Chester v. Maritima del Litoral SA

• Decision Date: 14 May 1984
• Docket Number: Civ. A. No. 80-C-1072.
• Citation: 586 F. Supp. 192,1985 AMC 2831
• Parties: Arthur Henry CHESTER, and Manitowoc (U.K.) Ltd., a foreign corporation, Plaintiffs, v. MARITIMA del LITORAL S.A., a foreign corporation, Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

586 F. Supp. 192

1985 AMC 2831

Arthur Henry CHESTER, and Manitowoc (U.K.) Ltd., a foreign corporation, Plaintiffs, v. MARITIMA del LITORAL S.A., a foreign corporation, Defendant.

Civ. A. No. 80-C-1072.

United States District Court, E.D. Wisconsin.

November 22, 1983.

On Motion for Reconsideration, May 14, 1984.

COPYRIGHT MATERIAL OMITTED

Ross F. Plaetzer, Davis & Kuelthau, S.C., Milwaukee, Wis., for plaintiff.

Ben G. Slater, Cook & Franke, Milwaukee, Wis., for defendant.

DECISION

TERENCE T. EVANS, District Judge.

This is an admiralty case which arose out of damage to certain cargo being shipped from Manitowoc, Wisconsin, to Loch Kishorn, Scotland. Seawater, spilling onto the deck of the freighter on which the cargo was shipped, apparently damaged four packages of parts which were accompanying three large cranes to Scotland. The plaintiffs are the consignee of the cargo, Manitowoc (U.K.) Ltd., and certain underwriters at Lloyds of London who insured the shipment. The underwriters became subrogated to the rights of Manitowoc after settling a claim with Manitowoc for the damaged cargo. The defendant is a Spanish corporation which owns the S.S. INAGUA ESPANA, the vessel which was carrying the cargo when it was damaged.

The case is before me on the plaintiffs' motion for partial summary judgment. The plaintiffs are attempting to neutralize defenses raised in Maritima's answer, namely, that its liability is limited to $500 per package (See Answer ¶ 23, Maritima's Eighth Affirmative Defense), and that its liability is precluded because the plaintiffs, who knew the goods were to be shipped on deck, assumed any risk of damage to them (see Answer ¶ 25, Maritima's Tenth Affirmative Defense).

Because questions arose during my review of the briefs on the pending motions, oral arguments were entertained on November 21, 1983. I construe the arguments of Ben Slater, attorney for the defendant, to be a request that the plaintiffs' motion be denied and that summary judgment be in fact entered for the defendant. I construe the arguments of Ross Plaetzer and James E. Braza, counsel for the plaintiffs, to be that their motions be granted and the defendant's requests denied. As so construed, I believe that the defendant must prevail and that the complaint must be dismissed.

In ¶ 8 of its answer, the defendant states that the bill of lading covering the shipment in question provided that:

"... neither the carrier nor the ship shall be liable for any loss or damage whatsoever howsoever caused to goods which are or were carried on the deck of the vessel; upon information and belief, that the said shipment of goods was carried on deck said vessel with the knowledge, approval, consent and permission of both said shipper and said consignee".

The exact language in the bill of lading used in this case stated "... neither the carrier nor the ship shall be liable for any loss or damage whatsoever however caused to goods which are hereby stated as being carried on deck and which are so carried."

This condition came as no surprise. All understood that the vessel involved was not built for below-deck stowage. See Patrick D. Guinan Affidavit, Ex. A; C, ¶ 19, and the admissions made during oral argument.

The S.S. INAGUA ESPANA is a class of ship designated as a "Ro-Ro", which is shorthand for "roll-on-roll-off". The design of the ship permits almost all of its cargo to be driven onto and off of the vessel intact. It is not equipped with underdecks, holds or other cargo areas other than its main deck, which is open to the weather. Simply stated, the ship is little more than a floating shelf, on which goods sit for their entire journey. The designation "Ro-Ro" is also found on the bill of lading.

The Carriage of Goods by Sea Act of 1936 (46 U.S.C. § 1304(5)) (COGSA), ordinarily limits a vessel's liability for damages to goods shipped by sea. COGSA provides that:

Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United States ... unless the nature and value of such goods have been declared by the shippers before the shipment and inserted in the bill of lading.

Before reaching the issue of whether the limitations apply, however, it must be determined whether COGSA even applies. I do not believe that it does. Section 1304(5) applies to "any loss or damage to or in connection with the transportation of goods". "Goods" is defined in § 1301(c) to exclude "live animals and cargo which by the contract of carriage is stated as being carried on deck and is so carried". The contract of carriage (the bill of lading here) stated, and everyone knew, that the vessel was a "Ro-Ro". Accordingly, the cargo had to be stored on the deck. It could not have been stored in any other place. Therefore, I conclude that the defendant has no liability at all in this case and that the complaint must be dismissed.

If the blanket disclaimer of liability were not applicable, I would be required to move to the next question and decide whether or not the $500.00 limitation applied. My decision finding no liability makes it unnecessary for me to consider the second question, but because it has been extensively briefed and argued I will discuss it.

The parties could have chosen to vary the liability limitations of COGSA. See General Motors Corp. v. Moore-McCormack Lines, Inc., 451 F.2d 24, 25 n. 1 (2d Cir.1971); General Electric Co. v. M.V. Lady Sophie, 458 F.Supp. 620, 622 (S.D.N. Y.1978). The bill of lading does not appear to evidence any such intent. Therefore, at first blush, the limitation appears to apply.

In order, however, for a carrier to take advantage of the $500 limitation, it must give the shipper a fair opportunity to declare a higher value and pay a correspondingly higher rate. Tessler Brothers (B.C.) Ltd. v. Italpacific Line, 494 F.2d 438 (9th Cir., 1974). In this case I believe that an issue of fact exists as to whether Maritima failed to provide a fair opportunity to the shippers to protect themselves against the loss of the goods which were shipped.

In the first place, Maritima gave little notice of the fact that it would rely on the $500 limit. Although courts have held that reciting the language of § 1304(5) in the bill of lading is prima facie evidence that the carrier gave such an opportunity, mere reference to COGSA without explicit insertion of its terms into the contract language is generally not sufficient. See Komatsu, Ltd. v. States S.S. Co., 674 F.2d 806, 810 (9th Cir.1982). As the court in Pan American World Airways, Inc. v. California Stevedore and Ballast Co., 559 F.2d 1173 (9th Cir.1977) explained, it goes "beyond the bounds of commercial realism" to assume that shippers are made aware of the provisions of COGSA by mere reference to it in the bill of lading, without COGSA'S terms themselves present on its face. Id. at 1177.

Even if the shippers had knowledge of the terms of COGSA, a question of fact exists as to whether the bill of lading gave them a fair opportunity to declare a higher value and pay a correspondingly higher freight rate. Maritima argues that the plaintiffs had a fair opportunity to declare a higher value because there was room on the front of the bill of lading in the space made available for describing the goods to be shipped. Without being designated as an area for declaring the value of the goods, this "free space" cannot, as a matter of law, constitute a fair opportunity to declare a higher value. See General Electric at 623. Maritima also argues that had it offered higher rates, the plaintiffs would have chosen not to pay them. Maritima relies on the plaintiffs' statement that they had already fixed the cost of shipment at $200,000 and could not go any higher. This is a question of fact.

There is a genuine issue of fact as to whether the shipper was given a fair opportunity to choose a higher liability and pay a correspondingly greater charge. Therefore, the motion for partial summary judgment against Maritima's Eighth Affirmative Defense would have been denied and left for trial. Similarly, the "assumption of risk" issue raised in the Tenth Affirmative Defense would also be left for trial, as genuine issues of fact exist in the case.

For the foregoing reasons, the defendant's motion for summary judgment is GRANTED and the complaint is DISMISSED. The plaintiffs' motions for partial summary judgment are DENIED. SO ORDERED.

DECISION

On Motion For Reconsideration

This is an admiralty case involving claims for goods which were stowed on an open deck and damaged by seawater. The plaintiffs' case was dismasted on summary judgment, but they have commissioned a fleet of new arguments in pursuit of reconsideration. Unfortunately, the prevailing legal winds are still blowing in the same direction.

In resolving the summary judgment motion against the plaintiffs, I found that the defendant was not liable for any damages. Two reasons anchored that decision: First, the bill of lading covering the plaintiffs' goods clearly and unquestionably foreswears liability for their loss. It provides on its first page that "Neither the carrier nor the ship shall be liable for any loss or damage whatsoever however caused to goods which are hereby stated as being carried on deck and which are so carried" (emphasis added). Second, there was no dispute about the central facts of the case: It was admitted in the submissions supporting the plaintiffs' original motion and conceded at oral argument that everyone concerned knew that the goods were to be carried on deck. Indeed, it was also known that the ship was not built with enough room to store the goods below deck. Thus, the plaintiffs' litigating voyage had come to a deep and watery end.

However, like the Phantom Dutchman, this case has sailed once again into my harbor. The plaintiffs request that I vacate the judgment...