Opinion
CIVIL ACTION NO. 01-0726 SECTION "I"(1)
July 30, 2002
ORDER AND REASONS
This matter is before the Court pursuant to a motion for partial summary judgment filed on behalf of plaintiff, Industrial Maritime Carriers (Bahamas), Inc. ("IMC"), seeking to limit its alleged liability to the $500 per package limitation of the Carriage of Goods by Sea Act, 46 U.S.C. § 1300, et seq. For the following reasons, the motion is GRANTED.
FACTUAL BACKGROUND
The facts are not in dispute. IMC is a corporation organized under the laws of the Bahamas with its principal place of business in New Orleans, Louisiana. IMC operates vessels for the carriage of goods for hire and at all relevant times it was the owner of the M/V INDUSTRIAL BRIDGE. At all relevant times hereto, IMC had a tariff on file with the Federal Maritime Commission ("FMC") which incorporated the COGSA limitation of $500 per package. Specifically, the tariff provided in pertinent part:
R. Doc. No. 13, Ex. 1, Affidavit of Sean Burke ("Aff. Burke"), ¶ 3.
Id. at ¶ 4.
R. Doc. No. 13, Ex. 2, Affidavit of Raven Douglas ("Aff. Douglas"), ¶ 2.
In case the Contract evidenced by this Bill of Lading is subject to the U.S. Carriage of Goods by Sea Act, the provisions stated in said Act shall govern before loading and after discharge and throughout the entire time the goods are in the Carrier's custody. The COGSA U.S. $500 Limitation as set forth in Section 1304(5) of said Act shall apply to all goods shipped to and from the United States, unless:
1. The value of said goods has been declared on Page 2 in the box provided and
2. Extra charge for ad valorem declaration is paid by the merchant.
* * *
Where value is declared on any piece or package in excess of the Bill of Lading limit value, the ad valorem rate, unless specifically provided against the item, shall be six (6%) percent of the value declared in excess of the said Bill of Lading limit of value and is in addition to the base rate. The minimum charge per package shall be $150.00 each.
On or about April 27, 2000, Intermarine, as agent for IMC, issued a liner booking note to defendant, Siemens Westinghouse Power Corporation ("Siemens"), for the carriage of two (2) generators and their component parts. On June 9, 2000, two generators were loaded aboard the M/V INDUSTRIAL BRIDGE and stowed in the aft section of the No. 1 lower hold. After the cargo was loaded, Intermarine, as agent for IMC, issued two IMC bills of lading identified as IMTB00387701 and IMTB003877002.
R. Doc. No. 13, Ex. 1, Aff. Burke, ¶ 6.
R. Doc. No. 13, Ex. 1, Aff. Burke, ¶ 7.
R. Doc. No. 13, Ex. 1, Aff. Burke, ¶ 8 and Ex. 1B attached thereto.
The IMC bills of lading contained a box on the front of each form labeled "shipper's declared value subject EXTRA FREIGHT" and referred the reader/shipper to both the published tariff and Clause B on the reverse side of the form. The boxes referred to were left blank on the bills of lading.
Like the tariff, Clause B on the back of the bill of lading incorporated the COGSA limitation provisions by stating:
B. U.S. Trade, Period of Responsibility, Limitation
In case the Contract evidenced by this Bill of Lading is subject to the U.S. Carriage of Goods by Sea Act, the provisions stated in said Act shall govern before loading and after discharge and throughout the entire time the goods are in the Carrier's custody. The COGSA U.S. $500 Limitation as set forth in Section 1304(5) of said Act shall apply to all goods shipped to and from the United States, unless:
1. The value of said goods has been declared on Page 2 in the box provided and
2. Extra charge for ad valorem declaration is paid by the Merchant.
3. During any pre-loading or post-discharge contractual extension of COGSA, the NO. OF PKGS. and DESCRIPTION OF PACKAGES AND GOODS conclusively establishes the shipping package or customary freight unit for limitation purposes.
R. Doc. No. 13, Ex. 1B.
R. Doc. No. 13, Aff. Burke, ¶ 9 and Ex. 1B attached thereto.
The M/V INDUSTRIAL BRIDGE departed Masan, Korea on June 10, 2000, and arrived in Houston, Texas, on July 16, 2000. On July 21, 2000, the vessel shifted and began to discharge cargo. During the offloading operations, it is alleged by defendant that the vessel's No. 1 hold which stowed the two generators were flooded. As a result, defendant alleges that the two generators, valued at approximately $3,100,000.00 each, were a total loss.
R. Doc. No. 13, Aff. Burke, ¶ 10.
Id.
R. Doc. No. 21, p. 1.
Id. at 2.
Siemens' further alleges that as a result of the loss, Siemens' customer rescinded its contact with defendant and filed a lawsuit, seeking liquidated damages of approximately $4,800,000.00 and return of milestone payments totaling over $24,000,000.00. Id.
SUMMARY JUDGMENT STANDARD
Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.Pro. 56(c). Once the moving party carries its burden of proving that there is no material factual dispute, the burden shifts to the nonmovant "to show that summary judgment should not lie." Hopper v. Frank, 16 F.3d 92, 96 (5th Cir. 1994). While the court must consider the evidence with all reasonable inferences in the light most favorable to the nonmovant, the nonmoving party must come forward with specific facts showing that there is a genuine issue for trial. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); Webb v. Cardiothoracic Surgery Associates of North Texas, 1998 WL 175313, *2 (5th Cir. 1998). This requires the nonmoving party to do "more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec., 475 U.S. at 586, 106 S.Ct. at 1356. The nonmoving party must "go beyond the pleadings and by his own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986); Auguster v. Vermillion Parish School Board, 249 F.3d 400, 402 (5th Cir. 2001). Partial summary judgment adjudicating only certain claims is appropriate under the same standards. See Fed.R.Civ.P. 56(d); see also, Perusahaan Pertambangan Minyak Dan v. Chainat Navee M/V, 136 F. Supp.2d 586, 587 (E.D.La. 2001). In this case, there is no genuine issue as to any material fact, and the Court finds that plaintiff is entitled to judgment as a matter of law.ANALYSIS
It is undisputed by the parties that because the shipment in question originated in a foreign port and was delivered to the United States, COGSA governs the rights and responsibilities of the parties. COGSA entitles a carrier to limit its liability for loss or damage to cargo to $500 per package unless the shipper declares the value of the goods on the face of the bill of lading before shipment. 46 U.S.C. § 1304(5); Brown Root, Inc. v. M/V Peisander, 648 F.2d 415, 420 (5th Cir 1981). To take advantage of COGSA's limit on liability, however, the carrier must (1) provide the shipper adequate notice of the $500 limitation by including a clause in a bill of lading that expressly adopts the provisions of COGSA, and (2) give the shipper a fair opportunity to avoid COGSA's limitation by declaring the true value of the shipment and paying a correspondingly higher shipping rate, i.e. the ad valorem rate. Insurance Co. of North America v. M/V Ocean Lynx, 901 F.2d 934, 939 (11th Cir. 1990) (citing Brown Root, 648 F.2d at 420 n. 11); General Elec. Co. v. M/V Nedlloyd, 817 F.2d 1022, 1024, 1028-29 (2nd Cir. 1987) ("Only by granting shippers a fair opportunity to choose between paying a greater or lesser charge to obtain corresponding more or less protection for its goods may a carrier limit its liability to an amount less than the loss actually sustained"); Perusahaan Pertambangan Minyak v. Chainat Navee M/V, 136 F. Supp.2d 586, 589 (E.D. La. 2001). With respect to the latter requirement, the courts of this circuit and others have held that either a clause in the bill of lading or a valid tariff filed with the Federal Maritime Commission which includes an opportunity to declare excess value is sufficient to afford the shipper a fair opportunity to avoid COGSA's limitation. Brown Root, 648 F.2d at 424 (holding that a published tariff which "has the effect of law" and "gave Shipper the opportunity to choose between valuations by paying more or less freight" afforded the shipper with a fair opportunity to opt out of COGSA's limitation); Wuerttembergishche Badische Versicherungs-Atiengesellschaft v. M/V Stuttgart Express, 711 F.2d 621, 622 (5th Cir. 1983) (finding that published tariff gave shipper notice of valuations satisfying requirement that the shipper be given a fair opportunity to avoid the limitation); M/V Ocean Lynx, 901 F.2d at 939 (holding that "[e]ither a clause paramount in the bill of lading or a valid tariff filed with the Federal Maritime Commission that includes an opportunity to declare excess value according to COGSA section 4(5)'s provisions is sufficient to afford the shipper an opportunity to declare excess value"). Finally, the shipper bears the burden of proving that a fair opportunity was not afforded. See Wuerttembergishche, 711 F.2d at 622 ("[T]he shipper carries the burden of proving that an opportunity for choice of evaluations and rates did not in fact exist").
COGSA applies to the carriage of goods between ports of the United States and foreign ports. Specifically, 46 U.S.C. § 1300 provides:
Every bill of lading or similar document of title which is evidence of a contract for the carriage of goods by sea to or from ports of the United States, in foreign trade, shall have effect subject to the provisions of this chapter.
Specifically, COGSA provides that a carrier shall not be liable "for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package . . ., or in the case of goods not shipped in packages, per customary freight unit . . ., unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading." 46 U.S.C. § 1304(5).
The practical effect of this limitation is to allocate the cost of procuring insurance among the parties. The shipper may opt to have the carrier insure the cargo by declaring the value of the goods on the face of the bill of lading and paying a higher freight rate. Perusahaan Pertambangan Minyak Dan v. M/V Chainat Navee, 136 F. Supp.2d 586, 587 (E.D.La. 2001). Alternatively, the shipper may decide to take advantage of the lower freight rate and procure its own insurance for the cargo, in which case, the shipper does not declare the value of goods on the face of the bill. Id. In this case, Siemens acknowledges that it "has in place a fairly sophisticated insurance program and marine cargo insurance protecting [Siemens'] cargoes against risk of loss or damage during transportation." [R. Doc. No. 21 Ex. 1, Affidavit of Frank Nemec, ¶ 7].
IMC argues that it is entitled to the $500.00 limitation as to each generator because (1) each generator constituted a COGSA package, (2) IMC's tariff and bills of lading provided Siemens with adequate notice of COGSA's provisions and a fair opportunity to avoid the package limitation, and (3) Siemens knowingly and deliberately chose not to declare the value of its goods and pay the higher freight charge.
R. Doc. No. 13, pp. 8, 10-12.
Siemens does not dispute that each generator constitutes a COGSA package or that IMC's tariff and bills of lading gave shippers adequate notice of COGSA's per package limitation. Additionally, Siemens does not dispute the fact that it knowingly chose not to declare the value of the two units. Rather, Siemens argues that the 6% ad valorem rate was so unreasonably high that it effectively deprived Siemens of its opportunity to declare a higher value and avoid COGSA's limitation. Accordingly, because it was allegedly denied a fair opportunity to declare the cargo's true value, Siemens argues that IMC should not be afforded the benefit of any limitation of liability.
R. Doc. No. 21, pp. 3-4.
Siemen's avers that had it declared its cargo, it would have been required to pay a 6% ad valorem charge of $186,000.00 per generator ($3,100,00.00 per generator x 6%). [R. Doc. No. 21, p. 20]. By contrast, IMC could have insured each generator for 0.2365% of its value, i.e. $7,331.51 per generator. Id.
In General Electric Co. v. M/V Nedlloyd, 817 F.2d 1022, 1029 (2d Cir. 1986), the Second Circuit rejected the very arguments advanced by Siemens in this case. The Second Circuit held that a shipper was estopped from arguing that the carrier's ad valorem rate of 10% prevented it from declaring the true value of its cargo where the shipper was experienced and the evidence showed that the shipper had never taken any steps toward actually declaring excess value. Acknowledging the novelty of the shipper's argument, the Court nevertheless stated:
Regardless of the novelty of [the shipper's] Claim, it cannot now challenge the ad valorem rate as being unreasonable because the record shows that [the shipper] never even inquired about making such a declaration, much less took steps towards actually declaring the value of its cargo. Thus, we conclude that [the shipper] is estopped from arguing — after its cargo was damaged — that an excessive ad valorem charge prevented it from declaring their value initially. As an experienced shipper, GE obviously knew it could declare a higher value. The lack of evidence with respect to [the shipper's] investigation of [the carrier's] ad valorem charge strongly suggests that `[t]hey made a business judgment . . . not to explore the possibility of obtaining greater protection . . . at [a] higher rate.' Hence, the alleged excessiveness of [the carrier's] ad valorem charge played no part in denying [the shipper] a fair opportunity to declare value. Instead, it was [the shipper's] own cost-benefit analysis that prevented it from taking such a step. Moreover, the cost analysis was made long before this particular action was contemplated, as attested by [the shipper's] Export Ocean Transportation Manager's statement that he had never known [the shipper] to declare the value of its ocean cargo.
Id. (citing First Pennsylvania Bank v. Eastern Airlines, Inc., 731 F.2d 1113, 1122 (3rd Cir. 1984)); see also Aetna Insurance Co. v. Lash Italia, 858 F.2d 190 (4th Cir. 1988); D.W.E. Corp. v. T.F.L. Freedom, 704 F. Supp. 380 (S.D.N.Y. 1989).
In this case, there is no evidence that Siemens had any intention of either declaring the true value of its generators or obtaining additional insurance from IMC. To the contrary, the sworn statement of Frank Nemec, defendant's risk manager for twenty-two (22) years, establishes that it has been Siemens' policy since the early 1980s not to declare the value of its cargo and avoid the COGSA limitation. Siemens has presented no evidence to indicate that it intended to abandon its policy.
Mr. Nemec served as risk manager assigned to Siemens Westinghouse Power Corporation from 1976 through 1998, and from August, 2000, through the present. [R. Doc. No. 21, Ex. 1, Aff. Nemec, ¶¶ 1-2]. As risk manager, Mr. Nemec's duties included working with the Siemens transportation department to reduce, to the greatest extent possible, the risks associated with transporting its products and obtaining insurance on cargoes shipped by Siemens. Id. at ¶ 4. Mr. Nemec conceded that as risk manager, he was fully aware of COGSA, its $500 limitation, and the ability of a shipper to declare a higher value, pay an ad valorem freight charge, and eliminate the package limit. Id. at ¶ 5.
R. Doc. No. 21, Ex. 1, Affidavit of Frank Nemec ("Aff. Nemec"), ¶¶ 10-12.
The sworn statement of Mr. Nemec further establishes that Siemens' decision to refrain from declaring the value of its cargo was based solely on defendant's own cost-benefit analysis and not the alleged excessiveness of IMC's ad valorem rate. This cost-benefit analysis was made over twenty years before the shipment of cargo in this case was even contemplated. Clearly, such evidence refutes any argument by defendant that IMC's ad valorem rate played any part in denying Siemens a fair opportunity to declare value with respect to the instant cargo.
Id. at ¶¶ 8-12.
Id. at ¶¶ 10-12.
Finally, defendant concedes that Siemens has in place a "sophisticated insurance program, and marine cargo insurance protecting [defendant's] cargoes against risk of loss or damage during transportation." It is well established that a "shipper who chooses to insure its cargo through an independent insurance company has made a conscious decision not to opt out of COGSA's liability limitation." Travelers Indemnity Co. v. Vessel Sam Houston, 26 F.3d 895, 900 (9th Cir. 1994); Fishman Tobin, Inc. v. Tropical Shipping Construction, 240 F.3d 956, 962 n. 7 (11th Cir. 2001); Carman Tool Abrasives, Inc. v. Evergreen Lines, 871 F.2d 897, 899 n. 10 (9th Cir. 1989); Realini v. Contship Containerlines, Ltd., 143 F. Supp.2d 1337, 1348 (S.D.Fl. 1999). Siemens admittedly decided "as a result of [Nemec's] investigation and analysis of the benefit of paying an ad valorem rate" that there was "absolutely no point in [Siemens] pursuing the possibility of declaring a higher value and paying higher freight to ocean carriers in order to eliminate the package limit." Siemens further admits that it chose to insure its own cargo through independent means. Based on these undisputed facts, this Court finds that Siemens "made a knowing and deliberate choice in foregoing the additional costs that would have been incurred in raising the liability limit." Vessel Sam Houston, 26 F.3d at 900 (citing Carman Tool Abrasives, Inc., 871 F.2d 897, 899 n. 1). Siemens is therefore estopped from claiming that it was denied a fair opportunity to avoid COGSA's limitation. M/V Nedlloyd, 817 F.2d at 1029.
R. Doc. No. 21, Aff. Nemec, ¶ 7.
Id. at ¶ 9.
Id. at ¶ 10.
Id. at ¶ 7.
Because Siemens has not raised any genuine issue of material fact, partial summary judgment is granted in favor of plaintiff. IMC has sustained its burden of establishing that there is no material fact in dispute and that it is entitled to judgment as a matter of law. Consequently, since Siemens failed to declare the actual value of its cargo, plaintiffs alleged liability is limited to $500 per generator. Accordingly, for the above and foregoing reasons,
IT IS ORDERED that the motion of plaintiff, Industrial Maritime Carriers (Bahamas), Inc., for partial summary judgment is GRANTED.