Csav v. I.T.O.

• Decision Date: 18 September 1996
• Docket Number: Civil Action No. S-95-1838.
• Citation: 940 F.Supp. 855
• Parties: COMPANIA SUD AMERICANA DE VAPORES, S.A., Plaintiff, v. I.T.O. CORP. OF BALTIMORE, et al., Defendants.
• Court: U.S. District Court — District of Maryland

940 F.Supp. 855

COMPANIA SUD AMERICANA DE VAPORES, S.A., Plaintiff, v. I.T.O. CORP. OF BALTIMORE, et al., Defendants.

Civil Action No. S-95-1838.

United States District Court, D. Maryland.

September 18, 1996.

Opinion Denying Reconsideration October 7, 1996.

COPYRIGHT MATERIAL OMITTED

Manfred W. Leckszas, Warren B. Daly, Jr., George H. Falter, III, Ober, Kaler, Grimes & Shriver, Baltimore, MD, for Plaintiff.

JoAnne Zawitoski, Semmes, Bowen & Semmes, Baltimore, MD, for I.T.O. Corp. of Baltimore.

Thomas S. Basham, Bergen & Tripoda, Timonium, MD, for Coastwide & Atlantic.

MEMORANDUM OPINION AND ORDER

SMALKIN, District Judge.

The parties to this indemnity action in admiralty are plaintiff Compañia Sud Americana De Vapores, S.A., (CSAV), and defendants I.T.O. Corporation of Baltimore (I.T.O.), Coastwide Cargo Securing Co., Inc., (Coastwide) and Atlantic Marine Contractors, Inc. (Atlantic Marine). The action is before the Court on the cross-motions of CSAV and I.T.O. for summary judgment. CSAV seeks summary judgment against I.T.O., or, "[i]n the alternative," against I.T.O. and Coastwide jointly and severally. (CSAV's Mot.Summ.J. at 3). I.T.O. seeks summary judgment against CSAV. The summary judgment motions have been fully briefed and no oral hearing is necessary.¹ Local Rule 105.6 (D.Md.).

Factual and Procedural Background

The parties have stipulated to the following facts. CSAV, a Chilean ocean carrier, entered into a Stevedore and Marine Services Agreement with I.T.O., a stevedoring company, whereby I.T.O. would provide stevedoring and other terminal services to all CSAV vessels calling at the Port of Baltimore. Pursuant to this agreement, I.T.O. took delivery of a Lorain crane at the South Locust Point Marine Terminal in Baltimore on November 13, 1992. I.T.O. was to store the crane briefly and then load it onto the M/V LIMARI, a CSAV vessel, for transportation to Valparaiso, Chile.

In early December, 1992, employees of the defendant Coastwide lashed the crane onto a flatrack for transportation to the M/V LIMARI. The Coastwide employees performed their services "at CSAV's request." (Stipulation of Facts at 3.) I.T.O. employees loaded the flatrack on an unpowered wheeled chassis known as a mafi. While an I.T.O. yard hustler operator was taking the crane to the ship, the flatrack slipped from the mafi and fell to the pier. The crane was damaged and was never loaded aboard the M/V LIMARI.

The purchaser of the crane, Astilleros y Maestranzas de la Armada (ASMAR), had insured the cargo through a Chilean insurance company. The cargo underwriters paid $90,444.34 as compensation for the damage to the crane.² Thereafter, the cargo underwriters presented a claim in writing to CSAV's general agent in New York, demanding the full amount of their payment. For its part, CSAV had formally notified I.T.O. in early December, 1992, that it intended to hold I.T.O. fully responsible for the damage to the crane. In October, 1993, CSAV told I.T.O. that the cargo underwriters had made a claim against CSAV. In December of that year, CSAV's New York general agent wrote to I.T.O., explaining that CSAV felt itself to be in imminent danger of suit in Chile and that it wished to settle the underwriters' claim. I.T.O. responded that it disagreed with CSAV's proposed course of action because, in I.T.O.'s view, any suit by the underwriters would be time-barred. As an alternative to the proposed settlement, I.T.O. suggested that CSAV and I.T.O. should join together to file a preemptive declaratory judgment action in the United States, seeking a declaration that the underwriters' claim was barred by both contractual and statutory limitations provisions. A few days after I.T.O. had made its proposal, CSAV informed I.T.O. that the cargo underwriters had made a final settlement proposal of $65,000 and had threatened to sue CSAV immediately in Chile if CSAV did not accept their proposal by early February. CSAV told I.T.O. that it intended to settle with the cargo underwriters and that it would not join I.T.O. in any proposed declaratory judgment action in the United States. Accordingly, CSAV settled the claim in Chile for $65,000 in early February, 1994, before any suit had been filed. In the present action, CSAV seeks indemnification from I.T.O. I.T.O. denies liability, arguing, inter alia, that CSAV's decision to settle with the underwriters was unreasonable as a matter of law.

The principal issue dividing the parties with respect to the prudence of CSAV's settlement involves choice of law. According to I.T.O., the one-year limitations period provided by § 1303(6) of the Carriage of Goods by Sea Act (COGSA) applies to any action against I.T.O. to recover damages for the injury to the crane. CSAV's bill of lading for the crane includes a clause paramount which provides, inter alia, that

[f]or shipments to or from the United States ... this Bill of Lading shall be deemed to incorporate and shall have effect subject to the provisions of the United States Carriage of Goods Act.... The provisions stated in said acts shall ... govern before the Goods are loaded on and after they are discharged from the ship and throughout the entire time that they are in the custody of the Carrier at a United States ... Port.

(Bill of Lading, Clause 2, Exh. C to I.T.O.'s Mot.Summ.J.). The bill of lading also includes a Himalaya Clause, which entitles "stevedores, longshoremen, terminal operators and others used by the Carrier in the performance of its work" to "all defenses, exemptions and immunities from and limitations of liability which the carrier has under the provisions of this Bill of Lading and under the United States Carriage of Goods by Sea Act." (Id., Clause 6.) Consequently, I.T.O. argues, COGSA is a part of the contractual relationship between the parties and governs I.T.O.'s potential liability for damage to the crane.³

I.T.O. specifically seeks to invoke § 1303(6) of COGSA, which provides that "the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered." Because no suit had been brought within the relevant one year period, I.T.O. contends that neither CSAV nor I.T.O. had any further exposure to liability for damage to the crane. As a consequence, in I.T.O.'s view, CSAV's decision to settle with the cargo underwriters in February, 1994 was unreasonable as a matter of law.

CSAV, of course, takes an entirely different view of the case. CSAV recognizes that COGSA is incorporated into the contract set forth in the bill of lading and has stipulated that "if cargo underwriters had brought their subrogation claim for damage to the Lorain crane in a United States court, CSAV, ITO [sic] and Coastwide all would have been entitled to the benefit of all applicable defenses under COGSA." (Stipulation of Facts at 4.) CSAV contends, however, that the parties' agreement with respect to COGSA is immaterial because cargo underwriters did not file suit in the United States but, rather, threatened to sue CSAV in Chile. The parties have stipulated that Chile has adopted "an international convention known as the Hamburg Rules ... as its law governing the carriage of goods by sea." (Stipulation of Facts at 3.) The Hamburg Rules, unlike COGSA, provide a two-year period of limitations. (Id., art. 20, § 1.)⁴

CSAV argues that the Hamburg Rules, rather than COGSA, would supply the limitations period for any litigation filed in a Chilean court to recover damages for the injury to the Lorain crane. If applicable, the Hamburg Rules would render the COGSA provisions incorporated into the parties' bill of lading, including the one-year period of limitations, "null and void." Hamburg Rules, art. 23 § 1. CSAV therefore argues that it acted reasonably when it settled the underwriter's claim in Chile, where it had been threatened with suit, even though the limitations period provided by COGSA had expired.

I.T.O.'s sole argument in its motion for summary judgment was that CSAV's settlement of a time-barred claim was a gratuitous payment which was unreasonable as a matter of law. Responding to CSAV's summary judgment motion, however, I.T.O. asserts that CSAV has failed to establish any right to indemnification for a number of additional reasons. According to I.T.O., CSAV failed to tender the defense of the underwriters' claim to I.T.O., failed to establish that an indemnitor/indemnitee relationship existed between itself and I.T.O., failed to demonstrate that it was required to pay the underwriters for the damage to the crane, failed to show that its settlement with cargo underwriters was reasonable and failed to establish that I.T.O. was legally or factually responsible for the damage to the crane.

Summary Judgment Standards

Summary judgment may be entered in a civil case if "the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits ... show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). In deciding cross-motions for summary judgment, this Court must, with regard to each motion, consider the facts and draw its inferences in the light most favorable to the party opposing the motion. See Tuck v. Henkel Corp., 973 F.2d 371, 374 (4th Cir. 1992), cert. denied, 507 U.S. 918, 113 S.Ct. 1276, 122 L.Ed.2d 671 (1993). Because the parties have entered into a stipulation of facts which describes most of the events underlying the action, this case may be an appropriate one for disposition through summary judgment.

Choice of Law

I.T.O.'s argument that suits for damage to the crane should have been filed within the COGSA limitations period, rather than within the period provided by the Hamburg Rules, has both a substantive and a procedural aspect. At the procedural level, I.T.O. contends...