Citrus Marketing Bd. of Israel v. J. Lauritzen A/S

• Decision Date: 28 August 1991
• Docket Number: 1431,Nos. 1271,D,s. 1271
• Citation: 943 F.2d 220
• Parties: CITRUS MARKETING BOARD OF ISRAEL and Agrexco (U.S.A.) Ltd., Plaintiffs-Appellants, Cross-Appellees, v. J. LAURITZEN A/S, and Irgens Larsen A/S, Defendants, J. Lauritzen A/S, Defendant-Appellee, Cross-Appellant. ockets 90-9084, 90-9130.
• Court: U.S. Court of Appeals — Second Circuit

Page 220

943 F.2d 220

1991 A.M.C. 2705

CITRUS MARKETING BOARD OF ISRAEL and Agrexco (U.S.A.) Ltd. Plaintiffs-Appellants, Cross-Appellees, v. J. LAURITZEN A/S, and Irgens Larsen A/S, Defendants J. Lauritzen A/S, Defendant-Appellee, Cross-Appellant.

Nos. 1271, 1431, Dockets 90-9084, 90-9130.

United States Court of Appeals Second Circuit.

Argued April 8, 1991.

Decided Aug. 28, 1991.

John R. Keough, III, New York City (Waesche Sheinbaum & O'Regan, P.C., of counsel), for plaintiffs-appellants, cross-appellees.

Robert L. Mahar, New York City (Freehill, Hogan & Mahar, of counsel), for defendant-appellee, cross-appellant.

Before CARDAMONE and MAHONEY, Circuit Judges, and PARKER, ^* District Judge.

MAHONEY, Circuit Judge:

Plaintiffs-appellants, cross-appellees Citrus Marketing Board of Israel ("CMBI") and Agrexco (U.S.A.) Ltd. ("Agrexco") appeal from a judgment of the United States District Court for the Southern District of New York, Kevin Thomas Duffy, Judge, that dismissed their complaint for failure to state a claim upon which relief can be granted. Defendant-appellee, cross-appellant J. Lauritzen A/S ("Lauritzen") cross-appeals from that judgment insofar as it denied Lauritzen's motion to stay this action pending arbitration. We reverse the dismissal of the complaint, affirm the denial of the stay, and remand.

Background

CMBI is the shipper, and Agrexco the consignee, of a shipment of oranges and grapefruit carried on board the M/V Ecuadorian Reefer (the "Vessel") from Haifa, Israel to New Bedford, Massachusetts in March 1990. The complaint alleges that Lauritzen managed the Vessel. ¹ It further alleges that the shipment of citrus fruit aboard the Vessel arrived at the port of New Bedford "damaged and/or short," and that:

Said loss and/or damage ... was proximately caused or contributed to by the fault, neglect and want of care on the part of defendants and/or their agents, servants, employees or representatives in that defendants failed to maintain the said vessel in a seaworthy condition, improperly managed the vessel, improperly cared for the cargo and/or improperly manned the vessel....

Prior to commencing this action, CMBI and Agrexco brought an in rem action against the Vessel in the United States District Court for the District of Massachusetts. See Citrus Marketing Bd. of Israel v. M/V Ecuadorian Reefer, 754 F.Supp. 229 (D.Mass.1990). On June 15, 1990, the asserted owner of the Vessel, K/S Ecuadorian Reefer, filed a claim to the Vessel and a motion to stay the action pending arbitration in London.

Although it cannot be confirmed in the record before this court, the opinion in the Massachusetts action indicates that K/S Ecuadorian Reefer chartered the Vessel to Lauritzen Reefers A/S (to be distinguished from the party herein, J. Lauritzen A/S), which then time-chartered it to Chiquita Brands, Inc. ("Chiquita"). Id. at 230. ² The record herein does establish, in any event, that Chiquita entered into a voyage charter dated December 28, 1989 with CMBI. ³ That charter provided for "Any dispute arising under this Charter Party to be settled in London by Arbitration," adding various provisions regarding the conduct of any arbitration.

The voyage charter incorporated a bill of lading that was issued at Haifa on March 7, 1990, naming CMBI as shipper and Agrexco as consignee. The bill of lading, in turn, includes a "Clause Paramount" incorporating the Carriage of Goods by Sea Act, 46 U.S.C.app. §§ 1300-15 (1988) ("COGSA"). In addition, clause 16 of the bill of lading provides:

Benefit to Third Parties. Every agent or employee of the Carrier or Shipowner and every independent contractor who performs any part of the services provided by the Carrier or Shipowner, including the vessel's officers and crew, stevedores, shore side employees, draymen, crane and other machinery operators, shall have the same rights, privileges, limitations of liability[ ] immunities and powers provided for the Carrier by this contract, by the Carriage of Goods by Sea Act, or by any other statute or regulation, the foregoing contract provisions being made by the Carrier and Shipowner for the benefit of all other persons and parties performing services in respect of loading, handling, stowing, carrying, keeping, caring for, discharging, and delivering the Goods or otherwise.

As is apparent, clause 16, inter alia, purports to extend the carrier's rights and immunities under COGSA to other parties. Such a clause is known as a "Himalaya clause." See Comment, Carriage of Goods by Sea: Application of the Himalaya Clause to Subdelegees of the Carrier, 2 Mar.Law. 91, 92 (1977) (explaining derivation of the term "Himalaya clause" from a British case involving the vessel Himalaya and discussing such clauses' reception in the courts).

While the motion to stay the Massachusetts action was pending, CMBI and Agrexco initiated the instant lawsuit on July 11, 1990 in the United States District Court for the Southern District of New York. On July 24, 1990, they filed papers in the Massachusetts action opposing the motion to stay that action pending arbitration, and cross-moving to transfer that action to the Southern District of New York.

On August 21, 1990, Lauritzen moved in the Southern District of New York for a stay of this action pursuant to section 3 of the Federal Arbitration Act, 9 U.S.C. § 3 (1988), pending the London arbitration. The argument of that motion was heard on November 14, 1990. After brief colloquy concerning the motion for a stay, the district court asked plaintiffs' counsel to state his theory of the case. Counsel responded that "the ship manager, in employing the crew and in supervising the crew, was negligent and hired incompetent officers."

The district court then stated:

What you're basically suing for is damage to cargo. I don't care what you call it--you can call it a maritime tort; you can call it a Fudgicle--you are suing under the contract of carriage. You don't have a maritime tort. You can call it anything you want: you lose.

I would assume that if that is the basis for your action, I will be seeing a motion to dismiss, which I will grant.

Counsel for Lauritzen then moved to dismiss the complaint, and the district court granted that motion while denying the motion for a stay. These rulings were incorporated in a judgment entered November 20, 1990. CMBI and Agrexco appealed from the dismissal, and Lauritzen cross-appealed from the denial of the stay. Subsequently, on December 28, 1990, the United States District Court for the District of Massachusetts stayed the Massachusetts action pending the London arbitration, and deferred decision on the motion to transfer that action to the Southern District of New York. See 754 F.Supp. at 234.

Discussion

A. The Motion to Dismiss.

The district court essentially ruled that plaintiffs' only cause of action was a contract action which would be governed by COGSA. The immunities and limitations provided by COGSA, however, extend only to a "carrier" of goods by sea, see Robert C. Herd & Co. v. Krawill Machinery Corp., 359 U.S. 297, 301-03, 79 S.Ct. 766, 769-70, 3 L.Ed.2d 820 (1959), and "there is nothing in the provisions, [or] legislative history and environment of [COGSA], to indicate any intention ... of Congress ... to limit the liability of negligent agents of the carrier." Id. at 302-03, 79 S.Ct. at 769-70. In so ruling, the Court emphasized the statutory definition of the term "carrier," see id. at 301, 79 S.Ct. at 769, which defines the term to include "the owner or the charterer who enters into a contract of carriage with the shipper." 46 U.S.C.app. § 1301(a) (1988).

In Herd, the Supreme Court unanimously affirmed a judgment against a negligent stevedore sued separately from the shipper, and rejected the stevedore's contention that it was entitled to the $500-per-package limitation on liability provided by section 1304(5) of COGSA. See 359 U.S. at 308, 79 S.Ct. at 772; see also In re Delphinus Maritima, S.A., 523 F.Supp. 583, 597 (S.D.N.Y.1981) ("An agent [of the carrier] is not covered by the limitations of COGSA available to the carrier, and may be fully liable for its acts of negligence. Cerro Sales Corp. v. Atlantic Marine Enterprises, Inc., 403 F.Supp. 562, 568 (S.D.N.Y.1975)."). We therefore conclude that the district court erred in dismissing the complaint on the basis that COGSA standing alone, precluded a separate action against Lauritzen.

Lauritzen argues, however, that it is entitled to the protections of COGSA because of the Himalaya clause included in the bill of lading. Since we may affirm on any basis for which there is a record sufficient to permit conclusions of law, including grounds upon which the district court did not rely, see In re Chesley v. Union Carbide Corp., 927 F.2d 60, 68 (2d Cir.1991); Larsen v. NMU Pension Trust, 902 F.2d 1069, 1070 n. 1 (2d Cir.1990); Alfaro Motors, Inc. v. Ward, 814 F.2d 883, 887 (2d Cir.1987), we address this contention.

"Parties may contractually extend COGSA's application beyond its normal parameters." Colgate Palmolive Co. v. S/S Dart Canada, 724 F.2d 313, 315 (2d Cir.1983), cert. denied, 466 U.S. 963, 104 S.Ct. 2181, 80 L.Ed.2d 562 (1984). For example, in Bernard Screen Printing Corp. v. Meyer Line, 464 F.2d 934 (2d Cir.1972) (per curiam), cert. denied, 410 U.S. 910, 93 S.Ct. 966, 35 L.Ed.2d 272 (1973), we approved contractual provisions in a bill of lading that extended to stevedores the $500-per-package liability limitation conferred upon carriers by 46 U.S.C.app. § 1304(5) (1988). Accord, Seguros "Illimani" S.A. v. M/V Popi P, 929 F.2d 89, 93-94 (2d Cir.1991); Barretto Peat, Inc. v. Luis Ayala Colon Successors, Inc., 896 F.2d 656, 659-60 (1st Cir.1990); Institute of London Underwriters v. Sea-Land Serv., Inc., 881 F.2d 761, 766-67 (9th Cir.1989); Brown & Root, Inc. v. M/V Peisander, 648 F.2d 415, 425 (5th Cir.1981); Tessler Brothers (B.C.) Ltd. v. Italpacific Line, 494 F.2d 438, 446-47 (9th...