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April 15, 1996


The opinion of the court was delivered by: GRUBIN

 SHARON E. GRUBIN, United States Magistrate Judge:

 This is an action brought under the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. § 1300 et seq., by ETS Gustave Brunet S.A., a French corporation engaged in the lace-making business, to recover $ 533,969 for damage to lace machines transported by ocean carrier defendant Nedlloyd Lijnen B.V. ("Nedlloyd") from Port Jefferson, New York to Calais, France. Plaintiff alleges the damage was caused by the fact that the machines were carried on deck on the three ships, the Nedlloyd Rosario, the Nedlloyd Rouen and the Strathconon. *fn1" Plaintiff also sues New York Express, an air freight forwarder it hired to arrange the shipment; Goth Transport, Inc. ("Goth"), an ocean freight forwarder hired by New York Express to find and engage an ocean carrier for the transportation of the machines; and Associated Rigging & Hauling Corp. ("Associated"), hired by New York Express to load and secure the machines in the containers furnished by Nedlloyd. Plaintiff has alleged against Nedlloyd and New York Express breach of the bills of lading for delivery in the damaged condition; against Nedlloyd and Goth, breach of contract to stow under deck; against New York Express and Goth, breach of agreement to provide freight forwarding services for under deck transport and negligence; and against Nedlloyd and Associated, breach of contract in not properly preparing and packaging the cargo, negligence, breach of contract of bailment and breach of implied warranty. Defendant Nedlloyd asserts cross-claims against New York Express, Associated and Goth for indemnity if it is found liable, claiming breach of contract, negligence and breach of warranty of workmanlike conduct and services. Defendants Associated and Goth assert cross-claims against each other and against Nedlloyd and New York Express for indemnity if found liable, claiming breach of contract, negligence and breach of warranty, and Associated also asserts cross-claims against Nedlloyd and Goth for indemnity if it is found liable, claiming fraud. The case was tried before me in 17 days of testimony.


 Plaintiff is a manufacturer of high-quality design lace in Calais, an area that has become a worldwide center for the manufacture of design laces. Most of the machines used by plaintiff to make its lace are a type that use a particular loom process known as Leavers and were manufactured by a company named Jardine France ("Jardine") in Nottingham, England until the early 1960s. Since then, the only new Leavers lace machines manufactured in the world have been manufactured by Spowage, Humphreys & Wyer, also of Nottingham. Having built a new plant in 1986 to expand its business, plaintiff wanted to buy additional Leavers machines which were of a 9 1/2 and 10 1/2 "point" size, to make lace out of Lycra. Most of the machines it already had were 12 and 14 point ones, and while 12 point machines could apparently be adapted to make Lycra lace, 14 point ones could not. Plaintiff sought machines that would all be of a similar manufacture so that, in the event repairs were needed on a machine during a job, parts would be interchangeable, allowing plaintiff to continue the work on another machine. Upon learning that Thomas Wilson & Sons, an American lace manufacturer in Port Jefferson, New York, had filed for bankruptcy, plaintiff's general manager Willie Convie visited the Wilson plant on June 6, 1986. Wilson had twenty to twenty-five Leavers machines available for sale, and Convie intended to purchase up to ten. During this trip Convie spoke with Wilson's president and agreed upon a purchase price for ten machines, comprised of two 9 1/2 point Jardine machines and all eight of the 10 1/2 point Jardine machines at this Wilson facility. Convie returned to Wilson's plant on July 11 with plaintiff's foreman who examined the machines and found them to be in good condition. As a result, plaintiff purchased the ten machines, paying $ 22,000 for each of five of the machines (which were missing "bottom bars") and $ 30,000 for each of the others. By Wilson-designated numbers, the machines sold to plaintiff were: 9, 13, 14, 15, 16, 17, 18, 19, 22 and 26.

 Plaintiff had no prior experience with transportation of such machines by sea. Convie spoke with John Van der Riet of Expedex B.V., an air freight company owned by the Dutch holding company that also owned plaintiff, and Van der Riet told Convie that Expedex also had no experience with transporting sea cargo and that he would contact a New York freight forwarder for assistance. Van der Riet then asked New York Express, itself an air freight forwarder with no sea cargo experience, to arrange for transportation of the ten machines from Port Jefferson to Calais. Wolfgang Reichel, the principal of New York Express, was given the dimensions of the machines -- each weighs approximately 39,800 pounds and is approximately 7.1 meters long, 2.3 meters wide and 3 meters high -- and Reichel contacted Goth, an international ocean freight forwarder, to arrange for the ocean transportation. To secure freight rates, Goth employee Hans Peter Betschart contacted Nedlloyd and another company, Polish Ocean Lines. Nedlloyd had begun a new service employing "ro-ro" vessels, which featured large ramps for rolling large cargo on and off below decks. Reichel's initial communications with Van der Riet and Betschart anticipated that the machines would simply be placed on flatbed trailers or on platforms known as mafis and wheeled into the ro-ro vessels for below deck stowage. It was subsequently determined that, although the machines were too high to fit in fully enclosed containers, they could nevertheless be placed in open-top containers, i.e., metal containers with floors and sides but no roofs.

 It is not disputed that Van der Riet told Reichel to obtain under deck stowage. Tr. 932-36. *fn2" Reichel maintains that he conveyed this instruction to Betschart, but Betschart denies that he received any such instruction from Reichel. Betschart admits that he never requested below deck stowage from Nedlloyd, although he testified that, during his negotiations with Nedlloyd salesperson Randy Clayton for shipment of the machines on Nedlloyd's ro-ro vessels in open-top containers furnished by Nedlloyd, Clayton stated that the machines would be stowed below deck. Indeed, the very point of a ro-ro vessel was to facilitate loading large cargo under deck, as Betschart testified was his understanding at the time. Clayton does not recall making such an express statement, although he does say it was his understanding at that time that the machines would be stowed below deck because it would have been "absolutely asinine" and "negligent at best" to put them on deck. Clayton ultimately provided Betschart with a freight rate which covered both the ocean transportation of the ten machines as well as their inland truck transportation from Port Jefferson to the New York pier and from the Le Havre pier to Calais. Betschart was told that the ten containers would be carried on three ro-ro vessels operated by Nedlloyd, the Nedlloyd Rotterdam, the Nedlloyd Rosario and the Nedlloyd Rouen.

 New York Express retained the services also of Associated to place each machine in a container and to secure the individual tarpaulin supplied with the container by Nedlloyd over the top of the container after Associated rigged the machine inside. Convie hired Chris Chambers, Wilson's designer, to help in preparing the ten machines for transport. Chambers wiped down the parts of each machine with oil, placed plastic over the "comb bars" and "working bars" of each machine, placed wood beams over the top of each machine to keep it from rubbing against the tarpaulin, and separately packed the bobbins and carriages in individual boxes after wrapping them in oiled paper and placing plastic over them. After loading, blocking and bracing each machine (with its box of bobbins and carriages) in a container, Associated affixed a tarpaulin to each container by running a wire cord through eyelets in the tarpaulin to grommets which were on the sides of the container near the top and over the doors at the rear of the container. Because each machine was one-and-one-half to two feet overheight, it was not possible to use every eyelet and grommet to cover each container completely, and there were visible gaps between each tarpaulin and the back side of the container.

 The first five containers trucked to the pier were loaded on September 29, 1986 onto the Strathconon, a container, not ro-ro vessel chartered by Nedlloyd from Australia Japan. Machines 13, 14, 15 and 16 were stowed below deck; machine 17 was stowed on deck, surrounded on three sides by an upper tier of other containers and in front by the house of the vessel. The next three containers to arrive at the pier, with machines 18, 19 and 22, were stowed on deck the ro-ro Nedlloyd Rosario on October 8. These containers were stowed in the middle of the deck with only one side of them having an upper tier of other containers stacked nearby. The last two containers to arrive at the pier, with machines 9 and 26, were stowed on deck the ro-ro Nedlloyd Rouen on October 20 with an upper tier of other containers near one side and two upper tiers near a second side. The bills of lading for each shipment contained no notation that any of the containers were being carried on deck, although each included a form clause giving Nedlloyd an option of stowing the cargo on deck. *fn3"

  The Strathconon arrived in Le Havre on October 13, and the five containers it carried were delivered to warehouses in Calais on October 17 and 20. Machine 13 (which had been carried below deck) arrived in Calais with the shifting arm of the front spindle of the machine broken, but the tarpaulin was intact. There was a meter-long tear on the tarpaulin on the container with machine 16 (also carried below deck) and apparently some rust on part of the jacquard (the loom mechanism that causes threads to be lifted in the proper succession for producing a programmed design) directly under the tear. The tarpaulin on the container with machine 17 (carried on deck) sustained three holes, and there were traces of oxidation on the jacquard below those holes. The two other machines (stowed below deck) apparently sustained no damage. The Rosario arrived in Le Havre on October 20 and the three containers it carried on deck were delivered to Calais on October 24. The tarpaulin on each was badly ripped and the machines had sustained extensive corrosion damage. Plaintiff notified Nedlloyd of the damage, and on October 24 a joint survey was conducted of the eight machines carried on the Strathconon and Rosario by Jean-Francois Rivenet, a Calais surveyor retained by plaintiff; Rene Galleman, a cargo and marine surveyor retained by Nedlloyd's insurer; Daniel Lecoeur, a representative of Jardine-France S.A. of Calais, now a lace machine repair company; Frans Van Bellen, retained by plaintiff's cargo underwriter; plaintiff's general manager Willie Convie and another employee of plaintiff. The Rouen arrived in Le Havre on November 3. A large portion of the tarpaulin on the container with machine 9 had been ripped loose, and the machine had also sustained corrosion as a result. The tarpaulin on the container with machine 26 had not been damaged and that machine arrived in good condition. Marcel Caraboeuf, representing Nedlloyd's insurer, conducted a survey of the two machines that same day at Le Havre.

 The surveyors conducted extensive tests on all the machines for which plaintiff seeks damages and the water found in the containers and concluded that the corrosion by rust and the oxidation pitting that had occurred was a direct result of exposure of the machines' carbon steel to salt water. They also found that the carriages and bobbins that had been separately packed had also been exposed to considerable salt water with concomitant corrosion and pitting to the carriages. During their investigation through January 1987 the surveyors considered obtaining new or reconditioned machines from Spowage, Humphreys & Wyer. The surveyors rejected that option as too expensive, and received an estimate for repairs from Lecoeur of Jardine. At a meeting on January 22, 1987, all of the surveyors discussed the damage that had been sustained and agreed to a final cost of repairs and manufacture of necessary replacement parts to be undertaken by Jardine. They agreed that repairs should begin quickly to stop the corrosive effects of the salt water. Plaintiff explained to the surveyors that extensive work on machines 18, 19 and 9 was required because, due to the intricacy of the machines, the replacement of some parts that were heavily pitted and corroded required that other parts working in unison with them also be replaced. Pursuant to the surveyors' agreement, plaintiff paid Jardine 1,867,357.93 fr. (the equivalent of $ 325,551 at undisputed exchange rates) for repairs and replacements, almost all of which, according to Lecoeur, related to corrosion (with only a small percentage to mechanical damage). These repairs had been completed by the time of trial. In addition, plaintiff contracted with Jardine to manufacture 2,800 replacement carriages, which had not yet been undertaken by the time of trial. The anticipated cost of the new carriages is 1,195,488 fr. ($ 208,418). Based on these sums, plaintiff seeks to recover $ 533,969 in damages.



A. Plaintiff Established a Prima Facie Case

 To hold Nedlloyd liable for damage to its cargo under COGSA, plaintiff has the initial burden of establishing a prima facie case by showing that the cargo was delivered in good condition to the carrier's custody but discharged in bad condition. Raphaely Int'l, Inc. v. Waterman S.S. Corp., 972 F.2d 498, 501 (2d Cir. 1992), cert. denied, 507 U.S. 916, 122 L. Ed. 2d 666, 113 S. Ct. 1271 (1993); Westway Coffee Corp. v. M.V. Netuno, 675 F.2d 30, 32 (2d Cir. 1982); Caemint Food, Inc. v. Brasileiro, 647 F.2d 347, 353 n.5 (2d Cir. 1981); Ferrostaal Corp. v. M.V. Singa Wilguard, 838 F. Supp. 757, 767 (S.D.N.Y. 1993). Although bills of lading containing no notations of damage, such as those issued by Nedlloyd in this case, ordinarily establish a presumption of the good condition of cargo at loading, Westway Coffee Corp. v. M.V. Netuno, 675 F.2d at 32; Ferrostaal Corp. v. M.V. Singa Wilguard, 838 F. Supp. at 768, where the condition is not apparent from examination of its container, it is arguable that such a presumption should not be drawn. See Caemint Food, Inc. v. Brasileiro, 647 F.2d at 353-54; David R. Webb Co. v. M/V Henrique Leal, 733 F. Supp. 702, 705 (S.D.N.Y. 1990). However, plaintiff has easily established the elements of a prima facie case without the benefit of the presumption.

 With respect to delivery in good condition, prior to plaintiff's purchase of the machines, plaintiff's shop foreman examined them in detail, actually operated them, and found that all were in good mechanical running condition, free of rust and properly maintained. Ex. 270, pp. 30-36. James Rodia, the Wilson plant foreman, testified also that the machines were in working order and free from rust when they were shipped from the plant, Ex. 281, pp. 22-23, 77-78, and Chambers of Wilson testified that the only rust on the machines was slight surface rust that could be removed merely by wiping the machines and that the machines were in good running condition. Ex. 279, pp. 13-14, 19, 23-24. Nedlloyd points to deposition testimony from Ronald Bodell, whose company also purchased machines from Wilson, that his machines were rusty when he picked them up at the plant. Ex. 285, pp. 24-25. However, that testimony provides at best only a speculative basis for determining that plaintiff's machines were not in good condition and does not contradict the testimony of plaintiff's shop foreman, of Rodia and of Chambers about the machines in suit. Moreover, as detailed below, the fact that only those machines whose tarpaulins were badly ripped while on board Nedlloyd's ships suffered significant rust corrosion while machines whose tarpaulins were undamaged suffered no corrosion damage creates an obvious inference that all of the machines were in good condition without rust at the time they were loaded onto Nedlloyd's ships.

 With respect to receipt in bad condition, it is especially clear that the extensive corrosion damage to machines 18, 19 and 9 -- to which all but a small portion of the damage claimed by plaintiff pertains -- was caused by their exposure to salt water and salt water spray as the result of the ripping of their tarpaulins while carried on the decks of the Rosario and the Rouen. According to plaintiff's surveyor Rivenet, who examined the damaged machines after their arrival in Calais, the tarpaulins on these three machines were either completely ripped or so extensively ripped from the back of the containers to the front that all or a large portion of each container was uncovered and the contents were directly exposed to the elements. Ex. 272, pp. 27, 36, 41-43. Nedlloyd's own surveyor concurred in Rivenet's opinion that the ripping of the tarpaulins occurred while on board their vessels and prior to their arrival in Le Havre. Ex. 277, pp. 25-26, 127. With respect to these three machines, there was water on the floor of the containers, in the machines themselves and in the cases of bobbins and carriages that had been separately packed in plastic. The water was tested with silver nitrate and found to be salt water. Ex. 272, pp. 34, 38-39, 47-48. See also Tr. 2335 ff. (testimony on use of silver nitrate to determine extent of corrosion by salt water). Rivenet found extensive oxidation on those parts of the machines that were not covered because of the ripped tarpaulins as well as on the bobbins and carriages in those containers. Ex. 272, pp. 32, 37-39, 44. Rivenet's testimony concerning the conditions of those tarpaulins and the rust on the machines, carriages and bobbins was also confirmed by the series of photographs that he took of those machines. Exs. 148-154. Although Nedlloyd contends that the tarpaulin to the container with machine 9 was in good condition but had been loosened because the line was defective, it is clear by examination of the photographs that that tarpaulin was in fact ripped. Ex. 153. It is possible that the damage to these machines was exacerbated by the containers being left in rain after their arrival in Le Havre and prior to truck transport to Calais, see Ex. 277, pp. 63-66, but the machines were still in Nedlloyd's custody at that time.

 The three machines -- 18, 19 and 9 -- that were stowed on deck and whose tarpaulins were extensively ripped sustained by far the most corrosion. Machine 26, carried on the deck of the Rouen, was the only machine stowed on deck whose tarpaulin was not damaged. That machine suffered no corrosion. The tarpaulin covering the container with machine 22, which was carried on deck the Rosario, was torn at one place at which it rested on a support, and the part of the machine directly under the hole in the tarpaulin was wet and sustained rust damage. Ex. 272, p. 49; Ex. 277, pp. 25-26. However, plaintiff submitted no claim to the surveyors for machine 22 and seeks no recovery for damage to that machine. The tarpaulin on the container with machine 17, carried on the deck of the Strathconon, sustained three holes above the machine's loom, and there were small traces of oxidation on the machine below those holes. According to Rivenet, wind conditions could have caused friction between the tarpaulin and the machine creating the holes. Ex. 272, p. 17. The tarpaulin on the container with machine 16, one of the four carried below deck on the Strathconon, sustained a meter-long tear. While some rust on the part of the jacquard located directly under the tear was found, the possibility that this damage might have occurred before stowage or after unloading hardly rebuts the overwhelming evidence that the severe corrosion damage to machines carried on deck occurred as a result of the on deck stowage. Indeed, the other three machines, stowed below deck, sustained no damage. As will be discussed below, the heavy winds and high waves on the North Atlantic at the time of the voyages, especially given the location and positions in which the containers were stowed and the fact that the tarpaulins did not completely cover the containers owing to the overheight cargo, further confirm that the tarpaulins were ripped and the corrosion to the machines was caused by wind, salt water and sea spray while the machines were being transported on Nedlloyd's decks.

 Accordingly, I find that plaintiff has established that its cargo was damaged while in Nedlloyd's custody. *fn4"

 B. Nedlloyd Has Not Rebutted Plaintiff's Prima Facie Case

 To rebut a prima facie case of liability for damage to cargo, a carrier must come forward with evidence to explain the cause of the damage, showing that the damage resulted from one of the excepted causes set forth under COGSA, 46 U.S.C. § 1304(2). If that burden is met, "the burden return[s] to the plaintiff to show that the carrier's negligence contributed to the damage." O'Connell Mach. Co. v. M.V. "Americana, " 797 F.2d 1130, 1133 (2d Cir. 1986). See also Montedison U.S.A., Inc. v. S/S AL WATTYAH, No. 87 Civ. 8545 (JMW), 1989 WL 165874, 1989 A.M.C. 2287 (S.D.N.Y. Apr. 3, 1989); United States v. Ultramar Shipping Co., 685 F. Supp. 887, 897 (S.D.N.Y. 1987), aff'd, 854 F.2d 1315 (2d Cir. 1988). Notably, the carrier has the duty under COGSA, 46 U.S.C. § 1303(2), to "properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried." For the following reasons, I find that Nedlloyd has not met its burden of showing that the damage arose under one of COGSA's excepted causes and that, in any event, Nedlloyd was negligent in stowing the containers on deck in the circumstances of this case and did not meet its duty under § 1303(2) in its stowage or care of the cargo.

1. Sufficiency of Packing

 Nedlloyd argues it is not responsible for the damage to plaintiff's cargo because it resulted from "insufficiency of packing," an excepted cause. 46 U.S.C. § 1304(2)(n). Whether packing was insufficient under § 1304(2)(n) depends on whether the cargo was "properly packed for the anticipated voyage." Mobil Sales & Supply Corp. v. M.V. "Banglar Kakoli", 588 F. Supp. 1134, 1141 (S.D.N.Y. 1984). See also Close v. Anderson, 442 F. Supp. ...

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