MTO MARITIME TRANSPORT v. UMM AL JAWABY PETROLEUM

• Decision Date: 09 December 1985
• Docket Number: C.A. No. H-84-1633.
• Citation: 624 F. Supp. 272
• Parties: MTO MARITIME TRANSPORT OVERSEAS, INC. v. UMM AL JAWABY PETROLEUM COMPANY, N.V.
• Court: U.S. District Court — Southern District of Texas

624 F. Supp. 272

MTO MARITIME TRANSPORT OVERSEAS, INC. v. UMM AL JAWABY PETROLEUM COMPANY, N.V.

C.A. No. H-84-1633.

United States District Court, S.D. Texas, Houston Division.

December 9, 1985.

James J. Sentner, Jr., Haight, Gardner, Poor & Havens, Houston, Tex., for plaintiff.

R. Scott Hogarty, Fulbright & Jaworski, Houston, Tex., for defendant.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

CARL O. BUE, Jr., District Judge.

Introduction

Plaintiff brought this action pursuant to the admiralty and maritime jurisdiction of this Court, which arises under Rule 9(h) of the Federal Rules of Civil Procedure, seeking damages for breach of a liner booking contract entered into between plaintiff and defendant.

On September 18, 1985, the case was tried to the Court without a jury. Having heard all of the testimony and having carefully reviewed documentary evidence, this Court hereby enters these Findings of Fact and Conclusions of Law, concluding that plaintiff is entitled to recover actual damages proximately resulting from defendant's breach of an oral contract of affreightment.

Findings of Fact

1. At all times material hereto, plaintiff, M.T.O. Maritime Transport Overseas, Inc. (hereinafter referred to as "M.T.O."), was a corporation duly organized and existing under the laws of the State of Texas with an office and place of business in Houston, Texas.

2. At all times material hereto, defendant, UMM Al Jawaby Petroleum, N.V. (hereinafter referred to as "Jawaby"), was a corporation duly organized and existing under the laws of the Netherlands with an office and place of business in Houston, Texas.

3. At all times material hereto, defendant, McLendon Forwarding Company (hereinafter referred to a "McLendon"), was a corporation organized and existing under the laws of the State of Texas with an office and place of business in Houston, Texas.

4. Defendant, McLendon, never entered an appearance in this action, and a decree of default was entered on September 17, 1984.

5. Defendant, Continental Emsco Company, was voluntarily dismissed by order dated January 22, 1985.

6. At all times material hereto, M.T.O. acted as the duly authorized agent for M.L.S. Maritime Logistics Service, S.A. (hereinafter referred to as "M.L.S."), and entered into an oral contract of affreightment on the behalf of M.L.S. (Plaintiff's Exhibit 1; Testimony of John Miller).

7. At all times material hereto, McLendon was a freight forwarder duly licensed by the Federal Maritime Commission. (Testimony of Frank McLendon).

8. Defendant Jawaby engaged the services of McLendon to arrange for the ocean transport of two workover drilling rigs and related equipment from Houston, Texas to Libya. (Plaintiff's Exhibits 25, 26; Testimony of Frank McLendon and Shelly Eckeroth).

9. The selection of the ocean carrier was left to the complete discretion of McLendon, who served as the duly authorized agent of Jawaby. (Defendant's Exhibit 11; deposition testimony of Mohamed Khalid; testimony of Frank McLendon).

10. McLendon entered into a booking contract with World Navigation, Inc., and North Africa Navigation, Ltd. (hereinafter referred to as "World Navigation"), and the first rig with related equipment was carried by World Navigation without incident. (Testimony of Frank McLendon and Shelly Eckeroth).

11. McLendon entered into a booking contract with World Navigation for the carriage of the second drilling rig and related equipment on, or about, December 3, 1983. (Defendant's Exhibit 4; testimony of Frank McLendon).

12. When it came time for the second rig and related equipment to be transported, McLendon ascertained that World Navigation did not have an available vessel and therefore could not perform in accordance with the booking contract entered into on December 3, 1983. (Defendant's Exhibit 9 with attached affidavit of Frank McLendon; testimony of Frank McLendon).

13. McLendon advised Jawaby concerning World Navigation's inability to perform in accordance with the terms of the booking contract. (Testimony of Frank McLendon and Shelly Eckeroth).

14. Jawaby allowed McLendon complete discretion in the arrangements for substitute transportation of the second rig and related equipment. (Defendant's Exhibit 11, deposition testimony of Mohamed Khalid; testimony of Frank McLendon).

15. Acting within the course and scope of his engagement as the freight forwarding agent of Jawaby, on, or about, December 28, 1983, McLendon entered into a booking contract for the carriage of the second rig and related equipment with M.T.O. (Defendant's Exhibit 9 with attached affidavit of Frank McLendon; testimony of John Miller and Frank McLendon).

16. As is customary practice within the shipping industry, plaintiff's representative, Bernard Gibson, left the liner booking note with McLendon after reaching an oral agreement. (Plaintiff's Exhibit 1; testimony of John Miller and Frank McLendon).

17. Although the liner booking note was never executed by McLendon, the parties reached an oral agreement regarding all of the material terms of the contract and they intended to be bound by the terms of the oral agreement. (Testimony of Frank McLendon and John Miller).

18. As the agent of M.L.S., M.T.O. arranged for the carriage of the second rig and related equipment on the carrier M/V "THALASSINI KYRA." (Plaintiff's Exhibits 1, 4, 5; testimony of John Miller).

19. Although McLendon knew that the cargo was subject to a prior booking note with World Navigation, he advised M.T.O. that the prior contract had been breached and cancelled, and represented to M.T.O. that the drilling rig and related equipment would be available for transport on, or about, January 10, 1984. (Plaintiff's Exhibit 13; testimony of John Miller and Frank McLendon).

20. The rig and related equipment were never delivered to M.T.O., which positioned the vessel M/V "THALASSINI KYRA" in Houston ready to receive the cargo. (Testimony of John Miller and Frank McLendon).

21. Despite the efforts of M.T.O. and McLendon, World Navigation refused to deliver the drilling rig and related equipment to M.T.O. (Plaintiff's Exhibits 8, 9, 10, 13; testimony of Frank McLendon and John Miller).

22. McLendon accompanied M.T.O. and offerd testimony in support of M.T.O.'s unsuccessful attempt to secure release of the cargo by obtaining an injunction against World Navigation on January 6, 1984 in Cause No. C.A. H-84-58, which was filed in the United States District Court for the Southern District of Texas. (Defendant's Exhibit 9; testimony of Frank McLendon and John Miller).

23. As a freight forwarder with many years of experience who had arranged for substitute carriers on many occasions under similar circumstances, McLendon did not anticipate difficulty in obtaining release of the cargo from World Navigation. (Testimony of Frank McLendon).

24. Both M.T.O. and McLendon believed that World Navigation's refusal to release the cargo upon orders of the freight forwarder was a violation of the regulations established by the port authority. (Plaintiff's Exhibit 14; testimony of John Miller and Frank McLendon).

25. McLendon exerted good faith efforts on behalf of Jawaby. There is no evidence to support Jawaby's allegations of fraud, collusion, or fraudulent procurement of contract. (Testimony of Frank McLendon and John Miller).

26. World Navigation was ultimately unable to perform in accordance with the terms of their booking contract, and delivery of the cargo was substantially delayed. (Testimony of Shelly Eckeroth and Frank McLendon).

27. Although the unexecuted memorandum of the agreement provides that M.T.O. would supply a vessel "on or about January 3, 1984," it is clear from the subsequent conduct of the parties that January 10, 1984, was the agreed upon departure date. Furthermore, the time arrangements were satisfactory to McLendon. Indeed, the rig and related equipment were not shipped until considerable time had elapsed after M.T.O.'s vessel departed. (Plaintiff's Exhibit 1, 10; testimony of John Miller, Frank McLendon, and Shelly Eckeroth).

28. By reason of Jawaby's failure to deliver the cargo, the vessel, M/V "THALASSINI KYRA," sailed with significant dead freight. (Plaintiff's Exhibits 11, 20, 21, 22; testimony of John Miller).

29. Although the M/V "THALASSINI KYRA" was ready to sail on January 11, 1984, M.T.O. detained its vessel at the Port of Houston until January 12, 1984, incurring detention costs in the amount of $10,006.67. (Plaintiff's Exhibits 10, 17, 19, 20, 21; testimony of John Miller).

30. M.T.O. made unsuccessful efforts to mitigate the damages by attempting to locate substitute cargo. (Plaintiff's Exhibits 16, 17, 18, 19, 21, 22, 23; testimony of John Miller).

31. M.T.O. is the duly authorized agent of M.L.S. Within the ordinary course and scope of its agency, M.T.O. regularly collects freight charges on behalf of M.T.S., and was authorized to bring the present law suit. (Plaintiff's Exhibits 1, 11; testimony of John Miller).

Conclusions of Law

1. This Court has jurisdiction of this matter pursuant to Rule 9(h) of the Federal Rules of Civil Procedure.

2. It is a well established and time honored custom that oral contracts of affreightment are valid under maritime law. See, e.g., Union Fish Co. v. Erickson, 248 U.S. 308, 39 S.Ct. 112, 63 L.Ed. 261 (1919) (oral contracts of affreightment create rights under maritime law which cannot be directed by contrary state law); Hellenic Lines Ltd. v. Gulf Oil Corp., 340 F.2d 398 (2d Cir.1964) (enforcing collateral oral affreightment contract); Atlantic Banana Co. v. M/V "CALANCA", 342 F.Supp. 447 (S.D.N.Y.1972) (upholding validity of oral contract of affreightment), and Orient Mid-East Lines v. Albert F. Bowen, Inc., 1972 A.M.C. 1509, 458 F.2d 572 (2d Cir. 1972).

3. The signing of a written contract of affreightment, also referred to as a "booking contract" or "booking note" is not necessarily an element of booking. "Booking" also has reference to...