Intercontinental Properties Management, S. A., Matter of
| Citation | 604 F.2d 254 |
| Decision Date | 09 July 1979 |
| Docket Number | 77-2407,Nos. 77-2406,s. 77-2406 |
| Parties | In the Matter of INTERCONTINENTAL PROPERTIES MANAGEMENT, S. A., as owner of the MOTOR VESSEL MIMI, for exoneration from or limitation of liability. INTERNATIONAL MINERALS AND CHEMICALS CORP., Strolee of California, Rota Agro, S. A., World Wide Air Marine Freight Forwarders, Inc., Roper Sales Corporation; Hasman & Baxt, Inc., Jesus Alberto Roman Pernia, Venequelan Supply, S. A., Rony Export Co. Inc., Sun Insurance Company of New York Inc., Calvert Fire Insurance Company, Amerven, Inc., Northwestern National Insurance Company, Industrias Electronicas Sharp De Venezuela, Avelax, C. A., Pronto Overseas, Inc., Central Madeirense, C. A., Anchor Hocking Corp., C. A., V. Sequros Caracas, 3M Venezuela, C. A., Appellants, v. INTERCONTINENTAL PROPERTIES MANAGEMENT, S. A., Appellee. In the Matter of INTERCONTINENTAL PROPERTIES MANAGEMENT, S. A., as owner of the MOTOR VESSEL MIMI, for exoneration from or limitation of liability. INTERNATIONAL MINERALS AND CHEMICALS CORP. et al., Claimants, v. INTERCONTINENTAL PROPERTIES MANAGEMENT, S. A., Appellant, All-Caribbean Inc. and High Watch Shipping Company, Limited, Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (4th Circuit) |
George F. Chandler, III, New York City (Bigham, Englar, Jones & Houston, New York City, on brief), Guilford D. Ware, Norfolk, Va. (Timothy A. Coyle, Norfolk, Va. (Crenshaw, Ware & Johnson, Norfolk, Va., on brief), for appellants in 77-2406.
Carter B. S. Furr, Norfolk, Va. (Waverly L. Berkley, III, Jett Berkley, Furr & Price, Norfolk, Va., on brief), for appellee in 77-2406 and for appellant in 77-2407.
Before BUTZNER, WIDENER and PHILLIPS, Circuit Judges.
This appeal presents the question whether a shipowner is liable to cargo owners for cargo loss caused by the deliberate scuttling of the ship by a member of the ship's crew. The district court concluded that because the shipowner had shown itself independently free of fault in respect of the crew member's act, it was entitled to exoneration from liability under applicable provisions of the Carriage of Goods by Sea Act of 1936, 46 U.S.C. §§ 1300-1315 (COGSA), and gave judgment accordingly. For errors going to the question of COGSA's application to the facts stipulated and found in the district court, we vacate the judgment and remand for further proceedings.
This litigation to decide whether the economic loss resulting from destruction of a ship's cargo shall be borne by the cargo owners or the shipowner grew out of a stark tragedy involving the destruction as well of several human lives.
The M/V MIMI sailed from Miami, Florida, at around 10:30 p. m., October 9, 1975, bound for ports of call in Venezuela and Guyana. Her cargo consisted of bagged fertilizer and other general cargo stowed below and containers of general cargo stowed on deck. A small vessel, just under 500 gross registered tons, the MIMI was owned at the time by the appellee-appellant International Properties Management, S. A., a Panamanian corporation (Shipowner) and was under time charter to two joint venturers, All-Caribbean, Inc. and High Watch Shipping Company, Ltd. (Charterers). She carried a complement of four German officers, four Indonesian seamen, and a Filipino cook. Among the seamen was one Gun Gun Supardi who had signed aboard five months before in Hamburg, Germany, and had since served continuously as a member of the crew.
During loading operations just before departure from Miami, Gun Gun Supardi was cut above one eye when a cable snapped and lashed him. He was taken to a hospital after the MIMI had left the dock, given four stitches and then returned to the vessel. The captain sent him to his cabin to rest and Supardi stayed there for about twenty-four hours. Shortly before midnight on October 10, having left his quarters he encountered the Chief Engineer in another part of the vessel. Words were exchanged, Supardi struck the officer with what he later described as an "iron," then knifed him. When another officer came to the rescue, Supardi knifed him. The berserk seaman then proceeded to seek out and knife in turn each of the other two officers. Those who survived the knife wounds were bludgeoned into submission. Supardi then awakened the sleeping crew members and forced them at knife-point to provision and lower a lifeboat. At some point in this process he shut down the engines and opened the sea-valves in the engine room. At about 4:00 a. m., October 11, 1975, while Supardi stood by in the lifeboat with his captive fellow crew members, the MIMI sank, carrying with it all its cargo and its already dead or incapacitated officers. Later that morning the lifeboat occupants were picked up by a passing ship, and at this point the author of the catastrophe passes from this factual account of the litigation's background.
In due course Shipowner petitioned in the United States District Court for the Eastern District of Virginia for exoneration from or limitation of liability under 46 U.S.C. §§ 181-189. Various owners of cargo and containers (Cargo) then filed claims to recover damages for the loss of their goods, and a variety of cross and counterclaims were eventually added to the litigation. 1 After extensive pre-trial proceedings and a trial confined to liability issues, the district court entered a judgment that, Inter alia, exonerated Shipowner from liability in respect of all of Cargo's claims. Cargo appealed, challenging by various assignments of error the district court's judgment insofar as it exonerated shipowner from liability. 2
At the outset, we are confronted with the question whether a necessary factual predicate for COGSA's applicability to the question of Shipowner's liability to Cargo has been established. Cargo's claims were made under COGSA theories of liability and the district court applied COGSA in adjudicating the claims, but the Shipowner unsuccessfully urged in the district court and now argues on this appeal that the statute has not been shown to apply to the claims made. This failure of proof, says Shipowner, defeats any right of recovery by Cargo, whose claims were entirely predicated upon COGSA's applicability. In consequence, the argument runs, this provides an alternative basis for affirming the district court's judgment which was entered on the basis that COGSA did apply but that under its terms and on the facts found, Shipowner was entitled to exoneration.
Because we do decide, for reasons developed in Part III, that if COGSA applies, Shipowner is not entitled under its terms to exoneration so that the district court erred in its contrary conclusion, we must consider this alternative basis for affirmance. For reasons that follow, we conclude that the issue of COGSA's applicability must be remanded for determination by the district court on a reopened record.
The factual predicate not established according to Shipowner was that Shipowner had entered into a contract of carriage with Cargo. Liability for cargo loss is imposed under COGSA only on those charterers and shipowners who meet the definition of "carrier" contained in 46 U.S.C. § 1301(a), that is, those "who enter( ) into a contract of carriage with the shipper." In prosecuting a claim for cargo loss under COGSA, the burden of proof to establish this predicate to its coverage is upon the cargo claimant. Associated Metals & Minerals Corp. v. S. S. Portoria, 484 F.2d 460, 462 (5th Cir. 1973); See Yeramex International v. S. S. Tendo, 595 F.2d 943 (4th Cir. 1979). Here Cargo did not offer any proof of the existence of a contract between Cargo and Shipowner. 3 Nevertheless the district court found the statute applicable on alternative grounds: (1) that it applied by its terms even though no contract existed; and (2) that Shipowner was estopped by its conduct in the litigation to deny its applicability. There is no basis in law for the first ground. 4 The second presents a more difficult problem, but a review of the whole record persuades us that the district court exceeded a proper exercise of its discretion in holding Shipowner estopped on this factual issue.
In its memorandum opinion, the district court identified three factors that justified its holding Shipowner estopped: that the issue was first raised by Shipowner "during final oral argument," and "without prior notice to the claimants"; that Shipowner "had submitted to the COGSA provisions in the final pretrial order"; and that it had similarly submitted to COGSA "in its brief opposing the motion of Cargo to increase bond." Shipowner contends against this that its position throughout the pretrial and trial proceedings was perfectly and openly consistent with a legitimate reliance upon two alternative positions: that COGSA was not applicable; but that if it were, Shipowner was by its terms entitled to exoneration. Shipowner points out that on the first position the burden was upon Cargo, and argues that this completely justified Shipowner's raising the deficiency in proof for the first time at the close of all the evidence, that it was under no duty to alert its adversary to the possible deficiency at any earlier time. Further, says Shipowner, any reference to COGSA in its brief on the bond increase issue and in the pretrial order is similarly consistent with the legitimate maintenance of these alternative tactical positions. In summary, Shipowner's contention is that a fair appraisal of its conduct in the factual and legal context of this litigation does not support the implication of "sandbagging" that is reflected in the district court's estoppel holding. While we find the matter troublesome, we are persuaded on balance to Shipowner's position.
It clearly lies within a trial court's informed discretion to hold a litigant estopped by its litigation conduct to have an issue considered by the trier of fact....
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