Full opinion text
OPINION AND ORDER WHITMAN KNAPP, District Judge. This action is between plaintiff Sundance Cruises Corp. (hereinafter “plaintiff”), the owner of the M/V Sundancer, a ship that flew the flag of the Bahamas, and defendant American Bureau of Shipping (hereinafter “defendant”), a classification society in the business of issuing classification and safety certificates on behalf of itself and the countries by which it is authorized so to do. On June 14, 1984 it issued various safety certificates regarding the vessel. On June 29 the Sundancer ran aground and sank off the coast of British Columbia. Although plaintiff acknowledges responsibility for the ship’s running aground, it contends that the ship would not have sunk but for defendant’s negligence, gross negligence, negligent misrepresentation, breach of contract, and breach of implied warranty of workmanlike performance in issuing the relevant certificates. Defendant moves for summary judgment on a variety of interconnected theories. BACKGROUND On January 19, 1984 the plaintiff, a Panamanian corporation jointly owned by Seattle-based McDonald Enterprises (50%), Johnson Line of Sweden (25%), and EFFOA of Finland (25%), purchased from Johnson Line the SVEA CORONA, a passenger car ferry then operating in the Baltic Sea between Sweden and Finland. PI. Aff. ¶ 10. Plaintiff planned to convert the SVEA CORONA into a luxury passenger cruise ship to be operated during the summer months along the west coast of North America from Vancouver to Alaska and in the winter from Los Angeles to Mexico. To that end it bid out conversion specifications outlining the planned changes. It ultimately awarded a Swedish consortium consisting of the Oskarsham Varv shipyard, contractor Skanska/IMS, and naval architects Von Tell Nico the contract to design the plans for and perform the substantial conversion. PI. 3(g) at III, HU 2, 6; PLAff. ¶ 34; Pl.Aff.Exh. 25; Def. Exhs. 5, 20. The Contract Between Plaintiff and Defendant On March 5, 1984 plaintiff and defendant entered into a Request for Classification Survey and Agreement (hereinafter the “Agreement”) that, inter alia, called upon defendant to survey the vessel according to its own rules and according to the regulations set forth in the SOLAS and Load Line conventions, and to issue classification and statutory safety certificates signalling compliance with those rules and regulations. Pl.Exh. 4; PI. 3(g) at II. The Agreement was signed on behalf of plaintiff by one Lars Sjogren, the head of Johnson Lines, the company that was to manage the vessel. Immediately above the Agreement’s signature lines is a clause in bold capitals stating: THE UNDERSIGNED PARTIES ACKNOWLEDGE THAT ALL OF THE TERMS AND CONDITIONS CONTAINED IN PAGES 1 THROUGH 4 HAVE BEEN REVIEWED AND THAT UNLESS OTHERWISE MUTUALLY AGREED IN WRITING, OR REQUIRED BY LAW, ALL SERVICES RENDERED IN CONNECTION WITH THIS REQUEST ARE GOVERNED BY THE TERMS AND CONDITIONS CONTAINED THEREIN. Term 2 of the Agreement concerns fees, and states in part that “(a) All fees and payments shall be determined in accordance with normal ABS [defendant] practices and quoted to the client in a separate letter.” Term 13 appears in bold capitals: 13. LIMITATION ABS MAKES NO REPRESENTATIONS BEYOND THOSE CONTAINED IN ARTICLES 11 AND 12 HEREOF REGARDING ITS REPORTS, STATEMENTS, PLAN REVIEW, SURVEYS, CERTIFICATES OR OTHER SERVICES. Term 11, which is entitled “CLASSIFICATION,” warns in part: in no way should classification, issuance of certificates or performance of services be deemed to be a representation, statement or warranty of seaworthiness, structural integrity, quality or fitness for a particular use of service, of any vessel, structure, item of material, equipment or machinery beyond the representation contained in the Rules of the ABS. while Term 12, “RESPONSIBILITY AND LIABILITY,” declares in part: The validity, applicability and interpretation of a certificate issued under the terms of or in contemplation of this Agreement is governed by the Rules and standards of American Bureau of Shipping who shall remain the sole judge thereof. Nothing contained herein or in such a certificate or in any report issued in contemplation of such a certificate shall be deemed to relieve any designer, builder, owner, manufacturer, seller, supplier, repairer, operator or other entity of any warranty express or implied. Finally, Term 14 is a Hold Harmless clause that reads in part: the party requesting classification hereunder ... agrees to indemnify and hold harmless ABS from and against any and all claims ... including legal fees ... which may be brought against ABS incidental to, arising out of or in connection with the work to be done ... except for those claims caused solely and completely by the negligence of ABS. The above-quoted “Classification” Term 11 makes reference to defendant’s Rules for Building and Classing Steel Vessels (1983). Rule 1.3 of those rules, entitled “Representation as to Classification,” reads in part: The Rules of the American Bureau of Shipping are not meant as a substitute for the independent judgment of professional designers, naval architects and marine engineers, nor as a substitute for the quality control procedures of shipbuilders ____ The Bureau represents solely to the vessel Owner or client of the Bureau that it will use due diligence in the development of Rules, Guides and standards ... The Bureau further represents to the vessel Owner or other client of the Bureau that its certificates and reports evidence compliance only with one or more of the Rules, Guides, standards or other criteria of the Bureau in accordance with the terms of such certificate or report. Rule 1.4, entitled “Responsibility and Liability,” essentially repeats above-quoted Term 12. Rule 1.25, entitled “Responsibility," reads: The Bureau [defendant], being a technical society, can act only through Surveyors or others who are believed by it to be skilled and competent. It is understood and agreed by all who avail themselves in any way of the services of the Bureau that neither the Bureau nor any of its Committees and employees will, under any circumstances whatever, be responsible or liable in any respect for any act or omission, whether negligent or otherwise, of its Surveyors, agents, employees, officers or Committees, nor for any inaccuracy or omission in the Record or any or the publication of the Bureau, or in any report, certificate or other document issued by the Bureau, its Surveyors, agents, employees or Committees. (Emphasis added). Finally, Rule 45.1.10 provides: No alterations which affect or may affect classification or the assignment of load lines are to be made to the hull or machinery of a classed vessel unless plans of the proposed alterations are submitted and approved by the committee before the work of alterations is commenced and such work, when approved, is carried out to the satisfaction of the Surveyor. Additionally, attached to the Agreement is an Application for Load Lines, immediately above the date and signature line of which application is a release clause that— substantially a condensation of the emphasized portion of the above-quoted Rule 1.25 — states: It is understood and agreed that neither the Bureau nor any of its Committees is under any circumstances whatever to be held responsible for any inaccuracy in any report or certificate issued by the Bureau or its Surveyors or in any entry in the Record or other publication of the Bureau or for any errors of judgment, default or negligence of its Officers, Surveyors or Agents. While there is no choice of laws clause in the Agreement itself, plaintiff has presented us with a total of seven invoices it had received from defendant in connection with the work performed under the Agreement, on the reverse side of each of which is a series of Terms and Conditions that “unless otherwise mutually agreed in writing” would govern “all services rendered and certificates issued in connection with th[e] invoice.” The last of these Terms and Conditions reads in part as follows: 15. GOVERNING LAW The validity, interpretation and performance hereof shall be governed by the laws of the State of New York. The parties hereto agree to the submit to the jurisdiction of the United States District Court for the Southern District of New York, and/or the Courts of the State of New York, any claim or dispute arising under this Invoice. Three of these invoices had approval stamps pasted over their Terms and Conditions sides that had been initialled by Lars Sjogren, who had signed the Agreement on plaintiffs behalf. Two others had been similarly initialled by an otherwise unidentified Johnson Ships superintendent. Upon examining the original invoices, which were first retrieved from Sweden and introduced into this litigation in early June 1992, we saw that the “approval stamp” is a white rectangle of paper pasted to the Terms and Conditions side of the invoice. On each of the three invoices on which Sjogren’s initials appear, the stamp obscures more than 90% of the above-quoted law selection clause as shown below: Subsequent to oral argument on the motion — upon plaintiffs representation that Sjogren might not be available at a later date — we ordered that plaintiff could take his videotape deposition for use at trial. At that deposition he testified that the Johnson Line practice with respect to invoices was for the financial department to affix an approval stamp on the invoice (either on the front or the reverse thereof) and send it to an appropriate person for his or her initials, which would signify approval for payment. He further testified that it was his normal business practice to review invoices for amounts exceeding Sw.Kr. 100,000, and that he customarily familiarized himself with the terms and conditions placed on such invoices. However, in this particular case he never became aware that such Terms and Conditions were any different from those set forth in the original Agreement. See Sjogren Tr. at 51. Conversion, Survey, Certification, and Casualty The conversion of the SVEA CORONA to the luxury passenger ship M/V Sundancer commenced in early February, 1984. It involved substantially increasing the amenities, number of passenger cabins, food preparation and storage capacity, air conditioning, waste disposal, etc. Pl.Aff.Exh. 25. . Defendant was required to inspect the vessel before issuing certificates. With respect to the requirements of SOLAS and Class inspections, William A. Cleary, one of plaintiffs expert witnesses, stated that (PI. Rearg.App.Exh. 3 at 15): the Subdivision aspects of SOLAS require [inspection to verify the watertight integrity of] ALL watertight bulkheads, at all levels up to the bulkhead deck, all longitudinal bulkheads, many sections of deck, all piping and electrical connections through watertight bulkheads and decks, following piping to be certain they are fully connected to closed systems, etc. This inspection, he averred, is the duty of the surveyor. Cleary also stated that the general plan review that must be completed prior to the issuance of SOLAS and Load Lines certificates required defendant to review a vast number of design plans, specifically including those concerning “full machinery and piping review with emphasis on changes [and] Watertight Subdivision Arrangement and Details (including bulkhead integrity and flooding).” Id. at 13. The field surveyor defendant assigned to the project was one Dick Nilsson. He has a degree in marine engineering and a chief engineer’s license, and had been a marine engineer for 13 years before joining defendant as a surveyor in 1973. Pl.Rearg.App. Exh. 50. He had had very little experience surveying passenger ships before starting on the Sundancer. Nilsson Tr. at 76-78. He was at the site for much of the conversion from March 9 to May 8, 1984, and aboard the vessel from May 28 to June 16. He devoted additional weeks before, during, and after those periods to paperwork involving the Sundancer. See Nilsson time sheets, Pl.Exh. 60. As part of the survey process, defendant required plaintiff to provide for its review complete sets of drawings for the vessel. Berndt Gabrielsson, a Johnson Line naval architect, acted for plaintiff in reviewing “technical facts” and collecting the “drawings” related to the conversion. He testified that, at a January 22, 1984 meeting attended by the parties and members of the consortium converting the vessel, one of defendant’s representatives asked for the drawings “as soon as possible.” Pl.Rearg. App.Exh. 30 at 84. At a March 1, 1984 meeting attended by many of the same persons, defendant’s representatives reiterated this demand and formally presented to plaintiff’s naval architects Von Tell Nico its T-8-2 letter listing six pages of “Plans Required for SOLAS 1974 Review on Passenger Ships.” Def.Exh. 10; Pl.Exh. 42; Pl.Rearg.Aff. 11234. Among the plans explicitly requested in that letter were those for “sanitary piping and similar systems,” which included the Grey Water Piping System and the Starboard Galley Drain. Plaintiff has indicated that some 600-700 plans were provided to defendant in response to these requests. However, both parties agree that no plans for the Grey Water Piping System — either as it existed in 1984 or when the vessel was first built in 1974 — or the Starboard Galley Drain were ever provided to defendant. (Hearing Tr. at 90-92, 96, 103-04). In a May 21, 1984 Telex Von Tell Nico stated to defendant that “we believe that all listed drawings are now submitted from here or from Johnson Line.” Pl.Aff.Exh. 40. On May 8, the Sundancer set sail from the Oskarsham yard to Miami, Florida carrying no passengers, but having on board a working crew of some 30-50 to complete some conversion jobs. Def.Aff. ¶ 16. The vessel — with no public passengers but a similar working crew — then sailed from Miami to Panama, Acapulco, Puerto Vallaría, Los Angeles, and San Francisco, and ultimately arrived on June 14 in Vancouver, from which port the first public cruise departed on June 16. The inspections that preceded defendant’s issuance of the SO-LAS, Load Lines, and classification certificates took place from May 28 through June 14 either at the Oskarsham yard or on board the vessel during its voyages. Nilsson issued a one-month cargo ship safety certificate on May 8, 1984 when the vessel left the Oskarsham shipyard (PI. Exh. 49), and subsequently issued a series of one-voyage provisional certificates so that the Sundancer could travel from Mexico to Vancouver via Los Angeles and San Francisco. Pl.Aff.Exh. 57. On June 12, Captain Berquist, the vessel’s master, telexed Johnson Lines, stating that “we have now reached a point when neither I nor my crew can handle the situation any longer if no further steps are taken. I intend to stay in port in Vancouver until the building of my ship has been completed so that at least it complies with the SOLAS security regulations.” PTO Exh. 512. As a result of this Telex, Sjogren flew to Vancouver and contracted with a local shipyard to complete the outstanding work, whereupon Nilsson on June 14, 1984 issued five-month provisional Load Line and SOLAS certificates. Berquist Tr. 208-11; Pl.Aff.Exh. 58. On June 21 one of defendant’s employees noticed that the Interim Class Certificate, which should have been issued simultaneously with the Load Line and SOLAS certificates, had not been so issued. Nilsson on that day issued such certificate, backdating it to match the June 14 date on the others. Pl.Exhs. 47, 59. The statutory safety certificates (SOLAS and Load Lines) are necessary to allow a shipowner operate its ship “worldwide” (Hearing Tr. at 41), and “to trade in the world” (Hearing Tr. at 83). See also PI. Opp.Mem. at 66 (refusal to issue certificates “would mean that the vessel could not be insured or allowed to carry passengers”). The classification certificate enables the shipowner to procure insurance: “He needs that because he cannot get hull insurance, P. & I. insurance [without it]” (Hearing Tr. at 81). See also Tr. at 82-83; Pl.Supp.Exh. 2 (ABS Company Profile notes, inter alia that classification can result in lower insurance premiums, satisfy jurisdictional requirements, and give owner “peace of mind”); Berquist Testimony Tr. at 36 (classification certificate necessary for insurance). The fee paid for the surveys and other services defendant performed incident to issuing the certificates was $85,000. Def. Exh. 12. Plaintiff, which purchased the ship for $18 million and converted it at the cost of approximately $10 million, now seeks compensatory damages in excess of $64 million and punitive damages of $200 million. Pl.Exh. 1; Def.Exh. 18; Amended Compl. Fifteen days after receiving its certificates, four minutes before midnight on its third voyage from Vancouver to Alaska (six hours and 41 minutes after setting sail), the M/V Sundancer ran aground on Maud Island in the Seymour Narrows of the Discovery Passage off the coast of British Columbia. Captain Berquist had retaken control of the ship from the Canadian pilot moments before the grounding when he had observed the pilot order the ship toward Maud Island. Captain Berquist’s evasionary tactics, however, were too late, and the Sundancer struck bottom, tearing a hole into it’s hull. By 12:07 a.m. Captain Berquist had guided the ship to an anchorage in a nearby bay, and damage assessment was in progress. By 12:09 the lower deck had been evacuated and all watertight doors closed, except for one, which had been wedged open by a piece of wood. One minute later the bilge pumps were started. Captain Berquist raised anchor and sailed for Duncan Bay at 1:04, tying up at a paper mill’s dock at 1:20, at which time the Canadian Coast Guard provided the crew with three additional pumps. Passenger evacuation began at 2:12, and within one-half hour over 500 persons had left the ship. Although no lives were lost, the evacuation was not without incident. Toward its end, the listing of the ship became so extreme that the gangplank which had connected the ship to the dock broke loose and fell into the Bay. Some passengers then escaped the vessel by jumping into the water and others by climbing down ropes that were hanging over the side. Several were injured seriously enough to require hospitalization. Pl.Rearg.Reply Aff. ¶ 16; Def.Rearg.Opp.Aff. ¶ 3. Captain Berquist, the last person to leave the Sundancer, went ashore at 4:30 a.m. After everyone had been evacuated, the ship settled onto the seabed, and when the tide changed, its weight broke up the dock. See generally PTO Exh. 1233, Berquist Tr. at 82-121, Pl.Rearg.App.Exh. 1 at 23-25. It is plaintiff’s claim that the proximate causes of the sinking were defects compromising the vessel’s watertight integrity, and that these were not detected by defendant’s survey and plan review. The parties agree that neither Nilsson nor other representative of defendant discovered or reported to plaintiff the existence of these defects. Specifically, defendant never reported either the defective and violative Grey Water Piping System or Starboard Galley Drain — which lacked non-return valves designed to prevent progressive flooding from a compromised watertight compartment to a secure one — or the existence of “the holes” — a 3.15 inch hole in watertight bulkhead No. 124 and a nearby unsealed pipe penetration in the same bulkhead. Pl.Exh. 31. Plaintiffs Claim of Gross Negligence In addition to its claims of ordinary negligence and breach of contract, plaintiff further alleged in its amended complaint: 22. ABS [defendant] was grossly negligent in performing its services, inspections, structural analyses, investigations, and recommendations during Vessel conversion design review and approval, conversion surveys, statutory certification and classification of the Vessel. 23. ABS was grossly negligent in the appointment, training, supervision, and review of the surveyors who performed the above described functions and in the review of the surveys performed. 24. Because of ABS’s gross negligence, negligence and breach of its contractual obligations and [plaintiff’s] reliance on ABS’s representations, [plaintiff was] unaware of the Vessel’s condition which caused her sinking. [Plaintiff] put the Vessel into service in reliance on the certification issued by ABS. 26. ABS knew or should have known that at least one of the Vessel’s subdivision watertight bulkheads was not watertight at the time they surveyed the Vessel. ABS also knew that they appointed an unfit surveyor to perform the Vessel’s on board inspections. Notwithstanding these facts, ABS acted recklessly and with willful and wanton disregard for the lives of the Vessel’s passengers and crew and [for] the rights of [plaintiff], and others when they issued the Vessel Load Line, SOLAS and classification certificates so as to justify the assessment of punitive damages in the amount of $200,000,000. Plaintiff’s gross negligence claim is based on defendant’s failure to discover the holes in bulkhead 124 and the defective piping systems. Roy Curtis, plaintiff’s marine salvage professional who made three investigatory visits to the vessel beginning in October 1988, was the first person to discover the holes and that the piping systems violated SOLAS requirements. See Pl.Rearg.Exh. 2 (Curtis Report). His report was thus the first information that plaintiff or the succeeding owner of the ship had of either defect. From 1976, when the defective Gray Water Piping System was installed, until Curtis’s discoveries in 1988, a number of classification societies and government agencies inspected the vessel. These include the classification societies known as Det Norske Veritas and Lloyd’s Register, both of which issued classification and safety certificates for the ship (for which they presumably performed full class and SOLAS surveys as well as annual inspections); the Swedish government; and the Canadian Coast Guard, which made an investigation to determine the cause of the sinking. Although plaintiff’s management had never heard of the holes, which Curtis concluded on the basis of his inspections had been cut into the bulkhead during the conversion at the Oskarsham yard (Pl.Rearg. App.Exh. 2 at 14-15), one Sonny Sorquist, a pipefitter for the contractor, testified that he had spotted them during the 1984 conversion. He apparently told no one of their existence. Sorquist Tr. at 58-59, 64. Dan Ingemar Gustaf Eriksson, another pipefitter on the 1984 conversion job, testified that he had cleaned some debris away from the area in which a “cutting torch” was to be used to cut holes into the same bulkhead during the conversion. Eriksson Dep. at 35-37. Against this background plaintiff has presented a number of expert witnesses to support its claims of gross negligence. One of the most frequently relied upon is William A. Cleary, to whom we have already referred. He is an adjunct professor of naval architecture at the Florida Institute of Technology with over 37 years experience in the field of international maritime safety, including 30 years with the United States Coast Guard, from which he retired as Chief, Naval Architecture Branch, Marine Technical and Hazardous Materials Division, Office of Marine Safety and Environmental Protection. See PI. Rearg.App.Exh. 55. His 55-page report commented on standards that should be employed in the issuance of SOLAS and Load Lines certificates, and on the actual performance of a number of defendant’s employees. Pl.Rearg.App.Exh. 3. Cleary asserted in his report that defendant had “ ‘no set procedure’ with regard to plan review and routing” and that “it is inconceivable that [defendant] could perform certification without a ‘worklist’ ” to assure the receipt of all plans relating to the vessel. Id. at 19, 21-22. He stated that defendant should have been weeks earlier in requesting and reviewing plans (Id. at appendix 2), and that the plan reviews should have found that the Starboard Galley Drain violated SOLAS requirements. Id. at 39. Cleary also claimed in his report that (Pl.Rearg.App.Exh. 3 at 15): Nilsson specifically testified that he had done all watertight bulkhead inspections on June 14, 1984. Nilsson p. 401. He then went on to say: It is impossible, in my opinion, for any single inspector to completely inspect all SOLAS aspects of watertight integrity on any passenger ship in one day. In the portion of his deposition to which Cleary’s report referred, Nilsson had actually testified (Nilsson pp. 399-401): Q. Do you have any idea when you examined those subdivisions? A. This was work on a continuous basis. It was not possible to examine a bulkhead and then say that I want to look at it again. I saw these bulkheads every time I was passing by to more or less extent. But every time — which I did many times every day was walk in and around the vessel. I had bulkheads and everything else under observation. Q. [W]hat was the last date that you looked at subdivision bulkhead 124? A. Well, it was a very late date because I went through and look through everything in Vancouver before I left the vessel. Finally, the Cleary report asserted that surveyor Nilsson should have investigated the new Starboard Galley Drain Line, which ran within 20% of the hull where it would be presumed to be damaged in a casualty, because it was included in the conversion specifications. Pl.Rearg.Aff. 1159, PI. Rearg.App.Exh. 3 at 39-43. One Luigi C. Sciandra also provided an expert report for plaintiff. He has a Ph.D. in Mechanical engineering and is in the process of earning a second doctorate in ocean engineering. He was employed by defendant for 14 years, for two of which he was a senior surveyor and three as a principal engineer. He is expert in the area of boilers, pressure vessels, and submersibles, and has been an engineering consultant since 1988. See Pl.Rearg.App.Exh. 36. His report asserted that defendant should have assigned at least two surveyors to the Sundancer project, one having experience in structure and the other in machinery. Additionally, the Principal Surveyor in Sweden should have noted the need for rapid review and turnaround of drawings. Pl.Rearg.App.Exh. 10 at 12-14. A project manager should have been assigned to oversee the project, something that several other organizations were doing at that time, and the surveyor should have hung a Ship General Arrangement Plan on the wall of his office in order better to follow the progress of the survey. Id. at 19, 26. And, among other problems, Sciandra also noted the existence as of June 11 of SOLAS deficiencies and the erroneous approval by defendant’s employees of an alternator and the non-approval of a prime mover. Id. at 38-39, 52. John Ian McCallum was another expert witness for plaintiff. He had been a surveyor for 16 years and Chief Surveyor for 11 years at Lloyd’s Register, a competing classification society. He had also been Chief Naval Architect for 10 years at John Brown & Co., Ltd., where he was chief designer of the Queen Elizabeth II, and has been a naval consultant since 1981. See Pl.Rearg.App.Exh. 42. McCallum testified that plans are essential to a survey (McCallum. Tr. at 51, 52). Q. ... Would Lloyds ordinarily require a copy of the conversion specifications to be provided? A. No, not particularly. They’re much, much more interested in the plans which are attached to the conversion. They would like to see that. That’s what they really have an interest in. Q. If Lloyd’s were not provided copies of conversion specifications, how would they know what work was being done in the conversion? A. They would get a copy of all the plans. That they would demand. Q. What if there were particular work being done and no plans prepared for that work, how would Lloyd’s know then that a particular kind of work was going on? A. They would require to have plans. That is absolutely essential. McCallum further testified that Lloyd’s Register utilized a means by which it could insure that a shipowner had submitted all plans required in order to perform a survey: “By all means, yes. Oh, yes ... there would be a checklist.” Id. at 53. Upon further questioning, he clarified that the document specifying which plans Lloyd’s would require for a survey leading to issuance of a classification certificate was Lloyd’s Rules, and that the shipowner would be “referred to the parts of the rules and regulations which enumerated the plans which had to be submitted.” Id. at 54. With respect to surveys prior to issuance of safety certificates, he testified that no particular Lloyd’s document enumerated required plans, but that a shipowner would be referred to the SOLAS convention itself. Id. at 55-56. Additionally, plaintiff cites a report by one Fred W. Beltz. In November, 1984, some five to six months after the sinking of the Sundancer and more than two years before this action was filed, defendant’s management commissioned Beltz, an engineer who had recently retired from a company known as DeLaval Turbines and a respected member of defendant’s Technical Engineering Committee, to examine the procedures of the Machinery Technical Department with respect to its ability to review and approve plans and answer inquiries in an “appropriate, speedy manner.” Beltz was directed to identify problems and to make recommendations to rectify them. Hannan Dep. at 428-434. Beltz’s ultimate report made no reference to the Sundancer casualty, but isolated several troublesome areas and described them in a fashion (sometimes with double punctuation marks!!) calculated to induce action on his suggested solutions. He concluded that “[t]he problems and in turn my recommendations are all ones of management and internal practices rather than technical expertise.” Pl.Rearg.Aff.Exh. 31 at 1. Among the problems Beltz considered were the Department’s plan review and approval procedures and its quality control, as to which he came to a number of conclusions. Plaintiff’s expert Sciandra in his report found the following to be the most significant of Beltz’s conclusions (Pl.Rearg. App.Exh. 10 at 49-50, Exh. 31 at 2, 4-5): (1) There is no preplanning in Machinery Technical, nor Hull Technical for that matter, the departments wait for plans and/or calculations to arrive!! There are no up front discussions with the client to develop what submittals are required, the timing or the desired sequence. (2) There is no scheduling — lacking expediting by the client its first in first out— whenever!! (3) After being logged in weeks may go by while a drawing moves to the top of the pile for review. (4) Review of the work is haphazard — if a drawing or plan is approved without comment, the Principal may not see the submittal and frequently it may not be reviewed by a Senior. Within the ... Department,' the basic review process appears to be sound except that the procedures and practices are not well defined and vary from Principal to Principal and from area to area. The net result is that things can and must fall between the cracks without traceability. The most obvious example is that a typical Plan Approval ... may not have been reviewed by the Principal____ Depending on the department it may or may not have been looked at by the Senior. Beltz concluded that the process needed to become “PROACTIVE rather than REACTIVE.” His recommendations included developing in advance a full submittal and approval schedule that is continuously revised, assigning a permanent identification number to a vessel when a contract to survey it is signed, estimating the time necessary for reviews in advance to ease staff scheduling, consider a “contract coordinator” to oversee an entire survey, making the entire process more visible, and establishing standard procedures for plan reviews. See id. at 3, 5. Finally, plaintiff offered the expert report of C.R. Cushing & Co., Inc. on the question, which for present purposes we assume would be answered in the affirmative, of whether or not the alleged defects could have caused the Sundancer’s sinking. See Pl.Rearg.App.Exh. 1. Plaintiff proffered a variety of additional documents, deposition excerpts, and expert opinions regarding acts of defendant that it alleged were grossly negligent. In support of an allegation that defendant overworked its employees, plaintiff points to a resignation letter discussing dissatisfaction with the writer’s salary as the cause of his resignation, and a memorandum concerning defendant’s exit interview with such writer which indicated that, though interested in returning to defendant if circumstances changed, he was unhappy with his salary, and that “no one in higher management ever spoke to him about his career path, and ... his responsibilities have dwindled and there are times when he has very little work to do.” Pl.Aff.Exh. 29. Additionally, plaintiff presented a series of telegrams that culminated in defendant’s buying back 20 days of surveyor Nilsson’s vacation time. Pl.Rearg.Mem. at 13; Pl.Aff.Exh. 28. Nilsson testified that, after having “sold back” the time in question, he still received the full vacation time required by Swedish law. Nilsson Tr. at 311-12. Plaintiff also suggests that defendant engaged in a “cover-up” to hide evidence of its grossly negligent acts. In that regard it points to Nilsson’s destruction of his survey notes and the alleged tampering with the Log book kept in defendant’s office in Sweden. With respect to Nilsson’s notes, it appears from his uncontroverted testimony that it was his custom to discard and destroy handwritten notes made in the course of a survey after he had reduced them to a narrative script to be typed by a secretary and submitted as a report; and that he destroyed the last of his Sundancer notes after having learned of its sinking. Nilsson Tr. at 130-33. He testified: “I couldn’t take any parallel results that my reporting and the grounding would have any connection with each other.” Nilsson Tr. at 137. With respect to the alleged tampering with defendant’s Gothenburg office Log Book, in which its surveyors record where and on what ship they are working, one David A. Crown, an expert on forgery, testified that the Log Book is filled with whited-out and changed entries referring to a variety of ships. He observed that whited-out entries were commonplace in the log. “I believe my statement said with humor that they bought it [the white out] by the liter was not taken amiss. Yes, they used it frequently.” Crown Tr. at 45. His testimony did not indicate that the whiting out of log entries relating to the Sundancer differed in any substantial way from those relating to other ships. Finally, plaintiff suggests that a “coverup” may be inferred from Nilsson’s action backdating the Classification certificate after it was was discovered that he had failed to issue it in a timely fashion. It further suggests that such an inference should be drawn from defendant’s alleged efforts to conceal the Beltz Report. * * * * Is * The extremely thorough discovery in this case has taken over five years and has resulted in the taking of more than 100 depositions and in the production of over 100,000 documents. For the most part it proceeded without trouble, although in 1990 the parties asked us to refer to a Magistrate Judge discovery disputes regarding material for which there was a claim of privilege. We did so, and Magistrate Judge Sharon E. Grubin disposed of those problems as they arose. The parties have agreed that discovery is now closed, and a pre-trial order has been submitted. DISCUSSION The origin of the motion now before us is somewhat complex. The first indication of defendant’s intention to submit a motion was contained in a letter to us dated April 11, 1991, which requested a conference to discuss a partial motion for summary judgment striking plaintiff’s claims sounding in tort (negligence, gross negligence, and punitive damages) on the basis of East River S.S. Corp. v. Transamerica DeLaval, Inc. (1986) 476 U.S. 858, 106 S.Ct. 2295, 90 L.Ed.2d 865. If this motion were successful, only claims sounding in contract would remain. No mention of any claim for immunity based on Bahamian law was then suggested. On October 18,1991 defendant filed the motion now before us raising the following contentions: plaintiff has contractually indemnified defendant with respect to all claims in question; plaintiff has not adduced evidence sufficient to support its claims for gross negligence; East River bars plaintiffs tort claims; Bahamian law is here controlling, and under that law defendant enjoys immunity with respect to the safety certificates it issued under Bahamian authority; plaintiff does not have a claim in contract for breach of the implied warranty of workmanlike performance under Ryan Stevedoring Co., Inc. v. Pan-Atlantic Steamship Corp. (1956) 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133; plaintiff has no claim for the tort of negligent misrepresentation. At a conference held shortly after the motion had been filed, plaintiff’s counsel complained that it was overbroad and so fact-intensive that it would be impossible to answer and wasteful of time. We tended to agree with this assessment, and suggested that plaintiff confine its opposition to the choice of law question and the related question of immunity under Bahamian law. We indicated that if plaintiff so limited its response, we would confine our decision to those two questions. We hoped that if so limited the matter might be resolved before the then scheduled trial date. Our suggestion, however, did not prove to be productive. Plaintiff’s opposition (consisting of a hundred and eleven page memorandum of law, hundred and four paragraph affidavit supported by sixty-nine exhibits in two volumes, and excerpts from thirty-four depositions) dealt in detail with every contention presented by defendant’s motion. In preparation for and during the course of the April 3, 1992 oral hearing on the motion, it occurred to us that there was an underlying question not specifically raised by defendant that might dispose of the entire case: does an entity that issues a license enabling the licensee to engage in certain activities undertake to assure the licensee of its fitness to undertake such activities? In this regard we reasoned by analogy that a person applying for a driver’s license does not thereby seek assurance of an ability to operate an automobile but merely permission to do so; and that a car owner procuring an inspection sticker from a licensed garage does not seek assurance that the automobile is safe, but merely permission to operate it on public highways. We tentatively concluded that the matter could be thus resolved, and on April 21, 1992 delivered to the parties a Draft Opinion so holding. We requested responses thereto. Having received and considered such briefs and supporting materials (styled by plaintiff as a motion for reargument and by defendant as its opposition to such motion) we now conclude for the reasons that will shortly follow in Part A of this opinion that summary judgment on that question is not appropriate. We therefore turn, in Part B, to a consideration of the contentions originally presented by defendant’s motion. As to them the record before us includes over 300 exhibits and excerpts from more than 65 depositions. We shall discuss the questions raised by these contentions under the following formulations: (1) did plaintiff release or indemnify defendant from these claims?; (2) has plaintiff after five years of extensive discovery developed any facts that would justify a finding that defendant was grossly negligent?; if not, (2)(a) has plaintiff alleged a claim for the tort of negligent misrepresentation?; or, (2)(b) does the East River doctrine limit plaintiff to contract remedies only?; if so, (3) can plaintiff make out a contract claim under the Ryan doctrine?; and (4) does the law of the Bahamas grant defendant immunity with respect to all aspects of the instant complaint? A. Our Draft Opinion In our Draft Opinion we proposed that the issuance by a classification society of certificates necessary for the operation of its customer’s (plaintiff’s) ship was not an assurance to the customer-shipowner that it had satisfied its non-delegable duty to provide a seaworthy vessel. On the contrary, it seemed to us, the shipowner looked only for documents that permitted operation of its vessel without running afoul of relevant regulations. While we did not consider what remedies against one who improperly issues such a certificate might be available to the victim of an accident that might have been prevented by the withholding thereof, it seemed to us clear that the issuer of the certificate could have no liability to the owner who requested and utilized it. We also concluded that the disparity between the $85,000 contract price paid and the more than $64 million in damages claimed supported our conclusion that in issuing the certificates defendant had no intention of guaranteeing the vessel’s seaworthiness or becoming the shipowner’s insurer. As the Second Circuit observed: such an “enormous disparity between the fee ... charged ... and the damage liability ... allegedly assumed is persuasive evidence that assumption of that risk” is not within the contract. Vitol Trading S.A., Inc. v. SGS Control Serv. (2d Cir.1989) 874 F.2d 76, 81-82; see also International Ore & Fertilizer v. SGS Control Services (S.D.N.Y.1990) 743 F.Supp. 250, 257. Based on defendant’s uncontradicted description of the nominated societies are the world’s “most eminent” (Hearing Tr. at 24) and on plaintiff’s assertion that the “modern climate of ... competition for statutory certification societies” is “fierce” (Pl.Opp. Mem. at 42), we inferred that the fees defendant charged here are comparable to those that any other of the classification societies nominated by the Bahamas to issue statutory safety certificates on its behalf would have charged. It thus appeared to us that accepted classification society practice with respect to fees indicates that such societies do not assume the risk of acting as insurer. In this respect, we believed Judge Tyler’s dictum in Great American Insurance Co. v. Bureau Veritas (S.D.N.Y.1972) 338 F.Supp. 999, 1012 to be illuminating: In theory, recognition of a right of action against a classification society would confer benefit upon ship owners, ship operators and seamen. In practice, such a “new remedy” would produce several undesirable effects____this right of action would have the effect of making the classification society an absolute insurer of any vessel it surveys and certifies____ this liability ... is also not in accord with the intent of the parties, the fees charged or the services performed. Our confidence in the foregoing observations was enhanced by our analysis of all cases cited by plaintiff in its Supplemental Memorandum (or discovered by our own research), which demonstrated that — although classification societies have been in existence for generations — no case has been found in which such a society has been held liable to a shipowner for errors— negligent or otherwise — committed in the course of preparing and issuing a certificate that, in effect, licensed the shipowner to engage in certain activities. Plaintiff offered no meaningful challenge to that conclusion. We called attention to Somarelf v. American Bureau of Shipping (D.N.J.1989) 704 F.Supp. 59, in which a motion for summary judgment made by the very defendant now before us had been denied. We noted that if the shipowner in that case should ultimately prevail it would not affect our analysis because it had not retained defendant to issue a certificate that would permit the doing of anything. On the contrary, it had retained defendant to calculate the tonnage of two certain vessels so that fees payable for passage through the Suez Canal could correctly be estimated. Plaintiff challenges this characterization, saying that we had neglected to mention that “those tonnage calculations were required in connection with [defendant’s] issuance of a certificate under the International Convention on Tonnage” (Pl.Rearg. Mem. at 23-24). Plaintiff does not suggest why that fact would have been relevant. Suffice it to say that the Somarelf opinion makes no mention of any Convention. The court there denied defendant’s motion for summary judgment because it found merit in plaintiff’s contention that, defendant having negligently provided information necessary for the proper calculation of Suez Canal fees, plaintiff “had stated a viable claim for indemnity from ABS” on a theory of negligent misrepresentation based on ‘Section 552 of the Restatement (Second) of Torts, Information Negligently Supplied for the Guidance of Others.’ ” 704 F.Supp. at 63-65. In the case now before us, plaintiff had not asked for “guidance” of any sort but simply for certificates that would entitle it to procure insurance and operate its vessel. In short, plaintiff has presented no argument or authority that undercuts the logic of our Draft Opinion. Plaintiff does, however, call our attention to one fact that gives us pause. In a wholly unrelated litigation (Psarianos, et al. v. Standard Machine, Ltd., Inc., Standard Marine (HELLAS) Ltd. and American Bureau of Shipping (E.D.Tex.) Docket No. B-84-298-CA) the defendant now before us made the following statement in a memorandum of law submitted to the court: “The second duty [of a classification society] is to use due care in the detection of defects in the ship that it surveys and notification of such detected defects to the owner.” Pl.Rearg.Aff.Exh. 3 at 31 (emphasis added). Although the litigation there in question was not brought by a shipowner but by and on behalf of injured and deceased seamen (See Psarianos, 728 F.Supp. 438, 440), defendant’s statement of its duty to notify a shipowner of detected defects is quite explicit. Moreover, similar inferences might be drawn from various public statements made by defendant on its own behalf. See Pl.Rearg.Reply Aff. ¶¶ 3-5. While we tend to discount the significance of these statements, we recognize that an appellate court might well conclude that they constitute admissions requiring explanation before a finder of fact. Accordingly, although we adhere to the conclusions stated in our Draft Opinion, we do not rely upon them. Instead, we turn to the other questions presented by defendant’s motion and plaintiff’s opposition thereto. B. Further Questions Presented by the Motion (1) Contractual Indemnity and Release Clauses Defendant contends that the contract contains two release clause that, if given the interpretation and effect that defendant posits, would end this litigation right here. First it suggests that Term and Condition 14 of the Agreement — the “Hold Harmless” clause — is also a release by plaintiff of “any and all claims ... which may be brought against defendant,” including those by plaintiff itself. As to that contention, we repeat our observation at. the April 3 oral argument that a hold harmless clause and a release are two entirely different animals. The clause now before us is devoid of language in any way signaling plaintiff’s intention to release defendant as well as holding it harmless from actions by third parties. Although defendant cites a Seventh Circuit case to the contrary (Edward E. Gillen v. U.S. (7th Cir.1987) 825 F.2d 1155), the rule in this Circuit is that “indemnity agreements are generally designed only to protect against liability for damage to third parties.” Atlantic Richfield Co. v. Interstate Oil Transp. Co. (2d Cir.1986) 784 F.2d 106; see also Schiavone Constr. Co. v. County of Nassau (2d Cir.1983) 717 F.2d 747 (indemnity clause too ambiguous to apply as between the contracting parties; remanded for parole evidence on that issue). An unambiguous release clause does, however, appear on the Application for Load Lines attached to the Agreement, which was signed on behalf of plaintiff on the same day and by the same person who signed the Agreement: It is understood and agreed that ... the Bureau ... is [not] under any circumstances whatever to be held responsible for any inaccuracy in any ... certificate issued by the Bureau or its Surveyors ... or for any errors of judgment, default or negligence of its Officers, Surveyors or Agents. Plaintiff urges that, despite the clause’s unambiguous wording, it applies only to the Load Lines certificate, and that the possible application of this broad phrasing to other certificates issued under the Agreement creates an ambiguity that must be construed against defendant. As a matter of construction, this is not a powerful argument: the Application is acknowledged to be part of the Agreement, the clause conflicts with no other term within the Agreement, the clause satisfies the Agreement’s “unless mutually agreed in writing” stricture against modification of the enumerated terms and conditions, and the clause is clear and unambiguous on its face. This release is also discernable in the Agreement via the “LIMITATION” clause in Term 13. That clause refers the contracting party to Terms 11 and 12, which restrict defendant’s representations to those set forth in its Rules. Thus the contracting party would naturally turn to the defendant’s Rules for Building and Classing Steel Vessels, and in particular the “RESPONSIBILITY AND LIABILITY” clauses. There one would find in the language in Rule 1.25 an unambiguous disclaimer of all liability (except, presumably, for gross negligence) that almost exactly tracks the release in the Application. Nevertheless, although the question is close, and though the presence of the release clause in the Application and the reiteration of that release in Terms 11-13 of the Agreement (via defendant’s published Rules) might be construed by a finder of fact as strong indications of how the parties intended to allocate liability between themselves, we believe that the placement and relative isolation of the former clause and the torturous trail one must follow to discover the release in the latter ones raise a question of fact as to the actual intention of the parties. Moreover, we are inclined, without the benefit of trial testimony as to the parties’ intention, to agree with Judge Tyler’s dictum that such total absolution from liability “is overbroad and unenforceable as contrary to public policy.” Great American Insurance Co. v. Bureau Veritas (S.D.N.Y.1972) 338 F.Supp. 999, 1010, n. 6. We thus deny summary judgment on this question. (2) Plaintiff’s Gross Negligence Claim The validity of plaintiff’s gross negligence claim would determine whether or not it is entitled to punitive damages, and would affect our treatment of its other tort claims. The Southern District has defined gross negligence as meaning that “defendant has not only acted carelessly in making a mistake, but that it was so extremely careless that it was equivalent to recklessness.” Hong Kong Export Credit Ins. v. Dun & Bradstreet (S.D.N.Y.1975) 414 F.Supp. 153, 160. The Second Circuit has “drawn attention to the close affinity of the concepts, gross negligence and deliberate indifference,” citing — in a footnote— the Massachusetts Supreme Judicial Court’s definition of gross negligence as an “indifference to present legal duty and utter forgetfulness of legal obligations, so far as other persons may be affected” Doe v. N.Y.C. Dept. of Social Services (2d Cir.1981) 649 F.2d 134, 143, n. 4, quoting Burke v. Cook (1923) 246 Mass. 518, 141 N.E. 585. Defendant asserts that plaintiff has produced no evidence that would warrant submitting the question of gross negligence to a trier of fact. See Celotex Corp. v. Catrett (1986) 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265. To overcome this assertion, plaintiff must do more than merely make a contrary assertion. Having the burden of persuasion at trial, it must point to specific evidence that would allow a trier of fact reasonably to find that the necessary elements of gross negligence had been established. See Borthwick v. First Georgetown Securities, Inc. (2d Cir.1989) 892 F.2d 178, 181; Quarles v. General Motors Corp. (2d Cir.1985) 758 F.2d 839, 840; Delaware & Hudson R.R. Co. v. Consolidated Rail Corp. (2d Cir.1990) 902 F.2d 174, 177. Reviewing the evidence plaintiff has submitted on this issue (supra pp. 370-374), it appears that it can be divided into two categories: (1) expert testimony tending to establish considerable disorganization in the procedures by which defendant attempted to carry out its Agreement with plaintiff; and (2) expert and other testimony designed to establish that one or more grossly negligent acts or omissions directly resulted in defendant’s failure to discover the holes in bulkhead 124 or the violative piping systems that are claimed, and for present purposes assumed, to have caused the sinking. Plaintiff additionally urges that gross negligence can be inferred from defendant’s alleged attempt to “cover-up” its delinquencies. We address these matters in turn. It must be conceded that plaintiff has raised a question of fact concerning, indeed has pretty well established, a general disorganization in defendant’s operations. However, absent evidence establishing that defendant was aware of — or entirely indifferent to — its own infirmities and nonetheless undertook to perform work for which it was unqualified, mere disorganization would not only fail to establish gross negligence, but would fail to establish actionable negligence at all. Proof of disorganization — without more— could not of itself establish causation of any particular injury suffered by plaintiff. There being no scintilla of evidence of such awareness or utter indifference on defendant’s part, we look to see whether gross negligence can be established with respect to any particular act or omission that could be said to have prevented discovery of the defects claimed to have caused the sinking. The evidence upon which plaintiff relies may be divided into two categories: the Beltz Report, which was created by defendant itself; and the reports and testimony of experts retained by plaintiff for the purpose of proving its case. The Beltz Report has no relevance to our inquiry concerning the effect of any particular act. It in no way mentions the Sundancer, confines itself exclusively to procedures, and does not identify a single negligent act or omission attributable to any employee of defendant. Accordingly, we shall not again refer to that Report in this connection, but confine ourself to the reports and testimony of plaintiff’s retained experts. We turn first to the asserted cause of defendant’s failure to detect the inadequacies in the ship’s piping systems. Plaintiff’s expert testimony is replete with adjectives and adverbs and with statements that defendant “should have” done this or that or “should have” looked here or there. However, upon a careful reading, it becomes clear that such testimony is nothing more nor less than an attempt — with 20-20 hindsight — to figure out how to blame defendant for the tragedy that occurred. There is no suggestion — let alone proof— that any act or omission on the part of any of defendant’s employees could be described as a departure from accepted industry practices or otherwise as “so extremely careless that it was equivalent to recklessness.” Perhaps the closest thing to an exception to the foregoing is plaintiff’s assertion that defendant had an obligation to keep a “checklist”; and that the existence and use of such a list would have enabled defendant to verify whether plaintiff — as it assured defendant it had done — had indeed supplied all the plans defendant had requested of it. For present purposes we must assume that utilizing such a checklist would have been a good idea and would indeed have permitted defendant to become aware of plaintiff’s dereliction. However, here again, there is not a suggestion in the evidence that failure to create and maintain such a checklist was in any way at variance with established industry practice. In this respect, expert Cleary stated that it would be “inconceivable” not to use a “worklist,” while expert McCallum merely indicated that it was the practice at Lloyd’s Register to use some form of checklist. However, aside from that statement about Lloyd’s, there is nothing in the record to suggest that any other of the classification societies designated by the Bahamas, had adopted such a practice. See supra at pp. 371, 373. Nor, of course, is there anything in the record about the practices of the many other societies with which defendant competes. Turning to surveyor Nilsson’s failure during his inspections to discover the holes or violative piping systems, plaintiff advances several theories: 1) He was grossly negligent in attempting to complete in a single day a full SOLAS inspection of every watertight bulkhead; 2) He was grossly overworked by defendant; and 3) His simple failure to find the defects in itself established gross negligence. With respect to the first theory, as we have seen, supra p. 371, plaintiff’s claim is based on an absurd misconception of the relevant evidence. Regarding the second theory, plaintiff emphasizes two items of evidence. We should, plaintiff urges, draw an inference of overwork from defendant’s having “bought back” 20 days of Nilsson’s vacation time. However, it is uncontroverted that, the “buy back” notwithstanding, Nilsson had received at least the amount of vacation time the government of Sweden had determined to be sufficient. Plaintiff also asked us to infer that Nilsson was overworked by citing a resignation letter submitted by another of defendant’s employees. However, as we have seen, supra p. 374, that employee’s complaint was not that he had been overworked, but that he had been underpaid, underappreciated, and underworked. This leaves plaintiff with the bare assertion that the holes were there and, ideally, should have been found. Assuming for present purposes that a finder of fact could draw an inference of negligence simply from defendant’s failure to make a discovery, it can hardly be said to establish “indifference to present legal duty and utter forgetfulness of legal obligations.” Not a single surveyor or investigator who inspected the vessel over a period of 12 years (1976-1988) with respect to the Grey Water Piping System, and four years (1984-1988) with respect to the holes and the Starboard Galley Drain succeeded in detecting the defects. These professionals include surveyors from at least two other classification societies (Det Norske Veritas and Lloyd's Register), who performed full class and SOLAS inspections or annual surveys; officials of the Swedish government; and Canadian Coast Guard investigators who examined the Sundancer for the express purpose of determining the cause of its sinking. The “cover-up” theory must also fail. With respect to Nilsson’s “destruction” of his the last of his handwritten survey notes after having learned of the sinking, his uncontradicted testimony established that he did so pursuant to his regular practice. Moreover, plaintiff has produced absolutely no evidence that challenges Nilsson’s wholly reasonable testimony that upon hearing that the Sundancer’s captain had run the ship aground, ripping a hole into its hull, it did not dawn on him that he would someday be blamed for the disaster. See supra p. 374. Concerning the presence of whited-out entries in defendant’s Gothenburg Log Book, it is undisputed that this practice — as sloppy as it may be — was routine in that office. Moreover, as we have observed supra p. 374, plaintiff is unable to point to anything that suggests that this endemic practice was in any way associated with the Sundancer. Regar