In re GMBH

GEORGE B. DANIELS

Motions granted.

John Devereux Kimball, Blank Rome LLP, New York, NY, for Allianz Global Corporate & Specialty Versicherungs–AktiengeSellSchaft, Amlin Syndicate 2001 at Lloyd's Under Limited Binder JGC 084400, HDI–Gerling Industrie Versicherung AG, Wurttembergische UND Badische Versicherungs–AktiengeSellSchaft, Schwarzmeer UND Ostsee Versicherungs–AktiengeSellSchaft Sovag, Gothaer Allgemeine Versicherung AG, Basler Securitas Vag, Bremen, Victoria Versicherung AG, Hamburg Ergo Versicherungsgruppe AG, Signal Iduna Allgemeine Versicherungs AG, Hamburg, Reaal Verzekeringen, Rotterdam, Lloyds Syndicate, Chaucer, Assikurazioni Generali S.P.A., HDI–Gerling Industrie Versicherung AG, Signal Iduna Allgemeine Versicherungs AG, Hamburg, Allianz Global Corporate & Specialty Versicherungs–AktiengeSellSchaft, Gothaer Allgemeine Versicherung AG. Gina Maria Venezia, Peter Judge Gutowski, Freehill, Hogan & Mahar, LLP, New York, NY, for Bernuth Lines, Ltd.
Edward P. Flood, Kirk M.H. Lyons, Michael Anthony Namikas, Lyons & Flood, L.L.P., New York, NY, for MSC Mediterranean Shipping Company S.A.
Linda Stephanie Strauss, Coughlin Duffy LLP, New York, NY, for United Insurance Company Limited.
James J. Ruddy, Edward C. Radzik, Lori Jean Quinn, McDermott & Radzik, LLP, New York, NY, for PS International Ltd., et al.
Peter Judge Gutowski, Barbara Grose Carnevale, Gina Maria Venezia, Freehill, Hogan & Mahar, LLP, New York, NY, for Certain Underwriters at Lloyds, Bernuth Lines Ltd.
John Alan Orzel, Carroll, McNulty & Kull, New York, NY, for Panalpina, Inc.
Patrick Carroll Crilley, Patrick Carroll Crilley, New York, NY, for Mitsui O.S.K. Lines, Ltd.
John James Sullivan, Hill, Rivkins & Hayden LLP, New York, NY, for Millenium Inorganic Chemicals, Inc., M/S Engees, N.V., Sueinder Birbhajan.
John Devereux Kimball, Kate Bea Belmont, Blank Rome LLP, New York, NY, for In the Matter of the Complaint of MS “Angeln” GMBH & Co. KG and Angeln Shipping Company Ltd. as Owner and Bareboat Charterer of the M/V Angeln, for Exoneration from or Limitation of Liability.

GEORGE B. DANIELS, District Judge:

This case arises from the sinking of the M/V Angeln on February 21, 2010, shortly after its departure from Vieux Fort, St. Lucia. The owner and bareboat charterer of the M/V Angeln ( i.e., MS Angeln Gmbh & Co. KG and Angeln Shipping Co.) (collectively “Owners”) commenced a limitation proceeding seeking to limit their collective liability related to the vessel's sinking (ECF Nos. 1 & 4). Many cargo interests filed suit against the Owners, Bernuth Lines Ltd., and Mediterranean Shipping Company, S.A. (“MSC”) for loss of cargo. These actions were consolidated ( Id.). Bernuth Lines then filed claims against Owners for losses, including fuel, equipment and containers, and for indemnity and contribution for exposure to cargo interests (ECF 48). In response, Owners filed counterclaims against Bernuth Lines, and its Miami-based agent Bernuth Agencies, Inc., and MSC seeking recovery of direct damages, and indemnity and contribution for exposure to cargo (ECF 82; 83). After the vessel's Hull Underwriters paid off the vessel owner, they filed a complaint in intervention against Bernuth and MSC seeking recovery of the value of the vessel (ECF 93).

Bernuth moves for summary judgment dismissing the Counterclaims filed by Owners and the Complaint in Intervention filed by the vessel's Hull Underwriters, against Bernuth for certain losses from the sinking of the M/V Angeln (ECF 174). In a separate motion, MSC also moves for summary judgment dismissing the Counterclaims filed by Owners and the Complaint in Intervention filed by Hull Underwriters against MSC for certain losses from the sinking of the ship (ECF 168). Bernuth and MSC's motions are GRANTED.

FN2. Owners and Hull Underwriters also argue that the Captain was highly competent, with over 30 years of experience, including as Captain of the M/V Angeln prior to this incident (Bernuth 56.1 Pl. Stmt. ¶ 68–70). They also argue that Captain Fijol had reviewed numerous loading plans for those vessels while serving as Captain. (MSC Opp. Mem. ¶ 70).

The Owners and Hull Underwriters' theory of negligence fails, as a matter of law, due to a lack of causation. There is no evidence that errant weight information provided by Bernuth proximately caused or contributed to the ship's sinking. The information provided, even if errant, accurately warned that the vessel would sink if it were taken out to sea as loaded (Gutowski Decl. Ex. 18, Cushing Tr. 205). The Owners' Captain ignored this warning and decided to sail anyway (Gutowski Decl. Ex. 4, Chodursky Tr. 598–99). The evidence shows that Captain Fijol was provided enough information to have been warned that the ship would sink. His negligence in sailing out of port despite those warnings was the sole preventable cause of the demise of the ship and its cargo.

“[I]n order to prove a breach of contract claim, a plaintiff must establish that his damages were caused by the defendant's wrongful conduct.” Petitt v. Celebrity Cruises, 153 F.Supp.2d 240, 263 (S.D.N.Y.2001); See also Bausch & Lomb Inc. v. Bressler, 977 F.2d 720, 731 (2d Cir.1992); Jorgensen v. Century 21 Real Estate Corp., 217 A.D.2d 533, 629 N.Y.S.2d 268 (2d Dep't 1995). Where, however, a time charterer assumes the “responsibility to load, stow and discharge” the cargo, the ultimate responsibility for seaworthiness remains with the vessel's command, and language such as that contained in the subject charter party does not divest the master from his obligation to the owners to ensure the vessel is seaworthy. See, e.g. Olsen v. U.S. Shipping Co., 213 F. 18, 20–21 (2d Cir.1914); Yeramex International v. S.S. Tendo, 595 F.2d 943, 947–948 (4th Cir.1979); Oxford Paper Co. v. The Nidarholm, 282 U.S. 681, 684–86, 51 S.Ct. 266, 75 L.Ed. 614 (1931).

A ship is unseaworthy if it is not reasonably fit for its intended use. Mitchell v. Trawler Racer, Inc., 362 U.S. 539, 550, 80 S.Ct. 926, 4 L.Ed.2d 941 (1960). The test is whether a vessel, in terms of its equipment and crew, was reasonably fit to undertake the voyage at issue. See, e.g. Farrell Lines, Inc. v. Jones, 530 F.2d 7, 10 n. 2 (5th Cir.1976). “The general rule is that the vessel must be staunch, strong, well equipped for the intended voyage and manned by a competent and skillful master of sound judgment and discretion.” Tug Ocean Prince, Inc. v. U.S., 584 F.2d 1151, 1155 (2d Cir.1978). Unseaworthiness therefore may result from failures which make the vessel ill-suited for its duties or from the vessel being manned with incompetent crew. Hercules Carriers, Inc. v. State of Fl., 768 F.2d 1558, 1565–1566 (11th Cir.1985). Consequently, a vessel is unseaworthy when it sails over its marks, with a list, and/or without sufficient stability, or with officers that are incapable of operating the vessel's basic equipment. See Trico Marine Assets Inc. v. Diamond D. Marine Servs., 332 F.3d 779, 790 (5th Cir.2003); In re Long, 293 F.Supp. 172, 175 (S.D.N.Y.1968), aff'd, 439 F.2d 109 (2d Cir.1971); Ionion Steamship Co. v. United Distillers of America, Inc., 236 F.2d 78, 81 (5th Cir.1956); Todd Shipyards Corp. v. United States, 391 F.Supp. 588 (S.D.N.Y.1975); The Vestris, 60 F.2d 273 (S.D.N.Y.1932); see also The Indien, 71 F.2d 752, 761–762 (9th Cir.1934); Andros Shipping Co. v. Panama Canal Co., 184 F.Supp. 246, 258 (D.C.Z.1960).

Owners' and Hull Underwriters' breach of contract claims arise from clauses 8 and 75 of the time charter, which allegedly make Bernuth responsible for the vessel's condition to the extent it was unseaworthy at the time of departure from Vieux Fort (Bernuth Opp. Mem. 3). Owners and Hull Underwriters allege that under clause 8 of the time charter, Bernuth was responsible for all cargo handling, under the supervision of the Captain, who for this purpose, Owners and Hull Underwriters argue, served as an agent of Bernuth ( Id.). Owners and Hull Underwriters allege that by misdeclaring weight information, Bernuth is responsible for the sinking of the vessel.

Owners and Hull Underwriters further allege that, under clause 75, Bernuth was responsible for providing accurate container weights to the Master and Chief Officer of the M/V Angeln (Bernuth Opp. Mem. 4). Clause 75 of the time charter provides that the charterer must furnish a container list with weights and is responsible for damages resulting from any discrepancies (Bernuth 56.1 Stmt. ¶ 64). Bernuth allegedly breached this obligation by providing errant weight information to the Captain.

In support of their motion, Bernuth argues that the ship's officers could not operate the stability computer, lacked a fundamental understanding of principles of stability, and loaded the vessel below its mark, and that the vessel was allowed to sail in an overloaded condition, with a list and virtually no stability (Bernuth Supp. Mem. 20). They argue that, as a matter of law, these circumstances rendered the ship unseaworthy and there can be no legitimate dispute that this unseaworthiness caused the vessel to sink ( Id.).

The Owners' and Hull Underwriters' breach of contract claim fails. Clause 8 of the time charter merely identifies which party is responsible for loading the cargo and contains no language regarding allocation of liability in the event of loss. Importantly, it does not make the charterer ultimately responsible for seaworthiness. See, e.g. Olsen v. U.S. Shipping Co., 213 F. 18, 20–21 (2d Cir.1914); Yeramex International v. S.S. Tendo, 595 F.2d 943, 947–948 (4th Cir.1979); Oxford Paper Co. v. The Nidarholm, 282 U.S. 681, 684–86, 51 S.Ct. 266, 75 L.Ed. 614 (1931).

Clause 75 provides the charterer with the obligation to furnish a container list with weights and makes that party responsible for damages resulting from any discrepancies. Owners and Hull Underwriters' breach of contract claim under this clause likewise fails because they have not adduced sufficient facts to establish that the damages were caused by the defendant's wrongful conduct. See Petitt v. Celebrity Cruises, 153 F.Supp.2d 240, 263 (S.D.N.Y.2001); Bausch & Lomb Inc. v. Bressler, 977 F.2d 720, 731 (2d Cir.1992); Jorgensen v. Century 21 Real Estate Corp., 217 A.D.2d 533, 629 N.Y.S.2d 268 (2d Dep't 1995). The evidence points to the contrary result. The weight information, despite possibly having some discrepancies with the actual weight of the containers, accurately reflected that the ship was in peril and should not have been taken out to sea by its Captain (Gutowski Decl. Ex. 18, Cushing Tr. 205). Despite these clear warnings, Captain Fijol decided to take the vessel out to sea. His negligent decision to set sail under these conditions caused the loss. The perilous warnings could not have been clearer.

The claims against MSC are similar to the claims against Bernuth ( See ECF 83, Counterclaim against MSC; ECF 93, Complaint in Intervention). These claims against MSC, however, are even weaker. First, there is no contractual relationship between MSC and the Owners, or MSC and the Hull Underwriters (MSC Supp. Mem. 8). Second, there is no evidence that any of the MSC containers were overweight or misdeclared (MSC 56.1 Def. Stmt. ¶ 20; Exhibit I to Flood Aff. 228–31). The sinking of the ship was caused solely by Captain Fijol taking the ship out to sea while it was clearly in an unseaworthy condition. There could be no contribution to this negligence on MSC's part because there is no evidence that MSC contributed to the cause of its sinking by providing incorrect weight information. Owners and Hull Underwriters' claim for negligence and breach of contract against MSC fail.

Bernuth's motion for summary judgment (ECF 174) and MSC's motion for summary judgment (ECF 168) dismissing the claims against them are GRANTED.

SO ORDERED.