Opinion
01 Civ. 1000 (JCF)
February 7, 2002
MEMORANDUM OPINION AND ORDER
This is a cargo damage action brought pursuant to the Carriage of Goods by Sea Act, 46 U.S.C. app. § 1300 et seq. ("COGSA"). The plaintiff, Asoma Corporation ("Asoma"), arranged for the shipment of water-sensitive steel from Turkey to the United States aboard the M/V Land, a vessel owned by defendant Stingray Maritime S.A. After the shipment was delivered to Asoma's customer, American Strip Steel, some of the coils were found to contain rust. Asoma granted American Strip Steel a reduced price on the damaged coils and commenced the instant action.
The parties consented to proceed before me for all purposes pursuant to 28 U.S.C. § 636 (c), and a bench trial was held on November 19, 2001. This opinion constitutes my findings of fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure.
Background
The product at issue in this case is hot rolled pickled and oiled steel. (Tr. 7; Pl. Exh. 1). Asoma purchased 62 coils of this steel from the Eregli Iron and Steel Works in Turkey. (Pl. Exhs. 1, 9). It then arranged for carriage of the goods from the port of Erdemir, Turkey to Fairless Hills, Pennsylvania. (Pl. Exhs. 1, 5).
"Tr." refers to the trial transcript. All exhibit designations refer to exhibits admitted into evidence at trial.
Because hot rolled pickled and oiled steel is sensitive to fresh water, it is packaged for transport. (Tr. 51-52). In this instance each coil was covered in laminated paper and then encased in a galvanized steel can or "wrapper" secured by metal bands. (Tr. 51-52, 73, 92; Pl. Exh. 3 at 8).
No evidence was presented at trial regarding how this shipment was transported from the mill or when it arrived at the dock for loading. (Tr. 24-25). Apparently, it was held on an open pier for at least five days. (Pl. Exh. 5; Tr. 21-24). It rained and snowed during the loading period, requiring the hold covers to be closed and work to be halted from time to time. (Pl. Exh. 3 at 3; Pl. Exh. 5). The coils in question were stowed in hold no. 5 along with coils of hot rolled steel that were not water-sensitive but which were covered with snow. (Pl. Exh. 5 photos). A bill of lading was issued that was clean except for notations of minor damage to some of the wrappers. (Pl. Exh. 1). When the M/V Land put in at Odessa to take on additional cargo, a shipment of wire rod that was wet from snow and rain was stowed on top of Asoma's hot rolled pickled and oiled coils. (Pl. Exh. 3 at 3; Tr. 56-57).
The hold of the M/V Land had a natural ventilation system that could be adjusted to let in fresh air. However, use of the system was restricted during the voyage because of heavy weather. (Pl. Exh. 3 at 3).
The vessel proceeded first to New Haven, Connecticut, and then to Fairless Hills, Pennsylvania, arriving on March 6, 2000. (Pl. Exh. 3 at 3). Charles J. Kinzie of Trident Marine Surveyors, Inc. conducted an outturn survey at that time. (Pl. Exh. 3). Mr. Kinzie found, that the top-tiered coils had sustained excessive damage to their wrappers as a consequence of the wire rod having been stowed on top. He noted that some securing bands were missing and that wrappers were buckled and dented and had sustained minor cuts. However, he characterized these defects as "mainly cosmetic in nature." (Pl. Exh. 3 at 6).
Mr. Kinzie further determined that the wrappers on the top-tiered coils had light white oxidation rust. (Tr. 100). There was no evident drip-down pattern of rust or tide marks on the wrappers, but the floor of the cargo compartment was slightly damp, with small puddles of water in the wing areas. (Pl. Exh. 3 at 4; Tr. 109, 112, 117-18). Mr. Kinzie concluded that the rust on the wrappers was caused by exposure to fresh water, but he did not note any damage to the coils themselves. (Pl. Exh. 3 at 7; Tr. 141). He specifically itemized each coil where he found wrapper damage. (Pl. Exh. 3 at 12-14).
After unloading was completed on March 8, the coils were transported by American Strip Steel to one of its warehouses in New Jersey. (Tr. 38, 66-67; Pl. Exh. 3 at 1). There is no evidence of how long the steel remained at the dock prior to removal, nor of the conditions in which it was stored. (Tr. 38-39). Although American Strip Steel generally transports its water-sensitive products on trucks covered with tarpaulins, there is no proof that that protocol was followed with respect to this shipment. (Tr. 67-68).
The first notice of damage was issued by American Strip Steel on March 29 and received by Asoma on April 3, which, in turn, notified the vessel owner the next day. (Pl. Exh. 4 at 2, 4; Tr. 63). American Strip Steel ultimately complained of rust damage to eight coils as well as mill damage to a ninth, which is not at issue here. (Pl. Exh. 4 at 4-10). Asoma engaged William M. Erhard Jr., also of Trident Marine Surveyors, to conduct the damage survey, and he inspected the steel on April 18, May 3, and June 29, 2000 at American Strip Steel's premises. (Pl. Exh. 4 at 2). Mr. Erhard confirmed the presence of rust on each of the coils, generally extending from one edge toward the center. (Pl. Exh. 4 at 3-9; Tr. 77). He determined that the oxidation was caused by fresh water (Pl. Exh. 4 at 10), and concluded that it was the result of external wetting during transit and prior to delivery to American Strip Steel. (Pl. Exh. 4 at 10; Tr. 71). Asoma allowed varying deductions based on the damage to each coil and ultimately reduced the total price paid by American Strip Steel by $9,883.04. (Pl. Exh. 4 at 10-11; Pl. Exh. 7). Together with the surveyor's fee of $1,985.00 (Pl. Exh. 8), this leads to total claimed damages of $11,868.04. Discussion
Although Asoma's counsel has referred to total damages of $11,919.43 including some inland freight charges (Tr. 16), the discrepancy has not been adequately explained or documented.
A. Legal Framework
A plaintiff can establish a prima facie case under COGSA by showing that the goods were delivered to the carrier in good condition but were damaged at outturn. Transatlantic Marine Claims Agency, Inc. v. M/V "OOCL Inspiration", 137 F.3d 94, 98 (2d Cir. 1998); Bally, Inc. v. M.V. Zim America, 22 F.3d 65, 68-69 (2d Cir. 1994); Caemint Food, Inc. v. Brasileiro, 647 F.2d 347, 352 (2d Cir. 1981). The burden then shifts to the carrier to demonstrate that the damage comes within an exception to COGSA liability. See Transatlantic, 137 F.3d at 98. Thus, "the initial burden of persuasion falls on the plaintiff to make out a prima facie case that the goods were, indeed, damaged while in the defendant's care."Id.
This can be accomplished in either of two general ways. First, the plaintiff can provide direct proof of the condition of the goods at delivery to the carrier and at outturn. Id. In this respect, "a clean bill of lading creates a presumption of delivery in good condition favorable to the plaintiff." Id. (footnote omitted). On the other hand, "a consignee who does not give notice of damage within three days of receipt is burdened by a presumption of arrival in good condition." Id. (citations omitted).
Alternatively, a plaintiff may carry its burden by showing that "the characteristics of the damage suffered by the goods justify the conclusion that the harm occurred while the goods were in the defendant's custody." Id. at 99. Thus, for example, if there is evidence that the packaging of an item of cargo was damaged in a particular way while in the custody of the carrier, and corresponding damage to the cargo itself is discovered upon removal of the packaging, then the carrier may be held liable even in the absence of direct proof that the item was in good condition upon delivery to the carrier. The evidence in this case may now be analyzed in accordance with these principles.
B. Condition on Delivery to Carrier
When the coils were delivered to the vessel, no exceptions regarding rust were noted on the bill of lading. "A clean bill of lading does not, however, constitute prima facie evidence of the condition of goods shipped in sealed packages where the carrier is prevented from `observing the damaged condition had it existed when the goods were loaded.'"Bally, 22 F.3d at 69 (quoting Caemint Food, 647 F.2d at 352); see also Phoenix Assurance Co. v. M/V Eagle Tide, No. 96 Civ. 8404, 1999 WL 163547, at *6 (S.D.N.Y. March 24, 1999), aff'd sub nom. Phoenix Assurance Co. v. American President Lines, Ltd., 199 F.3d 1323 (2d Cir. 1999);Associated Metals Minerals Corp. v. M/V Olympic Mentor, No. 93 Civ. 4330, 1995 WL 794062, at *7 (S.D.N.Y. Dec. 20, 1995); Arwright Mutual Insurance Co. v. M.V. Oriental Fortune, 745 F. Supp. 920, 923 (S.D.N Y 1990). Thus, the bill of lading in this case does not establish the condition of the coils themselves.
A consignee can, however, demonstrate the good condition of packaged goods by other means. For example, it may "show that the goods were prepared and packaged in accordance with proper procedures and were carried to the ship under conditions that should have prevented any damage to the contents en route." Caemint Food, 647 F.2d at 354 n. 6. No such evidence was presented in this case. Asoma had no information about how the coils were transported from the mill to the load port. (Tr. 24-25). At the port, the coils were apparently stored uncovered on the pier for at least five days (Tr. 22-23; Pl. Exh. 5 at 1), a period that Asoma's own expert considers "extremely" long. (Tr. 96). Furthermore, it rained and snowed during the loading process. (Pl. Exh. 3 at 3). Thus, there was ample opportunity for fresh water wetting prior to delivery of the cargo to the vessel, and good condition has therefore not been established.
C. Condition at Outturn
Asoma fares only slightly better with respect to proof of damage at outturn. Because the first notice of claim was issued on April 4, almost a month after the cargo was discharged from the vessel, there is no presumption that subsequently discovered damage occurred while the cargo was in the carrier's control. See Transatlantic, 137 F.3d at 98; Bally, 22 F.3d at 71; Francosteel Corp. v. M/V "Sherene", No. 91 Civ. 2809, 1992 WL 18266, at *1 (S.D.N.Y. Jan. 28, 1992). The fact that it may not have been economically practical to unwrap the coils for inspection sooner does not shift the burden; the risk of being unable to prove when the damage occurred remains on the plaintiff. Id.
While there is no direct evidence of exposure to fresh water after discharge, there is also no proof of how the cargo was actually handled by American Strip Steel. Although its truckers are supposed to use tarpaulins to cover water-sensitive steel (Tr. 68), there is no evidence that they did so in this case. Thus, the proof that the coils were damaged at the time of discharge rather than in the ensuing weeks is tenuous.
D. Proof of Negligent Conduct
There is little doubt that the defendants handled Asoma's cargo negligently. The water-sensitive coils were stowed along with other coils that had snow on them. Wet cargo was then dump stowed on top of the coils. And, although the hold had a natural ventilation system, it was not used consistently during the voyage because of bad weather. The defendants thus created conditions that could well have led to the rusting of the coils.
However, the damage sustained was not sufficiently unique that it can necessarily be causally linked to these conditions. Rather, fresh water wetting could have occurred either before or after the coils were in the defendants' control. This case, then, stands in contrast to the circumstances in Transatlantic, where "the nature of the damage — seawater wetting — was of the sort that inexorably justified the conclusion that injury occurred at sea." 137 F.3d at 99.
Evidence that might have created an inference that the wetting here occurred aboard the vessel is absent. There was, for example, no drip down pattern of rust. (Tr. 109, 112). There were no tide marks on the wrappers at outturn. (Tr. 118-19). Indeed, the coils that sustained wrapper damage and so might be expected to be more vulnerable to exposure to fresh water aboard the vessel were not the coils that rusted. (Tr. 105-06; Pl. Exh. 3 at 12-14; Pl. Exh. 4 at 10). See Caemint Food, 647 F.3d at 353 ("even at outturn the evidence showed no correlation between cans affected by mold and damaged cartons").
Conclusion
"[I]n the end, the risk of non-persuasion remains on the plaintiff. This is so because `[t]he shipper has [the ultimate] burden on the issue whether the goods were damaged while in the carrier's custody.'"Transatlantic, 137 F.3d at 99 (alterations in original) (quoting Caemint Food, 647 F.2d at 354). In this case, Asoma has not carried that burden.See Coutinho, Caro Co. v. Hyde Park Shipping, Inc., No. 91-3247, 1993 WL 255147, at *15 (E.D. La. June 29, 1993) ("the evidence is insufficient to permit any reasoned choice between several possible sources of the damages complained of") (footnote omitted), aff'd, 19 F.3d 15 (5th Cir. 1994). Accordingly, the Clerk of Court shall enter judgment in favor of the defendants dismissing the complaint.