Sundance Cruises v. American Bureau of Shipping
| Decision Date | 18 September 1992 |
| Docket Number | No. 87 Civ. 0819 (WK).,87 Civ. 0819 (WK). |
| Parties | SUNDANCE CRUISES CORP. and SCI Cruises, Inc., formerly known as Sundance Cruises, Inc., Plaintiffs, v. The AMERICAN BUREAU OF SHIPPING, Defendant. |
| Court | U.S. District Court — Southern District of New York |
Brian D. Starer, Steven A. Candito, Haight, Gardner, Poor & Havens, New York City, for plaintiffs.
John J. Loflin, John E. Grimmer, Elizabeth L. Humphreys, Peter A. Cal, Jennifer
A. Mangino, Lord Day & Lord, Barrett Smith, New York City, for defendant.
This action is between plaintiff Sundance Cruises Corp. (hereinafter "plaintiff"),1 the owner of the M/V Sundancer, a ship that flew the flag of the Bahamas, and defendant American Bureau of Shipping (hereinafter "defendant"), a classification society in the business of issuing classification and safety certificates on behalf of itself and the countries by which it is authorized so to do. On June 14, 1984 it issued various safety certificates regarding the vessel. On June 29 the Sundancer ran aground and sank off the coast of British Columbia. Although plaintiff acknowledges responsibility for the ship's running aground, it contends that the ship would not have sunk but for defendant's negligence, gross negligence, negligent misrepresentation, breach of contract, and breach of implied warranty of workmanlike performance in issuing the relevant certificates. Defendant moves for summary judgment on a variety of interconnected theories.
On January 19, 1984 the plaintiff, a Panamanian corporation jointly owned by Seattle-based McDonald Enterprises (50%), Johnson Line of Sweden (25%), and EFFOA of Finland (25%), purchased from Johnson Line the SVEA CORONA, a passenger car ferry then operating in the Baltic Sea between Sweden and Finland. Pl. Aff. ¶ 10. Plaintiff planned to convert the SVEA CORONA into a luxury passenger cruise ship to be operated during the summer months along the west coast of North America from Vancouver to Alaska and in the winter from Los Angeles to Mexico. To that end it bid out conversion specifications outlining the planned changes. It ultimately awarded a Swedish consortium consisting of the Oskarsham Varv shipyard, contractor Skanska/IMS, and naval architects Von Tell Nico the contract to design the plans for and perform the substantial conversion.3 Pl. 3(g) at III, ¶¶ 2, 6; Pl.Aff. ¶ 34; Pl.Aff.Exh. 25; Def. Exhs. 5, 20.
On March 5, 1984 plaintiff and defendant entered into a Request for Classification Survey and Agreement (hereinafter the "Agreement") that, inter alia, called upon defendant to survey the vessel according to its own rules and according to the regulations set forth in the SOLAS and Load Line conventions, and to issue classification and statutory safety certificates signalling compliance with those rules and regulations. Pl.Exh. 4; Pl. 3(g) at II. The Agreement was signed on behalf of plaintiff by one Lars Sjogren, the head of Johnson Lines, the company that was to manage the vessel. Immediately above the Agreement's signature lines is a clause in bold capitals stating:
Term 2 of the Agreement concerns fees, and states in part that "(a) All fees and payments shall be determined in accordance with normal ABS defendant practices and quoted to the client in a separate letter." Term 13 appears in bold capitals:
Term 11, which is entitled "CLASSIFICATION," warns in part:
in no way should classification, issuance of certificates or performance of services be deemed to be a representation, statement or warranty of seaworthiness, structural integrity, quality or fitness for a particular use of service, of any vessel, structure, item of material, equipment or machinery beyond the representation contained in the Rules of the ABS.
while Term 12, "RESPONSIBILITY AND LIABILITY," declares in part:
The validity, applicability and interpretation of a certificate issued under the terms of or in contemplation of this Agreement is governed by the Rules and standards of American Bureau of Shipping who shall remain the sole judge thereof. Nothing contained herein or in such a certificate or in any report issued in contemplation of such a certificate shall be deemed to relieve any designer, builder, owner, manufacturer, seller, supplier, repairer, operator or other entity of any warranty express or implied.
Finally, Term 14 is a Hold Harmless clause that reads in part:
the party requesting classification hereunder ... agrees to indemnify and hold harmless ABS from and against any and all claims ... including legal fees ... which may be brought against ABS incidental to, arising out of or in connection with the work to be done ... except for those claims caused solely and completely by the negligence of ABS.
The above-quoted "Classification" Term 11 makes reference to defendant's Rules for Building and Classing Steel Vessels (1983). Rule 1.3 of those rules, entitled "Representation as to Classification," reads in part:
Rule 1.4, entitled "Responsibility and Liability," essentially repeats above-quoted Term 12. Rule 1.25, entitled "Responsibility," reads:
The Bureau defendant, being a technical society, can act only through Surveyors or others who are believed by it to be skilled and competent. It is understood and agreed by all who avail themselves in any way of the services of the Bureau that neither the Bureau nor any of its Committees and employees will, under any circumstances whatever, be responsible or liable in any respect for any act or omission, whether negligent or otherwise, of its Surveyors, agents, employees, officers or Committees, nor for any inaccuracy or omission in the Record or any or the publication of the Bureau, or in any report, certificate or other document issued by the Bureau, its Surveyors, agents, employees or Committees.
(Emphasis added).
Finally, Rule 45.1.10 provides:
No alterations which affect or may affect classification or the assignment of load lines are to be made to the hull or machinery of a classed vessel unless plans of the proposed alterations are submitted and approved by the committee before the work of alterations is commenced and such work, when approved, is carried out to the satisfaction of the Surveyor.
Additionally, attached to the Agreement is an Application for Load Lines, immediately above the date and signature line of which application is a release clause that— substantially a condensation of the emphasized portion of the above-quoted Rule 1.25—states:
It is understood and agreed that neither the Bureau nor any of its Committees is under any circumstances whatever to be held responsible for any inaccuracy in any report or certificate issued by the Bureau or its Surveyors or in any entry in the Record or other publication of the Bureau or for any errors of judgment, default or negligence of its Officers, Surveyors or Agents.
While there is no choice of laws clause in the Agreement itself, plaintiff has presented us with a total of seven invoices it had received from defendant in connection with the work performed under the Agreement, on the reverse side of each of which is a series of Terms and Conditions that "unless otherwise mutually agreed in writing" would govern "all services rendered and certificates issued in connection with the invoice." The last of these Terms and Conditions reads in part as follows:
Three of these invoices had approval stamps pasted over their Terms and Conditions sides that had been initialled by Lars Sjogren, who had signed the Agreement on plaintiff's behalf. Two others had been similarly initialled by an otherwise unidentified Johnson Ships superintendent. Upon examining the original invoices, which were first retrieved from Sweden and introduced into this litigation in early June 1992, we saw that the "approval stamp" is a white rectangle of paper pasted to the Terms and Conditions side of the invoice. On each of the three invoices on which Sjogren's initials appear, the stamp obscures more than 90% of the above-quoted law selection clause as shown below:
Subsequent to oral argument on the motion—upon plaintiff's representation that Sjogren might not be available at a later date—we ordered that plaintiff could take his videotape deposition for use at trial. At that deposition he testified that the Johnson Line practice...
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