Crowley American Transport, Inc. v. Richard Sewing Mach. Co., s. 97-4011

• Decision Date: 14 April 1999
• Docket Number: 97-5390,Nos. 97-4011,s. 97-4011
• Citation: 172 F.3d 781
• Parties: 12 Fla. L. Weekly Fed. C 720 CROWLEY AMERICAN TRANSPORT, INC., Plaintiff-Appellee, v. RICHARD SEWING MACHINE CO., Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 781

172 F.3d 781

12 Fla. L. Weekly Fed. C 720

CROWLEY AMERICAN TRANSPORT, INC., Plaintiff-Appellee, v. RICHARD SEWING MACHINE CO., Defendant-Appellant.

Nos. 97-4011, 97-5390.

United States Court of Appeals Eleventh Circuit.

April 14, 1999.

R. Lawrence Bonner, Homer & Bonner, P.A., Miami, FL, for Defendant-Appellant.

Daniel Warren Raab, Raab & Strader, P.A., Miami, FL, George W. Chesrow, George W. Chesrow, P.A., Coral Gables, FL, for Plaintiff-Appellee.

Appeals from the United States District Court for the Southern District of Florida.

Before TJOFLAT and DUBINA, Circuit Judges, and SMITH ^*, Senior Circuit Judge.

TJOFLAT, Circuit Judge:

The appellant, Richard Sewing Machine Co., entered into a contract with the appellee, Crowley American Transport, Inc., to transport certain cargo ¹ from Miami, Florida, to the "Free Trade Zone" in Managua, Nicaragua. Once there, the contract provided that Crowley would notify both Industrias Sama & Cia, Ltda. ("Sama"), and a Nicaraguan bank regarding the cargo's arrival.

Crowley delivered the cargo to the Free Trade Zone as promised, and notified Sama--but not the bank--of its arrival. The cargo was then entrusted to the Nicaraguan customs authorities, who were expected to release the cargo upon presentation of the original bills of lading. ² Richard had given the original bills of lading to the Nicaraguan bank, with instructions to tender them to Sama at such time as Sama executed time drafts in Richard's favor totaling $473,704. Sama went to the bank after the cargo arrived, but refused to execute the required time drafts. Consequently, the bank refused to release the bills of lading, and ultimately returned them to Richard.

Richard, upon learning that the cargo remained unclaimed, contracted with Crowley for the return of the cargo from Nicaragua. Crowley, however, learned that Sama had obtained the cargo from the Nicaraguan customs authorities despite failing to present the original bills of lading. ³ Crowley obtained a Nicaraguan court order demanding return of the cargo; Sama then gave the cargo to Crowley, who shipped it back to Miami. According to Richard, the cargo sustained substantial damage while in Sama's possession.

Richard refused to pay for the transportation to and from Nicaragua, and Crowley brought suit for breach of contract in the United States District Court for the Southern District of Florida to collect the amounts due. ⁴ Richard defended on the ground that Crowley had failed to perform its obligations under the initial contract by (1) failing to notify the bank when the cargo arrived in Nicaragua, and (2) failing to protect the cargo from misappropriation. Richard also counterclaimed for the damage to the cargo on breach of contract and negligence theories.

Both parties moved for summary judgment on all claims. The district court granted Crowley's motion in full, granting summary judgment for Crowley on its breach of contract claims and on Richard's counterclaims. Crowley then filed a motion for summary judgment on the issue of damages, including a request for attorneys' fees; the district court granted the motion. Richard now appeals, on the same grounds (failure to notify the bank and failure to protect the cargo from misappropriation) upon which it relied in the district court.

I.

We begin by addressing the notification issue. It is clear that Crowley had a contractual duty to notify the bank upon arrival in Nicaragua: The contract has a section in which the shipper designates parties to be notified upon arrival of the cargo; Richard designated the bank and Sama. Furthermore, it is undisputed that Crowley did not notify the bank upon the cargo's arrival. Consequently, there can be no dispute that Crowley breached the contract.

Establishing that Crowley breached the contract, however, is not sufficient to excuse nonperformance by Richard; Richard must also establish that the breach was material. See 17A Am.Jur.2d Contracts § 701 (1991) ( "[W]here the nonperformance of one party to a contract is innocent, does not thwart the purpose of the bargain, and is wholly dwarfed by that party's performance, the breaching party has substantially performed its obligations and the non-breaching party is not excused from its responsibility under the contract."). In this case, Crowley performed its obligation of delivering the cargo to the Free Trade Zone. The only apparent purpose of the notification provision was to let the bank and Sama know that it was time to commence the exchange of the bills of lading for the bank drafts. This goal was accomplished by providing notification to Sama, which then went to the bank to discuss the documentary transaction. ⁵ There is no evidence to indicate that, had Crowley given the bank immediate notification of the cargo's arrival, the bank would have prevented Sama's misappropriation of the cargo. Therefore, the breach alleged by Richard was immaterial, and did not excuse Richard's nonperformance.

For this same reason, Richard's counterclaim of breach of contract fails. A party cannot recover damages for breach of contract unless it can prove that the damages were proximately caused by the breach. See 5 Arthur Linton Corbin, Corbin on Contracts § 997 (1964). Because there is no evidence that the bank would have prevented the misappropriation (and the consequent damage to the cargo) had Crowley notified it of the cargo's arrival Richard has shown no damages that were proximately caused by Crowley's breach. Consequently, whatever damages Richard may have suffered from Sama's treatment of the cargo, Richard cannot recover those damages from Crowley solely on the basis of Crowley's failure to notify the bank.

Next, we address the question whether Crowley had a contractual duty to prevent Sama's misappropriation of the cargo. Richard alleges that Crowley was responsible for delivering the cargo to Sama upon Sama's presentation of the original bills of lading; because Crowley relinquished possession of the cargo without receiving the original bills of lading, it failed to comply with its contractual duty of delivery. The contract, however, stated only that Crowley was to deliver the cargo to the Free Trade Zone and to notify Sama of its arrival. It established no duty on Crowley's part for continued oversight of the cargo until such time as Sama presented the original bills of lading. Richard has presented no evidence of a separate agreement for delivery directly to Sama, nor has it presented parol evidence regarding an ambiguity in the contract that would suggest that the contract required delivery directly to Sama. Thus, the misappropriation of the cargo by Sama after delivery to the Free Trade Zone cannot be considered a breach of the contract and does not excuse Richard's nonperformance. For the same reason, Richard's counterclaim for breach of contract on this ground also fails.

Finally, we address Richard's counterclaim for negligence. Pursuant to section 1 of the Harter Act, 46 U.S.C.App. § 190 (1994), a carrier has a non-waivable duty, independent of any contractual duties, to effect a "proper delivery" of cargo entrusted to it. ⁶ See Metropolitan Wholesale Supply, Inc., v. M/V Royal Rainbow, 12 F.3d 58, 61 (5th Cir.1994); English Elec. Valve Co. v. M/V Hoegh Mallard, 814 F.2d 84,...