Sea-Land Service, Inc. v. Lozen Intern., LLC.

• Decision Date: 03 April 2002
• Docket Number: No. 00-57058.,00-57058.
• Citation: 285 F.3d 808
• Parties: SEA-LAND SERVICE, INC., Plaintiff, v. LOZEN INTERNATIONAL, LLC, Defendant. Lozen International, LLC, Counterclaimant-Appellant, v. Sea-Land Service, Inc., Counter-defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

285 F.3d 808

SEA-LAND SERVICE, INC., Plaintiff, v. LOZEN INTERNATIONAL, LLC, Defendant.

Lozen International, LLC, Counterclaimant-Appellant, v. Sea-Land Service, Inc., Counter-defendant-Appellee.

No. 00-57058.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 13, 2002.

Filed April 3, 2002.

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Mary Kay Reynolds, Law Offices of Mary Kay Reynolds, Culver City, CA, for the counterclaimant-appellant.

Stephen M. Uthoff, Coniglio & Uthoff, Long Beach, CA, for the counterdefendant-appellee.

Appeal from the United States District Court for the Central District of California, Florence-Marie Cooper, District Judge, Presiding.

Before: BEEZER, TASHIMA, and GRABER, Circuit Judges.

OPINION

GRABER, Circuit Judge:

Plaintiff Sea-Land Service, Inc. (Sea-Land), brought this action against Defendant Lozen International, LLC (Lozen), to recover money owed under a shipping contract. Lozen counterclaimed for damages resulting from Sea-Land's failure to timely deliver one of the shipments at issue. The parties settled and dismissed Sea-Land's claim, but they were unable to reach an agreement with respect to Lozen's counterclaims. As to those, the district court entered summary judgment in favor of Sea-Land.

Lozen appeals, arguing that (1) the parties entered into a special oral contract for carriage of the shipment and, therefore, the terms printed on Sea-Land's international bills of lading do not control the parties' agreement; (2) the Carriage of Goods by Sea Act (COGSA), 46 U.S.C.App. §§ 1300 1315, does not apply to the shipment; (3) assuming COGSA applies, there is a genuine issue of fact as to whether there was an "unreasonable deviation" by Sea-Land; (4) even if the terms on SeaLand's bills of lading do control the parties' agreement, there is a genuine issue of fact as to whether the "liberty clauses" in the bills of lading protect Sea-Land from liability; and (5) a number of the district court's evidentiary rulings were erroneous.

We have jurisdiction under 28 U.S.C. § 1291, and we hold that (1) the terms on Sea-Land's international bills of lading control the parties' agreement; (2) COGSA applies to the shipment; (3) the district court erred in granting summary judgment on the issue of "unreasonable deviation"; (4) the court also erred in granting summary judgment on the "liberty clause" issue; and (5) the district court abused its discretion in excluding the e-mail that was offered to prove an unreasonable deviation and Lozen was prejudiced thereby. Accordingly, we reverse and remand for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

Dean Myring, Lozen's president, arranged with Sea-Land to transport three 40-foot containers of grapes from Hermosillo, Mexico, to Felixstowe, England. The containers were to travel by truck from Hermosillo to Long Beach, California. From there, they were to be transported by rail to Elizabeth, New Jersey, where they were to be loaded on the Mathilde Maersk (Maersk), an ocean vessel that would be stopping in Felixstowe. The estimated departure date of the Maersk was June 20, 1999, with an estimated arrival in Felixstowe on June 28, 1999.

Unfortunately, Sea-Land's railroad agent placed the containers on the wrong train. As a result, Lozen's grapes did not arrive in New Jersey in time for the sailing of the Maersk. Sea-Land notified Lozen of the problem and asked whether the company preferred to send the containers on the next week's vessel or, instead, to sell them domestically. After its customer in England agreed to buy the delayed grapes only at a reduced price, Lozen elected to sell them domestically at lower prices than it would have received under its original contract with the customer in England. A week's delay in arrival of the grapes in England was critical because, by then, cheaper European grapes were expected to "flood the market."

Sea-Land filed this action to recover the full amount of its contract with Lozen to transport the containers of grapes. Lozen answered and counterclaimed, arguing that, as a result of Sea-Land's delay in transporting the containers, it suffered damages when it sold its grapes domestically at distressed prices. The parties settled Sea-Land's original claim, and the district court granted a stipulated request for dismissal. However, the parties were unable to reach agreement with respect to Lozen's state-law counterclaim for breach of contract and its federal-law counterclaim for cargo loss and damage pursuant to sections 11706 and 14706 of the Interstate Commerce Act, 49 U.S.C. §§ 11706, 14706. The district court granted Sea-Land's motion for summary judgment with respect to both counterclaims, and Lozen filed a timely notice of appeal.

STANDARDS OF REVIEW

We review de novo the district court's grant of summary judgment. Neptune Orient Lines, Ltd. v. Burlington N. & Santa Fe Ry. Co., 213 F.3d 1118, 1119 (9th Cir.2000). Viewing the evidence in the light most favorable to the nonmoving party, we must determine whether there are any genuine issues of material fact and whether the district court properly applied the relevant law. Amdahl Corp. v. Profit Freight Sys., Inc., 65 F.3d 144, 146 (9th Cir.1995).

The district court's interpretation of a statute is a question of law that we review de novo. Silver Sage Partners, Ltd. v. City of Desert Hot Springs, 251 F.3d 814, 819 (9th Cir.2001). We also review de novo the district court's interpretation of the terms of a bill of lading. Yang Ming Marine Transp. Corp. v. Okamoto Freighters Ltd., 259 F.3d 1086, 1095(9th Cir.2001).

We review for abuse of discretion evidentiary rulings made in the context of summary judgment. Block v. City of Los Angeles, 253 F.3d 410, 416 (9th Cir.2001). Even when a district court has abused its discretion, however, reversal is appropriate only when the court's error was prejudicial. Tennison v. Circus Circus Enters., Inc., 244 F.3d 684, 688(9th Cir.2001); Fed. R.Evid. 103(a).

DISCUSSION

A. Jurisdiction

Before addressing the merits, we first must determine whether the district court had subject matter jurisdiction over Lozen's federal and state counterclaims. Herman Family Revocable Trust v. Teddy Bear, 254 F.3d 802, 804(9th Cir.2001). Sea-Land questions the court's jurisdiction, but we conclude that the court had authority to proceed as it did.

Lozen filed one of its counterclaims pursuant to sections 11706 and 14706 of the Interstate Commerce Act, commonly called the "Carmack Amendment." 49 U.S.C. §§ 11706, 14706. Because Lozen sought damages in excess of $10,000, the district court had jurisdiction over this claim under 28 U.S.C. § 1337(a). Hunter v. United Van Lines, 746 F.2d 635, 638 (9th Cir.1985). Although Lozen's Carmack Amendment claim turned out to be unsuccessful, it was not "insubstantial," that is, "`absolutely devoid of merit or obviously frivolous.'" Brady v. Brown, 51 F.3d 810, 816 (9th Cir.1995) (quoting Gilder v. PGA Tour, Inc., 936 F.2d 417, 421 (9th Cir. 1991)). Therefore, the district court had jurisdiction over it. Id.

The court's original jurisdiction over the Carmack Amendment claim gave it power to exercise supplemental jurisdiction over Lozen's state-law counterclaim. 28 U.S.C. § 1367(a). Because the federal and state counterclaims arise from the same transaction and rely on identical facts for their resolution, they "form part of the same case or controversy under Article III" for the purposes of supplemental jurisdiction. Id. Although the district court could have dismissed Lozen's statelaw claim after dismissing the Carmack Amendment claim, it did not abuse its discretion by choosing to entertain the merits of the state-law claim. 28 U.S.C. § 1367(c); Acri v. Varian Assocs., Inc., 114 F.3d 999, 1000 (9th Cir.1997) (en banc).

B. Terms of the Parties' Agreement

Lozen and Sea-Land dispute the nature of the agreement between them and the terms governing that agreement. Lozen argues that the parties entered into a special oral contract whereby Sea-Land expressly promised to deliver the three containers of grapes by a certain date. Sea-Land, on the other hand, argues that the terms of its international bills of lading constitute the parties' agreement. Those terms provided Sea-Land with some latitude as to the date by which it was required to deliver the three containers. The district court adopted the latter construction of the parties' agreement, and we agree.

This dispute arises because Lozen requested that express Sea waybills of lading be used in the transportation of its grapes.¹ Had this been a traditional shipment, documents incorporating the terms on Sea-Land's international bills of lading would have been printed by Sea-Land and given to Lozen. However, express sea waybills are issued electronically, and Sea-Land did not give a printed copy to Lozen.

Lozen claims that, when it entered into the shipping agreement, it was unaware that the terms printed on Sea-Land's international bills of lading also typically apply to shipments sent via its electronic sea waybills. Lozen further asserts that, regardless of the terms applicable to other shipments of this type, the parties entered into a special oral agreement with respect to this particular shipment and that Sea-Land expressly guaranteed the date by which the grapes would arrive.

Those arguments are unpersuasive on this record. Dean Myring, Lozen's president, twice conceded in his deposition that he could recall no specific details about the formation of the alleged special oral contract. He also admitted that Sea-Land, like other carriers, never guaranteed specific delivery times:

They are not guaranteed. In fact—well, if they were guaranteed Sea-Land would be opening themselves up to—any carrier would be opening themselves up to all sorts of fun and games if they put a cast iron guarantee on something.

As demonstrated by a fax that he sent to a domestic agent, Myring knew that "the...