Ingram River Equipment v. Pott Industries, Inc.

• Decision Date: 30 September 1983
• Docket Number: No. 79-947 A (D).,79-947 A (D).
• Citation: 573 F. Supp. 896
• Parties: INGRAM RIVER EQUIPMENT, INC., Plaintiff, v. POTT INDUSTRIES, INC., Defendant.
• Court: U.S. District Court — Eastern District of Missouri

573 F. Supp. 896

INGRAM RIVER EQUIPMENT, INC., Plaintiff, v. POTT INDUSTRIES, INC., Defendant.

No. 79-947 A (D).

United States District Court, E.D. Missouri.

September 30, 1983.

COPYRIGHT MATERIAL OMITTED

Goldstein & Price, Elmer Price, St. Louis, Mo., for plaintiff.

Thompson & Mitchell, Mary M. Bonacorsi, W. Stanley Walch, St. Louis, Mo., for defendant.

MEMORANDUM

WANGELIN, District Judge.

This matter is before the Court for a decision after a twelve-day trial on the merits. Since this is an admiralty case and within the Court's maritime jurisdiction under Rule 9(h) of the Federal Rules of Civil Procedure, and 28 U.S.C. § 1333, the Court heard the evidence without a jury. After considering the pleadings, testimony of the witnesses, stipulations of the parties and the various memoranda submitted on behalf of the respective parties, the Court makes the following findings of fact and conclusions of law in accordance with Rule 52 of the Federal Rules of Civil Procedure. Any finding of fact equally applicable as a conclusion of law is adopted as such and, conversely, any conclusion of law applicable as a finding of fact is adopted as such.

Findings of Fact

1. Plaintiff Ingram River Equipment, Inc. (hereinafter Ingram) was and is incorporated under the laws of the State of Delaware having its principal place of business in the State of Tennessee. Defendant Pott Industries, Inc. (hereinafter Pott) was and is incorporated and has its principal place of business in the State of Missouri.

2. Pott is engaged in the business of building boats and barges through its St. Louis ship division. The barges which are the subjects of this action were operated by Ingram Barge Company, a division of Ingram Industries, Inc., under a bareboat charter. Ingram Barge Company has assigned its claim for damages in this cause to plaintiff Ingram.

3. On March 21, 1973, Ingram and Pott entered into a written contract for the construction of four tank barges. The price of construction for the barges was stated as One Million Nine Hundred Sixty Five Thousand Two Hundred Dollars subject to certain escalation charges.

4. The contract originally provided that only one barge, the IB3001B, would have a steam coil system for heating heavy liquid cargo. However, the parties later agreed to include such a system in all four barges.

5. Article IX of the contract contained warranties made by Pott. It provides, in pertinent part, that the barges will: (1) conform to the requirements of contract documents, the U.S. Coast Guard and the American Bureau of Shipping; (2) be of good workmanship and quality; and (3) be free of all defects. The warranty extended for six months after delivery to Ingram.

6. In March, 1975, Pott submitted plans and drawings (including bills of materials) to Ingram providing for the fabrication of the steam coil system with a combination of two-inch Sch. forty and Sch. eighty A.S. T.M. 53 furnace-weld (type "F" pipe), sometimes referred to as "butt weld pipe". Ingram approved the bills of materials calling for the use of furnace-weld pipe. The additional cost of installing the pipe was One Hundred Twenty Two Thousand Three Hundred Dollars ($122,300). The total price paid by Ingram to Pott, including extras and changes for the four barges was Two Million Three Hundred Ten Thousand Four Hundred Nineteen Dollars and Seventeen Cents ($2,310,419.17).

7. The evidence indicates that seamless pipe is considerably stronger than furnace-weld pipe. The A.S.T.M. A-53 standards for two-inch Sch. forty and Sch. eighty furnace-weld pipe required such pipe to withstand hydrostatic fluid test pressures of up to one thousand p.s.i.g. (per square inch) and thirteen hundred p.s.i.g. respectively. The A.S.T.M. A-53 standards for two-inch Sch. forty Grade A seamless pipe require such pipe to withstand hydrostatic test pressures up to twenty three hundred p.s.i.g. The A.S.T.M. A-53 standards for two-inch Sch. forty Grade B seamless pipe requires such pipe to withstand hydrostatic test pressures up to twenty five hundred p.s.i.g.

8. The parties dispute whether defendant represented to plaintiff that furnace-weld pipe would be "just as good as" seamless pipe. The Court finds, however, that Ingram relied upon Pott's reputation as a shipbuilder and that Pott held itself out as an expert in this field. Additionally, Article IV(a) of the contract provides in pertinent part:

The detailed manner and method of performing work shall be under the control of seller (Pott), buyer (Ingram) being interested only in the results obtained.

9. Seamless and furnace-weld pipes of the same size and made from the same grade of steel are manufactured differently. Seamless pipe is manufactured in a continuous circumference without a seam; furnace-weld has a vertical seam which is joined together by welding in the manufacturing process. The use of both types of pipe and the fabrication of steel coils complies with the regulations of the United States Coast Guard applicable to the design and construction of steam coil heating systems in tank barges. Generally, seamless is more expensive than furnace-weld pipe.

10. Both Ingram and the United States Coast Guard approved the final bills of materials, plans and drawings of the steam coil heating systems in the barges. The heating systems were then installed by Pott in each of the four Ingram barges in conformity with the final material specifications, plans and drawings. An Ingram representative was present at Pott's shipyard during construction of the four barges.

11. Prior to delivery, Pott hydrostatically tested the steam coils in each barge and then purged the coils. The United States Coast Guard inspected each barge and issued its Barge Certificate of Inspection for each barge.

12. In August, 1977, splits, cracks and leaks were discovered in a number of the steam coils when one of the barges, IB2702T, was at the Avondale shipyards for hull repairs. The coils had not been used prior to this time because the barges only carried "light" cargo, such as gasoline, that did not require heat to be used to facilitate the pumping process. Ultimately, thirty five splits were found in the coils of barge IB2701L, seventy one splits in the coils of barge IB2702T, and fifty seven splits were found in the coils of a barge IB3001B. Splits were not found in the coils of the IB1501B at that time, although some splits were discovered later. Pott sent representatives to Avondale to examine the pipe after the steam coils had been repaired.

13. Following the initial repairs, Ingram continued to experience problems with leakage from the steam coils. In the Fall of 1978, Ingram decided to replace the steam coils in all four barges and to make certain design changes. Ingram contracted for the work to be done at Avondale after obtaining bids from Pott and Avondale. The barges were kept at Avondale from December 5, 1978 until February, 1979 for replacement of the steam coil system.

14. The parties agree that water freezing in the coils was most probably the immediate cause of the splits, cracks and leaks discovered in the steam coil systems of the Ingram barges. In normal operations, steam is introduced into tank barge heating coils to heat heavy liquid cargo sufficiently to permit the cargo to flow freely for pumping. Following the introduction of steam into the coils, normal operating procedures required that the coils be purged in order to remove the water accumulated during steaming. The design of the Ingram barges provided for purging by means of blowing compressed air through the coils to discharge the water. Water is also introduced from time to time in steam coils for testing. At other times coils are tested by introduction of air.

15. Both parties have introduced a substantial degree of expert testimony. The expert witnesses have performed numerous tests with different models of the steam coil heating system under a variety of conditions. Despite this impressive array of technical expertise, however, the central issue remains what quantity of water was necessary to rupture the furnace-weld pipe as it was designed in defendants' steam coil heating system.

16. Defendant argues that the pipes had to be substantially full of water before ruptures occurred. If this condition existed, the evidence indicates that regardless of the design of the system or whether seamless or furnace-weld pipe was utilized, the pipes would have burst. Further, defendant contends that the only party possibly responsible for filling the system with water would be the plaintiff. This is necessarily so because defendant hydrostatically tested the pipes only once and both parties have stipulated that the pipes were purged at that time. However, the Court finds that the extent and efficiency of the purging process was never tested by defendant.

17. Plaintiff's position is that the pipes need not have been substantially filled with water to rupture. Plaintiff argues that a relatively small amount of water left in the system could form pockets. These pockets of water would then freeze causing a rupture. However, only that portion of the water closest to the pipes surrounded by the freezing air would freeze, while water closest to the pipes surrounded by the petroleum product would remain liquid and, therefore, harmless to the pipe. This theory explains the apparently random ruptures in the coil since the movement of the barge would cause the water to be collected at various points which would then break when exposed to the freezing temperatures. Under plaintiff's theory, the efficiency of the purging process, as well as the design of the coils, becomes critical. If the water is not sufficiently purged by compressing air through the system, the pipe will rupture. Plaintiff argues that the purging process is ineffective to remove all of the water because the compressed air simply seeks the path of least resistance and blows over the low points in the...