Thyssen, Inc. v. S/S Eurounity

21 F.3d 533, 1994 A.M.C. 1638, 1994 U.S. App. LEXIS 7116
Court of Appeals for the Second Circuit·Decided April 8, 1994·No. Nos. 828, 978, 979, Dockets 93-7682, 93-7708 and 93-7718·Published·Cited by 21 cases

Opinion

MINER, Circuit Judge:

Defendants-appellants-cross-appellees S/S Eurounity (“Vessel”), Licetus Shipping, Inc. and Atlantic Lines S.A. appeal from a judgment entered on June 10, 1993 in the United States District Court for the Southern District of New York (Sand, J.) awarding damages in the amounts of $336,580.89 to plaintiff-appellee-cross-appellant Thyssen, Inc. and $19,447.55 to plaintiff-appellee Associated Metals & Minerals Corp. (“Associated”) in an action brought pursuant to the Carriage of Goods by Sea Act, 46 U.S.C.App. §§ 1300-1315 (“COGSA”), for seawater damage to steel cargo. The district court found that (1) plaintiffs had stated a valid claim and had established that they were proper parties to [536]*536bring suit; (2) plaintiffs had established a prima facie case for cargo damage under COGSA by presenting evidence that the cargo was in good order at loading and damaged at outturn; (3) defendants had failed to prove that the seawater damage to the steel cargo was due to a “peril of the sea”; (4) seawater had entered the vessel through unseaworthy hatchcovers; (5) the “market discount” theory was the proper measure of damages; and (6) 46 U.S.C.App. § 1304(5) limited plaintiffs’ damages to a maximum of $500 per package.

On this appeal, the Vessel and Licetus contend that plaintiffs failed to state a claim upon which relief can be granted and that the district court erred by finding that the plaintiffs had established a prima facie case for cargo damage under the provisions of COGSA. The Vessel and Licetus also contend that the district court erred in determining: that they failed to prove the defense of “peril of the sea”; that the hatchcovers were unseaworthy; and that the “market discount” theory applied to the calculation of damages in this case. Atlantic Lines cross-appeals from the judgment of the district court to the extent that the judge failed to resolve Atlantic Lines’ indemnity claim for costs and attorneys’ fees against the Vessel and Licetus. Thyssen cross-appeals, seeking modification of the judgment to allow it to collect its actual damages up to the COGSA package limitation from each defendant.

For the reasons that follow, the judgment of the district court is affirmed.

BACKGROUND

Thyssen and Associated are importers of steel products. They purchased a quantity of hot rolled steel in Europe for the purpose of resale and made arrangements to ship the steel from Antwerp, Belgium to Charleston, Jacksonville, Savannah and Houston aboard the Vessel. Atlantic Lines, the charterer of the Vessel, issued negotiable bills of lading for the cargo. The bills of lading included notations indicating that the steel was “RUST STAINED,” “PARTLY RUST STAINED” and “WET BEFORE SHIPMENT.”

On or about December 6,1988, prior to the loading of the cargo, Atlantic Lines had entered into a charter party with Licetus, the owner of the Vessel. Licetus warranted that the hull, machinery and equipment were in a “thoroughly efficient state” and that, on her delivery, the Vessel was “ready to receive ... cargo with clean-swept holds and [was] tight, staunch, strong and in every way fitted for ... service.” Licetus additionally “guaranteed” the Vessel’s hatch covers to be “completely watertight.” The charter party also included the “Inter-Club Agreement,” which provided that claims for cargo damage were to be settled as follows:

Claims for Loss of or damage to cargo due to unseaworthiness: 100% Owners
Claims for damage (including slackage/ul-lage) due to bad stowage or handling: 100% Charterers

During the transportation of the cargo, the Vessel encountered a severe storm on January 4, 1989. This storm was classified as an “ultra bomb” (extra-tropical cyclone) because its central pressure plummeted sixty millibars in twenty-four hours. The storm resulted in Beaufort Scale winds between Force 10 and 11,1 waves between 10 and 11.5 meters in height and chaotic cross-seas. During the storm, the Vessel was hove to (ship’s bow pointed into wind without forward motion) and its weatherdeck was awash. There is no dispute that seawater entered the cargo holds through the Vessel’s cargo hatches during the storm. The Vessel’s owner, Lice-tus, presented evidence and expert testimony to support its claim that the severe weather placed such torsional stress on the hull and hatches that seawater entry was inevitable. Thyssen, on the other hand, offered evidence and expert testimony that was intended to prove that the weather conditions did not cause the entry of the seawater. According to Thyssen, the cargo hatches and seals were not maintained properly and, as a result, were worn and unseaworthy, thereby allowing seawater to enter the cargo holds. Upon the Vessel’s arrival at the designated ports, the cargo was sold to various purchasers. These purchasers demanded a discount in price due to the damaged condition of the [537]*537steel caused by the seawater contamination that occurred during the voyage.

Plaintiffs’ claims at trial, pursuant to COG-SA, “relate[d] to salt water damage to 104 coils of hot rolled steel.” During the five-day bench trial, the following issues were raised: (1) whether the plaintiffs had standing to sue; (2) whether the plaintiffs had established a prima facie case for cargo damage by introducing clean bills of lading and proving the damaged condition of the cargo upon discharge; (3) whether the defendants were entitled to rely upon the statutory provision for exoneration because (a) the damage to the cargo was due to a “peril of the sea,” (b) the Vessel was seaworthy, and (c) due diligence was exercised; and (4) whether the plaintiffs had shown an entitlement to damages and, if so, whether the proper method of computing damages was used.

At the conclusion of trial, the district court held that the plaintiffs had established that they were the proper parties to bring the suit and that they had proved a prima facie case by evidence that the cargo was in good order at loading but damaged at outturn. The district court further held that defendants had failed to prove that the damage to the cargo was due to a “peril of the sea”; that seawater had entered the Vessel through unseaworthy hatch covers; and that the “market discount” theory was the proper measure of damages. With regard to responsibility under the Inter-Club Agreement, the district court stated that “it seems clear that the vessel owner, who has warranted to the charterer the seaworthiness of the vessel, is the ultimately responsible party.” The district court made no finding as to whether Atlantic Lines, the charterer, was entitled to indemnification for costs and attorneys’ fees. The district court held that the defendants were jointly and severally liable to Thyssen and reduced Thysseris damages from $329,330.65, to $500 per package, pursuant to 46 U.S.C.App. § 1304(5), and computed the damages as follows: Thys-sen recovered $500 per package for 420 packages, equalling $210,000; $30,845 for 240 steel plates not shipped in packages; plus $95,735.89 in interest, for a total of $336,-580.89. Associated recovered $13,915.94 for 94 steel plates not in packages, plus $5531.61 in interest, for a total of $19,447.55. The total judgment of $356,028.44 was taxed against the Vessel in rem and Licetus and-Atlantic Lines in personam.

DISCUSSION

1. Proper Claim for Relief

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Thyssen, Inc. v. S/S Eurounity, 21 F.3d 533, 1994 A.M.C. 1638, 1994 U.S. App. LEXIS 7116 (2d Cir. 1994).

21 F.3d 533 (Thyssen, Inc. v. S/S Eurounity) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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