UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
October 17, 1996
PT. KERATON SELARAS; QQ PT. CITRAMARGA NUSAPHALA PERSADA; QQ KONSORSIUM HUTAMA YALA; and QQ PT. CITRAMARGA NUSAPHALA PERSADA
M/V CARTAGENA DE INDIAS, her engines, machinery, tackle, apparel, etc.; INDUSTRIAL MARITIME CARRIERS (BAHAMAS), INC.; and FLOTA MERCANTE GRANCOLOMBIANA, S.A.
The opinion of the court was delivered by: PADOVA
October 17, 1996
Plaintiff, an Indonesian importer of construction equipment, hired Defendants, overseas carriers, to transport a mobile truck crane from Philadelphia, Pennsylvania to Jakarta Pusat, Indonesia. After the crane sustained damage while in transit, Plaintiff brought this action pursuant to the Carriage of Goods by Sea Act, 46 U.S.C.A.App. §§ 1300-1315 (West 1975) ("COGSA"). Both Plaintiff and Defendants currently submit cross-motions for summary judgment for the Court's consideration. For the following reasons, the Court will grant Defendants' Motions for Summary Judgment and deny Plaintiff's Motion for Summary Judgment.
A. The Parties
Plaintiff, P.T. Keraton Selaras ("Keraton"), is a corporation organized and existing under the laws of Indonesia, with its principal place of business in Jakarta Pusat, Indonesia. Keraton imports and operates heavy machinery and construction equipment in Indonesia. Defendant M/V Cartagena De Indias ("Vessel") is the ship on which the truck crane was transported from the United States to Indonesia. Keraton named the Vessel, her engines, machinery, tackle, apparel, etc. as a Defendant in this action. Defendant Flota Mercante Grancolombiana, S.A. ("FMC"), a Columbian company, owns, charters, manages, and operates the Vessel.
In making transportation arrangements for the mobile truck crane, Keraton contacted Global Transport Services, Inc. ("Global") to act as its agent and freight forwarder. Global, not a party to this litigation, entered into a contract of carriage with Defendant Industrial Maritime Carriers (Bahamas), Inc. ("IMC") to transport the cargo.
IMC chartered the Vessel from FMC. In short, Keraton approached Global to arrange transport; Global contracted with IMC; and IMC chartered the Vessel from FMC.
B. The Documents
On May 16, 1994, when Keraton purchased the mobile truck crane for $ 275,000, the bill of sale listed that item as:
" UNIT P/H CRANE CN 9125 T.C. 140 TON CRAN 1979 S/N (10 PCS)." Def. IMC's Mem. Supp. Mot. Summ. J. Ex. 15 ("IMC Mem."). In an effort to transport the crane from the United States to Indonesia, Keraton engaged Global to assist in making the shipping arrangements.
Keraton dealt with Ms. Charlsie Brown, vice president of Global. Global arranged to transport the truck crane aboard a ship chartered by IMC and obtained marine insurance. The mobile truck crane was dismantled into ten pieces for shipping purposes. A document styled "Packing Specification" describes the dismantled equipment:
S STC: 1 UNIT P/H CRANE CN 9125 T.C. 140 TON CRANE 1979 S/N 47850 . . .
WEIGHT KILOS 87167 KGS
MEASUREMENT 399.79 CBM
Pl.'s Mem. Supp. Mot. Summ. J. Ex. C ("Pl.'s Mem.").
Under the COGSA, the term "contract of carriage" applies to
contracts of carriage covered by a bill of lading or any similar document of title, insofar as such document relates to the carriage of goods by sea, including any bill of lading or any similar document as aforesaid issued under or pursuant to a charter party from the moment at which such bill of lading or similar document of title regulates the relations between a carrier and holder of the same.
46 U.S.C.A.App. § 1301(b). In the instant case, the relationship between the parties was governed by a "booking note" and a "bill of lading."
Specifically, IMC issued a document styled "'Conline Booking' Liner Booking Note" ("Conline Booking Note"). Through the Conline Booking Note, IMC agreed to ship the truck crane for Keraton. That document lists Keraton as "Merchant," IMC as "Carrier," and Global as "Merchant's representatives at loading port." IMC Mem. Ex. 3.
The Conline Booking Note contains, on the reverse side, a "General Paramount Clause" stating:
The Hague Rule contained in the International Convention for the Unification of certain rules relating to Bills of Lading dated Brussels the 25th 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 23, 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 lie animals.
Id. In addition, the Conline Booking Note contains a paragraph titled "U.S. Trade. Period of Responsibility" which provides: "in case the Contract evidenced by this Bill of Lading is subject to the U.S. Carriage of Goods by Sea Act, then 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." Id.
IMC also issued a "Bill of Lading" which lists Global as the "Forwarding Agent," Keraton as the "Notify Party," and the Vessel as "Cartagena." The Bill of Lading describes the truck crane as follows:
Particulars Furnished By Shipper
No. of Pkgs Description of Packages and Goods Gross Weight Measure
-10- PCS: "1 UNIT P/H CRANE CN 9125 TC 87167 KGS 399.79 CBM
140 TON CRANE 1979 S/N 47850
IMC Mem. Ex. 5. The reverse side of the Bill of Lading contains various provisions governing the contractual relationship between IMC and other parties, sharing the "General Paramount" and "Trade Period of Responsibility" paragraphs found in the Conline Booking Note.
The ten specific pieces of the mobile truck crane covered by the Bill of Lading issued by IMC included a counterweight, rolling crane house, 10 foot jib, inner boom, center boom, tip boom, boom insert, boom jib, block insert, and an additional counterweight. Pl.'s Mem. Ex. C. A document titled "Global Transport Services, Inc. Invoice No. 602112A" ("Global Invoice") imposes port charges and handling/forwarding fees. On the reverse side of that document, Global furnishes a disclaimer:
2. Liability Limitation of Third Parties. The company is authorized to select and engage carriers . . . to transport, store, deal with and deliver the goods, all of whom should be considered as the agents of the Customers, and the goods may be entrusted to such agencies subject to all conditions as to limitation of liability for loss, damage, expense or delay and to all rules, regulations, forwarders, custom brokers, agents, warehousemen, and others.
* * *
6. Declaring Higher Valuation. Inasmuch as truckers, carriers . . . and others to whom the goods are entrusted usually limit their liability for loss damage unless a higher value is declared and a charge based on such higher value is agreed to by said truckers, etc., the Company must receive specific written instructions from the Customer to pay such higher charge based on valuation and the trucker, etc., must accept such higher declared value, otherwise the valuation limitation of liability set forth herein in paragraph 8 [limiting liability to $ 50.00 per shipment] with respect to any claim against the Company and subject to the provisions of paragraph 2 above.
7. Insurance. The Company will make reasonable efforts to effect marine, fire, theft, and other insurance upon the goods . . . .
IMC. Mem. Ex. 4.
IMC filed a "Tariff" with the Federal Maritime Commission articulating its policies. It provides, with respect to rates, in pertinent part, "wherever freight charges are assessed on weight or measurement basis, the freight will be computed on the measurement basis, the freight will be computed on the weight or measurement of the individual package, whichever produces the greater revenue." Pl.'s Mem. Ex. J. With regard to rate selection, the Tariff provides:
Rule 2-C Choice of Rates.
1. This tariff offers shippers a choice of freight rates dependent upon whether the shipment is made subject to the bill of lading limit of value or a higher limit of value.
2. If the shipper elects to ship at a value in excess of the bill of lading limit of value, he shall declare the value in writing before delivery. The shipment is then subject to the provisions of Rule 12.
3. Should the shipper fail to declare valuation in excess of the bill of lading limit of value, in writing before delivery, such non-declaration shall constitute an election by the shipper to ship on the basis of the bill of lading limit of value and any liability of the carrier shall be computed on the basis of said limit of value in the manner provided in the bill of lading.
* * *
Rule 12 Ad Valorem Rates
A. The liability of the carrier, as to the value of shipment at the rates provided herein shall be determined in accordance with the clauses of the carrier's regular Bill of Lading form.
B. If the shipper desires to be covered for a valuation in excess of that allowed by the carrier's regular Bill of Lading form, the shipper must so stipulate in carrier's Bill of Lading covering such shipments and such additional liability only will be assumed by the carrier at the request of the shipper and upon payment of an additional charge based on the total declared valuation in addition to the stipulated rates . . . . 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.
IMC Mem. Ex. 10. The Tariff defines "Packages" to "include any shipping form other than in bulk, loose, in glass or earthenware, not further packed in our container, or skids." Id.
C. The Accident
The underlying accident which initiated this lawsuit occurred in Jakarta. While the Vessel was moored alongside a pier and the mobile truck crane was being unloaded, a wire sling failed, causing the crane to drop. Compare IMC Mem. at 1 (stating Keraton seeks to recover "for harm resulting to one of ten pieces of a disassembled truck crane") (emphasis supplied); and FMC Mot. Summ. J. P 16 (averring "the plaintiff's cargo was discharged from [the Vessel] with one package, the crane truck, in allegedly damaged condition") (emphasis supplied); with Pl.'s Mem. at 1-2 (stating "Defendants dropped the crane during discharge . . . . The crane was dismantled into 10 components for the transportation in accordance with the packing specifications for the crane").
II. Standard of Review
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show 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." Fed. R. Civ. P. 56(c). An issue is "genuine" only if there is sufficient evidence with which a reasonable jury could find for the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986). Furthermore, bearing in mind that all uncertainties are to be resolved in favor of the nonmoving party, a factual dispute is only "material" if it might affect the outcome of the case. Id. Rule 56(c) directs summary judgment "after adequate time for discovery . . . against a party who fails to make a showing sufficient enough to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 2552, 91 L. Ed. 2d 265 (1986).
A. The COGSA Generally
The 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 to when they are discharged from the ship." SPM Corp. v. M/V Ming Moon, 965 F.2d 1297, 1300 (3d Cir. 1992) (citation omitted). Essentially, the COGSA "defines rights, responsibilities, and liabilities of carriers of goods by sea . . . . [The COGSA aims] to protect shippers from the overreaching of carriers through contracts of adhesion and to provide incentive for careful transport and delivery of cargo." Gamma-10 Plastics, Inc. v. American President Lines, Ltd., 32 F.3d 1244, 1249-51 (8th Cir. 1994), cert. denied, 131 L. Ed. 2d 148, 115 S. Ct. 1270 (1995). See also Stolt Tank Containers, Inc. v. Evergreen Marine Corp., 962 F.2d 276, 279 (2d Cir. 1992) (noting the COGSA "allocates the risk of loss for cargo damaged during international transportation under contracts evidenced by bills of lading").
The COGSA is the United States' enactment of the Hague Rules of 1921. "The legislative history of the Act shows that it was lifted almost bodily from the Hague Rules of 1921 . . . . The effort of those Rules was to establish uniform ocean bills of lading to govern the rights and liabilities of carriers and shippers inter se in international trade." Robert C. Herd & Co., Inc. v. Krawill Mach. Corp., 359 U.S. 297, 301, 79 S. Ct. 766, 769, 3 L. Ed. 2d 820 (1959). See also Vimar Seguros Y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 132 L. Ed. 2d 462, 115 S. Ct. 2322, 2328 (1995) (noting the COGSA is modeled after "the Brussels Convention for the Unification of Certain Rules Relating to Bills of Lading (Hague Rules)").
The Act's application is compulsory. "Once a party issues a bill of lading, goods covered by that bill of lading become subject to section [1304(5)]. A contrary interpretation would defeat COGSA's intended purposes of allocating risk of loss and creating predictable liability rules on which not only carriers but others can rely." Stolt, 962 F.2d at 279. See Belize Trading, Ltd. v. Sun Ins. Co. of New York, 993 F.2d 790, 792 n.4 (11th Cir. 1993) (noting the "COGSA applies to all contracts for carriage of goods by sea to or from ports of the United States in foreign trade") (citation omitted), cert. denied, 114 S. Ct. 694 (1994); SPM, 965 F.2d at 1301 (stating the COGSA applies "by its own force" to a bill of lading); Couthino, Caro and Co., Inc. v. M/V Sava, 849 F.2d 166, 170 (5th Cir. 1988) (remarking the COGSA "applies by its own force to all contracts for carriage of goods by sea to or from ports of the United States in foreign trade").
The COGSA contains a liability limitation provision:
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 the 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.
By agreement between the carrier, master, or agent of the carrier, and the shipper another maximum amount than that mentioned in this paragraph may be fixed: Provided, That such maximum shall not be less than the figure above named. In no event shall the carrier be liable for more than the amount of damage actually sustained.
46 U.S.C.A.App. § 1304(5). Section 1304(5) "expressly allows parties to agree to a higher limitation amount -- either by declaring a higher value on the bill of lading (the first paragraph of that subsection) or by contractual agreement (the second)." SPM, 965 F.2d at 1301.
B. Fair Opportunity Requirement
In order for the carrier to invoke the liability limitation, the carrier must afford the shipper a fair opportunity to avoid the COGSA package limitation. "The Supreme Court has held that a carrier cannot limit its liability under COGSA unless the shipper is afforded a fair opportunity to declare a higher value and pay a correspondingly higher rate." Pyropower v. M/V Alps Maru, 1993 U.S. Dist. LEXIS 2174, 1993 AMC 1562, 1574 (E.D. Pa. 1993) (citation omitted). See also Venusa, Inc. v. Delta Steamship Lines, Inc., 1987 U.S. Dist. LEXIS 2171, No. 85-2469, 1987 WL 8334, at *1 (E.D. Pa. Mar. 25, 1987) (noting "the limitation in liability is valid only if the carrier gives the shipper a fair opportunity to choose between the higher or lower liability by paying a correspondingly greater or lesser charge") (citation omitted); Nathan Trotter & Co. v. Delta Steamship Lines, Inc., 1985 AMC 2783, No. 81-3417, 1982 WL 1543, at *4 (E.D. Pa. April 16, 1982) (remarking "it is undisputed that a carrier cannot limit its liability unless the shipper is afforded a reasonable opportunity to declare a higher value and pay a correspondingly higher rate") (citation omitted). The fair opportunity requirement is "meant to give the shipper notice of the legal consequences of failing to opt for a higher carrier liability." Travelers Indem. Co. v. Vessel Sam Houston, 26 F.3d 895, 898 (9th Cir. 1994) (citation omitted).
The carrier's burden of proof in illustrating "fair opportunity" is uniform among the Circuits. See Henley, 36 F.3d at 145 (remarking "the courts are in agreement that the carrier bears the burden of proving that it has afforded the shipper the requisite fair opportunity notice"). The carrier must produce prima facie evidence demonstrating "that it provided such notice to the shipper . . . . Once the carrier meets this initial burden, the burden of disproving fair opportunity [shifts] to the shipper." Mori Seiki USA, Inc. v. M/V Alligator Triumph, 990 F.2d 444, 449 (9th Cir. 1993).
The Circuits do not, however, agree on what constitutes prima facie evidence that the carrier provided the shipper with a fair opportunity to avoid the package limitation. See Henley, 36 F.3d at 145 (remarking that all courts "require the carrier to provide the shipper with some notice of the COGSA package/CFU liability limitation, differing only as to the type of notice"); Couthino, 849 F.2d at 169 (noting circuits have "different views . . . of what evidence establishes a carrier's prima facie case"). The Second Circuit, Fourth Circuit, Fifth Circuit, and Eleventh Circuit require "that the bill of lading include a 'clause paramount' incorporating COGSA by reference." Henley, 36 F.3d at 145. In this district, the carrier affords the shipper fair opportunity if "the carrier's regular form bill of lading, which is part of the agreement between the parties, incorporates by reference § 1304(5) of COGSA and where the carrier does not attempt to limit liability under all circumstances." Pyropower, 1993 AMC at 1574.
D. Defendants Satisfy The Fair Opportunity Requirement
Defendants argue that Keraton enjoyed a fair opportunity to declare a higher value, and, therefore, the COGSA's liability limitation applies. According to Defendants, the presence of the Clause Paramount in the Bill of Lading provides prima facie evidence of notice to the shipper. Keraton had constructive notice, argue Defendants, through IMC's Tariff and former freight negotiations between Global, Keraton's agent, and IMC.
Defendants maintain that Global, specifically its vice president Charlsie Brown, a sophisticated freight forwarder, knew that both the Conline Booking Note and the Conline Bill of Lading would be used, was familiar with the Conline Booking Note's terms, understood the Bill of Lading incorporated the COGSA package limitation, and knew that she could declare a higher rate. Defendants also ask the Court to infer, from Keraton's purchase of insurance, that Keraton consciously declined to elect out of the COGSA's liability limitation intending instead to rely on that insurance policy for protection.
Keraton protests that Defendants did not afford a fair opportunity to declare a higher cargo value. Keraton argues that the price of the higher rate, 6% of the cargo's value, is so unjustifiably exorbitant that it left Keraton with no choice but to forgo the extra coverage. Keraton attacks the Bill of Lading as inadequate, arguing that it does not incorporate the COGSA, never mentions the package limitation articulated in § 1304(5), and fails to provide a designated space for a shipper to declare an excess value declaration. According to Keraton, Brown had absolutely no knowledge of the Clause Paramount's effect on freight rates and dealt with each shipment on an individual basis.
Keraton also objects to Defendants' reliance on the Tariff, claiming it does not specifically indicate that the shipper's recovery might be limited to $ 500 and asserting that Brown never saw the Tariff. According to Keraton, the Tariff's terms played no part in the negotiation of the freight. Keraton seeks to characterize Brown as a "dual agent" to whom IMC paid a commission of 5% for booking freight on its ships. Finally, Keraton avers that it never received a copy of the Global Invoice.
1. Incorporation Of The COGSA By Reference
The Court finds that Defendants, through their submissions, have produced prima facie evidence that they afforded Keraton adequate notice and a fair opportunity to elect out of the package limitation provisions of the COGSA and to declare a higher cargo value. Both the Conline Booking Note and the Bill of Lading contain a "Clause Paramount" which refers to the Hague Rules, and the COGSA is the American equivalent to the Hague Rules. Keraton need not be an actual party to the Bill of Lading in order for that document to provide it with proper notice. See Stolt, 962 F.2d at 280 (concluding "that where a party is aware that another is shipping its packages aboard a vessel and has at least constructive notice that liability limitations might apply, that party is bound by that liability limitations agreed to by the shipper").
Both documents also contain a "U.S. Trade. Period of Responsibility" paragraph stating that "in case the Contract evidenced by this Bill of Lading is subject to the U.S. Carriage of Goods by Sea Act, then 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." IMC Mem. Ex. 5. While neither document specifically articulates the language of the COGSA § 1304(5), the Court concludes that the Conline Booking Note and the Bill of Lading incorporated that provision by reference and thereby afforded Keraton constructive notice of the package limitation. Similarly, the Global Invoice contained a disclaimer warning Keraton that carriers limit their liability for loss and damage. The Global Invoice required specific written instruction from Keraton to declare a higher cargo value.
Brown's depiction of how a bill of lading is prepared and processed provides support for the Court's conclusion. After Global receives a description of the cargo from a letter of credit, Global prepares the "master" bill of lading and submits it to the carrier, who then prepares an ocean bill of lading. See Pl.'s Mem. Ex. F at 42-44. Brown personally prepared the export declaration, dock receipts, and the master bill of lading. Brown was familiar with the terms of the Conline Booking Note and characterized it as the common form of booking in the freight business and the standard throughout the industry. Id. at 47-49, 102.
When shown the Bill of Lading in the instant case, Brown stated that she did not see language providing the option to declare a higher value. Id. at 106. Nonetheless, Brown understood and assumed that the Conline Booking Note and Bill of Lading incorporated the COGSA. Brown never encountered a situation where the Conline Bill of Lading did not incorporate the COGSA, and Brown was aware that she could obtain, for a higher freight rate, additional coverage. Id. at 58-60. Brown also revealed that she would declare excess value for the cargo after receiving instructions from her customer. Id. at 103.
IMC's Tariff, on file with the Federal Maritime Commission, provided Keraton with sufficient notice and a fair opportunity to object. Unimac Co., Inc. v. Ocean Serv., Inc., 43 F.3d 1434, 1438 (11th Cir. 1995) (stating "either 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 is sufficient to afford the shipper an opportunity to declare excess value") (citation omitted) (emphasis supplied); Ocean Lynx, 901 F.2d at 939 (11th Cir. 1990) (remarking that the Fifth Circuit adopted a "system of constructive notice . . . . Either 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 [ § 1304(5)'s] provisions is sufficient to afford the shipper an opportunity to declare excess value") (citing Brown & Root, Inc. v. M/V Peisander, 648 F.2d 415, 424 (5th Cir. 1981)) (emphasis supplied); Aetna, 858 F.2d at 194 (4th Cir. 1988) (finding fair opportunity because "the tariff and the bill of lading both explain the opportunity to declare a higher value and because the Egyptian Government had prior shipping experience"); Couthino, 849 F.2d at 171 (5th Cir. 1988) (stating, after finding inadequate opportunity to declare a higher freight rate, that the carrier "points to no other evidence, such as a tariff, to show that it offered the shipper the option to declare a higher value").
IMC's Tariff explicitly and unambiguously provided Keraton with an opportunity to choose a higher value limitation, informed Keraton of the consequences of the failure to specifically select the higher value limitation, i.e. freezing the value limitation to that contained in the Bill of Lading, and discussed the ad valorem rates for excess coverage. The entire purpose behind having a Tariff on file is to provide public notice of the terms and conditions of carriage. Moreover, Brown testified that she had access to IMC's Tariff and knew that it is a matter of public record. Pl.'s Mem. Ex. F at 56-57.
The Court considers Keraton's purchase of insurance indicative of an intent not to be bound by the $ 500 package limitation. Brown described the insurance as "all risk coverage subject to some deductible." Pl.'s Mem. Ex. F at 62. The Global Invoice indicates that Global procured $ 1,630,000 worth of insurance for Keraton. IMC also enclosed a "Certificate of Insurance" from the Americas Insurance Company insuring "12 UNITS: CRANES AND HEAVY MACHINERY . . . Shipped per MV 'CIUDAD DE INDIAS'" -- for $ 2,150,000. See IMC Mem. Exs. 4, 9. The Certificate of Insurance encompassed transportation, stating "ALL RISK SUBJECT TO A 1% DEDUCTIBLE PER CLAIM WAREHOUSE TO FINAL DESTINATION EXCLUDING RUSTING, OXIDATION, DISCOLORATION AND CORROSION AND IS SUBJECT TO THE SECOND HAND REPLACEMENT CLAUSE." IMC Mem. Ex. 9 (emphasis supplied).
Keraton made a purely financial decision, in view of the excess costs associated with declaring a higher value, to purchase insurance because it presented a more economically feasible alternative to paying the 6% ad valorem rate. See Travelers, 26 F.3d at 900 (9th Cir. 1994) (stating "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"); Aetna, 898 F.2d at 194 (4th Cir. 1988) (stating that the subrogee of an insurer cannot challenge the ad valorem rate as unreasonable where the insured "made a business judgment not to explore the possibility of obtaining greater protection") (citing General Elec. Co. v. M/V Nedlloyd, 817 F.2d 1022 (2d Cir. 1987), cert. denied, 484 U.S. 1011, 108 S. Ct. 710, 98 L. Ed. 2d 661 (1988)); New Hampshire Ins. Co. v. Seaboard Marine, Ltd., 1991 U.S. Dist. LEXIS 21640, No. 89-0255, 1992 WL 33861, at *4 (S.D. Fla. Jan. 2, 1992) (declaring insurance company "estopped from challenging" fair opportunity where the "shipper made a business judgment to rely on its insurance policy to protect its goods rather than to declare a higher value with the carrier and pay a correspondingly higher rate") (citing Ocean Lynx, 901 F.2d at 940).
4. Sophistication Of The Parties
Courts display a willingness to find adequate notice and a fair opportunity to opt out of the COGSA liability limitation when the shipper is sophisticated and experienced. This becomes especially true where the shipper engaged in past dealings and negotiations with the carrier. See Travelers, 26 F.3d at 899 (9th Cir. 1994) (describing shipper as "sophisticated" and having "shipped its goods with [the carrier] on several previous occasions. Thus, [shipper] was familiar with [carrier's] shipping procedures and its bill of lading"); Aetna, 858 F.2d at 194 (4th Cir. 1988) (finding fair opportunity because "the tariff and the bill of lading both explain the opportunity to declare a higher value and because the Egyptian Government had prior shipping experience"); General Elec., 817 F.2d at 1029 (remarking "as an experienced shipper, GE obviously knew it could declare a higher value").
In the instant case, the Court faces sophisticated parties with a history of prior dealings and negotiations. Brown testified that she dealt with IMC on a "regular" basis, speaking to them weekly and shipping cargo every other month. Pl.'s Mem. Ex. F at 21. Global booked cargo with IMC five times before the May, 1994 shipment, and Global had a blanket booking with IMC that involved 20 shipments and between 25 and 30 bills of lading. Id. at 21-3.
Accordingly, the Court concludes that the incorporation of the COGSA by reference through the Conline Booking Note, the Bills of Lading, and the Global Invoice; the standardization of bills of lading in the shipping industry; the information contained in the Tariff; the procurement of insurance; and the sophistication of both parties and the extent of their prior dealings indicate that Defendants afforded Keraton a fair opportunity to avoid the COGSA package limitation.
E. "Package" Defined
Having concluded that the $ 500 per package limitation does apply, the language of § 1304(5) now directs the Court to determine whether it applies "per package" or "per customary freight unit." See 46 U.S.C.A.App. § 1304(5) (limiting carrier liability to "$ 500 per package lawful money of the United States, or in the case of goods not shipped in packages, per customary freight unit"). The amount of liability hinges upon whether the damaged cargo constitutes a "package." Keraton asserts the $ 500 limitation applies per customary freight unit because the goods were not shipped in packages. Defendants respond that the goods were shipped in packages, and the $ 500 limit applies per package, specifically to the one packaged damaged.
A district court's definition of "package" presents a "question of statutory construction." Travelers, 26 F.3d at 900 (citation omitted). Two decisions in this district have addressed the definition of "package." In Trotter, the court contrasted the package definitions of the Second Circuit and the Ninth Circuit. Trotter remarked that the Second Circuit defined "package" as "a class of cargo, irrespective of size, shape or weight, to which some packaging preparation for transportation has been made which facilitates handling, but which does not necessarily conceal or completely enclose the goods." Trotter, 1985 AMC 2783, 1982 WL 1543, at *5 (citing Aluminios Pozuelo Ltd. v. S.S. Navigator, 407 F.2d 152, 155 (2d Cir. 1968) (finding a 6,200 lb. toggle press bolted to a skid constitutes a package)). By contrast, the Ninth Circuit rejected any test which rested on the subjective purpose for which a skid was attached to the cargo. See id. at *6 (referring to Hartford Fire Ins. Co. v. Pacific Far E. Line, Inc., 491 F.2d 960, 965 (9th Cir.), cert. denied, 419 U.S. 873, 95 S. Ct. 134, 42 L. Ed. 2d 112 (1974) (refusing to characterize an electrical transformer as a package merely because it was bolted to a skid)).
Trotter adopted the Second Circuit view, considering "not only the method of preparation of cargo but also the intent of the parties as manifested in the contract between them . . . . [The Court should examine] the manifestation of the parties' intent as evidenced by their own descriptions of 'packages' on documents." Trotter, 1985 AMC 2783, 1982 WL 1543, at *6 (citation omitted). Similarly, Pyropower considered the question of what constitutes a "package" one of contractual interpretation with the parties intent controlling. Pyropower directed that "package is to be defined in light of what the parties intended to describe as the unit of cargo shipped. In order to determine the parties' intent the Court initially must examine the bill of lading to determine whether it reveals the parties' agreement as to an appropriate COGSA package." Pyropower, 1993 AMC at 1572 (citations omitted).
F. The Mobile Truck Crane Is A "Package"
1. Number of Packages Column
In support of their argument that the mobile truck crane constituted one package, Defendants rely on the description of the cargo in several shipping documents and assert that the intent of the parties is unambiguously expressed through these descriptions. Specifically, Defendants note the entry of "10" in the "Number of Packages" column on the Bill of Lading. See IMC Mem. Ex. 5. The damaged crane, argue Defendants, was 1 of these 10 packages. Similarly, Defendants point to an entry in the "Description of Packages and Goods Column" which states "PCS: 1 UNIT P/H CRANE," maintaining that reference to "PCS" in conjunction with the entry of "10" in the "Number of Packages" column reveals an intent to ship 10 packages. According to Defendants, the shipper (Keraton and its agent Global) prepared the language in the Bill of Lading, and any ambiguity should be construed against Keraton.
Defendants also point to the Packing Specification which describes the truck crane as a "10 PCS STC." IMC Mem. Ex. 14. Defendants compare the Bill of Lading which covered the damaged truck crane, PHL/JAK-1, with another Bill of Lading, PHL/JAK-3, that covered two smaller 50 ton cranes that were not disassembled for shipment. In Bill of Lading PHL/JAK-3, under the "Number of Packages" column, the following was inserted in an effort to describe the two smaller cranes,
and the "Description of Packages and Goods" column contained an entry comporting with the insertion of "2" in the "Number of Packages Column:"
UNIT P CRANE CN 150 50 TON S/N 55152
UNIT P CRANE CN 150 50 TON S/N 55477
IMC Mem. Ex. 7. Defendants also point to a document styled "Shipper's Export Declaration" which describes the cargo in the same manner as the Bill of Lading (PHL/JAK-1):
Number of Packages Description of Commodities Gross Weight Measurement
-10- PCS: TOWER CRANES 87167 KGS 349.98 CBM
IMC Mem. Ex. 13. According to Defendants, a comparison of these documents reveals a consistent pattern between the entries in the "Number of Packages Column" and the descriptions inserted in the "Description of Goods" column. Defendants rely on these documents as a codification of Keraton's intent to ship 10 packages.
Keraton attacks Defendants' reliance on the use of "10" in the "Number of Packages" column, suggesting that it only refers to the number of component parts into which the crane was disassembled and not to the number of packages. Since the truck crane did not constitute a package, argues Keraton, the $ 500 limitation applies "per customary freight unit." The customary freight unit is "generally the unit of which the freight charge is based for the shipment at issue." Henley, 36 F.3d at 148. IMC issued three Bills of Lading, titled PHL/JAK-1 (399.79 CBM), PHL/JAK-2 (647.78 CBM), and PHL/JAK-3 (335.76 CBM) to document the total shipment. Bill of Lading PHL/JAK-1 covered the mobile truck crane and measured the cargo as 399.79 CBM. The $ 500 limit, argues Keraton, applies not to 1 package but to the customary freight units, 399.79 CBM.
While the Court faces several descriptions of the truck crane in the parties' submissions, the Court concludes that the insertion of "10" in the column titled "No. of Packages" reveals that the parties intended to classify the truck crane as 1 of 10 packages. In the absence of any evidence which contradicts this conclusion, the Court considers the entry in this column the dispositive factor, wholly indicative of the parties' intent. This decision comports with other cases which consider the entry in the "Number of Packages" column controlling when assessing the intent of the parties. See Travelers, 26 F.3d at 902 (considering the entry in the "Number of Packages" column the initial "point for determining the number of packages for purposes of the COGSA per-package limitation, and unless the significance of that number is plainly contradicted by contrary evidence of the parties' intent, or . . . refers to items that cannot qualify as packages, it is also the ending point of our inquiry") (citation omitted); Pyropower, 1993 AMC at 1572 (characterizing the entry in the "Number of Packages" column as "controlling unless other evidence of the parties' intent plainly contradicts the applicability of the number of packages listed in the number of packages column, or unless the item referred to by that number is incapable of qualifying as a COGSA package"). But see Tamini v. Salen Dry Cargo AB, 866 F.2d 741, 743 (5th Cir. 1989) (finding an entry of "1" in the column labeled "'No. of Pkgs.' is, of course, not determinative").
2. Shipping Preparation Created A "Package"
Defendants maintain that extensive packaging took place prior to shipment. According to Defendants, the supplier dismantled the crane into 10 pieces; the pieces were skidded; the big piece which was dropped was to have hoods or lifting points to facilitate loading and unloading; the crane was treated with a rust inhibitor; marks were applied; and the center of gravity was marked and located to assist in handling. This packing, argues Defendants, transformed the mobile truck crane into a "package."
Keraton claims that the mobile truck crane does not constitute a "package" because it was neither wrapped, skidded, nor otherwise enclosed for transit. According to Keraton, the crane was fully exposed and no appurtenances or packaging were attached to facilitate the handling during transportation. Keraton refers to the identical gross weights in the Bill of Lading and the Package Specification, implying no additional weight was added through packaging. The Court disagrees.
The packaging and preparation that took place prior to shipment removes the possibility that the mobile truck crane amounted to nothing more than freestanding cargo. See e.g., Henley, 36 F.3d at 148 (stating "cargo that is shipped without any packaging whatsoever is generally treated as not shipped in packages") (citation omitted). Rather, the record is replete with evidence suggesting that sufficient packaging and preparation, all designed to facilitate handling, took place, compelling a conclusion that the mobile truck crane constituted a package.
The Court notes, however, that the record is not without factual inconsistencies. At her deposition, Brown revealed the following activity: the application of a rust inhibitor, skidding, marking, and special handling instructions for the shipment of cranes. Pl.'s Mem. Ex. F at 79-80. To the contrary, Keraton's submissions contain the affidavit of Delores Cornell, president of the company which disassembled the crane for shipment. Cornell avers that the crane was in no way prepared for transport. Specifically, Cornell states that the crane was neither "skidded, palletized, wrapped, [nor] in any way packaged or concealed for shipment. The rolling crane house, in particular, was not skidded, placed on pallets, wrapped or in any way packaged for transport. No preparation was done to facilitate handling. The rolling crane house sat on its own treads." Pl.'s Mem. Ex. G. Finally, James Leonard, the IMC employee who handles vessel operations, testified at his deposition that he was unsure whether the truck crane was wrapped or prepared for transportation in any way and guessed only that the crane was probably nothing more than "skidded." Pl.'s Mem. Ex. E at 34.
Irrespective of these inconsistencies, the Court finds that the documents presented by both parties reveal rather extensive pre-shipment packaging activity. The Conline Booking Note states: "Cargo to be fitted with suitable lifting lugs or other adequate means of lifting and center of gravity to be clearly indicated. Any specially required lifting frames not already on board the vessel shall be supplied by the shipper." IMC Mem. Ex. 3. The original seller of the crane sent Global a letter instructing that the cargo was to be marked. See IMC Mem. Ex. 16. A letter from Brown on Global stationery corroborates her deposition testimony that the cranes were sprayed with a rust inhibitor prior to loading. IMC Mem. Ex. 23. Finally, an organization named "Shipside, Inc.," located in Philadelphia, billed Global for "labor, material & equipment to skid one crane . . . [and] services to apply rust inhibitor to various pieces of crane, truck, construction equipment." IMC Mem. Ex. 26. See e.g., Tamini, 866 F.2d at 743 (finding a drilling rig was not a package where the "cargo was not enclosed in the container; the rig was for the most part fully exposed; no appurtenances or packaging were attached to facilitate its handling during transportation; and transportation charges . . . were calculated on a weight, not per package, basis").
The Court rejects Keraton's reference to the identical gross weights in both the Bill of Lading and the Package Specification in an effort to imply that no additional weight was added through packaging. The record furnishes evidence to the contrary. On May 20, 1994, the Global Invoice that billed Keraton for shipping the mobile truck crane described the cargo as follows:
2 Patton & H. 9125 T.C. 2 P&H CN150 . . . 1 P&H T500 . . . 300,378 KGS 1224.56 CBM IMC. Mem. at 4. The cargo covered under all three Bills of Lading dated May 26, 1994, however, totals 1,383.33 CBM, and IMC billed Global on May 27, 1994 for "32 pcs of P&H Crane O/F 1.383.27 rts." IMC Mem. at 17. At some point between May 20, 1994 and May 27, 1994, the size of the cargo increased by roughly 158 CBM, from 1224 CBM to 1,383 CBM.
Similarly, the Shipper's Export Declaration, dated May 23, 1994, presented the following measurements:
Number of Packages Description of Commodities Gross Weight Measurement
-10- PCS: TOWER CRANES 87167 KGS 349.98 CBM
IMC Mem. Ex. 13. By contrast, the Packaging Specification and the Bill of Lading PHL/JAK-1 list, for the "1 UNIT P/H CRANE," a weight of 87167 KGS but a measurement of 399.79 CBM, presenting an increase of approximately 50 CBM above the previously recorded 349 CBM.
Accordingly, the Court concludes that the mobile truck crane damaged constituted a single "package" under the COGSA. Because the liability limitation provisions of the COGSA limit Defendants' potential liability to $ 500 per package, Keraton may receive no more than $ 500 for the one package purportedly damaged.
An appropriate Order follows.
AND NOW, this 17th day of October, 1996, upon consideration of Defendant Flota Mercante, S.A.'s Motion for Partial Summary Judgment (Doc. No. 21), Defendant Industrial Maritime Carriers' Motion for Summary Judgment (Doc. No. 22), Plaintiff's Responses thereto (Doc. Nos. 25, 26), Plaintiff's Cross Motions for Partial Summary Judgment (Doc. Nos. 27, 28), and Defendants' Responses thereto (Doc. Nos. 32, 33) IT IS HEREBY ORDERED THAT :
1. Defendant Flota Mercante, S.A.'s Motion is GRANTED.
2. Defendant Industrial Maritime Carrier's Motion is GRANTED.
3. Plaintiff's Cross-Motions are DENIED.
4. Plaintiff's claims against Defendant Flota Mercante, S.A. and Defendant Industrial Maritime Carriers are limited by the Carriage of Goods By Sea Act to $ 500.
BY THE COURT:
John R. Padova, J.