GTS Industries SA v. S/S HAVTJELD

• Decision Date: 29 July 1994
• Docket Number: No. 92 Civ. 2297 (RLC).,92 Civ. 2297 (RLC).
• Citation: 887 F. Supp. 531
• Parties: GTS INDUSTRIES S.A., Plaintiff, v. S/S "HAVTJELD", her engines, tackle, boilers, etc., in rem, K/S Havtjeld, A/S Havtor Management, and A/S Bulkhandling in personam, Defendants.
• Court: U.S. District Court — Southern District of New York

887 F. Supp. 531

GTS INDUSTRIES S.A., Plaintiff, v. S/S "HAVTJELD", her engines, tackle, boilers, etc., in rem, K/S Havtjeld, A/S Havtor Management, and A/S Bulkhandling in personam, Defendants.

No. 92 Civ. 2297 (RLC).

United States District Court, S.D. New York.

July 29, 1994.

COPYRIGHT MATERIAL OMITTED

Law Offices of David L. Mazaroli, New York City, for plaintiff; David L. Mazaroli, of counsel.

Haight, Gardner, Poor & Havens, New York City, for defendants; Chester D. Hooper, Sharon Elliot, of counsel.

ROBERT L. CARTER, District Judge.

I

Plaintiff, GTS Industries S.A. ("GTS"), a corporation organized under the laws of France, is engaged in the manufacture and sale of steel products including steel coated pipes. Defendants, the owners and operators of M/V Havtjeld, an ocean vessel, are engaged in the carriage of cargo by water for hire.

Plaintiff and defendants entered into a charter party dated March 14, 1991, pursuant to which defendants agreed to transport from Dunkirk, France to Philadelphia, Pa., USA a shipment of 6,431 metric tons of coated pipe, delivered duty paid to staging yard Philadelphia, for sale to Transcontinental Gas Pipe Line Corporation of Houston, Texas ("Transco"), at the price of $6,679,617.26. The pipe was to be used by Transco in an underground natural gas pipeline.

Pursuant to the charter party, defendants were paid some $452,270 in charges and fees. Clause 2 of the agreement provided for owner responsibility

for loss of or damage to the goods or for delay in delivery of the goods only in case the loss, damage or delay has been caused by improper or negligent stowage of the goods ... or by personal want of due diligence on the part of the Owners or their Manager to make the vessel in all respects seaworthy and to secure that she is properly manned, equipped and supplied....

(Pl.Ex. 23.)

Clause 5(b), labeled "F.I.O. and free stowed/trimmed" and provided that the

cargo shall be brought into the holds, loaded, stowed and/or trimmed ... by the Charterers or their Agents, free of any risk, liability and expense whatsoever to the Owners.

(Id.)

The shipment consisted of 1,660 pieces of pipe with a three layered external coating of polyethylene and ten externally uncoated pieces of pipe. The external coating was protection against corrosion which could cause rupture or breakdown. The pieces of pipe had beveled ends to facilitate the welding of one pipe to another in the pipeline.

Prior to transport to Dunkirk for shipment, the pieces of pipe, coating and end bevels were subjected to quality control tests and inspections and were determined to be in good order and condition and in compliance with manufacturing and contractual specifications. (Pl.Ex. 4-6)

The cargo was loaded onto the M/V "Havtjeld" beginning on or about April 2, 1991. Surveyors acting for plaintiff and defendants inspected the cargo on the Dunkirk pier and during loading. Captain Ingar Aakerman, defendants' employee at the time and in charge of all of defendants' pipe shipments from Dunkirk, inspected the cargo with the master and chief officer of the vessel before, during and after the loading aboard the M/V "Havtjeld". Captain Aakerman assisted the ship's officers in the supervision of the loading, stowage and lashing of the cargo aboard the vessel. (Aakerman Dep. at 48-52). Aakerman, who had a copy of the charter party with him during the loading of the cargo, testified that all operations related to the loading of the cargo were under the master's responsibility (id. at 50); that the pipes had no wrapping or covering so that their nature and characteristics were visible and apparent (id. at 53-54); that there were no objections to the way the pipes were loaded or stowed (id. at 18); that he inspected the cargo after loading to be sure the pipes were properly loaded and properly stowed (id. at 19); that he saw some minor scratches in the coating and a beveled end flattened about two centimeters, but that the cargo was in good condition. (Id. at 19-20.)

On April 3, 1991, defendants issued a bill of lading for the shipment. The bill of lading stated that the cargo was in apparent good order and condition except for 17 pieces of pipe noted as damaged on the master's protest attached to the bill of lading. The damage listed as to the coating:

2 pipes, the damage listed as 3mm in depth; 10 pipes, 2mm in depth; 1 pipe 1mm in depth. 2 pipes, damage noted to metal exposed 50 × 50mm; one pipe had an end flattened 2cm; and one pipe, there was the notation "BVI" which I take to mean beveled end pricked 3mm depth.

(Pl.Ex. 1 at 3.)

Also attached to the bill of lading was a preshipment condition survey prepared by Captain Michel de Chalvron covering the interests of the defendants. He reported that the shipment consisted of 1,670 steel pipes, 1,660 pipes with 4mm thick polyethylene external coating and "ten unprotected and rusty" pipes. He reported that the bevels at the ends of each pipe had no special protection, but the outside surfaces "and bevels at the ends were duly protected at contact points with steel wires in order to prevent chafing and bevels crushing". (Pl.Ex. 1 at 5.) The pipes were reported to be in general good condition, with no damage to bevels at the ends. There was some damage to the polyethylene coating and when damage to the coating was equal to or more than 3mm deep, repairs were done immediately. Thirteen pipes were listed as thus repaired; otherwise 20 pipes were repaired with a wraparound adhesive polyethylene tape; one of these was "found with the tape slightly unadhesive", and 2 pipes were partially repainted in the inner side at the request of a U.S. inspector. (Id. at 6.)

There was no countervailing evidence as to the condition of the pipes after being loaded and stowed on board the vessel at Dunkirk, for departure on April 3, 1991, en route to Philadelphia. The vessel docked at Philadelphia on or about April 16, 1991, and discharge of the cargo commenced.

Surveyors on behalf of plaintiff, defendants and stevedores were in attendance when the ship's holds were opened and during discharge. All the surveyors noted that the cargo was damaged in stow aboard the vessel, with cuts, scratches, with pieces of rust scale imbedded in the pipe coating. Glass, nails and other debris were also noted as a source of damage. Rocky Carney of the I.S. Derrick Co., the surveyor operating in the interest of the cargo underwriters, reported that the largest percentage of damage to the cargo was damage to the coating due to pieces of rust scale from the vessel. The rust scale, according to Carney's report, caused cuts and gouges to the coating during the voyage as the pipes shifted with the pitching and rolling of the vessel. Additional damage from the rust scale occurred during discharge as it shifted onto successive tiers of the stow causing cuts, scratches and gouges. Also improper handling by the stevedores in discharging the pipes in wooden saddles, called "Napoleon Hats," with protruding nails resulted in extensive damage in terms of cuts, scrapes and gouges to the coating. In addition there was damage to the beveled ends of the pipes during the voyage and on discharge.

Scott Esslinger, surveyor for defendants at the discharge in Philadelphia, noted the presence of "rust scale with some ... pieces up to approximately 1 inch in diameter ... in all compartments being discharged on April 18 , 1991...." (Esslinger Dep. at 17.) The scales appeared to have fallen or been scraped from the overhead or the coaming of the vessel, or to have been scraped from the lifting gear used to remove the pipes. (Id. at 20.)

Carney's handwritten 3 page field notes constitute his on site observations of the discharging operations on April 17, 18 and 19. The entry for April 17 states:

Coating damage was much worse than expected 75% to 100% of pipe at times were being marked with coating damage.... It was observed that nails driven in the top of the saddles so called Napoleon Hats were catching on the coating causing transverse deep marks (gouges) in the coating. All parties concerned were made aware of this pointing this out within each hold working (sic). All surveyors were in agreement. Measures were taken by the Port Capt since wooden saddles were supplied by ship. However, even after the use of carpet, pipe coating in instances was damaged due to improper placement of carpet and/or carpet would side (sic) off wood when first pipe made contact carpet (sic).

(Def.Ex. UU at 1.) The entry for April 18 reports:

Coating damage was very high, bevel damage was low.... Coating damages were of several types — transverse gouges near the ends and scratches along the length, usually where pipes had been touching.

(Id. at 2.) The entry continues:

This surveyor examined each hold and found the following in each hold 2-5. Previous coating gouges in some pipes; nails found between pipes; rust scale in various areas, heavier under coaming; wooden saddles with nail heads catching on coating; timbers used in wing area with cut end against pipe; stevedore damage hitting coaming/sides/bulkhead. Surveyors from GTS, P & I, Stevedores, Port Capt. as well as Transco was shown in each hold these conditions. All surveyors were in agreement.

(Id. at 2-3.) On April 19, 1991, the only pertinent entry is "coating and bevel damage about same." (Id. at 3.)

Carney testified at trial and attributed the majority of the damage to the coating to rust scale which had fallen from the overhead structures of the cargo compartments 2, 3, 4 and 5. He indicated that the rust scale in the cargo compartments of the vessel were of long standing duration.

At a meeting a day before the discharge began, representatives from Transco explained to the surveyors and other representatives of the various parties in interest that all pipes would be carefully inspected and damage to the coating and bevel ends of the pipe had to be repaired and reconditioned before...