B. Elliott (Canada) Ltd. v. John T. Clark & Son

• Citation: 542 F. Supp. 1367
• Decision Date: 13 July 1982
• Docket Number: Civ. No. Y-81-2088.
• Parties: B. ELLIOTT (CANADA) LTD. v. JOHN T. CLARK & SON OF MARYLAND, INC.
• Court: U.S. District Court — District of Maryland

542 F. Supp. 1367

B. ELLIOTT (CANADA) LTD. v. JOHN T. CLARK & SON OF MARYLAND, INC.

Civ. No. Y-81-2088.

United States District Court, D. Maryland.

July 13, 1982.

William C. Stifler, III, Christopher F. Drummond, Baltimore, Md., for plaintiff.

R. Roger Drechsler, J. Paul Mullen, H. John Bremermann, III, Baltimore, Md., for defendant.

MEMORANDUM OPINION AND ORDER

JOSEPH H. YOUNG, District Judge.

Plaintiff, B. Elliott (Canada) Ltd. ("Elliott") has brought this action against defendant John T. Clark & Son of Maryland, Inc. ("Clark") for damage to cargo allegedly incurred while in the custody of Clark following its discharge from the vessel, CV LIGHTNING. Clark filed a motion for summary judgment or, in the alternative, for partial summary judgment on April 15, 1982, claiming that it is entitled to the benefit of the limitations of liability under the U. S. Carriage of Goods by Sea Act (COGSA) (46 U.S.C. § 1300 et seq.), as conferred by certain provisions of the bill of lading issued by the carrier, Farrell Lines, Inc. ("Farrell").

FACTS

The essential facts material to the questions at issue are not in dispute. Elliott, a Canadian corporation, was the consignee of a gear hobber shipped in two containers from Hamburg, West Germany aboard the CV LIGHTNING, a vessel owned by Farrell, which arrived at the Dundalk Marine Terminal on February 10, 1980. Upon arrival, Clark, pursuant to its Stevedore Contract with Farrell, unloaded the containers from the vessel. One of the containers, ITLU 745034, was placed on a chassis and stored in a container yard owned by Farrell.

On the following day, John Kowaleviocz, a yard hustler employed by Clark, moved Container ITLU 745034 to Shed Number 4, a building leased by Farrell and operated by Clark, for preparation of the cargo for delivery to the overland trucker. As Kowaleviocz entered Shed Number 4, the container tipped over causing damage to the contents. Although the facts conflict as to the precise date of delivery to the overland trucker, it is clear from the pleadings filed that an overland trucker received delivery of the container on or before February 28, 1980. This action was filed August 19, 1981.

DISCUSSION

I. The Applicability of COGSA to Clark

Clark asserts that its liability is limited under the terms of the bill of lading¹ and COGSA². Certain limitations of liability under COGSA may be extended to third-party beneficiaries, even though COGSA by its own terms is applicable strictly to carriers. In Herd and Company v. Krawill Machinery Corp., 359 U.S. 297, 79 S.Ct. 766, 3 L.Ed.2d 820 (1959), the Supreme Court held that the limitation of liability provisions of the bill of lading, while applicable to the carrier, could not be extended to the stevedore claiming its protection, in the absence of clear and unambiguous language in the bill of lading providing for such an extension. Since the Herd decision, COGSA limitations of liability have been extended to stevedores³ and terminal operators⁴ by virtue of third-party beneficiary ("Himalaya") clauses in the bills of lading.

The dispute between Elliott and Clark revolves around a provision of the bill of lading designated as the "Himalaya Clause." Elliott contends that ¶ 1(b) is the applicable Himalaya Clause since it specifically mentions COGSA while terminal operators are not specifically mentioned as beneficiaries, and that the damages occurred to the goods while Clark was acting in the capacity of a terminal operator, alleging that Clark is therefore not entitled to the benefit of any limitation of liability under the bill of lading or COGSA. Clark concedes that it was acting in the capacity of a terminal operator when the damage to the goods allegedly occurred, but that ¶ 1(a) is the properly designated Himalaya Clause, and that terminal operators are specifically named beneficiaries of the limitations of liability enjoyed by the carrier.

If any one conclusion can be drawn from a reading of ¶¶ 1(a) and (b), it is that these paragraphs, taken together, constitute the Himalaya Clause, and when read in pari materia, form a clause benefitting specific third parties to the bill of lading. Clark, as a terminal operator, is entitled to the benefits conferred under ¶ 1(a) since that paragraph specifically names terminal operators as one of the beneficiaries, irrespective of the merits of the contention that terminal operators are not entitled to the benefits conferred under ¶ 1(b). In cases involving language in the bill of lading identical to that in ¶ 1(a), courts have held that the benefits to third parties include COGSA limitations of liability. Carle & Montanari, Inc. v. American Export Isbrandtsen Lines, 215 F.Supp. 76 (S.D.N.Y.1967), aff'd, 386 F.2d 839 (2d Cir. 1967), cert. denied, 390 U.S. 1013, 88 S.Ct. 1263, 20 L.Ed.2d 162 (1968); Mediterranean Marine Lines, Inc. v. John T. Clark & Son of Maryland, Inc., 485 F.Supp. 1330 (D.Md.1980).⁵

Reaching the same conclusion in this case does not thereby render ¶¶ 1(a) and (b) duplicative of one another. Different interests are protected in each paragraph. ¶ 1(a) extends COGSA limitations of liability to third parties who are sued in the capacity of carrier or bailee. ¶ 1(b) extends the protection to all others who may assist the carrier in a capacity other than as a carrier or bailee. This seemingly nice distinction has been used to justify the denial to third parties of COGSA protection where only the language of ¶ 1(a) appeared in the bill of lading. See Hanson & Orth, Inc. v. M/V Jalatarang, 450 F.Supp. 528 (S.D.Ga.1978) (Stevedore which negligently caused fire on vessel during unloading held not entitled to protection of either COGSA or the Fire Statute (46 U.S.C. § 182) under bill of lading provision identical to ¶ 1(a) in the document now under consideration, since stevedore was sued strictly in capacity of stevedore, not in capacity of carrier or bailee). The inclusion of ¶ 1(b) effectively cuts off the contention successfully raised by the consignees in Hanson. It is also apparent that ¶ 1(b) does not specifically include terminal operators as a third-party beneficiary simply because it is almost impossible to conceive a factual scenario in which a terminal operator could be sued in a status other than that of a bailee, so that its inclusion is unnecessary.

The contracting parties' intent to protect Clark acting in the capacity of terminal operator, manifested by ¶ 1(a) of the bill of lading, is consistent with certain provisions of the stevedoring contract entered into between Clark and American Export Lines, Inc., predecessor in interest to Farrell, in 1973. That contract, in which Clark agreed to provide stevedoring and terminal yard services, states in Section XI(B)(2),

With respect to claims for loss or damage to cargo or baggage, the liability of the contrator sic shall be limited by the vessel Owners bill of lading and/or baggage ticket clauses. It being the intention of the parties herein that the Contractor, where such limitation sic are valid, is not liable to cargo or other interests to any greater extent than is the vessels interests. * * *

This provision clearly indicates that Clark was an intended third-party beneficiary of Farrell's bill of lading, whether it was performing stevedoring services or terminal yard services. If the bill of lading governed the rights and obligations of the parties at the time the damage to the cargo occurred, Clark is entitled to COGSA limitations of liability, specifically that of the Statute of Limitations, as a third-party beneficiary to the bill of lading.

II. At What Point "Delivery"?

The question that must now be addressed is "whether what the right hand had extended in the COGSA incorporation * * * the left hand had taken back in a couple of `except as may be otherwise specifically provided herein' clauses, the effect of which would be contractually withdrawing this post-discharge occurrence from COGSA." (Emphasis in original). Zajicek v. United Fruit Company, 459 F.2d 395, at 399. Elliott points to ¶ 12⁶ of the bill of lading as an exception to ¶ 1 that takes this post-discharge occurrence out of the governance of COGSA and terminates the rights and obligations of all parties to the bill of lading. By the terms of ¶ 12, Elliott asserts, the carrier's responsibility terminated upon discharge of the containers onto the pier, and from that time Clark was acting as an agent, and on behalf, of the consignee, Elliott, rather than the carrier, Farrell.

Although COGSA applies ex proprio vigore only from "tackle-to-tackle," 46 U.S.C. § 1301(e), the parties to a bill of lading may extend the time within which the provisions of COGSA may govern to a time prior to loading or subsequent to discharge. 46 U.S.C. § 1307. The shipper, consignee and carrier agreed to this in ¶ 1 of the bill of lading. In addition, the Harter Act⁷ governs the period of time following discharge of the goods to their proper delivery, and to the extent that contractual provisions in a bill of lading conflict with the Act, they are null and void. See David Crystal, Inc. v. Cunard Steam-Ship Co., 339 F.2d 295, 297 (2d Cir. 1964), cert. denied, 380 U.S. 976, 85 S.Ct. 1339, 14 L.Ed.2d 271 (1965); Caterpillar Overseas, S.A. v. SS Expeditor, 318 F.2d 720, 723 (2d Cir. 1963), cert. denied, 375 U.S. 942, 84 S.Ct. 347, 11 L.Ed.2d 272; Levatino Company v. American President Lines, Ltd., 233 F.Supp. 697, 701 (S.D.N.Y.1964), aff'd, 337 F.3d 729 (2d Cir. 1964); Central Trading Corp. v. M/V "Dong Myung", 361 F.Supp. 302, 304 (S.D. N.Y.1973); Pine Street Trading Corporation v. Farrell Lines, Inc., 278 Md. 363, 380, 364 A.2d 1103, 1114 (1976). As a consequence, if Farrell's definition of delivery and disclaimer of liability in ¶ 12 of the bill of lading conflict with what was required in order to constitute "proper delivery" to the consignee under the Harter Act, the definition and disclaimer are null and void.

In Orient Overseas Line v....