Avondale Shipyards, Inc. v. Vessel Thomas E. Cuffe, 74-93.

• Decision Date: 15 June 1977
• Docket Number: No. 74-93.,74-93.
• Citation: 434 F. Supp. 920
• Parties: AVONDALE SHIPYARDS, INC., Plaintiff, v. The VESSEL THOMAS E. CUFFE et al., Defendants.
• Court: U.S. District Court — Eastern District of Louisiana

434 F. Supp. 920

AVONDALE SHIPYARDS, INC., Plaintiff, v. The VESSEL THOMAS E. CUFFE et al., Defendants.

No. 74-93.

United States District Court, E. D. Louisiana.

June 15, 1977.

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Edward J. Koehl, Jr., Robert B. Acomb, Jr., New Orleans, La., for Avondale Shipyards, Inc.

Edward S. Bagley, New Orleans, La., George L. Waddell, James D. Boughey, San Francisco, Cal., for Pacific Far East Line, Inc.

Curtis R. Boisfontaine, New Orleans, La., John Martin, Philadelphia, Pa., for DeLaval Turbine, Inc.

Edwin O. Schlesinger, Moise S. Steeg, Jr., New Orleans, La., for Friede & Goldman, Inc., LASH Systems, Inc., and Jerome Goldman.

ALVIN B. RUBIN, District Judge:

This opinion concerns the motions for summary judgment with respect to the tort, indemnity and contribution claims of Avondale Shipyards, Inc. (Avondale), a shipbuilder, against Friede & Goldman, Inc., (F. & G.), the designer of the vessels that Avondale built for Pacific Far East Line, Inc., (PFEL), and against Jerome Goldman (Goldman), President of F. & G., and himself a participant in the design of the vessels, and, arguably in the design of the propulsion system, including the main reduction gear, and the portion of the vessels' structure supplying the propulsion system.

I. BACKGROUND

In November, 1967, Avondale, PFEL and the Maritime Administration (Marad) entered into a contract for the construction of six vessels of a kind never before built. Known as LASH (lighter aboard ship) vessels, they were designed by F. & G., who acted at least in part through Goldman, to transport cargo in barges stacked within the hull. Cranes were to be used to lift fully loaded barges into the vessel, and to unload them in like manner at their destination.

In June, 1971, the first LASH vessel built for PFEL, the Cuffe, underwent sea trials. The vessels were built with a specially designed propulsion system whereby the power of the engines was transmitted to the propellers through reduction gears. At the sea trials, it became evident that there were some problems in the operation of the vessel's main reduction gear. After some repair work to attempt to rectify the operation of the gear, the Cuffe was delivered to PFEL in July, 1971. In September, PFEL's second ship, the Golden Bear, was delivered. By October 9, 1971, problems were being encountered in the main reduction gears in both vessels, and in three others of like design that had been produced for another purchaser, Prudential Grace. A change in the oil flow system was made, apparently upon the suggestion of the manufacturers of the propulsion system, DeLaval Turbine, Inc., (DeLaval).

In March and May, 1972, PFEL took delivery of two additional ships that proved trouble free. The drive shaft gears on these two were specially aligned by a procedure known as dot alignment. In August, 1972, the tenth LASH vessel was tendered for delivery to Prudential Grace. The gear on this vessel had been dot aligned, and it is arguable, and assumed for present purposes, that this vessel therefore was capable of operating properly.

F. & G., Avondale, DeLaval, Prudential Grace and PFEL had various conferences and exchanged correspondence about the gear problems and about many other matters pertaining to ship design, construction, and operation. Apparently, apart from the construction problems, Prudential Grace was not in a financial condition to take delivery and make final progress payments, at least until the Internal Revenue Service issued a ruling favorable to its proposed financing arrangement. Hence, Prudential Grace is portrayed here as seeking to find excuses to decline delivery.

Perhaps inspired by these motives, on August 21, 1972, Prudential Grace wrote Avondale, "It appears increasingly certain that the main reduction gear and/or hull supporting structure may be of inherently faulty design and/or manufacture and/or construction. This conclusion has been forced on us by the failure of every corrective step, every experiment, and all the tinkering engaged in by the contractor." Whatever the motives for writing this letter, in the light of the prior dealings between PFEL and Avondale, and the interrelationship of the problems in the two groups of vessels, this bald assertion that the fault lay in the design or manufacture of the reduction gear was enough to put both PFEL and Avondale on notice of the possible nature and cause of the problem. The letter was received by Avondale in August 1972 and was in PFEL's hands no later than November 1972.

Beginning late in 1972, Avondale commenced making substantial alterations, called retrofitting, in the PFEL vessels. In May, 1973, it proposed a contract modification to PFEL by which it would be reimbursed for the expenses involved in the retrofitting, but an agreement was never reached. On January 11, 1974, Avondale filed suit against PFEL for the amount it claimed: $11,740,869.42. On April 30, 1974, PFEL counter-claimed against Avondale, seeking damages resulting from Avondale's alleged breach of its contractual obligations and alleged negligent construction. It also filed a third-party action against DeLaval for breach of contract, breach of warranty, negligent construction, and product liability, and against F. & G. for breach of the design contract and of the technical service contract. On June 24, 1976, more than two years later, Avondale filed a third-party complaint against F. & G., Goldman, and LASH Systems, Inc., the holder of the patent on the LASH design.¹

The present motions challenge the claims of Avondale against Goldman and F. & G., which sound in indemnity, contribution and tort. Both of these third-party defendants contend that the facts of this case cannot, as a matter of law, give rise to a claim for implied contractual indemnity under Ryan Company v. Pan-Atlantic Steamship Co., 1956, 350, U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133, and its spawn, nor to an action for "active-passive tort" indemnity under the doctrine of Tri-State Oil Tool Industries, Inc. v. Delta Marine Drilling Co., 5th Cir. 1969, 410 F.2d 178. They further contend that any causes of action sounding in contribution or in tort are barred by laches. Let us consider these contentions separately.

II. IMPLIED CONTRACTUAL INDEMNITY AGAINST JEROME GOLDMAN

Ryan,² supra, and its spawn³ are predicated upon breach of a contractual duty, albeit an implied one, and not upon tortious conduct.⁴ Although courts in cases subsequent to Ryan have held that privity of contract between the indemnitor and indemnitee is not necessary,⁵ the Ryan cause of action for indemnity is based upon the breach of an implied contractual term of workmanlike performance. Cases applying the Ryan doctrine traditionally involve contractual privity; Ryan liability has been imposed absent privity only where the contract was made by a non-vessel owner for services to a vessel.

Because the original construction contract and technical service contract relating to ship construction are non-maritime contracts,⁶ any warranty of workmanlike performance in those contracts must be implied by state, and not maritime, law. The Ryan doctrine has been extended to non-maritime cases in some jurisdictions, but not Louisiana. General Electric Co. v. Cuban Am. Nickel Co., 5th Cir. 1968, 396 F.2d 89, 91-97. See Note — Indemnity — Tort and Contract Theories Under Louisiana Law, 1970, 44 Tul.L.Rev. 408, 412, note 22.

If, therefore, Louisiana law applies, it is evident there was no warranty from Goldman to Avondale. If, on the other hand, the case is guided by general maritime law, then we arrive at the same port. See Watz v. Zapata Off-Shore Co., 5th Cir., 1970, 431 F.2d 100, 120. As the Fifth Circuit has recently stated, "We have consistently refrained from extending the Ryan-type indemnity `beyond those controversies .. which necessitated its formulation and justify its application.' See In re Dearborn Marine Service, Inc., 5 Cir., 1974, 499 F.2d 263, 287. See also Delta Engineering Corporation v. Scott, 5 Cir., 1963, 322 F.2d 11; Ocean Drilling & Exp. Co. v. Berry Bros. Oilfield Service, 5 Cir., 1967, 377 F.2d 511." Thibodeaux v. Texas Eastern Transmission Corp., 5th Cir., 1977, 548 F.2d 581, 585. See also Loffland Brothers v. Roberts, 5th Cir., 1967, 386 F.2d 540, 549 ("We are ... extremely hesitant to extend the burdensome Ryan doctrine to situations not substantially similar to those which gave birth to the doctrine.")

Neither F. & G. nor Jerome Goldman had a contract with Avondale. Hence, neither could be held to have made a contractual warranty to Avondale. Whether an architect impliedly warrants his own workmanlike performance to the owner who employed him (here PFEL) presents a different question, and one that must ultimately be decided by this court when deciding F. & G.'s motion for summary judgment against PFEL. Compare Creighton v. Karlin, La. App.1969, 225 So.2d 288 with Steel v. Aetna Life & Casualty, La.App.1974, 304 So.2d 861.

Unlike a stevedore, wharfinger, or charterer, Goldman was not at any time in control of any vessel; Avondale had control of the vessels until they were delivered to PFEL. Although Jerome Goldman originated the LASH concept and participated in the design work undertaken by F. & G., he personally was not the architect who contracted with PFEL; F. & G. was. To extend the Ryan burden to the designer of a vessel would be to lose sight of its original intent and purpose, and cut free that doctrine from its jurisprudential moorings. Accordingly, Goldman is entitled to summary judgment against all indemnity claims predicated upon Ryan.

III. ACTIVE-PASSIVE INDEMNITY AGAINST JEROME GOLDMAN

For reasons set out in the opinion of this court in Bible v. Chevron Oil Co., E.D.La.1969, 308 F.Supp. 312, for jurisdictional purposes, a tort occurs where the impact of the act or omission produces injury. Thus, where a force giving rise to an...