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CARGILL INC. v. BUREAU VERITAS

October 18, 1995

CARGILL INCORPORATED, CARGILL INTERNATIONAL S.A., ANDRE AND CIE S.A., FRAHUIL S.A., VANDEMOORTELE, PAKSOY TICARET VE SANAYIA A.S., MADRA AKIN YAGCILIK VE SABONCULUK A.S. and CONTIMPEX S.A., Plaintiffs, against BUREAU VERITAS, Defendant.

John E. Sprizzo, United States District Judge


The opinion of the court was delivered by: SPRIZZO

SPRIZZO, D.J.,

 Plaintiffs Cargill Incorporated, Cargill International S.A., Andre and Cie S.A., Frahuil S.A., VandeMoortele, *fn1" Paksoy Ticaret Ve Sanayia A.S., Madra Akin Yagcilik ve Sabonculuk A.S. and Contimpex S.A. (collectively, "plaintiffs") bring the instant maritime action to recover monetary damages of $ 2.35 million. Defendant Bureau Veritas moves for summary judgment pursuant to Federal Rule of Civil Procedure 56(c) on the basis that a classification society is not liable as an insurer of a vessel's seaworthiness and that plaintiffs neither actually nor reasonably relied on defendant's classification of the vessel M/T PACIFIC DAWN ("Pacific Dawn"). *fn2" For the reasons that follow, defendant's motion is granted.

 BACKGROUND

 Bureau Veritas, a classification society, develops rules for the classification of ships and conducts periodic surveys to ensure the satisfaction of requirements for specified classes. See Affirmation of Steven Hammond dated Nov. 12, 1993, R.D. # 14, ("Hammond Aff."), Ex. A, BV Rules and Regs., ("Ex. A"), Art. 1.1. A shipowner contracts with Bureau Veritas to classify its vessel in accordance with Bureau Veritas' rules and to publish the ship's name and other pertinent information in Bureau Veritas' Register. See id., Art. 3.

 Bureau Veritas' rules provide that classifying a ship does not warrant the vessel's seaworthiness. Rather, classification only represents that the ship satisfies Bureau Veritas' rules. *fn3" See id., Art. 5.2. Bureau Veritas conducts periodic surveys of ships in service to ensure that a ship continues to meet its class requirements. See Hammond Aff., Ex. A, Art. 3. A ship's owner may request that Bureau Veritas supplement its classification by issuing an "attestation of class" based upon the most recent information regarding the ship's classification. See Hammond Aff., Ex. A, § 2.17 n.2. Bureau Veritas also publishes periodic supplements updating the Register. See Affirmation of Peter M. Corrigan, dated Jan. 21, 1994, R.D. # 20 ("Corrigan Aff."), Ex. 7; Affirmation of Kevin M. Crotty, R.D. # 25 ("Crotty Aff."), Ex. A, Portions of Periodic Supplements. However, the Register does not indicate whether a ship's class has been suspended. See Hammond Aff., Ex. A, § 2.17.18.

 According to Bureau Veritas' rules, a particular class certification is valid for a five year term, after which Bureau Veritas conducts a "special survey" for a new term. See id. §§ 1.11.23, 2.12.11, 2.11.14. The special survey of all of the equipment can be conducted simultaneously or, at the vessel owner's request, on a continuous basis. When conducting a special survey on a continuous basis, Bureau Veritas surveys various parts of the machinery covered by the class notation at least once during the term, and the interval between two consecutive surveys of each component must not exceed five years. *fn4" See id. § 2.12.21.

 Bureau Veritas' rules provide that a classification certificate may contain recommendations when repairs are temporarily postponed or when re-examination is necessary. Bureau Veritas attaches such recommendations to the classification certificate in the form of a "visa." See id. §§ 2.11.19, 2.11.12. According to Bureau Veritas' rules, these certificates with attached visas are "the only authentic information about the class of the ship." Id. § 2.11.12.

 The owner of the Pacific Dawn, Great Bear Shipping Company ("Great Bear"), hired Bureau Veritas as the classification society for Pacific Dawn, a vessel of Bahamian registry managed by Stamford Tankers, Inc. ("Stamford Tankers"). See Defendant's Statement of Undisputed Facts Pursuant to Local Rule 3(g), R.D. # 16, ("Def. 3(g) Stmt.") P 12. Plaintiffs are cargo owners, shippers and consignees of vegetable oil that was loaded on Pacific Dawn for transportation to various European ports. See id. P 14; Cargill Inc. v. M/T Pacific Dawn, 876 F. Supp. 508 (S.D.N.Y. 1995). As a custom and practice, plaintiffs hire for cargo shipment only vessels registered with a recognized classification society. See Corrigan Aff., Ex. 4, Randy Stuewe Affidavit, dated Jan. 18, 1994 ("Stuewe Aff. I").

 Prior to the events at issue, Bureau Veritas surveyed the Pacific Dawn in Italy and issued Visa No. 4, which postponed the survey of certain overdue continuous survey items and recommended the portside diesel generator be permanently repaired by February 15, 1992. See Hammond Aff., Ex. N, at 1020, Visa No. 4. On February 28, 1992, Pacific Dawn departed Spain and arrived in Beaumont, Texas on March 24, 1992, after having suffered repeated breakdowns and scavenge fires en voyage. See Corrigan Aff., Ex. 5, Extracts from Ship's Deck Log at 16-17. On or about March 27, 1992, Pacific Dawn arrived in Houston, Texas. See id. at 17. On March 31, 1992, Bureau Veritas issued Visa No. 5 to Pacific Dawn, which postponed the expiration date for the survey of overdue continuous survey items another week, until April 7, 1992, and specified that the portside diesel generator be permanently repaired by the same date. See Hammond Aff., Ex. N, at 1020, Visa No. 5.

 After departing Houston en voyage to New Orleans, Louisiana, on April 3, 1992, Pacific Dawn was forced to dock in Galveston, Texas due to machinery failure. The ship remained docked there until April 8, 1992. During its voyage from Galveston to New Orleans, Pacific Dawn suffered another scavenge fire. See Corrigan Aff., Ex. 28, Ship's Deck Log; Corrigan Aff., Ex. 5, Extracts from Ship's Deck Log at 18. On or about April 11, 1992, Pacific Dawn arrived at New Orleans. Visa No. 5 had extended the overdue continuous survey items and repair of portside generator only until April 7, 1992. See Hammond Aff., Ex. N at 1020, Visa No. 5. Bureau Veritas' rules provide that where a ship is at sea on the last date for a survey, the survey becomes overdue on the day of the ship's arrival in port, see id., Ex. A, § 2.1.17, which in this case was either April 8, 1992, when the ship docked at Galveston, or at best April 11, 1992, when it arrived at New Orleans. Between April 14 and April 17, 1992, while docked in New Orleans, the cargo at issue was loaded on board Pacific Dawn, after the classification certificate for machinery items had expired. See id.; Hammond Aff., Ex. N at 1020, Visa No.5.

 On May 26, 1992, Bureau Veritas surveyor Geoffrey Webster, after examining the portside generator and witnessing test runs, see Hammond Aff., Ex. E at 157-58; Ex. O at 1140, issued a "Detailed Report of Survey," Visa No. 6 and Visa No. 7. The Detailed Report of Survey indicated that all continuous survey machinery items had been put into satisfactory condition. See id., Ex. O at 1138, 1141-44. Visa No. 6 specified that "permanent repairs to No. 2 generator [had been] dealt with." Id., Ex. N at 1020, Visa No. 6. Visa No. 7 specified recommendations to be addressed at the ship's next port of call. See id Visa No. 7.

 Hours after departing New Orleans on June 1, 1992, Pacific Dawn was forced to cast anchor due to smoke in the engine room. See id., Ex. B at 167-68, 191-95; Ex. C at 37-39; Corrigan Aff., Ex. 5, Extracts from Ship's Deck Log at 18. Repairs were made to the ship between June 1 and June 4, 1992 by the crew and American Diesel, an independent ship repair company. See Hammond Aff., Ex. B, Sekachev Deposition ("Sekachev Dep.") at 168, 200-03, 324; Ex. C, Pavlov Deposition ("Pavlov Dep.") at 37-39; Corrigan Aff., Ex. 5, at 18-19. Bureau Veritas was neither invited to attend or survey the repairs, nor even advised of these repairs until after the vessel was later towed back to New York, see Hammond Aff., Ex. E, Webster Deposition ("Webster Dep.") at 166, notwithstanding the fact that Pacific Dawn's chief engineer characterized the services as "major repairs." See Sekachev Dep. at 324. On June 3, 1992, plaintiffs hired an independent company, South Marine Limited, to survey Pacific Dawn. See Crotty Aff., P 3, Ex. B.

 On June 15, 1992, the main engine stopped because of fires in its scavenge spaces. See Hammond Aff., Ex. B at 271-72, 285-86. The engine could not be restarted, purportedly because the portside generator had developed problems. See id. at 287-90. The ship was unable to continue its journey and therefore, was towed to New York on June 22, 1992. See Def. 3(g) Stmt., PP 42-43; Plaintiffs' Statement of Disputed Facts Pursuant to Local Rule 3(h), R.D. # 21 ("Plaintiffs' 3(h) Stmt."), PP 42-43. ...


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