Insurance Co. of North America v. Puerto Rico Marine Management, Inc., 85-1072

• Decision Date: 10 May 1985
• Docket Number: No. 85-1072,85-1072
• Citation: 768 F.2d 470
• Parties: INSURANCE COMPANY OF NORTH AMERICA, et al., Plaintiffs, Appellants, v. PUERTO RICO MARINE MANAGEMENT, INC., Defendant, Appellee. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 470

768 F.2d 470

1986 A.M.C. 2537

INSURANCE COMPANY OF NORTH AMERICA, et al., Plaintiffs, Appellants, v. PUERTO RICO MARINE MANAGEMENT, INC., Defendant, Appellee.

No. 85-1072.

United States Court of Appeals,

First Circuit.

Heard May 10, 1985.

Decided July 26, 1985.

Robert W. Fenet, Lake Charles, La., with whom Woodley, Barnett, Cox, Williams, Fenet & Palmer, Lake Charles, La., James A. Toro and Chavier-Stevenson & Toro, San Juan, P.R., were on brief for appellants.

J. Ramon Rivera-Morales, Hato Rey, P.R., with whom Jimenez & Fuste, Hato Rey, P.R., was on brief for appellee.

Before CAMPBELL, Chief Judge, VAN DUSEN, ^* Senior Circuit Judge, and BOWNES, Circuit Judge.

VAN DUSEN, Senior Circuit Judge.

Plaintiff, Insurance Company of North America (INA), ¹ which insured a consignee against the loss of a certain shipment of goods, brought suit against defendant, Puerto Rico Marine Management, Inc. (PRMMI), the sea carrier of those goods. Plaintiff alleged that defendant acted negligently by delivering the goods to an imposter who claimed to represent the consignee, rather than delivering them to the actual consignee. The defendant moved for summary judgment, contending that plaintiff's suit was time-barred by a one-year limitations provision contained in the bill of lading covering this shipment. Plaintiff opposed the motion, arguing that a one-year limitations period did not govern the action. The district court granted defendant's motion for summary judgment concluding that plaintiff's suit was time-barred.

Plaintiff now appeals the judgment of the district court. We have jurisdiction pursuant to 28 U.S.C. Sec. 1291 (1982). We will affirm for the reasons stated in this opinion.

I. Factual History ²

In December 1981, the Canadian Saltfish Corporation entered into a shipping agreement with defendant-carrier, PRMMI, to ship a load of 800 cartons of dry salt codfish to the consignee, Mendez & Company, Inc. PRMMI accepted the cargo for shipment at Elizabeth, New Jersey. The agreement provided that the cargo would be shipped to San Juan, Puerto Rico, where it was to be picked up by the consignee. A bill of lading covering the shipment was issued by PRMMI.

The cargo arrived at the port of San Juan on January 2, 1982. Upon the arrival of the goods, PRMMI unloaded the goods from its ship and held them in its storage facilities for safekeeping. On January 4, 1982, PRMMI delivered the goods to someone who arrived at its facilities purporting to represent the consignee. Later that day, an actual representative of the consignee came to PRMMI's storage facilities to obtain the goods, at which time he was informed by PRMMI officials that the goods had been delivered to another person. The next day, January 5, 1982, PRMMI was informed by the police department that the trailer that had contained the goods in question had been found empty and abandoned.

At the request of PRMMI, the police department then notified the consignee of its discovery. The consignee maintained that it had never taken delivery of the lost goods and asked PRMMI for reimbursement for their loss. PRMMI refused, asserting that it had delivered the goods to a person presenting the proper documents necessary to obtain them. As a result, the consignee filed a claim for compensation for the lost goods with plaintiff, its insurer. Plaintiff paid the claim.

On December 1, 1983, plaintiff filed this subrogation action in its own name against PRMMI in the United States District Court for the District of Puerto Rico. Service of process was not effected on PRMMI until March 19, 1984. The complaint made two claims: (1) that PRMMI had breached a maritime contract to protect the consignee's goods, and (2) that PRMMI was negligent in its care of those goods.

On August 21, 1984, PRMMI filed a motion for summary judgment. PRMMI contended that plaintiff's action failed to state a claim because it was not instituted within one year of the date the claim arose, as was required under the limitations provisions contained in the bill of lading which governed the shipment. On December 6, 1984, the district court granted PRMMI's summary judgment motion, agreeing that the action was time barred. See Ins. Co. of North Am. v. Puerto Rico Marine Mgmt., 599 F.Supp. 199, 204 (D.P.R.1984). Plaintiff now appeals the judgment of the district court.

II. Discussion

In granting defendant's motion for summary judgment, the district court ruled that plaintiff's action was time-barred because it was filed more than one year after the date delivery of the goods to the consignee was due. The district court concluded that the action was governed by the one-year limitations period specified in defendant's long-form bill of lading, which had been placed on public file with the Federal Maritime Commission (FMC). The court reasoned that, because the short-form bill of lading--which defendant issued for this specific shipment--expressly incorporated the terms of the long-form bill of lading, the limitations provision contained in the long-form bill of lading controlled. Plaintiff contends that the district court erred because, as a matter of law, insurers of consignees are not bound by limitations provisions contained in long-form bills of lading filed with the FMC, absent actual notice of such provisions.

We first observe that, because this case is a subrogation action, plaintiff, an insurer, has no greater or lesser rights than those of its insured, the consignee (Mendez & Co.). See United States v. Munsey Trust Co., 332 U.S. 234, 242, 67 S.Ct. 1599, 1603, 91 L.Ed. 2022 (1947); First National City Bank v. United States, 548 F.2d 928, 936 (Ct.Cl.1977); Aaacon Auto Transport v. State Farm Mut. Auto Ins., 537 F.2d 648, 651-52 (2d Cir.1976), cert. denied, 429 U.S. 1042, 97 S.Ct. 742, 50 L.Ed.2d 754 (1977). Thus, in deciding what limitations provision applies to plaintiff in this action, we must determine what limitations period would have governed a suit against defendant brought by the consignee in its own right.

Generally, for shipments between ports of the United States and its possessions, there is no specific limitations period for suits by a consignee against a carrier. The Harter Act, 46 U.S.C. Secs. 190-196 (1982), which governs such shipments, merely prohibits a carrier from releasing itself completely from liability for its negligence. See 46 U.S.C. Sec. 190 (1982). Carriers may, however, impose a limitations period on all claims against them for negligence, without violating the Act, so long as the time period specified is reasonable. See The Queen of the Pacific, 180 U.S. 49, 53-58, 21 S.Ct. 278, 279-82, 45 L.Ed. 419 (1901); J. Aron & Co. v. Askvin, 267 F.2d 276, 278 (2d Cir.1959); Zifferer v. Atlantic Lines, Ltd., 278 F.Supp. 736, 739 (D.P.R.1968).

On the other hand, for shipments between the United States and foreign ports, the Carriage of Goods by Sea Act (COGSA), 46 U.S.C. Secs. 1300-1315, specifically provides a one-year limitations period for claims against a carrier for negligence. The Act states:

"In any event 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."

46 U.S.C. Sec. 1303(6) (1982). COGSA does not apply by its own terms to shipments, such as the one in this case, which transfer goods between ports of the United States and its possessions. 46 U.S.C. Sec. 1312 (1982). Nevertheless, COGSA can apply if the bill of lading covering such shipments contains an express statement that the provisions of COGSA govern. ³

In this case, plaintiff maintains that its claim is governed by the Harter Act, and therefore it was not required to file suit within any particular time period. Plaintiff asserts that, as long as its suit was filed within a reasonable time, the suit was not time-barred. By contrast, defendant claims that the bill of lading covering the shipment in question specifically stated that the provisions of COGSA--including COGSA's one-year limitations provision--govern this shipment.

The bill of lading for the shipment in this case actually consists of two parts: a short-form bill of lading and a long-form bill of lading. The short-form bill of lading is a document issued by defendant that lists the particular specifications of the cargo (contents, weight, etc.) in the shipment. The long-form bill of lading is a document issued by defendant which lists the rates, fares, and charges, as well as terms and conditions pertaining to all of defendant's shipments. The long-form bill of lading is placed on public file with the Federal Maritime Commission pursuant to 46 U.S.C. Sec. 844. ⁴ Section 844 provides that a carrier, such as defendant, may give notice of the terms and conditions contained in a long-form bill of lading to all parties in interest--and thereby bind them to these terms and conditions--by incorporating by reference these terms and conditions into a short-form bill of lading. ⁵

The defendant's short-form bill of lading for this shipment incorporated by reference all the terms and conditions of its long-form bill of lading. The short-form bill of lading specifically stated that the long-form bill of lading governed at all times during which the goods were in the custody of the defendant or its agents. ⁶

The claim at issue in this case arose after the goods were unloaded from defendant's ship at the San Juan port, but while the goods were still in defendant's custody. Thus, defendant argues that the limitations provisions in the long-form bill of lading govern this action.

The long-form bill of lading provides for a one-year limitations period in two different places. Item number 1 of the Terms and Conditions section states that the long-form bill of lading is in effect while goods being shipped are in defendant's custody and that, when it is in effect, it is subject to the...