Opinion
No. 2:03-CV-141.
March 8, 2005
ORDER
This matter is before the Court on: (1) Defendants' Motion for Partial Summary Judgment, filed by Defendants on September 30, 2004; (2) Federal Marine Terminals' Motion for Summary Judgment Pursuant to Rule 56 of the Federal Rules of Civil Procedure, filed by Defendant, Federal Marine Terminals, Inc., on September 30, 2004; and (3) Motion for Summary Judgment, filed by Plaintiff, Fortis Corporate Insurance Company, on September 30, 2004. For the reasons stated below, Defendants' Motion for Partial Summary Judgment is GRANTED, the Court finding that Plaintiff's claim for damages is subject to the $500 per package limitation contained in the Carriage of Goods by Sea Act. Federal Marine Terminals' Motion for Summary Judgment Pursuant to Rule 56 of the Federal Rules of Civil Procedure is DENIED, and Fortis Corporate Insurance Company's Motion for Summary Judgment is also DENIED. Plaintiff's claims against Defendants REMAIN PENDING. BACKGROUND
This case involves a shipment of cold rolled steel coils shipped from Ghent, Belgium, to Burns Harbor, Indiana, aboard the M/V Lake Ontario. On June 19, 2003, Plaintiff, Fortis Corporate Insurance Company ("Fortis"), subrogee of JF Steel Corporation ("JF Steel"), filed an amended verified complaint against M/V Lake Ontario, her engines, boilers, etc., Fednav International Ltd. ("FIL"), Federal Marine Terminals, Inc. ("FMT"), and Lake Ontario, Inc. Fortis is the subrogated underwriter for JF Steel, and the amended verified complaint alleges that Fortis suffered more than $2 million in damages when a shipment of steel coils sustained rust and physical damage, due to the vessel and Defendants' alleged breaches of duties and obligations as common carriers, bailees, and warehousemen.
FIL entered into certain bills of lading, whereby the port of loading for the coils was Ghent, Belgium, and the port of discharge was Burns Harbor, Indiana. The coils were carried via the M/V Lake Ontario. The M/V Lake Ontario was owned by Defendant Lake Ontario, Inc., and time chartered to Defendant FIL. FMT was a Marine Terminal Operator (MTO) with respect to the coils. The coils were discharged from the M/V Lake Ontario at FMT in Burns Harbor, Indiana, on December 10-12, 2002. No ad valorum freight was paid by JF Steel for the goods.
The vessel sailed from Ghent, Belgium, on or about November 14, 2002, and arrived at Burns Harbor, Indiana, on December 10, 2002. Plaintiff claims while in transit, Defendants Lake Ontario, Inc. and FIL did not properly care for the coils, failed to protect them from conditions which promoted rust, and failed to properly ventilate the ship's holds where the coils were stowed which caused an excessive amount of condensation to form within the cargo holds. Defendants dispute these accusations.
Upon arrival at Burns Harbor, Indiana, on December 10, 2002, the coils were discharged by FMT's longshoreman. The coils were discharged from the vessel onto an adjacent pier where they remained from a period of time ranging from a few seconds, to a few hours, and some through the night of December 12 and into the morning of December 13, 2002. The weather conditions during the final night of discharge were warm and humid.
The coils were moved from the pier, and the majority were stored in FMT's warehouse known as Shed No. 1, which was neither heat nor climate controlled. On December 17-18, 2002, there was an increase in temperature at Burns Harbor to in excess of 60 degrees Fahrenheit.
All coils were eventually retrieved from FMT's warehouse by JF's truckers and transported to one of three JF locations ranging from 5 miles from the port to approximately 125 miles from the port. Plaintiff alleges that during later inspections it discovered varying degrees of rust on many of the coils (1,237 out of 1,918 coils), and claims it is entitled to recover $1,998,370.22 from Defendants, plus prejudgment interest.
In Defendants' instant motion for partial summary judgment, all of the named Defendants seek a declaration that Fortis' claim for damages is subject to the $500 per package limitation of the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. § 1300, et seq.
In FMT's motion for summary judgment, FMT seeks a ruling that it is not liable for the damage to the cargo claimed by Plaintiff based upon FMT's Marine Terminal Operator Schedule ("MTO Schedule"). In the alternative, FMT seeks dismissal of Count II of Plaintiff's verified amended complaint, claiming Plaintiff has failed to state a cause of action for conversion.
Finally, Plaintiff Fortis also seeks summary judgment, arguing that the undisputed material facts demonstrate that Fortis is entitled to judgment as a matter of law. The motions have all been fully briefed and are ripe for adjudication.
DISCUSSION
The standards that generally govern summary judgment motions are familiar. Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is proper only if it is demonstrated that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. See Nebraska v. Wyoming, 507 U.S. 584, 590 (1993); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). In other words, the record must reveal that no reasonable jury could find for the nonmovant. Karazanos v. Navistar Int'l Transp. Corp., 948 F.2d 332, 335 (7th Cir. 1991); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). In deciding a motion for summary judgment, a court must view all facts in the light most favorable to the nonmovant. Anderson, 477 U.S. at 255; NUCOR Corp. v. Aceros Y Maquilas De Occidente, 28 F.3d 572, 583 (7th Cir. 1994).
The burden is upon the movant to identify those portions of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits," if any, that the movant believes "demonstrate the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323. Once the movant has met this burden, the nonmovant may not rest upon mere allegations but "must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e); Becker v. Tenenbaum-Hill Assocs., Inc., 914 F.2d 107, 110 (7th Cir. 1990); Schroeder v. Lufthansa German Airlines, 875 F.2d 613, 620 (7th Cir. 1989). "Whether a fact is material depends on the substantive law underlying a particular claim and `only disputes over facts that might affect the outcome of the suit under governing law will properly preclude the entry of summary judgment.'" Walter v. Fiorenzo, 840 F.2d 427, 434 (7th Cir. 1988) (emphasis in original) (citing Anderson, 477 U.S. at 248).
"[A] party who bears the burden of proof on a particular issue may not rest on its pleading, but must affirmatively demonstrate, by specific factual allegations, that there is a genuine issue of material fact which requires trial." Beard v. Whitley County REMC, 840 F.2d 405, 410 (7th Cir. 1988) (emphasis in original); see also Hickey v. A.E. Staley Mfg., 995 F.2d 1385, 1391 (7th Cir. 1993). Therefore, if a party fails to establish the existence of an essential element on which the party bears the burden of proof at trial, summary judgment will be appropriate. In this situation, there can be "`no genuine issue as to any material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex, 477 U.S. at 323.
Where the parties file cross-motions for summary judgment, the Court must consider each motion and, even if the parties agree that no genuine issue of material fact exists, the Court can deny all motions if the parties do not establish their rights to judgment as a matter of law. Grabach v. Evans, 196 F.Supp.2d 746, 747 (N.D. Ind. 2002).
Applicability of COGSA
There is no question that COGSA generally applies to this case, where goods were shipped from Belgium to the United States. COGSA applies to "[e]very 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. . . ." 46 U.S.C. § 1300. Where applicable, COGSA provides an "exclusive remedy." Polo Ralph Lauren, L.P. v. Tropical Shipping Constr. Co., Ltd., 215 F.3d 1217, 1220 (11th Cir. 2000).
By its terms, COGSA applies to the carrier only "in relation to the loading, handling, stowage, carriage, custody, care, and discharge of such goods," and not to those periods unrelated to loading and unloading. 46 U.S.C. § 1302. In other words, "COGSA does not apply ex proprio vigore to the period before the goods are loaded onto the vessel and the period after the goods are discharged from the vessel. . . ." Gerling-Konzern v. Epeditors Int'l Ocean, No. 99 C 8348, 2000 WL 781434, at *3 (N.D. Ill. June 15, 2000).
However, the parties may agree to extend the COGSA limitation provisions "prior to the loading on and subsequent to the discharge from the ship. . . ." 46 U.S.C. § 1307. COGSA can be extended to the entire period during which the carrier has custody. Colgate Palmolive Co. v. S/S Dart Canada, 724 F.2d 313, 314 (2d Cir. 1983); Tokio Marine Fire Ins. Co., Ltd. v. Hyundai Merchant Marine Co., Ltd., 717 F. Supp. 1307, 1309 (N.D. Ill. 1989). In this case, the bill of lading issued by the carrier, FIL, mandates the application of COGSA, stating:
If either the port of loading or the port of discharge named on the face hereof is located in the United States of America, this Bill of Lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United States approved April 16, 1936, and the governing law of the contract evidenced by this Bill of Lading shall be the law of the United States. In such event, the provisions in said Act shall be deemed to be incorporated herein and shall govern before the goods are loaded on and after they are discharged from the ship and throughout the entire time the goods are in the custody of the carrier.
(FIL Bill of Lading, ¶ 3(1).)
COGSA provides a $500 per package limit on liability as follows:
Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United States, or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading. This declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall not be conclusive on the carrier.
46 U.S.C. § 1304(5) (emphasis added). In other words, under COGSA, a carrier may limit its liability to $500 per package if the shipper is given a fair opportunity to opt out of the limitation by declaring an excess value and paying a higher rate.
Defendants' Motion for Partial Summary Judgment
Defendants collectively move for partial summary judgment, urging the Court that as a matter of law and contract, Fortis' claim for damages is subject to the $500 per package limitation of COGSA, 46 U.S.C. § 1300, et seq. In support, Defendants argue that the same issue was previously decided by this Court in Fortis Corporate Insurance v. M/V Federal Saguenay, et al., Case No. 2:02-CV-332 (unpublished opinion dated February 13, 2004), consequently, Plaintiff is collaterally estopped from maintaining that the COGSA limitation does not apply. Even if the doctrine of collateral estoppel is inapplicable, Defendants claim that the Saguenay reasoning holds here, limiting Plaintiff's ability to recover to $500 per package.
Plaintiff Fortis argues that collateral estoppel does not apply. Plaintiff claims it did not previously have the opportunity to address who was a party to the MTO Schedule. Additionally, Fortis claims that recent discovery has revealed new evidence undermining the MTO Schedule, because there was a separate agreement in place between JF Steel and FMT.
Fortis submitted one memorandum of law in opposition to both Defendants' Motion for Partial Summary Judgment and FMT's Motion for Summary Judgment. Therefore, it is slightly difficult to decipher which of Plaintiff's arguments in its opposition brief correspond to the arguments articulated in the two summary judgment memoranda. The Court has done its best to address Fortis' responsive arguments.
It is well established that: the doctrine of collateral estoppel precludes litigation of issues in a subsequent proceeding when:
(1) the party against whom the estoppel is asserted was a party to the prior adjudication,
(2) the issues which form the basis of the estoppel were actually litigated and decided on the merits in the prior suit, (3) the resolution of the particular issues was necessary to the court's judgment, and (4) those issues are identical to issues raised in the subsequent suit.Cook County v. MidCon Corp., 773 F.2d 892, 898 (7th Cir. 1985) (citations omitted). In Saguenay, Fortis, as subrogee of JF Steel, filed suit for damages to a shipment of steel coils, and FIL and FMT moved the Court for partial summary judgment, requesting enforcement of the $500 per package limitation of COGSA and the bill of lading. Saguenay involved the same parties as this action, and it seems like this identical issue was already actually litigated and decided on the merits.
Fortis protests, claiming collateral estoppel should be not applied because the Court has "broad discretion to determine" when offensive collateral estoppel should be applied. Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 331 (1979). Additional discovery has occurred since summary judgment was granted in Saguenay, and Fortis urges the discovery compels a different outcome here. Although it appears to the Court that collateral estoppel is indeed applicable, it will briefly address the substance of Fortis' arguments.
First, however, it is important to note what the parties do not dispute. They do not dispute that COGSA generally applies, and they do not controvert that each steel coil in this case constitutes a package for the purposes of COGSA. This Court agrees that each steel coil is a package. See, e.g., Nichimen Co., Inc. v. M.V. Farland, 462 F.2d 319, 334-35 (2d Cir. 1972) (finding steel coils rolled, strapped, and tied with steel bands were packages under COGSA). It is uncontrovertd that FIL's bill of lading indicates the parties' intent to be bound by COGSA. (FIL Bill of Lading, ¶ 3(1).) It is also uncontested that no value for the shipment at issue in this case was ever declared, despite the opportunity on the bill of lading. ( See face of FIL Bill of Lading ("VALUE OF GOODS MAY BE DECLARED PROVIDED MERCHANT GIVES PRIOR NOTICE AND AGREES TO PAY HIGHER FREIGHT AD VALOREM BASIS SEE CL. 18 ON BACK HEREOF."); see also Dong Li Aff., ¶ 3.) Fortis does not expressly argue that the $500 per package limit contained in COGSA does not apply to FIL, and this Court finds that the limitations do indeed apply to FIL.
It is with FMT that the current disagreement lies. FMT's MTO Schedule provides as follows:
The MTO shall not, in any event, be or become liable for any loss or damage to goods in an amount exceeding the per package amount set forth in the Carriage of Goods at Sea Act, 46 U.S.C. Section 1304(5), $500 (USD) per package) or in case of goods not shipped in packages, the per customary freight unit amount set forth in the Carriage of Goods at Sea Act. 46 Section 1304(5), unless the party receiving the MTO services, prior to the commencement of such services, declares a higher value to the MTO and pays to the MTO a premium computed at 1% of the declared value of each package in addition to the other charges for such services as herein set forth. . . . In no event shall the MTO be liable for any damage unless said damage results solely from the failure of the MTO to exercise due and proper care in performing the services contracted for.
(FMT's MTO Schedule, Item 12(C).) With respect to FMT, Defendants contend FMT is entitled to COGSA's application as a matter of contract. Marine terminal operators like FMT make schedules of rates and operations available to the public and:
Any schedule that is made available to the public by the marine terminal operator shall be enforceable by an appropriate court as an implied contract between the marine terminal operator and the party receiving the services rendered by the marine terminal operator, without proof that such party has actual knowledge of the provisions of the applicable terminal schedule.46 C.F.R. § 525.2(a)(2); see also 46 U.S.C. § 1707(f). FMT's schedule of rates and operations is made available to the public via the Internet, and Defendants contend that the MTO Schedule became an implied contract between FMT and any entity utilizing its facilities and services, including Plaintiff. In Saguenay, this Court decided that FMT's MTO Schedule was an implied contract, and that it was sufficient to demonstrate that the $500 per package limit of COGSA applied to FMT as well.
Fortis puts forth several new arguments as to why the MTO Schedule should not constitute an implied contract between Plaintiff and FMT. Fortis claims that this implied contract cannot be enforced because during discovery, Fortis learned there was an actual contract between JF Steel and FMT governing the services provided under the MTO Schedule. The relevant statute provides that "[i]f the marine terminal operator has an actual contract with a party covering the services rendered by the marine terminal operator to that party, an existing terminal schedule covering those same services shall not be enforceable as an implied contract." 46 C.F.R. § 525.2(a)(3) (emphasis added).
Fortis argues that such an actual contract existed between JF Steel and FMT. Ian Hirt, the general manager of FMT, testified during his deposition that "[f]or JF Steel, historically, we've had a verbal agreement that if they pick up their cargo in a expeditious manner, then there will be an unlimited amount of free time" for JF Steel to pick up their goods from FMT without incurring additional storage charges. (Hirt Dep. dated Feb. 3, 2004, pp. 69-70.) Fortis cites to no case law to support its position that a long-standing commercial agreement about storage charges is an "actual contract" under section 525.2(a)(3). Moreover, there does not seem to be anything about this arrangement that alters the application of the MTO Schedule, and Fortis was in fact invoiced for terminal transfer charges under the MTO Schedule. (Hirt Aff., ¶ 3.) Because Fortis has failed to prove the existence of an actual contract covering the services rendered by FMT to JF Steel, this Court finds the MTO Schedule is an implied contract between FMT and Plaintiff. The MTO Schedule, as an implied contract, makes the $500 per package limit of COGSA applicable to FMT.
Defendants also contend that the "Himalaya Clause" in the bill of lading and the provisions of FMT's MTO Schedule give FIL and FMT the benefit of any defenses in the bill of lading. COGSA may also apply in its entirety to FMT through the Himalaya Clause contained in FIL's bill of lading; however, the Court need not decide this issue since the MTO Schedule is sufficient to demonstrate that the $500 per package limit contained in the COGSA applies to both FIL and FMT.
A "Himalaya Clause" is designed to extend the protections and immunities of an ocean carrier to agents and subcontractors. See Taisho Marine and Fire Ins. Co., Ltd. v. Maersk Line, Inc., 796 F. Supp. 336, 339 (N.D. Ill. 1992).
Plaintiff tries to make much of the fact that the MTO Schedule attached as Exhibit B to Defendants' instant motion for partial summary judgment differs from Exhibit 6 attached to FMT's motion for summary judgment. (Pl.'s Mem. of Law in Opp. to Mots. for Summ. J., pp. 14-16.) Fortis insinuates that because FMT could "unilaterally" alter the terms of its MTO Schedule which was posted on a website, FMT was deceptive and underhanded. ( Id., p. 15.) In response, Defendants admit that counsel made an error in attaching a previous version of the MTO Schedule. (Defs.' Reply in Supp. of Mot. for Partial Summ. J., p. 2.) The proper version of the MTO Schedule, as attested to in Hirt's Affidavit, is attached to Defendants' reply memorandum. This Court is satisfied that FMT's counsel made an inadvertent error, and corrected the same. To the extent Fortis requests that FMT be sanctioned and Fortis awarded attorneys' fees, this Court finds that such penalties are unwarranted at this time.
Finally, Plaintiff argues in the alternative that even if this Court determines that the MTO Schedule applies to Plaintiff, the terms violate 46 U.S.C. § 1709(d)(1) which provides that:
No common carrier, ocean transportation intermediary, or marine terminal operator may fail to establish, observe, and enforce just and reasonable regulations and practices relating to or connected with receiving, handling, storing, or delivering property.
Plaintiff has furnished no case citations or any other legal support for its proposition that certain provisions of FMT's MTO Schedule are not "just and reasonable regulations." Plaintiff's argument therefore fails.
Pursuant to the MTO Schedule, the party receiving MTO services includes:
Party receiving the services shall include the party ordering the MTO services from FMT, the owner of the cargo, the shipper, the consignor, the consignee, the ocean carrier, including owners and charteres of the vessel, and any other party having any interest in the cargo and/or receiving, directly or indirectly, any benefit from the services rendered.
(FMT's MTO Schedule, Item 4 (Additional Definitions).) Moreover, COGSA specifically states that the $500 per package limitation applies to the ship. See 46 U.S.C. § 1304. Therefore, the MTO Schedule and COGSA apply to the owner, Lake Ontario, Inc., as well as the vessel, M/V Lake Ontario.
In sum, this Court finds that the $500 limit found in COGSA governs this action. It applies to all Defendants and COGSA limits Fortis' claims against them. Defendants' Motion for Partial Summary Judgment is therefore GRANTED. FMT's Motion for Summary Judgment
The first section of FMT's motion for summary judgment deals with FMT's argument that its MTO Schedule is an implied contract between Fortis and FMT. This Court has already reached this conclusion and therefore turns to the second section, in which FMT contends that the MTO Schedule exonerates it from liability for the damage to the steel coils as alleged by Plaintiff.
FMT contends that two provisions in its MTO Schedule exonerate it from liability. Item 1(F) states as follows:
The MTO has no temperature or humidity control under cover in sheds. Goods which are subject to damage through temperature or humidity conditions or changes, climatological causes of any nature whatsoever, or other causes incidental to storage will be received solely at the risk of the party receiving MTO services.
(FMT's MTO Schedule, Item 1(F).) Additionally, Item 12(A) further states in pertinent part that:
The MTO shall not be liable for any expenses, losses, or claims whatsoever caused by or resulting from . . . an act of god; fire; flood; storm; frost; heat; leakage; evaporation; sweat; moisture . . . or any cause beyond the MTO's control. . . . Nothing herein above shall relieve the MTO of liability resulting from its own negligence.
(FMT's MTO Schedule, Item 12(A).) The parties do not provide further direct argument or apposite case law about what may constitute damages "through temperature or humidity conditions," climatological causes, or losses caused by an act of God, flood, leakage, evaporation, sweat, or moisture, or any cause beyond the MTO's control.
There are multiple questions of fact as to whether the damage sustained to the coils resulted from an occurrence that would relieve FMT of liability. For example, questions of fact exist as to what exactly caused the alleged damage to the coils, and when that event, or possibly multiple events, happened.
Regarding when the coils were loaded on board the M/V Lake Ontario, Plaintiff contends the coils were free from rust or defect because Paul De Laet, the surveyor attending the loading on behalf of FIL, reported no problems with the coils. (De Laet Dep., pp. 15-17.) Defendants disagree that the coils were pristine because De Laet stated that at the time of loading, the coils were packaged such that the steel itself, within the packaging, could not be inspected. (De Laet Dep., pp. 21-22.)
During the marine voyage, Plaintiff argues the vessel was unseaworthy because the ship was equipped with only natural ventilation. However, Defendants contend that natural ventilation is the standard for carrying steel cargo. (Van Damme Dep., p. 65.) Moreover, Plaintiff has not provided evidentiary support of its contention that improper ventilation caused an excessive amount of condensation to form within the cargo holds.
Regarding the time of discharge, condensation was observed to be falling from the interior of the hatch covers of the holds onto the coils and accumulated ice had to be removed from the top of the vessel's hatch covers. (Boltz Dep., p. 44; Sinnokrak Dep., p. 61.) Daniel Boltz, Plaintiff's marine surveyor, testified that he observed minor puddles on the vessel's tank tops and dried water rust stains. (Boltz Dep., pp. 33-34.) Yet Boltz did not know whether the rust stains formed during this voyage or a previous trip. (Boltz Dep., pp. 34-35.) Ian Hirt, the general manager of FMT, observed the majority of the coils discharged, and estimated that 80-90% had some form of condensation on them. (Hirt Dep., dated May 26, 2004, p. 31.) Yet, testimony from Boltz supports Defendants' claim that the coils were discharged in good condition. Boltz testified that at discharge, the "coils outturned in generally good condition" and the coils were examined for indications of wetting, and no real evidence was found. (Boltz Dep., pp. 58-59; Inland Surveyors Inc. Outturn Survey Report, p. 7.) Boltz further testified that he did not observe any problems with the weather that he was concerned with during discharge. (Boltz Dep., p. 31.)
Plaintiff contends that FMT "store[d] these coils in this unsuitable warehouse which lacked heat, climate controls, dehumidification devices, had leaking roofs and had between 4 and 6 large bay doors which remained open all day, everyday, through all types of inclement weather." (Pl.'s Mem. of Law in Opp. to Mots. for Summ. J., pp. 3-4; Hirt Dep., dated May 26, 2004.) Yet Plaintiff's marine surveyor found FMT's transit shed to be "as good or better than any others which could be found at Great Lakes ports, such as Detroit or Chicago." (Inland Surveyors Inc. Facilities Review of FMT, p. 3.)
With regard to the period of time after JF Steel picked up the coils from FMT's warehouse, there is a question of fact as to whether damage could have been incurred during that time period. Although JF Steel's procedure was to allow the coils to acclimate to the climate controlled, heated and humidity controlled premises of JF Steel's warehouse for a period of 24-48 hours, there is evidence that the coils were not decanned within a few days of receipt by JF Steel, due to the large volume of coils. Inspection and decanning of the coils at the JF Steel facility in Evanston, Illinois, occurred on January 28, February 12, 13, and 14, 2003. (Inland Surveyors Inc. Report No. C13403-03 DHB, p. 7.) Inspection of many of the coils as they were being processed took place at JF Steel in Evanston on certain dates in February, March, April, May, June, and August, 2003. (Boltz Dep., p. 75; Inland Surveyors Inc. Report No. C13403-03 DHB, pp. 7-8.) Inspection and decanning of the coils at JF Steel in Burns Harbor, Indiana, took place on January 31, February 11, and February 18, 2003. (Inland Surveyors Inc. Report No. C13407-03 JDB, p. 9.) Surveys were conducted at the JF Steel in Burns Harbor, Indiana, on certain dates in January, February, March, April, May, July, and August, 2003. ( Id. p. 8.) Surveys were conducted at the JF Steel facility in Jenison, Michigan, on March 13, April 7, and September 9, 2003. (Inland Surveyors Inc. Report No. C13436-03, p. 6.)
The Court cannot exonerate FMT from liability for damage to the rolled coils because it is undetermined when the alleged damage occurred. Based upon this Court's review of the record, some possibilities of when a fact finder could determine that the damage occurred are: pre-loading aboard the M/V Lake Ontario, during the ocean voyage, during discharge, post-discharge on the dock, post-discharge in the transit shed, or post-receipt by JF Steel. This list is not exhaustive, either. Moreover, there are several possible sources of the complained of damage, including but not limited to, the sufficiency of the coils' packaging, condensation that may have accumulated in the vessel's holds, moisture in the air during discharge, dripping water during discharge, exposure to weather on the dock, the excessive temperature change on December 17-18, 2002, the conditions in the transit shed, and water coming through the vent in the transit shed.
Other questions of fact abound as well. For example, "[a]n act of God is a term of art that does not include every natural occurrence." Ispat Inland, Inc. v. Am. Commercial Barge Line Co, et. al., No. 2:99 CV 58, 2002 WL 32098290, at *8 (N.D. Ind. Sept. 30, 2002.) The defense is available in only a limited number of circumstances, after having considered factors such as the severity of the natural occurrence causing the damage, the reasonable predictability of the occurrence, the lack of human agency in the damage to the property, and the reasonableness of any precautions. Id. FMT has failed to put forth evidence of the severity of the natural occurrence which allegedly caused the damage to the steel coils, or the predictability of the occurrence, or the lack of human agency, or the reasonableness of any precautions. FMT has not shown that the components of the weather was unforeseeable. Moreover, a fact finder could determine that FMT was aware of a certain amount of risk with moisture in the air during discharge, and the warm weather in December, and that FMT could have taken precautions, but chose not to. For all of the above-mentioned reasons, FMT's motion for summary judgment is DENIED.
In response to FMT's motion for summary judgment, Plaintiff also argues that because FMT has accepted responsibility for approximately 15-20 coils that were wetted when rain came through a ceiling vent in the transit shed, that FMT should admit responsibility for the rust damage to the other steel coils. Fortis' argument has no basis in law, and therefore is rejected.
FMT asks, in the alternative, that Count II of Plaintiff's complaint, stating a claim for conversion, be dismissed as a matter of law. FMT has not filed a proper motion to dismiss. Northern District of Indiana Local Rule 7.1 provides in pertinent part that:
Each motion shall be separate; alternative motions filed together shall each be named in the caption on the face. Any motion under Fed.R.Civ.P. 12 . . . shall be accompanied by a separate supporting brief.
N.D. Ind. L.R. 7.1(b). FMT has failed to accompany its motion to dismiss with a separate supporting brief. Therefore, this argument will not be considered by the Court.
Plaintiff Fortis' Motion for Summary Judgment
Fortis has filed a cross motion for summary judgment, claiming it has met its burden of proof establishing a prima facie case under COGSA, and that the undisputed material facts demonstrate that Fortis is entitled to judgment as a matter of law. Defendants contend that Plaintiff has failed to prove that the coils were delivered to the carrier in good condition and has failed to prove that the coils outturned from the vessel in a damaged condition.
To prevail on summary judgment, Fortis must demonstrate that no genuine issues of material fact exist regarding whether "its goods were damaged while in the carrier's custody." Caemint Food, Inc. v. Brasileiro, 647 F.2d 347, 351 (2d Cir. 1981) (citations omitted). Generally, a plaintiff can satisfy this burden by demonstrating that the goods were delivered to the carrier in good condition, and outturned by the carrier in damaged condition. Id. If a prima facie case is established, the burden shifts to the carrier to explain the loss. Westway Coffee Corp. v. M.V. Netuno, 675 F.2d 30, 32 (2d Cir. 1982). The carrier must then prove that "the loss or damage falls within one of the COGSA exceptions or that the carrier exercised due diligence in preventing damage to the cargo." Philip Morris v. Am. Shipping Co., Inc., 748 F.2d 563, 566 (11th Cir. 1984) (citation omitted).
With regard to the first prong, Plaintiff bears the burden of establishing the good condition of the cargo when it was delivered to the carrier. Fortis argues that at the time of loading, the coils were inspected by the M/V Lake Ontario's chief cargo officer who issued mate's receipts with respect to the coils, and then comments were inserted into the bills of lading. There were no comments regarding rust damage to the coils either in the mate's receipts or in the bills of lading. ( See Bills of Lading, Mates Receipts.)
A clean bill of lading is ordinarily prima facie evidence of receipt by the carrier of the cargo in good order and condition. Thyssen, Inc. v. S/S Eurounity, 21 F.3d 533, 538 (2d Cir. 1994); see also Am. Nat'l Fire Ins. Co. v. Yellow Freight Sys., Inc., 325 F.3d 924, 929 (7th Cir. 2003). However, as conceded by Fortis, a bill of lading is only prima facie evidence of the condition of so much of the goods as are visible to the carrier. "A clean bill of lading does not carry such probative force where the packaging in which the goods were shipped prevented the carrier from viewing the condition of the goods when they were loaded." MGC Commodity, Div. of Golodetz Co., Inc. v. S.S. Al Odailiah, 1982 A.M.C. 2160 (S.D.N.Y. 1982); see also Philipp Bros. v. M/V Sabogal, 490 F.Supp. 975, 980-81 (S.D.N.Y. 1980) (noting that a clean bill of lading is only a head start towards establishing that the goods were received in good condition, particularly where the condition of the goods is not readily visible at loading). The Court in Bally, Inc. v. M.V. Zim America, stated that a clean bill of lading does not constitute prima facie evidence of the condition of "goods shipped in sealed packages where the carrier is prevented from `observing the damaged condition and it existed when the goods were loaded.'" 22 F.3d 65, 69 (2d Cir. 1994) (citing Caemint Food, 647 F.2d at 352).
Here, De Laet, the surveyor attending the loading on behalf of FIL, reported no problems at loading with regard to the exterior packaging of the coils; however, De Laet stated that at the time of loading, the coils were packaged such that the steel itself, within the packaging, could not be inspected. (De Laet Dep, pp. 15-17, 21-22.) Based upon a review of the record, including photographs, this Court concludes, as it did in Saguenay too, that the steel coils were wrapped in plastified paper and packaged in a manner that would have made it difficult for the carrier to inspect at loading.
Fortis argues that the clean bill of lading coupled with Sidmar's exemplary production and packaging procedures is enough to establish that the goods were delivered in good condition to the carrier. (Pl.'s Mem. in Supp. of Mot. for Summ. J., pp. 4-5.) In Associated Metals Minerals Corp. v. M/V Olympic Mentor, No. 93 CIV. 4330 (DLC), 1995 WL 794062, *7 (S.D.N.Y. Dec. 20, 1995) (citing Caemint Food, 647 F.2d at 354, n. 6), the Court found that one way for a plaintiff to establish that the cargo was delivered in good condition would be to "show that the cargo was packaged and transported to the load port in such a manner and under such conditions that should have prevented damage from occurring en route."
Plaintiff has produced evidence about its manufacturing process and method of packaging of the coils ( see Van Damme Aff.), and it characterizes the packaging as exceeding industry standards, and "the best possible packaging for maritime transport" (Pl.'s Stmt. of Facts in Supp. of Summ. J., ¶ 19). However, Defendants dispute the sufficiency of the packaging. Defendants cite to Plaintiff's marine surveyor, Boltz, who noted in his survey report that:
A review of the coils at time of decanning indicated that the coils had been wrapped in a plastified type vapor barrier paper. The paper had been placed over the outer diameter and was tucked into the inner diameter of the coils itself. It was noted that the paper did not fully cover the inner diameter of the coils. Coils were then wrapped in either a steel circular or a corrugated paperboard circular, doughnut-shaped, edge protector. Steel waster sheets and/or corrugated paperboard waster sheets were then applied about the inside and outside diameters of the coils . . .
(Inland Surveyors Inc. Survey Report, C13407-03 JDB, pp. 10-11.) Rene Van Damme of Sidmar testified that the purpose of the vapor barrier paper "is mostly preventing the coil from let's say condensation, water infiltration, things like that." (Van Damme Dep., p. 35.) Additionally, De Laet, a surveyor in Belgium who surveys Sidmar coils, testified that he has "[his] doubts" as to whether the packaging of the coils was sufficient to transport the steel coils from Belgium to the United States by ocean carrier because he is "quite certain that the majority of the coils will have tears in the inner packing." (De Laet Dep., pp. 33-34.) Consequently, there is a disputed issue of material fact as to whether the packaging for the coils was sufficient, and it is best suited for the fact finder to determine.
This Court therefore finds that a genuine issue of material fact exists regarding whether the goods were received by FIL in good condition. Summary judgment in favor of Fortis is therefore inappropriate.
Given the above conclusion, this Court need not consider whether Fortis has demonstrated the cargo was delivered in a damaged condition. Nor does this Court need to decide when "delivery" technically occurred. However, the Court will briefly address the parties' arguments on these points.
Fortis claims that, based upon Clause 3(1) of FIL's bill of lading, the requirement that it prove "damage at outturn" requires a showing in this case of damage at the time the coils were actually delivered to JF Steel (not upon the discharge of the vessel). (Pl.'s Mem. in Supp. of Mot. for Summ. J., pp. 15-16.) Defendants disagree, arguing that under COGSA, Plaintiff must establish the condition of the cargo at the time of discharge from the vessel, and that delivery occurred when FMT received the cargo. (Defs.' Resp. in Opp. to Pl.'s Mot. for Summ. J., pp. 6-8.) Regardless of whether "delivery" from the carrier occurred at the time of discharge or when JF received the cargo, as discussed previously, there are materially disputed facts about whether the coils were in good condition or not at those points in time.
Moreover, it is a factual question as to whether "free time," or the period of time JF Steel had to retrieve all of its coils from FMT, had expired when additional rust damage to the coils allegedly occurred on December 17-18, 2002. For all the foregoing reasons, Fortis' motion for summary judgment is DENIED. CONCLUSION
For the reasons set forth above, Defendants' Motion for Partial Summary Judgment is GRANTED, the Court finding that Plaintiff's claim for damages is subject to the $500 per package limitation contained in the Carriage of Goods by Sea Act. Federal Marine Terminals' Motion for Summary Judgment Pursuant to Rule 56 of the Federal Rules of Civil Procedure is DENIED, and Fortis Corporate Insurance Company's Motion for Summary Judgment is also DENIED. Plaintiff's claims against Defendants REMAIN PENDING.