Case Name: MERRILL STEVENS DRY DOCK COMPANY, Appellant, v. Vivian ALVAREZ, f/u/b/o American Home Insurance Company, Appellee
Court: Florida District Court of Appeal
Jurisdiction: Florida
Decision Date: 1987-06-23
Citations: 510 So. 2d 931
Docket Number: No. 86-1732
Parties: MERRILL STEVENS DRY DOCK COMPANY, Appellant, v. Vivian ALVAREZ, f/u/b/o American Home Insurance Company, Appellee.
Judges: Before BASKIN, DANIEL S. PEARSON and FERGUSON, JJ.
Reporter: Southern Reporter, Second Series
Volume: 510
Pages: 931–933

Head Matter:
MERRILL STEVENS DRY DOCK COMPANY, Appellant, v. Vivian ALVAREZ, f/u/b/o American Home Insurance Company, Appellee.
No. 86-1732.
District Court of Appeal of Florida, Third District.
June 23, 1987.
Rehearing Denied Aug. 31, 1987.
Smathers & Thompson and Debra L. Brady and G. Morton Good, Miami, for appellant.
Hayden & Milliken and Domingo C. Rodriguez, Miami, for appellee.
Before BASKIN, DANIEL S. PEARSON and FERGUSON, JJ.

Opinion:
PER CURIAM.
This is an appeal from a final judgment in favor of the appellee, American Home Insurance Company, for $222,249, the amount determined by the trial court, sitting without a jury, to be the damages suffered by the appellee when a yacht owned by Alvarez, American Home's sub-rogor, was totally destroyed by fire. Merrill Stevens Dry Dock Company urges that an exculpatory clause in the repair contract relieved it from responsibility for damages to other parts of the vessel, or the vessel as a whole, caused by its negligent failure to properly repair a certain part of the vessel. We agree and reverse with directions to enter judgment for Merrill Stevens.
There is no dispute that the negligent failure of the defendant, Merrill Stevens Dry Dock Company, to install or to see to it that its subcontractor installed turbo-charger blankets on the plaintiff's yacht was a breach of its express undertaking "to repair the vessel in a good and workmanlike manner" and was the proximate cause of a fire resulting in the total loss of the vessel. There is also no dispute that it was neither pleaded nor proved that Merrill Stevens' omission amounted to gross negligence.
Initially, the trial court, in entering judgment for Merrill Stevens as to the loss of the vessel claim, concluded that Clause 7 of the repair contract
"clearly and unequivocally expresses the intent that Merrill Stevens shall have no liability for any damages or losses sustained, whether in tort or contract unless and until it has been established that their conduct amounted to gross negligence. Such clauses under the maritime law, known as "Red Letter" clauses have been held to be valid and binding. Todd Shipyard Corp. v. Turbine Service, Inc., 674 F.2d 401 (5th Cir.1982); Morton v. Zidell Explorations, Inc., 695 F.2d 347 (9th Cir.1982); Ortiz v. ETPM U.S.A., Inc., 553 F.Supp. 549 (S.D.Tex.1982); No-rtina TV, AMC 967 (D.Mass.1969). Clause 7 was under all of the circumstances surrounding these repairs binding on the parties, valid and enforceable."
On rehearing, the trial court reversed itself, concluding that the "Red Letter" clause did not "absolve Merrill Stevens from liability . resulting from breach of their express warranty to 'repair the vessel in a good and workmanlike manner.' "
We are of the view that the trial court was right in the first place: Merrill Stevens' undertaking to "repair the vessel in a good and workmanlike manner" made it responsible to correct defective repairs; the exculpatory clause relieved Merrill Stevens — unless grossly negligent — from responsibility for damages to other parts of the vessel caused by the defective repairs. This is simply an unambiguous arm's length transaction between parties of like bargaining power who were well able to allocate who was to bear the responsibility for insuring against what loss. Accordingly, the judgment under review is reversed, and the cause is remanded to the trial court with directions to enter judgment for Merrill Stevens. The order denying American Home's motion for attorney's fees is affirmed.
Affirmed in part; reversed in part, and remanded with directions.
DANIEL S. PEARSON and FERGUSON, JJ., concur.
. American Home cross-appeals from the trial court's order denying it attorney's fees. We affirm that order without further discussion.
.American Home, as the vessel's insurer, paid Alvarez $180,000 for the loss.
. Clause 7 of the contract provides:
"CONTRACTOR undertakes to perform the work outlined and haul and launch vessels, provide berth, wharfage, towage, and other services and facilities only upon the condition that it shall not be liable, directly or indirectly, in contract, tort, or otherwise, to the vessel, its owners, charterers, underwriters, or any of their agents, servants, or employees, or persons to whom they might be responsible for any personal injury or death, or damage to the vessel, its cargo, equipment or movable stores or for any consequence thereof, unless such personal injury, death, or property damage, is caused by CONTRACTOR'S gross negligence or the gross negligence of any of its employees, which gross negligence shall not be presumed but must be affirmatively established. In no event, including the negligence and/or the gross negligence and/or the breach of contract of CONTRACTOR, shall the CONTRACTOR'S aggregate liability to all such parties in interest for personal injury, death or damage sustained by them, including damages for delay of the vessel, or any other type of damage, exceed the sum of $300,000.00, and in no event shall the CONTRACTOR be liable to any extent to the vessel, her owners, charterers and/or underwriters, for the cost of defending any claims asserted by third parties, including attorney's fees, whether such actions shall be commenced by its employees or others."