DB Trade Intern., Inc. v. Astramar

• Decision Date: 30 August 1984
• Docket Number: No. 82 C 6283.,82 C 6283.
• Citation: 592 F. Supp. 1215,1985 AMC 1476
• Court: U.S. District Court — Northern District of Illinois
• Parties: DB TRADE INTERNATIONAL, INC., Plaintiff, v. ASTRAMAR, Mitsui Engineering & Shipbuilding Co., Ltd., a/k/a Mitsui Zosen K.K., et al., Defendants.

592 F. Supp. 1215

1985 AMC 1476

DB TRADE INTERNATIONAL, INC., Plaintiff, v. ASTRAMAR, Mitsui Engineering & Shipbuilding Co., Ltd., a/k/a Mitsui Zosen K.K., et al., Defendants.

No. 82 C 6283.

United States District Court, N.D. Illinois, E.D.

August 30, 1984.

Abraham Diamond, Steven C. Weiss, Michael A. Snyder, S. Michael Ritter, Snyder & Gerard, Chicago, Ill., for plaintiff.

Geoffrey G. Gilbert, Robert D. Barnes, McBride & Baker, Harold Witsaman, Ray, Robinson, Hannine & Carle, Chicago, Ill., for defendants.

MEMORANDUM OPINION AND ORDER

WILLIAM T. HART, District Judge.

In this action DB Trade International, Inc. ("DB Trade") seeks to recover approximately $99,000, plus costs and fees, for loss sustained when a shipment of steel from Argentina arrived in damaged condition. DB Trade's claim is an admirality claim within this Court's jurisdiction pursuant to 28 U.S.C. § 1333, and also 28 U.S.C. § 1337. Plaintiff and two of the defendants have filed cross-motions for partial summary judgment on the issue of damages, the matters currently before the Court.

In connection with these motions, the parties have submitted a stipulation of uncontested facts. The defendants maintain that plaintiff's recovery is limited to the $11,500 by the Carriage of Goods by Sea Act ("COGSA"). 46 U.S.C. § 1304(5). For the reasons set forth below, the defendants are not entitled to the protection of the COGSA limitation of liability provision. Accordingly, the defendants' motion is denied and the plaintiff's motion is granted.

FACTS

Since January, 1980, plaintiff DB Trade has been engaged in the business of importing steel and other products from overseas. On September 10, 1981, DB Trade contracted to purchase cold rolled steel from Columbia International Investments and also contracted to resell the steel to National Material Corporation in Illinois. Propulsora Siderurgica SAIC ("Propulsora") manufactured the steel in Argentina and made arrangements for its shipment from Argentina to Chicago. Propulsora arranged for shipment by engaging Fletamar S.A.C., a local broker and shipping agent.

The steel was loaded on board the ocean going vessel Scandinavia Maru at Ensenda, Argentina between October 16 and 23, 1981. The Scandinavia Maru is owned by defendants Mitsui Engineering & Shipbuilding Co., Ltd. ("Mitsui") and Showa Aircraft Industry Co., Ltd. ("Showa") who had chartered the vessel to Fuji Marine Co., Ltd. ("Fuji"). Fuji, in turn, subchartered the vessel to its vessel managing subsidiary Fuji Kisen Kaisha, Ltd. ("FujuKisen"), who subchartered the vessel to Cari Bulk Carriers, A.P.S. of Copenhagen, Denmark, who, in turn, subchartered the vessel to defendant Astramar CIA Argentina de Navegacion S.A.C. ("Astramar") for the voyage from Argentina to Chicago.

After loading the steel on board, the ship's mate (an employee of Fuji) prepared and signed receipts for the goods. Based on these receipts, Fletamar then prepared a cargo manifest and signed the bills of lading issued by Astramar. Under the customary practice, the carrier (Astramar) provides the shipper (Fletamar) with blank form bills of lading. The shipper completes the forms with the requested information, signs the bills and returns them to the carrier. The parties have stipulated that Fletamar and Astramar followed this customary practice. Although Astramar's bill of lading form does not contain a specific space labelled "valuation" in which the shipper may insert the actual value of the shipment, the form also has no restriction prohibiting the shipper from including such a valuation in its description of the goods. The forms used here contain the following provision on their face:

Paramount Clause

This Bill of Lading shall have effect subject to the provisions of any legislation relating to the carriage of goods by sea which incorporates the rules relating to Bills of Lading contained in the International Convention, dated Brussels 25th August, 1924, and any modification thereof which is compulsorily applicable to the contract of carriage herein contained.

The COGSA is the legislation in this country which incorporates these treaty provisions. It contains the following section on limitations of liability:

(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 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.

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) (emphasis added). Neither DB Trade, Propulsora nor Fletamar requested that a declaration of actual value be inserted in the bills of lading. DB Trade's marine cargo insurer, Employers Insurance of Wausau, and the underwriter, American Marine Underwriters, Inc. also failed to request a declaration of actual value. DB Trade brought this action after twenty-three of the steel coils arrived in Chicago in damaged condition.

DISCUSSION

If applicable, the COGSA limitation of liability provision would cap DB Trade's recovery at $11,500 (23 × $500), as the parties do not dispute that each coil is a "package" as defined in § 1304(5). Defendants Showa and Mitsui contend that the § 1304(5) limitation applies, since the shipper failed to include a declaration of actual value in the bills of lading. On its face, the statute appears to mandate this result. However, the courts have added a gloss to the statute, requiring a carrier who seeks the COGSA's protection to provide its shipper "a fair opportunity to chose between a higher or lower liability by paying a correspondingly greater or lesser charge." Komatsu, Ltd. v. States S.S. Co., 674 F.2d 806, 809 (9th Cir.1982) (citations omitted). Accordingly, the issue presented here is whether Astramar afforded DB Trade and its shipper, Fletamar, a "fair opportunity" to avoid the COGSA limitation.

The Seventh Circuit has not spoken to the issue of what constitutes such a fair opportunity. In addition, the Fifth and Ninth Circuits have taken conflicting views of the meaning of "fair opportunity." In a recent line of cases, the Ninth Circuit has adopted the following view:

The carrier bears the initial burden of proving `fair opportunity.' Normally, the carrier

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