Orduna S.A. v. Zen-Noh Grain Corp.

• Decision Date: 05 October 1990
• Docket Number: No. 89-3297,ZEN-NOH,89-3297
• Citation: 913 F.2d 1149
• Parties: ORDUNA S.A. and Transglobal Maritime Corporation, Plaintiffs-Appellants-Appellees-Cross-Appellees, v.GRAIN CORPORATION, et al., Defendants-Third Party Plaintiffs-Appellees-Cross-Appellants, v. F & P ENGINEERS, INC., Republic Insurance Company and Employers Insurance Company of Wausau, Third Party Defendants-Appellants-Cross-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1149

913 F.2d 1149

1991 A.M.C. 346

ORDUNA S.A. and Transglobal Maritime Corporation, Plaintiffs-Appellants-Appellees-Cross-Appellees, v. ZEN-NOH GRAIN CORPORATION, et al., Defendants-Third Party Plaintiffs-Appellees-Cross-Appellants, v. F & P ENGINEERS, INC., Republic Insurance Company and Employers Insurance Company of Wausau, Third Party

Defendants-Appellants-Cross-Appellees.

No. 89-3297.

United States Court of Appeals,

Fifth Circuit.

Oct. 5, 1990.

Rehearing Denied Nov. 6, 1990.

Hugh Ramsay Straub, Walter Carroll, Jr., Benjamin W. Yancey, Terriberry, Carroll & Yancey, New Orleans, La., for Orduna, et al.

Thomas C. Cowan, William K. Christovich, Christovich & Kearney, New Orleans, La., for F & P Engineers, et al.

James G. Burke, Jr., Bernard H. Ticer, Burke & Mayer, New Orleans, La., for Zen-Noh Corp.

John M. Futrell, John Michael Kops, Faris, Ellis, Cutrone & Gilmore, New Orleans, La., for Euro Frachtkontor.

Sarah A. Lowman, Craig R. Nelson, New Orleans, La., for Buehler-Miag, Inc. and CNA.

Appeals from the United States District Court For the Eastern District of Louisiana.

Before GEE, DAVIS, Circuit Judges, and LITTLE ¹, District Judge.

W. EUGENE DAVIS, Circuit Judge:

While loading a ship, a loading arm fell from a grain elevator tower causing the ship damage. The district court found the elevator operator, the designer of the tower, and the ship's charterer liable for that damage. The various parties have filed multiple appeals and cross-appeals raising several issues. We affirm in part, reverse in part, and remand the case to the district court.

I. FACTS

In March 1984, a steel loading arm fell from a grain elevator on the Mississippi River onto the deck of the M/V TREBIZOND which was loading cargo in the berth below. This incident damaged the ship and delayed its departure. The shipowners, Orduna, S.A. and Transglobal Maritime Corporation (collectively Orduna), sued its voyage charterers, Euro-Frachtkontor G.m.b.H. (Euro); the owner and operator of the grain elevator, Zen-Noh Grain Corporation (Zen-Noh); the design engineering firm of the collapsed structure, F & P Engineers, Inc. (collectively, with its insurers, F & P); and the loading arm manufacturer, Buhler-Miag, Inc. (Buhler). These defendants filed a flurry of cross-claims and third-party claims among themselves.

Following a bench trial, the district court found Zen-Noh and F & P jointly and severally liable to Orduna. The district court awarded Orduna $378,528.75 in damages with interest running from date of judgment. The court also found Euro liable to Orduna, but granted Euro full indemnification from Zen-Noh and F & P. The court apportioned fault between Zen-Noh and F & P at one-third and two-thirds respectively.

The parties raise several issues on appeal. Zen-Noh argues that the trial court erred in finding it negligent in not inspecting and maintaining its grain elevator properly. Zen-Noh also argues that the trial court should have found that the exculpatory clause of Zen-Noh's dock tariff relieved it from liability. Zen-Noh further argues that the trial court erred in failing to allow it to submit rebuttal testimony, and it questions the damages awarded to plaintiff.

F & P argues that because its inadequate design of the tower did not cause the accident, the judgment against it cannot stand. Euro argues that it should not be liable to Orduna based solely on the safe berth clause in the charter party. Orduna also challenges the district court's denial of prejudgment interest. We will address all these issues in turn.

II. ZEN-NOH'S APPEAL

A.

Zen-Noh argues first that the trial court erred in finding it negligent in not properly inspecting and maintaining its grain elevator. ² We have said that a wharfinger, such as Zen-Noh, has the

"duty to exercise reasonable diligence to furnish a safe berth and to avoid damage to the vessel. This includes the duty to ascertain the condition of the berth, to make it safe or warn the ship of any hidden hazard or deficiency known to the wharfinger or which, in the exercise of reasonable care and inspection, should be known to him and not reasonably known to the ship owner."

Bunge Corp. v. M/V FURNESS BRIDGE, 558 F.2d 790, 795 (5th Cir.1977) (quoting Trade Banner Line v. Caribbean S.S. Co., S.A., 521 F.2d 229, 230 (5th Cir.1975)), cert. denied, 435 U.S. 924, 98 S.Ct. 1488, 55 L.Ed.2d 518 (1978). We will review the trial court's findings that Zen-Noh was negligent in its inspection and maintenance procedures under the clearly erroneous standard. Noritake Co. v. M/V HELLENIC CHAMPION, 627 F.2d 724, 728 (5th Cir. Unit A 1980).

Zen-Noh installed the loading arm at issue in this case in the spring of 1982, and the casualty occurred in March of 1984. The district court found that "[n]o formal inspection was ever made by Zen-Noh of structural members of the loading arms" during this approximately two-year period. The testimony of Zen-Noh's own plant manager supports this finding. The plant manager further testified that before the casualty Zen-Noh never inspected the upper block assembly of the loading towers, even though such an inspection was feasible. F & P's expert testified that one should inspect yearly such structural members on lifting devices.

The district court further found that from a walkway one could inspect the tower support visually from a distance of about ten feet. Testimony that the pre-casualty cracks in the steel supporting members would "have been seen on visual inspection by a knowledgeable person with a trained eye" supports this finding. Zen-Noh's plant manager testified that after the casualty Zen-Noh installed hinges on the grating of these walkways so it could inspect more easily. This evidence supports the trial court's conclusions that Zen-Noh did not adequately inspect the structural members of its loading tower for almost two years and that this failure to inspect was a proximate cause of the casualty.

As the district court explained, the 75-ton steel loading arm was suspended almost 100 feet above vessels and longshoremen working below. The district court was justified in holding Zen-Noh to a high standard of care and inspection when the risk involved substantial property damage and personal injury. We cannot say that the trial court's findings that the elevator owner was negligent were clearly erroneous.

B.

Zen-Noh next argues that an exculpatory clause in its dock tariff should have relieved it from all liability to Orduna. Zen-Noh claims Orduna's berth application incorporated by reference the indemnity provision in Zen-Noh's dock tariff. ³ Before enforcing an indemnification clause for an indemnitee's own negligence, a court must be firmly convinced that the exculpatory provision reflects the intention of the parties. See United States v. Seckinger, 397 U.S. 203, 211-12, 90 S.Ct. 880, 885-86, 25 L.Ed.2d 224 (1970) (4-3 decision) (courts are reluctant "to cast the burden of negligent action upon those who were not actually at fault"); see also Branch v. Fidelity & Casualty Co., 783 F.2d 1289, 1294 (5th Cir.1986) ("To secure indemnification from one's own negligence ... the intent of the parties must be expressly and specifically manifested.").

In the instant case, the shipowner's agent signed a berth application which he agreed was "in compliance with and subject to all applicable tariffs, rules, and regulations of Zen-Noh Grain Corporation, The South Louisiana Port Commission, and the Federal Grain Inspection Service." No excerpts of the pertinent texts of these documents or even a list of the documents appeared on the berth application. Thus the berth application did not identify by either date or number the specific dock tariff that purported to exculpate Zen-Noh from its own negligence. To be enforceable, clauses exempting one from one's own negligence must be "specific and conspicuous." Restatement (Second) of Contracts Sec. 195 comment b (1981) (emphasis added). ⁴

Zen-Noh's port coordinator testified that when Zen-Noh began operating he mailed the dock tariff to local shipping agents and to the South Louisiana Port Commission. Although he stated that he kept a list of agents to which he mailed the tariff and that he had return receipts indicating delivery, the port coordinator produced neither the list nor the receipts at trial. Conversely, the shipping agent's general manager testified that when the casualty occurred the shipping agent had not received a copy of Zen-Noh's tariff and therefore was unfamiliar with its terms when applying for berth. The district court found that the plaintiff never received or consented to Zen-Noh's tariff. The trial court saw and heard both witnesses. We cannot say his factual determination was clearly erroneous. Given this factual finding, the district court's conclusion follows: Zen-Noh did not carry its burden of demonstrating that Orduna intended to exculpate Zen-Noh from Zen-Noh's own negligence.

Zen-Noh cites this court's opinion in Farmers Export Company v. M/V GEORGIS PROIS, 799 F.2d 159 (5th Cir.1986), in support of its position. This reliance is misplaced. In Farmers Export, we upheld enforcement of specific provisions of a dock tariff that were contained in a berth application. Unlike the instant case, however, the issue in Farmers Export was not the effective incorporation of an exculpatory clause by reference. In that case the clauses at issue were damage provisions, and they were specifically included in the berthing application itself. Id. at 161. Moreover, the captain also signed additional documents which included the relevant provisions. Id. The district court did not err in rejecting Zen-Noh's defense predicated on the exculpatory clause in its dock tariff.

C.

Zen-Noh argues next that the trial court erred in failing to permit it to submit testimony to rebut F & P's evidence that Zen-Noh should have inspected the structural members connecting the loading arm to the tower. Zen-Noh...