Louis Dreyfus Corp. v. 27,946 Long Tons of Corn

830 F.2d 1321, 1988 A.M.C. 1053, 9 Fed. R. Serv. 3d 640, 1987 U.S. App. LEXIS 14398
CourtCourt of Appeals for the Fifth Circuit
DecidedOctober 29, 1987
DocketNo. 86-3569
StatusPublished
Cited by2 cases

This text of 830 F.2d 1321 (Louis Dreyfus Corp. v. 27,946 Long Tons of Corn) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Louis Dreyfus Corp. v. 27,946 Long Tons of Corn, 830 F.2d 1321, 1988 A.M.C. 1053, 9 Fed. R. Serv. 3d 640, 1987 U.S. App. LEXIS 14398 (5th Cir. 1987).

Opinion

W. EUGENE DAVIS, Circuit Judge:

This litigation stems from the partial flooding of the M/V ORIENT TRADER as it was onloading grain at the St. Charles Grain Elevator in New Orleans, Louisiana. Korea Maritime Transport Co., (KMTC), the owner of the ORIENT TRADER, appeals the judgment of the district court awarding damages to Louis Dreyfus Corp. (Dreyfus), the charterer of the ORIENT TRADER and to Adnac, Inc., the owner of the St. Charles Grain Elevator. KMTC also challenges the district court's rejection of its claims for earned freight and general average. Adnac cross-appeals arguing that the district court erred in finding that the liquidated damage clause in the docking tariff agreement is unenforceable. We find no error and affirm.

I.

Dreyfus time chartered the ORIENT TRADER from KMTC. The charter party provided for loading approximately 52,000 long tons of grain onto the vessel in New Orleans for delivery to Japan. The charter agreement includes a USA Clause Paramount that makes the provisions of the Carriage of Goods by the Sea Act, 46 U.S.C. § 1300 (COGSA) applicable to any dispute arising between Dreyfus and KMTC.

The ORIENT TRADER arrived in New Orleans and commenced loading at the St. Charles Grain Elevator on February 17, 1984. Three days later, while loading was still in progress, the engine room flooded because of an open valve in the seawater cooling system. Both Dreyfus and Adnac filed lawsuits to recover damages incurred as a result of this flooding.

It is largely undisputed that the flooding on the ORIENT TRADER was caused by a defect in the ship’s seawater cooling system. The principal controversy at trial concerned whether the vessel owner or crew should have discovered and corrected the defect. Consideration of this issue requires some understanding of the operation of the cooling system on the ORIENT TRADER.

The ORIENT TRADER’S engines and generators are cooled with fresh water which in turn is cooled by seawater. Seawater enters the vessel through two large openings located below the waterline on the ship’s starboard side. Sea water enters these openings and is carried through pipes to a heat exchanger (radiator) where the sea water cools the heated fresh water. The sea water is then discharged overboard.

Before entering the heat exchanger, the sea water passes through a strainer designed to filter out any sea debris. The steel-mesh basket contained in the strainer housing requires periodic cleaning. In order to clean the strainer, a crewmember must remove a cover plate located in the engine room that permits access to the strainer housing. Because the cover plate’s removal would allow sea water to enter the engine room, the system is equipped with manual and hydraulic valves which prevent seawater from entering the strainer housing while the strainer itself is being cleaned. Crew members operate the hydraulic valves through a control panel that registers a green light when the valves are closed (isolating the strainer) or a red light when the valves are open (permitting sea water to enter the strainer housing).

In addition to the indicator lights and switch position on the control panel, the valve position can be confirmed by inspecting a mark machined on the top of actuator [1324]*1324stem. The actuator is the mechanism that controls the actual opening and closing of the valve by means of a disc contained in the pipe. Mated directly to the valve stem, the actuator stem supplies a direct mechanical reading of the valve disk position by way of the machined mark on the exposed end of the stem.

A final safety feature is located on the top of the strainer housing in the form of a plug. By loosening this plug, a crew member can discover whether pressurized water is still entering the strainer. If the water in the strainer is under pressure, the crew member can easily replace the plug and close the valves before opening the intake pipe.

While the ORIENT TRADER was under construction, the shipbuilder encountered numerous problems with the cooling system. During tests of the system, the control panel’s indicator lights and the activator spindle shaft mark gave conflicting readings. When the spindle shaft indicated that the valves were closed, the control panel light was green, indicating that the valves were open. Realizing that either the control light or the spindle shaft mark was set incorrectly, the builder assumed that the control panel was accurate and modified the spindle shaft mark accordingly. Unfortunately, the builder’s assumption was wrong. After the modification neither the spindle shaft mark nor the light registered the correct valve position.

On the date of the accident, the ORIENT TRADER was only on its second voyage and the ship’s first engineer endeavored to remove the strainer for the first time. Observing that the lights on the remote panel were green and that the spindle shaft mark showed that the valves were closed, the engineer began to remove the wing nuts from the strainer cover. After removing six of the eight wing nuts, the pressure forced the cover off and water began to flood the engine room.

Upon being informed of the flooding, Adnac ordered the ship to vacate its loading berth at 1740 CST on February 20. The ship, however, was under an order by the Coast Guard not to move and thus could not comply with this instruction until February 23.

Dreyfus filed suit against: (1) the ORIENT TRADER (in rem); (2) KMTC as the owner of the vessel; (3) Samsung Shipping and Heavy Industries, Ltd. (Samsung), the ship builder; and (4) Superfos Hydraulic A/S (Superfos), the manufacturer of the seawater valve system. KMTC counterclaimed against Dreyfus claiming it was entitled to freight earned and contribution in general average. Adnac brought a separate suit against the ORIENT TRADER (in rem) and KMTC to recover damages resulting from the ORIENT TRADER’S failure to vacate the loading berth on February 20.

Following trial of the two actions (consolidated by the district court), the court: (1) found that KMTC failed to exercise due diligence to provide a seaworthy vessel and rendered judgment in favor of Dreyfus and against KMTC and the ORIENT TRADER; (2) found that KMTC breached its Berthing Agreement with Adnac and awarded damages to KMTC for the breach; (3) dismissed Dreyfus’ suit against Samsung and Superfos; and (4) denied KMTC’s claim against Dreyfus for earned freight and general average.

On appeal, KMTC argues that: (1) the district court’s finding that KMTC failed to exercise due diligence to make the ORIENT TRADER seaworthy is clearly erroneous; (2) the district court erred in refusing to apportion fault between Samsung, Superfos and KMTC; (3) the district court erred in refusing to enforce the earned freight and general average provisions of its charter party with Dreyfus; and (4) the district court awarded excessive damages to Dreyfus and Adnac.

In Adnac’s cross-appeal, it argues that the district court erred in failing to enforce the liquidated damage clause in the Berthing Agreement.

II.

A.

Dreyfus initially argues that KMTC filed a premature notice of appeal in the district court and that, because no later notice of [1325]*1325appeal was filed, this court lacks jurisdiction.

Judgment was entered by the trial court on July 1, 1986.

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830 F.2d 1321, 1988 A.M.C. 1053, 9 Fed. R. Serv. 3d 640, 1987 U.S. App. LEXIS 14398, Counsel Stack Legal Research, https://law.counselstack.com/opinion/louis-dreyfus-corp-v-27946-long-tons-of-corn-ca5-1987.