Insurance Co. of North America v. M/V OCEAN LYNX

Decision Date18 May 1990
Docket NumberNo. 89-5301,89-5301
Citation901 F.2d 934
PartiesINSURANCE COMPANY OF NORTH AMERICA, Plaintiff-Appellee-Cross-Appellant, v. M/V OCEAN LYNX, a/k/a M/V OCEAN LINK, her engines, tackle, furnishings, etc., in rem, et al., Defendants, Mar Shipping Line, Inc., a foreign corporation, Defendant-Appellee, Cross-Appellee, A. Bottacchi S.A. De Navegacion, a foreign corporation, Defendant-Appellant, Cross-Appellee.
CourtU.S. Court of Appeals — Eleventh Circuit

Allan R. Kelley, Fowler, White, Burnett, Hurley, Banick & Strickroot, P.A., Miami, Fla., for Bottacchi S.A. De Navegacion.

G.J. Rod Sullivan, Jacksonville, Fla., for Ins. Co. of North America.

Mary Lou Rodon Alvarez, Schreibert, Rodon-Alvarez, P.A., Miami, Fla., for Mar Shipping Line, Inc.

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

Before JOHNSON, Circuit Judge, HILL * and HENLEY **, Senior Circuit Judges.

JOHNSON, Circuit Judge:

This case arises on appeal from the district court's judgment limiting the defendants' liability under the Carriage of Goods by Sea Act, 46 U.S.C.A. App. Secs. 1300-15 ("COGSA"), and from the district court's order granting the defendant Mar Shipping Line, Inc. ("Mar") attorneys' fees and pre-judgment interest on its cross-claim against the defendant A. Bottacchi, S.A. De Navegacion ("Bottacchi").

I. FACTS
A. Background

Educational Innovation Systems International, Inc. ("Edusystems") shipped 59 boxes of vocational and agricultural equipment to Asuncion, Paraguay on May 9, 1985. Through a freight forwarder in Miami, Meadows Wye and Company ("Meadows"), Edusystems entered into a contract with Mar, which is a non-vessel-operating common carrier, 1 for transportation of the cargo from Miami to Paraguay. Mar, acting as Edusystems' agent, 2 entered into a carriage contract with Bottacchi for shipment of the cargo from Miami to Buenos Aires, Argentina. 3 Bottacchi loaded the cargo onto the M/V Ocean Lynx, a vessel chartered by Bottacchi and owned by Nabadi Maritime, S.A. On June 7, 1985, the Ocean Lynx encountered rough weather, and the container holding the cargo was lost at sea.

Both Mar and Bottacchi supplied bills of lading. The Mar bill of lading consists of one piece of paper. The front identifies the parties and contains a block where the shipping cost is calculated. The back contains twenty-seven clauses in extremely fine print. 4 Clause one states that the carriage contract is subject to COGSA, and clause sixteen recites provisions of COGSA section 4(5), 46 U.S.C.A. App. Sec. 1304(5), limiting Mar's liability for loss to $500 per package. Clause sixteen states,

In case of any loss or damage to or in connection with the goods exceeding $500.00 ... the value of the goods shall be deemed to be $500.00 per package ... unless the nature of the goods and a valuation higher than $500.00 shall have been declared in writing by the shipper upon delivery to the carrier and inserted in this bill of lading and extra freight paid if required ... [in which case] the carrier's liability, if any, shall not exceed the declared value....

The Bottacchi bill of lading states that it binds the owner of the cargo and that it supersedes all other agreements covering the shipment. The back of the bill of lading is also in fine print and contains provisions identical to the Mar bill of lading. 5

Mar had filed a tariff with the Federal Maritime Commission. The tariff included a copy of Mar's bill of lading. Rule Twelve of the tariff provided for a declaration of increased valuation that would increase Mar's liability beyond $500 per package. In case of a declaration of excess value, Mar's tariff provided for additional freight charges. Bottacchi also had filed a tariff with the Federal Maritime Commission. Rule Twelve, "Ad Valorem Rates," states that "[a]n ad valorem or 2% value to be declared on bill of lading, shall be assessed on the following: Currency, Specie, Gold or Silver Bullion, Precious Metals N.O.S., and Negotiable Securities. Minimum bill of lading charge--$101.50."

Edusystems' freight forwarder, Meadows, and Mar's freight forwarder, Continental, had dealt with one another on numerous occasions. Meadows has acted as freight forwarder for Edusystems hundreds of times. On none of these occasions did Edusystems' representative declare the value of a shipment and pay added freight charges.

B. Proceedings in the District Court

On March 28, 1986, Edusystems' insurer, Insurance Company of North America (the "plaintiff"), 6 filed a complaint against the M/V Ocean Lynx, in rem, Mar, Bottacchi, and Nabadi Maritime, S.A., claiming $244,820 in damages for the lost cargo. 7 Mar and Bottacchi answered asserting that their liability was limited to $500 per package under COGSA. Mar also filed a cross-claim against Bottacchi for Mar's damages, interest and costs in the action.

On January 9, 1987, Mar served the plaintiff with an offer of judgment of $29,500 plus interest and costs. 8 On the same day, Bottacchi served Mar with an offer of judgment of $34,500. 9 The plaintiff and Mar rejected these offers. 10

The district court held a bench trial on September 8-9, 1987. The court found that under COGSA section 4(5) Mar's and Bottacchi's liability was limited to $500 per package lost. The court rejected the plaintiff's argument that Mar's bill of lading was illegible and therefore did not invoke COGSA section 4(5)'s limitation on liability. The court found that the print on the back of the Mar bill of lading appeared blurry, but stated that "[w]ith the aid of a magnifying glass ... most of the words and numerals can be read by a party examining the words and conditions stated therein." Nevertheless, the court found that the Mar bill of lading was sufficient to incorporate COGSA section 4(5)'s limitation of liability.

The court also rejected the plaintiff's argument that COGSA section 4(5) did not apply because Mar and Bottacchi did not present Edusystems with an opportunity to declare the cargo's value. The court stated that incorporation of COGSA in the bills of lading provided a fair opportunity to declare excess value as a matter of law. The court also found that Mar's tariff was valid and presented the plaintiff with an opportunity to declare the cargo's value. Accordingly, the district court entered judgment for the plaintiff against Mar for $29,500 on the plaintiff's complaint and judgment for Mar against Bottacchi for $29,500 on Mar's cross-claim.

On January 8, 1988, Mar moved to recover attorneys' fees and costs from Bottacchi for defending against the plaintiff's claim and to recover costs from the plaintiff. Mar claimed that it was entitled to attorneys' fees from Bottacchi for defending the main claim because it was an indemnitee of Bottacchi. Mar claimed that it was entitled to costs accrued after January 22, 1987 from the plaintiff because the plaintiff refused Mar's offer of judgment. 11 On January 15, 1988, Bottacchi moved the court to deny Mar pre-judgment interest and to tax costs against Mar because Mar rejected Bottacchi's offer of judgment.

In an order dated February 22, 1989, the district court granted Mar's motion against Bottacchi, awarding Mar $22,262 in attorneys' fees. The court also awarded Mar $563 in costs against the plaintiff. Finally, the court denied Bottacchi's motion to limit Mar's pre-judgment interest and awarded Mar the same amount of pre-judgment interest from Bottacchi as the court had awarded the plaintiff from Mar.

In this appeal, we first consider whether the district court erred in holding that Mar and Bottacchi have limited liability under COGSA section 4(5). Second, we consider whether the district court erred in holding that Mar could recover attorneys' fees from Bottacchi for the cost of defending against the plaintiff's claim. Finally, we consider whether the district court erred in ruling that Mar could recover pre-judgment interest from Bottacchi for the period after Bottacchi's offer of judgment.

II. STANDARD OF REVIEW

The district court's interpretation of a statute is subject to de novo review by this Court. Keys Jet Ski, Inc. v. Kays, 893 F.2d 1225, 1227 (11th Cir.1990). The district court's findings of fact are subject to "clearly erroneous" review in this Court. Anderson v. Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985).

III. ANALYSIS
A. Limited Liability

COGSA section 4(5) provides as follows:

Neither the carrier nor the ship shall in any event become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package ... unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading.

46 U.S.C.A. App. Sec. 1304(5). Congress enacted the COGSA limitation on liability in 1936 in order to restrain the superior bargaining power wielded by carriers over shippers by setting a reasonable limitation on liability that the carriers could not reduce by contract. Sony Magnetic Prods., Inc. v. Merivienti O/Y, 863 F.2d 1537, 1542 (11th Cir.1989).

Courts have developed two preconditions to invoking COGSA section 4(5)'s limitation on liability. First, the carrier must give the shipper adequate notice of the $500 limitation by including a "clause paramount" in the bill of lading that expressly adopts the provisions of COGSA. Brown & Root, Inc. v. M/V Peisander, 648 F.2d 415, 420 (5th Cir.1981); General Elec. Co. v. MV Nedlloyd, 817 F.2d 1022, 1029 (2d Cir.1987); 46 U.S.C.A. App. Sec. 1312. Second, the carrier must give the shipper a fair opportunity to avoid COGSA section 4(5)'s limitation by declaring excess value. Brown & Root, 648 F.2d at 420 & n. 11; General Elec., 817 F.2d at 1028.

The clause paramount establishes three things. First, it makes COGSA applicable at times when it would not apply of its own force. Brown & Root, 648 F.2d at 420. Second, COGSA's...

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