Opinion
No: 98-3116 Section "R" (1)
June 14, 2000
ORDER AND REASONS
Before the Court is the motion of defendants, Lake Marion, Inc., Bay Ocean Management Inc., and the M/V LAKE MARION, for partial summary judgment on the issue of whether the Carriage of Goods by Sea Act, 46 U.S.C. § 1300 et. seq., limits their liability for damage to plaintiff's cargo to $500 per package. For the following reasons, the motion is denied.
I. BACKGROUND
This case involves alleged damage to a shipment of cold rolled, hot rolled, and galvanized steel enroute from Riga, Latvia to various ports in the United States aboard the M/V LAKE MARION. At the time of the alleged incident, Lake Marion owned the M/V LAKE MARION and Western Bulk Carriers had time chartered the ship. Western Bulk Carriers issued the bills of lading for the steel shipment on the CONGENBILL 1978 form, and Riga Shipping Agency, the charterer's agent, signed them on behalf of the Master.
The bills of lading each contained a "General Paramount Clause" which provided:
The Hague Rules contained in the International Convention for the Unification of certain rules relating to Bills of Lading, dated Brussels the 25th August 1924 as enacted in the country of shipment shall apply to this contract. When no such enactment is in force in the country of shipment, the corresponding legislation of the country of destination shall apply, but in respect of shipments to which no such enactments are compulsorily applicable, the terms of the said Convention shall apply.
Trades where Hague-Visby Rules apply In trades where the International Brussels Convention 1924 as amended by the Protocol signed at Brussels on February 23rd 1968 — the Hague-Visby Rules — apply compulsorily, the provisions of the respective legislation shall be considered incorporated in this Bill of Lading. The Carrier takes all reservations possible under such applicable legislation, relating to the period before loading and after discharging and while the goods are in the charge of another Carrier, and to deck cargo and live animals.
(Mot. Partial Summ. J. Ex. A.) The bills of lading do not expressly refer to COGSA or a limitation of liability to $500 per package. The bills of lading do not contain any reference to a published tariff. The import tariff published by Western Bulk Carriers states that the Hague Rules apply to determine the carrier's liabilities. (See Supp. Mem. Supp. Summ. J. Ex. 1.) It does not refer to COGSA or COGSA's liability limitation provision. ( See Id.)
Although the bills of lading identify JSV "Severstal-Insvest" as the shipper, Steel Coils purchased the cargo and became the consignee. Upon discharge at Camden, New Orleans, and Houston, it was allegedly discovered that seawater had entered the cargo holds and damaged the steel. Plaintiff, Steel Coils, filed this suit to recover damages in the amount of $550,000.
II. DISCUSSION
A. Legal Standard
Summary judgment is appropriate when there are no genuine issues as to any material facts, and the moving party is entitled to judgment as a matter of law. See FED. R. CIV. p. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552 (1986). A court must be satisfied that no reasonable trier of fact could find for the nonmoving party or, in other words, "that the evidence favoring the nonmoving party is insufficient to enable a reasonable jury to return a verdict in her favor." Lavespere v. Niagara Mach. Tool Works, Inc., 910 F.2d 167, 178 (5th Cir. 1990) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511 (1986)), abrogated on other grounds by Little v. Liquid Air Corp., 37 F.3d 1069 (5th Cir. 1996). The moving party bears the burden of establishing that there are no genuine issues of material fact.
If the dispositive issue is one for which the nonmoving party will bear the burden of proof at trial, the moving party may satisfy its burden by merely pointing out that the evidence in the record contains insufficient proof concerning an essential element of the nonmoving party's claim. See Celotex, 477 U.S. at 325, 106 S.Ct. at 2554; see also Lavespere, 910 F.2d at 178. The burden then shifts to the nonmoving party, who must, by submitting or referring to evidence, set out specific facts showing that a genuine issue exists. See Celotex, 477 U.S. at 324, 106 S.Ct. at 2553.
B. Fair Opportunity and Notice of COGSA's $500 Package Limitation
COGSA may apply to a contract of carriage "either by operation of law ( ex proprio vigore) or by the bills of lading incorporating it." General Elec. Co. v. Inter-Ocean Shipping, 862 F. Supp. 166, 168 (S.D. Tex. 1994); see also Craddock Int'l Inc. v. W.K.P. Wilson Son, Inc., 116 F.3d 1095, 1106 (5th cir. 1997) (determining applicability vel non of COGSA). Here, the parties do not dispute that COGSA applies ex propio vigore because this action involved a contract of carriage to ports in the United States from a foreign port. See 46 U.S.C. § 1312; see also 46 U.S.C. § 1300 (COGSA applies to "[e]very bill of lading . . . which is evidence of a contract for the carriage of goods by sea to or from ports of the United States, in foreign trade. . . ."); Mem. Supp. Mot. Partial Summ. J., at 2; Mem. Opp'n Mot. Partial Summ. J., at 4. COGSA limits a carrier's liability to $500 per package, "unless the nature and value of the goods have been declared by the shipper before the shipment and inserted in the bill of lading." 46 U.S.C. § 1304 (5). To benefit from section 4(5)'s $500 per package limit on liability, the carrier bears the burden of providing prima .facie evidence that the shipper had a fair opportunity to avoid the $500 limitation by declaring the value of the cargo and paying a higher freight rate. See Couthino, Caro and Co., Inc. v. M/V SAVA, 849 F.2d 166, 168 (5th Cir. 1988); Brown Root, Inc. v. N/V PEISANDER, 648 F.2d 415, 420 n. 11 (5th Cir. 1981); Cargill Ferrous Int'l v. M/V ARCTIC CONFIDENCE, 1994 WL 97787, at *4 (E.D. La. March 22, 1994). If the carrier provides prima facie evidence, the burden shifts to the shipper to show that a fair opportunity did not in fact exist. See M/V SAVA, 849 F.2d at 171 (citing General Elec. Co. v. M/V NEDLLOYD, 817 F.2d 1022, 1029 (2d Cir. 1987)).
The Fifth Circuit has not delineated exactly what type of evidence a carrier must set forth to satisfy a prima facie case of fair opportunity. A review of its rulings on this issue nevertheless provides the contours of what evidence will support a carrier's prima .facie case. In M/V PRISANDER, the court held that the shipper had fair opportunity to avoid COGSA's $500 per package limitation when the bills of lading incorporated COGSA "and more significantly, the published tariff which has the effect of law very carefully gave the Shipper a choice of valuations by a choice of precisely definable freight rates." 648 F.2d at 424. See also Wuerttenibergische and Badische Versicherungs-Aktigengesellschaft v. M/V STUTTGART EXPRESS, 711 F.2d 621, 622 (5th Cir. 1983) (finding fair opportunity to shipper when "[t]he option to increase valuation by declaration and paying higher freight was clear in the tariff which was in terms incorporated into the bill of lading."). The M/V PEISANDER court also expressly rejected the notion that a bill of lading must contain on its face a blank space for the shipper to write in excess valuations in order for the shipper to have the opportunity to avoid COGSA's per package liability limitation. 648 F.2d at 425. But see Pan American World Airways, Inc. v. California Stevedore Ballast Co., 559 F.2d 1173 (9th Cir. 1977). In contrast to M/V PEISANDER and M/V STUTTGART EXPRESS, the M/V SAVA court found no fair opportunity when the bill of lading did not expressly incorporate COGSA, and the carrier offered no other evidence, such as a tariff, that the shipper had the option to declare a higher value. 849 F.2d at 170-71. The court declined to address whether the mere incorporation of COGSA into a bill of lading, without more, constitutes prima facie evidence of fair opportunity. See id. at 171 n. 6.
After reviewing this Fifth Circuit jurisprudence, the Court concludes that defendants fail to establish a prima facie case of f air opportunity because the bill of lading does not expressly incorporate COGSA and its $500 liability limitation, nor does it incorporate or refer to a tariff or contract that does so. See, e.g., Associated Metals v. M/V Encouragement, 1994 WL 202312, at *3 (E.D. La. May 14, 1994) (denying summary judgment on issue of fair opportunity when bills of lading failed to incorporate COGSA generally or COGSA's per package limitation in particular and further fail[ed] to refer to or incorporate the terms of the tariff). Defendants have therefore failed to establish the absence of a genuine issue of material fact on the fair opportunity issue.
Defendants erroneously cite Henley Drilling Co. v. McGee, 36 F.3d 143 (1st Cir. 1994), and Z.K. Marine, Inc. v. M/V ARCHIGETIS, 808 F. Supp. 1561, 1563-64 (S.D. Fla. 1992), for the proposition that "[t]he reference to the Hague Rules in the bills of lading constitutes prima facie evidence of notice of COGSA's limitations and fair opportunity." (Mem. Supp. Mot. Partial Summ. J., at 13.) In Henley, the Clause Paramount stated that the bill of lading "shall have effect subject to the provisions of [COGSA]." 36 F.3d at 145-46. Further, the bill of lading gave even more particular notice of COGSA's liability limitation in its "Valuation Clause," which summarized section 4(5) and stated that the carrier would not be liable "in an amount exceeding $500 per package . . . unless the nature of the goods and a valuation thereof higher than $500.00 is declared in writing . . . and extra freight is paid thereon. . . ." Id. at 146. Z.K. Marine involved a paramount clause similar to the one at issue here. 808 F. Supp. at 1564-65. The clause referred to the applicability of the Hague or Hague-Visby Rules, depending upon their compulsory application or enactment in the country of loading or of discharge, but did not expressly mention COGSA. See id. The Court found that plaintiffs had notice and the opportunity to declare a higher value, but the Court noted that the face of the bill of lading referred to an additional clause on the reverse side which "explicitly spells out the $500 limitation on carrier liability in language almost identical to that used in COGSA." Id. at 1566. Because the bills of lading in both Henley and Z.K. Marine expressly referred to COGSA and its $500 liability limitation, those cases are not persuasive here.
The facts here are most similar to those in St. Paul Fire and Marine Insurance Co. v. Thypin Steel Co., Inc., in which the district court for the Southern District of New York vacated its prior order and held that a CONGENBILL bill of lading containing a General Paramount Clause identical to the one here did not give sufficient notice of the COGSA liability limitation. 1999 WL 639718, at *6 (S.D.N.Y. Aug. 23, 1999) . With regard to the General Paramount Clause's implicit incorporation of COGSA, the court noted: "the fact that the shipper would have to "investigate which set of rules, if either, had been adopted in the country of shipment and then determine how to avoid whatever liability limitations those rules imposed' was . . . too circuitous to establish the carrier's prima facie case." Id. at *7 (quoting Royal Ins. Co. v. M/V ACX Ruby, 1998 WL 524899, at *4 (S.D.N Y Aug. 21, 1998)). See also Armco Chile Prodein, S.A. v. M/V NORLANDIA, 880 F. Supp. 781, 795-96 (M.D. Fla. 1995) (holding similar paramount clause failed to give plaintiffs fair opportunity to avoid section 4(5)'s liability limitation by merely incorporating COGSA). As in this case, the General Paramount Clause in Thypin Steel did not expressly incorporate COGSA, nor did the bills of lading contain any liability limitation provision, let alone refer to COGSA's $500 per package limitation. 1999 WL 639718, at *8. Because the bills of lading did not notify the shipper of its rights, the Court held that the carriers failed to meet their prima facie burden. See id.
Defendants also assert that, as an experienced shipper, Steel Coil's own knowledge gave it constructive notice of the applicability of COGSA's liability limitation to the shipment of steel cargo here. The Court is not persuaded that the experience of the shipper, without more, establishes defendants' right to summary judgment as a matter of law. Here, there is no evidence that Steel Coils had actual notice of the $500 per package liability limitation and the Court will not deem that plaintiff had notice simply on the basis of allegations that it is an experienced shipper.
The Court notes that Steel Coils disputes that it was the "shipper." (See Mem. Supp. Opp'n Partial Summ. J., at 6-7.)
III. CONCLUSION
For the foregoing reasons, the Court DENIES defendants' motion for partial summary judgment.