Acro Automation Systems v. Iscont Shipping Ltd.

• Decision Date: 25 January 1989
• Docket Number: Civ. No. PN-85-3264.
• Citation: 706 F. Supp. 413
• Parties: ACRO AUTOMATION SYSTEMS, INC. v. ISCONT SHIPPING LIMITED, et al.
• Court: U.S. District Court — District of Maryland

706 F. Supp. 413

ACRO AUTOMATION SYSTEMS, INC. v. ISCONT SHIPPING LIMITED, et al.

Civ. No. PN-85-3264.

United States District Court, D. Maryland.

January 25, 1989.

David W. Skeen, Stephen F. White, Wright, Constable & Skeen, Baltimore, Md., for plaintiff.

JoAnne Zawitoski, Thomas Hoxie, David B. Goldstein, and Semmes, Bowen & Semmes, Baltimore, Md., for defendant Iscont Shipping Ltd.

Donald C. Greenman, Ober, Kahler, Grimes & Shriver, Baltimore, Md., for defendants Timur Carriers (Private) Ltd. and Trans Freight Lines, Inc.

John T. Ward, Quinn, Ward and Kershaw, Baltimore, Md., for defendants Navifonds N.R. 10, Seeschiffanlagegesellschaft, and Engler Beteil Igungs—GmbH & Co.

Michael L. Schwartz, Kaplan, Schwartz & Blumberg, Baltimore, Md., for defendant Baltimore Shipping Co., Inc.

Robert H. Bouse, Jr., E. Philip Franke, III, and Anderson, Coe & King, Baltimore, Md., for defendants Bekins Van Lines Co., The Primary Source for Transp., Inc. and Bekins Forwarding Co., Inc.

J. Paul Mullen, George G. Tankard, III, and Lord & Whip, P.A., Baltimore, Md., and James M. Kenny, Leonard, Kenny & Stearns, New York City, for defendant Maher Terminals, Inc.

OPINION

NIEMEYER, District Judge.

Acro Automation Systems, Inc., a business located in Milwaukee, Wisconsin, purchased laser welding equipment from a manufacturer in Israel and engaged Bekins High Technologies International (Bekins HiTech) to make arrangements for shipment of the equipment from Israel to Acro's place of business in Milwaukee. The equipment was shipped by various methods of transportation involving several different companies and was delivered to Acro in Milwaukee in September, 1984. When it was delivered, the equipment had been damaged and had a salvage value of $147,890. Acro had paid $400,000 for the equipment and consequently sustained a loss of $252,110, for which it now seeks damages.

Acro presented its claim in the first instance to its insurance carrier, Insurance Company of North America (INA) which recognized the damage less a deductible of $500. However, instead of paying Acro the amount outright, it loaned the money lost to Acro under an arrangement called a "loan and trust receipt," a commonly used arrangement to avoid INA becoming subrogated to the claim.

In the complaint filed in this case, Acro sued, among others, Bekins HiTech and two sister companies, Bekins Forwarding, Inc., which was the trucking company, and Bekins Van Lines, the holder of the interstate motor carriers license issued by the ICC under which Bekins Forwarding carried the cargo. The Bekins companies have claimed limitations of liability that would reduce the damages recoverable to $1.25 per pound, or a total of $24,000.

At this stage of the proceedings, Acro has moved for summary judgment on the limitation of liability defense, urging that as a matter of law no limitation of liability applies and it is entitled to claim the full $252,000. The Bekins companies have filed a motion to add Acro's insurance carrier, INA, as a real party in interest. For the reasons that are given hereafter, the Court will grant Acro's motion for partial summary judgment determining that the limitation of liability is not available in this case, and the Court will deny Bekins' motion to add INA as a real party in interest.

I. LIMITATION OF LIABILITY

Before Acro engaged Bekins to arrange for the shipping of the laser equipment from Israel, Robert Leis, a representative of Acro, spoke with a representative of his insurance carrier about proper ways to insure the cargo. During their conversation the insurance representative advised Mr. Leis that Acro would enjoy a lower price for the carriage of its goods if it instructed the shipping agent not to declare the cargo's full value. Under this type of arrangement, the limitation of liability would have been $1.25 per pound. The insurance representative actually gave Mr. Leis the name of a Mr. Pollard at Bekins, with whom to discuss the issue. Although Leis called Mr. Pollard at Bekins HiTech to make arrangements for the shipment, there is no evidence in the record that Leis actually discussed the issue with Mr. Pollard or instructed him to agree to a limitation on Acro's behalf. Neither Mr. Leis nor Mr. Pollard recalls any such conversation.

For part of the transportation from Israel, Pollard arranged with Bekins Forwarding, Bekins HiTech's sister company, to truck the machines from the Port of Baltimore to Milwaukee. When Bekins Forwarding delivered the equipment to Acro in Milwaukee, it presented a blank form of bill of lading issued by another sister company, Bekins Van Lines. Bekins Van Lines issued the bill of lading because it was the company that held the ICC license. The blank form of bill of lading that was delivered provided for signatures in three different blocks. The first was a shippers agreement to limitation of liability and included a blank space for the shipper's signature. The second block included an agreement as to the condition of the goods at origin and provided blanks for the signatures of the shipper and the driver. The third block included an agreement as to the condition of the goods at destination and provided blanks for the signatures of the consignee and the driver. On the only bill of lading produced in this transaction, the limitation agreement in the first blank remained unsigned. The agreement as to the condition of goods at origin was signed by the truck driver only, and the agreement as to the condition of goods at destination was signed both by Mr. Leis of Acro and by the truck driver. The damaged condition at delivery was noted. There can be no dispute that Acro signed at the time when the bill of lading was first presented on September 17, 1984, in Milwaukee after delivery of the damaged goods.

The Bekins defendants, in urging a written agreement limiting liability, offer only the document signed by Acro on September 17, 1984. They argue that this constitutes a clear written agreement of limitation. Additionally, they argue that the receipt and acceptance of the document, coupled with the subsequent action of Acro in paying the bill constitutes an acceptance of it. In their papers the Bekins defendants also suggest that the conversation between Mr. Leis of Acro and his insurance company about limiting liability should permit an inference that Mr. Leis actually did discuss a limitation of liability with Mr. Pollard of Bekins. They can point to no evidence of such a conversation, however, and for this reason the Court will dismiss that argument and direct attention to the written instrument.

A motor carrier moving cargo in interstate commerce is liable for the actual loss or injury that it causes to the cargo unless the carrier properly limits its liability. See 49 U.S.C. § 11707(a) and (c) (recodifying the Carmack Amendment to the Interstate Commerce Act (formerly 49 U.S.C. § 20(11)) without substantive change. Liability must be limited under 49 U.S.C. § 10730, which provides, in relevant part:

The Interstate Commerce Commission may require or authorize a carrier ... to establish rates for transportation of property under which the liability of the carrier for that property is limited to a value established by written declaration of the shipper, or by a written agreement, when that value would be reasonable under the circumstances surrounding the transportation.

Rates founded on limited liability are lower than their counterparts based on full value because the shipper, in choosing the rate based on limited liability, becomes a co-insurer of the shipment.

In order to limit its liability, therefore, the carrier must (1) maintain a tariff in compliance with the requirements of the ICC, (2) give the shipper a reasonable opportunity to choose between two or more levels of liability, (3) obtain the shipper's agreement as to his choice of liability, and (4) issue a bill of lading prior to moving the shipment that reflects the agreement.

Because agreements limiting liability shift a portion of the risk of loss from the carrier to the shipper, as an exception to the full liability imposed on the carrier by the Act, they will be carefully scrutinized to assure that the shipper was given a meaningful choice and exercised it as evidenced by a writing. The burden of establishing that an agreement limiting liability has been made rests with the carrier. See Flying Tiger Line, Inc. v. Pinto Trucking Service, Inc., 517 F.Supp. 1108, 1112 (E.D.Pa.1981).

The rules of scrutinizing such agreements are well established and are fairly summarized in Anton v. Greyhound Van Lines, Inc., 591 F.2d 103, 107-08 (1st Cir. 1978), where the court said:

The shipper necessarily may "agree in writing" only after he has had the opportunity to inspect the written terms of the agreement. "Although action in writing by the shipper is plainly required, his signature is not necessary but it does furnish good evidence that he did declare or agree in writing." "Congress no doubt used these words to indicate that a shipper should agree in the same sense that one agrees or assents to enter into a contractual obligation." Such assent is effective, however, only if given after "a fair opportunity to choose between higher or lower liability by paying a correspondingly greater or lesser charge ..."

* * * * * *

Shippers are charged with notice of terms, conditions, and regulations contained in the tariff schedule pertaining to a carrier's liability which in turn affect the rates charged the carriage of goods. However, a carrier in order properly to limit its liability must do more than merely show that it maintained appropriate tariff schedules with the ICC. A carrier's arbitrary limitation of its liability for full actual damages is not effective unless the shipper enters into an agreement limiting that liability "as the result of an equally certain specified action ... in respect to a voluntary valuation of his goods."...

In

...