Sundance Cruises Corporation, Sci Cruises, Inc., Also Known as Sundance Cruises, Inc. v. The American Bureau of Shipping

7 F.3d 1077, 1994 A.M.C. 1, 1993 U.S. App. LEXIS 26847, 1993 WL 414244
CourtCourt of Appeals for the Second Circuit
DecidedOctober 15, 1993
Docket1141, Docket 92-9153
StatusPublished
Cited by72 cases

This text of 7 F.3d 1077 (Sundance Cruises Corporation, Sci Cruises, Inc., Also Known as Sundance Cruises, Inc. v. The American Bureau of Shipping) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Sundance Cruises Corporation, Sci Cruises, Inc., Also Known as Sundance Cruises, Inc. v. The American Bureau of Shipping, 7 F.3d 1077, 1994 A.M.C. 1, 1993 U.S. App. LEXIS 26847, 1993 WL 414244 (2d Cir. 1993).

Opinion

GEORGE C. PRATT, Circuit Judge:

On June 29, 1984, the luxury cruise ship SUNDANCE R struck an underwater rock off the coast of British Columbia and sank. The ripples caused by the sinking spread beyond the Pacific waters of Discovery Passage to the United States District Court for the Southern District of New York, where the owners of the SUNDANCE R, Sundance Cruises Corp. (“SCC”) and Sundance Cruises, Inc. (“SCI”) (collectively, “Sundance”), filed suit against the American Bureau of Shipping (“ABS”), a classification society headquartered in New York. A classification society such as ABS develops rules, guides, standards, and other criteria for the design and construction of ships. When requested, a society reviews the design and surveys a ship before, during, and after construction to verify compliance with the relevant international safety conventions and applicable rules of the classification society.

Less than two weeks before the SUN-DANCER foundered, ABS had issued certificates to Sundance representing that the vessel complied with international safety standards and with ABS’s own rules for classifying vessels. Sundance raised claims in contract and tort, alleging that in carrying out its contractual duties of inspecting the vessel *1079 and issuing safety and classification certificates, ABS had failed to detect and advise Sundance that the watertight integrity required of the vessel was compromised by holes in one of its bulkheads and by the absence of valves in its sanitary or “grey-water” piping system.

ABS raised numerous defenses to liability, including a claim that Bahamian law, the law of the vessel’s flag, immunized ABS from any liability arising from safety inspections it performed for the Bahamian government. In a thorough opinion, the district court, Whitman Knapp, Judge, agreed; on motion for reargument, the court held that in addition, Sundance had provided no evidence that it was damaged by ABS’s purported errors in issuing the classification certificate, and granted ABS’s motion for summary judgment. 799 F.Supp. 363 (S.D.N.Y.1992). Sundance now appeals from final judgments of the district court entered on July 31 and September 21,1992, which dismissed its complaint with prejudice.

FACTS AND BACKGROUND

We recount only the facts necessary to this appeal; a more detailed recitation of facts may be found in the district court’s opinion at 799 F.Supp. 363.

In early 1984 Sundance purchased an overnight car ferry and converted it at a Swedish shipyard into a luxury cruise ship capable of making week-long voyages along the west coast of North America, with accommodations for over seven hundred passengers. Sundance sought to register the converted vessel with the Bahamian government; the Bahamian Merchant Shipping Act requires that Bahamian flag ships evidence their compliance with several international safety conventions to which the Bahamas adheres. Accordingly, Sundance needed (1) a safety certificate representing the ship’s compliance with the 1974 Convention on the Safety of Life at Sea (“SOLAS”); (2) a certificate showing compliance with the Load Line Convention; and (3) a Tonnage certificate, not at issue in this case. These certificates are referred to herein variously as the “statutory” or “safety” certificates. In addition, in order to obtain insurance for the vessel, Sun-dance also needed a classification certificate, a document that certified the vessel’s compliance with the classification society’s own rules. 799 F.Supp. at 369.

On March 5, 1984, Sundance formally retained ABS by executing, in Sweden, an agreement denoted “Request for Classification Survey and Agreement”. By that agreement, ABS was engaged to inspect the vessel to determine its compliance with ABS class rules and to perform regulatory checks on behalf of the Bahamian government in connection with the issuance of the above mentioned statutory and class certificates. Classification of a vessel by ABS represents that the ship has been found structurally and mechanically fit for a particular use or service in accordance with ABS rules and standards.

ABS representatives were on site during some portions of the conversion process in the Swedish shipyard. Sundance provided ABS with many plans for the vessel, although for some reason no plans for the grey-water piping system, which channels water from the ship’s showers and sinks, were ever provided. 799 F.Supp. at 369. Inspections of the converted ship took place in Sweden and on board the vessel during its initial voyages. Id.

On June 14, 1984, acting on behalf of the Bahamian government, ABS issued a five-month provisional Load Line certificate and a SOLAS passenger ship safety certificate to the vessel. The SOLAS certificate represented, among other things, that the vessel possessed the water-tight integrity required by the SOLAS Convention. Shortly thereafter, ABS issued a provisional classification certificate to the vessel, which represented that the vessel was in compliance with ABS’s rules, including rules on the watertight integrity of vessels.

The SUNDANCER was a two-compartment ship, meaning that it could survive the flooding of any two of the watertight compartments of its thirteen. When the SUN-DANCER struck the underwater rock, its hull was breached below the waterline. While only two watertight compartments initially flooded, progressive flooding of other *1080 compartments occurred when water passed through two holes in bulkhead 124 and through the unvalved grey-water system. As a. result of the progressive flooding, the vessel listed heavily and eventually sank at a nearby pier.

The absence of valves in the grey-water system was a SOLAS violation; the two holes in bulkhead 124 were a violation of both SOLAS and ABS’s rules. Neither violation had been reported by ABS. The SUN-DANCER was declared a constructive total loss, and some passengers and crew members were injured. Fortunately, no lives were lost.

Sundance claims that the vessel would not have sunk but for ABS’s (1) negligence, (2) gross negligence, (3) negligent misrepresentation, (4) breach of contract, and (5) breach of the Ryan implied warranty of workmanlike performance in issuing the relevant certificates, see Ryan Stevedoring Co. v. Parir-Atlantic S.S. Corp., 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133 (1956). ABS was paid a fee of $85,000 under the contract. Sundance seeks actual and punitive damages totalling $264,000,000.

The district court held that the law of the vessel’s flag, Bahamian law, shielded ABS with immunity for its actions in issuing the SOLAS and Load Line certificates for the Bahamian government. Irrespective of immunity, the court concluded that Sundance had not produced any evidence to sustain a charge of gross negligence, and that Sun-dance’s negligent misrepresentation claim failed for lack of “a scintilla of evidence * * * that plaintiff had asked defendant to provide it with any information for its guidance”. 799 F.Supp. at 382. Finally, the court held that no Ryan implied warranty existed in a ship-inspection setting. 799 F.Supp. at 385-86.

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7 F.3d 1077, 1994 A.M.C. 1, 1993 U.S. App. LEXIS 26847, 1993 WL 414244, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sundance-cruises-corporation-sci-cruises-inc-also-known-as-sundance-ca2-1993.