COMPLAINT OF NORFOLK, BALTIMORE & CAROLINA LINE, INC.

• Decision Date: 04 October 1979
• Docket Number: Civ. A. No. 79-164-N.
• Court: U.S. District Court — Eastern District of Virginia
• Parties: In the Matter of the Complaint of NORFOLK, BALTIMORE & CAROLINA LINE, INC., as Owner of the TUG DOROTHY H and CONTAINER TRANSPORT # 1 for Exoneration from or Limitation of Liability.

478 F. Supp. 383

In the Matter of the Complaint of NORFOLK, BALTIMORE & CAROLINA LINE, INC., as Owner of the TUG DOROTHY H and CONTAINER TRANSPORT # 1 for Exoneration from or Limitation of Liability.

Civ. A. No. 79-164-N.

United States District Court, E. D. Virginia, Norfolk Division.

October 4, 1979.

Walter B. Martin, Jr., Vandeventer, Black, Meredith & Martin, Norfolk, Va., for petitioner.

Francis N. Crenshaw, Crenshaw, Ware & Johnson, Norfolk, Va., for Maritime Terminals, Inc.

William B. Eley, Eley, Rutherford & Leafe, Norfolk, Va., Raymond P. Hayden, Hill, Rivkins, Carey, Loesberg & O'Brien, New York City, for Consolidated Fibres, Inc. and Manila Paper Mills, Inc.

R. Arthur Jett, Jr., Jett, Agelasto, Berkley, Furr & Price, Norfolk, Va., Kirlin, Campbell & Keating, New York City, for United States Lines, Inc.

OPINION AND ORDER

CLARKE, District Judge.

On December 28, 1978, the Tug DOROTHY H and CONTAINER TRANSPORT # 1 arrived at Norfolk International Terminals, after journeying from Baltimore, Maryland. Shortly thereafter, CONTAINER TRANSPORT # 1 capsized and sank, dumping her cargo of containers into the water adjacent to her berth. Norfolk, Baltimore & Carolina Line, Inc. (NBC), a Virginia corporation, has filed this suit for exoneration from or limitation of liability, under the Limitation of Liability Act, 46 U.S.C. § 181-89 (1976),¹ for all claims arising from this mishap.

Responding to NBC's Complaint, United States Lines, Inc. (US Lines), a Delaware corporation, filed a claim against NBC for $7,000,000, representing the amount of damage to 93 containers shipped by US Lines on CONTAINER TRANSPORT # 1, and other costs incurred by US Lines as a result of this incident. NBC has moved for partial summary judgment under Rule 56 of the Federal Rules of Civil Procedure. NBC seeks a ruling from this Court that, under the terms of the tariff and bill of lading, which formed the contract of carriage, any liability which NBC may ultimately have to US Lines is limited to $500 per container.

I. Background

US Lines, through its authorized agent, contracted with NBC for the transportation of 96 containers from Baltimore to Norfolk, Virginia. Twenty-six of the containers were 20 feet in length and 70 were 40 feet in length. Two of the 40-foot containers were empty. All of the other containers held various commodities destined ultimately for other ports of the United States or ports abroad. These containers, the parties agree, were owned by US Lines, and were packed and sealed prior to their delivery to NBC by someone other than NBC or its agents. Thus, NBC was unable actually to observe the contents of these containers.

The first page of the bill of lading, prepared and signed by US Lines, contained the following provisions regarding NBC's liability:

NOTE: Shipper hereby certifies that he is familiar with all the terms and conditions of the said Bill of Lading as referred to above, including those on the back thereof, as well as those on the back hereof as set forth in the tariff which governs the transportation of this shipment, and the said terms and conditions are hereby agreed to by the shipper and accepted for himself and his assigns. Shipper further hereby certifies that unless otherwise specifically declared in the space provided below (and on the reverse side hereof) the value of each loaded or empty container or trailer, including the contents, if any, is hereby specifically agreed or declared by shipper to not exceed $500.00

. . . . .

Shipper hereby authorizes carrier to place excess liability insurance in the amount of (if none—so state) at rate of 10¢ per 100. Thereof in accordance with the terms of the back hereof.

In the blank provided for the declaration of excess liability, three x's were placed, apparently by US Lines. The reverse of the bill of lading contained the following provisions:

(a) All shipments made pursuant to the rates contained in the tariff governing this shipment shall be subject to the provisions of the Carriage of Goods by Sea Act of the United States, approved April 16, 1936, and the carrier is entitled to avail itself of all rights, limitations, exemptions and immunities provided for in said Act, although the contract of carriage evidenced by this Bill of Lading, may be for the carriage of goods between ports of the United States. Pursuant to the provisions of said Act the liability of the carrier, if any, shall be determined on the basis of a value of $500 per customary freight unit (i. e., loaded or empty container or trailer) unless a higher value shall be declared by the shipper in writing, before shipment, on this Bill of Lading.

CLAUSE PARAMOUNT. This bill of lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United States approved April 16, 1936, which shall be deemed to be incorporated herein, and nothing herein contained shall be deemed a surrender by the carrier of any of its rights or immunities or an increase of any of its responsibilities or liabilities under said Act. If any term of this bill of lading be repugnant to said Act, to any extent, such term shall be void to that extent, but no further. The carrier shall be entitled to avail itself of all rights, limitations, exemptions and immunities provided for in said Carriage of Goods by Sea Act, although the contract of carriage evidenced by this bill of lading may be for the carriage of goods between ports of the United States.

VALUATION. In the event of any loss, damage or delay in connection with any loaded or empty container or trailer, exceeding in actual value $500 per customary freight unit (i. e., loaded or empty container or trailer), in lawful money of the United States, the value of said loaded or empty container or trailer shall be deemed to be $500, and the carrier's liability, if any, determined on the basis of said value of $500, unless a higher value shall be declared by the shipper in writing before shipment and inserted in this bill of lading (see paragraph (b)). In no event shall the carrier be liable for more than the loss or damage actually sustained. The carrier shall not be liable for any consequential or special damage and shall have the option of replacing any lost container, trailer and/or contents or repairing any damaged container, trailer and/or contents.

(b) Shippers may, at their option, declare in writing a valuation in excess of the $500 limitation of liability provided in this bill of lading. When a shipper elects to declare a valuation on any loaded or empty container or trailer in excess of the $500 limitation of liability stipulated in this bill of lading, the transportation charges on the shipment will be computed on the basis of the rates named in the tariff governing this shipment, PLUS a charge of 10¢ per $100 of the value that is declared in excess of the $500 amount stipulated in this bill of lading.

NO CARGO INSURANCE PROVIDED

The carrier will not provide insurance for cargo moving pursuant hereto. Any such insurance desired by shipper shall be obtained by shipper at shipper's expense.

DEFINITION OF "TRAILERS" AND "CONTAINERS"

. . . . .

(b) The term "Container" as used in this Bill of Lading shall refer to demountable trailer bodies without wheels or bogies and furnished by the shipper, including their contents, if any.

Beneath these provisions were half a page of lines upon which the shipper was invited to give a "description of Container/Trailer" and to declare its value. These lines were left blank.

As the quoted provisions indicate, the bill of lading expressly incorporated the Carriage of Goods by Sea Act (COGSA) to govern the rights and liabilities of the parties; but for this incorporation, COGSA would not apply to this shipment between two domestic ports. Such shipments generally are subject to COGSA's predecessor statute, the Harter Act, 46 U.S.C. § 190-95 (1976); however, Section 13 of COGSA, 46 U.S.C. § 1312 (1976), expressly authorizes the incorporation of COGSA into bills of lading governing domestic shipments, and further provides that any bill of lading which incorporates COGSA "shall be subjected hereto as fully as if subject hereto by the express provisions of this chapter."

COGSA establishes certain limitations of liability which apply to shipments subject to that Act:

(5) 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, or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other currency, unless the nature of such goods have been declared by the shipper before shipment and inserted in the bill of lading. This declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall not be conclusive on the carrier.

By agreement between the carrier, master, or agent of the carrier, and the shipper another maximum amount than that mentioned in this paragraph may be fixed: Provided, That such maximum shall not be less than the figure above named. In no event shall the carrier be liable for more than the amount of damage actually sustained.

Neither the carrier nor the ship shall be responsible in any event for loss or damage to or in connection with the transportation of the goods if the nature or value thereof has been knowingly and fraudulently misstated by the shipper in the bill of lading.

46 U.S.C. § 1304(5) (1976).

NBC takes the position that its liability to US Lines is governed by COGSA, by reason of its incorporation by reference in the bill of lading; that each of the 93 containers is a separate "package" within the meaning of section 4(5) of that Act; and that its liability for damage to these containers and their contents accordingly is limited to $500 per container, absent a declaration of their higher value. Predictably, US Lines disputes this...