Fortis Corp.Orate Ins. v. Viken Ship Mgmt. As

• Decision Date: 10 March 2010
• Docket Number: Nos. 08-4478, 08-4479.,s. 08-4478, 08-4479.
• Citation: 597 F.3d 784
• Parties: FORTIS CORPORATE INSURANCE, SA, Plaintiff-Appellee/CrossAppellant, v. VIKEN SHIP MANAGEMENT AS, Defendant-Appellant/CrossAppellee.
• Court: U.S. Court of Appeals — Sixth Circuit

597 F.3d 784

FORTIS CORPORATE INSURANCE, SA, Plaintiff-Appellee/CrossAppellant, v. VIKEN SHIP MANAGEMENT AS, Defendant-Appellant/CrossAppellee.

Nos. 08-4478, 08-4479.

United States Court of Appeals, Sixth Circuit.

Argued: Oct. 14, 2009.

Decided and Filed: March 10, 2010.

ARGUED: Irene C. Keyse-Walker Tucker Ellis & West LLP, Cleveland Ohio, for Appellant. David T. Maloof, Maloof & Browne & Eagan LLC, Rye, New York, for Appellee. ON BRIEF: Irene C Keyse-Walker, Susan M. Audey, Henry E Billingsley, II, Tucker Ellis & West LLP, Cleveland, Ohio, for Appellant. David T. Maloof, Maloof & Browne & Eagan LLC, Rye, New York, for Appellee.

Before: O'CONNOR, Associate Justice (Ret.); ^* MOORE and COOK, Circuit Judges.

OPINION

SANDRA DAY O'CONNOR, Associate Justice (Retired).

This is a maritime shipping case involving a claim for rust damage to steel coils caused by exposure to seawater during a journey from Szczecin, Poland to Toledo Ohio. The central issue in this appeal is whether a ship manager charged with providing a Master, officers and crew, and performing various other ship-management tasks for the shipping vessel qualifies as a "carrier" under the Carriage of Goods by Sea Act (COGSA). We agree with the district court's finding that such a manager is not a COGSA carrier, and therefore COGSA's one-year statute of limitations does not bar the underlying suit. We also reject Appellant's argument that the district court's judgment rested on clearly erroneous factual findings, and we AFFIRM.

I.

Fortis Corporate Insurance insured a cargo of 176 steel coils belonging to Metallia LLC. The coils were carried from Szczecin, Poland to Toledo, Ohio aboard the M/V Inviken, a 17, 313 gross ton bulk carrier. During the journey, seawater entered the cargo hold containing the steel coils and caused significant rust damage to 99 of them. Fortis, as underwriter, paid Metallia $375,000 for the damage to the steel coils. Fortis then brought a lawsuit as Metallia's subrogee, alleging negligence and breach of bailment against the Inviken's owner, Viken Lakers, along with the ship's manager, Viken Ship Management (VSM).

Fortis I

This dispute has previously come before this court. See Fortis Corporate Ins. v Viken Ship Mgmt, 450 F.3d 214 (6th Cir. 2006). We provide a brief account of the facts giving rise to the earlier appeal because they are relevant to some of the issues presented here.

In 1998, FedNav International (a Canadian company) chartered the Inviken from Viken Lakers for a period of several years. This arrangement is referred to as a time charter; it basically allowed FedNav to use the Inviken to transport cargo on an as-needed basis for the duration of the charter period. In the time-charter agreement, Viken Lakers provided FedNav with assurances that the Inviken was fit to traverse the Great Lakes and, more specifically, that it was a suitable vessel for use in the Toledo port. In 2002, Metallia subchartered the Inviken from FedNav for the Toledo-bound voyage transporting the cargo of steel coils at issue in this case. When the steel coils were damaged during that voyage, Fortis (as Metallia's subrogee) brought suit against Viken Lakers and VSM alleging negligence and breach of bailment.

The United States District Court for the Northern District of Ohio initially dismissed Fortis's lawsuit, finding that it lacked personal jurisdiction over Viken Lakers and VSM (Norwegian companies). The district court noted that the touchstone of personal jurisdiction is whetherthe defendant purposefully established "minimum contacts" in the forum state, such that it could anticipate being haled into court there. See Asahi Metal Indus. Co. v. Superior Court of Cat, 480 U.S. 102, 108-09, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987) (plurality opinion); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). In evaluating the jurisdictional arguments, the district court found that Viken Lakers and VSM were "in essence, the same company, " and concluded that there was no jurisdiction because Viken Lakers and VSM had not established the necessary minimum contacts in Ohio. It reasoned that Viken Lakers derives its income from providing its ships to timecharterers, none of whom were American; it was FedNav, not Viken Lakers or VSM, that chose to use the Inviken to ship through the Toledo port. The court concluded that providing a ship to a Canadian company did not establish the necessary contacts with Ohio, even though the Canadian company made clear its intent to use the ship to carry cargo to Ohio.

Fortis appealed that judgment, and this court reversed. In finding that there was jurisdiction over Viken Lakers and VSM, a panel of this court explained:

[Defendants outfitted and rigged their ships to sail into the Great Lakes. Defendants confirmed in the Charter Agreement that "the vessel is suitable for Toledo." Defendants' officers testified that the vessels were rigged to travel to the Great Lakes. They entered into a long-term agreement with a charterer that made its money shipping into the Great Lakes. Not counting travel time, they earned $558,000 for the number of days spent in Ohio ports over five years. Defendants had more than sufficient notice that they might be subject to jurisdiction here....

Fortis, 450 F.3d at 221. The case was remanded to the district court for further proceedings.

Fortis II

On remand, Viken Lakers and VSM moved for summary judgment on the basis that the suit was filed beyond the one-year statute of limitations provided for in COGSA, 49 Stat. 1207 (1936), (codified at 46 U.S.C. § 30701 (Notes)). COGSA generally applies "to all contracts for carriage of goods by sea to or from ports of the United States in foreign trade." 46 U.S.C § 30701 (Notes § 13). COGSA provides that "carriers" are subject to certain statutory "responsibilities and liabilities, " and in turn they are provided with certain "rights and immunities, " such as the one-year statute of limitations invoked by Viken Lakers and VSM. Fortis did not dispute that the suit was brought outside of the one-year statutory period provided for in COGSA, but instead argued that COGSA did not apply to this dispute because neither Viken Lakers nor VSM were "carriers" covered by the terms of that Act.

The district court agreed with Viken Lakers that it was a "carrier" and that the suit against it was barred by the one-year statute of limitations. However, it found that VSM was not a COGSA carrier and therefore could not invoke the one-year statute of limitations. COGSA provides that "[t]he term 'carrier' includes the owner or the charterer who enters into a contract of carriage with a shipper, " 46 U.S.C. § 30701 (Notes § 1(a)), and the district court found that VSM could not qualify as a carrier because it was not an owner or charterer party to the contract of carriage. Summary judgment was granted in favor of Viken Lakers, and the claims against VSM proceeded to a bench trial.

At the bench trial, the parties stipulated that the amount of damages to the steelcoils was $375,000, that it was caused by seawater entering the cargo hold where the coils were stored during the voyage, and that the seawater entered through a crack in the ship's hull. The question at trial was whether the crew should have noticed and repaired the leak before the seawater damaged the steel coils. Critical to answering that question, and a subject of dispute between the parties, is when the crack in the ship's hull occurred.

Immediately prior to the voyage at issue, the Inviken was used to transport cargo to Antwerp, Belgium. It remained in Antwerp for several days until October 10, 2002, when it departed for Szczecin. After the Inviken arrived in Szczecin, the steel coils at issue in this case were loaded onto the ship in cargo hold number two, and the Inviken departed Szczecin for Toledo on October 17. Immediately after the departure, the crew performed bilge soundings to check the amount of water in the ship's bilges. The depth of the bilges for hold number two was.65 meters. The initial bilge sounding in hold number two was documented in the ship's log as empty, indicating that there was no water in the bilges just after departure. Bilge soundings were then taken each morning of the voyage. The daily soundings for the number two hold during the following three days steadily increased. On October 18, the sounding indicated that the bilges were filled to.12/.35 meters (the two readings represent the port and starboard side, respectively); on October 19, it was.29/.35 meters; on October 20, it was.56/.54 meters. These readings were considerably higher than those recorded for the other cargo holds on the ship.

It was not until after the October 19 sounding of.29/.35 that the crew made a visual inspection of the number two hold. The Inviken's October 19 logbook entry indicated that crew entered the hold and conducted a visual inspection. While noting an excess of humidity in the number two hold, the logbook entry did not note any cracks or leaks and indicated that the steel coils were "still in good stowed." The next day, when the soundings indicated that the bilges were nearing their total capacity of.65 meters, the ship's logbook indicated that the crew conducted a "thorough" inspection of the number two hold and once again noted no damage and concluded that the cargo was "still in good stowed." The ship's Master ordered the bilges pumped to remove the water.

On October 21, the day after the bilges were emptied, the sounding indicated that the bilges were yet again nearing their total capacity, with a reading of.57/.S3. The chief mate reported that the ship was taking on water from the starboard side. The ship's Master then inspected the number tw^ro hold and observed a crack in the hull that was causing water to leak into the ship. The crew temporarily repaired the crack and the vessel arrived safely in Toledo on October 30. Ninety-nine steel coils...