Amdahl Corp. v. Profit Freight Systems, Inc.

• Decision Date: 08 September 1995
• Docket Number: No. 93-17011,93-17011
• Citation: 65 F.3d 144
• Parties: , 95 Cal. Daily Op. Serv. 7106, 95 Daily Journal D.A.R. 12,142 AMDAHL CORPORATION, Plaintiff-Appellant, v. PROFIT FREIGHT SYSTEMS, INC., a corporation; Lep International Inc.; Lep Profit International, Inc.; Atlas Consolidated Container, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 144

65 F.3d 144

1995 A.M.C. 2694, 95 Cal. Daily Op. Serv. 7106,

95 Daily Journal D.A.R. 12,142

AMDAHL CORPORATION, Plaintiff-Appellant, v. PROFIT FREIGHT SYSTEMS, INC., a corporation; Lep International Inc.; Lep Profit International Inc.; Atlas Consolidated Container Defendants-Appellees.

No. 93-17011.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Nov. 15, 1994.

Sept. 8, 1995.

Stanley L. Gibson, Adam B. King, Derby, Cook, Quinby & Tweedt, San Francisco, CA, for plaintiff-appellant.

David C. Phillips, Catherine E. Woodward, Goldstein & Phillips, San Francisco, CA, for defendants-appellees.

Appeal from the United States District Court for the Northern District of California.

Before: Jerome Farris, Robert Boochever, and Melvin Brunetti, Circuit Judges.

BRUNETTI, Circuit Judge:

This appeal involves a suit to recover for damage sustained by a laser wire bonder during overseas transport. Plaintiff-appellant Amdahl Corporation (Amdahl) appeals an order of the Northern District of California granting partial summary judgment to defendants-appellees Lep Profit International (Lep) and Atlas Consolidated Container, Inc. (Atlas). The district court determined that 46 U.S.C.App. Sec. 1304(5) limited the liability of Lep and Atlas to $500 for damage to Amdahl's package. We have jurisdiction pursuant to 28 U.S.C. Sec. 1291. We affirm the order of summary judgment as to Atlas but we reverse the order of summary judgment as to Lep.

I.

Amdahl contracted with Lep to ship a laser wire bonder from Sunnyvale, California to Dublin, Ireland. That contract was in the form of a "Shipper's Letter of Instructions." On the front page of that contract, Amdahl authorized Lep to "sign and accept [in Amdahl's name] any documents relating to said shipment and forward this shipment in accordance with the conditions of carriage and the tariffs of the carriers employed." On the reverse of the contract Lep and Amdahl specifically agreed to limit Lep's liability to twenty dollars per kilogram. ¹

Three weeks later, on behalf of Amdahl, Lep arranged for Atlas to carry the laser bonder by sea from New York to Dublin, Ireland. The bill of lading between Amdahl and Atlas stated that Atlas' liability was limited to $500 per package. ² That contract specifically listed only New York and Dublin as ports of call. ³

Atlas did not carry the laser bonder directly to port in Dublin, Ireland. At Antwerp, Belgium, Atlas unloaded the laser bonder and reloaded it upon a different vessel bound for Dublin. When the laser bonder arrived in Dublin, it had sustained over $100,000 damage. Amdahl brought this action to recover damages.

Lep and Atlas moved for partial summary judgment, asserting that 46 U.S.C.App. Sec. 1304(5) limited their liability to $500 for the package. The district court granted partial summary judgment for Lep and Atlas. The parties agreed to have stipulated judgment entered against Lep and Atlas in the amount of $500 and this appeal followed.

II.

We first turn to the grant of partial summary judgment on Lep's liability. We review grants of partial summary judgment de novo. Kyle Ry. v. Pacific Admin. Serv., 990 F.2d 513, 517 (9th Cir.1993). Viewing the evidence in the light most favorable to the nonmoving party, we determine whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. Jesinger v. Nevada Fed. Credit Union, 24 F.3d 1127, 1130 (9th Cir.1994).

The Carriage of Goods by Sea Act (COGSA) limits a carrier's liability to $500 per package unless the nature and value of the shipped goods is declared by the shipper and inserted into the bill of lading. 46 U.S.C.App. Sec. 1304(5). If Lep had recited section 1304(5) or language to the same effect in its Letter of Instructions with Amdahl, Lep would have made a prima facie case that Amdahl had been given a fair opportunity to choose a different liability clause, and thus that the $500 limitation should have applied. See Mori Seiki USA, Inc. v. M.V. Alligator Triumph, 990 F.2d 444, 448-49 (9th Cir.1993).

Lep and Amdahl's bill of lading does not recite section 1304(5). Instead, paragraph 4 limits Lep's liability to $20 per kilogram. We conclude that this clause, not COGSA's default limitation, determines Lep's liability.

Our conclusion is supported by the Third Circuit's holding in SPM Corp. v. M/V Ming Moon, 965 F.2d 1297 (3d Cir.1992). In SPM, one paragraph of the pertinent bill of lading essentially incorporated COGSA's limitations, but another recited a $2 per kilogram limitation. Id. at 1301. The Third Circuit concluded that the latter paragraph controlled the carrier's liability. Id. at 1301-02. If a specific liability provision overrides a reference to the COGSA limitation when an agreement recites both, there is no question that such a provision--in this case, the $20 per kilogram limitation--governs when an agreement makes no reference to COGSA.

Lep seeks to invoke COGSA to limit its liability to $500 by virtue of the COGSA limitation recited in Atlas' bill of lading. Lep argues that Amdahl authorized Lep to forward the laser bonder in accordance with the conditions of carriage of the carriers employed. According to Lep, "the conditions set forth in Atlas' bill of lading are expressly incorporated into Lep's contract with Amdahl."

We reject Lep's argument. The liability limitation in Lep and Amdahl's Letter of Instructions governs Lep's liability. While the contract did provide Lep the authority to act as its agent in forwarding the shipment, the contract limited the scope of Lep's agency. Paragraph 2 of the contract states in pertinent part that "[n]o agent, servant, or representative of the Forwarder has authority to alter, modify or waive any provision of the contract." Even if Lep did have the power to impose terms on Amdahl, Lep did not have the power to impose a liability provision conflicting with the provision already established between Amdahl and Lep.

Lep substituted the $20 per kilogram liability provision for the $500 COGSA limitation provision and so cannot benefit from that lower COGSA provision. Accordingly, the district court erred in granting partial summary judgment for Lep. ⁴

III.

We now turn to the partial grant of summary judgment on Atlas' liability. Amdahl argues that a statutory exception operates to deprive Atlas of the benefit of that limitation. The exception applies if the carrier commits an "unreasonable deviation" from the contract of carriage. 46 U.S.C.App. Sec. 1304(4). We have held that a "deviation is a 'serious departure from the contract of carriage,' exposing the cargo to 'unanticipated and additional risks.' " Nemeth v. General S.S. Corp., 694 F.2d 609, 613 (9th Cir.1982) (citation omitted).

Atlas did not carry the laser bonder directly to port in Dublin, Ireland. At Antwerp, Belgium, Atlas unloaded the laser bonder and reloaded it upon a different vessel bound for Dublin. The bill of lading did not specifically state that the laser bonder would pass through Antwerp. Amdahl argues that Atlas' unloading the cargo at Antwerp establishes a prima facie case of deviation under 46 U.S.C.App. Sec. 1304(4) and shifts the burden to Atlas to show that the deviation was reasonable. See P & E Shipping Corp. v. Empresa Cubana Exportadora, 335 F.2d 678, 680 (1st Cir.1964) (stating that once plaintiff shows that deviation has occurred, burden shifts to defendant to demonstrate that deviation was reasonable).

The Third Circuit recently addressed a similar situation in SPM Corp. In SPM, the carrier restowed the shipper's cargo at an intermediate port without indicating on the bill of lading that it would do so. SPM, 965 F.2d at 1299. The SPM court concluded that conduct customary in the maritime trade is not a deviation because a shipping contract ordinarily presumes that parties will follow such customs. Id. at 1304. Because intermediate port restowage was customary, no deviation occurred. Id. We agree with the reasoning of the Third Circuit in SPM. If a carrier follows a customary trade route, there can be no deviation, even if the bill of lading discloses only the location of terminal ports. See also General Elec. Co. Int'l. v. S.S. Nancy Lykes, 706 F.2d 80, 84 (2d Cir.), cert. denied, 464 U.S. 849, 104 S.Ct. 157, 78 L.Ed.2d 145 (1983) (defining route deviation in terms of degree of departure from customary route, established and known to the shipping community).

In the instant case, the district court ordered partial summary judgment for Atlas, relying on the bill of lading's liberty clause. ⁵ However, we may affirm a correct decision on any grounds supported by the record. Scott v. Kuhlmann, 746 F.2d 1377, 1378 (9th Cir.1984). Atlas introduced uncontroverted evidence, a declaration by an employee of Lep, that it is customary and known to the shipping community that shipments en route to Dublin travel first to another European port. Amdahl argues that the declaration was inadmissible because Lep produced a...