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SPM Corp. v. M/V Ming Moon

filed: June 10, 1992; As Corrected July 2, 1992. Second Correction September 15, 1992.

SPM CORPORATION, APPELLANT
v.
M/V MING MOON; BLUE ANCHOR LINE, DIVISION OF TRANSPAC CONTAINER SYSTEM, LTD.; YANGMING MARINE TRANSPORT CORPORATION; AND MAHER TERMINALS, INC.



On Appeal from the United States District Court for the District of New Jersey. (District Court Civil Action No. 89-2784)

Before: Becker, Cowen, and Garth, Circuit Judges

Author: Becker

Opinion OF THE COURT

BECKER, Circuit Judge.

In this admiralty action, the plaintiff-appellant SPM Corporation ("SPM") sued to recover some $228,000 in damages incurred when stevedores negligently damaged cargo during a restowage operation at Elizabeth, New Jersey, an intermediate port of call on the route from Yokohama, Japan, to Norfolk, Virginia. SPM, the importer of the goods, appeals from the district court's order awarding it only $500 in damages from each of three defendants: Blue Anchor Line ("Blue Anchor"), which arranged the shipment; Yangming Marine Transport Corporation ("Yangming"), the actual carrier and the owner of the M/V Ming Moon, a nominal defendant and the vessel that carried the cargo; and Maher Terminals, Inc. ("Maher"), which employed the stevedores who damaged the cargo.

SPM appeals on three grounds. First, it claims that Blue Anchor's limitation on liability was two dollars per kilogram, rather than the default $500 per package under the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. § 1304(5) (1988). We agree that under Blue Anchor's bill of lading, Blue Anchor's liability was limited to $40,800 instead of $500. SPM also contends that the restowage of cargo at Elizabeth was an "unreasonable deviation" depriving all the defendants of contractually limited liability. We disagree, holding that the category of nongeographical "quasi-deviations" must be narrowly construed, and does not include actions, such as restowage at intermediate ports, that are customary in the maritime trade.

Finally, SPM argues that, at all events, Maher was liable for the full amount of damages because the contractual liability limitations available to Blue Anchor and Yangming did not extend to Maher. We again disagree, holding that the "Himalaya clause" in Yangming's bill of lading validly extended Yangming's $500 limitation on liability to Maher. We will therefore affirm in part, reverse in part, and remand for further proceedings.

I. FACTS AND PROCEDURAL HISTORY

The facts are not in dispute. SPM was the owner and importer of certain plastic injection molding machines that were shipped from Yokohama, Japan, to Norfolk, Virginia, in June 1988. The shipment consisted of three crates; the one that was eventually damaged weighed 20,400 kilograms. SPM had purchased the machinery for $243,000, and had arranged to resell it to a third party, Canon USA, Inc., for $255,000.

The manufacturer and shipper of the machines, Sumitomo Heavy Industries ("SHI"), engaged Blue Anchor to arrange for transport of the machines. Blue Anchor is a non-vessel-operating common carrier" or "NVOCC," which is "a common carrier that does not operate the vessels by which the ocean transportation is provided, and is a shipper in its relationship with an ocean common carrier," 46 U.S.C. § 1702(a)(17). Blue Anchor issued an ocean bill of lading (the "Blue Anchor bill of lading") for the shipment, which was negotiated to SPM, the consignee. As NVOCC, Blue Anchor never actually handled the cargo, and instead subcontracted with Yangming to perform the actual ocean carriage on board the Ming Moon, a container vessel. Yangming issued its own ocean bill of lading ("the Yangming bill of lading") to Blue Anchor's agent in Japan, Kuehne & Nagel (Japan), Ltd. The district court found that Kuehne & Nagel was the agent for SPM as well as for Blue Anchor.

The Ming Moon followed its published itinerary and put in at Los Angeles, California, and Savannah, Georgia, before stopping on July 8, 1988 at another intermediate port, Port Elizabeth, New Jersey, which is part of the Port of New York. At Port Elizabeth, Maher, Yangming's contract stevedore there, restowed SPM's cargo. More specifically, pursuant to Yangming's instructions, Maher's employees removed SPM's cargo from the vessel in order to stow other cargo in the lower hold of the Ming Moon, and reloaded SPM's cargo on board the ship. Although SPM's cargo had been originally stowed in Japan in a location readily accessible for unloading at Norfolk, Yangming ordered the restowage to make room for other cargo on the return trip to Japan and to have SPM's oversized cargo relocated so that it would remain accessible for discharge at Norfolk. According to the district court's finding of fact, restowage is a common practice in the maritime trade.

The parties have stipulated that during this restowage, one of SPM's packages was damaged due to negligence by Maher's employees. After the cargo was delivered in Norfolk, the damaged package was declared a constructive total loss. SPM recovered approximately $15,000 in salvage parts, but, according to another stipulation of the parties, suffered a net loss of approximately $228,000. SPM then sued Blue Anchor, Yangming, and Maher, seeking recovery of its damages. Blue Anchor cross-claimed against Yangming and Maher, seeking indemnification (including attorney's fees expended in defending the action) if it were found liable for any damages that each owed to SPM.

The district court had jurisdiction over this admiralty case under 28 U.S.C. § 1333 (1988) and Federal Rule of Civil Procedure 9(h). The case was tried to the district court sitting without a jury, based on stipulated facts, documentary evidence, and deposition transcripts. SPM has appealed from the court's order dated August 26, 1991, which, among other things, found Blue Anchor, Yangming, and Maher liable to SPM, but only in the amount of $500 each, plus prejudgment interest. The district court also ruled that Blue Anchor was entitled to indemnification from Yangming and Maher, including reasonable attorney's fees, but the amount of those fees has yet to be resolved.

II. APPELLATE JURISDICTION

Although the parties submit that we have appellate jurisdiction over a final order of the district court under 28 U.S.C. § 1291 (1988), we disagree. Because the amount of Blue Anchor's reasonable attorney's fees has not been set, the extent of Yangming's and Maher's total liability, including indemnification of Blue Anchor, has not been determined. Accordingly, the district court's order was not final, even though SPM's rights have been fully determined. See Vargas v. Hudson County Board of Elections, 949 F.2d 665, 668-70 (3d Cir. 1991) (where attorney's fees are sought as part of damages, and not as prevailing party, rule of Budinich v. Becton Dickinson & Co., 486 U.S. 196, 108 S. Ct. 1717, 100 L. Ed. 2d 178 (1988), does not apply, and district court's ruling is not final until amount of fees is fixed).

Nevertheless, we conclude that we do have jurisdiction over SPM's appeal under 28 U.S.C. § 1292(a)(3) (1988). That provision grants courts of appeals jurisdiction over interlocutory admiralty decrees that have determined the rights and liabilities of the parties, even if the dollar amount of damages has not been fixed. See Salazar v. The Atlantic Sun, 881 F.2d 73, 75 (3d Cir. 1989); Kingstate Oil v. M/V Green Star, 815 F.2d 918, 921-22 (3d Cir. 1987). Such is the situation with SPM's appeal. We now give plenary review to the district court's Conclusions of law, while we review its findings of facts only for clear error.

III. BLUE ANCHORS DAMAGE LIMITATION

The first ground of SPM's appeal is that the district court improperly limited Blue Anchor's inability to $500. The parties agree, and the district court concluded, that COGSA applies to the Blue Anchor bill of lading by terms of the Act itself. Under 46 U.S.C. § 1300, COGSA controls bills of lading that evidence a contract of carriage of goods by sea to or from the United States and in foreign trade. Carriage of goods covers the period from when the goods are loaded on when they are discharged from the ship. 46 U.S.C. § 1301(e). We agree with the district court that ...


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