68 F.3d 197 (7th Cir. 1995), 95-1912, Zenith Electronics Corp. v. Panalpina, Inc.

Docket Nº:95-1912.
Citation:68 F.3d 197
Party Name:ZENITH ELECTRONICS CORPORATION, Plaintiff-Appellant, v. PANALPINA, INC., Defendant-Appellee.
Case Date:October 16, 1995
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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Page 197

68 F.3d 197 (7th Cir. 1995)

ZENITH ELECTRONICS CORPORATION, Plaintiff-Appellant,

v.

PANALPINA, INC., Defendant-Appellee.

No. 95-1912.

United States Court of Appeals, Seventh Circuit

October 16, 1995

Argued Sept. 7, 1995.

Page 198

Thomas F. Bush, Jr. (argued), Thomas A. Doyle, Saunders & Monroe, Chicago, IL, for Plaintiff-Appellant.

Thomas F. McFarland, Jr., Stephen C. Herman, Belnap, Spencer, McFarland & Herman, Chicago, IL, Andrew B. Sacks (argued), Cynthia C. Crawford, Galland, Kharasch, Morse & Garfinkle, Washington, DC, for Defendant-Appellee.

Before RIPPLE, MANION and KANNE, Circuit Judges.

RIPPLE, Circuit Judge.

Zenith Electronics Corporation ("Zenith") filed suit against Panalpina, Inc. ("Panalpina") claiming breach of fiduciary duty, breach of contract, and breach of duties imposed by the 1984 Shipping Act, 46 U.S.C.App. Sec. 1701 et seq. 1 Zenith alleged that Panalpina's failure to deliver bills of lading to a guarantor bank in a timely fashion resulted in Zenith's failure to collect the purchase price of goods it shipped to a customer in Peru. The district court granted summary judgment for Panalpina, finding Zenith's suit barred by a one-year limitation clause incorporated in the bills of lading. For the reasons that follow, we reverse and remand for further proceedings.

I

BACKGROUND

  1. Facts

    In the summer of 1991, Zenith contracted to sell 2,100 television kits to Electronica Bellavista, one of its customers in Peru. To secure payment by the foreign customer, Zenith and Electronica Bellavista set up a commonly used letter of credit arrangement, under which Zenith would be paid by a U.S. bank, the Hamilton Bank of Miami, upon presentation to the bank of a clean bill of lading. After a series of extensions, the letter of credit was set to expire on September 30, 1991.

    According to its complaint, Zenith retained Panalpina to serve as the freight forwarder, or forwarding agent, for the shipment to Peru. Freight forwarders essentially "act as export departments for their shipper clients," New York Foreign Freight Forwarders & Brokers Assn. v. Federal Maritime Comm., 337 F.2d 289, 292 (2d Cir.1964), cert. denied, 380 U.S. 910, 85 S.Ct. 893, 13 L.Ed.2d 797 (1965), making all necessary arrangements to dispatch merchandise to a foreign port. 2 Zenith, through its export manager Donna Wojcik, was informed that Panalpina would be issuing its own bills of lading for the shipment. Zenith then prepared the television kits and other documents for shipment by Panalpina.

    Page 199

    Because Panalpina is not itself a carrier, one of its obligations as freight forwarder was to arrange for transportation services with an oceangoing carrier. Panalpina used Pantainer, Inc. ("Pantainer"), its wholly-owned subsidiary and in-house NVOCC, 3 to effect the Zenith shipment. Zenith's television kits left U.S. port on September 18, 1991 and arrived in South America on October 11, 1991.

    After the departure of the shipment, Zenith received copies of two bills of lading from Panalpina, each bearing the name "Pantainer" at the top, to cover the ocean carriage to Peru. On the back of each bill of lading are several printed "Terms and Conditions." Paragraph 8 of these terms, entitled "Time Bar," provides:

    Carrier shall be discharged from all liability unless suit is brought within twelve months after the date of delivery of the goods, or after the date when the goods should have been delivered. Suit shall not be deemed brought against Carrier until jurisdiction shall have been obtained by service of process on Carrier.

    Panalpina's obligations as freight forwarder required it to prepare the necessary shipping documents and present them to the Hamilton Bank of Miami for payment under the letter of credit. The bills of lading, however, were not presented to the bank until October 3, 1991, three days after the letter of credit expired. As a result of the untimely presentment, Hamilton Bank refused to release the funds.

    In November of 1991, Panalpina informed Zenith that it had failed to properly present the bills of lading to Hamilton. Zenith filed suit against Panalpina in March of 1994; its complaint alleged that Panalpina, through its mishandling of the shipping documents, had breached its contract with Zenith, breached the fiduciary duty it owed to Zenith, and breached the duties imposed on freight forwarders by the 1984 Shipping Act. See 46 U.S.C.App. Sec. 1709(d)(1).

    Panalpina moved for summary judgment, arguing that Zenith's claim was barred by the one-year limitation period found in the bills of lading. Neither party disputed that Zenith's claim was brought after the limitation period had run. The motion for summary judgment turned, therefore, on whether Panalpina could avail itself of the time-bar defense.

  2. Proceedings in the District Court

    The district court concluded that Panalpina could avail itself of the time-bar defense and, accordingly, granted summary judgment on that basis to Panalpina. Noting that Panalpina, as parent corporation of Pantainer, had conceded its vicarious liability for any wrong committed by Pantainer, the district court concluded that the only issue to be decided was whether Zenith is barred by the limitation period.

    With the issue framed in this manner, the threshold inquiry for the district court was whether a contract existed between Pantainer and Zenith. The district court answered this...

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