In re Rationis Enterprises, as Owner of "MSC Carla"

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DMC/SandT/04/49
In re Rationis Enterprises, Inc. of Panama as Owner of the MSC CARLA
United States: Federal Court for the Southern District of New York: Judge Richard Owen: 2004 U.S. Dist. LEXIS 12994: 12 July 2004
Products Liability: Negligence: Manufacturer: Seller: Defect
Summary
In this case, the United States District Court for the Southern District of New York held that defendants Hyundai Corporation and Hyundai Mipo Dockyard Co., Ltd. ("HMD") (collectively the "Hyundai Defendants") were liable in strict products liability and in negligence for damages arising out of the fracture of the MSC Carla’s hull while on a voyage from Le Havre to Boston in 1997. The Court held that the Hyundai Defendants, as manufacturers and sellers of an insert section welded into the Carla’s hull in 1984, were liable for all damages resulting from their failure properly to fabricate and install the insert.

DMC Category: Confirmed

Case Note contributed Brian Tretter, an attorney with the firm of Healy & Baillie, LLP, New York. Healy & Baillie are the International Contributors to this website for the United States

Facts
In 1984, the owners of the MSC Carla contracted with Hyundai Corporation ("HC"), as "contractor," to lengthen the Carla by approximately 15 meters. HC delegated the work to its shipyard Hyundai Mipo Dockyard Co., Ltd. ("HMD"). The elongation was accomplished by cutting the vessel in half and welding a lengthening insert to the aftbody and forebody of the vessel.

On November 24, 1997, the Carla encountered heavy weather en route to Boston from LeHavre. The hull of the Carla broke apart in a complete "U" along the line where the lengthening insert was welded to the stern of the vessel. The forebody of the Carla sank over a period of five days. The stern of the Carla was towed to Spain where it was scrapped. The owners of the Carla filed a limitation action as a result of the casualty. The cargo interests filed a claim in the limitation action and impleaded the Hyundai Defendants.

Judgment
After a trial on the claims against the Hyundai Defendants, the Court concluded that the installation of the lengthening insert had been a sale, rather than a repair, and that the Hyundai Defendants therefore had a duty to use reasonable care in designing and manufacturing the insert to avoid foreseeable risk of injury.

The Court rejected HC’s assertion that it was not responsible for the defective workmanship because it delegated the work to HMD and it further held that:
(1) HC was responsible under tort law because HC was a manufacturer and seller for the purposes of the law of products liability1 and
(2) HC was responsible under contract law because HC was designated as "contractor" under the terms of its agreement with the Carla’s owners and therefore was responsible for the work.

The Court ultimately concluded
(1) that the insert had been defectively manufactured;
(2) that the defect had existed at the time the Hyundai Defendants delivered the insert to the Carla’s owners, and
(3) that the defect had been the proximate cause of the casualty.

The Court stated that under admiralty law, this was sufficient to find the Hyundai Defendants liable in strict liability and in negligence. Having established liability, the Court directed the parties to proceed with a hearing on damages.

Products Liability1
Under US law, strict liability is imposed on a party who manufactures or sells a defective product which is unreasonably dangerous to the ultimate user of the product. The concept of strict liability in tort is based upon the premise that when a manufacturer presents his goods to the public for sale, he represents that they are suitable for their intended use. To invoke this doctrine it is essential to prove that the product was defective when placed into the stream of commerce.

 

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