Somarelf v. American Bureau of Shipping

• Decision Date: 29 September 1989
• Docket Number: Civ. A. No. 86-4615.
• Parties: SOMARELF, Elf Union and Fairfield Maxwell Services, Ltd., Plaintiffs, v. The AMERICAN BUREAU OF SHIPPING, Defendant.
• Court: U.S. District Court — District of New Jersey

720 F. Supp. 441

1989 AMC 2330

SOMARELF, Elf Union and Fairfield Maxwell Services, Ltd., Plaintiffs, v. The AMERICAN BUREAU OF SHIPPING, Defendant.

Civ. A. No. 86-4615.

United States District Court, D. New Jersey.

September 5, 1989.

As Amended September 29, 1989.

William France, Healy & Baillie, New York City, for plaintiffs.

Sarah M. Barton, Adams & Barton, Paramus, N.J., for defendant.

OPINION

WOLIN, District Judge.

This is a maritime action originally brought by plaintiffs Somarelf and Fairfield Maxwell Services Ltd. ("Fairfield Maxwell"), for damages incurred because of mistakes in calculation by defendant American Bureau of Shipping ("ABS"), a classification society which classifies and surveys ships. After the action was commenced, Fairfield Maxwell paid $200,000 in settlement to Somarelf for all claims Somarelf had arising from the miscalculation and for breach of the charter warranties extended to Somarelf by vessel owners represented by Fairfield Maxwell as agent. Fairfield Maxwell then pursued an action for indemnification against ABS. ABS's motion for summary judgment was denied. Somarelf v. American Bureau of Shipping, 704 F.Supp. 59 (D.N.J.1988), and the Court pointed out certain unresolved issues of fact. Id. at 64. This matter was tried on May 9-12, 22-26, 1989 before this Court without a jury. The following constitutes this Court's findings of fact and conclusions of law pursuant to Rule 52(a), Federal Rules of Civil Procedure.

I. FINDINGS OF FACT

The Parties and Vessels Involved

1. Somarelf is a corporation formed and existing under the laws of the country of France. Somarelf is engaged in the business of operating and chartering ocean-going vessels for the carriage of crude oil and petroleum products. Somarelf's chartered vessels are employed in the carriage of crude oil and petroleum products for the account of Somarelf's parent corporation, Elf France, a subsidiary of Society National Elf Aquitaine ("SNEA"); for the account of other subsidiaries of SNEA and, on occasion, for its own account when fixing time chartered vessels in the spot market. SNEA is a French corporation, 51% of the shares of which are held by the French government.

2. Somarelf was, at all material times, the successor of Elf Union as of January 1, 1980 and the time charterer of two motor tank vessels, the HAPPY SPRITE and JOLLY SPRITE (renamed VIC BILH). Somarelf employed the vessels for the carriage of crude oil and petroleum products. During the material time, Somarelf voyage chartered (sub-chartered) the vessels on four occasions. It was in regard to these sub-charters that Somarelf's claims arose.

3. Fairfield Maxwell is a corporation organized and existing under the laws of the United Kingdom. Fairfield Maxwell and several other corporations comprise the Fairfield Maxwell group of companies whose primary business is international shipping. Fairfield Maxwell is a ship management and operating affiliate of the Fairfield Maxwell Group.

4. Fairfield Maxwell was, at all material times, the managing agents for and operators of the motor tank vessels HAPPY SPRITE and JOLLY SPRITE, on behalf of the registered owners of those vessels. Fairfield Maxwell brings this action in its capacity as agents for the registered owners of the motor tank vessels HAPPY SPRITE and JOLLY SPRITE.

5. ABS is a not-for-profit ship classification society created by Special Act of the New York State Legislature in 1862. In addition to providing ocean-going vessel classification services, ABS, along with other recognized international classification societies, measures ocean-going vessels and certifies such vessel measurements, including gross and net tonnage measurements, on behalf of national governments and the Panama and Suez Canal Authorities. The Suez Canal Authority (the "SCA") authorizes ABS to issue Suez Canal Special Tonnage Certificates. Trial Transcript (hereinafter "Tr.") 1009.

6. The motor tank vessel HAPPY SPRITE was built by Sasebo Heavy Industries Co., Ltd. of Japan ("Sasebo") as hull 283 and was delivered to her registered owner Astre Tankers Limited of Liberia ("Astre"), a company of the Fairfield Maxwell Group, on or about December 22, 1980. Tr. 20-26. The contract for construction of hull 283 was entered into with Sasebo in July, 1979 by Comet Tankers, a company of the Fairfield Maxwell Group. On delivery, the HAPPY SPRITE was reregistered in the names of New Eastern Limited ("New Eastern") and Astre. New Eastern was a company owned by Taiyo Fisheries, a Japanese corporation, and was a 50% owner of the HAPPY SPRITE. Astre and New Eastern remained joint owners of the HAPPY SPRITE until April 1985, when the vessel was sold to Aquastar Navigation. The sale to Aquastar provided that Astre and New Eastern would take the vessel back on a 10-year charter. At all material times, from 1979 through 1985, the HAPPY SPRITE was at least 50% owned by companies of the Fairfield Maxwell Group.

7. The motor tank vessel JOLLY SPRITE was built by Sasebo as hull 285 and was delivered to her registered owner, Penmarine Ltd. ("Penmarine"), a Liberian corporation, on or about March 25, 1981. Tr. 33. The contract for construction of hull 283 was entered into with Sasebo in July, 1979 by New Caravel Ltd. ("New Caravel"), a company of the Fairfield Maxwell Group which acted on behalf of SNEA in entering into the construction contract. The vessel was transferred to Penmarine on her delivery. Penmarine was owned by Eton Trading which was, in turn, owned by SNEA. Tr. 22-23. Subsequently, Penmarine decided to transfer the JOLLY SPRITE from Liberian to British flag. As an accommodation to Penmarine and as part of that transfer, Lenox Holdings Limited was established by the Fairfield Maxwell Group to act as registered owner until the transfer to British flag occurred in February, 1982. In February, 1982, ownership of the JOLLY SPRITE was transferred to Lombard Facilities Ltd. and Lombard Discount Ltd., British financing institutions unrelated to either the Fairfield Maxwell Group or SNEA. The vessel's name was then changed from the JOLLY SPRITE to the VIC BILH. The VIC BILH remains in the ownership of Lombard Facilities Ltd. and Lombard Discount Ltd. The VIC BILH left British flag on March 26, 1986 and has changed countries of registry on several occasions. The VIC BILH is presently registered in Hong Kong. Since the transfer of the JOLLY SPRITE's ownership to Lombard in February, 1982, Fairfield Maxwell has continued to have the management and operational responsibilities for the vessel.

The Suez Canal Special Tonnage Certificates for the Vessels

8. Fairfield Maxwell selected ABS as the classification society for the HAPPY SPRITE and JOLLY SPRITE. ABS was selected because it was regarded as more efficient and more reliable than other classification societies. Tr. 37-39. The construction contracts provided that the vessels would be designed and constructed under ABS's supervision and according to ABS's rules and standards and that the vessels would be delivered classed by ABS and with all necessary statutory certificates including Liberian National and Suez Canal Special Tonnage Certificates. Fairfield Maxwell Group representatives supervised construction of both vessels and Penmarine paid for these services in respect of hull 285. Tr. 36-38, 48; Exh. 216. ABS's services during the construction of the vessels, including preparation and issuance of the Suez Canal Special Tonnage Certificates, were for the benefit of the builders and owners of the vessels. During construction, ABS communicated with representatives of the Fairfield Maxwell Group. After deliveries of the vessels, ABS communicated with Fairfield Maxwell concerning the services ABS provided for the vessels. Tr. 159, 160-61, 987-88.

9. On or about October 6, 1980, Sasebo issued its "Tonnage Computation Under Register (Liberian) Tonnage Regulation" and its "Tonnage Computation Under Suez Canal Tonnage Regulation" for Sasebo hull 283, the HAPPY SPRITE. Those Tonnage Computations were attested to by ABS's surveyor at the port of Sasebo, Japan. The attestation consisted of a confirmation that the Tonnage Computations accurately reflected the physical dimensions of Sasebo hull 283. The Tonnage Computations were then forwarded to the Tonnage Section of the Hull Structures Department at ABS's headquarters then located in New York City. Vessel tonnages under Liberian and Suez Canal tonnage regulations, and under tonnage regulations of other nations or authorities, refer to measured or calculated volumes, not weights, of a vessel's hull and superstructure.

In this case, Sasebo prepared two tonnage computations for the HAPPY SPRITE: "Tonnage Computation Under Register (Liberian) Tonnage Regulation" (Exh. 6) and "Tonnage Computation Under Suez Canal Tonnage Regulation" (Exh. 7). The Liberian Tonnage computation contained a complete calculation of the underdeck tonnage. The "number tons below tonnage deck as measured" on Sasebo's computation was 60,320.67. Liberian tonnage regulations exempt underdeck water ballast spaces from the underdeck tonnage. Consequently, Sasebo's computation subtracted a total of 13,698.30 tons for the fore and afterpeak and numbers 2 and 4, port and starboard, ballast tanks. The "number tons below tonnage deck for registry" was therefore 46,622.37 tons. Sasebo's Suez Tonnage Computation contained no calculation of the underdeck tonnage. Rather, in the appropriate space on that computation, Sasebo had simply written: "As similar to Reg.ister underdeck tonnage 46,622.37." As Suez Canal tonnage regulations do not exempt underdeck ballast spaces, Sasebo's statement was incorrect. The Suez Canal underdeck tonnage should have been approximately 60,320.67 tons, as determined on the Liberian Tonnage Computation before deduction of the underdeck water ballast spaces. Tr. 529-33.

These computations were prepared by Sasebo as a courtesy and free of charge to ABS, Tr. 532...