UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 91-3669

DEUTSCHE SHELL TANKER

GESELLSCHAFT mbH,

Plaintiff-Appellant/

Cross-Appellee,

versus

PLACID REFINING COMPANY,

Defendant-Appellee/

Cross-Appellant.

Appeals from the United States District Court

for the Eastern District of Louisiana

( June 8, 1993 )

Before POLITZ, Chief Judge, JOHNSON and JOLLY, Circuit Judges.

POLITZ, Chief Judge:

This case involves a general average claimarising from the

grounding of the tanker DIALA in the Mississippi River. Deutsche

Shell Tanker-Gese llschaft mbH, the vessel owner, appeals the

judgment in favor of the cargo owner, Placid Refining Company.

Finding no reversible error, we affirm.1 There were no qualified radar technicians on board the

vessel.

2 Background

In 1983 Deutsche Shell contracted to deliver a shipment of

crude to Placid's refinery in Port Allen, Louisiana. The crude was

transpsorted by the tanker DIALA which departed Sullom Voe,

Scotland on May 21, 1983. The Atlantic crossing was uneventful.

Upon reaching the Mississippi River the DIALA took on a compulsory

Mississippi River pilot to guide the vessel upstream.

On June 5, in the Mississippi, the sh ip passed through

shallow water and experienced a vibration after which its 10-

centimeter radar picture failed. Captain Schätzel radioed Deutsche

Shell's New Orleans agent, Lykes Bros., requesting service for the

1 0-cm radar and for the 3-cm radar which had a weak p icture.

Further upriver, the tanker encountered a squall during which its

3-cm radar unit als o failed leaving the tanker without any

operational radar.

Captain Schätzel was able to interswitch the two radar systems

and establish a picture on the 3-cm display. The pilot, however,

fearful that another radar failure would leave the tanker in the

shipping lanes at night with no radar, and believing that Coast

Guard regulations required the ship to have two operational radar

units, re fused to proceed and directed the ship to anchor. 1 The

Mississippi River was at flood stage with a swift current. Before

the second anchor took hold, the current caught the ship and swept

her two miles downstream where she ran aground. After a week of2 The shipping contract contained the following general

average clause:

General average shall be payable according to the

York/Antwerp Rules 1974 and shall be adjusted in London, but

should the adjustment be made in accordance with the law and

practice of the United States, the following clause shall

apply:

NEW JASON CLAUSE SQ In the event of accident, danger,

damage or disaster before or after the commencement of the

voyage, resulting from any cause whatsoever, whether due to

negligence or not, for which, or for the consequences of

which, the Carrier is not responsible, by statute, contract

or otherwise, the cargo, shippers, consignees or owners of

the cargo shall contribute with the Carrier in General

Average to the payment of any sacrifices, losses or expenses

of a General Average nature that may be made or incurred and

shall pay salvage and special charges incurred in respect of

the cargo.

3 "General average is an ancient maritime doctrine making

all participants in a maritime venture ratably responsible for

losses incurred for their common good." Atlantic Richfield Co.

v. United States , 640 F.2d 759, 761 (5th Cir. Unit A 1981).

3 extensive salvage efforts, the DIALA was refloated and de livered

the oil to Placid's refinery.

Deutsche Shell brought suit against Placid asserting a claim

under the general average clause of the shipping contract 2 to

recover a portion of the costs of the sal vage effort. 3 Placid

denied the claim asserting that it did not own the cargo at the

time of the grounding and that the proximate cause of the grounding

was Deutsche Shell's failure to maintain the radar in proper

working order.

The issue of liability was tried to the court which entered a4 The district court's opinion is reported at: Deutsche

Shell Tanker-Gesellschaft mbH v. Placid Refining Co. , 767 F.

Supp. 762 (E.D.La.1991).

5 See The Jason , 225 U.S. 32, 32 S.Ct. 560, 56 L.Ed. 969

(1912).

6 Atlantic Richfield , 640 F.2d at 761; see COGSA, 46 U.S.C.

§ 1301 et seq

.

7 46 U.S.C. § 1304(1).

4 take nothing judgment in favor of Placid. 4 The district court

found that Deutsche Shell failed to prove that a general average

act occurred and, even if such had occur red, Deutsche Shell's

failure to exercise due diligence in maintaining the 3-cm radar was

the proximate cause. The district court also found that Placid

owned the cargo at the time of the grounding. Deutsche Shell

timely appealed; Placid cross-app ealed on the issue of cargo

ownership.

Analysis

A standard "New Jason clause" 5 require s general average

contribution even if the carrier is negligent, unless the carrier

is responsible for the damage under the C arriage of Goods by Sea

Act. 6 Under COGSA a carrier is held at fault for damage to the

cargo caused by unseaworthi ness resulting from "want of due

diligence on the part of the carrier to make the ship seaworthy." 7

A general average claim such as the claim at bar r equires a

three step analysis. The vessel owner has the initial burden to8 See Atlantic Richfield, 640 F.2d at 761-62; see generally

2 B ENEDICT ON A DMIRALTY §§ 181-188 (7th Ed. 1992); G. Gilmore & C.

Black, The Law of Admiralty, ch. V, at 244-71 (2d Ed. 1975).

9 See The Pennsylvania , 86 U.S. (19 Wall.) 125 (1874).

Under the Pennsylvania Rule, "if a party violates a statute which

5 establish a general average act and that there was a separate cargo

o wner at the time of the act. If the vessel owner meets this

b urden, the cargo owner may avoid liability by establishing that

the vessel was uns eaworthy at the start of the voyage and the

unseaworthiness was the proximate cause of the general average act.

Finally, if the cargo owner establishes unseaworthiness, the vessel

owner may still succeed if it proves that it exercised due

diligence to make the vessel seaworthy at the start of the voyage. 8

Deutsche Shell raises several issues on appeal. First, that

the district court er red as a matter of law in determining that

there was no general average act because the pre-trial order did

not list this as a contested issue of either fact or law. Deutsche

Shell further contends that, based on the uncontested evidence

presented at trial, the district court's determination that there

was no peril and hence no general average act was clearly

erroneous. Deutsche Shell also contends that the district court's

determinations that it failed to exercise due diligence a nd that

such failure was the proximate cause of the grounding were clearly

erroneous. In the cross-appeal, Placid contends that the district

court erred in finding that Placid owned the crude oil on board the

DIALA at the time of the grounding, and furthermore that Deutsche

Shell should be held liable under the Pennsylvania Rule. 9is designed to preclude an accident from occurring, that party

bears the burden of proof in showing that its fault did not

contribute to the accident." Sheridan Transportation Co. v.

United States , 897 F.2d 795, 797 (5th Cir. 1990). Coast Guard

regulations required the DIALA to have two independently

operating radar systems. 33 CFR §§ 164.35(a) and 164.37(a).

Placid argues that violation of this statute requires application

of the Pennsylvania Rule.

10 Elevating Boats, Inc. v. Gulf Coast Marine , 766 F.2d 195

(5th Cir. 1985); Fed.R.Civ.P. 52(a).

11 Elevating Boats , 766 F.2d at 199.

12 York/Antwerp Rule A (1974), reprinted in 2 B ENEDICT ON

A DMIRALTY § 181, at 13-1.

13 The district court found as follows:

With little more than a citation to York/Antwerp Rule A and

the London adjustor's statement, Shell would have the Court

6 The determinations regarding peril, due diligence, and

proximate cause are findings of fact which are upheld on appeal

unless clearly erroneous. 10 "A finding is clearly erroneous only

if the appellate court is left with the definite and firm

conviction that a mistake has been made." 11

I. The General Average Act

"There is a general average act when, and only when, any

extraordinary sacrifice or expenditure is intentionally and

reasonably made or incurred for the common safety for the purpose

of preserving from peril the property involved in a common maritime

adventure." 12 The district court found that Deutsche Shell failed

to prove that a general average act occurred because the tanker was

not in peril. 13 Deutsche Shell argues that the district court erredgloss over the initial issue whether Shell's degrounding

efforts constituted a general average act. Shell perhaps

believes that the Court should find the existence of a

general average act here merely because the DIALA was

carrying millions of gallons of crude oil. The Court

rejects this position and does not otherwise find

circumstances sufficient for the Court to conclude that a

general average act occurred here.

767 F.Supp. at 783.

14 See York/Antwerp Rule E (1974):

The onus of proof is upon the party claiming in General

Average to show that the loss or expense claimed is properly

allowable as General Average.

Reprinted in 2 B ENEDICT ON A DMIRALTY § 181, at 13-2.

15 We note, however, that peril is a flexible concept:

While the courts in some cases have used expressions

indicating that both in general average and in salvage cases

it is essential that the property at risk be subject to an

immediate impending danger, we think the 'imminency' of the

peril is not the critical test. If the danger be real and

substantial, a sacrifice or expenditure made in good faith

7 in raising th e issue of peril s ua sponte because the issue was

never in dispute. The lists of contested issues of law and fact in

the pretrial order contain no mention of a general average act.

Placid argues, on the other hand, that a general average act

is a necessary element of Deutsche Shell's cause of action, and the

burden is on Deutsche Shell to prov e that it occurred. 1 4 The

parties never explicitly stipulated that a general aver age act

occurred. Because we uphold the district court's finding that

Deutsche Shell failed to exercise due diligence to maintain the

3-cm radar, we need not decide whether the vessel was in peril nor

whether the issue was raised properly. 15for the common interest is justified, even though the advent

of any catastrophe may be distant or indeed unlikely.

Navigazione Generale Italiana v. Spencer Kellogg & Sons, Inc. , 92

F.2d 41, 43 (2d Cir.), cert. denied , 302 U.S. 751 (1937). A

tanker, fully laden with crude oil, unintentionally grounded in

the Mississippi River at flood stages is quite likely to be in a

perilous position.

16 The district court found that the failure of the 10-cm

radar was not caused by a lack of due diligence by Deutsche

Shell.

17 767 F.Supp. at 788.

8 II. Lack of Due Diligence

The district court held that even if a general average act

occurred, such act was caused by Deutsche Shell's fai lure to

exercise due diligence to maintain the vessel's radar in seaworthy

condition. The district court found that Deutsche Shell's

inadequate maintenance practices contributed to the failure of the

3 -cm radar. 16 The court concluded that the 3-cm radar failed for

two reasons: (1) "water incursion into the antenna/waveguide

compone nts of the unit from Shell's improper maintenance;" and

(2) "the T/R cell's having reached its actual useful life capacity,

which far exceeded either T/R cell type's average minimum life

expec tancy." 1 7 Although we find the district court's conclusion

regarding the T/R cell in error, we find no clear error in the

court's findings that water incursion contributed to the vessel's

grounding and that the water incursion was a result of Deutsche

Shell's failure to exercise due diligence in maintaining the 3-cm

radar.18 767 F. Supp. at 769-70.

9 The Equipment

The DIALA was equipped with two independent radar units SQ a

10-cm unit and a 3-cm unit, both installed in 1973. Each unit has

a 16-inch display screen on the bridge of the vessel which leads to

an MTR (modulator/transmitter/receiver) unit in the next room. The

3-cm unit's MTR is connected to a hollow metal waveguide that leads

to a 12-foot antenna array unit on the mast atop the bridge. The

antenna array units are covered with fiberglass, and contain rotary

ball bearings above and below the array so the antenna may make 360

degree sweeps.

The district court pro vided the following helpful "layman's

explanation" of certain radar components:

A modulator sends power to a magnetron, whi ch converts

the power to dense RF (radio freq uency) energy for

transmitting out the radar unit. This RF energy passes

through a T/R (transmitter/receiver) cell and then, for

the 3-cm unit, through a waveguide . . . to the antenna

array, where the RF energy is tra nsmitted into the

atmosphere. A small fraction of this transmitted energy

returns, or echoes, back to the antenna and back down the

waveguide . . . again. The same T/R cell then directs

this much weaker returning energy into rec eiver mixer

crystals; the T/R cell is designed and is able, when

functioning properly, to prevent the stronger, outgoing

RF energy from passing through and thereby damaging these

delicate mixer crystals. A klystron sends another, "base

line" RF signal into the mixer crystals. "Mixing" these

two incoming signals, the mixer crystals produce useful

electronic information, which is finally sent to the

display unit. The modulator, magnetron, T/R cell, mixer

crystals, and klyst ron are all components of the MTR

unit. 18

The DIALA also was equipped with an interswitch device which19 767 F.Supp. at 770.

20 Id.

10 permits the antenna and MTR unit of one radar system to be operated

with the display unit of the other. Prior to the radar failures on

June 5, 1983 no member of t he DIALA crew had ever operated the

interswitch device.

Symptoms of Radar Failure

When a radar malfunctions, a white spot may appear on the

display screen and render the uni t unfit for use. Among the

sources for s uch malfunction are: "a defective magnetron, a

defective modulator, blown or defective mixer crystals, possibly a

defective klystron, or water ingress i nto the waveguide." 1 9 When

a T/R cell fails, it allows the high power transmitting RF energy

to go directly through the mixer crystals causing them to blow out.

Such failure of the T/R cell and crystals also causes a small white

spot in the center of the display screen and the loss of the rest

of the display picture.

Water incursion generally does not directly e ffect the T/R

cell. However, the presence of water in the waveguide may act as

a close-range reflector of transmitting RF energy which may cause

damage to the mixer crystals. In addition, a weak display picture

may be caused either by a magnetron malfunction or water in the

waveguide. 20

Based upon the expert testimony at trial, the district court

identified three ways in which water may get inside the waveguide:21 Id. at 771 (footnote and record citations omitted).

22 767 F.Supp. at 771.

11 through flanges or seams on the waveguide, through the front

or edges of the fiberglass scanner array unit (to which the

waveguide connects), and through the rotary ball bearing

components just above or below the sc anner. Because the

antenna cover is continuously exposed to the harsh elements of

the maritime environment, it may become soft and porous over

time or otherwise in need of fiberglass recoating to prevent

water leakage in the waveguide. 21

The heat produced by transmitting RF energy may produce a

"microwave" effect and dissipat e or boil off small quantities of

water that enter the waveguide, thus leaving little or no evidence

of the water incursion. 22

Maintenance Practices

Although the radar manufacturer recommended that a radar log

be kept of all service to the radar units, Deutsche Shell did not

do so. Instead, Deutsche Shell maintained a Gerätetagebuch, or

equipment book, containing invoices from radar repair technicians.

It also appears that no one regularly checked or followed up on the

recommendations made by service technicians in the Gerätetagebuch.

For example, a service report made on March 11, 1980 indicated that

the upper antenna array's ball bearing needed to be replaced; there

was no evidence in subsequent reports that this recommendation was

ever followed. As further evidence of Deutsche Shell's poor record

keeping, the Chief Officer's December 1982 quarterly report noted

the condition of the radar as " keine Störungen seit der Werft " or

"no problems since drydock," when the Gerätetagebuch showed three

service calls regarding the radar during that period.12

The manufacturer's instructions advised that the antenna array

should be removed and thoroughly overhauled every second year. The

G erätetagebuch's radar repair records bear no evidence that this

was ever done during the entire ten years that the 3-cm radar had

been installed on the DIALA.

Radar Repairs Made After the Grounding

At 2:00 a.m. the morning after the grounding, Ben Kempf, a

radar technician came aboard the DIALA to work on the radar

systems. He did not testify at trial, but his work order indicates

the following regarding the 3-cm radar:

[T]he transmitter is inoperative; all power supply

voltages are normal; replaced blown receiver mixer

crystals, but still no targets; replaced klystr on with

ship's spare; crystal current appears normal at this time

but still unable to tune. [N]o other replacement parts

are available. [S]uspect both klystrons 2K25 are

defective, because it was necessary to decrease crystal

a ttenuation to achieve any reading of receiver mixer

crystal current. No t/r cell replacement aboard ship;

suspect water in waveguide or in array. [D]isassembled

waveguide at transmitter but no water there. [R]emoved

waveguide from pedestal; but n o evidence of water

intrusion. [W]ill return tomorrow to finish repairs.

Later that same day, Michael St. Romain, another radar technician

came to complete the radar repairs. His report indicated the

following:

Picture on radar showed signs of water in waveguide very

weak picture and large spot in center. No evidence of

wat er could be found below. Removed scanner and

inspected upper assembly. Some slight evidence of water

was shown from scanner. The front of scanner in dire

nee[d of] recoating. It is very porous and could get

water inside during a severe storm. Recommend recoating.

Also noted that top ball bearing is badly worn and should

be replaced.

. . . After reassembling the waveguide parts

a very slight improvement in picture was noted, but not

enough. Changed defective TR cell and blown crystals.

This improved picture further. Tuning of klystron cavity23 The district court noted that the only causes for a weak

display picture are water in the waveguide or a defective

magnetron, and there was no evidence of a defective magnetron in

this case. T/R cell failure, alone, would not cause a weak

picture. 767 F.Supp. at 788.

24 Another service technician worked on the radars the

night of the grounding, but his testimony was not presented at

trial. His report indicates that he suspected water in the

waveguide, but found no evidence of water. The district court

discounted his failure to find traces of water based upon the

facts that his inspection took place during evening hours and

that he spent only 2 1/2 hours on the vessel to work on both

radars, and spent most of his time repairing the 10-cm radar.

The district court's determination regarding the reliability of

the report is not clearly erroneous.

13 showed no change in picture. Changed klystron from

ship's spares. This improved picture further, now out to

6 miles. Made several other checks in TR unit with no

help in picture. Changed out klystron with one from our

kit. Tuned up radar now to have targets 24 miles.

St. Romain also returned the next day and recoated both the 3-cm

and 10-cm scanners.

A. Water Incursion

The district court found that the circumstances surro unding

the failure of the 3-cm radar were most consistent with water

incursion in the waveguide and scanner areas. This finding is

amply supported by the evidence. First, a white dot appeared upon

the screen just before the unit failed. This symptom suggests that

there was water in the waveguide. In addition, the weak picture

noticed by Captain Schätzel is also sympt omatic of water

incursion. 23 St. Romain, the radar service technician, also found

evidence of water in the scanner. 24 While St. Romain found no water

remaining in the waveguide, he did find some improvement of the25 When asked if the porous condition existed when the

DIALA left Sullom Voe, Stakelum testified: "Well the condition

as Mr. St. Romain saw it in June of 1983 I think in effect

existed the same way two weeks prior to that."

26 767 F.Supp. at 788.

14 radar picture after disassembling and then reassembling the

waveguide. From this the district court made the reasonable

inference that in the process, St. Romain cleaned out any water

that was in the waveguide. Finally, the failure of the 3-cm radar

coincided wit h the ship hitting a squall, thus providing the

opportunity for water incursion.

St. Romain disc overed that the scanner array was extremely

porous and in "dire nee[d of] recoating." He also found evidence

of water in the scanner. Deutsche Shell's own expert, Mr.

Stakelum, recognized that the extremely porous condition of the

scanner array could not have suddenly manifested itself, but must

have existed when the vessel left Sullom Voe. 25

In addition, Deutsche Shell argues that any damage to the ball

bearing could not have caused the water incursion because water was

found only in the scanner and not in the waveguide where it would

be if it entered through the ball bearing. We do not agree. The

evidence demonstrated that water could enter the waveguide through

a defective ball bearing. The district court found, consistent

with the expert testimony, that "the ef fects of evaporation may

explain the absence of more water." 26 Thus, the fact that no water

was found in the waveguide af ter it failed, does not mean that27 Ionian Steamship Co. v. United Distillers , 236 F.2d 78,

84 (5th Cir. 1956).

15 water was not present at the time the radar failed.

The district court conclu ded that the water incursion was a

result of Deut sche Shell's failure to exercise due diligence in

maintaining the 3-cm radar unit.

Where the standard of due diligence is applicable, it

comprehends inspection and investigation, where prudent, to

determi ne the existence of deficiencies before they become

critica l, and the failure to discover defects which

examination would necessarily have disc l osed is the very absence of due diligence. 27

Deutsche Shell argues that regardless o f whether water incursion

occurred, they proved that the DIALA was seaworthy when it left

Sullom Voe. We agree with the district court that Deutsche Shell

focuses on too narrow a time frame.

The district court specifically rejected Deutsche Shell's

effort to focus on the period between the drydocking in August 1982

and the grounding in June 1983 . The antenna was not overhauled

while the vessel was in drydock. While the vessel was in drydock

in 1982, Jens Pedersen, then a young, ine xperienced technician,

spent only five hours on the vessel examining both radar units and

the directional finding device. The radar also passed a German

classification inspection. There was no indication, however, that

the classification inspector conducted more than a cursory review.

As the district court noted, "[i]f a shipowner is to enjoy the safe

harbor of an inspector's okay, the shipowner must show that it28 767 F.Supp. at 789.

29 We find no merit in Deutsche Shell's argument that the

district court improperly excluded evidence of actual practices

within the industry. The district court refused to allow the

corporate representative, Martin Buck, to testify as to

statements made by other vessel owner's representatives regarding

their maintenance practices. The district court correctly noted

that the corporate representative had no personal expert

knowledge on these matters, and that the statements of these

undisclosed other vessel owners were inadmissible hearsay.

Deutsche Shell contends that these statements were not offered

for the truth of the matters asserted, but to demonstrate

Deutsche Shell's understanding of the industry practices. We

agree with the district court. Deutsche Shell's understanding of

industry practices is irrelevant to the question of whether it

exercised due diligence. Due diligence is an objective standard;

therefore, to the extent that these statements attempted to

demonstrate what that standard is, they are rank hearsay.

16 revealed sufficient facts to the inspector; Shell did not." 28

Accordingly, the district court gave little weight to the lack of

problems detected by Pedersen or the German classification

inspector.

The district court found, consistent with the evidence, that

if Deutsche Shell had followed the manufacturer's recommendation to

keep an accurate radar log and to overhaul the radar array every

two years, Deutsche Shell would have avoided the surprises that led

to the grounding in June 1983. Deutsche Shell's actions did not

even approach the standard suggested by the radar manufacturer. 29

There was no evidence that either the 3-cm or t he 10-cm radar

underwent the recommended overhaul during the entire ten year

period they were installed on the DIALA. During such an overhaul,

the severe porosity problems, the defective ball bearing, and other

opportunities for water incursion would have been remedied, thereby30 See Exhibit P24A.

31 See Exhibit P26-B pp. 5-11. The source of the district

court's error appears to have been the abstract of repair

invoices admitted as Placid's exhibit D-3 which indicated that

the VDX 1047s T/R cell was replaced in the 10-cm radar. Placid

attempts to argue that Deutsche Shell stipulated to the contents

of the abstract and therefore cannot now argue that the T/R cell

in the 3-cm radar had been replaced. We find no such

stipulation. Deutsche Shell agreed to the admissibility of the

abstract, it did not stipulate to the accuracy of its contents

particularly when the abstract contradicts the document from

which it purports to abstract.

17 averting the failure of the 3-cm radar.

B. The T/R Cell

The dis trict court indicated that "[t]he record contains no

evi dence that the 3-cm unit's T/R cell from 1973 had ever been

replaced at any time." We agree with Deutsche Shell that this

finding is not supported by the record. The radar repair invoices

submitted by the defendants indicate that a VDX 1047s type T/R cell

was replaced in June 1982, 30 one year before the radar failure which

led to the grounding. This type of T/R cell is used in the 3-cm

radar unit but not in the 10-cm unit. 31 These T/R cells have an

average useful life expectancy of 2000-5000 hours; Deutsche Shell's

radar expert, Mr. Stakelum, estimated that the average use of the

3-cm radar on a vessel such as the DIALA was 1500 to 2500 hours per

year. The T/R cell in the 3-cm radar, having been replaced only

one year before, was not so dangerously close to the end of its

usefulness that it would have been a failure of due diligence not

t o replace it prior to the voyage. We find, however, that the

water incursion contributed to the failure of the 3-cm radar and18

is sufficient to support the district court's judgment in favor of

Placid.

III. Proximate Cause

Deuts che Shell also argues that even if the district court

properly found that it failed to exercise due d iligence in

maintaining the 3-cm radar, the district cour t's conclusion that

the grounding was proximately caused by that unseaworthy condition

was clearly erroneous.

The district court found that the flood stages of the river,

the pilot's decision not to continue the voyage without two

reliable radar units, and the sub sequent decision to anchor were

all foreseeable events. These findings are not clearly erroneous.

Certainly, grounding is one of the risks a vessel faces when its

radar fails. The fact that the vessel was grounded while

attempting to anchor does not make the result unforeseeable.

Finding no reversible error, we AFFIRM.