Opinion ID: 19793
Heading Depth: 2
Heading Rank: 2

Heading: General Average & Carriage of Goods at Sea Act (COGSA)

Text: 14 Folger Coffee and Gulf Insurance maintain that the M.V. Olivebank was not entitled to general average because the vessel was unseaworthy under the Carriage of Goods at Sea Act, 46 U.S.C. 1300-1315. 15 The parties do not dispute that the bill of lading covering the cargo aboard the M.V. Olivebank required general average contribution. Under COGSA, once the vessel establishes that a general average act occurred, 3 the cargo owner may only avoid liability by establishing that the vessel was unseaworthy at the start of the voyage and that the unseaworthiness was the proximate cause of the general average event. If the cargo owner proves unseaworthiness, the vessel may still prevail by proving that it exercised due diligence to make the vessel seaworthy prior to the voyage. See Deutsche Shell, 993 F.2d at 468.
16 The district court held that the evidence did not support the proposed finding that the vessel was unseaworthy due to a defective emergency electrical system. The district court found that the failure of the batteries and emergency system was due to the same intervening event that caused the primary alternators to fail (entry of seawater and corresponding power surge) and that the collapse of both systems at the same time was fortuitous. The district court further found that the emergency system was sufficient because it started, whether mechanically or manually, and that the broken switch was caused by human error not a defect. The district court found the contemporaneous evidence established that the engineer made a decision not to engage the stand-by alternator (number 2) and that the automatic starting mechanism was not defective. The district court held that the M.V. Olivebank was seaworthy when it left port and that the open skylight and the vent covers were not an issue of seaworthiness but a management decision. The district court's decision was not clear error. 17
18 Folger Coffee and Gulf Insurance contend that the vessel was per se unseaworthy under the 1993 amendment to the 1974 Safety of Life at Sea Convention. They argue that the M.V. Olivebank did not meet the SOLAS standards regarding alternate and emergency power and lighting, and that this failure was the proximate cause of the loss. 19 We are not persuaded by Folger Coffee and Gulf Insurance's contention that the concept of negligence per se may be used to overcome COGSA's burden of proof requirements. The authority FolgerCoffee and Gulf Insurance rely on to support this contention deals with negligence in the context of personal injury rather than under COGSA. See Kernan v. American Dredging Co., 355 U.S. 426, 438-39 (1958) (wrongful death action claiming FELA violation); Smith v. Trans-World Drilling Co., 772 F.2d 157, 162 (5th Cir. 1985) (seaman injury claim under Jones Act and general maritime law); Dougherty v. Santa Fe Marine, Inc., 698 F.2d 232 (5th Cir. 1983) (employees of mobile offshore drilling unit alleging injury for violation of Coast Guard regulation). 20
21 Folger Coffee and Gulf Insurance contend that the entry of seawater into the vessel leads to a presumption of unseaworthiness. We find no authority to support such a presumption. Jahn v. The Folmina, 212 U.S. 354 (1909), a pre-COGSA case, did not deal with seaworthiness as the term is used under COGSA, but rather how the absence of proof as to causation affects a determination of negligence where cargo has been damaged by seawater. Similarly, in Artemis Maritime Co. v. Southwestern Sugar & Molasses Co., 189 F.2d 488 (4th Cir. 1951), seawater reached the cargo through a corroded and weak hull, conditions that, with due diligence, could have been discovered prior to the voyage. See id. at 491. Here, in contrast, any damage to the cargo could reasonably be deemed by a trier of fact to have stemmed from events occurring after the entry of seawater. 22 The district court did not commit clear error by finding the vessel seaworthy despite the entry of seawater. It found that the water came onto the ship over the stern in a storm with force 11 winds. This finding has support in the record. 23
24 Folger Coffee and Gulf Insurance contend that the conditions of the skylight, or hatch, and vent covers and the fact that these items were not customarily closed made the vessel unseaworthy. The district court found that the most likely explanation for the entry of water into the alternator room was through the hatch and the exhaust vents and that the vessel was relieved of liability because the decision not to close the skylight or the vent covers was a management decision. The district court further found that these items, though not in ideal condition, functioned properly since, once closed and fastened, they did not let any more water inside. 25 COGSA excepts the carrier for liability from damage caused by '[a]ct, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship.' Usinas Siderugicas de Minas Geras, SA-Usiminas v. Scindia Steam Navigation Co., Ltd, 118 F.3d 328, 333 (5th Cir. 1997) (quoting 46 U.S.C. 1304(2)(a)). Failure to detect a flaw prior to sailing constitutes a failure to exercise due diligence and not an error of management. See id. at 332. There is a fine line between actions that constitute errors in management and inaction that constitutes a lack of due diligence. Id. 26 Folger Coffee and Gulf Insurance argue that the failure to close the skylight and vents could not have been a management decision because it was not an act but an omission. Folger Coffee and Gulf Insurance have misconstrued the district court's use of the phrase management decision. Neglect by management also relieves liability under COGSA. 4 See 46 U.S.C. 1304(2)(a). 27 The district court's finding that the vessel was not rendered unseaworthy due to the state or condition of the skylight andvent covers was not clear error and is supported by the record.
28 Folger Coffee and Gulf Insurance bear the burden of proving both unseaworthiness and proximate cause. See Deutsche Shell, 993 F.2d at 468. The record supports the district court's finding that the vessel was seaworthy. We therefore do not reach the issue of proximate cause. The district court's failure to make findings on due diligence was not clear error in light of its findings on seaworthiness and proximate cause. See id.