Summary
noting that "shipped on board" signifies date cargo was loaded on vessel
Summary of this case from Sara Corporation v. Sainty International America Inc.Opinion
96 Civ. 9391 (RO)
October 16, 2001
Machale A. Miller, Esq., Miller Williamson LLC, New Orleans, Louisiana, Stanley McDermott III, Esq., Piper Marbury Rudnick Wolfe LLP, New York, New York, for plaintiffs.
Vincent M. Dc Orchis, Esq., R. Brett Kelly, Esq., De Orchis, Walker Corsa, LLP, New York, New York for defendants.
OPINION ORDER
Plaintiff Lindauer Dornier Gessellschaft MBH ("Lindauer Dornier") is a German corporation, which for many years has manufactured sophisticated, delicate, computerized textile weaving machines, including those involved in this litigation. Plaintiff American Dornier Machinery Corp. ("American Dornier") is a U.S. corporation that purchased said machines from Lindauer Dornier. Defendant Mediterranean Shipping Company ("MSC") was the carrier of the shipment involved in this litigation. Monnard Spedition GmbH ("Monnard") was a German freight forwarder, which acted as agent for a number of German machinery manufacturers, including plaintiffs, making arrangements for ocean transportation of approximately 600 machines per year. Bertling GmbH ("Bertling") was the agent for MSC, booking cargoes on MSC's vessels for shipment from Europe to various overseas destinations including the United States.
Due to their water-sensitive and expensive nature, all of Monnard's customers have a concern that their containerized machinery shipments be stowed below deck. Because of this concern, in December of 1994, Gerhard Woeheide, Bertling's line manager, Rolf Meier, Monnard's export manager, and Bob Moskowitz, an officer with one of Monnard's machinery-manufacturing clients, Windmoeller, met to discuss arrangements for the upcoming year 1995. During that meeting, they agreed upon rates and a stowage arrangement for containerized machinery cargoes, and specifically with regard to the requirements of Monnard's customers with respect to under-deck stowage of containerized machinery shipments for all 1995 shipments (as had been the practice for many years.) Because the Trans-Atlantic Conference Agreement ("TACA"), of which MSC was a member, would not permit an agreement guaranteeing underdeck stowage (since this would be an impermissible preference), the parties nevertheless reached an accommodation that satisfied the needs of both Monnard, acting for all of its customers, and the carrier (MSC), under which MSC would try to stow all machinery shipments booked by Monnard under deck. If MSC, due to the practicalities of the stowage of a given vessel, was unable to do so, however, MSC would timely so inform Bertling who in turn would notify Monnard, which would contact the individual customer, advising of MSC's inability to stow under deck. Then, the customer could decide whether to allow the shipment to go above deck or reschedule the shipment on another MSC vessel the following week (hopefully below deck), or, alternatively, cancel the booking without penalty and make arrangements with another carrier. This oral arrangement was agreed to by all parties, was in accord with their longstanding prior practice, and did not violate TACA (as was stipulated at trial).
Defendants assert that this agreement regarding notification to the shipper and its options on loading is barred by the parol evidence rule. It is not. As Meier testified, "The only thing we signed in the contract is the rates." (Apr. 11, 2000 Tr. at p. 154). "[I]f a contract is not fully integrated, parol evidence of additional contract terms may be admitted to complete the agreement, but only to the extent that the additional terms do not contradict the written terms of the agreement." Richard A. Lord, Williston on Contracts § 33:20 (4th Ed. 1999).
Significantly, Monnard's Meier made it clear that if Bertling/MSC had been unwilling or unable to agree to this arrangement and instead insisted upon being free to stow containerized machinery shipments on deck without notice and explicit approval, Monnard would not have agreed to ship with MSC and would have dropped the relationship. While Woeheide, of Bertling, the agent for MSC, testified to a number of contradictory, exculpatory things in this area, on the weight of the evidence, and assessing the goal of the relationship, I decline to credit any of them. Woeheide contended that the agreement applied only to manufacturer Windmoeller's out-of-gauge shipments, whereas Meier of Monnard said that it applied to all machinery shipments of all of its customers in any type of container. Support for the latter is found in the fact that Monnard acts in its name for numerous unnamed manufacturers, all of whom understandably want their valuable, water-sensitive machinery stowed below deck. It is illogical to conclude that (a) Monnard, in dealing with Bertling/MSC, would favor one customer over another, and (b) that Woeheide would know which customer was which. Further, Lindauer Dornier's Muller had been dealing with Monnard's Meier for 20 years. Throughout that time, Muller unwaveringly insisted upon under-deck stowage. It is inconceivable that Meier, when negotiating with Bertling at the December 4, 1994 meeting, would not press to get acceptance of his long-term, valued customer's demand, and if he failed, would go elsewhere for a carrier.
Further, the manifest need to protect the sensitive machinery by under-deck stowage is obvious. The wall thickness of box containers is considerably less than that of a vessel's hold. Consequently, delicate machinery stowed above deck in a thin walled container is far more vulnerable to boarding seas or rain or other moisture than that same machinery stowed under deck and protected by the thick, steel walls of the vessel's hold. Moreover, as a matter of common sense, containers stowed on deck can be swept overboard. Further, the treatment by Bertling's employees (under Woeheide) of Monnard's Absetzentrag, a document delivered dockside by the trucker that states in German, "stow below deck, sensitive to water," also contradicts Woeheide's attempt to limit the stowage agreement to Windmoeller's out-of-gauge cargo. While Woeheide claimed the Absetzentrag was irrelevant to Bertling and, if received, would be thrown away by his employees, his own employee, Katja Liebchen, testified to the contrary. Liebchen testified that Bertling employees in fact do pay close attention to the Absetzentrags, and that whenever she receives an Absetzentrag stating that the cargo should be stowed below deck, she will contact MSC to try to arrange for under-deck stowage.
Accordingly, I find that on March 3, 1995 at approximately 3:30 p.m., Monnard, in accordance with its usual practice, delivered at the dock and also sent to Bertling via computer the Absetzentrag for the weaving machines in the two containers with the said express instruction " verladung under deck vor nasse schutzen," meaning "stow under deck, cargo sensitive to water." Initially, Woeheide downplayed the document trying to make it appear that he never received it. When writing to MSC after the casualty, however, he did not deny that he had received the Absetzentrag prior to sailing. This was an obvious attempt to cover up the fact that Bertling, as MSC's agent, received the Absetzentrag before sailing and inexplicably ignored it.
I conclude that Absetzentrag for Lindauer Dornier's machines, which were to be shipped on MSC GINA, got to Bertling some time after 2:00 p.m. on Friday, March 3. Although Bertling cuts off written communications with MSC after noon on Fridays, Bertling can relay to MSC by telephone any requests received from shippers after noon. Thus, Bertling had ample time before loading the vessel to communicate telephonically to MSC Monnard's desire to have the two containers with Lindauer Dornier machines stowed below deck. It was not until two days later, on March 5, 1995, that Bertling on behalf of MSC issued bill of lading MSCU-B 0729562 for the carriage of the six weaving machines in two containers from Bremerhaven to Wilmington. The bill of lading is stamped "shipped on board" with the date March 5, 1995, signifying that the cargo had been loaded on that date. MSC GINA sailed from Sunday, March 5, 1995, having however loaded Lindauer Dornier's weaving machines on deck.
Prior to the loss of the containers overboard, no one informed Monnard or Lindauer Dornier that the cargo would be or had been stowed on deck. Specifically, Bertling did not contact Monnard prior to loading to advise that MSC was unable to stow the cargo under deck and did not afford Monnard the opportunity to contact Lindauer Dornier to see what the customer wished to do, all in direct violation and contravention of the agreement reached between Monnard, as representative for Lindauer Dornier, and Bertling, as representative for MSC. Monnard first received notice of deck-stowage on March 16 when it received a letter advising that the two containers had been washed overboard while the MSC GINA was in route from Bremerhaven to Wilmington, that the vessel encountered rough weather, as a result of which seas, boarding the deck of MSC GINA, swept 16 containers overboard including the two containers with Lindauer Dornier's weaving machines.
I conclude that MSC violated the contract of carriage, which incorporated the December 1994 agreement, by unilaterally stowing the containers on deck without first informing Monnard and giving the manufacturer the options described earlier. The requirement in the December 1994 agreement, which forms part of the contract of carriage between MSC and the shipper, whereby MSC would try to stow machinery cargos below deck, and if unable to do so, timely inform Monnard prior to loading so that Monnard could decide whether to wait to ship below deck on another vessel or on deck, was at the essence of the contract. This was because the risk of water damage to those machines was much higher, and notwithstanding any insurance, these machines take four months to replace.
Whenever a carrier, like MSC, breaches a contract term going to the essence of the agreement, and a special stowage agreement by its very nature goes to the essence of the contractual venture, a deviation occurs stripping the carrier of the COGSA package defense. Farr v. Hain S.S. Co., 121 F.2d 940, 944 (2d Cir. 1941); Pioneer Import Corp. v. M/V Lafcomo, 49 F. Supp. 559 (S.D.N.Y.), aff'd, 138 F.2d 907 (2d Cir. 1943); Siderurgica Del Orinoco S.A. M/V NORTH EXPRESS, 1977 A.M.C. 1140 (E.D.La 1976); Calmaquip Eng'g West Hemisphere Corp. v. West Coast Carriers, Ltd, 650 F.2d 633, 638-39 (5th Cir. 1981). Accordingly, MSC's failure to honor the December 1994 agreement deprived MSC of the package limit defense here since MSC was not at liberty to stow containers above deck at its option. Nor did a clean bill of lading here avoid the unreasonable deviation that occurred depriving the carrier of all of its defenses including the $500 per package limitation, which conclusion is not in conflict with the traditional rule of deviation set forth by the Supreme Court in St. Johns N.F. Shipping Corp. v. S.A. Companhia Geral Commercial do Rio de Janeiro:
By stowing the goods on deck the vessel broke her contract, exposed them to greater risk than had been agreed and thereby directly caused the loss. She accordingly became liable as for a deviation, cannot escape by reason of the relieving clauses inserted in the bill of lading for her benefit, and must account for the value at destination.263 U.S. 119, 124-25 (1923).
MSC cites Du Pont de Nemours International S.A. v. S.S. Mormacvega, 493 F.2d 97 (2d Cir. 1974) for the proposition that stowage of containers on deck for carriage under a clean bill of lading is not an unreasonable deviation. But MSC's reliance on the Mormacvega decision is misplaced, for that case is factually distinguishable. While Mormacvega holds that stowage of containerized cargo on deck of a specially-designed containership is not a deviation because the dangers historically associated with on-deck stowage, primarily loss overboard and damage from wave wash, are substantially reduced, 493 F.2d at 103, here, Lindauer Dornier, even though it knew that its cargo was going to be shipped on one of the MSC's containerships that may well have reduced the risks of on-deck stowage, nevertheless concluded that, due to the highly sophisticated, water-sensitive and time-sensitive nature of its weaving machines, it did not want its containers stowed on deck because some risk of water and wave wash damage and loss overboard nevertheless remained. Not wishing to run even these reduced risks, Lindauer Dornier demanded stowage below deck, and the December 19, 1994 stowage agreement between Monnard and Bertling implemented that requirement inasmuch as the agreement, although not guaranteeing under-deck stowage, effectively eliminated above-deck stowage for Lindauer Dornier' s containers because Richard Muller's company's traffic manager would never allow above-deck stowage upon being notified that under-deck stowage could not be provided on that voyage of that vessel.
In conclusion, MSC's violation of its stowage agreement of December 1994 carried Lindauer Dornier's water-sensitive, time-sensitive weaving machines on deck thereby exposing them to loss overboard which happened and was one of the very risks Lindauer Dornier and Monnard sought to avoid in the December 1994 agreement. As a consequence, MSC committed an unreasonable deviation and is deprived of the package limit of 46 U.S.C. § 1304(5).
A trial on the remaining issues shall be held on a date to be fixed at a conference of the parties to be held on November 2, 2001 at 2:30 p.m. in Courtroom 1106, of the United States Courthouse at 40 Foley Square.
The foregoing constitutes the court's Findings of Fact and Conclusions of Law and is So Ordered.