Appendix — Sentry Insurance v. Todd Shipyards Corp.

3n ALEXANDER .. STEVAS.

the ouenn

SENTRY INSURANCE A MUTUAL COMPANY

AND GONZALES MANUFACTURING AND

INDUSTRIAL MACHINE WORKS, INC.

Petitioners

VERSUS

TODD SHIPYARDS CORPORATYON, BT AL.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

APPENDIX TO

PETITION FOR WRIT OF CERTIORARI

VOL. Il — APPENDIX C

John I. Hulse IV

HULSE, NELSON & WANEK

1250 Poydras St., Suite 895

New Orleans, LA 70112

(504) 524-6221

Attorney for Petitioners

NEN Ts Gt. tow Oteemn, La. 900) 084 40eS

i

TABLE OF CONTENTS

—_—

Table of Contents

Sentry Insurance, A Mutual Company

Subsidiaries and Affiliates

Appendix C

A-59

SENTRY INSURANCE, A MUTUAL COMPANY

SUBSIDIARIES AND AFFILIATES

Sentry Insurance, A Mutual Company, lists the

following subsidiaries and affiliates: Seniry Insurance, A

Mutual Company, Century Communications, Sentry Rein-

surance, Inc., The Sentry Corporation, Sentry Insurance of

Michigan, Inc., Sentry Insurance of Illinois, Inc., Mid

State Airlines, Inc., Reed Industries, Inc., Leitner Corpora-

tion, Magna Systems, Inc., Photon Sources, Inc., Sentry

Broadcasting, Inc., Stevens Point Broadcasting Company,

Sentry Aviation Services, Inc., Barnhill-Hayes, Inc., SEN-

CO, Inc., Parker Services, Inc., Sentry Life Insurance Com-

pany, Sentry Life Insurance Company of New York,

Patriot General Life Insurance Company, Parker Stevens

Agency, Inc., Parker Stevens Insurance Agency of

Massachusetts, SNE Corporation, formerly Vetter Cor-

poration, Sentry Indemnity Company, Middlesex In-

surance Company, Patriot General Insurance Company,

Harris Chrestline Corporation, Chrestline, Inc., Chrestline

International Sales Corporation, Creative Management

Alternatives, Inc., Dairyland Insurance Company, Great

Southwest Fire Insurance Company, Great Southwest

Surplus Lines Insurance Company, Dairyland County

Mutual Insurance Company of Texas, Sentry Group Foun-

dation, Inc., Sentry Syndicate, Inc. (NY), Sentry Syn-

dicate/Illinois, Inc., Texas Sentry, Inc., HANSECO, Sen-

try Equity Services, Inc., Sentry Foundation, Inc., Sentry

Services, Inc., Sentry Fund, Inc., Sentry Cash Manage

ment Fund, Inc., Sentry Financial Services Corporation,

iii

Sentry Credit Corporation, Sentry Investment Manage

ment, Inc., Sentry Reinsurance Management, Inc., Center-

point Reproductions, Inc., Midway Productions, Inc., Sen-

try Assurance International Ltd., Sentry Insurance Group

U.K. Ltd., City of Westminster Assurance Company Ltd.,

City of Westminster Assurance Society, Marsham Court

Management Company Ltd., Sentry Motor Insurance Com-

pany Ltd., Sentry Insurance Services Ltd., Sentry Under-

writing Agencies Ltd., Sentry U.K. Insurance Company

Ltd., Gaudery Ltd., Great Lumley Farming Company Ltd.,

Willisham Farming Company Ltd., Dorane Farms Ltd.,

Astwood Hill Farming Company Ltd., Sentry Insurance

Management Ltd., Sentry Finance Ltd., Sentry Securities

Ltd., Sentry Association Ltd., Sentry Pension and Life

Assurance, IRAN Life Company, Sentry Holding Ltd., Sen-

try Life Assurance Ltd., Sentry Marketing Party Ltd.,

Australian Casualty Company Ltd., Sentry Insurance

(Australasia) Ltd., Sentry Financial Management Ltd., Sen-

try Assurance of South Africa Ltd., SNA Holdings Ber-

muda Ltd., Sentry Assurance Management Ltd. Bermuda,

SNA-RE Bermuda Ltd., SNA Holding SAL, Building Socie-

ty SAL, Saudi Insurance Company Ltd., Societe Nationale

D’ Assurance, Bank of the Near East, Actuarial Manage-

ment and Marketing Companies, VADUZ, Jordan Eagle In-

surance Company Ltd., Middle East Reinsurance Office,

AMC (UK) Ltd., Sentry Holdings (Antilles) N.V., AMC

(Morocco) LA MAROCAINE VIA, Sentry Holdings (Asia)

Ltd., Sentry Holdings (PTE) Ltd. Singapore, Sentry Capital

Ltd., Sentry (HK) Ltd., Sentry Insurance Company Ltd.,

Maghrebia Society D’ Assurances.

A-59

APPENDIX “C”

TODD SHIPYARDS CORPORATION,

Plaintiff,

v.

TURBINE SERVICE, INC.,

Gonzales Manufacturing and Industrial Machine Works,

Inc., and a Certain Turbine Rotor, Casing, Blades, Rings,

Housing, and All Assorted Parts Thereto, all of which

being from the SS KATRIN, Defendants.

Civ. A. Nos. 75-1825, 75-2719.

United States District Court,

E. D. Louisiana

Sept. 1, 1978

Shipyard which had agreed to perform repairs on

vessel's turbine brought action against subcontractor and

sub-subcontractor demanding return of damaged parts.

The subcontractor and sub-subcontractor asserted a lien

for money due from the shipyard. Vessel owners interven-

ed. The District Court, Cassibry, J., held that: (1) shipyard,

subcontractor, and sub-subcontractor had been negligent

and had breached their implied obligations of diligent per-

formance; (2) vessel owners had not been contributorily

negligent; (3) red-letter clause limiting shipyard’s liability

to $300,000 was invalid in the instant case; (4) measure of

damages to be awarded to the shipowners was the sum of

the cost of repairs to return the turbine to the state it

would have been in if the contract had been performed, the

necessary expenses during down time of the vessel after

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the repairs were performed deficiently, lost profits during

that down time, and costs and attorney fees, and (5)

shipyard was entitled to indemnity from the subcontractor

and the sub-subcontractor.

Order accordingly.

William R. Pitts, Breard Snellings, New Orleans, La.,

for Siemens A. G., Siemens Capital and Siemens Corp.

James B. Kemp, Jr., Phelps, Dunbar, Marks,

Claverie & Sims, New Orleans, La., Richard A. Hagen,

Crowell, Rouse & Varian, New York Clty, for Todd

Shipyards Corp.

William A. Ransom, III, Chaffe, McCall, Phillips,

Toler & Sarpy, New Orleans, La., Donald F. Mooney, New

York City, for Auto Transportation.

George V. Baus, Adams & Reese, Michael G. Crow,

New Orleans, La., for Turbine Service, Inc.

Fred E. Salley, Jones, Walker, Waechter, Poitevent,

Carrere & Denegre, New Orleans, La., for Travelers Ins.

Co.

Crawford, Lambert & Goldsmith, John L. Gold-

smith, Gonzales, La., Ralph E. Smith, Deutsch, Kerrigan &

Stiles, Allen F. Campbell, New Orleans, La., for Gonzales.

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Hammett, Leake, Hammett, Hayne & Hulse, John I.

Hulse, IV, New Orleans, La., for Sentry Ins. Co.

CASSIBRY, District Judge.

I. BACKGROUND

BASIC FACTS

This case involves an attempt by owners of the

vessel KATRIN to recover damages due to faulty repairs

performed by several repairers. The SS KATRIN was )our-

chased by Auto Transportation, S.A., (““Owners” or

“Shipowners”’) early in 1973 and managed and operated by

Diana Shipping Agencies, Inc., a Greek management com-

pany (“Diana’’). In February of 1975, the vessel entered

Todd Shipyards Corporation's (“Todd”) repair yard at

Algiers, La. for repairs to the bulkheads and boilers as well

as an inspection of the vessel’s high pressure (HP) and low

pressure (LP) turbines. Todd engaged a subcontractor,

Turbine Service, Inc. (“Turbine Service”) to open up the

turbines for inspection. The LP turbine was found to be

badly damaged, needing extensive reblading and repair.

The HP turbine required relatively minor repairs. Todd ob-

tained a bid from Turbine Services for the required repair

of the turbines. Turbine Service, in turn, subcontracted a

substantial portion of the work to Gonzales Manufacturing

and Industrial Machine Works, Inc. (““Gonzales’’).

Todd and Turbine Service personnel searched for re-

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placement blades for the KATRIN’s LP turbine. Finding

none that were suitable, Turbin~ Service procured some

blades which had an airfoil profile nilar to the airfoils of

the KATRIN’s LP rotor blades.! . decision was made to

arc weld more than 400 of these replacement airfoils onto

roots of old blades for insertion into the KATRIN’s LP tur-

bine rotor. Who decided to do this welding was a primary

issue at trial. Because the fabricated blad*s were shorter

than the original KATRIN blades, Gonzales manufactured

“spacer rings,’ annular steel rings, to attach to the inner

diameter of the KATRIN’s LP turbine casing to take up

the gap left between the fabricated blades and the casing.

In addition, shrouding strips were manufactured and at-

tached to the rotor blades around the entire circumference

of four rows.? Shrouding is a steel rim all the way around

the ends of the airfoils. The casings, rotor and airfoils may

be seen in pictures which are in the record.

The work on the turbines was accomplished during

March, April and May of 1975. The turbines were tested

during two dock trials without major incident. On Satur-

An airfoil of a turbine blaue is that portion of the blade that pro-

trudes into the steam flow, transforming energy in the steam into

mechanical energy to propel the ship. It is distinguished from the “blade

root,’ the bottom portion of the blade which fits into a groove to hold the

blade in place.

2 The KATRIN had two types of LP blades: “rotor blades,” fixed

on a rotating rotor drum with a geometric pattern similar to the spokes

of a bicycle without a rim; and “stationary blades,” fixed around the

outer circumference of the turbine casing, having a geometric pattern

similar to bicycle spokes without a hub. There are several pictures of the

LP turbine in the record which clearly show its airfoil configuration.

Some of the original airfoils themselves are also in the record.

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day, May 24, 1975 the KATRIN underwent a river trial. A

Todd observer on board the KATRIN during the river trial

reported that the turbines had reached normal operating

speed when he heard a “‘ping”’ in the LP turbine. Later he

heard two more “pings’’ followed by a rubbing sound. The

turbines were stopped and the vessel was returned to Todd

by tow. The LP turbine was opened, and considerable

damage was found. Owners elected to ship the LP turbine

to Siemens A.G. in Germany (“Siemens”), the original

manufacturer, for rebuilding.? Eight months later the LP

turbine was returned to New Orleans and reinstalled by

owners’ own contractor, outside Todd Shipyards, under

the supervision of manufacturer's and owners’ represen-

tatives. An examination of the HP turbine, which had re

mained in place in New Orleans, disclosed that the gaps

between the tips of the rotor blades and the outer casing of

the turbine (known as “clearances’’) were excessive.

Despite this discovery owners decided to let the vessel sail

5 All references to Siemens in this opinion are to Siemens A.G., a

domiciled and incorporated under the laws of the

poration, a corporation domiciled and incorporated under the iaws of

New Jersey. Siemens Turbinenwerk is in fact a factory of Siemens A.G.,

and once the parties were apprised of this fact it disappeared from subse

quent filings except for the final stipulation.

Apparently inadvertently, a fourth Siemens name appeared in the

record, that of Siemens Capital Corporation. Although they are

sometimes referred to as a third-party defendant in the record, they were

never made a third-party defendant to this suit.

On May 1, 1978, a Stipulation was entered into by all parties to the

suit that removed all Siemens entities from the suit except for the claim

of Siemens A.G. against Todd in the amount of $12,838.01.

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out of New Orleans on March 2, 1976.

The vessel traded commercially for the next four

months, experiencing excessive temperatures in the con-

denser top. In July of 1976, passing the Irish coast at Cork,

one boiler was closed down while repairs were being made

to an evaporator cover, and the vessel maintained a speed

of about 45 RPM. The turbines suddenly seized and stop-

ped. The vessel began drifting towards the coast, and the

danger was such that preparations were made to abandon

ship. The master ordered the chief engineer to try to

operate the turbines, no matter what their condition, in

order to save the ship and crew. The chief engineer started

the turbines and operated them long enough to bring the

vessel away from the coast and subsequently into Cork

harbor. The damage to both the HP and LP turbine due to

this casualty was so extensive that the vessel was sold for

scrap.

THE LITIGATION

This suit was initiated on June 11, 1975 by Todd

against Turbine Service and Gonzales demanding return of

the damaged turbine parts of the KATRIN, which had

been removed after the river trial casualty and taken to the

shops of Turbine Service and Gonzales. Both Gonzales and

Turbine Service asserted a lien for monies due from Todd

on prior invoices for work done on the turbines. Owners

then intervened in this action. After that Turbine Service's

insurer, The Travelers Insurance Company (Travelers) and

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Gonzales’s insurer, Sentry Insurance Company (Sentry),

were brought into the case. More recently, Siemens was im-

pleaded. Siemens counterclaimed against Todd for unpaid

bills for _ttendance of their representatives in New Orleans

after the river trial casualty.

The title of the consolidated suits does not accurate

ly reflect the position of the various parties. The true

nature of the litigation is an action by shipowners to

recover for damage to the KATRIN. The main action has

had various interrelated claims, counter-claims and cross-

claims of the parties engrafted onto it. The parties’ claims

are summarized as follows:

1. Shipowners seek to recover an amount stated to be

in excess of three million five hundred seven thousand and

five hundred sixty-two ($3,507,562.00) dollars for the cost

of repairing the LP turbine in Germany, loss in value by

reason of the casualty off Cork, detention of the vessel dur-

ing the various repair periods and related survey fees, ex-

pert fees, and expenses. Shipowners have sued Todd, Tur-

bine Service, Gonzales, Travelers and Sentry, all of whom

are named as defendants.

2. Todd has counter-claimed against shipowners for

the balance of its repair invoices of $175,166.00 and also for

approximately $99,647.00 for work ordered by shipowners’

representative after the casualty of May 24, 1975. Todd

has also cross-claimed against defendants Turbine Service

and Gonzales and their respective underwriters for indem-

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nity in the event Todd is found liable to shipowners,

together with the cost of defense and seeks to recover

$40,000 paid to Turbine Service on account.

3. Turbine Service and Travelers have cross-claimed

against Gonzales and Sentry for indemnity for negligent

workmanship by Gonzales; Turbine Service has counter-

claimed against Todd and claimed against the vessel to

recover $125,000, the unpaid balance of its invoices for the

initial turbine repair.

4. Gonzales has cross-claimed against Turbine Ser-

vice and Todd and counter-claimed against shipowners to

recover unpaid invoices of $50,000 and seeks indemnity

from Turbine Service for any liability it may have to

shipowners or Todd.

5. Siemens has settled with shipowners and has been

dismissed from the action on condition that any liability of

Siemens for the Cork casualty will pro tanto reduce the

liability of the remaining defendants. Siemens has retained

its counter-claim against Todd for the cost of its service

representatives in the amount of $12,838.01.

A global summary of the issues and how I have

resolved them might help in understanding the subsequent

discussion. (The Appendix is a list of dramatis personae in

alphabetical order.) It was vital to determine what caused

A-67

the river trial casualty, and I have determined that the

preponderance of evidence shows that the failure of one or

more low pressure rotor blades initiated the chain of

damages. The ultimate loss of the ship was due to the

casualty at Cork, but I have concluded that no repairer was

responsible for the defect that caused that casualty. The

classic questions of negligence analysis were presented

here, i. e., was any repairer negligent and was the negligent

act a proximate cause of the river casualty. I have found all

of the repairers liable to owners in tort. I have found no

contributory negligence on the part of owners.

A separate but parallel route to liability urged by

shipowners was breach of warranty. I have concluded that

all repairers owed an obligation of diligent and

workmanlike performance to the shipowners and breached

it, that the breaches proximately caused the injuries to

owners in each case and that the owners did not prevent or

hinder proper performance in any way.

The closeness of an issue often is manifested by the

energy counsel expend in arguing it. This was the case with

the issue of whether Todd's release-from-liability clause

was valid. I have found that the clause formed a part of the

contract between Todd and shipowners, but that it was not

valid in this specific situation.

The repairers generally presented a united defense

against owners’ attacks. However, it was necessary to

decide each repairer’s right to indemnity from the other

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repairers. I have concluded that Turbine Service and Gon-

zales must indemnify Todd for the breach of their obliga-

tions of diligent and workmanlike performance to Todd.

Finally, an issue almost orphaned by counsel was

whether or not Todd was liable to Siemens A.G. of Ger-

many for various services requested by Todd after the

river trial casualty. I have concluded that Todd benefitted

from the services and is liable.

Il. FINDINGS OF FACT

I now make the following findings of fact:

1. The KATRIN was a steam-powered bulk carrier

with two turbines, one high pressure (HP) and one low

pressure (LP). The steam from its two boilers passed

through the HP turbine, entered the LP turbine, and pass-

ed from there into a condenser.

2. Simos Palios was president and part-owner of

Auto Transportation and authorized to contract on its

behalf, either in that capacity or in his capacity as presi-

dent of Diana.

3. The KATRIN was last drydocked in approximate-

ly April, 1974.

4. On or about February 7, 1975 the KATRIN

entered the port of New Orleans in need of several tons of

A-69

bulkhead repairs and boiler repairs.

5. Emmanuil Manellis, a Greek national and

technical director of Diana, arrived in New Orleans shortly

after the vessel had entered port and began negotiations

with Todd to repair the bulkheads and boilers and to open

the vessel’s turbines to inspect them to determine the need

for repairs.

6. On February 10, 1975 Manellis gave Todd a list of

work items that he wished to have performed on the

KATRIN. On February 12, William Koren, an employee of

Todd, gave Manellis a letter typed on Todd stationery of-

fering to perform those items of work requested on the

February 10 list. The Todd stationery included a printed

clause in small red letters near the top of the page, the ad-

dress, date and salutation being typed in above the red

printed clause, the text of the letter being typed below the

clause.4

4 The red-letter clause read as follows:

We contract for vessel repair and drydocking and other services

only upon the basis of insured limited liabilities as set forth below. In no

event shall our liability for any claim arising under this contract exceed

in the aggregate the sum of $300,000.00.

We are not liable for any loss, damage or delay resulting from

strikes or labor difficulties, whatsoever and wheresoever occurring or for

stoppage of work due to causes beyond our control.

We are not liable for defective workmanship or material or for

damage to any vessel or for any loss sustained by its owners, charterers

or underwriters, or parties in interest, directly or indirectly, in contract,

tort or otherwise, unless the same is caused solely by the negligence of

our own employees, which negligence shall not be presumed but must be

affirmatively established. Our liability, if any, is strictly limited to the

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7. Manellis telexed owners in Greece shortly after

receipt of the February 12 offer. The telex is a verbatim

repeat of the February 10 list and the February 12 offer

with three exceptions: 1) the telex to owners includes none

without limitation, delay, detention, demurrage, towage, and pilotage.

We shall be discharged from all liability for defective workman-

ship or material or for loss or damage, unless the same is discovered

prior to and claim in writing made to us within six months and litigation

is commenced within one year after our work has ceased for whatever

reason or has been completed, or the vessel has been redelivered,

whichever first occurs.

We shall not be liable for any personal injury, including death, or

for damage to property of third parties, unless the same is the result of

the sole negligence of our own employees. The vessel, its owners, and all

parties in interest, shall indemnify and hold us harmless from all liability

arising under any air or water quality statute or regulation unless the

same shall be caused by the sole negligence of our own employees.

In no event shall we be liable for the cost of defense, including at-

torneys’ fees, of any action whether commenced by our employees, sub-

contractors’ employees, or others against the vessel, its owners, agents,

charterers or underwriters.

The foregoing is in lieu of all warranties and liabilities expressed or

implied and any document which unilaterally purports to alter or in-

crease our liability beyond that stated herein is not acceptable to us and

does not form a part of this contract.

Different or more extensive liabilities will be accepted if an agree-

ment in writing stating the nature and extent thereof is entered into

before the vessel enters our yard or work is commenced, whichever first

occurs, and an adjustment is made in the price which shall include the

cost of appropria-e additional insurance.

herein shall be deemed to constitute a waiver of our

maritime lien. Invalidity of any one or more provisions of this contract

shall not affect or impair the remaining provisions. This contract may

not be changed oral'y.

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of the red-letter clause; 2) some inconsequential lines giv-

ing Diana an address for forwarding boiler tubes were add-

ed to the telex; and 3) the telex included prices alongside

the work items.

8. Palios did not receive any documents with the red-

letter clause on them nor did he personally have notice of

the existence of the clause at this time.

9. Palios received a letter on Todd stationery on

April 26, 1975 including the printed red-letter clause.

10. On February 14, 1975 Manellis called Todd

Shipyards and advised them that the owners had accepted

the tender and would move the KATRIN to Todd. On that

same day, Todd wrote a letter addressed to the “S/S

‘KATRIN’, c/o Diana Shipping Agencies, S.A., New

Orleans, Louisiana’ acknowledging that they had received

instructions to begin work. This letter also contained the

red-letter clause. It was presented to Manellis on board the

KATRIN along with a tax exemption certificate Manellis

signed the tax exemption certificate and accepted the

February 14, 1975 letter.

11. Manellis knew or shouid have known that the red-

letter clause was part of Todd's original tender and that it

applied to every order of work placed with Todd.

12. Manellis had the authority to transmit offers

from Todd to the owners in Greece and to communicate

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acceptances of offers from owners to Todd.

13. A contract was formed between Todd and ship-

owners on February 14, 1975 to perform boiler and

bulkhead repairs and to examine the HP and LP turbines,

as specified in the February 10, 1975 list, including as one

of its terms the red-letter clause printed on the Todd sta-

tionery. Both of Todd’s letters of February 12 and

February. 14 specifically stated that the offer or

acknowledgment was ‘‘subject to all the provisions con-

tained herein,” and “applied to every order for work

whether written or verbal.’ Owners knew or should have

known that the red-letter clause was an integral part of

each and every contract formed between shipowners and

Todd.

14. The two contracting parties in this situation en-

joyed approximately equal bargaining power.

15. It was Todd's policy to accept different or more

extensive liabilities if an agreement was entered into before

the vessel entered the yard or work was commenced, and

an adjustment would be made in the price to include the

cost of appropriate additional insurance.

16. The clause clearly and unequivocally limits

Todd’s liability for negligence and for all other claims to

$300,000.

17. Manellis had been authorized to place work in

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hand and settle prices, and Todd was aware of this

authorization as of February 14, 1975.

18. Manellis had express authority to tell Todd what

work had to be done, receive bids from Todd, pass them on

to Palios, and pass the message from Palios to Todd if the

bid was acceptable.

19. Todd contracted with Turbine Service to open up

the vessel’s turbines for inspection.

20. On February 26, 1975 Jan D. Van Rynbach, an in-

dependent surveyor hired by owners, prepared a field

survey of the damage to the KATRIN’s boilers and tur-

bines after viewing the equipment with the upper casings

of the turbines removed and the rotors still in place in the

lower casings.

21. Van Rynbach telephoned Palios in Greece to

report the results of the survey. Palios gave Van Rynbach

an order to have Todd begin repairs in accordance with the

field survey, and the field survey was given to Walker Col-

eman, Todd’s contract negotiator and estimator.

22. The items in the “Found” column of the

February 26, 1975 field survey by Van Rynbach and Keith

Harvey, a London Salvage Association surveyor, are cor-

rect descriptions of the damage found in the HP and LP

turbines of the KATRIN as of that date. I make no finding

on whether or not the survey fails to mention damage that

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did in fact exist.

23. The ““Recommended”’ column of the February 26,

1975 field survey shows the following recommendation for

the LP turbine rotor blading: “L.P. Turbine Rotor to be

removed to shop. All blading of Ahead part to be removed

and renewed. Spare blading to be supplied by Owners from

ship’s spares. Afterwards rotor to be balanced.”

24. In order to lift the top half of the LP ahead tur-

bine casing from its normal position, it was necessary to

work on the bolts and nuts with a cutting torch, to knock

out the bolts with pins and to drive a chisel in between the

parting faces of the turbine casing halves to pry them

loose.

25. Jon Sheridan, supervisor of the KATRIN job for

Turbine Service, testified that opening the LP and HP tur-

bine was not any more difficult than usual, and that such

jobs are always difficult.

26. None of the surveys conducted in February of

1975 revealed any distortion in the casings of the LP ahead

or astern turbines.

27. Todd was aware of a warping in the astern tur-

bine casing sometime before the repair job was completed.

28. Basec: =non the field survey conducted February

26, 1975, Todd began to investigate methods of repair and

A-75

availability of spare parts to determine whether or not the

LP turbine could be repaired at Todd.

29. On February 28, 1975 a work specification was

agreed upon between Manellis and Todd to remove broken

blades, furnish and install new blades, straighten all bent

blades and rebalance the LP rotor. In addition, it was

agreed to renew or straighten stationary blading in the up-

per and lower casing as found necessary.

30. In spite of the fact that the original field survey

recommended renewing the entire blading of the LP rotor,

such a course of repair was either ignored by Manellis or

specifically rejected by February 28, 1975.

31. Because Todd’s labor force was occupied and its

shops were crowded, Todd asked Turbine Service to con-

duct the investigation of potential methods and material in

order to determine whether or not Turbine Service could be

granted a subcontract to repair the LP turbine.

32. Todd had contracted with Turbine Service on

other previous jobs for opening and closing of one main

turbine, reblading turbine generators, major rotor work,

sea valves, piping and smaller steam turbine work.

33. Todd conducted no independent investigations of

the qualifications of Turbine Service to conduct a major

steam turbine reblading job before the investigation of

methods began.

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34. Manellis was not aware of the fact that Turbine

Service was a separate and distinct entity from Todd nor

did he ever visit the facilities at Turbine Service.

35. On or about February 28, 1975 Todd’s purchas-

ing department called Siemens A.G. in Germany to deter-

mine whether or not they could manufacture replacement

blades for the LP turbine.

36. By March 3, 1975 a decision had been made to ac-

complish repairs on the LP turbine rotor more or less in ac-

cordance with the recommendations of the field survey.

However, two different alternatives were being considered

for rotor Rows 11-14. The understanding was that, if Tur-

bine Service could locate replacement blades, Rows 11

through 14 would be rebladed and considered a “perma-

nent” repair. If those blades could not be located, the

blades of those rows were all to be cut off smooth at the

root to allow the ship to return to service minus those rows

of blades.

37. On March 4 or 5, some spare replacement blades

were located aboard the KATRIN. It was not known at

that time how many were proper replacement blades for

the damaged blades in the LP rotor. Approximately 557

replacement blades awere needed for the various rows of

the LP rotor.

38. Informal discussions between Todd and Turbine

Service sometime between February 28, 1975 and March 7,

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1975 resulted in an understanding that Turbine Service

was to accomplish the repair work on the LP turbine and

that Turbine Service would be able to find sufficient

replacement blades to accomplish the permanent repair.

39. Manellis had never been involved with opening a

steam turbine before nor had he ever observed a turbine

reblading job before.

40. It is not unusual that a chief engineer or a person

with experience equivalent to that of a chief engineer has

not participated in a major turbine repair throughout the

course of his career.

41. Manellis left New Orleans on March 7, 1975, ar-

rived in Greece on March 8 and retired from service.

42. When Manellis arrived in Greece on March 8,

1975, he did not give Palios a report on the technical details

of the repair discussions in New Orleans; he did not tell

Palios about any procedure for reworking and replacing

blades. Manellis gave Palios some photos and an unused,

non-welded blade.

43. Neither Manellis nor Palios knew that Todd or

Turbine Service planned to replace LP turbine rotor blades

by welding old roots to new airfoils.

44. When Manellis left New Orleans on March 7,

1975 owners had not yet made a decision to authorize the

A-78

replacement of rotor blades in the LP turbine. Todd was

prepared to receive a telex on March 11 authorizing perma-

nent repairs and was, in the meantime, authorized to pro-

ceed with the other repairs, known as temporary repairs.

45. Owners telexed Todd on March 10, 1975 authoriz-

ing permanent repairs and asking for a breakdown of ex-

penses and a reconfirmation of time.

46. The contract to repair the LP turbine included

the red-letter clause as one of its terms.

47. Jon Sheridan of Turbine Service, after a trip to

the northeastern United States, returned to New Orleans

on March 14, 1975 with turbine blades with a profile very

similar to the KATRIN's LP rotor blades. He took four or

five of these blades to Gonzales with old roots taken from

the LP rotor. He asked Ronald Hoover, supervisor of the

KATRIN job for Gonzales, to mill off the rotor root, cut

the root off the new blade and mill it off to weld the old

rotor root to the newly procured airfoil.

48. Hoover told Sheridan he wasn’t sure he could do

it but he would try. Dale Saint, Gonzales’ welder, asked

Sheridan to tell him the metallic composition of the old

roots and new airfoils. Sheridan did not know the metallic

composition nor did anyone else who undertook to weld the

four or five blades.

49. Saint consulted a welding manual at Gonzales

A-79

and determined that a 309 Stainless rod was recommended

for dissimilar metals. Gonzales did not have any 309

Stainless rods so Saint decided to use a 308 Stainless rod

since in his opinion it was very close to » 309.

50. After welding the samp) blades, Sheridan put

one or two of the newly fabricated blades in a vise and he

and Hoover bent them and hammered them to determine

the strength of the weld.

51. Sheridan took the remaining welded blades, say-

ing that he would do some tests on them and take them to

Todd and the shipowners for approval.

52. Sheridan’s testimony that he met with Manellis

~. the KATRIN on or about March 17, discussing the

welded blades with him and giving Manellis the remaining

fabricated sample blades to take back to Greece with him,

was not credible testimony.

53. The testimony of Sheridan that Bergeron, Todd's

assistant general manager, was well aware of the fact that

Turbine Service was going to weld blades, was not credible

testimony.

54. On March 18, 1975 Diana telexed Todd asking

again for advice of “present estimate of cost and time in-

volved for permanent repairs now in hand.”

55. Sometime between March 17 and March 20,

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Charles Woods, vice-president of Turbine Service, and

Sheridan prepared a proposal estimating repairs necessary

to return the HP and LP turbines to service. Two

estimates were submitted, the first including removal,

repair and straightening of the first ten rows of LP rotor

blades with replacement of 38 blades in those ten rows, the

removal of Rows 11, 12, 13 and 14 of the rotor and 5 rows of

stationary blades, called “temporary repairs.’’ The second

option, the “permanent” repairs, included everything

outlined in the temporary repairs except that the 4 rows of

rotor blades were to be replaced and the damaged stator

blades were to be replaced or repaired.

56. Turbine Service's estimate was dated March 4,

1975 in spite of the fact that it was not prepared until

sometime after March 17, 1975.

57. On March 20, 1975 Todd telexed Diana in Greece

quoting a price breakdown for permanent repairs in the

lump sum of $273,269.00. This telex indicated that the

price breakdown was ‘‘per field survey, crew negligence,

January 31, 1975, and as quoted to Mr. E. S. Manellis

March 4, 1975.”

58. In spite of the fact that the March 20 telex from

Todd to Diana indicates that it is “per field survey” of

January 31, 1975, the price given for LP turbine rotor

blading and LP turbine stationary blading of $148,891 was

not high enough to indicate that the parties contemplated

renewal of all LP rotor blades as had been recommended in

A-$1

Van Rynbach’s field survey.

59. The price quoted by Todd to Diana for repair of

the LP turbine rotor and stationary blading was $148,891.

Total work on the HP and LP turbines of the KATRIN was

priced at almost $200,000, more than 70% of the $273,269

quoted for all work contemplated.

60. On March 21, 1975 Todd issued purchase orders

to Turbine Service for repairing the HP turbine rotor and

LP turbine. The LP purchase order confirmed an order

dated March 4, 1975 made to Sheridan by telephone. The

HP purchase order confirmed an order made by telephone

to Sheridan on March 6, 1975. Both purchase orders stated

that “all work was to meet approval of Todd, owners and

regulatory body.’’ The letter and two purchase orders are

the best reflection of the contract between Todd and Tur-

bine Service.

61. The LP purchase order required that “Four rows

of blades...be replaced and damaged stators...be replaced

or repaired.”’ The back of the purchase orders stated that

the work could not be subcontracted and that all goods and

labor were to be warranted by Turbine Service to be mer-

chantable and fitting in all respects for the purpose for

which intended. It also stated that if goods and labor were

approved, such approval should not in any way be con-

strued as a waiver of any warranties, express or implied,

and that Turbine Service would guarantee to Todd that all

the material, equipment and labor be guaranteed in the

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same manner and to the same extent that Todd was re-

quired to guarantee such material, equipment and labor to

its customers.

62. On March 21, 1975 Gonzales received an order

from Turbine Service to “modify turbine blades and

repair’’ from Sheridan based upon an estimated price of

$43,800.

63. Sheridan’s testimony that Turbine Service did

not authorize Gonzales to start work on the repairs before

April 1 is not credible.

64. Sheridan told Hoover to “do all the rest of the

blades the same way.’ Sheridan assured Hoover the welds

were good and that they had been accepted.

65. When Hoover advised Sheridan that Gonzales

could not test the welds, Sheridan told Hoovaer that that

was not necessary since Turbine Service had already plann-

ed to test them.

66. I. J. Saenz, Jr., a Gonzales employee, machined

the new blade foils to prepare them for welding. Sheridan

told him how he wanted this done. The new blade was cut

off with one-sixteenth of an inch of its root remaining in

order to weld it onto the old root. The old blade roots were

also cut off with some materia! left for welding purposes.

The cutting was done with a’: abrasive saw followed by a

fly cutter.

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67. Todd assigned Gordon Ault as ship’s superinten-

dent. He was in charge of the job for Todd.

68. Ault was familiar enough with turbines to know

if any problems arose and to inform his superiors.

69. Ault was serving on two or three jobs as ship's

superintendent at the same time. Although he considered

himself to be supervising Sheridan “in a reund about

way,” since the job was subcontracted, Shuridan “was

supervising himself, really.’’

70. No one at Todd had any dealings with Gonzales,

no contract was made between Todd and Gonzales and no

direct payment was made by Todd to Gonzales.

71. The overwhelming weight of testimony at the

trial shows that welding two different parts of a steam tur-

bine rotor blade onto one another is not considered prudent

engineering practice.

72. The preponderance of testimony at trial showed

that the only proper way to weld airfoils to biade roots

such as those in question in this case would be to effect a

full penetration weld between the two parts so that there

was no discontinuity of any kind across the cross-section of

the weld. Testimony also showed that such a welding pro-

cedure would have been much more time-consuming and

expensive than the procedures actually used.

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73. The preponderance of evidence produced at trial

showed that the standard of conduct expected of a

reasonable repairer in the ship industry would require a

contractor to refuse to do a job that was considered un-

workmanlike, even if ordered to do so by a customer unless

the customer had been fully informed of the risk of failure

and had assumed it.

74. Turbine Service did not perform any work on the

LP astern casing.

75. Turbine Service accomplished the following work

on the LP turbine: welded various spots on LP blades and

ground the welds smooth; inserted shims between the

blade roots, replaced some stator blades from ship's

spares; removed some rotor blade roots to take to Gonzales

for fabrication of new blades; placed the newly fabricated

blades back in their grooves in the LP rotor; attached

shrouding rings in a full circle around the tips of Rows 11

through 14 of the LP rotor using the tenons protruding

from the purchased airfoils; and reinstalled the turbine cas-

ings and rotor in the vessel.

76. Turbine Service accomplished the following work

on the HP turbine: straightened damaged HP rotor blades;

inspected all HP blades and “dressed” burrs on the upper

edge of the HP rotor blades without grinding or filing any

“feather edges” or ‘‘feather tips’’ of the HP rotor blades.

77. Plaintiff failed to show by a preponderance of

A-85

evidence that any repairers ground off the feather edges of

the HP rotor blades or caused excess clearances between

the tips of the blades and the HP casings.

78. Plaintiff failed to show by a preponderance of the

evidence that the feather tips of the HP rotor blades were

intact when the vessel first entered Todd.

79. Gonzales accomplished the following on the LP

turbine: machined and welded all fabricated blades, in-

cluding four different sizes of blades; manufactured spacer

rings according to measurements given to them by

Sheridan and installed these rings around the inside cir-

cumference of the LP turbine casing situated in such a way

as to close the steam-passage gap caused by the short

blades in Rows 11 through 14 of the rotor; and balanced

both the HP and LP rotors on their balancing equipment.

80. Gonzales manufactured one-half of one spacer

ring inaccurately so that it did not complete a full circle. On

orders from Sheridan, it filled up the gap left with brazing

material.

81. On May 14, 1975, Hoover met Sheridan at the

Painted Pony Bar near Todd and presented him with a

release-from-liability statement which Sheridan willingly

signed.

82. On May 15, 1975 Gonzales billed Turbine Service

in the amount of $43,800 less a 5% discount of $2,190 for a

A-86

total of $41,610 for an item entitled ‘‘modify turbine blades

and repair.”

83. On or about May 14, 1975 Sheridan presented

Van Rynbach with a previously requested list of the work

that Sheridan had accomplished. This statement was

typed on a plain sheet of paper without any signature.

84. On or about that same day Sheridan gave the

same work list to Keith Harvey pursuant to Harvey's re

5

quest.

85. The testimony of Sheridan that he did not

prepare these statements was not credible. I find that

Sheridan did prepare the two statements.

86. The statement referred to the blade replacements

as “new blades manufactured involving four complete

rows. An additional 63 blades were made for rotor at

various rows.’’ No mention was made of welding old roots

to new airfoils.

87. On May 16, 1975 Van Rynbach, Harvey, and

5 At trial, Sheridan vehemently denied preparing or delivering the

statements. Owners filed into evidence a letter from a typewriter expert

who had studied the statements and other documents, including a letter

signed by Sheridan on Turbine Service stationery and a report previous-

ly identified as being from Turbine Service. The expert concluded that

the statements in dispute had been typed on the same typewriter as the

one used on the identified documents. Counsel for Travelers conceded in

his post-trial brief that someone at Turbine Service did apparently

prepare the statements.

A-87

Coleman set the final prices for the repair work done. The

prices were negotiated using the original quote as a base

(altering prices if the repairs in fact did not conform to the

original plan) and quotations as of the March 20, 1975

telex.

88. Even though it was written in the future tense as

if the work were still to be done, a revised field survey was

prepared and dated May 14, 1975 with the ““Recommend-

ed”’ column reflecting the actual work done rather than the

work projected. Item 6 of that revised field survey

reflected that Rows 2-5 of the LP ahead part were “‘to be

removed and completely renewed. Necessary blading to be

manufactured.’’ The convention used in numbering the LP

rotor blades in the field surveys prepared by Van Rynbach

was opposite to the conventions used by all other

surveyors and witnesses at the trial so that Rows 2

through 5 in the Van Rynbach surveys correspond to Rows

11 through 15 in other testimony and documents.

89. At the final price-negotiation meeting, no one

mentioned anything about welding of new blades onto old

roots and the procedure is not mentioned in any of the

documents relating to that meeting.

90. On May 17, 1975, Van Rynbach wrote Diana to

certify the final field survey including information that the

total cost was $337,161, exclusive of any overtime charges,

and was agreed to by all parties concerned as fair and

reasonable. That letter also mentioned that Todd was to

A-88

submit separate invoices to owners for ten separate items.

This letter is the best expression of detail work con-

templated by the contract between Todd and owners.®

© The contract terms pertinent to the LP turbine repair were as

room. Rotor to be transported to the shop for repairs. Rows

Upper and lower halves of L. P. Turbine casing to be discon-

nected, rigged from engine room and transported to shop.

Stationary blading to be removed, faired and dressed as

necessary and afterwards reinstalled in good order.

Casings to be transported back to shop, rigged into the

engine room and reinstalled in good urder.

Forward and after journal bearings to be opened up, bearing

shells taken to shop, remetalled, machined, transported back

to ship and placed on board as spares.

te a aOR) VS a RY Oe eT I

back to the ship «ad installed in good

ar say Rotor journals to be polished.

A-89

91. The bulkhead and minor miscellaneous repairs in

the engine room necessary in February 1975 would have re-

quired about three weeks to cothplete if there had been no

repairs to be carried out on the boilers and turbines.

92. Stylianos Tsaknaris, a Greek national, was the

chief engineer on the vessel from March 25 to May 24, 1975

and owners stipulated at trial that he was authorized to

place work in hand and to settle prices during that period.

Todd was aware of this authorization.

93. Tsaknaris was not an experienced steam turbine

engineer.

94. No evidence was presented at trial to show that

Tsaknaris knew that LP rotor blades had been welded

together. The only testimony tending to show that

Tsaknaris had knowledge of such welding was presented

by Sheridan and was not credible.

95. Tsaknaris was present at Gonzales on May 7,

May 9, and May 13 while the LP turbine rotor was being

balanced. On one of those occasions, Tsaknaris made a

comment indicating that he was aware of the existence of

shrouding on Rows 11-14 of the turbine rotor.

96. Tsaknaris had difficulties with the English

language.

97. After the last balancing, Tsaknaris said that he

A-90

would accept the LP rotor as being balanced.

98. By May 7, 1975 Tsaknaris either knew or should

have known in the exercise of reasonable diligence that

subcontractors were performing some of the work on the

LP rotor.

99. Ault from Todd was present at one of the balaac-

ings and did not observe that the blades were welded onto

old roots. Olaf Olsen, III, a Germanischer Lloyd surveyor,

was present at one of the balancings and was not aware of

the fact that the blades were welded to old roots. Van Ryn-

bach was present at one of the balancings and was not

aware of the fact that the blades were welded to roots.

100. At the trial, all witnesses except Sheridan and

Gonzales personnel denied any knowledge of the fact that

old roots were being welded to new blades.

101. McPhate, an engineering professor called to in-

spect the LP turbine rotor after the river trial casualty in

late May, testified that it was not obvious to him that the

blades were welded when he looked at the rotor but that

someone told him later.

102. Ault testified that he closely inspected the LP

rotor to see the blade repair work but failed to see the

welding because he wasn’t looking for it.

103. Olsen said that at the first LP balancing he

A-91

touched the blades and felt that they were jiggling but did

not notice any difference in the blades.

104. None of the owners’ representatives or represen-

tatives of Todd Shipyards knew that the new airfoils had

been welded to old roots on the LP rotor.

105. The LP turbine casing and rotor were installed

by Turbine Service sometime between May 14 and May 20,

1975.

106. The lower casing was set in place and the rotor

lowered down into it. Clearance measurements were taken.

107. Somewhere close to Rows 13 and 14, rotor

blades were touching the neighboring stator blades so that

the rotor would not rotate. To correct this condition,

Adams of Turbine Service heated the base of the stator

blades to a red-hot condition with a welding torch and tap-

ped on the blades with a hammer to straighten them out

and allow the rotor to turn freely in the lower casing.

108. When Turbine Service attempted to lower the

upper casing down over the guide rods, the casing became

jammed and had to be forced down on top of the lower cas-

ing. The casings would not fit flush with one another at ‘ e

parting faces in spite of Turbine Service's attempts to

tighten the bolts down.

A-92

109. Ault told his superior at Todd, O'Neil, that there

was some difficulty with the reinstallation. Tsaknaris and

Bergeron were also aware of the difficulty.

110. O'Neil and Sheridan agreed that heating the

casing in the vicinity of the bolts would help tighten down

the casing.

111. Tsaknaris was aware that such a procedure was

being used and did not attempt to stop it. Tsaknaris did ex-

press his unhappiness with the heating procedure to

Bergeron but did not order him or anyone else at Todd to

stop the job or the reinstallation of the turbine.

112. Ultimately the ahead turbine upper casing was

successfully tightened down on top of the lower casing.

113. The LP ahead casing was distorted to some

unknown degree at the time of reinstallation in the vessel

and before the river trial casualty.

114. The LP astern casing was distorted to some

unknown degree prior to the time of reinstallation and

before the river trial casualty.

115. Heating of the LP turbine ahead casing did not

cause the distortion and out-of-roundness present at the

time of reinstallation.

116. Shipowner’s expert surveyor Higgins attempt-

A-93

ed to make a claim on behalf of the owner against under-

writers for the warped casings in June or July of 1975 bas-

ing the claim on the theory that it was attributable to an in-

cident of crew negligence that occurred on January 31,

1975, shortly before the vessel entered New Orleans.

117. Higgins changed his view as to the cause of the

distortion in the casing after he heard evidence that the

repairers had heated the casing in attempting to close the

LP turbine. After the river trial casualty Higgins observed

and recorded a distortion or warping in the astern casing

by taking measurements with the top half placed on top of

the bottom half of the casing.

118. On May 29, 1975, after the river trial casualty,

Gonzales prepared a drawing of the ahead casing. This

showed the lower half casing diameter measured from par-

ting face to parting face (horizontal diameter) .107"’ shorter

than the diameter of the upper half from parting face to

parting face. With the casing halves placed on top of one

another, the horizontal diameter was less than the vertical

diameter by at least .048”’.

119. Higgins had observed LP rotor clearances being

taken in Rotterdam in April of 1973 and considered the

clearances to be proper and the casings to be round.

120. The turbines were operated with steam at the

dock trial on May 21, 1975, manifesting a noise that was

caused by a pinion gear improperly assembled by the crew.

A-94

This was corrected before the second dock trial.

121. Todd determined that an LP support bearing

had “‘wiped”’ (a technical term meaning bearing metal had

been rubbed away) during the first dock trial and had to

remetal and remachine the bearing before the second dock

trial.

122. On May 23, 1975 a second dock trial was ac-

complished, starting and stopping both the ahead and

astern turbines several times, reaching a maximum RPM

of 65 RPM ahead and 20 RPM astern. Total time of the

dock trial was 3% hours. The turbine itself manifested no

noises or irregularities at the second dock trial. Gear noise

was heard both ahead and astern but all bearing

temperatures were normal. Tsaknaris gave the OK ending

the dock trial.

123. Any testimony by Sheridan that the turbine

was scraping when it was running on the jacking gear dur-

ing the second dock trial was not credible.

124. During the second dock trial, the LP rotor turn-

ed freely in place without touching any part of the casing

or casing blades.

125. The port and starboard clearances between

rotor blades and stationary casing parts at the parting

faces of the LP ahead turbine were below manufacturer's

recommended clearances.

A-95

126. The river trial began on Saturday, May 24, 1975

enroute to a loading berth where the vessel was to pick up

cargo.

127. Mussachia was Todd's representative on board

the vessel during the river trial.

128. The river trial began at approximately 9:00

A.M. Speed was steadily increased up to 75 RPM at 9:45

A.M. The engine was run at 80 shaft RPM for approx-

imately 2 hours. The shaft RPM was raised to 85 RPM at

about 11:40 A.M. when Mussachia heard a ping, a noise

like “‘a nail thrown against a tin building.” This ping was

followed by two more pings, Mussachia gave the order to

the chief engineer to stop the engine. The pilot would not

let the engines stop immediately because there was no pro-

per anchorage. The pinging noises were followed by ‘‘scrap-

ing noises” or “groaning.”

129. After the engine was stopped, the turbine was

turned by electric motor t» avoid distortion due to rotor

shaft sag.

130. Prior to the pinging sound there was an increase

on the LP astern bearing of 3.1 degrees, over the course of

an hour.

131. The turbine did not reach full operating

temperature during the river trial.

A-96

132. The vessel was anchored 8-10 miles upriver from

Todd. The LP rotor bearings and thrust bearings were in-

spected and found to be wiped.

133. Sheridan was not on board during the river trial

but went on board at St. Rose before the vessel was towed

back to the yard on Sunday, May 25, 1975.

134. After the river trial casualty Sheridan selected

ten blades to be tested by an independent testing

laboratory. These ten blades were tested using destructive

testing techniques in what is known as a pull test. The first

five blades tested broke under tension at 9,500 pounds,

18,000 pounds, 21,800 pounds, 17,000 pounds and 18,500

pounds. The second set of five blades tested broke at

21,020 pounds, 17,050 pounds, 18,000 pounds, 15,000

pounds and 22,000 pounds.

135. Nine expert witnesses expressed their opinions

as to the cause of the river trial casualty.

136. McPhate, the mechanical engineering professor

calculated that the maximum total centrifugal force ap-

plied to the blades of Row 14 with the shrouding attached

would be 3,483 pounds at a turbine speed of 3.950 RPM.

He also testified that his force calculation would increase

by the square of the increase in speed.

137. Higgins testified that the maximum turbine

speed was 5,000 RPM. I find that the centrifugal force ac-

A-97

cording to McPhate’s calculations would be approximately

5,400 pounds at a maximum speed of 5,000 RPM.

138. The cause of the damage to the LP turbine dur-

ing the river trial on May 24, 1975 was the failure of a weld

in one or two Row 14 rotor blades causing the fracture of

the blades at the weld. One or two rotor blades plus attach-

ed shrouding tore loose and the loose parts jammed bet-

ween rotating and stationary parts of the turbine. The tur-

bine was thus thrown out-of-balance. All damage which

resulted was caused by the broken rotor blade or blades.

139. The river trial casualty was not caused or ag-

gravated in any way by whatever distortion existed in the

LP ahead turbine.

140. Ault prepared a list of LP rotor and casing con-

ditions after the river trial casualty.

141. McPhate also prepared a report of his May 30,

1975 inspection of the LP turbine.

142. Surveys were conducted on June 3, 1975, June

11, 1975 and July 21, 1975, the latter being the final joint

survey of the damage from the river trial casualty.

143. Tudd requested that Siemens send a represen-

tative to aid in the investigation of the casualty; and

possibly to supervise repairs. Heinz Distelhut of Siemens

arrived on May 28 or May 29.

A-98

144. The price charged by Siemens for the atten-

ee ee ee

and reasonable. -

145. Pativs arrived in New Orleans with Higgins on

gune 5, 1975.

146. On June 6, 1975 Siemens telexed Bergeron at

Todd that new blades could not be delivered before the

middle of September and ‘‘welding on blades cannot be ac-

cepted by us.”

147. Palios, Higgins and Todd personnel met on June

9, 1975 to discuss problems caused by the river trial casual-

ty. Temporary repairs were contemplated consisting of

removing Rows 11-15 of the stator, removing Rows 11-15

of the rotor, balancing the rotor and reinstalling with pro-

per alignments and clearances. Todd estimated that such

work would take about 3 weeks.

148. Bergeron and Meghrian, of Todd, assured Hig-

gins and Palios that the vessel’s turbines would be put in

order.

149. Bergeron testified that it was Todd’s respon-

sibility to put the turbines back in order after the river trial

casualty.

150. The classification society, Germanischer Lloyd

of Hamburg, agreed to the temporary repairs specified

A-99

above.

151. The owners gave Todd auihorization to re-open

the HP turbine for checking on July 16, 1975.

152. On July 17, 1975, after fly ash blasting, the

Siemens’ representative recommended that temporary

repairs not be performed on the LP turbine. They recom-

mended a complete overhaul at their own workshop in Ger-

many with complete new blades for the stator and rotor.

153. On July 18, 1975, all parties were notified of a

final field survey to take place on July 21, 1975.

154. On July 21, 1975, a field survey was made with

Higgins, Harvey, Bergeron, Tsaknaris, O'Neil, Ault,

Meghrian, Sheridan, Richter as well as other personnel.

The results found were reported in a document dated July

21, 1975. This document accurately reflects the condition

of the LP turbine after the river trial casualty.

155. On July 22, 1975 Siemens telexed Todd that the

time for manufacturing Rows 1 through 14 stator and rotor

blades would be about three months, with one more month

being necessary for dismantling and reblading the stator

and the rotor.

156. On August 19, 1975 Diana authorized Todd to

arrange with owners’ agents Hansen and Tidemann to col-

lect all parts of the LP turbine for shipment to West Ger-

A-100

many for repair. This decision was made by the

shipowners.

157. The HP turbine was opened as requested by

owners and the damage was inspected by owners’ surveyor

Higgins. No HP rotor blade clearances were taken at this

time. The HP was closed up after an undetermined period

of time. In July/August, 1975, neither owners nor Todd

was aware of the fact that the rotor blade tip clearances

were excessive.

158. Higgins did not check clearances of the HP

rotor blades in July of 1975 because Bergeron had told him

that the clearances would be furnished to him on both the

HP and the LP. Neither Sheridan nor Bergeron showed

any clearances of any kind to Higgins before January of

1976.

159. The LP turbine was repaired and reconditioned

by Siemens in West Germany with extensive reblading,

remachining, reboring, removal of Row 15 of the rotor and

the addition of shrouding strips on several of the rotor

blade rows.

160. The LP turbine was shipped back to New

- Orleans in early January, 1976.

161. Higgins was commissioned by the owners to at-

tend the reinstallation of the LP turbine. Two Siemens per-

sonnel were ordered by owners to aid in the installation.

A-101

162. Todd made an offer to reinstall the LP turbine

for $29,000.

163. Ardell Marine Engineering Corporation of

Brooklyn, N.Y. and two New Orleans firms were hired to

help reinstall the LP turbine instead of Todd.

164. The KATRIN was removed from the Todd berth

to a city pier for reinstallation.

165. Higgins became concerned because of the

unavailability of any HP clearances and decided to open

the HP turbine to take rotor blade clearances.

166. The HP turbine was opened on January 29,

1976. On February 6, 1976 clearances were taken on the

HP rotor blade tips.

167. Higgins had observed clearances being taken in

Rotterdam in April 1973 and spot-checked those

clearances himself. The increase in rotor blade tip

clearances between the Rotterdam inspection and the

February, 1976 inspection varied from 0.4 mm to 1.3 mm.

The clearances for the stator blades of the HP had increas-

ed by only about 0.05 mm over that same period of time.

168. Higgins made a close examination with a magni-

fying glass, noting that there were marks on the ends of

the HP rotor blade tips, not visible to the naked eye, which

looked like filing or scratch marks.

A-102

169. Higgins discussed this problem with the

Siemens engineer, Warnkross. They agreed that the excess

clearances would cause decreased efficiency of the HP tur-

bine, increased consumption of fuel oil and an increase in

the HP turbine exhaust temperature.

170. It would have taken approximately 130 man

hours to file off the tips of the HP rotor blades while spin-

ning the HP rotor in a lathe.

171. Higgins informed Palios that there were ex-

cessive HP clearances but together the two of them decid-

ed that the HP could be closed and the vessel put into ser-

vice.

172. The KATRIN took on cargo, leaving New

Orleans on March 2, 1976.

173. It was reported to Higgins that the vessel was

experiencing excessive condenser top temperatures after

leaving New Orleans. Because of this, when he attended

the vessel at Birkenhead on June 7, 1976, Higgins checked

the HP clearances once again and determined they had not

changed since New Orieans.

174. Higgins installed a new, higher range ther-

mometer to the condenser top to allow the crew to be able

to monitor the temperatures more closely.

175. On July 10, 1976, 3-5 miles from Cork, the

A-103

KATRIN was required to reduce speed to 45 shaft RPM

because of difficulties with one boiler. This continued for 4

hours. The engine began to vibrate for 3 or 4 minutes and

then stopped at 10:00 P.M. The current pulled the vessel

toward shore and the captain forced the chief engineer to

start the engine again to save vessel and crew.

176. When the engine was re-started, the crew was on

deck preparing to abandon ship.

177. The engine was successfully started and run at

45 RPM for 2 hours, moving the ship 10 miles away from

the coast.

178. The cause of the Cork casualty was the ex-

cessive blade tip clearances of the HP rotor. Excessive

steam was allowed to pass through the gap between the

rotor blade tips and the casing, the temperature drop

across the HP turbine was decreased so that the

temperature of the steam exiting the HP turbine was ex-

cessive, the steam exiting the LP turbine and entering the

condenser was excessively hot, and the condenser top

temperatures increased to a dangerous degree.

179. The excessive condenser top temperatures caus-

ed unusual expansion in the LP turbine. The turbine could

not tolerate such heat and grew to such a degree that it

seized. This caused all of the subsequent damage found

when the turbines were later opened for inspection.

A-104

180. Since it was not economically feasible to repair

the KATRIN, it was sold for scrap on February 8, 1977 for

a price of $364,800.

181. The value of the vessel at the time of the Cork

casualty was $850,000.

Ill. LIABILITY

CAUSE OF THE RIVER TRIAL CASUALTY

[1] As I have said, the principal issue in this case is

the cause of the breakdown of the KATRIN’s LP turbine

on May 25, 1975. The ultimate burden of proof is on owners

to establish the cause of that breakdown. I have found that

a defective weld on one or two LP rotor blades precipitated

the casualty. Although repairers have advanced other

theories of the cause of the casualty, the preponderance of

evidence favors the findings I have made.

After the river casualty, one thing was undebatable:

two LP rotor blades from Row 14 were broken at the root.

Owners’ expert welding witness Arthur Kugler testified

that the welds between the new airfoils and the old roots

were “‘non-penetration welds.” This testimony was uncon-

tradicted. In essence, the new airfoil was set down upon the

old root and the two pieces were welded together around

the four sides of the rectangle, leaving the unreachable

mating surfaces in the center of the cross-section unwelded

and unconnected. Kugler testified that the gap in the

A-105

center of this fabrication would tend to grow like an air

bubble as the rotor increased speed up to 5,000 RPM. He

emphasized that the moving blade would be subjected to

cyclical stresses as it rotated, such stresses causing flutter-

ing of the blade and further localized increases in stresses.

This is not the first time that a court has faced the

problem of a “non-penetration weld.” In a case in the

United States Second Circuit Court of Appeals a helicopter

crash was allegedly caused by the failure of a steel tube

welded to a stabilizer bracket on the helicopter’s tail. The

court’s discussion of expert testimony in that case has a

familiar ring:

The root of a weld is the point at which the sur-

A-106

Krause v. Sud-Aviation, Societe Nationale de Construc-

tions Aeronautiques, 413 F.2d 428, 430 (2nd Cir. 1969).

Owners’ expert witnesses in this case provided a

similar explanation of the failure mechanism. Kugler

testified that the welds he observed on some of the

fabricated blades could not withstand severe stress. Har-

rison viewed many of the welds of the blades tested after

the casualty and condemned all of them he observed as be-

ing defective. Higgins made note of the lack of penetration

on the welds and explained that the gap in the interior of

the weld would act like a fracture under working condi-

tions. After a certain amount of time, the fracture or split

would propagate, move into the existing weld and lead to a

failure. All of the experts awere agreed that the maximum

stress concentration occurred at the point where the cross-

section was abruptly changed, that is, where the root left

off and the airfoil began. That is where the blades were

welded by repairers.’

Of course, an adequate and consistent explanation of

how an accident may have occurred is not evidence that it

in fact occurred that way. What evidence supports owners’

hypothesis? Some major confirming evidence is provided

by the “ear-witness” account of Todd’s employee

Mussachia. His description of the three “‘pings’’ followed

by a scraping and rubbing conforms to the hypothesis that

one or more rotor blades broke at the weld. As described by

T See generally 1 L. Frummer & M. Friedman, Products Liability §

6.03{3] (1978) for a discussion of failure mechanisms in metal parts or

structures.

A-107

various experts, if a rotor blade broke, it would fly off and

hit the casing or neighboring blades at a very high speed.

This could have caused the ‘‘ping’’ that Mussachia heard.

Since there were two blades and pieces of shrouding attach-

ed to those blades that were found to be ripped off after the

casualty, it is also consistent that Mussachia heard more

than one ping. Higgins and Harvey both testified that

pieces of blade or shrouding spinning around in the LP tur-

bine would most likely become jammed between moving

and stationary parts, an occurrence that would very likely

give rise to scraping or groaning noises that Mussachia

heard. Expert witnesses also explained that when one or

two rotor blades and shrouding break loose, an LP turbine

is thrown out of balance so severely that it begins to rotate

in an eccentric pattern, thereby coming in contact with the

casing and other stationary parts. This is a further ex-

planation for the rubbing and scraping sounds.

After the river trial casualty, Turbine Service sent

ten sample blades to a testing laboratory to be subjected to

a pull test. All of the blades broke at the welds. One blade

broke at an applied force of 9,500 pounds, and the balance

broke at an applied force of 15,000 pounds or more. Turbine

Service’s expert witness McPhate calculated that the cen-

trifugal force that would be applied to a Row 14 rotor blade

at a speed of 3,950 RPM would be 3,483 pounds.

Static testing is not a final indicator of whether or

not a part will stand up in service. Numerous cases support

this assertion. In the famous case of Sieracki v. Seas Shin

A-108

ping Company, 149 F.2d 98 (3rd Cir. 1945) a 10-ton boom

on a vessel was tested by lifting a dead weight of 12% tons

before turning the vessel over to the shipowner. Later, the

boom broke under a weight of 8.2 tons or less, causing in-

jury to a seaman (not to mention the injuries it caused to

courts later faced with cases involving ‘‘Sieracki seamen’’).

The court found that other and more searching tests could

have been made and should have been made in the exercise

of reasonable care. The Fifth Circuit has more recently

upheld a trial court’s conclusion that static testing of a

chain hoist at loads of one and one-half times its rated

capacity was not sufficient to reveal a defective weld in a

link that failed. Watz v. Zapata Off-Shore Co., 431 F.2d

100, 114-115 (5th Cir. 1970). '

Owners’ counsel objected that the turbine’s

operating speed was higher than 3,950 RPM and elicited

from McPhate the concession that the centrifugal force

would increase with the squar? of the increase in speed

above 3,950 pounds. Nonetheless, using all Professor

McPhate’s other assumptions, the maximum centrifugal

force at the maximum turbine speed of 5,000 RPM would

be 5,400 pounds. Repairers have asked me to join them in

their inference that since the maximum centrifugal force

was no more than 60% of the breaking force necessary to

fracture the weakest of the ten test blades, the blade welds

could not have failed in service on the river casualty. It

should be noted that Professor McPhate did not testify

that this inference was supportable. He merely said 9,500

A-109

Ibs. is more than 4,000 Ibs.8

To draw this inference, many hurdles must be

leaped. First of all, the sampling procedures of the pull-

tests were completely unknown. Turbine Service picked

ten blades to test them. No one else saw them or par-

ticipated in choosing them, and no other party or represen-

tative was present at the test. Testimony at trial indicated

that the jaws used in the pull-test to hold the test

specimens were probably not properly designed for this

type of blade, thereby giving inconclusive results. Further-

more, the fact that ten blades might break at a certain

point does not prove that two blades of the remaining nine-

ty would not break at a much lower point. No evidence

showing the statistical likelihood of this happening was

presented.

Even if all of these hurdles were cleared, there is one

remaining fact that has caused me to refuse to draw the in-

ference pressed upon me by repairers. Kugler testified that

the LP biades rotating at a high speed were subject to

cyclic stresses. These loads may be less than the static

loads applied to a part in a pull-test. Neveartheless, par-

8 Transcript of May 8, 1978, page 133:

Q: Now if we were to assume that a blade that had been weld-

ed was pull-tested and it pulled apart at 9,500 pounds, not

pounds per square inch, but at 9,500 pounds, would that be

above or below the weighting that you have calculated to ap-

ply to that blade under operating conditions with the turbine

running at 3,950 rpm's?

A: It would be a greater load. You would have a safety factor

of about more than two and one-half.

A-110

ticularly when a part has a flaw such as insufficient roct

penetration, the repeated application of such stresses may

be severe enough to cause a fracture. I am convinced by a

preponderance of the evidence that that is what happened

in this case.

In accident reconstruction cases a court is

sometimes fortunate enough to be faced with damage

symptoms that allow only one conclusion as to their cause.

This case was not so easy. All of the damage that was

observed could have been caused according to any one of

three separate theories advanced during the litigation. For

instance, the groove marks on the inside of one of the

spacer rings could have been caused by the piece of broken

rotor blade flying around inside the turbine or it could have

been caused by expanding rotor parts coming in contact

with the out-of-round casing and spacer ring or it could

have been caused by a stator blade breaking loose and be-

ing dragged across the spacer ring by a moving part.

Almost all of the observable evidence was susceptible to

reasonable inferential analysis that would lead back to any

- of the three hypothetical causes of the river trial. The

repairers strenuously advocated the distorted casing

theory. They contended that the casing was warped before

the vessel was put into Todd. Under this theory of causa-

tion, none of the repairers would be liable for any damages

due to the river trial casualty.

Although I have found that the LP ahead casing as

well as the LP astern casing were distorted to some

unknown degree before the river trial casualty, I have also

A-111

found that the distortion was not the cause of the casualty.

I made this finding based upon two considerations. First,

the dock trial of May 23 was conducted without any scrap-

ing noises originating from the turbine. Gear noise was

heard both ahead and astern, but otherwise everything ran

smoothly. To be convinced that the distorted casing was

the cause of the river trial casualty, I would have to believe

that something happened on the river trial that had not

happened during the second dock trial. Repairers put forth

the hypothesis that the rotor expanded due to increased

heat during the river trial and that the expansion caused

rotating parts to come in contact with the distorted casing.

This appeared to me to be unsupported conjecture. Har-

rison and Higgins were not of the opinion that the

clearances would be reduced due to thermal expansion.

McPhate was asked to make a calculation showing the

dimensional effects of certrifugal force and thermal expan-

sion. He made an assumption that there was 130°F

temperature difference between the rotor and casing.

There was no evidence and very little reliable explanation

for such an assumption. McPhate was of the opinion that

the full thermal expansion did not take place on the dock

trials and therefore the rotor did not touch any part of the

casing prior to the river trial.? Bergeron testified that if

9 At another point, Turbine Service's expert McPhate seemed to

contradict himself on this issue. Testifying in a different context,

McPhate seemed to be of the opinion that thermal expansion would not

be very significant.

Q@: And, you also indicated in the case of the KATRIN’s tur-

bine that it would have also been necessary to re-machine the

parting faces.

A-112

the casing were out-of-round the problem should have

manifested itself at the dock trial. Most persuasive to me,

however, was the testimony by several experts that ther-

mal e,pansion would cause a gradual growth and contact

manifesting itself during the river trial by scraping and

rubbing noises as the parts began to rub together. The

distorted casing hypothesis is generally inconsistent with

the three pings preceding rubbing and scraping noise, and

I have rejected it as an explanation for the river trial

casualty.

Another hypothesis advanced by the repairers was

that a stator blade in the 14th row broke loose, became

lodged between moving and stationary parts, tore out the

Row 14 rotor blades, threw the rotor out-of-round and caus-

ed all the subsequent damage. Under this theory it was

possible that none of the repairers would be liable since

they allegedly were ordered to fair and straighten the

stator blades and this caused the fracture. Another

possibility, advocated by some of the repairers (but, for ob-

vious reasons, not others) was that the stator blade broke

because it had been heated and tapped by Turbine Service

personnel at the installation, thereby weakened and made a

candidate for fracture. This was the most probable cause of

the casualty in McPhate’s opinion. Roemer also gave some

(Footnote 9 continued)

A: Yes, especially since this was a Low Pressure turbine. You

know, the cold dimensions as seen in the shop are not going

to be really drastically different in the running dimensions.

Transcript, May 8, 1978, Page 97.

A-113

credibility to this theory. Most of the owners’ expert

witnesses agreed that the damage was consistent with this

theory. However, Harrison said that he had never seen a

stator blade come adrift although he had seen a fairly great

number of rotor blades break loose. He was somewhat

doubtful about the broken stator blade theory since the

stator blades were only subject to steam load whereas the

rotor blades were subject to centrifugal force plus bending

and flutter. Harvey and Higgins both agreed that you

could not completely rule out the theory that a fixed blade

had touched the rotor drum and come loose. However, Hig-

gins did not think that the ping sound could have been a

stator blade breaking off because it would not be moving at

a high velocity like a rotor blade. Weighing all the evidence

I also reject this theory as an explanation for the damage

caused during the river trial casualty.

One expert, Harvey, was particularly insistent about

the fact that accident reconstruction in marine surveying

was not an exact science. There are always many possible

causes for damages found after a casualty. Indeed, the ex-

perts in this case proved this to be true more than once. On

many questions of fact, competent and experienced

surveyors disagreed. Furthermore, Higgins changed his

opinion as to the cause of the warped casing over the

course of the litigation, originally believing it was caused

by a carryover on January 31, 1975. Two years later, upon

hearing new evidence, Higgins changed his mind and ex-

pressed the opinion that the distorted casing was caused

by repair personnel heating it with torches. McPhate’s first

A-114

opinion expressed in May of 1975 was that the most likely

cause of the river casualty was a distorted casing. Two

years later, upon discovering new cvidence, McPhate

changed his mind and decided that the most likely cause

was that one of the stator blades broke off. Unfortunately,

I cannot wait two years for further evidence nor was the

jury of nine experts able to come to a unanimous conclu-

sion to help me out of my dilemma. Further, I have not

been able to stand the three theories beside one another to

see which received a plurality of votes in its favor. The

burden of proof on owners requires that one theory be sup-

ported by a majority of evidence. I have found that the

rotor blade weld-failure theory is more likely true than not

true.

WHAT LAW APPLIES

[2,3] Maritime law applies in this case. A tort is deem-

ed to have occurred not where the wrongful act or omission

had its inception but where the impact of the act or omis-

sion produces injury. For this reason, an injury occurring

on the navigable waters of the United States due to defec-

tive repairs which took place on land still falls within ad-

miralty jurisdiction. Jig The Third Corp. v. Puritan Marine

Insurance Underwriters Corp., 519 F.2d 171 (5th Cir. 1975);

Roberts v. United States, 498 F.2d 520 (9th Cir. 1974), cert.

denied, 419 U.S. 1070, 95 S.Ct. 656, 42 L.Ed.2d 665 (1974);

Dudley v. Bayou Fabricators, Inc., 330 F.Supp. 788

(S.D.Ala.1971).

A-115

[4] A contract to make repairs to equipment aboard a

vessel in navigation is a maritime contract. It is also clear

that a contract to furnish supplies or accessories to a vessel

is maritime in nature, the locality of performance not being

determinative. Houston-New Orleans, Inc. v. Page

Engineering Co., 353 F.Supp. 890, 898-99 (E.D.La.1972)

(Rubin, J.).1°

NEGLIGENCE OF TODD

Todd has denied that it was negligent. In its brief it

states that “[t}he only negligence tha. coulu possibly be

charged to [it] is its alleged failure to observe the design

changes.’’ Among other things, it is apparently referring to

the welding of new airfoils to old roots when it mentions

“design changes.” It argues that it is normal practice in a

shipyard that “a part sent out of the shipyard to an in-

dependent contractor and specialist for repairs is not ex-

amined upon its return, but the part is reinstalled and if

found satisfactory upon testing is passed by the yard and

owner’s representative. No supervision of an independent

contractor is contemplated by the parties.”’

This proposition is apparently based on the oft-

stated maxim that an employer of an independent contrac-

tor has no vicarious responsibility for the contractor's

' torts. Prosser on Torts 480-91 (3d ed. 1964). If so, Todd has

10 Judge Rubin's opinion in the above case covers many of the

same issues and facts before me now and deserves careful reading.

A-116

misapprehended its own position in the chain of events.!1

[5-8] The only conduct that was required of Todd in

_ this situation was reasonable care. A discussion of the

standard of reasonable care in a similar case can be found

in Noel v. United Aircraft Corp., 219 F.Supp. 556, 566-68

(D.Del.1963). See also Restatement (Second) of Torts § 291

(1965). The amount of care which a reasonable man must

take increases with the foreseeable risk involved to others.

Todd's duties in this case were very similar to those of a

manufacturer or an assembler who uses component parts

in the final product. A repairer is generally subject to the

same liability as that imposed upon a manufacturer.

Restatement (Second) of Torts § 404 (1965). Such manufac-

turers have a duty to exercise reasonable skill and care in

the design and manufacture of their products, commen-

surate with the risk of harm flowing from normal use of

that product. This duty also binds the manufacturer with

respect to component parts incorporated into its final pro-

duct but manufactured by another. A manufacturer thus

has an affirmative duty to make such tests and inspections,

during and after the process of manufacture, which are

commensurate with the dangers involved in the intended

*} Owners have contended that Todd was independently negligent

by not exercising reasonable care in selecting a competent, experienced

and careful contractor. Owners have also claimed that Todd knew that it

did not have the men and shop capacity to do the turbine repair job but

nevertheless held itself out as capable of doing the job and accepted the

work on that basis. This might leave Todd open to vicarious liability for

Turbine Services’ negligence under the principles stated in the Restate

ment. Restatement (Second) of Torts §§ 400, 429 (1965). I do not find it

necessary to reach these contentions since Todd is liable on other

grounds.

A-117

use of the product. Nicklaus v. Hughes Tool Co., 417 F.2d

983, 986 (8th Cir. 1960). In the Sieracki case the trial judge

found that certain tests which could have been made to the

defective part in question were not made. Failing to make

these tests was conduct that fell below the level of

“reasonable care.’’ Sieracki v. Seas Shipping Co., 149 F.2d

98, 100 (3rd Cir. 1945). Todd’s negligence need not have

changed the condition of the turbine for the worse. It is

enough that the turbine did not leave Todd's hands “‘in

that safe condition in which a competent contractor would

have put it and that it [was] used in reliance upon the care

and competence”’ of Todd. Restatement (Second) of Torts §

404, Comment b (1965).

It is not necessary that the part in question be “‘in-

herently dangerous.” It is not necessary that the risk be a

great one or that it be a risk of death or serious bodily

harm. A risk of harm to property is enough. All that is

necessary is that the risk be an unreasonable one. Restate-

ment (Second) of Torts § 395, Comment d (1965).

[9] I find as a matter of law that the standard of con-

duct which applies to a shipyard conducting a major repair

job on the main propulsion unit of a large vessel requires at

least two things that Todd did not do. A shipyard must: 1)

find out at least the broad outlines of the steps planned by

a subcontractor and 2) inspect the finished repairs at least

closely enough to be able to determine whether or not

substandard repairs have been made or idiosyncratic

design changes have been employed.

A-118

The magnitude of the risk in this case was high. Risk

is a product of two factors: the probability of loss and the

magnitude of that loss if it occurs. The probability that a

subcontractor such as Turbine Service may conceive of an

improper repair method and carry it out may.be a

debatable matter, but testimony made it plain that it was

by no means so low as to be disregarded. The magnitude of

the potential loss, however, was undebatably great. When

a vessel is delayed in port because of improper repair,

tremendous costs are incurred. Faulty repairs on a turbine

whose blade tips are moving at a speed of nearly 500 mph

may well cause enormous damage to machinery and engine

room personnel. Worst of all, faulty repairs on the

KATRIN ’s turbines could have left the vessel without any

source of power in the middle of the Mississippi River,

causing a tragedy similar to others in this port’s recent

history.

When the foreseeable risk involved to others is this

great, the amount of care which a reasonable man must

take is very high indeed. It is certainly high enough to re-

quire the two steps that I have described above. I am rein-

forced in this opinion by the testimony of the many experts

including Todd’s Assistant General Manager Bergeron. He

felt, at least after the fact, a clear responsibility for the

events leading to the casualty.!2

T2 Tn doing 80, he was not the only witness who exhibited how dif-

ferently engineers and attorneys look at the concepts of fault. Technical

witnesses, dealing in uncertainties and statistical probabilities, seemed

at times to reflect a completely different view of responsibility from that

which attorneys are accustomed to. On numerous occasions witnesses

testified that the conduct they would expect of themselves and their col-

A-119

Todd’s counsel elicited testimony on several occa-

sions to the effect that the work of subcontractors on elec-

tric motors and other such items was never inspected.

They were merely put back into the ship and put in service.

If the part did not work, it was returned to the subcontrac-

tor or repaired in some other fashion. Such an approach

may be conscionable for parts such as electric motors.

“The character of harm likely to result from the failure to

exercise care in manufacture affects the question as to

what is reasonable care. It is reasonable to require those

who make or assemble automobiles to subject the raw

slight, though still substantial, harm to those who use it.”’

Restatement (Second) of Torts § 395, Comment e (1965).

The object in question here was not so small or insignifi-

cant as an electric motor, and the character of harm that

would be likely to result from the failure of care was not so

A-120

was the “‘ship’s superintendent”’ on this job, he was super-

vising Turbine Service “in a roundabout way.” Since the

job had been subcontracted, Sheridan ‘was supervising

himself really."’ Weither Ault nor Bergeron nor any other

Todd personnel seemed to know where Sheridan had pro-

cured new blades or anything else about how the job was

being done. No Todd personnel bothered to look closely at

the completed rotors or even had sufficient interest in the

outcome of the job to recognize that spacer rings and

shrouding had been added to the LP turbine, two things

that would certainly have given them pause for thought if

they had been prone to take such pausv. I find that the

lackadaisical attitude demonstrated by Todd personnel

toward the subcontract for the repair of the LP turbine was

below the standard of care that a reasonable person in the

same position would take and that such action or lack of ac-

tion constituted a negligent act on the part of Todd.

[11,12] An essential element of a cause of action for

negligence is that there be some reasonable connection bet-

ween the act or omission of the defendant and the damage

which a plaintiff has suffered. Causation in fact must be

found before a party can be held liable, but that term in-

cludes all conduct which has contributed to the damage

and without which it would not have occurred. The term

covers a defendant’s omissions as well as his acts. ‘The

failure to extinguish a fire may be quite as important in

causing the destruction of a building as setting it in the

first place.” Prosser, Law of Torts 237-38 (4th ed. 1971).

A-121

[13] It is not necessary for me to review the volumes

of accumulated learning on causation in fact and its

analytical sibling, proximate cause. Suffice it to say that

the Restatement of Torts expresses most of the pertinent

considerations in Sections 431 and 435. The Restatement

accepts the “substantial factor” test in determining

whether an actor’s negligent conduct is a legal cause. I

have no difficulty finding that Todd’s failure to conduct

themselves according to the standards I have outlined

above was the legal cause of the damages suffered during

the river trial casualty. If Todd had lifted a hand to deter-

mine what was happening in the major repair job they had

contracted to take, the harm that was sustained would

have been avoided.

[14] Even though Todd’s conduct may have

been a substantial factor in bringing about the river trial

damages, they may be relieved of liability if it appears to a

factfinder highly extraordinary that such conduct should

have brought about the harm. This is the normal test of

foreseeability applied in negligence analysis. I find that

Todd should have realized that complete abdication of

responsibility to a subcontractor on a major turbine

reblading job might cause harm in substantially the man-

ner in which it was in fact brought about. There is nothing

highly extraordinary about what happened as a result of

Todd's negligent act, and Todd cannot therefore be reliev-

ed of liability for lack of proximate causation. Restatement

(Second) of Torts § 435 (1965).

A-122

NEGLIGENCE OF TURBINE SERVICE

[15,16] The general principles developed above for the

standards of conduct to be applied to any actor are similar-

ly applicable in an analysis of the liability of Turbine Ser-

vice. However, those very general principles are sup-

plemented by somewhat more finely calibrated measuring

rules in Turbine Service's case. A repairer has a duty to ex-

ercise reasonable skill and care in the design and repair of

the object to be repaired, commensurate with the risk of

harm flowing from normal use of that product. Restate-

ment (Second) of Torts § 404 (1965); Nicklaus v. Hughes

Tool Co., 417 F.2d 983, 986 (8th Cir. 1969). Reasonable skill

and care in Sheridan's case meant the skill and knowledge

normally possessed by members of his profession. Restate-

ment (Second) of Torts § 299A (1965). Having undertaken

to render services in the trade of a turbine technician, he

was required to exercise certain skills and knowledge

above that possessed by the general public.

{17} I find that Turbine Service was negligent

because Sheridan conducted himself with less skill and

knowledge normally possessed by members of his profes-

sion or trade during the repair of the LP turbine. First of

all, it was uncontroverted that welding airfoils to old blade

roots in this type of turbine was never done. Experts on

both sides testified to that effect.!3 The essence of the

negligent act was conceiving of a design or plan that would

TS Roemer did say, however, that sometimes blades were welded

in gas turbines using modern, sophisticated technology. This was not a

gas turbine, nor was the technology modern or sophisticated.

A-123

be universally condemned in the trade.

[18, 19] The damaging effect of such a plan was com-

pounded by other acts of negligence. I find that Sheridan's

failure to consult with a welding engineer to determine a

proper welding procedure or method or his failure to insist

that Gonzales do so was also conduct below the normal

skill and knowledge expected of his trade. Finally, I find

that the failure to make any calculations or conduct any

destructive or nondestructive testing on the fabricated

blades to determine whether or not they would stand up in

service was also below the standard of conduct expected of

him. The only test carried out by Sheridan and Turbine

Service was to “beat and hammer on [the blades] with a

hammer.” From the testimony of the many turbine

specialists who testified during the trial, I am convinced

that the conduct of Turbine Service in this matter fell far

short of the standard expected of such specialists within

and without that profession.

[20] The standards and principles discussed above for

legal cause and proximate cause apply equally in the case

of Turbine Service. Turbine Service’s conduct was a

substantial factor in bringing about the harm that

ultimately occurred. Sheridan was the managing and driv-

ing force behind the repair job. His conduct was a legal

cause of the damages resulting from the river trial. It was

also a proximate cause since the damages that flowed from

his conduct were foreseeable and not extraordinary.

A-124

[21,22] Turbine Service could be released from liabili-

ty if there was an intervening act of Todd, such as Todd's

failure to adequately supervise or inspect the work being

performed, that rose to the status of a superceding cause. I

reject that contention, because the failure of Todd to ade-

quately inspect was a foreseeable risk of Turbine Servize’s

negligence. A repairer or manufacturer is subject to liabili-

ty even though a dangerous condition is discoverable by an

inspection which a party in Todd’s position would be under

a duty to make. Restatements (Second) of Torts § 396

(1965); Fredericks v. American Export Lines, 227 F.2d 450,

453-54 (2d Cir. 1955), cert. denied, 350 U.S. 989, 76 S.Ct.

475, 100 L.Ed. 855 (1956). Sheridan knew from the way

Todd was dealing with the repairs that he was not being

closely supervised or inspected. It was foreseeable that

Todd might fail to test or detect any errors Turbine Service

made. For these reasons, Turbine Service is liable to the

shipowners for the damages suffered on the river trial

casualty due to their negligence.

NEGLIGENCE OF GONZALES

[23,24] The principles of negligence applied to Tur-

bine Service are equally applicable to Gonzales. One who

undertakes repairs has a duty arising in tort to do them

without negligence. Southwest Forest Industries, Inc. v.

Westinghouse Electric Corp., 422 F.2d 1013, 1020 (9th Cir.

1970), cert. denied, 400 U.S. 902, 91 S.Ct. 138, 27 L.Ed.2d

138 (1970). I have discussed above the formula for deter-

mining how high the risk is in any given situation. This

A-125

high degree of risk required a very high standard of care by

Gonzales. Gonzales was aware of the fact that the repair

was being made on a major propulsion unit of 8a ocean-

going vessel. This high standard of conduct is more

precisely defined because Gonzales, like Turbine Service,

was required to perform with a certain skill and knowledge

prevalent in its profession or trade. A person who under-

takes to manufacture an instrumentality for use by others

will be held to an expert’s knowledge of the arts, materials

and processes relating to his product. Pipe Welding Supply

Co. v. Gas Atmospheres, Inc., 201 F.Supp. 191, 200 (N.D.

Ohio 1961). Because Gonzales undertook to render services

as a welder of turbine blades, they were required to exer-

cise the skill and knowledge commonly possessed by

welders. Restatement (Second) of Torts § 299A (1965).

[25] I find that the standard of care required of Gon-

zales was that: 1) before welding two parts to be used on a

steam turbine it satisfy itself by independent inquiry or in-

vestigation that the plan or design was reasonable; 2) even

if it had ascertained that such a plan was reasonable, it

complete the welds in a inanner that would reasonably in-

sure that the blades would hold up in service; 3) it ascertain

with reasonable certainty the metallic composition of the

parts to be welded; 4) it choose a proper rod with which to

weld the metal pieces; 5) it pre-heat, post-heat and stress-

relieve the materials used; and 6) it perform or commission

tests or otherwise assure itself with reasonable certainty

that tests have been performed to insure that the welds

will hold up under normal operating conditions. McKee v.

A-126

Brunswick Corporation, 354 F.2d 577, 578 (7th Cir. 1965).

Gonzales did not inquire into the feasibility or pro-

priety of welding new airfoils to old roots on a steam tur-

bine rotor. It did not try to determine whether or not two

fillet welds and two fusion passes were proper welds under

the circumstances. The low standard of conduct mani-

fested by Gonzales in failing to determine what the metals

were before welding was amply demonstrated by testi-

mony of several witnesses. The choice of a welding rod was

made in a similarly careless manner. Gonzales did not

know the materials were 410 stainless steel, but was under

the impression that the parts were made of different

metals. Thereafter, the welder iooked in a manual in the

shop and determined that a 309 stainless rod was recom-

mended. Gonzales didn’t have one, so they used a 308 rod

since “that was very close.”

At least two experts testified that a welding ‘‘pro-

cedure” should have been developed for this particular job.

A welding procedure is a description of the weld prepara-

tion, jigging procedure, current settings, filler rod, number

and. type of passes and the pre-treatment and post-

treatment to be used on the job. Gonzales did not adopt or

even consider a welding procedure.

The evidence established that if a weld of this nature

is carried out, it should be a “full penetration’ weld, that

is, there should be 100% metal-to-metal contact between

the two pieces with no discontinuities across the cross-

A-127

sectional area. Since Gonzales had undertaken to weld

parts of this type, they should have known that anything

less than a full-penetration weld would be substandard

work. They should also have known that welding on the

metals involved could only be properly conducted with pre-

heat, post-heat and stress-relief treatment.

[26,27] Gonzales argued vehemently and at length

that it was not legally required to meet these standards of

conduct. It contended that since Gonzales did not devise

the method of repair, and since it welded according to

specific instructions and directions given by Sheridan, and

since it had no facilities to test the blades and was not ex-

pected to guarantee that the method of repair would func-

tion under operating conditions in the turbine, it could not

be found at fault. In fact, “{it could not] be blamed for a

result which did not come up to manufacturer's standard.”

I reject this contention. A repairer must have more respon-

sibility than merely following orders. When a job is given

to a craftsman such as a welder, it can be expected that he

will accomplish the task so that there is a reasonable cer-

tainty that the part will perform properly under operating

conditions. It is not enough to attach the two parts

together so that they do not come apart when held in the

hand or when beaten with a hammer. It is also not enough

to gauge one’s own conduct as a technician and machinist

solely by what a customer orders done. This is particularly

true when the customer ordering the work is not a welding

expert. The welding in this case should have been perform-

ed according to the standards | have described above. The

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fact that it was not constitutes negligence.

[28,29] Gonzales’ assertions of lack of liability could

also be a claim that its negligent act was not the proximate

cause of the damage because the conduct of Turbine Ser-

_vice was a superceding cause. Restatement (Second) of

Torts § 431 (1965). It urged this argument with particular

force based on its allegations that Sheridan told it that the

blades were satisfactory and had been or would be tested.

An intervening act by a third person, even if negligent,

relieves the original negligent party from liability only if

the subsequent wrongdoer’s act could not have been an-

ticipated by the first party. [See generally Restatement

(Second) of Torts § 447 (1965) and Moyer v. Martin Mariet-

ta Corp., 481 F.2d 585, 591 (5th Cir. 1973)]. I have already

discussed above how the duty to test or inspect possessed

by an actor subsequent to the original actor in the chain of

causation does not relieve the original actor of negligence.

Sheridan’s intervening conduct and omissions cannot

relieve Gonzales from liability nor can Todd’s, since the

conduct of both parties was foreseeable to Gonzales. The

original negligence of Gonzales in defectively welding

blades was like a time bomb aimed at the KATRIN. The

fact that Turbine Service or Todd did not defuse it before it

caused any harm was not a highly extraordinary event or

one outside the range of normal foreseeability. A manufac-

turing shop which is called upon to render certain services

cannot perform the work and then hope someone further

down the line will catch any errors they might have made

when the consequences of such a careless attitude are so

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grave. I find that the negligence of Turbine Service and

Todd subsequent to Gonzales’ work was foreseeable and

not a superceding cause. Therefore, I also find that Gon-

zales’ negligence was a proximate cause of the river trial

damages.

CONTRIBUTORY NEGLIGENCE OF OWNERS

The repairers have contended that the owners of the

KATRIN were also negligent and that, therefore, recovery

should either be denied or reduced. Whether we call this

allegation one of contributory negligence or some other

term is unimportant at this point. Essentially, the

repairers are saying that the owners’ conduct contributed

as a legal cause to the harm they suffered and fell below the

standard to which they were required to conform for their

own protection. Restatement (Second) of Torts § 463

(1965).

[30] Owners’ conduct was allegedly deficient in two

ways. First, repairers contend that Manellis conceived or

at least approved the idea of welding new airfoils to old

blades before he left New Orleans or that he took the idea

with him back to Greece and explained it to Palios. Thus,

when Diana telexed approval for permanent repairs, it is

contended that it was implicit that Diana was approving of

a welding plan that had been fully discussed. I have re-

jected the contention that it was Manellis’ idea to weld air-

foils to the roots, that he discussed it with Palios or that

Palios knew of the plan. The only direct evidence that Ma-

A-130

nellis knew of the proposed welding was provided by

Sheridan’s testimony and I have found that not to be credi-

ble.

[31] The second series of allegations focuses on

whether the second owners’ representative, Tsaknaris,

authorized or approved the welded blades. As I have

already found, Tsaknaris was not an experienced steam

turbine man and his command of the English language was

minimal. There was no credible evidence that Tsaknaris

knew the blades were being welded or saw the blades when

he observed the rotor.

[32] The only question left is whether or not owners

were under some duty to inspect for and find defects in

design and repair such as welded blades. In what is pro-

bably the most obscure and least cited portion of the

Sieracki opinion, the court was faced with a very similar

problem. A longshoreman was injured when the shackle of

a boom broke and injured him. He argued, as to repairers in

this case, that the shipowner was liable based on

negligence. The court disagreed.

could not have found it by

i

reasonable care required such effort on the part of

A-131

owner. The master of the ship was present

to tear down the thing bought and subject it to

independent tests in order to be exercising due

care.

Sieracki, 149 F.2d at 101. I find that the standard of due

care did not require the vessel owner to inspect renewed

blades in the LP turbine rotor to insure themselves that

the blades were not welded or otherwise defective.

CONTRACTS BETWEEN OWNERS AND TODD,

TODD AND TURBINE SERVICE, AND OWN-

ERS AND TURBINE SERVICE

It is difficult to find a document or series of

documents that expresses the entire contract between

owners and Todd. O’Brien testified that there were several

methods of contracting between an owner and a shipyard.

Sometimes an owner prepares specifications for a bid and

gives it to the shipyard. The shipyard then returns the bid

and owner gives the contract on the basis of the bid he

receives. A second method is to put the work in hand on a

“time and material basis’ with a base rate per hour or

pound. After the work is done, a total price is calculated.

Harvey testified that an original field survey is sometimes

used as a broad outline to set the repair process in motion.

Once that has happened, decisions are made on an ad hoc

A-132

basis, owners and repairers relying to a great extent upon

the good faith traditions of the industry. It appeared that

the contract process between Todd and the owners was a

combination of these and several other methods. However,

certain specific documents and decisions are informative as

to the details of the contract.

The original contract negotiations began between

Todd and Manellis on February 12, 1975. Sometime in ear-

ly March owners decided to make permanent repairs on the

KATRIN ’s LP turbine, but the actual details of how this

was to be done and what price was to be charged were left

until the March 20, 1975 telex from Todd to Diana. The

original field survey may have set the repair process in mo-

tion and provided a broad guideline as to what was to be

done, but it was not the final expression of the contract.

[33] Probably the best objective expression of the

contract between Todd and owners is the final price

negotiation sessions between Van Rynbach, Harvey and

Coleman in mid-May. Although this was written after the

repairs were completed and everyone knew what had been

done, that negotiated agreement plus a list of ten extra

items for which owners were to submit separate invoices

clearly delineates the parties’ contract for the repair work.

[34] A letter dated March 4, 1975 is a proposal by

Turbine Service to accomplish certain tasks on the

KATRIN’s turbines. Although this letter was written

sometime between March 17 and March 20, it was back-

A-133

dated to March 4. On March 21, 1975 two purchase orders

were written by Todd to Turbine Service to confirm an

earlier telephone confirmation that Turbine Service was to

conduct the work. I find that the letter and purchase

orders constitute the contract between Todd and Turbine

Service.

No serious contention was made at trial that a con-

tract existed between owners and Turbine Service. I find

that there was none.

CONTRACTS BETWEEN GONZALES AND OTHER

PARTIES

Gonzales contends that no contract existed between

Gonzales and Turbine Service. They remind me that no

purchase order existed for the work Gonzales did and that

the only documents pertaining to the job were the final bill

submitted by Gonzales for the work performed and the

written release from liability which Gonzales obtained

from Turbine Service after the work was completed.

Because the arrangement was verbal and there was an

unspecified amount of work to be done rather than a fixed

task to be accomplished, because there was no specified

contractual term for completion of the job and because

ultimate control over the details of the work and method of

performance were under Sheridan, Gonzales argues that

there was no contract at all between the two parties.

[35] The lack of any writing is not dispositive in

A-134

rmaritime contracts. Oral contracts are generally regarded

as valid by maritime law. Kossick v. United Fruit Co., 365

U.S. 731, 81 S.Ct. 886, 6 L.Ed.2d 56, reh. denied, 366 U.S.

941, 81 S.Ct. 1657, 6 L.Ed.2d 852 (1961).

Hoover of Gonzales was the principal contact man

with Sheridan. On March 21, 1975, one lot of turbine blades

was sent from Turbine Service to Gonzales to be modified

and repaired. Testimony as to the pricing arrangement bet-

ween Gonzales and Turbine Service was extremely vague.

It appears that Gonzales geve an original figure of $43,800,

which included work on other parts of the turbine as well.

Hoover testified that later “it got hectic’’ and the price

method was changed.

[36] Regardless of the pricing agreement, it is ap

parent that Sheridan and Hoover agreed that Sheridar

would send old roots and new airfoils to Gonzales to be

welded and that Gonzales would do the welding as soon as

possible. Toward the end, ten or twelve blades were being

welded and redelivered three or four times a day.

These negotiations have all the earmarks of an oral

contract. Sheridan said he planned to bring the blades of

the KATRIN’s LP rotor to Gonzales to be welded, and

Gonzales declared its readiness to weld the blades. The two

parties agreed upon a price that Turbine Service would pay

Gonzales in return for its services. In technical terms, Gon-

zales made an offer to Turbine Service to perform certain

services for a price which was accepted by Turbine

A-135

Service each and every time a lot of blades was brought to

Gonzales to be welded. The agreement was supported by

consideration, which was the amount Turbine Service was

to pay. On any given occasion, had Gonzales failed to weld

the blades that Turbine Service brought to it and had this

resulted in some damage to Turbine Service, Gonzales

would have been liable to Turbine Service for breach of con-

tract. As explained in a leading treatise on contracts:

specified terms, with all the goods or services

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Sutherland and Co. v. United States, 262 U.S. 489, 43 S.Ct.

592, 67 L.Ed. 1086 (1923).

A-136

[37,38] I find that there was a valid and enforceable

contract or series of contracts between Turbine Service

and Gonzales. The terms of the contracts) included Gon-

zales’ promise to weld turbine blades to blade roots for a

certain agreed-upon, if fluctuating, price.'4

** Much has been made of the issue of whether or not Gonzales

was an “independent contractor.’’ I think a decision on this issue is of no

help in deciding the case. Generally, whether or not a person is an “‘in-

dependent contractor’’ is dispositive in determining a master's vicarious

tort liability or whether or not a party is liable under various types of

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A-137

[39] Although there was a contract between Gonzales

and Turbine Service, I find that there was no contract bet-

ween Todd and Gonzales. Bergeron, Todd's assistant

general manager, said that he first found out about Gon-

zales after the river trial casualty. He had nothing to do

with any dealings between Turbine Service and Gonzales,

and to his ki#owledge neither did anyone else at Todd. It

made no direct payments to Gonzales, and Todd's ship’s

superintendent said that he knew nothing of Gonzales until

after the river trial.

OBLIGATION OF DILIGENT PERFORMANCE

[40] I have found all of the repairers negligent as to

shipowners. There is another basis of liability as well. The

legal theories of strict liability in tort, applied on land, are

gathering adherents in admiralty at an accelerating pace.

Although this circuit has not specifically decided that such

theories apply in admiralty!5 numerous other courts have

adopted and developed them.!§ One of the latest and best

(Footnote 14 continued)

skill for its proper performance tends to show that the relation between

Turbine Service and Gonzales was not that of master and servant. Final-

ly, Gonzales had the right to choose its own employees and servants to

carry on the work, being responsible only to Turbine Service to produce

the welded blades, according to the contract. See 2 F. Harper und F.

James, The Law of Torts 26.11 (1956).

15 Higginbotham v. Mobil Oil Corp., 545 F.2d 422, 426 n.5 (5th

Cir. 1977), rev'd on other grounds, 436 U.S. 618, 98 S.Ct. 2010, 56

L.Ed.2d 681 (1978); Williams v. Brasea, Inc., Vessel Ciapesc I, 497 F.2d

67, 78 (5th Cir. 1974).

16 pan-Alaska Fisheries, Inc. v. Marine Construction and Design

Co., 565 F.2d 1129, 1134 (9th Cir. 1977); Lindsay v. McDonnell Douglas

A-138

descriptions of the impact of such theories on admiralty is

discussed in Pan-Alaska Fisheries, Inc. v. Marine Con-

struction and Design Company, 565 F.2d 1129, 1134-36

(9th Cir. 1977). Section 402A of the Restatement (Second)

of Torts is the best and most widely-accepted expression of

the theory of strict products liability. Under that theory,

anyone who sells any product in a defective condition

unreasonably dangerous to the user or his property is sub-

ject to liability for physical harm if the seller is engaged in

the business of selling such a product and it is expected to

and does reach the user or consumer without substantial

change in the condition in which it is sold. That rule applies

even though a seller has exercised all possible care in the

preparation and sale of the product and even though the

user did not buy the product from or enter into any con-

tractual relationship with the seller. The term “‘sell’’ is

merely descriptive, and a product is considered ‘‘sold’’ if it

has been placed in the stream of commerce by any means.

Pan-Alaska Fisheries, Inc., 565 F.2d at 1135; Delaney v.

Towmotor Corp., 339 F.2d 4, 6 (2nd Cir. 1964); Greeno v.

Clark Equipment Co., 237 F.Supp. 427, 433 (N.D.1nd.1965).

The movement by courts to adopt strict liability principles

into admiralty has been motivated by their beliefs that

(Footnote 16 continued)

Aircraft Corp., 460 F.2d 631, 635 (8th Cir. 1972); Sanderlin v. Old Domi-

nion Stevedoring Corp., 385 F.2d 79, 81 (4th Cir. 1967); Boncich v. M. P.

F.Supp. 396, 402 (N.D.Cal.1971); Ohio Barge Line, Inc. v. Dravo Corp.,

326 F.Supp. 863, 866 (W.D.Pa.1971); In re Marine Sulphur Transport.

Corp., 312 F.Supp. 1081, 1102 (S.D.N. Y.1970); Soileau v. Nicklos Drill

ing Co., 302 F Supp. 119, 127 (W.D.La.1969).

A-139

admiralty may look to and adopt land-based principles that

have gained wide acceptance.!7 | do not here incorporate

the law of strict liability in tort. Although I am convinced

that it would be consonant with the prevalent currents of

maritime law, it is not necessary to go so far in this case.

However, many of my conclusions are colored and inform-

ed by the burgeoning law of strict products liability.

[41] I find that one who enters a maritime contract

for repairs or other services impliedly agrees to perform in

a diligent and workmanlike manner.18 This obligation does

not require that there be privity between the party who

owes the obligation and the one to whom it is owed.

[42] This obligation of diligent performance

resembles the warranty of workmanlike performance

(WWP) that sprang into being in the Ryan case. Ryan

TT Lindsay v. McDonnell Douglas Aircraft Corp., 460 F.2d 631,

637 (8th Cir. 1972); Schaeffer v. Michigan-Ohio Navigation Co., 416 F.2d

217, 221 (6th Cir. 1969); Sieracki v. Seas Shipping Co., 149 F.2d 98,

99-100 (3rd Cir. 1945); Houston-New Orleans, Inc. v. Page Engineering

Co., 353 F.Supp. 890, 899 (E.D.La.1972); In re Alamo Chemical

Transportation Co., 320 F.Supp. 631, 639 (S.D.Tex.1970); Soileau v.

Nicklos Drilling Co., 302 F.Supp. 119, 127 (W.D.La.1969).

18 “(1m our view Ryan, by necessary implication, confirmed the

perform in a and workmanlike manner. 9 S. Williston, Contracts

§ 1012C, at 38-39 (3d ed. Jaeger 1967). This obligation has been implied

in contracts from an construction contract,

uv. Jindra, 191 Neb. 317, 214 N.W.2d 926 (1974), to a contract to install

plumbing, In re Estate of Talbott, 184 Kan. 601, 337 P.2d 986 (1959), toa

contract to tan goat skins, William Beaden Kopf Co. v. Henwood &

Nowak, Inc., 14 F.2d 126 (D.Mass.1926), and there is no reason why it

should not be implied in maritime service contracts as well." Fairmont

Ship. Corp. v. Chevron Int. Oil, Inc., 511 F.2d 1252, 1259 (2d Cir. 1975).

A-140

Stevedoring Co., Inc. v. Pan-Atlantic S.S. Corp., 350 U.S.

124, 76 S.Ct. 232, 100 L.Ed. 133 (1956); see Fairmont Ship

Corp. v. Chevron International Oil Co., Inc., 511 F.2d 1252,

1255-61 (2nd Cir. 1975). In the last two decades, the stream

of cases applying the WWP has broadened the narrow bed

of policy out of which Ryan flowed.

Warranties of workmanlike performance are not

limited to cases involving personal injuries!9 nor those in-

volving stevedoring services, having been applied to con-

tracts for ship’s services other than stevedoring services,

including agreements to make ship repairs.20 Courts have

applied the warranty without a contract between stevedore

and vessel owner. Waterman S.S. Corp. v. Dugan and

McNamara, Inc., 364 U.S. 421, 422, 81 S.Ct. 200, 5 L.Ed.2d

169 (1960); Crumady v. The Joachim Hendrick Fisser, 358

U.S. 423, 428, 79 S.Ct. 445, 3 L.Ed.2d 413 (1959). Subcon-

tractors also owe a WWP to the vessel owner whether they

have contracted with him or not. United States v. San

Francisco Elevator Co., 512 F.2d 23, 28 (9th Cir. 1975).

Ryan held that a stevedore’s implied WWP was compar-

19 See Interstate Steel Corp. v. S.S. “Crystal Gem”, 317 F.Supp.

112, 120 (S.D.N. Y.1970); Alcoa Steamship Company v. Charles Ferran &

Company, 242 F.Supp. 962, 973 (E.D.La.1965); Hershey Chocolate Corp.

v. The S.S. Robert Luckenbach, 184 F Supp. 134, 140 (D.Ore.1960), aff'd,

Albina Engine & Machine Works, Inc. v. Hershey Chocolate Corp., 295

F.2d 619 (9th Cir. 1961).

20 United New York Sandy Hook Pilot's Ass'n v. Rodermond In-

dustries, Inc., 394 F.2d 65, 71 (3rd Cir. 1968); Lusich v. Bloomfield S.S.

Co., 355 F.2d 770, 776 (5th Cir. 1966): American Export Lines v. Norfolk

Shipbuilding and Drydock Corp., 336 F.2d 525 (4th Cir. 1964); Booth S.S.

Co. v. Meier & Octhalf Co., 262 F.2d 310 (2d Cir. 1958); Smith v. Brown &

Root Maine Operators, 234 F.Supp. 130 (W.D.La.1965), aff'd, 376 F.2d

852 (5th Cir. 1967).

A141

able to that of a manufacturer who impliedly guarantees

the fitness of his product for normal use. 350 U.S. at

133-34, 76 S.Ct. 232. The consequences of that holding are

powerful, since a guarantee of the fitness of a product ex-

tends to all foreseeable victims of a breach. MacPherson v.

Buick Motor Co., 217 N.Y. 382, 111 N.E 1050 (1916). The

zone of liability is commensurate with the zone of

foreseeable risk. Sills v. Massey-Ferguson, Inc., 296

F.Supp. 776, 782 (N.D.Ind.1969).

[43,44] It is the general rule that a retailer or other

seller suffering a judgment against him by an injured per-

son in a warranty action is entitled to indemnity from a

manufacturer who sold the product to him with a similar

warranty. 3 L. Frumer & M. Friedman, Products Liability

§ 44.03[1] n.1. Turbine Service purchased new airfoils and

contracted to have them cut and welded onto old roots, cer-

tainly a manufacturing process. Gonzales (which includes

the word “Manufacturing” in its firm name) also was a

manufacturer of blades.

An implied obligation of diligent performance from a

subcontractor to other foreseeable parties in the chain pro-

motes the policy, so important in maritime law, that

“liability should fall upon the party best situated to adopt

preventive measures and thereby to reduce the likelihood

of injury.” Italia Societa v. Oregon Stevedoring Co., 376

U.S. 315, 324, 84 S.Ct. 748, 754, 11 L.Ed.2d 732 (1964). The

responsibility for discovery and prevention of a dangerous

defect is shifted to the party or parties who incorporate the

A-142

defect into the product.

_ [45-48] The WWP stream is joined by the tributary of

strict liability doctrine to give force and strength to my fin-

dings on the implied obligation of diligent performance.

The three repairers all knew that the work they were per-

forming was to benefit the vessel. Gonzales knew that they

were hired by Turbine Service who contracted with Todd

who was engaged by the vessel. Turbine Service also

understood al! of these relationships. I find that there was

an implied obligation of diligent performance running from

Todd to the shipowners. Because of my findings as to the

red-letter clause, I find that the obligation was not ex-

tinguished by that clause. I also find that Turbine Service

had an implied obligation tc Todd as well as an express

warranty articulated in the Todd purchase order. For pur-

poses of this case, the express warranty and implied obliga-

tion are identical. Finally, I find that Gonzales owed the

owners, Todd and Turbine Service an obligation of diligent

performance arising out of their maritime contract with

Turbine Service. Gonzales’ obligation to Turbine Service

was extinguished by the release signed by Sheridan on

May 14, 1975. That release disavows any warranty or

liability.21 However, the release granted by Turbine Ser-

vice has no effect upon the implied obligation to Todd or

shipowners.

21 INSPECTION & ACCEPTANCE

OF REPAIR WORK

This will acknowledge that repair work done on the Seaman

{sic} LP turbine rotor, HP turbine rotor, rotor casing, and

A-143

[49] One might ask what ‘diligent performance’”’ re-

quires? What standard of conduct is demanded of one who

owes such an obligation to another? I find that the obliga-

tion of diligent performance demands that a party conduct

himself at least non-negligently. Since I have found Todd,

Turbines Service and Gonzales all negligent, I also find

that they all failed in their obligations of diligent perfor-

BREACHES OF CONTRACT

[50] A failure to perform what is promised in a con-

tract is a breach of that contract.”22 Todd impliedly pro-

mised owners they would perform in a diligent and work-

(Footnote 21 continued)

being done in accordance with instructions given by Turbine

Service, Inc.

Gonzales Manufacturing & Industrial Mr ine Works, Inc.

makes no warranty as to the suitability. such repairs and

accepts no liability for any possible failure in service or con-

sequentia! damage arising from such failure.

22 «4 failure”, without justification, to perform all or any part of

what is promised in a contract, is a breach thereof.

7. A, a surgeon, contracts to perform a certain operation on B for

which B contracts to pay. A performs the operation unskillfully and

carelessly. He has committed a breach of contract. A promise of

reasonable skill and care is inferred in fact.”

Restatement of Contracts § 314 (1932); see also Restatement (Second) of

Contracts §§ 251, 260, 262 and 266 (Tent. Draft No. 8; March 20, 1973).

A-144

manlike manner. Turbine Service made an identical pro-

mise to Todd. These promises were discussed above. When

the parties failed to fulfill the obligations, the contracts

were breached.

[51] The material failure of performance on the part

of each repairer had the effect of a non-occurrence of a con-

dition precedent to the duty of each repairer’s employer to

pay the agreed price under the terms of their respective

contract.23 The failures were “material” in that the

employer in each case was deprived of the benefit which he

reasonably expected. This discharges the respective

employer’s duty to pay the contract price they had agreed

to.24

[52] Gonzales, on the other hand, was released from

the implied obligation. Stripped of that obligation, the con-

tract demanded no more of Gonzales than they in fact per-

formed. Gonzales did not breach its contract with Turbine

Service, yet Turbine Service has breached its contract with

Gonzales in failing to pay the agreed price.

23 Restatement of Contracts § 314 (1932); Restatement (Second)

of Contracts §§ 251, 260, 262 and 266 (Tent. Draft No. 8; March 20,

1973).

24 Nevertheless, due to principles of restitution discussed in the

damage portion of this opinion, the essential result of the damage award

is that each party to the two contracts is compelled to perform as pro-

mised, i e., Todd and Turbine Service are required to pay the costs of

providing their respective employers with a running turbine, and owners

and Todd are required to pay the agreed price. See text accompanying

fn.31 infra.

A-145

RED-LETTER CLAUSE

[53,54] I have found as a matter of fact that Manellis

did receive a copy of the tender letter on Todd stationery

with the red-letter clause on February 12, 1975. Koren

testified that he gave that document to Manellis on that

date and a telex signed by Manellis was sent to Diana

duplicating the letter language but leaving out the red-

letter clause. Owners have argued that the fact that

Manellis received the red-letter clause does not make it a

part of the contracts between owners and Todd. I have

found that the contract to repair the LP turbine included

the red-letter clause as one of its terms. The liability of a

principal is affected by the knowledge of an agent concern-

ing a matter upon which it is his duty to give the principal

information. Restatement (Second) of Agency § 272 (1958).

I have found as a matter of fact that Manellis had express:

ed authority to pass messages back and forth between

Palios and Todd concerning bids and acceptances.

Whatever else Msnellis’ duty may have been (and it may

have been broader than I have stated it) it certainly was to

pass on the terms of Todd’s offers.

The general rule which imputes an agent’s

knowledge to the principal is well established.

The underlying reason for it is that an innocent

third party may properly presume the agent will

perform his duty and report all facts which affect

the principal’s interest. Mutual Life Insurance of

New York v. Hilton-Green, 241 U.S. 613, 622-23,

36 S.Ct. 676, 680, 60 L.Ed. 1202 (1916).

The reai reason for the rule which charges a prin-

A-146

cipal with his agent’s knowledge is simply the in-

justice of allowing the principal to avoid, by act-

ing vicariously, burdens to which he would

become subject if he were acting for himself.

Bowen v. Mt. Vernon Savings Bank, 70 App.D.C.

273, 105 F.2d 796 (1939).

It is no defense that the agent did not, in fact,

communicate his knowledge to his principal. U.S.

v. Hanna Nickle Smelting Uo., 253 F.Supp. 784,

793 (D.Or.1966), aff'd 400 F.2d 944 (9th Cir.

1968).

See also Newsom v. Watson, 198 Okl. 220, 177 P.2d 109

(1947). I conclude that Manellis was owner’s agent for the

purpose of passing messages, that he was under a duty to

transmit all offers faithfully and completely, and that

notice to him that all work performed by Todd was subject

to the red-letter clause was effective notice to owners.

[55] The owners have argued that even though it may

be true that the red-letter clause was part of the initial con-

tract to open the turbines for inspection, it did not form

part of the contract to repair the LP turbine. This is not

supported in the evidence. Frequently agreements are ar-

rived at piecemeal, different terms and items being discuss-

ed and agreed upon separately. The letters that Manellis

received on February 12 and February 14 specifically

stated that the provisions of the offer “applied to every

order for work whether written or verbal.’’ Negotiations

continued at e hectic pace throughout the next few days,

but no new and distinct reference to the terms already com-

municated was necessary. See Gates Rubber Company v.

USM Corporation, 508 F.2d 603 (7th Cir. 1975); Southwest

Forest Industries, Inc. v. Westinghouse Electric Corp., 422

F.2d 1013 (9th Cir. 1970); Fire Association of Philadelphia

v. Alis Chalmers Manufacturing Co., 129 F.Supp. 335

(N.D.lowa 1955). I am of the opinion that Manellis, owner’s

agent for the purpose of transmitting messages, was on

A-147

full notice that the clause was implied in every repair con-

tract between the owners and Todd.

[56,57] In admiralty a party may contract against

liability for his own negligence. Jurisich v. United Gas

Pipeline Co., 349 F.Supp. 1227, 1229 (E.D.La.1972). A

release from liability clause with a $300,000 limitation is

not invalid per se in the ship repair business. Alcoa Steam-

ship Co. v. Charles Ferran and Co., 383 F.2d 46, 55 (5th Cir.

1967), cert. denied, 393 U.S. 836, 89 S.Ct. 111, 21 L.Ed.2d

107 (1968). Although owners have argued that the clause is

not valid because the intent of the parties is not manifestly

plain and unequivocal, I have found that the clause is very

plain and very unequivocal in limiting Todd's liability to

$300,000, limiting liability to the cost of repair, correction

or replacement and making the clause in lieu of all warran-

ties and liabilities expressed or implied.

Todd has made much of the Alcoa Steamship and

Hudson Waterways cases where similar clauses were found

to be valid. Alcoa Steamship Co. v. Charles Ferran and Co.,

383 F.2d 46 (5th Cir. 1967), cert. denied, 393 U.S. 836, 89

S.Ct. 111, 21 L.Ed.2d 107 (1968); Hudson Waterways Corp.

v. Coastal Marine Service, Inc. 436 F.Supp. 597

(E.D.Tex.1977). Their argument seems to be that since the

clauses were found to be valid in those cases, they must be

valid in all cases. The law is hardly as case-hardened as

they would desire. It is true that su~n contracts exempting

one of the parties from the results of his own negligence are

usually legal unless public policy forbids such a contract.

A-148

Hali-Scott Motor Car Company v. Universal Insurance

Company, 122 F.2d 531, 537 (9th Cir. 1941), cert. denied,

314 U.S. 690, 62 S.Ct. 360, 89 L.Ed. 552 (1968). But since

such clauses are not the favorites of the law, courts have

found various public policy reasons not to enforce them.

Annot., 175 A.L.R. 1 (1947). The Restatement of Contracts

limits these clauses to “negligence not falling greatly

below the standard established by law for the protectiun of

others against unreasonable risk of harm.’’ Restatement of

Contracts § 574 (1932). The comment to the above section

makes it clear that the section is referring to “gross

negligence.”

It is generally held that those who are not engag-

ee ee ee

liability for harm caused by their ordinary

in performance of contractual duty;

negligence

but such an exemption is always invalid if it ap-

plies to harm wilfully inflicted or caused by gross

or wanton negligence.

6A Corbin on Contracts § 1472 (1964 ed.)

[58,59] For reasons of public policy, I conclude that

this clause is invalid when two conditions occur:

1) a shipyard undertakes to conduct substantial repair

work to a component of a vessel that is vital to the vessel’s

safety; and

2) the shipyard’s conduct is greatly below the standard

established by law for the protection of others against

oer

A-149

unreasonable risk of harm.

This conclusion is in harmony with prior decisions on

this question and with the broad policies expressed by

various courts when analyzing such clauses as they apply

to the ship repair industry. The leading case striking down

an exculpatory clause for public policy reasons was Bisso

v. Inland Waterways Corp., 349 U.S. 85, 75 S.Ct. 629, 99

L.Ed. 911 (1955). The court referred to a judicial rule in-

validating contracts releasing towers from all liability for

their negligence.

This rule is merely a particular application to the

their customers. The two main reasons for the

creation and application of the rule have been (1)

to discourage negligence by making wrong doers

pay damages, and (2) to protect those in need of

goods or services from being over reached by

others who have power to drive hard bargains.

349 U.S. at 90-91, 75 S.Ct. at 632. The second reason given

by the court does not apply to this case. The first reason is

important here. That rule of policy was not originated in a

punitive spirit or out of moralistic excess. It is part of the

larger policy developed and applied by the Supreme Court

to encourage efficient decision-making. That policy is

“that liability should fall upon the party best situated to

adopt preventive measures and thereby to reduce the

A-150

likelihood of injury.’ [talia Societa v. Oregon Stevedoring

Co., 376 U.S. 315, 324, 84 S.Ct. 748, 754, 11 L.Ed.2d 732

(1964). Effective discouragement of negligence was the

concern of the court in the Bisso case and continued to be

the concern of other courts, even those who upheld the

clause. The court in the Alcoa Steamship case faced the

Bisso concern by finding that “potential liability for

$300,000 should deter negligence.”’ 383 F.2d at 55 fem-

phasis added]. The rule I have stated merely discourages

gross negligence by making those who are guilty of gross

negligence pay damages. When fault in a case is the mere

failure to replace a fitting to a dropline, as it was in the

Alcoa Steamship case, such clauses can stand; when a

shipyard effectively ignores a vessel repair it has con-

tracted to perform, red-letter clauses must fall.

LIABILITY FOR THE CORK CASUALTY

The Cork casualty occurred on-July 10, 1976, about

five miles off the coast of Cork, Ireland. Plaintiffs attribute

any and all damage as a result of that casualty, including

the loss of the ship, to the repairs that were carried out in

New Orleans in 1975. Three questions are pertinent to an

analysis of liability for this casualty: 1) did the excess

radial clearances of the HP rotor blades cause the Cork

casualty? 2) have owners satisfied their burden of proof

that one of the repairers caused the excess clearances? and

3) can repairers be held liable for damages caused by a

defect that was known to owners before the vessel left New

Orleans in 19767

A-151

No purpose is served by a lengthy recapitulation of

the events leading to the Cork casualty. The pertinent

facts are that Higgins noticed excess biade clearances in

the HP in February 1976 at the time the rebuilt LP was be-

ing installed. He and Palios discussed the effect of these

clearances fully. Despite this knowledge Palios decided to

put the KATRIN back into service at that time. During the

next few months the vessel experienced high condenser top

temperatures in the LP turbine area. Higgins checked the

LP and the condenser in June, but Higgins neither recom-

mended nor did owners on their own initiative take any cor-

rective action. The findings of fact adequately describe the

events off the coast of Ireland. Several surveyors viewed

the damages, and the cause of the damages was in-

vestigated. The theory advanced by Higgins was that the

excess blade tip clearances had allowed steam to pass by

the blades resulting in excess temperatures all the way

through the turbine system. No evidence was offered to

show that the casualty was caused by anything other than

the excess blade clearances.

[60] Shipowners failed to prove that the excess blade

clearances were caused by one or more of the repairers.

There are two clear facts concerning the HP rotor blade

clearances. Higgins had attended the vessel in Rotterdam

in April 1973 and found the HP rotor blade clearances to be

normal and satisfactory. When he opened the HP again in

New Orleans in February 1976 he found the clearances to

be excessive. What happened in the meantime is anyone’s

guess. Van Rynbach testified that he saw the HP blade

A-152

tips during an intensive investigation of the HP in

February 1975 and there were no grinding or filing marks

on the tips at that time. I am not convinced that Van Ryn-

bach could have seen the marks since Higgins testified

that in 1976 the grinding and filing marks were not visible

to the naked eye. He had to use a magnifying glass to see

them. Excess blade tip clearances are a matter of

millimeters, and the mere fact that Van Rynbach did not

notice any unusual marks on the end of the HP tips is not

particularly helpful. On the other hand, Woods testified

that he saw the HP turbine during an inspection before any

repairs had been made and that there were no feather edges

on the HP blade tips 25 Sheridan also testified that all

feather edges were missing from the blade tips in the HP

before the repairs began. Other testimony on the condition

of the HP including that of Harrison, Adams and Harvey,

was inconclusive as to the condition of the tips or when the

filing was accomplished.

[61-63] There was uo direct evidence that any repairer

did anything to the HP turbine blade tips to increase the

25 Feather tips or feather edges deserve more explanation. A

blade airfoil has a relatively constant cross-section and profile from the

root all the way to the tip. However, the cross-section is reduced

drastically for the last few raillimeters of the blade where the tip almost

contacts the casing. This feather edge provides a seal between the blade

tip and the casing so that steam will not escape over the blade and avoid

conversion into rotating energy. The reduced volume of the feather tip is

to prevent damage to turbine parts in case of contact. This may be caus-

ed by temporary misalignment due to thousands of unknowns in turbine

operation. If a full-section airfoil touched the casing, severe friction and

damage would occur. When a feather tip touches a casing, it is worn

away, effectively machined in place, until the alignments between the

various parts are corrected. Owners contend that the feather tips were

missing entirely or excessively worn after the repair.

A-153

blade clearances. Woods saw filing and grinding being

done on the HP blades but made it very clear, with

diagrams and explanations, that he was not referring to

grinding on the feather edges. He was referring to the

dressing along the edge of the main trunk of the blade, but

he reiterated that no feather tip at all existed on the blades

at the time of that work. Owners’ expert witness Harrison

calculated tiiat it would take about 130 man-hours to

rotate the HP turbine im a lathe or balancing machine and

file off the tips. Yet no one saw or knew of filing. This is

heavy circumstantial evidence to weigh against the cir-

cumstantial evidence offered by owners that the grinding

and filing was in fact dome by some repairer. For that

reason, I have found that owners have failed to satisfy

their burden of proof that the excess tiade tip clearances

that caused the Cork caswalty were caused by any

repairer.26

‘6 Even if 1 had found that some repairer had been guilty of grin-

ding or filing on the HP blade tips, I would have to reject owners’ con-

tention that damages for the Cork casualty are recoverable. The doctrine

of ‘‘avoidable consequences’’ would have to be put into play in this case

to deny owners any recovery. Soineone in owners’ position must use

such means as are reasonable under the circumstances to avoid or

minimize damages after discovering that another person has committed

a tort, breach of contract or other legal wrong against him. The person

wronged cannot recover for any item of damage which could thus have

been avoided. McCormick, Handbook on the Law of Damages §§ 33-42

(1935). This particular doctrine has been amply developed by the Fifth

Circuit. Southport Transit Company v. Avondale Marine Ways, 234

F.2d 947 (5th Cir. 1956). In essence it reflects the view that the law will

not allow oue to sit idly by and see his property be destroyed through

forces negligently set in motion by another and then collect damages oc-

disaster. Southport Transit Company, 234 F.2d at 951. See also Gulf Oil

v. Panama Canal Company, 481 F.2d 561 (5th Cir. 1973); Cottle v.

byt apes 1970), Ellerman Lines, Ltd. v. President

Harding, 288 F.2d 288 (2d Cir. 1961); Westchester Fire Insurance Com-

A-154

INDEMNITY OF TODD

Todd has cross-claimed against defendants Turbine

Service and Gonzales and their respective underwriters for

indemnity in the event Todd is found liable to shipowners,

together with the cost of defense. I have found that Tur-

bine Service and Gonzales are liable and must indemnify

Todd for their losses, but not for the cost of defense.

(Footnote 26 continued)

pany of New York v. Pennsylvania Railroad Co., 96 F.2d 133 (2d Cir.

1938); The Ashbury Park, 147 F. 194 (2d Cir. 1906); The Mars, 9 F.2d 183

(S.D.N.Y.1914).

Although unerring foresight is not required of one who seeks to

avoid or minimize damages, I have concluded that the decision to let the

KATRIN sail made by Palios, consulting with Higgins, was

unreasonable under the circumstances. Although Higgins consulted

with Warncross of Siemens, I have concluded that this was not suffi-

cient consultation or care under the circumstances.

One reason courts are generally reluctant to impose the doctrine of

sinking of a ship may not be held to a high standard of reasonableness.

The Walter A. Luckenbach, 14 F.2d 100 (9th Cir. 1926). There was no

haste or emergency in the instant case.

The decision Higgins and Palios faced is very nearly the same fac-

ed by other owners in an earlier case. In that case the damage was

surveyed the next day by a competent surveyor acting in behalf of the

the tort of another to take reasonable steps to minimize the amount of

the damage.” Isthmian Steamship Co. v. Jarka Corp. of Baltimore, 100

F.Supp. 856, 861 (D.C.Md.1951). Although the decision facing Palios

and Higgins involved different variables of time and cost, it was also

A-155

{64} I must make it clear from the outset that this

conclusion is not based upon the concepts of “‘active’’ or

“passive’’ negligence. When an obligation of diligent and

workmanlike performance has been breached, concepts of

active and passive negligence are not pertinent to the ques-

tion of whether one party should be indemnified. The Ryan

case made it plair. that a party seeking indemnity could re-

ly upon contractual rights of indemnity as distinguished

from concepts of “primary” and “secondary” or “‘active’’

and “passive” tortious conduct. Ryan Stevedoring, 350

U.S. at 133, 76 S.Ct. 232. This distinction was reaffirmed in

later cases. Weyerhaeuser Steamship Co. v. Nacirema

Operating Co., 356 U.S. 563, 569, 78 S.Ct. 438, 2 L.Ed.2d

491 (1958); Johnson wv. Swerd Line, Inc., 257 F.2d 541, 545

(8rd Cir. 1958); Schipper v. Lockheed Aircraft Corp., 278

F.Supp. 743, 746 (S.D.N.Y.1968).

[65] The obligation of diligent and workmanlike ser-

vice is comparable to a manufacturer’s warranty of the

(Footnote 26 continued)

basically an economic decision to sail the vessel in the face of risk. They

were not faced with an emergency, and there was sufficient time and

facilities for adequate consultation and consideration of the problem.

Owners’ counsel admitted at the trial that the decision was made with

“eyes wide open.” What is reasonably required of an owner in this case

“depends on the extent of the threatened injury as compared with the

expense of remedying the situation, and the practical certainty of suc-

cess in preventive effort.” Rathborne, Hair and Ridgway Co. v.

Williams, 59 F Supp. 1, 3, 4 (E.D.S.C.1945). It is clear that the extent of

the threatened injury in this case was quite great indeed. Ultimately, the

decision almost cost the entire vessel and the lives of its crew. I conclude

that the damages suffered by the owners due to the Cork casualty were

consequences which were avoidable with the exercise of reasonable care

and that owners’ decision to put the ship to sea with excess clearances

was not conduct amounting to reasonable care.

A-156

soundness of its manufactured product. See Ryan Steve-

doring, 350 U.S. at 133-34, 76 S.Ct. 232. A demand for in-

demnity in cases of breaches of warranty of merchantabili-

ty “is based upon the theory that where one sells a product

to another under an implied warranty of merchantability

and this buyer in turn, re-sells the product, also giving an

implied warranty of merchantability to his buyer, the

original seller is liable over to his buyer if this second war-

ranty is breached and the first buyer can establish that the

product was sold by him in the same condition as when it

was purchased from the original seller.’’ Grummons v. Zoll-

inger, 189 F.Supp. 64, 65-66 (N.D.Ind.1960). The same

general principles have also found expression in two dif-

ferent Restatements.27

27 Where a person has become liable with another for harm

caused to a third person because of his negligent failure to

make safe a dangerous condition of land or chattels, which

was created by the misconduct of the other or which, as bet-

ween the two, it was the other’s duty to make safe, he is en-

of the danger, he acquiesced in the continuation of the condi-

tion.

Restatement of Restitution § 95 (1937).

Although we are here concerned with contractual principles, an

identical result would be mandated by the proposed principles in the

Restatement of Torts:

(1) If two persons are liable in tort to a third person for the

same harm, and one of them discharges the liabi’ity of both,

he is entitled to indemnity from the other if the other would

be unjustly enriched at his expense by the discharge of

liability.

(2) Instances in which indemnity is granted under this

poincipio inciade the Sellewtng:

A-157

[66] When an obligation of diligent and workmanlike

performance is owed by one party to other parties, the

determination of whether contractual indemnity should be

allowed requires that a court weigh the conduct of both

parties to determine:

1) whether the obligation was breached; 2)

whether that breach proximately caused the in-

See Parfait v. Jahncke Service, Inc., 484 F.2d 296, 302 (5th

Cir. 1973); Garner v. Cities Service Tankers Corp., 456 F.2d

476, 481 (5th Cir. 1972); Southern Stevedoring and Con-

tract Co. v. Hellenic Lines, Ltd., 388 F.2d 267 (5th Cir.

1968); Waterman S.S. Corp. v. David, 353 F.2d 660, 665

(5th Cir. 1965), cert. denied, 384 U.S. 972, 86 S.Ct. 1863, 16

L.Ed.2d 683 (1966).

[67] I have already discussed my findings that the

obligations of diligent performance owed by Turbine Ser-

vice and Gonzales to Todd were breached. I also find that

those breaches proximately caused the injuries in this case,

as I have discussed above in the negligence analysis.

(d) the indemnitor supplied a defective chattel or performed

defective work upon land or buildings, as a result of which

both were liable to the third person, and the indemnitee in-

nocently or negligently failed to discover the defect;....

Restatement (Second) of Torts § 886B, Tentative Draft No. 18, April 26,

1972.

A-158

In the Waterman case, the court found guidance for

its deliberations on whether or not a proposed indemnitee’s

conduct prevented workmanlike performance from the

Restatement of Contracts §§ 295 and 315 and Corbin on

Contracts §§ 571, 947 and 1264. Using those sources and

the cases cited above, I find that Turbine Service did not

burden, delay or interfere with the performance of Gon-

zales in an unreasonable manner, and that Todd did not

burden, delay or interfere with the performance of either

Turbine Service or Gonzales. I also find that the shipowner

did not prevent or hinder any of the repairers in performing

in a diligent manner.

[68] Throughout the trial, Turbine Service and Gon-

zales made much of the fact that they had been ordered to

do certain things that constituted nondiligent perfor-

mance. Since I have found that no agent of the owners even

knew of the welded blades and since the breaches of obliga-

tions involved in this case occurred due to the conduct of

the repairers with respect to these welded blades, this

argument must fail as a matter of fact.28

“23 Even if the owners’ two agents did know of the plan to weld

blades to roots and authorized, approved or passively acquiesced in this

conduct by the repairers, I have serious doubts that this would be conduct

“preventing diligent and workmanlike performance.’’ When a shipowner

arrives in a shipyard, he is under no legal obligation to hire an independent

surveyor to determine whether or not the advice he is receiving from the

shipyard and the specialists they hire is correct. It may be prudent to do

so, but from a contractual point of view, the ship repairer has agreed to

provide workmanlike advice and repairs. Thus, if owners’ agents with lit-

tle experience in steam turbine reblading jobs and doubtful competence in

the English language order a repairer to perform in a manner that would

be considered unacceptable throughout the industry, the obligation of

diligent performance should demand that the repairer clearly warn the

shipowner in unequivocal terms of the inadvisability of the repair.

A-159

[69,70] I have given great consideration to conten-

tions that Todd’s own conduct should preclude them from

receiving indemnity from other wrongdoers. It is clear by

now, however, that, although Todd may have failed in its

obligations to the shipowner, this failure has no effect upon

the relationships between Todd and its subcontractors.

“Whatever may have been the respective

obligations of the stevedoring contractor and of

the shipowner to the injured longshoreman for

proper stowage of the cargo, it is clear that, as

between themselves, the contractor, as the war-

rantor of its own services, cannot use the

shipowner’s failure to discover and correct the

contractor's own breach of warranty as a

defense.’’ Ryan Stevedoring Co. v. Pan-Atlantic

Steamship Corporation, 350 U.S. 124, 134-35, 76

S.Ct. 232, 238, 100 L.Ed. 133 (1956).

This principle is another that has experienced constant

development since its expression in the Ryan case. When

an action over is in contract, whether the proposed indem-

nitee can recover turns upon whether his actions are such

as to prevent the diligent performance of the proposed in-

demnitor and not upon whether he has or has not been

found negligent in regard to the shipowner. Calmar Steam-

ship Corporation v. Nacirema Operating Co., 266 F.2d 79,

81 (4th Cir. 1959). Where « party initially creates a hazard,

the negligent failure of another party to discover the

danger does not preclude indemnity. DeGioia v. United

States Lines Co., 304 F.2d 421, 424 (2nd Cir. 1962). Ali of

these principles have been specifically addressed and

adopted by the Fifth Circuit. Southern Stevedoring and

A-160

Contract Co. v. Hellenic Lines, Ltd., 388 F.2d 267 (5th Cir.

1968).

Turbine Service made an express warranty that all

goods and labor would be merchantable and fitting in all

respects for the purpose for which intended. Because there

was a contract between the two parties, privity, that old

bugaboo of products liability, does not enter the analysis.

It does materialize in the decision concerning indemnity of

Gonzales to Todd. I have found above that it has been ex-

orcised in such situations and is not a condition precedent

in the granting of indemnity. The ‘‘obligations which arise

from the implied warranty are not limited to the confines of

the usual action on contract; the zone of responsibility may

extend to parties who are not in direct contractual relation-

ship.’’ Whisenant v. BrewsterBartle Offshore Company,

446 F.2d 394, 401 (5th Cir. 1971).

[71] When one or more parties manufactures a defec-

tive product that is placed in the stream of commerce and

another party has no actual knowledge of the defect, a

cause of action for indemnity against the manufacturer or

manufacturers will lie even when the failure to inspect and

discover is considered negligent. Jennings v. United

States, 374 F.2d 983, 987 n.7 (4th Cir. 1967); Hales v. Green

Colonial, Inc., 402 F.Supp. 738, 741 (W.D.Mo.1975), aff'd in

part, Hales v. Monroe, 544 F.2d 331 (8th Cir. 1976).

OTHER INDEMNITY CLAIMS

A-161

[72,73] Turbine Service and Travelers have also cross-

claimed against Gonzales and Sentry for indemnity for

negligent workmanship by Gonzales. Since Sheridan sign-

ed a release extinguishing the warranty from Gonzales to

Turbine Service, Turbine Service cannot rely upon the con-

tractual indernnity rules discussed above.29 Without the

benefit of contractual indemnity rules, Turbine Service

must rely upon the normal negligence standards. To reach

my conclusion in this case I have made reference to the

Restatement (Second) of Torts Section 886B discussed

above and the principles of active and passive negligence

prevalent in maritime law.2° It is my conclusion that Tur-

bine Service can not recover indemnity from Gonzales

under either of these theories or under any other non-

contractual indemnity theory that I can find. Drawing

from all the facts and circumstances of the case, I cannot

find that Turbine Service was “‘passively’’ negligent com-

pared to Gonzales. Both were aware of and participated in

tandem in the blade-welding operations. Both “supplied a

defective chattel’’ to another party.

29 Although the release may extinguish a warranty or other im-

plied obligation, there is a serious question as to whether the release is

sufficient to release Gonzales from liability due to its own negligence.

The clause does not mention negligence or any cognates of it. Although a

party may contract against liability for his own negligence, such an

agreement must clearly indicate the intentions of the parties. Jurisich v.

United Gas Pipeline Company, 349 F Supp. 1227, 1229 (E.D.La.1972). I

do not reach here the validity of the release with regard to Gonzales’

is only technical or pussive." Tri-State Oil Tool Industries, Inc. v. Delta

Marine Drilling Co., 410 F.2d 178, 181 (5th Cir. 1969).

A-162

[74] Gonzales also seeks indemnity from Turbine Ser-

vice for any liability it may have to shipowners or Todd. No

warranty of workmanlike performance ran from Turbine

Service to Gonzales, and Gonzales must rely on non-

contractual rules of indemnity that I have just discussed

with regard to Turbine Service's claim of indemnity

against Gonzales. For reasons indicated in that discussion,

I also conclude that Gonzales is entitled to no indemnity

from Turbine Service. Although Gonzales has insisted

throughout the litigation that they were merely following

orders, their duty was not a “secondary duty.” They knew

what the parts they manufactured were going to be used

for and who was going to use them, and the harm they set

in action was not aggravated by the acts of any other party

later on.

IV. DAMAGES

PROPER MEASURE

Not surprisingly, the parties in this case have ad-

vocated principles of damage recovery that constitute two

extremes. Owners have asked for the full cost of repairs

conducted in Europe by Siemens and loss of use from May

25, 1975 to March 2, 1976. Their contention is that, by vir-

tue of the contract, they deserved to have a turbine in

‘good operating condition” and the Siemens repairs were

necessary to put the KATRIN’s LP turbine into “good

A-163

operating condition.’’3! They also suggest that the defec-

tive repairs were of no benefit to them so they should not

be required to pay any portion of the agreed price to ‘i'odd.

Repairers contend they are required only to ‘“‘make

owners whole.” They argue that the turbine was in serious

disrepair when it arrived at Todd and that they should be

liable for no more -han enough to return the LP turbine to

that same condition. They also allege that the turbine was

in better shape after the river trial casualty than when it

arriv>d, except for the welded blades, the spacer rings and

the shrouding. Thus, they argue, they should only be

charged with enough damages to pay for the removai of the

welded blades, shrouding and rings and for loss of use for

the period it would have taken to accomplish those

removals. The essence of their theory is that such damages

are sufficient since the KATRIN could then have sailed out

of Todd in no worse condition than when it arrived.

Repairers also contend that owners suffered no loss of use.

They argue that they are liable for damages to return

owners to a position they would bave occupied but for the

faulty repairs. Since the faulty repairs caused a loss of time

only from February to May 1975 and since the vessel was

laid up for boiler and bulkhead repairs anyway during most

of that time, they suggest their negligence has caused only

a few days loss of use.

3T «Good operating condition” means different things to different

people. Repairers, for instance, have suggested that the Siemens repairs

put the turbine inte what I might call “best operating condition,” a

superlative state that owners were not entitled to achieve at repairers’

expense.

A-164

[75] I find that the proper measure of damages to be

awarded shipowners in this case is the sum of the cost of

repairs to return the LP turbine to the state it would have

been in had the contract been performed, necessary ex-

penses during down time of the vessel, loss of profits dur-

ing down time (the down time being the amount of time it

would have taken Todd to complete the repairs necessary

to restore the LP turbine), and costs and attorney's fees.

Thibodeaux v. Texas Eastern Transmission Corp., 548

F.2d 581, 587 (5th Cir. 1977); 5 Corbin on Contracts § 1037

(1964).

[76] This conclusion is founded upon several general

principles of damage law. These principles were somewhat

difficult to isolate since this case involves negligence,

breaches of implied obligations and breaches of contract all

at the same time. I have been pressed by the repairers to

adopt what is essentially a tort measure of damage calcula-

tions. Using that measure, a party suffering injury to his

property is entitled to no more than restoration to its con-

dition prior to the wrong. Petition of M/V Elaine Jones, 480

F.2d 11, 27 (5th Cir. 1973). The purpose of compensatory

damages in tort cases is to place the injured person as near-

ly as possible in the condition he would have occu

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