Fireman's Fund Insurance Companies, a Corporation,intercontinental Metals Corporation and Berg Steelpipe Corporation, Plaintiffs-appellants, v. M/v Vignes, Her Boilers, Furnishings, Tackle, Etc., in Rem;a/s Kristian Jebsen Rederi, Her Owners, and Cardinal Steelcorporation, Now Known As Cardinal Shipping Corporation, Inpersonam, Defendants-appellees, 794 F.2d 1552 (11th Cir. 1986)

In this appeal, we must determine whether the District Court erred in holding that the shipowner (Kristian Jebsen Rederi) and the charterer (Cardinal Shipping Corporation) of the M/V VIGNES exercised due diligence to make the VIGNES seaworthy. The District Court ruled that the seawater-damage to the VIGNES' cargo resulted from perils of the sea and latent defects not discoverable by the exercise of due diligence. After careful examination of the record in this case, we conclude that the District Court did not err and we therefore affirm its judgment.

The Ship, Elongated, Sets Sail

M/V VIGNES is a three-hold, steel hulled cargo vessel built in 1979. Her owner is defendant-appellee A/S Kristian Jebsen Rederi (Kristian).¹  In late 1980, VIGNES underwent modifications in the shipyard at Bremerhaven, Germany. The vessel was lengthened by approximately 15 meters, requiring work to be performed on the ship's hatchcovers and hatch coamings. Upon completion of the modifications, VIGNES was surveyed by Det Norske Veritas, a recognized international classification society. All the hatchcovers and hatch coamings were tested with streams of water fired from high pressure hoses and were found to be completely watertight.

After leaving the shipyard, VIGNES made two short voyages before setting sail on the voyage which led to this lawsuit. During these two voyages there were no leaks in the hatchcovers, but a leak was detected in a pipe in the No. 1 cargo hold. VIGNES was returned to the shipyard to effect the necessary repairs. Following the repairs, the hatchcovers were washed down to test for leaks, but no leakage was revealed. VIGNES then set sail for Oxelosund, Sweden to load the cargo of steel plates involved in this suit.

Defendant Cardinal Steel Corporation (Cardinal) chartered VIGNES for the purpose of transporting about 5,350 tons of steel plate from Oxelosund to Panama City, Florida, the location of the plant of Berg Steel Pipe Corporation (Berg), the purchaser of the steel plate. Berg purchased the steel from Swedish Steel, the Oxelosund-based manufacturer, by placing an order with its purchasing agent, Intercontinental Metals Corporation (Intercontinental). Intercontinental was insured by Fireman's Fund Insurance Companies (Fireman's Fund) under an all-risk policy.

Before the steel plates were loaded aboard VIGNES, they had been stored outside at Oxelosund for between 1 and 89 days. The outside storage resulted in the formation of atmospheric rust on the plates, but this type of rust was insignificant in relation to the steel's intended use as fabricated large steel pipe.

VIGNES sailed from Oxelosund under the command of Captain Jan Drewes, an employee of Kristian, her owner. The hatchcovers were inspected prior to loading, and the hatchcovers' hydraulic sealing hooks were checked for tightness after VIGNES set sail. During the voyage, VIGNES encountered five days of heavy weather with winds up to force 10 on the Beaufort Scale and high seas of up to 25 feet breaking over the hatches. Seawater leaked into the No. 2 hold and had to be pumped out on two different occasions. It is undisputed that the seawater entered the hold through the hatchcovers.

Upon the arrival of VIGNES at Panama City, Florida, on February 19, 1981, 527 of the steel plates--about 25% of the shipment--were set aside as being suspected of seawater damage. Tests performed on those plates confirmed that the heavy rusting was caused by saltwater. Visual inspection of the holds revealed rust-colored splash marks on the sides of the holds where it appeared that water had dripped on the plates and splashed against the wall.

Berg rejected the 527 damaged plates, but used 78 of the damaged plates to meet a pressing order for pipe. Salvage bids were solicited for the remainder of the damaged plates, but Berg rejected the highest bid and purchased all the plates for the reduced price of $409,876.64.² Plaintiff Fireman's Fund, which insured Intercontinental (Berg's purchasing agent), paid Intercontinental $351,739.23, which constitutes the difference between the insured value (110% of the cargo's actual value) and the amount Berg paid for the damaged plates.³ Fireman's Fund sought to recover from defendants the amount it paid under the insurance policy to Intercontinental. The District Court ruled in favor of the defendants and this appeal followed.

Diligent Due Diligence

Under Sec. 1303(1) (a) of the Carriage of Goods by Sea Act (COGSA), the carrier⁴  must exercise due diligence to make the ship seaworthy. 46 U.S.C. § 1303(1) (a). As a reflex to this duty, Sec. 1304 provides that the carrier will not be liable for any damage resulting from unseaworthiness "unless caused by want of due diligence on the part of the carrier to make the ship seaworthy." 46 U.S.C. § 1304(1). Section 1304 also provides that the carrier will not be responsible for damage resulting from "perils of the sea" or "latent defects not discoverable by due diligence." 46 U.S.C. § 1304(2) (c), (p). The carrier has the burden of showing that any damage was brought about by one of the excepted causes listed in Sec. 1304. Campagnie De Navigation v. Mondial United Corp., 316 F.2d 163 (5th Cir. 1963).

The District Court found that the carrier in this case exercised due diligence, and concluded that the damages resulted from perils of the sea and latent defects not discoverable by the exercise of due diligence. Questions of due diligence and proximate cause are fact questions, and the District Court's findings on these issues will not be overturned on review unless clearly erroneous. Marcona Corp. v. Oil Screw Shifty III, 615 F.2d 206, 208 (5th Cir. 1980) (proximate cause); Socony Mobil Oil Co. v. Texas Coastal & International, Inc., 559 F.2d 1008, 1010 (5th Cir. 1977) (due diligence); see also Hasbro Industries, Inc. v. M/S ST. CONSTANTINE, 705 F.2d 339, 341 (9th Cir. 1983) ("due diligence is essentially a negligence concept and ... determinations of negligence in admiralty cases are findings of fact which will be given application unless clearly erroneous"), cert. denied, 464 U.S. 1013, 104 S. Ct. 537, 78 L. Ed. 2d 717. Under the clearly erroneous standard, if the District Court's account of the evidence is plausible in light of the record viewed in its entirety, we may not reverse even if we would have weighed the evidence differently and arrived at a contrary conclusion. See Anderson v. Bessemer City, 470 U.S. 564, ----, 105 S. Ct. 1504, 1512, 84 L. Ed. 2d 518, 528 (1985). "Where there are two permissible views of the evidence, the factfinder's choice between them cannot be clearly erroneous." Id. Appellants ("Cargo"),⁵  however, maintain that the District Court's findings on due diligence and proximate causation were clearly erroneous.

First, Cargo argues that requesting a classification society to perform a test for watertightness is not enough to satisfy the carrier's duty to exercise due diligence.⁶ 

Cargo's argument rests primarily on the oft-quoted expression that seaworthiness--or due diligence to make a vessel seaworthy--cannot be proved simply by routine classification surveyor reports.⁷  But that is not what occurred here. As pointed out earlier, the classification society's testing for watertightness was performed only a few weeks prior to the relevant voyage and involved testing under water pressures much greater than those encountered at sea. Thus, the classification society survey--though not conclusive standing alone--could be credited by the judge as very strong evidence of due diligence in this case. Moreover, the survey by the classification society was only one of a number of steps undertaken by the carrier to ensure seaworthiness. Before loading the steel plate at Oxelosund, VIGNES' cargo holds were washed down and inspected, and the bilge alarms were tested. After loading, the hatches were closed and secured with hydraulic hooks. After leaving Oxelosund, but before entering the Atlantic, the hatchcovers and hydraulic hooks were inspected once again. Finally, and very significantly, the VIGNES' hatches and hatchcovers had never been known to leak prior to the problems experienced on the subject voyage.⁸  In light of all the preceding evidence, we conclude that the District Court was not clearly erroneous in finding that the carrier exercised due diligence to make the VIGNES seaworthy.⁹ 

Knife-Edged Perils of the Sea

Cargo claims that the District Court was clearly erroneous in finding that the proximate cause of the damage was a combination of perils of the sea and latent defects not discoverable by the exercise of due diligence. Specifically, Cargo argues that the damage was caused by a patent defect discoverable by the exercise of due diligence--the use of hatchcovers without knife edges for extra compression.¹⁰ 

Contrary to the assertions of Cargo, there is testimony in the record--which the judge could credit--that there is no significant difference in the watertightness of hatchcovers with knife edges and those without. Moreover, the District Court never determined that the lack of knife edges was a "defect." Rather, the District Court merely stated that the lack of knife edges, if a defect at all, was not a "latent" defect. When read together with the Court's conclusion that the damage was caused by latent defects not discoverable by due diligence, it is readily apparent that the District Court did not attribute the cause of the damage to the lack of knife edges, whether "patent," "latent," "defective," or otherwise.¹¹  Therefore, we find no inconsistency in the District Court's findings which leads us to doubt its conclusions on due diligence and proximate cause.

In a nutshell, upon review of the entirety of the evidence, we hold that the District Court was not clearly erroneous in its findings on due diligence and causation.¹² 

AFFIRMED.