499 U.S. 907, 113 L. Ed. 2d 218, 111 S. Ct. 1109 (1991) (citations omitted). The language which would have kept the clause a FIO provision is excised, which clearly evidences the intent of the parties that the ship owners, not the shipper, was to be bear the expense and risk of discharging the cargo on its arrival at Philadelphia. Indeed, the evidence establishes that the defendants assumed responsibility for the discharge operations at Philadelphia.
The cargo arrived in Philadelphia and when the holds of the vessel were opened in the presence of the representatives of all the parties considerable damage to the coating of the pipes was discovered due to rust scale from the coaming of the cargo compartments, and from nails and glass debris, apparently left by the loading stevedores at Dunkirk, which had become imbedded in the pipes' coating. During the discharge of the cargo, the discharging stevedores inflicted considerable damage to the pipes' coating by discharging the pipes on wooden saddles with protruding nails and damaged the bevel ends of the pipes by banging them against parts of the vessel in the off loading process.
Clause 2 of the charter party is an express warranty on defendants' part "to make the vessel in all respects seaworthy. One essential aspect of seaworthiness is that the vessel must be fit for the purpose intended under the charter party," Nichimen Co., 462 F.2d at 332; when a vessel owner has breached its warranty of seaworthiness, the "cargo owner may hold the shipowner on his warranty to the charterer." Siderius, Inc. v. M.V. "Amilla", 880 F.2d 662, 665 (2d Cir. 1989) (quoting New York Cent. R.R. v. New York, N.H. & H.R.R., 275 F.2d 865, 866 (2d Cir. 1960)).
The uncontroverted testimony was that much of the damage to the pipes' coating was caused by rust scale in the cargo compartments and Carney testified that this condition was of long duration. Defendants seek to escape liability for this breach of the warranty of seaworthiness by contending that clause 4, part 111 of the charter party providing that the ship's "holds are to be properly swept, cleaned and dried . . . to the Charterers' satisfaction", placed on the plaintiff responsibility to inspect and approve the ship's holds before the cargo was loaded. Accordingly, defendants argue that by accepting the ship as satisfactory, plaintiff cannot now complain about the presence of rust scale since this was a preexisting condition. However, the duty to provide a seaworthy ship is a duty the shipowner cannot delegate, and if cargo damage is caused by "some defect in the vessel which the Captain had failed to discover and correct, primary liability" falls on the ship owner. Nichimen, 462 F.2d at 332.
Damage to the cargo from the rust scale is defendants' responsibility, as is damage to the pipes' coating from protruding nails on the wooden saddles and to the bevel ends of the pipes in being banged against the bulkhead and other parts of the vessel during the offloading operation. Damage to the pipes' coating from embedded nails and glass debris appears to have been an aftermath of the loading for which defendants are not liable.
Plaintiff incurred $ 201,196.36 in repair costs, plus $ 11,630.76 in survey fees. Plaintiff is entitled to be reimbursed for the reasonable and necessary costs for repairing the damaged cargo, Scott & Williams, Inc. v. Pittston Stevedoring Corp., 422 F. Supp. 40, 43 (S.D.N.Y. 1976) (Weinfeld, J.); Interstate Steel Corp. v. S.S. Crystal Gem, 317 F. Supp. 112, 121 (S.D.N.Y. 1970) (Tenney, J.), and necessary expenses incidental to the loss, such as survey fees. Santiago v. Sea--Land Service, Inc., 366 F. Supp. 1309, 1317 (D.P.R. 1973).
Carney testified that the repair costs were reasonable. Esslinger, who acted for defendants, stated in deposition testimony that Transco was sending for repair some pipes with minor coating damage, but it is not clear that he made any complaint at the time. At any rate, the vulnerability of the pipes to corrosion and their intended use in an underground gas pipeline makes putative corrosion a public hazard which cannot be risked. Accordingly, the court cannot second guess Transco as to the need for repair.
Defendants challenge Carney's allocation of the cause of damage to the pipes because he made no such allocation in his field report. Carney did not quantify the kinds of repair costs until after litigation was instituted. But there was no need to do that until he was required to do so in pressing plaintiff's claims in this litigation. The defendants have proposed no alternative allocation of repair costs. The damage estimate of a surveyor is a valid basis for determining recoverable damages. Nissho-Iwai Co. v. M/T Stolt Lion, 1986 A.M.C. 269, 271 (S.D.N.Y. 1984) (Goettel, J.) (citing Empresa Central Mercantil de Representacoes, Ltda. v. Republic of Brazil, 147 F. Supp. 778, 780 (S.D.N.Y. 1957), aff'd, 257 F.2d 747 (2d Cir. 1958).
Accepting plaintiff's allocation of the repair costs, plaintiff is entitled to recover from defendants $ 130,000.00 for repair of coating damage due to rust scale, $ 26,000.00 for repair of damage from the protruding nails on the wooden saddles and $ 28,896.00 for damage to end bevels caused by rough handling of the discharging stevedores for a total of $ 184,896.00 for repairs.
From this amount $ 8,000.00 is deducted for repair of the 17 damaged pipes during the loading process. Carney estimated that reasonable cost of repair of these 17 pipes was $ 5,000.00. In addition there were ten pipes with no external protective coating, described by the surveyor at Dunkirk as "unprotected and rusty". No mention was made of these pipes during the hearing or post trial procedures. They could have been included in the repair operation in Philadelphia. Accordingly, the court is allocating $ 3,000.00 for those pipes. $ 8,000.00 is to be deducted for these items, leaving $ 176,896.00 in repair costs to be recovered from defendants. Plaintiff is also entitled to recover $ 11,630.76 in survey fees, for a total recovery against defendants of $ 188,526.76.
Although awarding of prejudgment interest is within the court's discretion, it is generally awarded, unless special circumstances warrant a contrary result. See Interstate Steel Corp., 317 F. Supp. at 123-24. No countervailing circumstances are present here. Accordingly, plaintiff is awarded prejudgment interest at 9 percent.
IT IS SO ORDERED.
Dated: New York, New York
July 28, 1994
ROBERT L. CARTER
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