Clubb Oil Tools, Inc. v. M/V GEORGE VERGOTTIS

• Decision Date: 10 August 1978
• Docket Number: Civ. A. No. 76-B-168.
• Citation: 460 F. Supp. 835,1980 AMC 556
• Parties: CLUBB OIL TOOLS, INC., Plaintiff, v. M/V GEORGE VERGOTTIS, Her engines, boilers, tackle and cargo, In Rem, Pacific Marine Corporation, Trefalcon Sales Company, and Franconia Sea Transport, Ltd., In Personam, Defendants.
• Court: U.S. District Court — Southern District of Texas

460 F. Supp. 835

1980 AMC 556

CLUBB OIL TOOLS, INC., Plaintiff, v. M/V GEORGE VERGOTTIS, Her engines, boilers, tackle and cargo, In Rem, Pacific Marine Corporation, Trefalcon Sales Company, and Franconia Sea Transport, Ltd., In Personam, Defendants.

Civ. A. No. 76-B-168.

United States District Court, S. D. Texas, Brownsville Division.

August 10, 1978.

COPYRIGHT MATERIAL OMITTED

Jeffrey D. Roerig, Cox, Wilson, Black & Roerig, Brownsville, Tex., for plaintiff.

J. Michael Mahaffey, Kleberg & Weil, Corpus Christi, Tex., for defendants M/V George Vergottis & Franconia Sea Transport.

Benjamin S. Hardy, Hardy, Rodriguez, Colvin & Lanford, Brownsville, Tex., for defendant Pacific Marine.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

CARL O. BUE, Jr., District Judge.

INTRODUCTION

This is an action brought by Clubb Oil Tools, Inc. ("plaintiff") against the M/V GEORGE VERGOTTIS, her engines, boilers, tackle and cargo, in rem, to foreclose on a maritime lien and an action against Trefalcon Sales Company ("Trefalcon"), Franconia Sea Transport, Ltd. ("Franconia") and Pacific Marine Corporation ("Pacific") on a debt. In addition, plaintiff alleges a fraud action against Trefalcon, and Franconia has brought a third-party complaint against Trefalcon pursuant to a Decision and Award entered March 17, 1978, by an arbitration board ordering Trefalcon to pay to Franconia any amount Franconia may be held liable for in the instant suit. All of the actions arise from plaintiff's rental of oil pipe to Trefalcon on or about July 30, 1976, to facilitate the loading of oil on board the GEORGE VERGOTTIS from an oil pit located approximately one mile from the vessel's berth in Brownsville, Texas.

Trefalcon failed to answer or appear at trial, and plaintiff and Franconia have moved for default judgment. Based on the following findings of fact and conclusions of law, the Court finds that plaintiff is entitled to damages for breach of contract against Trefalcon and is also entitled to a maritime lien against the GEORGE VERGOTTIS in the same amount, liability to be joint and several. In addition, Franconia is entitled to a default judgment on its third-party complaint against Trefalcon.

FINDINGS OF FACT

1. Plaintiff is a Texas corporation engaged in the oil pipe rental business.

2. Trefalcon is a foreign corporation with offices in New York, New York, which has done business in the State of Texas by chartering vessels that call at Texas ports.

During July-August, 1976, it was the time charterer of the GEORGE VERGOTTIS. See Defendant's Exhibit 9.

3. Defendant Pacific is a foreign corporation with its principal place of business in New York, New York, involved in the business of acting as agent for maritime vessels during July-August, 1976.

4. Defendant M/V GEORGE VERGOTTIS is a Liberian registered vessel sailing under the flag of Liberia, official number 2502.

5. The Court finds that near the end of July, 1976, Mr. Gordon Vaughan, the then general manager of plaintiff, received a call from Mr. George Utley of Trefalcon inquiring about the rental of oil pipe for approximately ten days to use in the loading of oil aboard the GEORGE VERGOTTIS. After communicating with the other officers of Clubb, talking with Jack Garland, president of Trefalcon, and communicating by telephone with an individual who identified himself as an employee of Chase Manhattan Bank and who verified the credit of Trefalcon, Vaughan orally agreed with Utley to rent the pipe under the following terms: (1) 5,270 feet of pipe would be rented at .07 cents per foot per day; (2) Trefalcon agreed to pay transportation charges from Corpus Christi to Brownsville; (3) Trefalcon agreed to pay plaintiff's charges and expenses for stringing the pipe alongside the vessel; (4) Trefalcon agreed to pay the price of any pipe lost or damaged beyond repair during the rental; (5) Trefalcon agreed to pay plaintiff's charges and expenses for cleaning, testing and drifting the returned pipe after the rental term; (6) Trefalcon agreed to pay plaintiff's charges and expenses for repairing damaged pipe; and (7) Trefalcon agreed to return the pipe to Corpus Christi following the rental. The Court finds that this agreement constitutes a valid and enforceable oral contract.

6. Following the oral agreement, Utley told Vaughan that billing for the rental would be handled through Mr. Bud Koar of Pacific. Vaughan testified that in his conversations with Koar, he was not apprised of the agency/principal relationship between Trefalcon and Pacific and that he thereby concluded Pacific was assuming liability as a joint venturer. On the other hand, Koar testified, and the Court so finds, that he disclosed Pacific's agency relationship to Vaughan and that Pacific never represented that it would be jointly liable under the contract. Given the credibility of the witnesses and the manner and method of the negotiations, the Court finds that Pacific's agency relationship was apparent to plaintiff. This finding is buttressed by the first written instrument arising from the transaction, Plaintiff's Exhibit 4, which is plaintiff's delivery receipt for the pipe prepared by Vaughan and which invoices the ticket to Pacific as agent for Trefalcon.

7. On or about July 30, 1976, plaintiff loaded the pipe at its yard in Corpus Christi, and the following day the pipe was delivered in Brownsville pursuant to the terms of the contract.

8. On approximately August 9, 1976, Vaughan called Utley and was told that the pipe would be needed an additional five or six days. Subsequently, Utley informed Vaughan that even more time would be needed due to problems encountered in pumping the oil onboard the vessel, and Vaughan authorized an extension of the rental through August 31. Plaintiff was never formally notified that the rental agreement was terminated, and on September 15 it determined that the pipe had been abandoned. Subsequent demands for payment made to both Trefalcon and Pacific were unsuccessful, and on August 26, 1976, plaintiff filed this action. As previously noted, Trefalcon failed to answer or appear at trial to present any justification for its failure to honor the contract with plaintiff. Accordingly, the Court finds that Trefalcon materially breached the contract. Following the breach, and during the latter part of September, plaintiff sent its work crews to Brownsville to disassemble the pipe and return it to Corpus Christi where it was tested and repaired to the extent possible.

9. The evidence presented by plaintiff concerning damages was largely unchallenged by defendants, with the exception of defendant Franconia's argument that by failing to electronically test 4422 feet of pipe that was downgraded for use as lower grade pipe following the rental, plaintiff waived its claim to the $4,864.00 loss it claimed it sustained as a result of the downgrading. In the absence of any evidence indicating that the pipe need not have been downgraded, the Court concludes that plaintiff's damages should include this amount. There was ample evidence at trial concerning the harsh treatment the pipe sustained during the rental period due to the inartful way it was assembled and the stress it was exposed to from the bouncing up and down during the pumping of the oil/water mixture from the pit to the vessel. In addition, the compound placed on the pipe threads by Trefalcon during construction of the line was a seizing compound which had the effect of sealing the pipe so tightly that it was disassembled only with substantial damage to the pipe. It is therefore reasonable to conclude from all of the evidence that following this use it was no longer suitable for use as high grade pipe which must be able to withstand extreme pressure.

The Court finds that the total damages due plaintiff amount to $33,031.83. This figure includes $18,031.83 of rental expense tabulated on the basis of the contract price of $.07 per day per foot for 5270 feet of pipe over a 47-day period. The remaining $15,000.00 represents other damages incurred by plaintiff, including but not limited to (1) labor, equipment use and other expenses incurred in recovering the pipe, breaking it down and transporting it back to Corpus Christi; (2) testing and drifting the pipe; (3) straightening bent pipe, replacing damaged collars and rethreading damaged pipe ends; (4) the replacement cost of pipe damaged beyond repair as well as the above-mentioned loss incurred as a result of downgrading repaired pipe. Although these figures total approximately $20,000.00, the Court has subtracted $5,000.00 as an estimate of the expense of reasonable wear and tear which, pursuant to the terms and conditions stated in Plaintiff's Exhibit 4, plaintiff agreed to assume. Defendants failed to produce any evidence as to what dollar amount represents reasonable wear and tear, and the Court has therefore selected the sum of $5,000.00 as a reasonable figure under the facts and circumstances presented.

10. In arriving at the above-mentioned findings of fact, the Court has taken into consideration the credibility and demeanor of the witnesses and, where appropriate, given them appropriate weight.

CONCLUSIONS OF LAW

1. This is a case of admiralty and maritime jurisdiction under Rule 9(h), Fed.R. Civ.P.

2. Defendant Trefalcon failed to answer or appear at trial and is therefore in default. Accordingly, plaintiff is awarded damages against Trefalcon in the amount of $33,031.83. See Finding of Fact 8.

Although plaintiff prays for punitive damages against Trefalcon for fraud arising out of alleged misrepresentation of Trefalcon's financial condition, the Court concludes that the evidence does not support such an award. Accordingly, plaintiff is awarded only actual damages against Trefalcon. In addition, defendant Franconia is entitled to default judgment on its third-party complaint brought against Trefalcon pursuant to an arbitration award ordering Trefalcon to pay Franconia for any...