M/V American Queen v. San Diego Marine Const. Corp., No. 81-5927

CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)
Writing for the CourtBefore GOODWIN, HUG, and BOOCHEVER; BOOCHEVER
Citation708 F.2d 1483
Parties13 Fed. R. Evid. Serv. 1278 M/V AMERICAN QUEEN, a United States Vessel, and Caribe Fishing Company, Inc., a Puerto Rican corporation, Plaintiffs-Appellants, v. SAN DIEGO MARINE CONSTRUCTION CORP., and Campbell Industries, California corporations, Defendants-Appellees.
Docket NumberNo. 81-5927
Decision Date24 June 1983

Page 1483

708 F.2d 1483
13 Fed. R. Evid. Serv. 1278
M/V AMERICAN QUEEN, a United States Vessel, and Caribe
Fishing Company, Inc., a Puerto Rican corporation,
Plaintiffs-Appellants,
v.
SAN DIEGO MARINE CONSTRUCTION CORP., and Campbell
Industries, California corporations, Defendants-Appellees.
No. 81-5927.
United States Court of Appeals,
Ninth Circuit.
Argued and Submitted Nov. 1, 1982.
Decided June 24, 1983.

Page 1485

Peter Murphy, Maloney, Chase, Fisher & Hurst, San Francisco, Cal., for plaintiffs-appellants.

Daniel C. Minteer, Lillick, McHose & Charles, San Diego, Cal., for defendants-appellees.

Appeal from the United States District Court for the Southern District of California.

Before GOODWIN, HUG, and BOOCHEVER, Circuit Judges.

Page 1486

BOOCHEVER, Circuit Judge:

Appellants, M/V American Queen and Caribe Fishing Company (hereinafter collectively "Caribe") brought suit against two marine repair and construction companies alleging improper service and repair of the American Queen's rudder, which disabled the vessel while at sea. Defendants sought and were granted summary judgment on the basis of a limitation of liability clause in the contract for maintenance and repairs. We find the grant of summary judgment appropriate and affirm.

FACTS

In October 1977, Manuel Caboz brought the vessel American Queen to San Diego, California, to be dry-docked for inspection and repairs as required for insurance purposes. Caboz was master of the American Queen and president of Caribe Fishing Company, corporate owner of the American Queen. In San Diego, Caboz obtained bids from San Diego Marine Construction Corp. and Campbell Industries, the only facilities available in the San Diego area which were properly outfitted for the required work. On the basis of the bids, Caboz chose San Diego Marine for the dry dock. At the time, San Diego Marine was a subsidiary of Campbell, but the companies maintained separate repair facilities.

As the work progressed, San Diego Marine periodically presented handwritten documents outlining proposed work, and Caboz wrote his assent to the proposed repairs on these documents. On or about November 1, 1977, San Diego Marine presented a proposal for removal and reinstallation of the ship's rudder; Caboz assented as usual. This work was done between November 1, 1977 and about November 15, 1977.

After the rudder work was done, San Diego Marine presented Caboz with its standardized, preprinted ship repair contract. Caribe asserts that Caboz believed it necessary to sign the form to get redelivery of the vessel and that Caboz was unaware of the limitations provision therein. Caboz admits, however, that he knew he would have to sign a contract at some point in the work and that it was a common practice for the contract to be signed after work began. Caboz signed the contract on November 15, 1977; the contract was backdated to October 12, 1977. The contract incorporated by reference all work done prior to the actual signing and contained an integration clause.

In November 1978, Caboz again brought the vessel to San Diego Marine for repairs, including work on or around the ship's rudder. On July 5, 1979, the American Queen became disabled at sea when the rudder separated from the rudder stock. Caribe alleges that the rudder problem was due to San Diego Marine's improper installation. Caribe asserts that the defect in the rudder could not be visually detected, either at sea or while the vessel was in dry dock.

Caboz gave verbal notice to Campbell of the rudder problem the day of the disabling. The vessel was towed to San Diego, where Campbell repaired the rudder. Approximately four months later, Caribe filed this action alleging various causes of action, all based on San Diego Marine's alleged improper service. 1 On April 20, 1981, San Diego Marine and Campbell filed a motion for summary judgment based on a provision of the contract limiting the time for notice and suit on negligent repairs. To have a valid claim, the contract required that Caribe give written notice of the claim within sixty days of, and file suit within six months of, redelivery of the vessel. Before hearing on the motion, appellants filed a motion for leave to file an amended complaint to add claims against San Diego Marine and Campbell for fraud and negligent breach of a duty to disclose. The trial court denied leave to amend. It then granted San Diego Marine's and Campbell's motions for summary judgment and awarded them attorneys' fees.

Caribe raises numerous issues on appeal, including whether the exculpatory clause was reasonable and enforceable as to these

Page 1487

parties and to these causes of action; whether the court properly admitted certain evidence; whether the court abused its discretion in denying appellant leave to file an amended complaint; and whether the court properly awarded attorneys' fees.
STANDARD OF REVIEW

In reviewing a grant of summary judgment, our task is identical to that of the trial court. State ex rel. Edwards v. Heimann, 633 F.2d 886, 888 n. 1 (9th Cir.1980). Viewing the evidence in the light most favorable to the party against whom summary judgment is granted, we must determine de novo whether there was no genuine issue of material fact and that the moving party was entitled to judgment as a matter of law. Heiniger v. City of Phoenix, 625 F.2d 842, 843 (9th Cir.1980).

DISCUSSION

I. Reasonableness of the Limitation Provision

The repair contract contains an array of limitation clauses, 2 including paragraph 8 which states that no claim under the contract or for tort shall be valid unless written notice is given San Diego Marine within sixty days of redelivery of the vessel and suit is commenced within six months of redelivery. The lower court granted summary judgment on the basis of paragraph 8 only, and the reasonableness of this clause is all that is argued on appeal.

Caribe argues that the limitation provision cannot be reasonable if its effect is to bar claims for latent defects because Caribe's claim could not reasonably have been discovered within the period provided. Caribe cites several non-admiralty cases which support its contention. See, e.g., Neville Chemical Co. v. Union Carbide Corp., 422 F.2d 1205 (3d Cir.), cert. denied, 400 U.S. 826, 91 S.Ct. 51, 27 L.Ed.2d 55 (1970); Majors v. Kalo Laboratories, Inc., 407 F.Supp. 20 (M.D.Ala.1975). Further, in Queen of the Pacific, 180 U.S. 49, 21 S.Ct. 278, 45 L.Ed. 419 (1901), the Supreme Court, in dicta, stated that a provision in a bill of lading requiring that suit for damages be brought within thirty days of the date of the bill would not be enforceable if the loss occurred at sea after the expiration of the thirty-day period, because adherence to the limitation clause would wholly destroy the cause of action. Id. at 53, 21 S.Ct. at 279. The clause would be enforceable only if the loss were made known soon enough to bring suit. Queen of the Pacific, however, deals with liability to a shipper of goods, and is not a maritime repair case.

Caribe contends that prompt notice was given after the actual discovery of the defect, thus fulfilling the purpose of the limitation clause and disposing of the necessity to comply with the technical contractual requirements. See Delaware Steel Co. v. Calmar Steamship Corp., 378 F.2d 386, 388 (3d Cir.1967). 3 San Diego Marine and Campbell counter by claiming that the parties deliberately allocated the risk of all defects, including latent defects, by the terms of the limitation agreement and that Caribe should be held to the bargain. See Tokio Marine & Fire Insurance v. McDonnell Douglas Corp., 617 F.2d 936 (2d Cir.1980); Posttape Associates v. Eastman Kodak Co., 537 F.2d 751 (3d Cir.1976); and

Page 1488

Iowa Electric Light & Power Co. v. Allis-Chalmers Manufacturing Co., 360 F.Supp. 25 (S.D.Iowa 1973). These cases make it clear, however, that the parties may so allocate this risk, but that the parties must clearly intend to do so. We address first the enforceability of limitation clauses generally and then the intent of the parties as evidenced by the contract language.

It is well settled that in admiralty law, the parties to a repair contract may validly stipulate that the shipowner is to assume all liability for all damage occasioned by the negligence of the shipyard. See Hall-Scott Motor Car Co. v. Universal Insurance Co., 122 F.2d 531, 538 (9th Cir.), cert. denied, 314 U.S. 690, 62 S.Ct. 360, 86 L.Ed. 552 (1941); Newport News Shipbuilding & Dry Dock Co. v. United States, 34 F.2d 100, 107 (4th Cir.1929). These cases find no violation of public policy in enforcing exculpatory clauses, but rather uphold these clauses as a means to give effect to the expressed intent of the parties. See Sun Oil Co. v. Dalzell Towing Co., 287 U.S. 291, 294-95, 53 S.Ct. 135, 136, 77 L.Ed. 311 (1932). San Diego Marine and Campbell reason that if a clause relieving a repairer from all liability for negligence is valid, then a fortiori, a clause agreed to under similar conditions but only limiting liability must also be valid. We find this logic compelling.

This circuit recently reaffirmed its Hall-Scott decision in Morton v. Zidell Explorations, Inc., 695 F.2d 347 (9th Cir.1982), cert. denied, --- U.S. ----, 103 S.Ct. 1431, 75 L.Ed.2d 791 (1983), and held that, absent evidence of overreaching, clauses limiting liability in ship repair contracts will be enforced. We are bound by that holding. We find no evidence of overreaching in the present case. Caboz neither objected to nor even mentioned the limitation provision when he signed the standardized contract. Caribe argues that Caboz believed that he was required to sign the standardized contract to regain possession of the vessel and that the form contract was forced on Caboz after it was too late to go elsewhere. Caboz admits, however, that he knew a formal contract would be signed at some point. When presented with it, he assented without complaint...

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319 practice notes
  • Transgo, Inc. v. Ajac Transmission Parts Corp., Nos. 80-5659
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • August 15, 1985
    ...the relevancy of evidence cannot be reversed absent abuse of discretion. M/V American Queen v. San Diego Marine Construction Corp., 708 F.2d 1483, 1491 (9th In the instant matter, Transgo explained to the district court that the primary relevance of Fairbanks' subsequent instruction sheet w......
  • Ascon Properties, Inc. v. Mobil Oil Co., No. 87-5807
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • January 31, 1989
    ...Irrigation District, 107 F.R.D. 377, 380-82 (D.Nev.1985); see also MV American Queen v. San Diego Marine Construction Corp., 708 F.2d 1483, 1492 (9th Cir.1983) (denial of motion to amend upheld where new allegations based on facts moving party already knew would totally alter basis of actio......
  • Hal Roach Studios, Inc. v. Richard Feiner and Co., Inc., No. 87-6146
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • February 22, 1990
    ...the district court and remanding on this technicality would be pointless. Cf. M/V American Queen v. San Diego Marine Constr. Corp., 708 F.2d 1483, 1492 (9th Cir.1983) (affirming the admission of documents despite a technical error in authentication). Similarly, given that the district court......
  • In re Foodsource, Inc., Bankruptcy Appeal No. C-90-2336 EFL.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • July 16, 1991
    ...whether the moving party was entitled to judgment as a matter of law. Id. at 1280; M/V American Queen v. San Diego Marine Constr. Corp., 708 F.2d 1483, 1487 (9th B. The Issue Is Justiciable Because The Court's Opinion Will Not Be Merely Advisory The issue presented is ripe for determination......
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319 cases
  • Transgo, Inc. v. Ajac Transmission Parts Corp., Nos. 80-5659
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • August 15, 1985
    ...the relevancy of evidence cannot be reversed absent abuse of discretion. M/V American Queen v. San Diego Marine Construction Corp., 708 F.2d 1483, 1491 (9th In the instant matter, Transgo explained to the district court that the primary relevance of Fairbanks' subsequent instruction sheet w......
  • Ascon Properties, Inc. v. Mobil Oil Co., No. 87-5807
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • January 31, 1989
    ...Irrigation District, 107 F.R.D. 377, 380-82 (D.Nev.1985); see also MV American Queen v. San Diego Marine Construction Corp., 708 F.2d 1483, 1492 (9th Cir.1983) (denial of motion to amend upheld where new allegations based on facts moving party already knew would totally alter basis of actio......
  • Hal Roach Studios, Inc. v. Richard Feiner and Co., Inc., No. 87-6146
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • February 22, 1990
    ...the district court and remanding on this technicality would be pointless. Cf. M/V American Queen v. San Diego Marine Constr. Corp., 708 F.2d 1483, 1492 (9th Cir.1983) (affirming the admission of documents despite a technical error in authentication). Similarly, given that the district court......
  • In re Foodsource, Inc., Bankruptcy Appeal No. C-90-2336 EFL.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • July 16, 1991
    ...whether the moving party was entitled to judgment as a matter of law. Id. at 1280; M/V American Queen v. San Diego Marine Constr. Corp., 708 F.2d 1483, 1487 (9th B. The Issue Is Justiciable Because The Court's Opinion Will Not Be Merely Advisory The issue presented is ripe for determination......
  • Request a trial to view additional results

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