IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
THE FOLGER COFFEE COMPANY; GULF
OLIVEBANK; CHARMAIN SHIPPING, INC.;
SAFBANK LINE LIMITED; ANDREW WEIR
SHIPPING LIMITED; LYKES BROTHERS
STEAMSHIP COMPANY, INC.,
GULF INSURANCE COMPANY,
M/V OLIVEBANK; CHARMAIN SHIPPING,
INC.; SAFBANK LINE LIMITED,
ASSOCIATED MARINE UNDERWRITING
AGENCY; SOUTH AFRICAN EAGLE
INSURANCE COMPANY; CARGO UNDER-
WRITING AGENCY; AEGIS INSURANCE
COMPANY LIMITED; MUTUAL & FEDERAL
INSURANCE COMPANY LIMITED; CESAM;
UNDERWRITERS OF LLOYD'S; HENRY
VOET-GENICOT BVBA; CHUBB & SON, INC.;
MARINE OFFICE OF AMERICA CORPORA-
TION; SUN ALLIANCE GENERAL
INSURANCES; SUN ALLIANCE INTER-
NATIONAL LIMITED; ALEXANDER &
ALEXANDER (ACTING ON BEHALF OF
LLOYD THOMPSON); COMMERCIAL UNION
ASSURANCE COMPANY PLC; UNDER-
WRITERS OF AMSTERDAM BOURSE AND
OTHER UNDERWRITERS; CIGNA INSURANCE
CO. OF EUROPE SA NV/CIGNA PROPERTY &
CASUALTY INSURANCE COMPANY OF
NORTH AMERICA; CEEMIS (ACTING ON
BEHALF OF UNDERWRITING MANAGEMENT
SERVICES); PACIFIC EMPLOYERS
M/V OLIVEBANK, her engines, boilers, tackle,
etc., in rem; CHARMAIN SHIPPING, INC.;
ANDREW WEIR SHIPPING LIMITED;
SAFEBANK LINE LTD.; LYKES BROTHERS
SHIPPING CO., INC.; BLUE ANCHOR LINES,
INC.; BLUSHIP LTD.,
INTERCARGO INSURANCE COMPANY;
FIREMAN'S FUND INSURANCE COMPANIES
(NEW YORK); FIREMAN'S FUND
INSURANCE COMPANIES (CHICAGO),
M/V OLIVEBANK, her Engines, Boilers, Tackle,
etc., in rem; CHARMAIN SHIPPING, INC.;
ANDREW WEIR SHIPPING LIMITED; LYKES
BROTHERS SHIPPING CO., INC; ICON
Appeals from the United States District Court
Southern District of Texas
February 3, 2000
WIENER, and STEWART, Circuit Judges.
JEROME FARRIS, Circuit Judge.
In this admiralty and maritime appeal, Folger
Coffee Co. and its insurer, Gulf Insurance Company, seek to reverse the
district court's judgment that (1) the vessel M.V. Olivebank is entitled
to use general average on a salvage lien and (2) that Folger Coffee and
Gulf Insurance owe their proportional share to the general average fund.
The M.V. Olivebank left the Port of Durban,
South Africa on June 12, 1996, with cargo that included granite blocks,
steel wire and earth moving equipment. On the morning of June 15, 1996,
the vessel encountered severe weather and extremely rough seas which caused
seawater to come over the aft deck. At approximately 8:00 a.m., seawater
in the vessel's alternator room, two levels below the deck, shorted the
two active alternators and caused a complete loss of electrical power to
the ship. Electricity was required to run the main engine and steer the
ship. The third alternator, which was on standby, should have engaged but
either did not or was immediately turned off so that it could be evaluated
for water damage. The vessel's emergency electrical system, required by
the Safety of Life at Sea Convention of 1974, should have provided emergency
lighting from batteries, followed by the automatic start-up of the emergency
generator to provide electrical services for steering. The batteries failed
and the emergency generator was ultimately started manually. The emergency
system was not designed to provide motive power.
The parties dispute the exact means by which
the seawater reached the alternator room. It is, however, undisputed that
a skylight, or raised hatch, nine feet above deck and two levels above
the alternators was open at some point during the relevant period. The
floor of the room below the skylight was the ceiling of the alternator
room. Several small holes had been cut in this floor/ceiling to enable
equipment to operate properly while resting on the floor. Water coming
through the skylight could have gone through these holes into the alternator
room. It is also undisputed that outside deck-level vent covers to the
exhaust vents were open and that these vents lead to the alternator room.
Without steering, the vessel was tossed at
extreme angles as it could not position itself to best withstand the high
waves. The captain of the vessel put out a Mayday. He entered into a salvage
agreement with Pentow Marine, Ltd., a salvage tug, pursuant to a Lloyd's
Open Form. The salvors arrived in the late afternoon.
In the process of trying to manually start
the emergency generator, two engineers on board broke the handle off the
emergency generator circuit-breaker. The electrician then "hot wired" the
broken circuit breaker to engage the emergency system. The restored lighting
enabled the engineers to examine and start the stand-by alternator. The
main engines were ultimately started prior to the arrival of the salvors,
and, after waiting out the storm, the M.V. Olivebank sailed to a port of
refuge on its own power.
The salvors exercised their salvage lien by
threatening arrest of the cargo and/or the ship. Prior to salvage arbitration,
the vessel and the cargo interests settled with and paid the salvors. The
owners of the M.V. Olivebank declared general average, forcing the cargo
interests to provide general average bonds and guarantees, which remain
Folger Coffee and Gulf Insurance filed actions
in district court seeking a declaration that the vessel was not entitled
to general average and recovery for damage to cargo. The actions were consolidated,(2)
and, following a two-day bench trial, the district court found for the
vessel. The district court found that the loss of power was caused by a
fortuitous combination of events and that the vessel was seaworthy when
it left port. The district court entered a final amended judgment on October
8, 1998, and Folger Coffee and Gulf Insurance timely appealed.
A. Rule 52(a) & Standard of Review
Rule 52(a) requires a district court sitting
as trier of fact to "find the facts specially and state separately its
conclusions of law thereon[.]" The rule specifically permits oral delivery
following the close of evidence and states that "[f]indings of fact . .
. shall not be set aside unless clearly erroneous." Folger Coffee and Gulf
Insurance urge us to exercise de novo review because the district court
failed to "express its findings of fact with sufficient particularity and
provided no recognizable conclusions of law."
We rejected an identical argument in Burma
Navigation Corp. v. Reliant Seahorse MV, 99 F.3d 652, 656 (5th Cir.
[Appellants'] challenge to the specificity
of the district court's fact findings under Rule 52(a) appears to be a
thinly veiled attempt to turn a sufficiency-of-the-evidence argument into
a legal challenge. . . . Rule 52 requires the district court to simply
issue findings with sufficient detail to enable the appellate court to
consider the findings under the applicable reviewing standard. Rule 52
is satisfied if the district court's findings give the reviewing court
a clear understanding of the factual basis for the decision.
Id. (note and citations omitted); see
also Chandler v. City of Dallas, 958 F.2d 85, 88-89 (5th Cir. 1992)
(per curiam) (discussing rationale behind the rule). More recently, we
have stressed that as long as the district court's account of the evidence
is plausible, it must be accepted. See Luhr Bros., Inc. v. Shepp (In
re Luhr Bros., Inc.), 157 F.3d 333, 338 (5th Cir. 1998), cert. denied
sub nom. Jones v. Luhr Bros., Inc., 119 S. Ct. 1357 (1999). The district
court's findings of fact and conclusions of law meet the requirements of
Folger Coffee and Gulf Insurance further contend
that the issue of seaworthiness is a mixed question of law and fact reviewed
de novo. We have previously held that seaworthiness is an issue of fact
reviewed for clear error. See Stevens v. East-West Towing Co., Inc.,
649 F.2d 1104, 1106 (5th Cir. 1981); see also Deutsche Shell Tanker
Gesellschaft v. Placid Refining Co., 993 F.2d 466, 469 (5th Cir. 1993)
(determinations regarding each element of general average claim are findings
of fact). The contentions of Folger Coffee and Gulf Insurance do not persuade
B. General Average & Carriage of Goods
at Sea Act (COGSA)
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.
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.
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
a. Negligence Per Se - Safety of Life at
Sea Convention (SOLAS)
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.
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 Folger
Coffee 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).
b. Entry of Seawater-Presumption of Unseaworthiness
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
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.
c. Management Decision - Skylight and Vent
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.
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."
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).
The district court's finding that the vessel
was not rendered unseaworthy due to the state or condition of the skylight
and vent covers was not clear error and is supported by the record.
2. Proximate Cause & Due Diligence
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.
The district court's findings of fact and
conclusions of law met the requirements of Fed. R. Civ. P. 52(a). The district
court did not clearly err by (1) enforcing the general average, (2) finding
that the vessel was seaworthy, and (3) failing to reach the issue of due
1. 1 Circuit
Judge of the Ninth Circuit , sitting by designation.
2. 2 Two other
actions were later filed and subsumed into the same docket number.
3. 3 The parties
do not dispute that the events experienced by the M.V. Olivebank were sufficient
to trigger general average.
4. 4 We recognize
that the district court made no finding of negligence by the crew. We stress
only that COGSA does not permit liability predicated on neglect by management.