author: MYRON H. THOMPSON, District Judge.

text:
    Leroy BIRL, etc., Plaintiff, v. Kenneth WALLIS, etc., et al., Defendants.
    Civ. A. No. 83-T-809-N.
    United States District Court, M.D. Alabama, N.D.
    Sept. 4, 1985.

      Greg Bass, Demopolis, Ala., Abigail Turner, Legal Services Corp. of Alabama, Inc. Mobile, Ala., for plaintiff.
    G.R. Trawick, R. Emmett Poundstone, III, Asst. Attys. Gen., Alabama Dept, of Mental Health, Montgomery, Ala., for defendants.
   MEMORANDUM OPINION

MYRON H. THOMPSON, District Judge.

This lawsuit challenges the constitutionality of Alabama’s mental health procedures for reconfining a person who has been involuntarily civilly committed to a state mental institution and then conditionally released. Plaintiff Leroy Birl has brought this lawsuit pursuant to 42 U.S. C.A. § 1983 against defendant Kenneth Wallis, court-appointed receiver and commissioner of the Alabama Department of Mental Health, and defendant Charles A. Fetner, director of Bryce Hospital, one of the department’s residential mental health facilities. The court’s jurisdiction has been properly invoked pursuant to 28 U.S.C.A. § 1343.

This lawsuit is now before the court on cross-motions for summary judgment. Summary judgment is appropriate only if “there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law.” Fed.R. Civ.P. 56(c). For reasons that follow, the court holds that the law and the undisputed facts warrant summary judgment declaring the challenged procedures unconstitutional and enjoining their further use against Birl.

I.

The parties do not dispute the following facts, which the court has culled from the evidence submitted.

Birl, who is in his late thirties, has suffered from mental disorder for at least seven years. He has been hospitalized for this disorder at least ten times. He has also frequently received treatment from doctors outside hospitals.

On August 4, 1982, Birl’s mother filed a petition in the probate court of Marengo County, Alabama, to have Birl involuntarily civilly committed to the custody of the Alabama Department of Mental Health. The court ordered Birl’s commitment on August 9, 1982, and the next day he was arrested and brought for admission to Bryce Hospital.

Bryce Hospital personnel examined and interviewed Birl and apparently also spoke to his mother and his wife. According to one record, Birl’s wife “reported that she first noticed her husband becoming sick approximately five years ago. ‘About March of every year it starts.’ ”

On December 3, 1982, Bryce Hospital personnel granted Birl a “temporary visit” with his mother for fourteen days. According to the evidence, a temporary visit is a release for a predetermined period of time, not exceeding fourteen days, for therapeutic or recreational purposes. Birl does not challenge the temporary visit policy to which he was subjected.

On December 17, 1982, Birl returned to Bryce Hospital for further evaluation. At that time, hospital personnel determined that he should be released on a “trial visit.” The only applicable written policy of the department for such visits was as follows:

Patients who are placed in the community on trial visit from the hospital and for whom a request for readmission is pending must be screened by the local community mental health center for evaluation prior to readmission. Criteria used to assess the appropriateness of readmission will be the same as those used for new admissions. All community resources should be exhausted prior to readmission to the state facility. When readmission is considered, the appropriate facility will be contacted by the local community mental health center for final acceptance of the patient.

In addition, Bryce Hospital’s October 1982 “Clinician’s Guide to Admissions and Releases” stated that a trial visit

indicates the patient is released into the community as a test of his ability to cope. Such patients are retained on the hospital rolls and, if in need of further inpatient psychiatric treatment, are allowed to return to the hospital anytime within six (6) months without new commitment proceedings. Such patients will be automatically discharged at the end of this six month period if they have not returned to the hospital for further treatment.

In his deposition, Dr. Charles Duane Burgess, clinical director of Bryce Hospital at the time of Birl’s commitment, gave a more detailed description of how trial visits operated at that time. According to Burgess, the decision to release a civilly-committed patient on a trial visit is made by a psychiatrist in consultation with the other members of ■ the patient’s “treatment team,” usually a psychologist, a social worker, and a nurse. The patient is released on trial visit with instructions to continue with medication and therapy previously prescribed. Arrangements are made for the patient to visit a community mental health center for continuity of care. The Department of Mental Health contracts with such centers for this purpose.

Bryce Hospital relies on the community mental health centers to recommend that a patient be returned from a trial visit if necessary. A psychiatrist, psychologist or social worker at a center makes such a recommendation by calling the admitting officer at Bryce Hospital. Bryce Hospital personnel at times attempt to verify the reasons given for the return of a patient from a trial visit but are not required to do so.

A patient may be returned to Bryce Hospital voluntarily or involuntarily. Upon return, the patient is usually seen by a psychiatrist right away. In any event, a psychiatrist must make the decision to readmit the patient. According to Burgess, “the decision is made on a case-by-case basis by the Community Mental Health Center and their decision is to return them for [the treatment] team or the psychiatrist on-call to evaluate for return or for readmission.” The psychiatrist who decides to readmit a patient from a trial visit is thus not always the psychiatrist on the treatment team making the original decision to release the patient.

Release on trial visit may well represent a patient’s full release from commitment. If not returned from trial visit after six months, the patient is discharged from the hospital’s rolls and must undergo new commitment proceedings tó be recommitted. However, if returned from trial visit during the first six months, the patient remains on the rolls as though there had been no release at all.

Birl testified by deposition regarding his release on trial visit on December 17, 1982. That day, he returned from his temporary visit as scheduled and met with his treatment team, which had to approve the trial visit. The team also told him what to do during the trial visit.

[Birl.] Well, they told — say take your medicine for one thing, try to get along with others, they say go to mental health and try to situate yourself back into the community.
Q. Okay. Did they tell you anything that would happen if you didn’t do all of that, follow all those conditions?
[Birl.] Yes.
Q. What did they tell you?
[Birl.] You would be recalled.
* * * * * *
Q. Did you agree to those conditions to be placed on trial visit?
[Birl.] You have to, [it is] the only way you can get out.

What transpired during Birl’s trial visit is not entirely clear. Until March 1983, there were apparently no events of note. The medical records for March 3, 1983, include the following “Emergency Call Record” taken by Martha Dunn, a counseling psychologist at West Alabama Mental Health Center:

REFERRAL SOURCE: General Public BRIEF STATEMENT OF PROBLEM: Leroy has been off his medication and is becoming manic in his actions. He has been making threats to public officials and to his family. He is not sleeping, is not eating, is becoming violent in behavior. — Calls made for pick-up order to return him to Bryce — no result — Home visit made to evaluate behavior.
ACTION TAKEN: Bryce will take him if he is returned the first of next week. DISPOSITION RECOMMENDATIONS: Return to Bryce. .

Bryce Hospital records include an “Initial Contact” form which stated in part:

March 3, 1983: Ms. Martha Dunn, West Alabama Mental Health Center representative, called regarding the need to return Mr. Birl from his trial visit place-ment____ As of today, Mr. Birl has been in the community calling up the attorney and judges, threatening several local people. He has been acting out and harassing people. He apparently was taken off his medication by a local physician due to drawing in his face.
* * * * * *
This information was referred to Dr. Tu-lao, psychiatrist on Intermediate Treatment, who agreed to accept him as a return from trial visit. As there were no beds available, I notified Ms. Dunn that we would accept him as soon as a bed became available.

In his deposition, Birl denied making any threats to anyone during his trial visit. He said that he called a lawyer in Demopo-lis, as well as the office of the probate judge who committed him. "... I just wanted to know why and what happened and who did it and why they did it. I was just searching for information.”

On March 15,1983, Birl went to the West Alabama Mental Health Center to inquire about the proper dosage of his medication. According to a record of this visit by outpatient counselor Carey H. Mason, Birl was given an appointment for the following week and told to alert clinicians at the center if his condition worsened.

Birl’s records also include a report of this visit by Martha Dunn, who had received the earlier complaint about Birl. Dunn’s report said that

Leroy was in to clinic — he was verbally abusive to the clients and it was obvious that he has not improved in his feelings. He still needs to go to Bryce. Center Receptionist call the Sheriff’s Office in Linden to request that Leroy be picked up and returned to Bryce.
ACTION TAKEN: Leroy returned to Bryce.

In his deposition, Birl said that he did not see Dunn on March 15, but did see Mason. After this visit, he returned home. There, a police officer came and took him back to Bryce Hospital. Birl testified that he did not wish to return.

Once back at Bryce Hospital, Birl tried to learn the reasons for his return. The evidence is in dispute as to whether the hospital staff informed Birl of the reasons for his return. Hospital officials maintain that their practice at the time was to inform patients of the reasons. However, Birl states that

when I was admitted back, I went to see the doctor on order. They told me I had to see the doctor. I asked them why. He told me he would find out and tell me later, but they [are] hush, hush up there. They don’t tell you nothing.

The psychiatrist on Birl’s treatment team, Dr. Marino S. Tulao, saw him on March 15. His “treatment notes” for that date state, “I don’t have any information why he was sent back to Bryce.” A record by Tulao for the following day, however, states:

According to reports, he started making threatening phone calls to the judge, to the director of mental health center, and to his attorney. He also was reportedly refusing to take his medication and be followed up by the mental health center.

Birl remained at Bryce Hospital until July 8, 1983, when he was again released on a trial visit. He was discharged from the rolls of Bryce Hospital on January 8, 1984.

On May 11,1983, Bryce Hospital issued a written policy on trial visits, and on August 27, 1984, the Department of Mental Health issued an expanded version of its written policy. While more extensive than the policies set forth above, neither of these subsequent policies altered the procedures afforded a patient on trial visit that Birl here challenges, except for the addition of the requirement that the hospital give the patient written notice of conditions governing the trial visit.

On August 4, 1983, during his second trial visit, Birl filed this lawsuit. He seeks declaratory and injunctive relief against enforcement against him of the Department of Mental Health’s procedures for reconfin-ing patients who have been released on trial visit.

II.

Before considering the merits of Birl’s challenge to his return from the first trial visit, the court must resolve three challenges to its authority to entertain this lawsuit.

A.

First, since Birl is not now on a trial visit and, in fact, has been discharged from Bryce Hospital and for now freed of the restrictions of the trial visit policy, the court must consider whether he has standing to pursue declaratory and injunctive relief against enforcement of the procedures for reconfining those on trial visits. Birl must have not only a live claim, but the standing to raise it. “The constitutional limits on standing eliminate claims in which the plaintiff has failed to make out a case or controversy between himself and the defendant.” Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 99, 99 S.Ct. 1601, 1607, 60 L.Ed.2d 66 (1979).

The Supreme Court has directly considered the standing of a plaintiff seeking declaratory and injunctive relief in the context of law enforcement and criminal prosecution. In City of Los Angeles v. Lyons, 461 U.S. 95, 103 S.Ct. 1660, 75 L.Ed.2d 675 (1983), the Court held that the plaintiff lacked standing to enjoin the police from using a dangerous chokehold on criminal suspects.

It is the reality of the threat of repeated injury that is relevant to the standing inquiry, not the plaintiffs subjective apprehensions. The emotional consequences of a prior act simply are not a sufficient basis for an injunction absent a real and immediate threat of future injury by the defendant.

Id. at 107 n. 8, 103 S.Ct. at 1668 n. 8.

The Court in Lyons relied on its earlier decision in O’Shea v. Littleton, 414 U.S. 488, 94 S.Ct. 669, 38 L.Ed.2d 674 (1974), where it found that plaintiffs had no standing to claim racial bias in criminal prosecutions. The Court said that

[p]ast exposure to illegal conduct does not in itself show a present case or controversy regarding injunctive relief ... if unaccompanied by any continuing, present adverse effects.

Id. at 496-97, 94 S.Ct. at 676. Past trouble with the law does not establish standing to challenge future illegal law enforcement or criminal prosecution because “[w]e assume that respondents will conduct their activities within the law and so avoid prosecution and conviction as well as exposure to the challenged course of conduct said to be followed by petitioners.” Id. at 498, 94 S.Ct. at 677; see also Dudley v. Stewart, 724 F.2d 1493, 1494 (11th Cir.1984). The court relied on similar reasoning in Lyons. Lyons, 461 U.S. at 107, 103 S.Ct. at 1668.

Like the plaintiffs in Lyons and O’Shea, Birl is seeking declaratory and injunctive relief from an allegedly illegal practice whose effects he suffered in the past. He does not seek damages, nor does he purport to represent a class of similarly situated people. The question then is whether Birl can show either “a real and immediate threat of future injury by the defendant,” Lyons, 461 U.S. at 107 n. 8, 103 S.Ct. at 1668 n. 8, or “continuing, present adverse effects,” O’Shea, 414 U.S. at 497, 94 S.Ct. at 676, so as to warrant declaratory and injunctive relief.

The fact is that Birl stands before the court in a distinctly different posture from that of the plaintiffs in Lyons and O’Shea. He is a long-time sufferer of mental disorder who has been hospitalized on numerous occasions, and not someone who once had a brush with the law and may never again. This is a difference recently recognized by the Eleventh Circuit and also supported by a Supreme Court decision regarding the civil commitment of the mentally ill.

In Lynch v. Baxley, 744 F.2d 1452 (11th Cir.1984), the Eleventh Circuit faced a standing question quite similar to Birl’s in the context of a challenge to the detention of the civilly committed in county jails pending their hospitalization. The court found that the named plaintiffs injury from jail detention was past at the time he was named as a plaintiff. Id. at 1456. Nevertheless, the court determined that the plaintiff had standing according to the facts found by the district court. “There is every indication that the named plaintiff could continue to be the subject of involuntary commitment petitions and thereby subject to emergency detention.” Id. at 1456-57. The court stressed the difference between this plaintiff and that in O’Shea.

[He] is at risk of being detained in jail not because of volitional acts on his part but because his mental condition would prompt his family, as it has done on two previous occasions, to petition for involuntary commitment.

Id. at 1457 n. 7.

The Supreme Court has also recognized that, unlike former criminal convicts, the mentally ill often face a continuing threat of involuntary commitment. In Vitek v. Jones, 445 U.S. 480, 100 S.Ct. 1254, 63 L.Ed.2d 552 (1980), the Court upheld a prison inmate’s claim that he had been transferred to a mental hospital without due process, despite the fact that he subsequently had been returned to prison.

... [T]he District Court, relying on Jones’ history of mental illness and the State’s representation that he represented a serious threat to his own safety as well as to that of others, found that Jones “is in fact under threat of being transferred to the state mental hospi-tal____” We see no reason to disagree with the District Court’s assessment at that time, and the reality of the controversy between Jones and the State has not been lessened by the cancellation of his parole and his return to state pris-on____

Id. at 486,100 S.Ct. at 1260; see also In Re Ballay, 482 F.2d 648, 651 (D.C.Cir.1973).

The facts that Birl presents here show that he does have standing to seek declaratory and injunctive relief against the trial visit procedure. Birl has been hospitalized for a mental disorder approximately ten times over a seven-year period. His records indicate that he had not fully recovered when he was last released from Bryce Hospital. One notation said “[p]atient will possibly do well if he follows prescribed treatment and family attends CMHC [Community Mental Health Center] to educate themselves re: illness.” Birl’s discharge from Bryce Hospital’s rolls six months later resulted from this very passage of time, according to the medical records, rather than from any identified improvement. There is no evidence that Birl has recovered from the illness that brought him to Bryce Hospital in the first place. According to his ex-wife, he becomes ill every year around March. “There is every indication that [Birl] could continue to be the subject of involuntary commitment petitions____” Lynch v. Bax-ley, 744 F.2d at 1456.

If recommitted, Birl will again become subject to the same trial visit policy that he here challenges, with the single change described above. This is a department-wide policy, so it will not matter whether Birl is placed at Bryce Hospital or another institution in Alabama.

In his deposition, Burgess testified that some patients are released without first undergoing trial visits; however, Birl would most likely not be one of these. They are, according to Burgess,

those patients who have had acute illness, have had rapid remission of their symptoms, so that for all intent they would be considered to be in good remission of their illness, that are showing no signs or symptoms of their illness that other people could see, then, those are the ones that are normally discharged. I am not sure what percentage, but, again, this is a clinical decision, but it would be normally those people who have not been in and out many times.

The evidence shows that Birl has been “in and out many times.” On the two occasions he has been released from Bryce Hospital in the past, he has been placed on trial visits. After any future commitment, Birl would most likely undergo a trial visit before being discharged. Birl faces “a real and immediate threat of future injury” from the trial visit policy, such as he alleges he suffered in 1982-83. City of Los Angeles v. Lyons, 461 U.S. at 107 n. 8, 103 S.Ct. at 1668 n. 8. Therefore, he does have standing to present his claims and seek declaratory and injunctive relief.

B.

Next, Wallis and Fetner have suggested that since the filing of this lawsuit Birl’s claim has become moot because of the latest written policies governing trial visits.

A claim is moot when there is “ ‘no reasonable expectation ... ’ that the alleged violation will recur ... and ... interim relief or events have completely and irrevocably eradicated the effects of the alleged violation.” City of Los Angeles v. Davis, 440 U.S. 625, 631, 99 S.Ct. 1379, 1383, 59 L.Ed.2d 642 (1979) (citations omitted). “The burden of demonstrating mootness ‘is a heavy one.’ ” Id.; see also Firefighters’ Local Union No. 1784 v. Stotts, 467 U.S. 561, 104 S.Ct. 2576, 81 L.Ed.2d 483 (1984).

Wallis and Fetner contend that Birl’s claim became moot with the issuance of the latest written policies on trial visits. These policies appear to have added only one procedural requirement to prior practice in effect at the time of Birl’s release, as described by Burgess. The single new requirement is that patients must be informed in writing, not just orally, of the conditions of the trial visit prior to release.

Since Birl’s challenge to trial visit procedures attacks more than the lack of written notice of conditions prior to release, the policies have not “completely and irrevocably eradicated the effects of the alleged violation,” City of Los Angeles v. Davis, 440 U.S. at 631, 99 S.Ct. at Í383, and his claim is therefore not moot.

C.

Finally, Wallis and Fetner contend that Birl’s avenue of relief is by way of habeas corpus procedures, 28 U.S.C.A. § 2254, rather than section 1983. They note that habeas corpus procedures require exhaustion of state remedies before a federal action may be commenced and that Birl has failed to meet this requirement. They contend that this court is therefore without authority to entertain this lawsuit.

“Supreme Court cases have continued to delineate the distinction between [a] actions to obtain release from confinement and [b] civil rights actions which challenge the constitutionality of procedures but where a decision of unconstitutionality does not of itself entitle the person in confinement to be released.” Chancery Clerk of Chickasaw County, Mississippi v. Wallace, 646 F.2d 151, 156-57 (5th Cir.1981) (Unit A). See, e.g., Preiser v. Rodriguez, 411 U.S. 475, 93 S.Ct. 1827, 36 L.Ed.2d 439 (1973) (challenge to denial of good-conduct-time credits requires use of habeas proceedings rather than § 1983 action because requested relief, award of good-conduct-time credits, would result in immediate release of some prisoners and acceleration of release of others); Gerstein v. Pugh, 420 U.S. 103, 107 n. 6, 95 S.Ct. 854, 859 n. 6, 43 L.Ed.2d 54 (1975) (allowing a § 1983 challenge to pretrial custody procedures since “release was neither asked nor ordered”). The former are habeas actions and require exhaustion. The latter are generally section 1983 actions, which do not require exhaustion under Patsy v. Board of Regents of the State of Florida, 457 U.S. 496, 102 S.Ct. 2557, 73 L.Ed.2d 172 (1982).

Here, Birl is merely challenging the procedures by which his first trial visit was revoked. He is not seeking release from confinement. His lawsuit is therefore properly premised on section 1983. See, e.g., Chancery Clerk of Chickasaw County, Mississippi v. Wallace, 646 F.2d at 155-58.

III.

Having concluded that Birl may pursue his claim, the court must now determine whether the claim is valid.

A.

It is now axiomatic that involuntary civil commitment imposes a “massive curtailment of liberty,” Humphrey v. Cady, 405 U.S. 504, 509, 92 S.Ct. 1048, 1052, 31 L.Ed.2d 394 (1972), “that requires due process protection” under the fourteenth amendment to the U.S. Constitution. Addington v. Texas, 441 U.S. 418, 425, 99 S.Ct. 1804, 1809, 60 L.Ed.2d 323 (1979). The Supreme Court has held that even a prisoner, whose constitutional rights are greatly reduced, see Hudson v. Palmer, — U.S. —, 104 S.Ct. 3194, 82 L.Ed.2d 393 (1984); Wolff v. McDonnell, 418 U.S. 539, 94 S.Ct. 2963, 41 L.Ed.2d 935 (1974), has an interest warranting protection when he is considered for commitment for mental illness. Vitek v. Jones, 445 U.S. 480,100 S.Ct. 1254, 63 L.Ed.2d 552 (1980).

The fact that Birl’s trial visit was only a conditional release makes no difference, for the Supreme Court has explicitly recognized the existence of the liberty interest for persons conditionally released from confinement in the context of parole revocations. In Morrissey v. Brewer, 408 U.S. 471, 92 S.Ct. 2593, 33 L.Ed.2d 484 (1972), the Supreme Court held that the state could not revoke parole without following certain minimum procedures. The Court required these procedures because “the liberty of a parolee, although indeterminate, includes many of the core values of unqualified liberty and its termination inflicts a ‘grievous loss’ on the parolee and often on others.” Id. at 482, 92 S.Ct. at 2601.

Parole and the trial visit program share several characteristics. First, both constitute a conditional release intended to permit the parolee or patient to demonstrate that he can function in society. “The parolee has been released from prison based on an evaluation that he shows reasonable promise of being able to return to society and function as a responsible, self-reliant person.” Id. at 482, 92 S.Ct. at 2600. Similarly, the trial visit is “a test of ... ability to cope,” according to Bryce Hospital’s manual. Furthermore, both the parolee and the mental patient on trial visit enjoy considerable liberty. “Subject to the conditions of his parole, [the parolee] can be gainfully employed and is free to be with family and friends and to form the other enduring attachments of normal life.” Id. at 483, 92 S.Ct. at 2600. Birl was equally free from restraints on trial visit, for the evidence showed that Birl was required only to “try to situate [himself] back into the community” and to continue with therapy and medication. In light of the similarities between parole and trial visits, the Court’s conclusions in Morrissey clearly apply. Regardless of the fact that Birl’s release on trial visit was only conditional, therefore, he was still entitled to certain procedural protections before his release could be terminated. As the Court noted in Morrissey, “the liberty is valuable and must be seen as within the protection of the Fourteenth Amendment. Its termination calls for some orderly process[.]” Id. at 482, 92 S.Ct. at 2601.

At least two other courts have relied on Morrissey to reach the conclusion that patients who have been conditionally released cannot be reconfined without being given some procedural protections. See Lewis v. Donahue, 437 F.Supp. 112, 114 (W.D.Okl. 1977) (three-judge court); Meisel v. Kre-mens 405 F.Supp. 1253,1257 (E.D.Pa.1975); see also C.R. v. Adams, 649 F.2d 625 (8th Cir.1981). In Lewis, for example, the three-judge court held that

a statute which permits the revocation of outpatient or convalescent leave without notice or opportunity to be heard prior to institutionalization is infirm for failure to comport with the due process clause of the Fourteenth Amendment of the Constitution of the United States.

Lewis, 437 F.Supp. at 114. As Lewis makes clear, due process requires that mental patients such as Birl be given certain basic procedural safeguards before they are returned from trial visit.

B.

Wallis and Fetner argue that while re-confinement could conceivably require due process protection in some cases, no such protections are required here because the decision to reconfine Birl was made by a private party and not the state. According to Wallis and Fetner, the facts show that Birl was returned from the trial visit by personnel from West Alabama Mental Health Center, which is a private facility, rather than the state-run Bryce Hospital. Based on this interpretation of the facts, Wallis and Fetner contend that the fourteenth amendment does not even come into play because there was no state action.

Wallis and Fetner’s position has no basis in the record. The evidence indicates that the decision to readmit Birl was made by Dr. Tulao of Bryce Hospital based on a report to him from the Bryce Hospital admitting officer who in turn had received a call from West Alabama Mental Health Center recommending that Birl be returned. That Tulao acted on information and advice from others does not mean that his actions were not his own. Indeed, his involvement was in accordance with department policy, as described by Burgess, which requires psychiatrists to effect all returns from trial visits.

Even assuming that the community mental health center was at least partially responsible for Birl’s return, Wallis and Fetner are not absolved. The department of which they are supervisory employees has contracted with the community mental health centers, according to Burgess, to do just what they did to Birl. Regardless of the “private” status of the centers, they are sufficiently involved with the state to be considered state actors. See American Civil Liberties Union of Georgia v. Rabun County Chamber of Commerce, 698 F.2d 1098, 1109 n. 19 (11th Cir.1983). The private facility’s role in Birl’s reconfinement was minimal, but in any case the centers must be considered to be state actors. Having suffered a deprivation of liberty as a result of state action, Birl was entitled to basic due process protections.

C.

There can be no question that Birl was denied the safeguards of due process.

Due process requires “that a deprivation of life, liberty, or property, ‘be preceded by notice and opportunity for hearing appropriate to the nature of the case.’ ” Cleveland Bd. of Educ. v. Loudermill, — U.S. —, —, 105 S.Ct. 1487, 1493, 84 L.Ed.2d 494 (1985) (quoting Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 313, 70 S.Ct. 652, 656, 94 L.Ed. 865 (1950)). This requirement certainly was not met here, for Birl was reconfined without any prior notice or opportunity for hearing. The West Alabama Mental Health Center requested and Bryce Hospital accepted Birl’s reconfinement .without giving Birl a reasonable opportunity to challenge the decision, either before he was reconfined or within a reasonable time thereafter. All Birl received was notice of the reasons for his reconfinement, and that came only after he had already been returned and apparently only when he specifically asked. Since an after-the-fact notification of the reasons for confinement hardly meets the due process requirements identified in Loudermill, the court concludes that Birl was denied the protections to which he was entitled.

IV.

A determination that Birl was entitled to and denied due process leads to the question of what process is due. See Santosky v. Kramer, 455 U.S. 745, 754, 102 S.Ct. 1388, 1394, 71 L.Ed.2d 599 (1982). In Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976), the Supreme Court explained that the nature of the procedure required in a given situation depends upon three factors:

First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government’s interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirements would entail.

Id. at 336, 96 S.Ct. at 903.

A.

Without specifically addressing the three factors set forth in Mathews, Wallis and Fetner rely on Williams v. Wallis, 734 F.2d 1434 (11th Cir.1984) to argue that the current procedures are sufficient. Williams held that due process does not require persons committed to the Alabama mental health system after having been acquitted of a criminal offense by reason of insanity to be given adversarial proceedings. Williams is inapplicable to the present case, however, because the procedures used and the interests at stake are so different for patients deemed criminally insane and patients who are civilly committed.

The procedures used in Williams kept “the risk of an erroneous deprivation” of liberty, the second Mathews factor, extremely low. First, the decision whether to release a patient was made by a treatment team that had followed that particular patient’s progress from the date he was committed and was therefore quite familiar with the patient’s condition. Furthermore, the treatment teams were made up of medical professionals who “certainly have no bias against the patients or against re-lease____ [W]e can safely assume they are disinterested decision-makers.” Id. at 1438. Finally, the treatment teams saw the patients quite often, and “the frequency of the evaluations also reduces the risk that the patient will be confined any longer than necessary.” Id.

The procedures used to reconfine Birl are in sharp contrast to those at issue in Williams. Under the Mental Health Department’s procedures, a patient on a trial visit could be reconfined on the basis of an unconfirmed report by an unnamed member of the public or because someone in a community mental health center disagreed with the diagnosis of the psychiatrist who originally recommended the trial visit. Indeed, when Birl was first returned to Bryce, the psychiatrist on his treatment team did not even know the reasons for his reconfinement. Unlike the situation in Williams, Birl had no assurance that the decision to reconfine him would be made by someone who was reliable, knew him well, and saw him frequently. There is therefore a much higher risk of erroneous deprivation of liberty in Birl’s situation, and thus the procedural safeguards must be correspondingly more stringent.

An additional factor indicating that Williams is inapplicable is that the government does not have the same interest in the continued commitment of the civilly committed patient as it does in that of the criminally insane. As the court noted in Williams, “[t]he state’s interest in preventing the premature release of individuals who have already proven their dangerousness to society by committing a criminal act is substantial.” Id. at 1439. The government has considerably less interest in reconfining civilly committed patients, for these patients have not committed crimes and in fact may be guilty of nothing more than unusual or bizarre behavior. Because the government’s interest in re-confining a patient such as Birl is relatively weak, it will have to provide more elaborate procedural safeguards than required by Williams. Of the three factors articulated in Mathews, only one — the private interest — was the same for the Williams plaintiffs and for Birl. The other two factors both indicate that Birl is entitled to more protection than the non-adversarial procedures upheld in Williams.

B.

While it is clear that Birl should be given more protection than he received or that was provided in Williams, the record is not sufficient to determine exactly what procedures are required. In arguing against the present procedures, Birl has made clear the private interest in avoiding unexplained or unnecessary reconfinements. There may also be a private inter-est in assuring that prompt medical attention is available for recurring mental disorders, however, and this interest should certainly be taken into account when developing reconfinement procedures. Before the first Mathews factor can be addressed, therefore, the parties must define the exact nature of the private interest.

Further explanation of the government’s interest is also necessary. The record as it stands does not make clear the government’s interest in the release and recon-finement of mental patients, nor does it establish the extent of the fiscal and administrative burdens that new procedures might impose. Finally, the record fails to address directly either the risk of erroneous deprivation or the likely value of additional procedures. Without a more thorough presentation of all three Mathews factors by the parties, it is impossible to determine which specific procedures should be implemented.

The court also considers it primarily the task of the state, through its legislature or administrative agencies, to identify the proper procedures for reconfinement decisions. See Lewis v. Donahue, 437 F.Supp. at 114. So far, such procedures have been patently lacking. The court will therefore provide Wallis and Fetner with the opportunity to propose detailed, written procedures within a fixed period of time in conformance with constitutional requirements. The court will also provide Birl an opportunity to review and respond to the proposed procedures. The parties are encouraged to agree on these procedures, if possible. The court will then require the parties to submit their proposed procedures with evidence substantiating their basis according to the Mathews v. Eldridge factors. The court will review them on this basis and determine whether they provide due process or require alteration. For this purpose, the court retains jurisdiction over this cause.

An appropriate judgment will be entered.

      . The probate judge who committed Birl was originally a defendant in this lawsuit; however, the judge and Birl reached a settlement in which the judge admitted that Birl's commitment violated constitutional requirements. Birl is no longer pursuing his claim regarding the commitment itself.

      . The factual dispute whether Birl made threats in not material to this cause, since Birl does not claim so much that he should not have been returned from trial visit as simply that the procedures by which he was returned were defective. Indeed, whether Birl should have been returned is not for this court to decide. The dispute is nevertheless illustrative of what the procedures Birl proposes be implemented would have resolved.

      . In fact, it is not entirely clear from the record what the current procedure is. For example, it appears that patients on trial visit are recon-fined only after a hearing before a probate judge in some counties, but the court cannot tell with certainty from the record whether this is indeed true.


source: Caselaw Access Project

author: ROBERT L. CARTER, District Judge.

license: Public Domain

text:
    The INGERSOLL MILLING MACHINE COMPANY, Plaintiff, v. M/V BODENA, her engines, boilers, etc., Excellent Marine, Inc., and Taiwan International Line Limited, Defendants. TAIWAN INTERNATIONAL LINE LIMITED, Third-Party Plaintiff, v. J.E. BERNARD, & CO., Third-Party Defendant. The INGERSOLL MILLING MACHINE COMPANY, Plaintiff, v. J.E. BERNARD & CO. and Fireman’s Fund Insurance Co., Defendants.
    Nos. 80 Civ. 6729 (RLC), 81 Civ. 4744 (RLC).
    United States District Court, S.D. New York.
    Sept. 4, 1985.

      John Doar, Michael S. Devorkin, John Doar Law Offices, New York City, for plaintiff Ingersoll Milling Machine Co.; David Wade, Richard M. Zuckerman, Eugene O’Neill, Jr., New York City, of counsel.
    Warren J. Marwedel, Stephen C. Velt-man, Tribler & Marwedel, P.C., Chicago, 111., for defendant Fireman’s Fund Ins. Co.; Dale L. Schlafer, Chicago, 111., of counsel.
    Walker & Corsa, New York City, for defendant Excellent Marine, Inc.; Christopher H. Mansuy, Leroy S. Corsa, New York City, of counsel.
    Dougherty, Ryan, Mahoney, Pellegrino, Giuffra & Zambito, New York City, for defendant and third-party plaintiff Taiwan Intern. Line Ltd.; Thomas L. Tisdale, Vincent J. Barra, New York City, of counsel.
    Wildman, Harrold, Allen & Dixon, Chicago, 111., for defendant and third-party defendant J.E. Bernard & Co.; H. Roderic Heard, Susan L. Walker, Carol J. Gerner, Chicago, 111., of counsel.
   OPINION

ROBERT L. CARTER, District Judge.

I

The Facts

Plaintiff, the Ingersoll Milling Machine Co. (“Ingersoll”), is principally engaged in the business of manufacturing special design machinery. It is privately owned and operates out of Rockford, Illinois. Plaintiff has brought two actions, 80 Civ. 6729, against the M/V Bodena (“the Bodena”), her engines, etc., Excellent Marine, Inc. (“Excellent Marine”) and Taiwan International Line Ltd. (“Taiwan”), and 81 Civ. 4744, against J.E. Bernard & Co. (“Bernard”) and Fireman’s Fund Insurance Co. (“Fireman’s Fund”). The cases have been consolidated for all purposes.

Defendant Excellent Marine is a foreign corporation doing business in Hong Kong and is the owner of the Bodena. Defendant Taiwan is a corporation doing business in Taiwan and has time chartered the Bode-na from Excellent Marine pursuant to the terms and conditions of a charter party dated May 9, 1979. Both Excellent Marine and Taiwan are engaged in the business of common carriers of merchandise by water for hire and operated, managed or otherwise controlled the Bodena as a common carrier of merchandise by water for hire between New Orleans and Pusan, Korea, during the period relevant to this litigation. Defendant Bernard is a freight forwarder doing business in Elk Grove Village, Illinois, and other parts of the United States. Defendant Fireman’s Fund is a wholly owned subsidiary of the American Express Co., having its principal place of business in San Francisco, California, and doing business throughout the United States.

In January, 1978, Waldrich Siegen, GmbH. (“Waldrich Siegen”) a sister corporation to plaintiff and, like plaintiff, a wholly owned subsidiary of Ingersoll International, contracted to sell heavy specially designed machines to Hyundai International, Inc. (“Hyundai”) in Korea. Waldrich Siegen engaged Ingersoll as subcontractor to manufacture Shop Order 24441 (“S024441”), a ram type, horizontal spindle, traveling column machinery center for Hyundai at a purchase price of $2,108,000 and to arrange for its transportation to Korea.

Sometime in July or August, 1979, John Mellon of Ingersoll contacted Bernard and Gryphon Shipping Services, Inc. (“Gryphon”), a broker and steamship agent in Chicago. He asked William J. Brokamp of Bernard to shop around for freight rates on shipments of machinery to Korea, and asked Michael Malarski of Gryphon about the type of service available on Jin Yang Line for the shipment of machinery to Korea. He gave Malarski an estimate of the sizes of the expected shipments. Both Bro-kamp and Malarski made the requested inquiries.

Malarski spoke to Arnold Larsen, Vice President of Cathay Pacific Maritime, Taiwan’s General Agent in New York, in about mid-August. Larsen offered space on the Bodena scheduled to leave New Orleans at the end of September for Korea. Larsen advised Malarski that another Taiwan vessel would also be available in early October, and Larsen agreed that if Malar-ski secured the Ingersoll cargo for shipment by Taiwan, Gryphon would receive a commission from Taiwan of 1.25-2.50% and the freight forwarder would receive a commission of 1.25%.

Malarski informed Mellon of the availability of the Taiwan Bodena in September and of another vessel in October. Mellon advised Malarski that he accepted the terms quoted for the Bodena, that the shipment would consist of 20 pieces which accorded with his initial estimate and that Bernard would be the freight forwarder. Malarski advised Brokamp that Taiwan would pay Bernard a commission of 1.25%.

Larsen testified at trial that he told Ma-larski that the shipment would be on deck since the Bodena had no available cargo space below deck. Malarski disputes being told or agreeing that the cargo was to be shipped on deck, or being advised that space was a problem on the Bodena. No booking notes were made by either Malar-ski or Larsen. Neither Larsen’s notebook, which contained a chronological record of his booking communications, nor his worksheets noted that the Ingersoll cargo had been booked on deck. Moreover, the evidence at trial showed that there was space below deck when the Ingersoll cargo was stowed.

The shipments of the 20 boxes to New Orleans commenced on August 29, 1979. One box came from Detroit, and the others left Rockford at various dates and were delivered to New Orleans by truck and rail to the custody of the Cooper Stevedoring Company at Julia Street Wharf in New Orleans. The machinery was packed by Ingersoll employees. Bernard was notified when the boxes left Rockford.

The Ingersoll cargo was loaded on September 26 and 27, 1979. Eighteen of the boxes were stowed on deck when the Bode-na left New Orleans on September 27, 1979. When the Bodena left Savannah on October 14, 1979, three boxes of the Inger-soll shipment were stowed below deck.

By letter dated September 10, 1979, Fred Woywod of Ingersoll asked Bernard to secure three original and four copies of clean on board bills of lading, listing ocean freight prepaid. Georgette Seipler, the documentation clerk at Bernard, pursuant to Ingersoll’s letter, prepared a master ditto form and the shipper’s export declarations. Bernard by letter requested Taiwan to provide three original clean on board bills of lading and at least 10 copies, and on September 25, Bernard sent one master ditto form for the bills of lading and three export declarations to Mid Gulf, Taiwan’s agent in New Orleans, and another master ditto form and a copy of the export declarations to Gryphon.

Bernard used the master ditto form to prepare its advance notice of shipment, which was sent to Woywod on September 25, 1979. Bernard’s advance notice was similar to a bill of lading in format and contained the same shipping information that appears on the top half of a bill of lading. The advance notice which Woywod received on September 26, contained no notation as to stowage. Accompanying the advance notice was the following message: “the shipment described above is scheduled for exportation as indicated above ...” Woywod called Bernard to advise that all the data on the advance notice was correct except the port of discharge should be changed to Pusan. As Woywod recalls his conversation with Seipler, she advised him that the port would be changed to Pusan and shipping charges would be added but that otherwise the bill of lading would mirror the advance notice.

On September 26, Woywod called Bro-kamp asking for the quickest way to get the bills of lading other than having to wait to have them come by mail. Brokamp suggested that Woywod might pick up the bills of lading at Gryphon in Chicago. On September 28,1979, Woywod sent a messenger to Gryphon to pick up the documents, but they were not ready. An Ingersoll messenger returned to Chicago on October 1,1979, picked up the originals and four copies and delivered them to Woywod who saw the documents at the end of the day. Bernard also received copies the same day. The bills of lading contained the words “on deck at shippers risk”. Woywod did not know that these words rendered the bills of lading unclean. He did not notice them. However, the phrase was in bold letters for him to see.

The phrase “on deck at shipper’s risk” was added to the bills of lading on September 27, 1979, by Mid Gulf, Taiwan’s agent. After the vessel sailed, the master of the Bodena mailed the originals and 13 copies to the Chicago area.

Woywod sent copies of the bills of lading to Waldrich Siegen. Apparently, no one at Bernard, Gryphon, Ingersoll or Waldrich Siegen who saw the copies of the bills of lading, at least until preparation for this litigation began, took note of or recognized the significance of the “on deck at shipper’s risk” legend on the bills of lading.

The voyage to Korea was beset with storms, heavy seas and wind. The ship experienced heavy rolling and pitching during parts of the voyage, and ocean water was constantly on deck. Some of the boxes on deck were broken. Substantia] quantities of water penetrated the boxes, and sometimes the boxes sat in water to their top.

The Bodena arrived at Pusan on November 29, 1979, and unloaded. Ingersoll’s cargo was discharged to Hyundai’s stevedore, Kukji Transportation Co. The foreman found one on deck box discolored, some boxes broken and all the bands on the on deck boxes rusty. None of the under deck boxes were in this condition. On November 30, 1979, 17 Ingersoll boxes on deck were entered in the exceptional column on the damage report prepared by the foreman. The cargo was placed on four barges, subsequently discharged and moved to Changwon. K.M. Lee, Hyundai’s assistant manager for heavy machinery, observed the discoloration, broken boxes, loose boards and rust on the parts of the machinery he could see. No pictures were taken at that time. At Hyundai’s request a survey was taken by H. Lee, a licensed surveyor. The surveyor found discoloration, broken boxes, loose boards, and rust on the bands. He looked inside the boxes and described the surfaces seen as heavily rusted. He took 6 photographs to illustrate the conditions he found. In his report the surveyor described the damage to the cargo as irreparable because of widespread corrosion from sea water and exposure during the voyage.

Ronald Humphries was a service manager in the heavy division at Ingersoll at the time of these events. His assignment was to oversee the erecting of the machine at Changwon, and he went to Korea in December for that purpose. He arrived in Changwon on December 14,1979. The cargo was located in the Hyundai’s heavy fabrication shop. The structure of the building was completed, but some windows and doors were missing, and the floors were unfinished. The plant itself was about 500 yards from the river estuary. He found the cargo in similar condition to that found by the stevedore foreman on inspecting the cargo on discharge at Pusan, by K.M. Lee, Hyundai’s assistant manager for heavy machinery on the cargo’s arrival at Changwon and by H. Lee, the surveyor, when he inspected the cargo. Humphries returned to Changwon in March, 1980, and found the machinery in the same condition he had noted in December, 1979.

Plaintiff has an all risk policy with Fireman’s Fund. This is an open marine cargo policy which covered all of Ingersoll’s shipments. Ingersoll filled out a certificate of insurance for each shipment, indicating the contents of the cargo, its value, destination and the carrier. A particular shipment became covered under the policy when Inger-soll sent Fireman’s Fund a copy of the certificate of insurance, or when Ingersoll issued a monthly declaration covering all shipments for that month. All shipments were automatically covered even if the certificate or monthly declaration was sent after a loss had occurred.

The pertinent provisions of the policy are set out below:

INSURING CLAUSES

PERILS CLAUSE 16. Touching the adventures and perils which this Company is content to bear, and take upon itself in this voyage, they are of the Seas, Fires, Assailing Thieves, Jettisons, Barratry of the Master and Mariners, and all other like perils, losses and misfortunes, that have or shall come to the hurt, detriment or damage of the said goods and merchandise or any part thereof.
AVERAGE CLAUSES 17. (a) UNDER DECK shipments — Including containerized shipments under optional On Deck &/or Under Deck bill(s) of lading are insured. Warranted free from Particular Average unless the vessel or craft be stranded, sunk or burnt, but notwithstanding this warranty this Company is to pay any loss of or damage to the interest insured which may reasonably be attributed to fire, collision or contact of the vessel and/or craft and/or conveyance with any external substance (ice included) other than water, or to discharge of cargo at port of distress. The foregoing warranty, however shall not apply where broader terms of Average are provided for hereinafter.
BROADER TERMS:
Insured against all risks of physical loss or damage from any external cause irrespective of percentage, including theft, pilferage and/or non-delivery, but excluding, nevertheless, the risks of war, strikes, riots, seizure, detainment, confiscation, requisition, nationalization and other risks excluded by the “F.C.&S. and/or S.R. & C.C.” warranties in the printed portion of the policy except to the extent that such risks may be specifically covered by endorsement, also warranted free from any claims arising out of the inherent vice of the goods insured or consequent upon loss of time and/or market, (b) ON DECK shipments are insured:—
Warranted free of particular average unless caused by the vessel and/or interest insured being stranded, sunk, burnt, on fire or in collision with another ship or vessel or with ice or with any substance other than water, but liable for jettison and/or washing overboard, irrespective of percentage. The foregoing warranty, however, shall not apply when broader terms of Average are provided for hereinafter.

Clause 17(a) of the policy provides for full coverage of up to $2.5 million for all under deck shipments. Clause 17(b) negates coverage for partial loss of on deck shipments and, if covered, these shipments are insured only to a limit of $175,000 pursuant to clause 8(B)(2).

Fireman’s Fund has interpreted clause 17(a) to cover losses suffered from on deck stowage where there is an under deck bill of lading or a bill of lading not specifying stowage but the cargo is stowed on deck without the insured’s consent. It applies 17(b), however, where the cargo is stowed on deck and there is an on deck bill of lading without regard to the insured’s consent.

Robert Donovan, Fireman’s Fund’s Marine Secretary and senior underwriter in the midwest, whose department had responsibility for writing the Ingersoll policy, testified that the contract terms of this insurance were not contained solely in the four corners of the policy. Donovan’s initial reaction was that there should be coverage on the all risk policy. After he contacted John Stewart on the west coast and other senior Fireman’s Fund officials, he changed his mind. Fireman’s Fund officials seem to agree that the policy covers losses resulting from the insured’s negligence since the policy was intended to cover fortuitous circumstances. While Robert Burke, Assistant Vice President and Nationwide Manager for Ocean Marine Claims, agreed that some negligence of the insured was covered, he was unable to define when such negligence was covered and when it was not.

II

Discussion

A. Bernard, Taiwan and Excellent Marine

There is no evidence that Malarski told anyone at Ingersoll that on deck shipment was to take place if the Bodena was booked. No booking notes were made by either Malarski or Larsen, and the various indications that Larsen relied on to support his version of what he told Malarski were at best inconclusive. Taiwan discounts the evidence at trial that there was available stowage below the deck of the Bodena when Ingersoll’s cargo was loaded on board. Taiwan argues that the evidence presented did not take into account access; that cargo must be stowed in relation to time and ports of discharge. While this is true, Taiwan has not shown that the available space evidenced at trial could not have been used for plaintiff’s cargo because the cargo in that space would have to be discharged before the Bodena reached Pusan. More importantly, it has not established that when the vessel arrived at New Orleans, stowage below deck could not have been so organized that plaintiff’s cargo could have been stowed pursuant to a rational discharge plan based on time and port of discharge.

Defendants, certainly Excellent Marine, Taiwan and Bernard, vehemently argue that Gryphon was Ingersoll’s agent. The record, however, does not support that contention. Taiwan paid Gryphon a commission in connection with this transaction, while Ingersoll paid Gryphon nothing. That fact alone makes Gryphon more clearly Taiwan’s agent than Ingersoll’s. Gryphon contacted carriers servicing the Far East at Ingersoll’s request for information on the availability of vessels to carry three shipments of machinery to the Far East. Malarski found out from Larsen that the Bodena was available in September, 1979. He told Larsen of Ingersoll’s needs and was offered a commission if he succeeded in getting Ingersoll’s business for Taiwan. Gryphon became Taiwan’s agent, not In-gersoll’s. In addition, the only authority Malarski had from Ingersoll was to secure the information Mellon asked for and report back.

A shipper’s normal expectation on booking cargo for shipment is that it will be stowed below deck, unless the shipper expressly agrees to have the cargo stowed on deck. Encyclopaedia Britannica, Inc. v. S.S. Hong Kong Producer, 422 F.2d 7, 14 (2d Cir.1969), cert. denied, 397 U.S. 964, 90 S.Ct. 998, 25 L.Ed.2d 255 (1970). Accord, Calmaquip Engineering West Hemisphere Corp. v. West Coast Carriers, Ltd., 650 F.2d 633, 639 (5th Cir.1981). Since this would be the normal expectation and custom and usage of the business, any deviation therefrom would have to be established by those claiming it. St. John’s N.F. Shipping Corp. v. S.A. Companhia Geral Commercial Do Rio De Janiero, 263 U.S. 119, 124, 44 S.Ct. 30, 31, 68 L.Ed. 201 (1924). Even proof that Malarski and Larsen agreed that the Ingersoll shipment was to go on deck would be insufficient to show that Ingersoll knew or agreed to on deck shipment prior to or at the time of the booking or loading of the cargo.

There is no evidence that Ingersoll specified below deck stowage either. Nor was the contention that Ingersoll always shipped below deck established. Indeed, the record shows that subsequent to this shipment, some Ingersoll machinery was carried on deck on another vessel. All of this is beside the point, however, since our concern is only with the Bodena’s voyage to Pusan, Korea, leaving New Orleans on September 27, 1979. As to that voyage there is no credible evidence that Ingersoll agreed to an on deck shipment. Stowage on deck is the unexpected, which the carrier cannot do without the express permission of the shipper. It clearly would make no sense for Ingersoll to expose its $2 million machinery to on deck shipment at its own risk.

Plaintiff engages in extensive discussions in its post trial brief of the validity under the maritime law of oral contracts of carriage and argues that the arrangements in this case were such. However, that question need not be explored in any depth. There is no dispute that a contract of carriage existed. Taiwan contends that there was an oral agreement to allow the Bodena to carry the cargo on deck, and that such a contract was evidenced by the on deck at the shipper’s risk bills of lading. Since Taiwan and anyone making that contention has the burden of proving such agreement, and Taiwan’s proof does not meet that burden, we have a contract of carriage without evidence of any agreement by the shipper to allow the carrier to stow the cargo on deck.

Defendants argue that Mellon was present in New Orleans at the loading of the Ingersoll cargo on September 26 and 27. The evidence shows that Mellon was in New Orleans on September 21, but there is no evidence that he or any other Ingersoll representative was present when cargo was loaded on September 26 and 27.

The form of Bernard's advance notice would tend to give the recipient the idea that the notice contained all the vital information as it would appear on the bills of lading. Bernard seeks to discount Woy-wod’s recollection of his September 26, 1979 conversation with Seipler to the effect that, except for the change of the port of discharge and shipping charges, the bills of lading would be the same as the advance notice, but it has the ring of truth. Nothing was ever said to Bernard or Seipler by Mid Gulf or Taiwan about on deck stowage of the Ingersoll machinery. Stowage is not usually specified on a clean bill of lading. Seipler had every reason to believe that the bills of lading, with the port of discharge corrected and the shipping charges added, would not differ from the advance notice. However, Woywod’s failure to examine the bills of lading when he received them on October 1, 1979, cannot be justified on the basis of his September 26 conversation with Seipler. Ingersoll’s apparent position that it had no knowledge that its machinery was carried on deck until the damage was discovered in Korea has no merit. It had constructive notice that its goods were being carried on deck at Ingersoll’s risk on October 1, 1979, when the bills of lading were delivered to Woywod. The fact that he did not understand the legal significance of the legend on the bills of lading is immaterial for the purpose of establishing when Ingersoll was on notice that its machinery was being shipped to Korea on deck and at its risk.

Bernard, Taiwan, and Excellent Marine spent an inordinate amount of time contending at trial and in their briefs that the bills of lading were clean. That argument is without merit and is wholly inconsistent with the purpose and meaning of a clean bill of lading.

Under the Carriage of Goods by Sea Act (“COGSA”), 46 U.S.C. § 1300 et seq., a prima facie case of carrier liability is established by proof of delivery of the cargo to the carrier in good condition and discharge at destination in a damaged state. A clean on board bill of lading as a general rule satisfies the showing of good order at the time of shipment. Emmco Insurance Co. v. Wallenius Caribbean Line, S.A., 492 F.2d 508, 513 (5th Cir.1974). The very purpose of clean on board bills of lading is to provide the shipper with documentation that the damage to his goods, if any occurs, cannot be attributed to him. In short, its purpose is to relieve the shipper of risk during the voyage. The bills of lading in this case maintain liability on Ingersoll throughout the voyage. Such bills cannot be clean. In any event, Judge Werker, who first handled this case in this court, and I have no trouble finding these bills of lading providing for on deck stowage at the shipper’s risk unclean. As Judge Werker stated in disposing of the motions for summary judgment. “It long has been recognized that a clean bill of lading either is silent on the method of stowage, thereby portending that goods are to be stowed under deck, or does not specifically provide for on-deck stowage. There is no doubt that a reference to the poor condition of the cargo would make a bill of lading unclean. Even in the absence of such a reference, however, a ... bill of lading that specifically calls for on-deck stowage is not clean.” Memorandum Decision, June 23, 1983, slip op. at 6 (citations omitted).

Taiwan argues that since Woywod thought the bills of lading were clean, as did Bernard and Taiwan, there was a meeting of the minds and a valid bargain was struck. That argument makes no sense. Woywod may not have recognized a clean bill of lading when he saw one in 1979, but he asked in clear, unambiguous language for Bernard to supply clean bills of lading. Bernard and Taiwan are in the business of dealing with bills of lading constantly. Bernard held itself out as knowing what a clean bill of lading was. At any rate, Bernard and Taiwan should have known what constitutes a clean bill. That they were ignorant in this regard will not suffice to free them from responsibility. Whatever Bernard’s and Taiwan’s view about on deck shipment being consonant with instructions to provide clean bills of lading, they had to know that shipper’s risk notation rendered the bills of lading unclean.

Bernard argues that because it performed some but not all of the duties of a freight forwarder, it should not be held accountable for any damage to plaintiff’s shipment. Bernard points out that it did not engage the Bodena, and it did not pick up the original bills of lading or deliver them to Ingersoll. That is beside the point. Bernard was engaged to secure clean on board bills of lading, and it failed to do so. Additionally, on receipt of the bills of lading on October 1, 1979, it failed to examine the copies'it received and failed to advise Ingersoll that Taiwan had not followed instructions to issue clean bills of lading.

The testimony, which at trial and in its brief counsel for Bernard seek to distort, is that when Woywod spoke to Brokamp about obtaining the bills of lading more quickly than awaiting their delivery by mail to Rockford, Woywod decided that Inger-soll would pick up the documents directly on his own. That is not true. Brokamp suggested that Woywod pick the bills of lading from Gryphon in Chicago. The suggestion did not originate with Woywod. While there was no testimony to this effect, the court’s surmise is that Brokamp suggested Gryphon in Chicago rather than Bernard in Elk Grove Village, because Bro-kamp assumed that the mail from New Orleans would reach Gryphon’s office in Chicago before it would reach Bernard’s office in Elk Grove Village.

Bernard contends that Woywod’s decision to secure the bills of lading directly from Gryphon rather than from Bernard relieved Bernard of any further responsibility. I disagree. Bernard was requested to secure clean on board bills of lading. It took on that assignment as Ingersoll’s agent. Its responsibility included examining the issued bills of lading to determine whether they were in fact clean. Bernard failed to do that.

Plaintiff has introduced evidence tending to establish that Bernard did not have well trained or knowledgeable personnel but this, as with so much of the evidence and contentions in this case, constitutes gratuitous surplusage. Whether incompetence, sloth or lack of attention was the cause, Bernard did not perform its part of the bargain. That failure, for whatever reason, suffices to render Bernard liable.

Taiwan has failed to show that it put plaintiff’s merchandise on deck with the latter’s permission. The evidence discloses that Mid Gulf added the legend to the bill of lading without consultation with plaintiff or anyone authorized to act for the plaintiff. Under such circumstances, the bills of lading cannot be said to represent the contract of carriage between the parties.

Taiwan contends that Ingersoll’s failure to act between October 1, 1979, when it received the bills of lading and October 14, 1979, when it could have intercepted the vessel and off shored the merchandise before the Bodena left United States ports, should be construed as acceptance of its unilateral act. That contention is rejected.

The record indicates that Ingersoll was of the impression that the Bodena was proceeding directly from New Orleans to Korea. By checking shipping information, plaintiff could have discovered that the Bodena was scheduled to stop at various United States ports before proceeding to Korea. Plaintiff, however, should not be penalized for failure to take such steps when the carrier acts unlawfully and unilaterally in stowing the cargo on deck and, contrary to the shipper’s instructions, issued unclean on deck at the shipper’s risk bills of lading. While the off shoring of the merchandise at some United States port is presented as an option plaintiff failed to exercise, there was no evidence to show the consequences of such a course of action. Could plaintiff have readily secured space on another vessel bound for Pusan? When was such passage available? What costs would plaintiff have had to incur to exercise that option? The court cannot determine from the dearth of evidence on the issue that off shoring was a real option that could have been exercised. The burden was on defendants to establish that such a real option existed.

Bernard for the first time asserts in its post trial brief in chief (pp. 3-8) that the court lacks subject matter jurisdiction because Ingersoll’s claims as to Bernard do not come within the admiralty jurisdiction of the court. Federal courts have traditionally exercised admiralty jurisdiction over shipper’s claims against freight forwarders. See, e.g., Reid v. Fargo, 241 U.S. 544, 545-46, 36 S.Ct. 712, 713, 60 L.Ed. 1156 (1916); The Cayo Mambi, 1 F.Supp. 116, 117 (E.D.N.Y.1932), aff'd, 62 F.2d 791 (2d Cir.1933); A.P. Moller Steamship Co. v. Bromhead & Dennison, Ltd., 1982 AMC 1455 (S.D.Tex.1981). See also A. Murr, Export/Import Traffic Management and Forwarding 49 (6th ed. 1979) (federal district courts have original jurisdiction in admiralty in practically all civil and/or criminal actions brought by, or against, foreign freight forwarders).

The cases cited by Bernard are distinguishable. Maher v. Newtown Creek Towing Co., 190 F.Supp. 933 (S.D.N.Y.1961) (Weinfeld, J.), involved the question of jurisdiction under general maritime law of a cause of action asserted against a non-diversity defendant by virtue of its joinder with the Jones Act. P.D. Marchessini & Co. v. Pacific Marine Corp., 227 F.Supp. 17, 18 (S.D.N.Y.1964) (Weinfeld, J.), involved “preliminary service leading to maritime contract.” The same is true of The Thames, 10 F. 848 (S.D.N.Y.1891) (Brown, J.), and of The Harvey and Henry, 86 F. 656, 658 (2d Cir.1898). David Crystal, Inc. v. Cunard Steamship Co., 223 F.Supp. 273, 293 (S.D.N.Y.1963) (Levet, J.), aff'd, 339 F.2d 295 (2d Cir.1964), cert. denied, 380 U.S. 976, 85 S.Ct. 1339, 14 L.Ed.2d 271 (1965), involved services performed after the voyage had been completed. In this case, the services Bernard performed were not preliminary or rendered after completion of the voyage.

“The character of the work is determinative of the question whether the agreement was maritime and the jurisdiction properly laid in admiralty.” The Hinkins Steamship Agency v. Freighters, Inc., 498 F.2d 411, 412 (9th Cir.1974). Services such a “supervising dockage, pilotage, tug assisting ... cleaning of holds ... and handling operating details pertaining to the vessel’s call [at a port of discharge]” were held to be “clearly maritime in nature.” Id. Preparation and processing the bill of lading, the export declarations and payment of the ocean freight “were clearly maritime and necessary” for the shipment by ocean voyage to Korea. Id. Moreover, as the court stated in the above case referring to authorities, at least one of which Bernard relies on, “[u]nder more modern decisions, appellant’s cases are of doubtful validity.” Id. The jurisdictional contention has no merit.

Nor does the argument that the small print on Bernard’s invoice to Ingersoll, dated September 28, 1979, operates to limit Bernard’s liability to $50. This invoice was received by Ingersoll on October 4, 1979. This was after the Bodena had sailed with Ingersoll’s cargo improperly stowed. A post hoc presentation containing a clause unilaterally purporting to indemnify one of the parties against liability does not operate to modify the original agreement unless the terms are agreed to by the other party and consideration therefor received. Tanker & Tramps Corp. v. Tugs Jane McAllister and Margaret M. McAllister, 358 F.2d 896, 899-900 (2d Cir. 1966). The argument that the invoice complied with custom and usage also has no merit. There was no evidence at trial that use of the invoice with the limitation clause was such as to establish it as custom and usage of the trade. Tankers & Tramps Corp. v. Tugs Jane McAllister and Margaret M. McAllister, supra, at 899 (there must be evidence presented to establish sufficient frequency of use of the restrictive clause to warrant a finding of custom and usage).

While a clean on board bill of lading always establishes that unpackaged goods were in good order at the time of shipment, Emmco Insurance Co. v. Wallenius Caribbean Line, S.A., supra, when the goods are packaged such clean bills of lading merely attest to the apparent good condition of the cargo based on external inspection. See, e.g., Vana Trading Co. Inc. v. S.S. Mette Skow, 556 F.2d 100 (2d Cir. 1977); Midwest Nut and Seed Co., Inc. v. S.S. Great Republic, 1979 AMC 379, 383-84 (S.D.N.Y.1978) (Carter, J.), cited with approval in Caemint Food Inc. v. Brasileiro, 647 F.2d 347, 353 and n. 5 (2d Cir.1981). Where a hidden vice or defect may be the cause of cargo damage, the shipper must establish that the goods were delivered‘in good condition. See Midwest Nut & Seed Company, Inc. v. S.S. Great Republic, supra. There is no evidence that the Ingersoll cargo had a hidden defect or was delivered to the Bodena in a rusted or deteriorated condition. Nor is there any credible evidence that the machinery was inadequately or carelessly packed. The testimony was that the packing and crating, except for one item, was done at Rockford, and that the machinery was packaged in Ingersoll’s customary manner. That the packaging did not withstand exposure to turbulence and storms to which the machinery and its packaging were exposed on open deck is not proof of negligent or improper packaging by Inger-soll. The evidence is clear that the rust which afflicted the machinery stowed on the deck of the Bodena was not present in the three crates stowed below deck.

Plaintiff has established that the rust damage to the machinery resulted from exposure on deck to sea water, and has met its burden of showing that the rust did not result from exposure in Korea. The rust was the result of sea water and condensation. The cargo on deck was exposed to heavy storms and wind turbulence. There is no credible evidence that the rusting was present before loading of the cargo at New Orleans, or that the rusting did not occur until after discharge at Pusan or that there was any material additional rusting while the cargo was in Korea. The court is satisfied that the rusting to the on deck cargo resulted from the Bodena sailing through a turbulent ocean and several severe storms.

Both Taiwan and Bernard are held liable jointly and severally in full to Ingersoll for damages it suffered in respect of SO 24441.

I cannot see any liability, however, on the part of Excellent Marine. It owns the Bodena, but control of the vessel in regard to making a contract of carriage of cargo was in Taiwan’s hands under a time charter. The master of the Bodena and the crew were under Excellent Marine’s control. The form of the bills of lading was the responsibility of Taiwan. The master accepted the bills of lading as presented. He did not authorize or require that they be issued under his authority. I see no connection whatsoever between Excellent Marine and plaintiff for the purpose of holding Excellent Marine liable for any damages to Ingersoll’s cargo.

Plaintiff sought to establish that the crew was incompetent and negligent in the handling of the ship so as to render the Bodena unseaworthy. The court is not persuaded. The claims against Excellent Marine are dismissed.

B. Fireman’s Fund

Fireman’s Fund seems to argue that the burden is on plaintiff in respect of this all risk insurance policy to establish that its loss resulted from an insured peril. This is so, it contends, because Fireman’s Fund is not arguing “an exclusion or exception to ‘all risk’ coverages. Rather it is the very question of whether ‘all risks’ or ‘limited risk’ coverage is afforded this loss which is at issue. Hence the burden remains on Ingersoll to prove that this loss resulted from an insured peril.” Fireman’s Fund Post Trial Brief at 9. That convoluted statement can only mean precisely what Fireman’s Fund says it does not mean, i.e. that this loss is excluded or excepted from “all risk” coverage.

The rule as I understand it, is that an all risk policy places the burden on the insured to establish only the existence of the all risk policy and its loss. Then the burden shifts to the insurer to show that the coverage of the loss comes within one of the exceptions. Pan American World Airways, Inc. v. Aetna Casualty & Surety Co., 505 F.2d 989, 999 (2d Cir.1974). Fireman’s Fund argues that the loss is covered by clause 17(b) which would mean no coverage on a partial loss and a limit of $175,000 recovery as per clause 8(B)(2) of the policy in any event. Under Pan American and cognate cases, Fireman’s Fund has the burden to establish that clause 17(b) is applicable, that its exception or exclusion applies. See also Holiday Inns, Inc. v. Aetna Insurance Co., 571 F.Supp. 1460, 463-64 (S.D.N.Y.1983) (Haight, J.); Redna Marine Corp. v. Poland, 46 F.R.D. 81, 86 (S.D.N.Y. 1969) (Mansfield, J.). Ingersoll has made out a prima facie case by establishing that it is the insured under the policy with its all risks provisions and that it suffered a loss of cargo.

In construing the policy, the court is to be guided by federal admiralty law where there is an established rule. Walter v. Marine Office of America, 537 F.2d 89, 94, reh. denied, 542 F.2d 1174 (5th Cir. 1976). Only in the absence of established federal rules will state law govern. Wilburn Boat Co. v. Fireman’s Fund Insurance Co., 348 U.S. 310, 316, 75 S.Ct. 368, 371, 99 L.Ed. 337 reh. denied, 349 U.S. 907, 75 S.Ct. 575, 99 L.Ed. 1243 (1955). In that regard in applying New York’s choice of law tenets, the law of the state having the most contacts and interest in the controversy, would govern. J. Zeevi & Sons, Ltd. v. Grindlays Bank (Uganda), Ltd., 37 N.Y.2d 220, 371 N.Y.S.2d 892, 333 N.E.2d 168 (1975), cert. denied, 423 U.S. 866, 96 S.Ct. 126, 46 L.Ed.2d 95 (1975). Both California and Illinois would seem to qualify as the state with the greatest interest: California because it is the state where Fireman’s Fund has its principal place of business; and Illinois because of its interest in having citizens and residents of the state collect what is due them from out of state insurance companies. I believe New York courts would find Illinois has the greatest interest in this controversy. The issue, however, seems academic since on matters material to determination of this controversy, federal maritime law is firmly established, and Illinois law appears to be consistent with federal law.

A marine insurance policy, as well as other types of insurance policies, is to be liberally construed in favor of the insured. Kalmbach, Inc. v. Insurance Co. of the State of Pennsylvania, 529 F.2d 552, 555 (9th Cir. 1976); Fogelmark v. Western Casualty & Surety Co., 11 Ill.App.2d 551, 556, 137 N.E.2d 879, 882 (1956). Where the terms are clear and unambiguous, they are given appropriate effect. United States Fire Ins. Co. v. Schnackenberg, 88 Ill.2d 1, 4, 57 Ill.Dec. 840, 842, 429 N.E.2d 1203, 1205 (1981); Zipf v. Allstate Insurance Co., 514 Ill.App.3d 103, 11 Ill.Dec. 798, 369 N.E.2d 252 (1977).

The language in the policy originated with Fireman’s Fund. Therefore, if the provisions are ambiguous or equivocal, they must be construed “most favorably to the insured and most strictly against the insurer.” Index Fund, Inc. v. Insurance Co. of North America, 580 F.2d 1158, 1162 (2d Cir.1978), cert. denied 440 U.S. 912, 99 5. Ct. 1226, 59 L.Ed.2d 461 (1979), cited with approval in Vargas v. Insurance Co. of North America, 651 F.2d 838, 839-40 (2d Cir.1981).

Continuing at 840, the Vargas court said: “The insurer bears a heavy burden of proof, for it must ‘ “establish that the words and expressions used [in the insurance policy] not only are susceptible of the construction sought by [the insurer] but that it is the only construction which may be placed on them. ” ’ Filor, Bullard & Smyth v. Insurance Co. of North America, 605 F.2d 598, 602 (2d Cir.1978), cert. denied, 440 U.S. 962 [99 S.Ct. 1506, 59 L.Ed.2d 776] (1979) (quoting Lachs v. Fidelity & Casualty Co. of New York, 306 N.Y. 357, 365-66, 118 [118 N.E.2d 555] (1954)). The insurer is ‘obliged to show (1) that it would be unreasonable for the average man reading the policy to [construe it as the insured does] and (2) that its own construction was the only one that fairly could be placed on the policy.’ Sincoff v. Liberty Mutual Fire Insurance Co., 11 N.Y.2d 386, 390, 230 N.Y.S.2d 13, 16, 183 N.E. 899, 901 (1962). Thus the question in this case is narrow: is the insurer’s interpretation of the contract the only reasonable and fair construction as a matter of law?” (Emphasis in the original.)

There is no mention of bills of lading in clause 17(a) or 17(b) of the insurance policy. They speak of under deck and on deck shipments. The officials of Fireman’s Fund testified that Ingersoll’s failure to realize or its slowness in realizing that it had an on deck bill of lading caused Fireman’s Fund no prejudice. Although Burke did testify that if he found that a shipper has been issued an on deck bill of lading after the vessel sailed and the insured had diligently done all it could, he might find coverage. I do not understand why this situation does not meet that criterion. On the one hand, he, Donovan and Stanley Krasula, Claims Manager of the Ocean Marine Claims Department, seem to view the bill of lading as controlling without regard to the fact that the shipper was not at fault. On the other hand Burke sometimes seems to be saying that other factors might govern. In any event, the policy has been rendered ambiguous by the gloss Fireman’s Fund has engrafted on 17(a) and 17(b).

Fireman’s Fund officials accepted Inger-soll’s version of the events that it booked an under deck shipment and on deck stowage was unauthorized. If under deck shipments in clause 17(a) to which full coverage is accorded the insureds means on deck shipments without the insured’s assent with under deck bills of lading, it also can be reasonably read to cover on deck shipments without the insured’s assent with on deck bills of lading issued contrary to its instructions. It was agreed that Fireman’s Fund’s interpretation of clauses 17(a) and (b) requires one to go beyond the words in the clauses. The interpretation Fireman’s Fund has adopted is not written in the policy itself, nor in any interpretive Fireman’s Fund manual or document. It was decided upon apparently ad hoc, among Burke, Stewart, Donovan and Krasula to deal with this unusual situation.

The reason for not applying clause 17(b) to on deck cargo with an under deck bill of lading was explained by Burke as based on equitable considerations. Even though the cargo is physically on deck, “there was a contract for it to go under deck.” That the cargo is on deck he regarded as fortuitous. The same analysis justifies 17(a) coverage to cargo which it placed on deck with an on deck bill of lading without the owner’s consent. In these circumstances the contract is for under deck carriage. The circumstances to the shipper are just as fortuitous in the one case as in the other.

Fireman’s Fund sought to justify the interpretation given the court on the basis of their and Ingersoll’s understanding of what the policy meant. But the interpretation offered constituted the subjective views of Fireman’s Fund officials, never communicated to Ingersoll until this litigation. The proffered explanation of the policy’s meaning, therefore, cannot be used to establish that Fireman’s Fund and Ingersoll had such intent and understanding when they entered into the insurance contract. Lubrication Maintenance, Inc. v. Union Resource Co., Inc., 522 F.Supp. 1078, 1081 (S.D.N.Y.1981) (Weinfeld, J).

This is an all risks policy which covers “all losses that are fortuitous no matter what caused the loss.” Goodman v. Fireman’s Fund Insurance Co., 600 F.2d 1040, 1042 (4th Cir.1979). A loss is not fortuitous “only if it results from an inherent defect, ordinary wear and tear or from the intentional misconduct of the insured.” Id. Fireman’s Fund officials conceded that the insured’s negligence was considered a fortuitous event. Burke sought to limit this to certain circumstances, but he could not give any clear parameters as to what negligent circumstances were fortuitous and those that were not. According to him the question had to be decided on a case by case basis. This approach is not appropriate. The meaning of an insured’s negligence as embraced within fortuity must be clear to both the insured and the insurer. The carrier here breached the contract of carriage by placing the cargo on deck, and the loss to Ingersoll necessarily became fortuitous.

The explanations given by Fireman’s Fund seems contrived, concocted solely to keep from paying up to $2.5 million which was the extent of Ingersoll’s coverage under this policy. Because the policy covered fortuitous circumstances, officials at Fireman’s Fund must have realized that without the gloss of the under deck bills of lading engrafted on 17(a), that the phrase under deck shipments had to embrace on deck shipments without the shipper’s consent, since the latter was a fortuitous event. By its strained interpretation of 17(a) to cover only under deck bills of lading no matter where the cargo was physically stowed, Fireman’s Fund official sought to defeat Ingersoll’s legitimate claims. This has caused Ingersoll to have to undertake the cost of suing all other parties involved — a task which more properly should be assumed by the insurance company after having paid Ingersoll’s claim.

There was conflicting testimony among the officials concerning the basis for denying coverage, and Donovan and Burke’s deposition testimony was in direct conflict with critical statements they made on the witness stand. Thus, in depositions Burke and Donovan would appear to take one position which each would alter, modify or contradict at trial. These conflicts and inconsistencies helped convince the court that Fireman’s Fund had conjured up its strained reading of the insurance policy solely in an effort to avoid accepting the liability the policy imposed.

Plaintiff’s pursuit of the other defendants for the damage sustained was a direct and forseeable consequence of the Fireman’s Fund breach. Mitsui v. American Export Lines, 636 F.2d 807, 824 (2d Cir.1981). Hence the litigation expenses Ingersoll incurred are recoverable. Artvale Inc. v. Rugby Fabrics Corp., 232 F.Supp. 814, 826 (S.D.N.Y.1964) (Levet, J.), aff'd, 363 F.2d 1002 (2d Cir.1966).

Plaintiff also relies on clause 25 of the policy as requiring Fireman’s Fund to reimburse plaintiff for all the litigation costs it has incurred. That clause provides:

In case of any loss or misfortune, it shall be lawful and necessary for the Assured, his or their factors, servants and assigns, to sue, labor and travel for, in and about the defense, safeguard, and recovery of the aforesaid subject matter of this insurance, or any part thereof, without prejudice to this insurance, the charges whereof this Company shall bear in proposition to the sum hereby insured.

That clause, however, seems principally invoked to obtain reimbursement for those expenses incurred in an effort to mitigate damages, see, e.g., Blasser Brothers Inc. v. Northern Panamanian Line, 628 F.2d 376, 378 (5th Cir.1980), and has no application to plaintiff’s litigation and attorneys’ fees claims here.

As a rule attorneys’ fees are awarded in maritime cases in order to make the insured whole, Hamilton v. Canal Barge Co., 395 F.Supp. 978, 990 (E.D.La. 1975), and attorneys’ fees are recoverable in this instant case in view of the fact that plaintiff’s recovery against Fireman’s Fund will be reduced by whatever the former recovers from the other defendants. However, the reduction of Fireman’s Fund’s liability to plaintiff is the net of such recovery, less Ingersoll’s expenses incurred in prosecuting this litigation. Those expenses necessarily embrace attorneys’ fees. McDonald v. E.J. Lavino Co., 430 F.2d 1065, 1073 n. 7 (5th Cir.1970); Baier v. State Farm Insurance Co., 28 Ill.App.3d 917, 329 N.E.2d 543 (1st Dist.1975), aff'd 66 Ill.2d 119, 5 Ill.Dec. 572, 361 N.E.2d 1100 (1977).

In light of the purpose in awarding attorneys’ fees in admiralty case, see Mitsui & Co., Ltd. v. American Export Lines, supra; Artvale, Inc. v. Rugby Fabric Corp., supra, the limitation of $5,000 argued for by Fireman’s Fund as being required under Illinois law, Fireman’s Fund Post Trial Brief at 71, has no application to this case. The award of attorneys’ fees is in keeping with the admiralty rule which is to make the aggrieved party whole. See Mitsui & Co., Ltd. v. American Export Lines, supra; Artvale, Inc. v. Rugby Fabric Corp., supra.

Within one month of the issuance of this opinion, counsel for Ingersoll is to submit evidence of the litigation expenses it incurred in this case. These expenses should be shown by affidavits, time sheets and other data pertinent to the matter, with a memorandum supporting recovery for what is claimed. Fireman’s Fund should file its opposing papers three weeks after plaintiff’s submission. The court will determine the matter on such submissions or, if deemed necessary, set a hearing prior to making a final decision.

No other punitive award will be made. While defendant should have paid plaintiff under clause 17(a), its action in refusing to do so awaiting the outcome of this litigation does not constitute such egregious conduct to warrant an award of punitive damages other than attorneys’ fees and litigation expenses, in addition to compensatory damages.

C. Damages

Plaintiff’s damages are the costs incurred in repair to the machinery. To these costs a claimed 43% is added for overhead expenses and profits. While overhead costs and profits are legitimate items, the markup plaintiff seeks is not warranted.

Plaintiff seeks $1,149,647.57 for the costs of repair of the rusted machine, plus $90,-969.65 for delay in contract payments by Hyundai caused by the damage and necessary repairs.

There is no dispute as to $153,818.10 for freight and insurance charges. There is no dispute as to. the $70,337 C & F cost for transporting the repaired machine from Germany to Korea. Those items, therefore, are allowed. The other items are disputed.

There is resistance to the claim of $90,-969.65 for interest for delay in receiving payment from Hyundai for the machine. This is a legitimate item. The interest is calculated from the date payment is due to the date payment is received. Interest is calculated daily and averages about 12%. Interest calculated at the market rates for this item is appropriate. Black Sea & Baltic Insurance Co., Ltd. v. S.S. Hellenic Destiny, 575 F.Supp. 685, 695 (S.D.N.Y. 1983) (Lasker, J.). During the period re-

quired for repair plaintiff lost use of the funds which it would have otherwise received. Accordingly, $90,670.00 is allowed (I am only calculating to the nearest whole dollar figure).

For items bought and for labor costs, plaintiff seeks an extremely liberal markup for overhead expenses and profits. The court sees no justification for any markup being added to the cost for parts taken from Ingersoll-Rockford inventory or purchased by it. These items listed as $9,532 and $18,471 are allowed without markup. Labor costs for parts built by Ingersoll-Rockford are arrived at by computing the basic cost of labor which is $6,713.73, adding overhead costs in excess of 30% and then applying a 40% profit. That seems excessive. A markup of 40% should be adequate to cover overhead and profits on this item. Accordingly, $30,853.00 is allowed. Reimbursements including salaries of $46,635 and $32,000 are allowed. Total repair and repackaging costs of $525,284 are allowed. Overhead and profits have been included in this figure. Thus the total allowed for damages for repair, repackaging and delivery of the machine to Korea is $977,899.

Prejudgment interest in admiralty cases is to be granted in the discretion of the trial court and “should be granted in the absence of extraordinary circumstances.” Mitsui & Co., Ltd. v. American Export Lines, 636 F.2d 807, 823 (2d Cir.1981). The latest case in this circuit to deal with the subject, In the Matter of the Complaint of Rio Grande Transport, Inc. v. Rio Grande Transport and Embarsay of Tunisia, 770 F.2d 262 (2nd Cir.1985), reached the same conclusion. As I read this rule, prejudgment interest must be allowed unless good cause warrants denial. To do otherwise would constitute an abuse of discretion. Socony Mobil Oil Co. v. Texas Coastal and International, Inc., 559 F.2d 1008, 1014 (5th Cir.1977).

The rate of interest rests in the court’s broad discretion, Independent Bulk Transport, Inc. v. The Vessel “Morania Abaco”, 676 F.2d 23, 27 (2d Cir.1982). Plaintiff “is entitled to income which the monetary damages would have earned and that should be measured by interest on short term risk free obligations.” Id. In this circumstance plaintiff has lost income that would have been made on money spent to make these repairs. Thus interest should run “from date repairs were paid for until the date of reimbursement”. Id., (Newman, J., concurring). The interest rate to be applied is the rate associated with federal paper as found in the Federal Reserve Bulletin covering the time in question.

The parties are to calculate prejudgment interest under this formula and submit same in plaintiffs proposed final order and in defendants’ proposed counter orders.

Judgment is awarded against Taiwan, Bernard and Fireman’s Fund jointly and severally in the amount of $977,899, plus prejudgment interest pursuant to the formula outlined in this memorandum. In addition, judgment is awarded against Fireman’s Fund in the amount of plaintiff’s litigation expenses and attorneys’ fees. Plaintiff is to recover its costs.

IT IS SO ORDERED.