Continental Ins. Co. v. Columbus Line, Inc.

• Decision Date: 17 April 2003
• Docket Number: No. B157323.,B157323.
• Citation: 133 Cal.Rptr.2d 199,107 Cal.App.4th 1190
• Court: California Court of Appeals Court of Appeals
• Parties: CONTINENTAL INSURANCE CO., Plaintiff and Respondent, v. COLUMBUS LINE, INC., Defendant and Appellant.

133 Cal.Rptr.2d 199

107 Cal.App.4th 1190

CONTINENTAL INSURANCE CO., Plaintiff and Respondent, v. COLUMBUS LINE, INC., Defendant and Appellant.

No. B157323.

Court of Appeal, Second District, Division 5.

April 17, 2003.

As Modified May 2, 2003.

Russell, Mirkovich & Morrow, Joseph N. Mirkovich and Margaret E. Morrow,

Long Beach, for Defendant and Appellant.

Gibson Robb & Lindh, Stanley L. Gibson and Joshua E. Kirsch, San Francisco, for Plaintiff and Respondent.

TURNER, P.J.

I. INTRODUCTION

Defendant, Columbus Line, Inc., appeals from a $189,328 judgment, plus interest, entered after a court trial. The trial court found defendant was liable for $189,328, plus interest, for damage to a yacht mast owned by America True. The action was brought by plaintiff, Continental Insurance Co., the mast owner's insurer. Plaintiff filed a summary adjudication motion challenging defendant's sixth affirmative defense. We conclude: plaintiff failed to sustain its summary adjudication burden of production; the summary adjudication motion should have been denied; and the judgment must be reversed.

II. BACKGROUND

The complaint alleged that defendant is a common carrier. On July 16, 1999, defendant received a mast as cargo. Defendant was to carry the mast from Los Angeles, California to Auckland, New Zealand. Before being loaded on board defendant's ship, the mast was damaged. The damage was so severe that the mast could not be loaded on defendant's ship and carried to New Zealand. The mast's value depreciated by $189,328 as a result of the damage. Plaintiff agreed to indemnify the mast owner for loss or damage to the cargo while in transit. Plaintiff paid the mast owner $189,328. Defendant has refused to pay plaintiff for the damage to the mast.

Defendant answered the complaint and asserted a number of affirmative defenses including the one at issue here, which is whether plaintiffs damages were limited to $500 based on the Carriage of Goods by Sea Act and a bill of lading. Specifically, defendant relied on title 46 United States Code Appendix section 1304(5) which states in part: "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 and value 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."

On September 24, 2001, plaintiff filed a summary adjudication motion, which sought a ruling that defendant's sixth affirmative defense was without merit. In addition to the language in the bill of lading, which will be related shortly, the sole evidence relied upon by plaintiff was as follows: the complaint alleged damage to cargo in transit from Los Angeles to Auckland, New Zealand; the sixth affirmative defense alleged that defendant's liability was limited to $500 pursuant to the Carriage of Goods by Sea Act; defendant alleged that the $500 limitation existed because of language in the bill of lading and tariff; no tariff had been produced by defendant; and defendant's standard bill of lading did not contain any statement that its liability was limited to $500 or any other amount.

Paragraph 3 of the bill of lading states in part: "3. RESPONSIBILITY; APPLICABLE LEGISLATION [¶] a) Except as otherwise provided herein, the Carrier shall be responsible for the Goods from the time received at the Port of Loading until delivered (or should have been delivered) at the Port of Discharge and also during any previous or subsequent period of carriage performed under this Bill of Lading, subject to the provisions of any legislation compulsorily applicable to this Bill of Lading (1) which gives effect to the Hague Rules contained in the International Convention on the Unification of Certain Rules Relating to Bills of Lading dated at Brussels, August 25, 1924, including the specific adaptations thereof, such as the Carriage of Goods by Sea Act of the United States (hereinafter `COGSA') or (2) which gives effect to the said Rules as amended by the Protocols to Amend the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, dated at Brussels, February 23, 1968 (the `Visby Amendments') and December 21, 1979 (the `SDR Protocol'), including, if compulsorily applicable, the Australian Carriage of Goods by Sea Act 1991 or (3) where the Hague Rules, adaptations thereof or Hague Visby Amendments (including the SDR Protocol) are not compulsorily applicable, this Bill of Lading shall take effect subject to any national law which may be in force at the Port of Loading or place of issue of the Bill of Lading making the United National Convention on the Carriage of Goods by Sea [Act,] 1978 (the 'Hamburg Rules') compulsorily applicable to this Bill of Lading, in which case this Bill of Lading shall have effect subject to the Hamburg Rules which shall nullify any stipulation derogating therefrom to the detriment of the Merchant. The applicable legislation/national law and any amendments shall govern during the Carrier's entire period of responsibility. [¶] b) In the absence of compulsorily applicable legislation/national law, the `Hague Rules 1924' shall govern from the time received at the Port of Loading until the time delivered at the Port of Discharge and during all waterborne transport, including multimodal transport, but as to all non-water multimodal transport, except as stated above or elsewhere herein. Carrier's liability shall not in any event exceed 2.5 SDRs (Special Drawing Rights) per kilo of gross weight of the Goods."

In addition, paragraph 17 of the bill of lading provides: "17. LIMITATION OF LIABILITY [¶] The limitation of liability which shall be applicable and to which the Carrier shall be entitled is that set forth in the legislation/national law which is compulsorily applicable under the circumstances. In the absence of compulsorily applicable legislation/national law, the limitation applicable per Clause 3. b) hereof shall govern and shall also extend to Goods shipped in bulk. [¶] Where the Hague Rules, 1924 or COGSA, 1936 is applicable, as per Clause 3. a) (1) hereof, Carrier's liability shall be limited in accordance therewith, which limitation shall also apply to a Container which, although furnished by the Carrier, is characterized as a package or a lump sum freight is assessed, regardless of any numerical reference which may appear elsewhere on the reverse side hereof, and conclusively to a Container which is not furnished and/or stuffed by Carrier, unless the nature of the Goods and valuation thereof shall have been declared by Merchant before shipment, inserted in the Bill of Lading (in special box entitled `Declared value' on reverse side hereof) and extra freight paid if required. In no event shall the limitation amount exceed the Declared valued. In the event any part of this provision is held invalid during a period when compulsory legislation/national law shall apply, it shall nevertheless apply during all noncompulsory periods during which the Carrier bears responsibility for the Goods. [¶] Nothing herein shall be construed as waiver of limitation." Defendant alleges that its liability, if any, is limited to $500 for the shipment as asserted in its sixth affirmative defense pursuant to the Carriage of Goods by Sea Act. Relying on Komatsu, Ltd. v. States S.S. Co. (9th Cir. 1982) 674 F.2d 806, 809, plaintiff argued in its moving papers: "A carrier of cargo cannot limit its liability by incorporating a statute or other documents by reference into its bill of lading. Under established law [Ninth Circuit Law] the carrier must expressly state the dollar amount of the limitation in the bill of lading. Since [defendant's] bill of lading failed to do so, [defendant] cannot limit its liability."

The trial court summarily adjudicated that there was no merit to the sixth affirmative defense based on the bill of lading limitation of liability provision. The matter then proceeded to a court trial. In a statement of decision, the trial court stated it had summarily adjudicated that the sixth affirmative defense lacked merit because the bill of lading did not contain valid limitation language in that it merely incorporated the Carriage of Goods by Sea Act by reference, which was insufficient under Komatsu, Ltd. v. States S.S. Co., supra, 674 F.2d at page 809. After rejecting defendant's additional affirmative defenses, the trial court found that plaintiff was entitled to judgment in the amount of $189,328, plus interest. Defendant's timely appeal from the judgment challenges the trial court's ruling summarily adjudicating that the sixth affirmative defense based on the Carriage Of Goods by Sea Act $500 damage limitation had no merit.

III. DISCUSSION

A. Standard of Review

In Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850-851, 107 Cal. Rptr.2d 841, 24 P.3d 493, the Supreme Court described a party's burdens on summary judgment or adjudication motions as follows: "[F]rom commencement to conclusion, the party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law. That is because of the general principle that a party who seeks a court's action in his favor bears the burden of persuasion thereon. [Citation.] There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.... [¶] [T]he party moving for summary judgment bears an...