Nissan Fire & Marine Insurance v. M/V Hyundai Explorer

93 F.3d 641
CourtCourt of Appeals for the Ninth Circuit
DecidedAugust 21, 1996
DocketNos. 95-15092, 95-15094
StatusPublished
Cited by1 cases

This text of 93 F.3d 641 (Nissan Fire & Marine Insurance v. M/V Hyundai Explorer) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nissan Fire & Marine Insurance v. M/V Hyundai Explorer, 93 F.3d 641 (9th Cir. 1996).

Opinion

D.W. NELSON, Circuit Judge.

I.

INTRODUCTION

This case arises out of an engine room fire aboard the M/V HYUNDAI EXPLORER (the “Vessel”), a Korean flag container cargo ship, on or about January 2, 1992. Defendant-appellant Hyundai Merchant Marine Co., Ltd. (“HMM”), the bare-boat charterer1 and operator of the Vessel when she experienced the fire, appeals the district court’s grant of summary judgment for plaintiffs-appellees Nissan Fire & Marine Insurance Co., Ltd., Taiko Bussan Kaisha, Ltd., Fireman’s Fund Insurance Co. and American Home Assurance Co., (collectively, ■ “Cargo Interests”). Cargo Interests are the subrogated insurers or consignees of cargo that suffered damage because of the fire. We reverse the summary judgment for Cargo Interests and remand to the district court with instructions to enter judgment for HMM.

II.

FACTUAL AND PROCEDURAL BACKGROUND

The parties stipulated to most of the relevant facts in their Agreed Statement, of Facts, which they filed with the district court. During the voyage at issue, the Vessel loaded and discharged cargo at Long Beach, Oakland and Seattle. It' departed Seattle for Pusan, Korea on December 22, 1991. During the cargo operations in the United States ports and on the voyage to Korea, both of the Vessel’s generators oper[644]*644ated with no apparent problems until a fire was discovered on the morning of January 2, 1992.

The Vessel has an automated control room and was therefore manned only between 0800 and 1730 hours. The Third Engineer, who was the duty officer on the night of January 1, noted nothing out of the ordinary when he visited the engine room at 2200 hours as part of his routine. At 0700 hours on January 2, however, an alarm alerted him to a fire in the engine room. Although the crew was able to extinguish the fire, the engine control room sustained significant damage, and the Vessel required a salvage tug to tow her to Pusan. While under tow, she was unable to provide refrigeration to the refrigerated (“reefer”) cargo, and much of it spoiled.

The fire resulted from the failure of a compression coupling on a fuel oil line to the No. 2 generator fuel pressure alarm. When the coupling failed, the line separated from the main fuel line and sprayed oil, which ignited when it contacted the engine exhaust system. The line was not original, but had been replaced at some unknown time in the past. Inspection of the coupling indicated that it was not defective, but that it had been improperly fitted. Inspection also revealed that a rubber “O” ring and some thread sealing tape were attached to the coupling. Presumably, the ring and tape were used to repair a previous leak, but it is not known when they were applied.

Both parties’ expert witnesses opined that the repair to the coupling was of the type normally performed by a crewmember and that the curves on the replacement line indicated that a crewmember, rather than a shipyard, most likely made the repair in question. None of the engineers aboard at the time of the fire, each of whom had joined the Vessel between March and August, 1991, fitted the coupling in question or had ever seen the coupling leak. Only the engine room log books and maintenance records might have reflected repairs made by prior crew members, and these were destroyed in the fire.

While assembled, the coupling completely concealed the “O” ring, sealing tape and its poor fit. Indeed, both experts agreed that the defective fitting would not have been visually apparent to even a trained engineer or surveyor while assembled. Moreover, Cargo Interests’ expert testified that engineers and surveyors normally do not open compression couplings in an engine room for inspection purposes and that disassembly is not part of routine maintenance or inspection. These observations held true in this case as HMM’s port engineer in charge of the Vessel’s maintenance and repair failed to discover the defect in the coupling assembly before the Vessel departed on the voyage in issue.

In addition, official inspections of the Vessel had failed to discover the defective coupling if, in fact, it existed when they were performed. The Vessel is certified (“classed”) by the Korean Register of Shipping (“KRS”), which inspects vessels’ safety for governmental insurance purposes. In September, 1990, the KRS surveyed the Vessel’s No. 2 generator and its safety devices and alarms and found them to be in order. The KRS made another hull/machinery survey in August, 1991 and issued a report stating that it had inspected the safety devices and alarms for the generators and again found them to be in order. The No. 2 generator was next due for survey in 1995.

Cargo Interests brought suit against the Vessel and HMM for damages they incurred due to the spoiled reefer cargo. This ease originally was brought as two separate suits, each against HMM in personam as claimant to the Vessel and against the Vessel in rem. After the eases were consolidated, the district court heard the parties’ cross motions for summary judgment. HMM moved for summary judgment on the basis of its assertion that the “fire defenses” insulated it from liability. The fire defenses are comprised of two statutes that limit a shipowner’s liability for cargo damage caused by fire aboard a vessel: the “Fire Statute,” 46 U.S.C.App. [645]*645§ 182,2 and the COGSA Fire Exemption, 46 U.S.C.App. § 1304(2)(b).3

The court determined, and HMM concedes, that the defective coupling responsible for the fire was an unseaworthy condition. The court then ruled that under the law of this Circuit, HMM had the burden of proving it had exercised due diligence to make the Vessel seaworthy before it could invoke the fire defenses. Further, the district court held that HMM’s duty of due diligence was “absolute or non-delegable” and that HMM had failed to meet its burden. We reverse.

III.

STANDARD OF REVIEW

We review de novo summary judgment rulings. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir.1995), cert. denied, — U.S. -, 116 S.Ct. 1261, 134 L.Ed.2d 209 (1996). Under de novo review, we must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. Id.

IV.

DISCUSSION

A. Burden of proof on due diligence.

“Fire is the peril most dreaded by all mariners, and a peril most difficult to combat in a fully laden ship.” In re Liberty Shipping Corp., 509 F.2d 1249, 1250 (9th Cir.1975). That being so, the maritime law has developed unique provisions embodied in the fire defenses which govern a shipowner’s liability in connection with a fire'hboard .his vessel. This court has held, however, that where unseaworthiness4 caused the fire, a carrier5 bears the burden of showing that it exercised due diligence to make the ship seaworthy before it can invoke the fire defenses to exonerate it from liability. See [646]*646

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