Gamma-10 Plastics, Inc. v. American President Lines, Ltd.

Citation32 F.3d 1244
Decision Date10 August 1994
Docket NumberGAMMA-10,Nos. 93-3285,93-3286 and 94-1190,s. 93-3285
PartiesPLASTICS, INC., Plaintiff, Appellant and Cross-Appellee, v. AMERICAN PRESIDENT LINES, LTD.; American President Companies, Ltd., Defendants, Appellees and Cross-Appellants.
CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)

Scott Allen Johnson, Wayzata, MN, argued (Todd M. Johnson, on the brief), for appellants.

Ray Robinson, Chicago, IL, argued, for appellee.

Before McMILLIAN, Circuit Judge, LIVELY, * Senior Circuit Judge, and WOLLMAN, Circuit Judge.

LIVELY, Senior Circuit Judge.

A jury in this maritime case rendered a verdict in favor of the shipper and against the carrier for failure to deliver goods and for damages to other goods caused by negligence of the carrier. In post-trial proceedings the district court awarded pre-judgment interest to the plaintiff, but refused to award attorney fees. 839 F.Supp. 1359. Both parties appealed and the court consolidated the appeals from the judgment following trial and from the order deciding post-trial motions.

I.
A.

This case arises out of a 1988 contract for carriage by sea between Gamma-10 Plastics, Inc. (G-10) and American President Lines, Ltd. (APL). The contract called for APL, one of the largest steamship carriers in the world, to transport G-10's plastic resin from the United States and deliver it to customers at various ports in China. The resin was packed in bags, which in turn were placed by APL in large sealed containers for shipment. The controversy concerns four shipments of plastic resin: (1) five sealed containers of resin shipped to Whampoa, China in August, 1988; (2) five containers shipped to Shanghai, China, in October, 1988; (3) six containers shipped to Hong Kong in October, 1988; and (4) four containers held by APL in Los Angeles after a dispute arose over the previous shipments.

Somehow, G-10's first shipment of resin was lost on the docks of Whampoa. Throughout the investigation of the lost goods, APL claimed that they were on the Tung Kwong Hau Pier (Tung Pier), and provided G-10 with the name and telephone number of a contact person in Whampoa for verification. APL maintained at trial that there was nobody present at the docks to pick up the resin because G-10 had a poor product and lost its principal Chinese contract (the Acada contract) with Wallon Energies. G-10, on the other hand, claimed that a second Chinese company, Vic International, assumed the Acada contract and that an agent for Vic International went to Tung Pier three times in search of the goods but never found them. In response to the loss of its resin, G-10 sent APL two written complaints for lost or missing goods in October and November of 1988. APL ignored the complaints, and G-10 charged that APL's conduct became vindictive after the grievances were filed.

G-10's second shipment was loaded on board ship at Los Angeles on September 8, 1988, and discharged at Hong Kong on September 24. For some reason APL did not make out a bill of lading for this shipment until October 4, 1988, after the resin had been unloaded in Hong King. According to G-10's president, this shipment was supposed to have gone directly to Shanghai. At any rate, because Vic International succeeded the original purchaser, Wallon Energies, as consignee, G-10 directed APL to hold the shipment in Hong Kong until delivery in Shanghai could be arranged. There is some confusion as to the whereabouts of the goods prior to their reappearance in Shanghai on November 10. G-10 claims that it asked APL to deliver the goods to Shanghai by October 13, but that the goods did not arrive In November, 1988, G-10's president, Joseph Kopstein, flew to China to find the missing resin from the two shipments. When he finally located the resin from the first shipment in Whampoa, someone had removed it from the sealed containers and many of the resin bags were ripped. G-10 contended at trial that as a result of the condition of the goods and the three month delay in locating them, it suffered the cancellation of the Acada contract and lost its primary Chinese customer, Vic International. As with the first shipment, when G-10 located the resin from the second shipment in Shanghai, it had been taken out of the sealed containers and damaged. After paying the ocean freight and storage charges, G-10 finally sold this resin on July 12, 1989.

timely. APL counters that G-10 did not release the goods to Shanghai until November 4, and that it dutifully shipped the goods by November 10.

G-10 alleges on appeal that after the first shipment was lost, APL purposefully interfered with its attempt to resell the million pounds of resin that remained in China. G-10's potential customers insisted on testing samples of the resin before buying large amounts. However, APL refused to provide access to the resin until G-10 paid $60,000 claimed to be due in shipping and storage costs. G-10 asserts that the costs claimed by APL resulted from APL mistakenly shipping the third batch of resin to China. G-10 sent this resin to Los Angeles, but specifically told APL not to transport it to Hong Kong. At oral argument APL admitted mistakenly shipping the resin. According to G-10, APL not only delivered the goods to China, but stored them in a very expensive Hong Kong terminal despite suggestions from APL's own Los Angeles office to store the goods in free storage at a nearby APL facility in Taiwan. G-10 further claims that APL violated U.S. shipping laws by charging it at a rate that was 30% higher than the published tariff permitted. G-10 thus contends that the $60,000 claimed by APL was not its responsibility.

G-10 cites several other instances of alleged misconduct by APL. For example, APL originally quoted G-10 a price of $7,240 to store its fourth shipment of resin in Los Angeles. However, G-10 claims that APL raised the price to $37,819 after G-10 filed the instant lawsuit. Also, after this lawsuit was filed G-10 found a buyer in Jakarta, Indonesia for the fourth shipment of resin. APL told G-10 that there was no published rate to Jakarta, and that it would cost $133,000 to ship 100 metric tons, considerably more than the shipment itself was worth. In an attempt to prove discrimination, G-10 asked an associate in the industry, Sandra Renner, to obtain a quote from APL to send the identical amount of resin to Jakarta. G-10 presented evidence that APL advised Renner there was a published rate to Jakarta, and that it would cost $13,900 to ship 100 metric tons.

B.

G-10 filed this action against APL in a Minnesota state court on July 2, 1990. Soon after G-10 filed its complaint, APL removed the case to federal court in Minnesota under 28 U.S.C. Sec. 1332, basing jurisdiction on diversity of citizenship. G-10 then filed an amended complaint in which it sought damages of $3,536,000 for negligence and negligent or intentional misrepresentation.

In its answer APL pled several affirmative defenses under the United States Carriage of Goods by Sea Act (COGSA), 46 U.S.C.App. Sec. 1300-1315 (1988). As one defense, APL cited the COGSA statute of limitations that provides, "the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered...." COGSA Sec. 1303(6). APL claimed that it delivered all of G-10's resin between September 15 and November 15, 1988, but that G-10 did not file suit until July 2, 1990, more than one and one-half years after the last shipment of the goods.

G-10 moved for partial summary judgment on APL's affirmative defenses, which the district court granted. The district court agreed that APL could extend COGSA contractually by inserting appropriate language in a bill of lading. The court struck APL's affirmative defense of limitations, however, after finding that APL delivered its bill of lading to G-10 only after G-10's goods were shipped and that G-10, an inexperienced Midway through a five week trial, G-10 moved the court for permission to amend its pleadings to claim punitive damages. The district court refused, stating that G-10's evidence against APL was "circumstantial" and did not show "clear and convincing evidence of deliberate disregard for the plaintiff's rights or safety." The district court also rejected G-10's request to instruct the jury on punitive damages. After three days of deliberation, the jury returned a verdict in G-10's favor for $500,000, but also specifically found that APL did not commit fraud, and that G-10 owed APL almost $13,000 in unpaid freight for the first resin shipment to Whampoa.

shipper, was unaware of the contractual extension of COGSA in APL's bill of lading.

II.

In its cross-appeal APL seeks reversal of the district court's denial of its motion for summary judgment on the basis of limitations. Inasmuch as some or all of the remaining issues will become moot if we determine that G-10's suit was barred by limitations, we consider that question first, reviewing the district court's decision de novo. See Cox v. Mid-American Dairymen, Inc., 13 F.3d 272, 274 (8th Cir.1993).

A.

Two federal statutes set forth the rights, duties and obligations of shippers and carriers of cargo by sea. Congress enacted the Harter Act, 46 App.U.S.C. 190-196 (1988), in 1893. It governs shipments between "ports of the United States and foreign ports," and applies to the entire period that a carrier has possession of a shipper's goods, from prior to loading until after discharge. The Act contains no limitations period and specifically prohibits a carrier from inserting into its bill of lading a general release from negligence. However, carriers may "impose a limitations period on all claims against them for negligence, without violating the Act, so long as the time period specified is reasonable." Ins. Co. of North America v. Puerto Rico...

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