Hasbro Industries, Inc. v. M/S St. Constantine, GARONNE-GLITTRE

• Citation: 705 F.2d 339
• Decision Date: 04 May 1983
• Docket Number: Nos. 81-4660,GARONNE-GLITTRE,81-4644 and 82-4006,s. 81-4660
• Parties: HASBRO INDUSTRIES, INC., Plaintiffs-Appellants, v. M/S "ST. CONSTANTINE," et al., Defendants, v. A/S, et al., Plaintiffs in Intervention-Appellees-Cross- Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 339

705 F.2d 339

HASBRO INDUSTRIES, INC., Plaintiffs-Appellants, v. M/S "ST. CONSTANTINE," et al., Defendants, v. A/S GARONNE-GLITTRE, et al., Plaintiffs in

Intervention-Appellees-Cross- Appellants.

Nos. 81-4660, 81-4644 and 82-4006.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Oct. 20, 1982.

Decided Feb. 8, 1983.

As Amended May 4, 1983.

George W. Ashford, Jr., Burke, Ashford, Sakai, McPheeters, Bordner & Gilardy, Honolulu, Hawaii, James H. Simonson, Bigham, Englar, Jones & Houtson, New York City, for Hasbro Industries, Inc.

William L. Fleming, Cades, Schutte, Fleming & Wright, Honolulu, Hawaii, M.E. DeOrchis, Haight, Gardner, Poor & Havens, New York City, for A/S Garonne-Glittre, et al.

Appeal from the United States District Court for the District of hawaii.

Before CANBY, NORRIS and REINHARDT, Circuit Judges.

PER CURIAM:

Appellants Hasbro Industries, Inc., and A.A. Importing, Inc., were owners or underwriters of cargo destroyed when a fire broke out aboard the M/S St. Constantine, a cargo ship owned by the St. Constantine Maritime Co., Ltd. Appellants filed claims in a limitation proceeding brought by the vessel under the Limitation of Liability Act, 46 U.S.C. Secs. 190-195 (1976). The claims were based upon the carriage of Goods by Sea Act (COGSA), 46 U.S.C. Secs. 1300-1315 (1976). The district court found that the fire started when a lube oil line valve fractured due to excessive engine vibration and the absence of a necessary pipe support bracket, causing oil to spill onto the hot exhaust manifold and ignite. The crew was unable to extinguish the blaze because of inadequate training in firefighting techniques. The court concluded that the shipowner had notice of the defects and lack of training and was therefore liable because it failed to exercise due diligence to ensure that the vessel was seaworthy and that the crew was properly trained. The shipowner has not appealed.

Appellees A/S Garonne-Glittre and Barber Lines A/S intervened as plaintiffs in the proceedings below. Appellees were time charterers and subcharterers, respectively, of the vessel, with whom appellants had contracted for the transport of their goods. Appellants cross-claimed against appellee-charterers, alleging that the charterers were also liable because their duty to exercise due diligence was identical to the duty owed by a shipowner under COGSA, so that a breach of that duty by the shipowner was necessarily a breach by the charterers. The district court disagreed, finding that the charterers were absolved from liability because they had acted with the due diligence expected of reasonably prudent time charterers. We affirm.

Under COGSA, both shipowners and charterers who enter into a contract for carriage of goods are considered "carriers." 46 U.S.C. Sec. 1301(a). As such, shipowners and charterers must exercise due diligence to make the vessel seaworthy and to properly man, equip, and supply the ship. 46 U.S.C. Sec. 1303(1), (2). If a carrier exercises due diligence, then the carrier will be exonerated from liability for loss due to fire unless caused by the carrier's "actual fault or privity." 46 U.S.C. Sec. 1304(2)(b). Thus, the overriding obligation under COGSA is the duty to exercise due diligence. Sunkist Growers Inc. v. Adelaide Shipping Lines, 603 F.2d 1327, 1338 (9th Cir.1979), cert. denied, 444 U.S. 1012, 100 S.Ct. 659, 62 L.Ed.2d 640 (1980).

Appellants claim that the question whether due diligence has been exercised is a question of law reviewable de novo on appeal. On the contrary, this circuit has repeatedly held that due diligence is essentially a negligence concept and that determinations of negligence in admiralty cases are findings of fact which will be given application unless clearly erroneous. Waterman Steamship Corp. v. Gay Cottons, 414 F.2d 724, 735 n. 27 (9th Cir.1969); Rederi A/B Soya v. SS Grand Grace, 369 F.2d 159, 163 (9th Cir.1966). Of course, it is true that the question of what standard should be applied in determining due diligence is a question of law. Id. We find, however, that the district court applied the correct standard here. To hold otherwise would impose liability on time charterers for unseaworthiness resulting from the shipowner's lack of due diligence, regardless of whether the charterer acted reasonably and prudently. As we stated in Sunkist, "[I]f the carrier used due diligence, the unseaworthiness would be excusable." 603 F.2d at 1335 (emphasis omitted). Thus, where the charterers exercised due diligence but the shipowner did not, only the shipowner will be held liable, and the unseaworthiness is excusable with respect to the charterers.

Appellants' basic assertion is that the shipowner's duty of due diligence is identical to the charterer's, with the result that whenever the one breaches its duty the other is liable vicariously. In support of this proposition, appellants cite section 1301(a) of the Act and Sunkist.

First, section 1301(a) serves only to include both shipowners and charterers within the definition of "carrier." While both owe a duty of due diligence as a matter of law, 46 U.S.C. Sec. 1304(1), the question whether particular circumstances amount to a breach is one of fact, the determination of which will vary with the circumstances. See Waterman Steamship Corp., 414 F.2d at 735 n.27. Since liability for loss by fire may be imposed only where there is "actual fault," 46 U.S.C. Sec. 1304(2)(b), a breach is necessarily personal to the "carrier" that is responsible for the harm. Thus, it is perfectly comprehensible that in some cases a shipowner may be liable when a charterer is not. Nothing in the statute suggests otherwise.

Second, the Sunkist case deals primarily with allocation of the burden of proof in COGSA cases, and with the trial court's error in shifting the burden to the cargo claimants once the carrier had made an initial showing. See 603 F.2d at 1331, 1341. Because the court used the plural in referring to the potential liability of "appellees," meaning both shipowner and charterer, appellants maintain that both must be liable in every case. This overlooks the Sunkist court's statement that the "obligation to exercise due diligence ... [applies] to the owners or charterers personally." Id. at 1341 (emphasis supplied). Sunkist does not require that the liability of one "carrier" must be imputed to all others. On the contrary, a district court must consider evidence...