In re Re

Decision Date10 September 2018
Docket Number12-cv-8892 (KBF)
PartiesIN RE M/V MSC FLAMINIA
CourtUnited States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York

IN RE M/V MSC FLAMINIA

12-cv-8892 (KBF)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

September 10, 2018


OPINION & ORDER

KATHERINE B. FORREST, District Judge:

This is the second of two decisions in the above, large maritime matter that together set forth this Court's liability determinations.

On July 14, 2012, the M/V MSC FLAMINIA (the "Flaminia") was crossing the Atlantic Ocean bound for Antwerp, Belgium. The vessel had departed from New Orleans, Louisiana fourteen days earlier and was loaded with cargo. Early on the morning of July 14, alarms began to sound; a smoky cloud rose from one of the holds; and an explosion followed shortly thereafter. The Court previously found that the explosion was the result of runaway auto-polymerization of cargo consisting of 80% grade divinylbenze ("DVB80"), stowed in one of the holds. See In re M/V MSC FLAMINIA, No. 12-cv-8892 (KBF), 2018 WL 526549 (S.D.N.Y. Jan. 23, 2018) (ECF No. 1447, Corrected Opinion & Order dated January 23, 2018) (hereinafter, "Flaminia Phase I Opinion"); In re M/V MSC FLAMINIA, No. 12-cv-8892 (KBF), 2017 WL 5514525 (S.D.N.Y. Nov. 17, 2017) (ECF No. 1407, Opinion & Order dated November 17, 2017). As a result of the explosion and a fire, three members of the crew were killed, thousands of cargo containers were destroyed, and

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the vessel was seriously damaged. A number of lawsuits followed, seeking compensation for, inter alia, death, bodily injury, loss of cargo, damage to the vessel, and for contribution and indemnification. Many of the original claims have been resolved, including those alleging wrongful death and bodily injury. The remaining claims are based on theories of negligence, statutory violations, and breaches of contractual obligations.

I. PROCEDURAL HISTORY

Due to the complexity of issues to be decided, and anticipated duration of a single proceeding, the Court divided the trial into phases: a "Phase I" trial that determined the cause of the explosion; and a "Phase II" trial to establish responsibilities. (See ECF Nos. 872, 874, 885.) A "Phase III" trial will follow if an upcoming mediation process does not resolve the remaining damage issues. (See id.) The Court presided over the Phase I bench trial from September 11, 2017, through September 19, 2017, with closing arguments on September 26, 2017. See Flaminia Phase I Opinion, 2018 WL 52649, at *1. It issued its initial decision on what caused the explosion on November 17, 2017, and a corrected decision on January 23, 2018. See id. From August 13, 2018, through August 29, 2018, the Court presided over the Phase II trial that is the subject of this Opinion & Order.

In Phase I, the Court made factual findings relating to the cause of the explosion aboard the Flaminia. The Court found that auto-polymerized DVB80, a chemical contained in a container aboard the Flaminia, ignited by a spark, caused

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the explosion and fire. Id. at *30-31. More specifically, the Court found the following facts relevant to this Phase II proceeding:

• The DVB80 was delivered to the New Orleans Terminal ("NOT") in an appropriately oxygenated state. Id. at *2.

• The manufacturer of the DVB80, Deltech Corporation ("Deltech"), made a fateful choice to ship this cargo out of NOT in June. Id.

• Together, stagnant storage under a hot sun at NOT, followed by high ambient temperatures in the hold ("Hold 4") of the Flaminia, caused the DVB80 to auto-polymerize. Id.

• Containers of heated diphenylamine ("DPA"), adjacent to those filled with DVB80 at NOT and in Hold 4, was a substantial contributing factor to the auto-polymerization. Id.

• After alarms sounded aboard the Flaminia on the morning of July 14, 2012, the crew missed a final opportunity to prevent the explosion when, lacking information as to the cause or conditions in Hold 4 (namely that the DVB80 had auto-polymerized and created a smoky vapor cloud) and instructions as to how much carbon dioxide ("CO2") to release to meet those actual (gas) conditions, it failed to release sufficient CO2 to inert venting gases. Id.

• The crew's reasonable response to what they believed was an ongoing fire (not a smoky gas vapor cloud) created a spark that triggered the explosion. See id.

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• Dr. Scott G. Davis (an expert on gas explosions whose testimony in this regard the Court credited) concluded that the DVB80 would not have auto-polymerized if (1) it had not sat still in the sun at NOT; (2) it had not been stored next to the DPA both at the terminal and in Hold 4; and (3) Hold 4 had been ventilated and not had high ambient temperatures. Davis also concluded that additional CO2 could have rendered the gas inert and that an ignition event (such as a spark) was necessary to trigger the explosion. Id. at *4.

• Dr. Hans Fauske (also an expert who testified in Phase I) performed useful modelling showing that under normal conditions, DVB80 manufactured according to the same process as that aboard the Flaminia should not have auto-polymerized for 64.9 days. Id. at *6.

Based on these and related findings, the Court found the following substantially contributed to the DVB80's auto-polymerization:

• "The decision to ship the DVB80 out of NOT, which necessitated a longer voyage than would have a more northeastern port and exposed it to undesirable conditions;

• "The fact that the DVB80 was left still on the dock at NOT for 10 days in the sun, in hot weather, and next to a number of tanks of heated DPA;

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• "The placement of the DVB80 in Hold 4, where it was stored next to containers of heated DPA and near the ship's heated fuel tanks; and

• "The lack of proper ventilation, leading to hotter-than-typical ambient temperatures in Hold 4."

Id. at *30-31.

II. OVERVIEW OF THE PARTIES' CLAIMS

It is easy to lose oneself in the thicket of claims, cross claims, and counterclaims asserted by an array of parties. However, this Court's factual findings herein render much of this legal positioning irrelevant. As the Court finds that only Deltech and Stolt Tank Containers B.V. ("Stolt") bear responsibility, many legal arguments simply do not matter.

For the sake of the convenience and the sanity of the reader, the Court summarizes the relevant claims and defenses. Claims for lost cargo (the "Cargo Claims"), have been asserted against MSC Mediterranean Shipping Company, S.A. ("MSC"); Conti 11. Container Schiffahrts-GMBH & Co. KG MSC "Flaminia" ("Conti"); and NSB Niederelbe Schiffahrtsgesellschaft MBH & Co. KG ("NSB"). The Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. § 30701 (note), applies to such claims either by contract or force of law; the relevant contracts are the terms and conditions of the MSC bills of lading and/or sea waybills under which various cargoes were carried aboard the vessel.

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A number of parties have asserted tort claims based on theories including general negligence, negligent failure to warn, and strict liability. In this regard, NSB has asserted tort claims against MSC, Deltech, Stolt, and Chemtura Corporation ("Chemtura"); Conti has asserted tort claims against Deltech, Stolt, and Chemtura; Deltech and Stolt have asserted tort claims against MSC,1 Chemtura, and NSB.

Additionally, two contract claims are at issue: MSC has asserted contract claims against Deltech and Stolt under the operative Sea Waybills and under a Service Contract it has with Stolt; and Stolt has asserted a contract claim against BDP.2

Conti has also asserted a "General Average" claim against all parties3 (ECF Nos. 131, 133); NSB has asserted claims for negligence, indemnity, and contribution

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against MSC (ECF Nos. 108, 130). Conti and NSB have together asserted claims against Chemtura,4 Stolt, and Deltech for strict liability for failure to warn, negligent failure to warn, general negligence, negligent misrepresentation,5 and indemnity.

The defenses available to certain parties are equally complicated. Conti, as the owner of the vessel, and NSB, as ship manager, assert entitlement to various defenses. First, they assert a defense under the Limitation of Shipowner's Liability Act (the "Limitation Act"). 46 U.S.C. §§ 30501-30512; 3 Benedict on Admiralty § 12 (7th ed. 2018). The Limitation Act's "Fire Statute" specifically exonerates—rather than merely limits—a shipowner and ship manager from liability as to loss or damage to cargo caused by fire on board its vessel unless the fire was caused by the "design or the neglect of the owner." 46 U.S.C. § 30504. In addition, COGSA (the exclusive remedy for a cargo claimant against a carrier, see 46 U.S.C. § 30701 (note); Rationis Enterprises Inc. of Panama v. Hyundai Mipo Dockyard Co., 426 F.3d 580, 587 (2d Cir. 2005)) contains a "Fire Exception" in Section 4(2)(b). This section provides an additional basis for exoneration when the fire does not result from the actual fault of the shipowner or ship manager and is not caused by privity with the carrier.6 Finally, the provisions of the bill of lading may (and here do)

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contractually extend the defenses and limitations of liability provided to a carrier under COGSA to an agent of the carrier (including here the shipowner and ship manager, here, Conti and NSB), through what is known as the "Himalaya Clause." Mikinberg v. Baltic S.S. Co., 988 F.2d 327, 332 (2d Cir. 1993). MSC's bill of lading included a Himalaya Clause in Clause 4.2.

As discussed in the findings below, the Court specifically finds that the fire aboard the Flaminia was not caused by the design or neglect of the owner.

III. THE PHASE II TRIAL: SUMMARY OF FINDINGS

Following a bench trial at which the Court received evidence from a total of 82 witnesses (24 live; 2 by trial declaration only (cross-examination waived); and 56 by deposition designation) and reviewed hundreds of documents as evidence (see ECF No. 1540), this Court has now made final liability determinations. The Court has considered the extent to which the following parties may bear responsibility for the explosion and loss: Deltech, the...

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