Kukje Hwajae Ins. Co., Ltd. v. M/V Hyundai Liberty

• Decision Date: 26 June 2002
• Docket Number: No. 00-56970.,No. 00-57049.,00-56970.,00-57049.
• Citation: 294 F.3d 1171
• Parties: KUKJE HWAJAE INSURANCE CO., LTD., a corporation, Plaintiff-Appellant/Cross-Appellee, v. The "M/V HYUNDAI LIBERTY," her Engines, Boilers, Tackle, etc., in rem, Defendant-Appellee/Cross-Appellant, and Glory Express, Inc., a business entity, in personam, Defendant-Appellee, Glory Express, Inc., a California Corporation, Third-Party Plaintiff-Appellee, v. Streamline Shippers Association, a California Corporation, Third-Party Defendant, and Hyundai Merchant Marine Co., Ltd., a business entity, Does 1-10 inclusive, Third-Party Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

294 F.3d 1171

KUKJE HWAJAE INSURANCE CO., LTD., a corporation, Plaintiff-Appellant/Cross-Appellee, v. The "M/V HYUNDAI LIBERTY," her Engines, Boilers, Tackle, etc., in rem, Defendant-Appellee/Cross-Appellant, and Glory Express, Inc., a business entity, in personam, Defendant-Appellee, Glory Express, Inc., a California Corporation, Third-Party Plaintiff-Appellee, v. Streamline Shippers Association, a California Corporation, Third-Party Defendant, and Hyundai Merchant Marine Co., Ltd., a business entity, Does 1-10 inclusive, Third-Party Defendants-Appellees.

No. 00-56970.

No. 00-57049.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 13, 2002.

Filed June 26, 2002.

Michael W. Lodwick, Haight Brown & Bonesteel LLP, Santa Ana, CA, for plaintiff-appellant/cross-appellee.

Christina L. Owen and Robert E. Coppola, Cogswell Nakazawa & Chang, Long

Beach, CA, for defendant-appellee/cross-appellant.

Simon H. Langer, Beverly Hills, CA, for defendant/third-party plaintiff-appellee.

Appeals from the United States District Court for the Central District of California, Audrey B. Collins, District Judge, Presiding. D.C. No. CV-98-09217-ABC.

Before BEEZER, TASHIMA, and GRABER, Circuit Judges.

OPINION

GRABER, Circuit Judge.

This case requires us to answer two questions: (1) whether the owner of cargo, who contracted with an intermediary non-vessel operating common carrier (NVOCC) to arrange for the carriage of cargo on a ship, was bound by the forum-selection clause in the bill of lading issued by the ship's owner to the NVOCC, and (2) whether the NVOCC was entitled to take advantage of a statutory limitation of liability by having given the cargo's owner a "fair opportunity" to opt for higher limits by paying a greater charge. We hold that the cargo's owner was bound by the forum-selection clause and that the statutory limitation of liability applies. Accordingly, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff Kukje Hwajae Insurance Company is the subrogated insurer of the Doosan Corporation, a Korean manufacturer of machinery. Doosan contracted with Glory Express, Inc., an NVOCC, to ship a "Doosan Brand Vertical Twin Spindle CNC Lathe" from Busan, Korea, to Los Angeles, California, on the vessel the Hyundai Liberty. Glory Express issued three bills of lading to cover the shipment. Each one identifies Doosan as the shipper and the "Hyundai Liberty" as the "Exporting Carrier." The Glory Express bills of lading contain a forum-selection clause requiring that all suits relating to the carriage of goods covered by the bills of lading be brought in the federal courts in New York, although Glory Express has not sought to enforce that clause here.

Glory Express, in turn, contracted with Hyundai Merchant Marine Company to ship the lathe on its vessel, the Hyundai Liberty. It did so by acting through Streamline Shippers Association, a nonprofit organization of shippers (Streamline).¹ Hyundai Merchant Marine issued a bill of lading identifying Streamline as the shipper. That bill of lading provided:

The claims arising from or in connection with or relating to this Bill of Lading shall be exclusively governed by the law of Korea except otherwise provided in this Bill of Lading. Any and all action concerning custody or carriage under this Bill of Lading whether based on breach of contract, tort or other wise shall be brought before the Seoul Civil District Court in Korea.

(Emphasis added.)

According to Plaintiff's complaint, the lathe was damaged during the course of the sea voyage, resulting in more than $200,000 in damages. Plaintiff paid Doosan's claim and then initiated this action. The complaint asserted claims for damage to cargo, breach of contract, negligence, breach of duty to care for property in bailment, and unseaworthiness. Plaintiff brought the action in personam against Defendant Glory Express and in rem against the Hyundai Liberty (Hyundai).²

Hyundai moved to dismiss Plaintiff's complaint as to the vessel, seeking to enforce the forum-selection clause in its bill of lading. The district court denied the motion, in part because it found that Hyundai had not properly authenticated the copy of the bill of lading that it had attached to its motion.³ Additionally, the court denied the motion because Plaintiff's subrogor, Doosan, had not "accepted" the bill of lading and it was, therefore, not enforceable against Plaintiff. The court stated further that, if Plaintiff "accepted" the bill during the litigation by relying on it to establish an element of one of its claims, the court would entertain again Hyundai's motion to enforce the forum-selection clause.

Hyundai filed a motion for partial summary judgment on the ground that the Carriage of Goods by Sea Act (COGSA) — specifically 46 U.S.C. app. § 1304(5) — limited the ship's in rem liability. Over Plaintiff's opposition, the court granted the motion.

Plaintiff then moved for summary judgment against Glory Express. The court granted the motion in part, holding that Glory Express was liable to Plaintiff for damage to the lathe, but that its liability was limited by the terms of the Glory Express bills of lading and by COGSA. At that time, the court did not calculate the total amount of damages for which Glory Express was liable, because Plaintiff had not established how many "packages" had been shipped for purposes of COGSA. Glory Express then moved for summary judgment on the ground that the total number of packages shipped was six. The court granted the motion.

Plaintiff and Hyundai filed cross-motions for summary judgment on the issue of the vessel's in rem liability. Each party opposed the other's motion. The court denied both parties' motions and, instead, dismissed the case. The court reasoned that Plaintiff's use of a part of the Hyundai bill of lading to establish that the goods were delivered on board the Hyundai Liberty in good condition constituted "acceptance" of the bill of lading. The court also held that "any claim that Kukje has against the Hyundai Liberty must be brought pursuant to the Hyundai's Bills of Lading." The court dismissed the action with respect to the Hyundai "without prejudice to Plaintiff's right to bring a claim that complies with the forum selection clause of the Hyundai's Bills of Lading."

Plaintiff and Hyundai timely appealed.

STANDARDS OF REVIEW

We review for abuse of discretion the district court's decision whether to enforce a forum-selection clause. Fireman's Fund Ins. Co. v. M.V. DSR Atl., 131 F.3d 1336, 1338 (9th Cir.1997). A motion to enforce a forum-selection clause is treated as a motion pursuant to Federal Rule of Civil Procedure 12(b)(3). Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 324 (9th Cir.1996). Consequently, the pleadings need not be accepted as true, and facts outside the pleadings properly may be considered. Id.

We review de novo the district court's grant of summary judgment. Balint v. Carson City, 180 F.3d 1047, 1050 (9th Cir. 1999) (en banc).

DISCUSSION

A. Whether Plaintiff is bound by the forum-selection clause in the Hyundai bill of lading.

Plaintiff argues that the district court erred by dismissing the in rem action because of the forum-selection clause. Plaintiff contends that the clause does not bind it because Plaintiff's subrogor, Doosan, never accepted the Hyundai bill of lading and, therefore, is not a party to the contract. Plaintiff argues that its evidentiary use of the bill of lading did not operate as "acceptance" of the contractual terms of the bill. Because Plaintiff does not seek to enforce the contractual terms of the bill of lading, but has brought a tort claim for cargo damage, and because neither Plaintiff nor its subrogor is a party to the bill of lading, Plaintiff reasons that the forum-selection clause is not enforceable against it.

Hyundai, by contrast, argues that the court erred by not enforcing the forum-selection clause at the outset of the litigation. Hyundai asserts that the clause is enforceable against Plaintiff because Plaintiff's subrogor is a party to the bill of lading or, in the alternative, is so "closely related" to the transaction that the clause is enforceable. We agree with Hyundai that the in rem action should have been dismissed at the outset for want of jurisdiction.

As an initial matter, it is clear that Plaintiff's in rem action for cargo damage, characterized by Plaintiff as a tort,⁴ is within the scope of the forum-selection clause. The text of the clause provides: "Any and all action concerning custody or carriage under this Bill of Lading whether based on breach of contract, tort or otherwise shall be brought before the Seoul Civil District Court in Korea." Plaintiff's action concerns damage to the lathe that occurred during "carriage under this Bill of Lading" on board the Hyundai Liberty.

It also is clear that enforcement of the clause does not contravene COGSA. In Fireman's Fund, we approved a similar forum-selection clause requiring that a claim for cargo damage be brought in Korea. 131 F.3d at 1338-40. In that case, the plaintiff (the consignee of the cargo covered by the bill of lading at issue) brought claims for cargo damage in both an in rem action against the vessel and an in personam action against the vessel's charterer. Id. at 1339. We rejected the plaintiff's argument, which posited that COGSA barred enforcement of the forum-selection clause because in rem proceedings are not available under Korean law, and we held that the district court abused its discretion when it declined to enforce the clause. Id. at 1338-40. We remanded the case to district court to dismiss the in rem and in personam proceedings for "want of jurisdiction." Id. at 1340.

Therefore, we can, consistent with both precedent and the terms of the bill of lading, apply the Korean forum-selection clause to Plaintiff's in rem action. The question is whether the clause can be enforced against Plaintiff. We conclude that it can....