Milanovich v. Costa Crociere, S.p.A.
Decision Date | 04 February 1992 |
Docket Number | No. 90-7155,90-7155 |
Citation | 954 F.2d 763 |
Parties | , 293 U.S.App.D.C. 332 Gregory MILANOVICH, et ux., Appellants, v. COSTA CROCIERE, S.P.A., et al., Appellees. |
Court | U.S. Court of Appeals — District of Columbia Circuit |
Appeal from the United States District Court for the District of Columbia (Civil Action No. 89-00866).
Allen M. Hutter, Washington, D.C., for appellants.
George Mencio, Jr., for appellees. Daniel S. Pearson, Miami, Fla., and Mitchell H. Stabbe, Washington, D.C., also entered appearances, for appellees.
Before WALD, SILBERMAN and D.H. GINSBURG, Circuit Judges.
Opinion for the Court filed by Circuit Judge WALD.
Appellants Gregory Milanovich and Marjorie Koch-Milanovich appeal the grant of summary judgment to appellees Costa Crociere, S.p.A., an Italian cruise line corporation, and Costa Cruises, Inc., a New York corporation serving as Costa Crociere's general sales agent. For reasons given below, we vacate the judgment and remand for further proceedings on appellants' claim.
The district court disagreed. The court reasoned that federal maritime law governed this contract, and that under federal maritime choice-of-law rules, the governing law of the contract is determined by a "center of gravity" analysis, not by the contractual intent of the parties alone. Milanovich v. SJK Enterprises, Inc., 747 F.Supp. 1, 2 (D.D.C.1990). Because of the preponderance of U.S. contacts--appellants are U.S. citizens, the cruise was advertised in the U.S., the tickets were purchased and delivered in the U.S., and the ship left from and returned to a U.S. port--the court held that U.S. law, not Italian law, provided the rule of decision regarding the validity of the one-year limitation clause. Id. at 3. Applying U.S. law, the court found that this provision had been effectively incorporated into the contract and was legally enforceable. 4 In a supplemental memorandum and order, the district court considered, and rejected, appellants' argument that the district court had failed to appreciate the significance of the Supreme Court's decision in The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972), in which the Court enforced a contractual choice-of-forum clause in a maritime towage contract. 5 The district court reasoned that
[i]t is doubtful if the Supreme Court anticipated an extension of the rule of The Bremen so far from the [commercial] circumstances of that case as to allow a passenger ticket for a pleasure cruise to dictate, as a matter of contract alone, the terms and conditions upon which a shipowner would be liable to its passengers for personal injury.... The proposition may be tested by asking whether, were the situation reversed and the limitations clause less favorable to the Milanoviches under Italian law than under the applicable provision of U.S. maritime law, would it nevertheless be enforced under the rule of The Bremen in the circumstances of this case.
Id. at 5, 92 S.Ct. at 1911 (emphasis in original). Implicitly answering that question in the negative, the district court reiterated that American law, not Italian law, governed this contract and that appellants' suit was time-barred. On appeal, the Milanoviches challenge the district court's refusal to enforce the choice-of-law provision contained in their passage ticket. 6
The Milanoviches' cruise ticket is a maritime contract and thus the substantive law to be applied in this case is the general federal maritime law, including maritime choice-of-law rules. See Hodes v. S.N.C. Achille Lauro Ed Altri-Gestione, 858 F.2d 905, 909 & n. 2 (3d Cir.1988) (citing The Moses Taylor, 71 U.S. (4 Wall) 411, 427, 18 L.Ed. 397 (1886)), cert. dismissed, Hodes v. Lauro Line s.r.l., 490 U.S. 1001, 109 S.Ct. 1633, 104 L.Ed.2d 149 (1989); Siegelman v. Cunard White Star, 221 F.2d 189, 192-93 (2d Cir.1955). The question we ultimately face is whether a provision of that contract limiting the time for suit was validly incorporated and is legally enforceable. The resolution of those questions depends, however, on the body of contract law with which we examine the contract.
The contract contains a provision purporting to adopt Italian law as the law of the contract, but to follow that direction and use Italian contract law to decide whether the provision telling us to use Italian law is valid would obviously be "putting the barge before the tug." DeNicola v. Cunard Line Ltd., 642 F.2d 5, 7 n. 2 (1st Cir.1981) (dicta). What law should govern whether a choice-of-law provision is a valid part of a maritime contract is a difficult question, but one we need not decide because both parties here have assumed that American contract law principles control.
If the choice-of-law provision is enforceable, we will use the law that it selects to evaluate the enforceability of the remainder of the contract terms. Siegelman, 221 F.2d at 193 (examining American law initially to determine that a choice-of-law provision selecting English law is enforceable, and then using English law to interpret a provision limiting the time for suit); DeNicola, 642 F.2d at 7 n. 2 (dicta)
Under American law, contractual choice-of-law provisions are usually honored. RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 187 (1971). This principle applies even when the choice-of-law clause is contained in a contract of adhesion, although courts typically scrutinize such contracts to prevent substantial injustice to the adherent. Id. comment b. Thus, in Siegelman v. Cunard White Star, 221 F.2d 189 (2d Cir.1955), the court enforced a choice-of-law provision in a cruise ship passage ticket where "there [did] not appear to be an attempt ... to evade American policy" and "there [was] no suggestion that English law [the stipulated law of the contract] is oppressive to passengers." Id. at 195. See also Jansson v. Swedish American Line, 185 F.2d 212, 218 (1st Cir.1950) ( ).
The district court here, however, ignored the choice-of-law clause, reasoning that The Bremen, in which the Supreme Court enforced a similar clause, 7 was distinguishable because it involved commercial parties of equal bargaining strength. Appellees, in turn, argue that the district court properly disregarded the choice-of-law clause--a clause that they drafted and included in this adhesion contract--because a contractual choice-of-law clause is only one factor to be considered in a court's choice-of-law analysis. Brief for Appellee at 14. We find neither argument persuasive.
First, while there are indeed statements by some district courts that a choice-of-law clause is only one factor in determining the applicable law, see, e.g., McQuillan v. "Italia" Societa Per Azione Di Navigazione, 386 F.Supp. 462, 468 (S.D.N.Y.1974) (dicta), aff'd, 516 F.2d 896 (2d Cir.1975); Pisacane v. Italia Societa Per Azioni Di Navigazione, 219 F.Supp. 424, 425 (S.D.N.Y.1963), they appear to express mainly the courts' understandable reluctance to automatically enforce the terms of these adhesion contracts against the passenger. See Caruso v. Italian Line, 184 F.Supp. 862, 863 (S.D.N.Y.1960) () (emphasis supplied); Mulvihill v. Furness, Withy & Co., 136 F.Supp. 201, 206 (S.D.N.Y.1955) ( ). While these concerns warrant heightened judicial scrutiny of choice-of-law provisions in passage tickets, they do not sanction their utter disregard, especially where there are no countervailing policies of the forum implicated and where it is the nondrafting party that seeks enforcement of the choice-of-law provision. 8 Second, the district court's conclusion that the reasoning of The Bremen is limited to the commercial...
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