James N. Kirby, Pty Ltd. v. Norfolk Southern Ry.

• Citation: 300 F.3d 1300
• Decision Date: 08 August 2002
• Docket Number: No. 01-13776.,01-13776.
• Parties: JAMES N. KIRBY, PTY LTD., d.b.a. Kirby Engineering, MMI General Insurance Limited, Plaintiffs-Appellants, v. NORFOLK SOUTHERN RAILWAY COMPANY, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

300 F.3d 1300

JAMES N. KIRBY, PTY LTD., d.b.a. Kirby Engineering, MMI General Insurance Limited, Plaintiffs-Appellants, v. NORFOLK SOUTHERN RAILWAY COMPANY, Defendant-Appellee.

No. 01-13776.

United States Court of Appeals, Eleventh Circuit.

August 8, 2002.

Michael F. Sturley, University of Texas Law School, Austin, TX, J.S. Scott Busby, Atlanta, GA, Charles Robert Sharp, Bovis, Kyle & Burch, LLC, Atlanta, GA, David C. Frederick, McLean, VA, for Plaintiffs-Appellants.

Richard K.V. Hines, Atlanta, GA, for Defendant-Appellee.

Appeal from the United States District Court for the Northern District of Georgia.

Before EDMONDSON, Chief Judge, and CARNES and SILER^*, Circuit Judges.

CARNES, Circuit Judge:

This case, the facts of which began in Australia and ended in Alabama, is about Himalaya clauses, Clauses Paramount, COGSA, the package limitation defense, FBLs, FIATA, and the like. In short, it is a bill of lading case. The issue it presents us is whether a railroad's liability, if any, to a shipper for damage done to goods by the derailment of train is limited by the "Himalaya clause" in either of two bills of lading that were issued for the transport of the goods.

A Himalaya clause is a clause in a bill of lading that extends the carrier's defenses and limitations of liability under the bill to the carrier's agents and subcontractors.¹ Both bills of lading in this case contained Himalaya clauses, although the text of each clause is different. The first bill of lading was issued to James N. Kirby Pty Ltd. (Kirby) by International Cargo Control Pty Ltd. (ICC), an Australian freight forwarder Kirby hired to arrange the shipment of the machinery, and the second bill of lading was issued to ICC by Hamburg Sud, the ocean shipping company ICC hired to perform the actual transport of the goods. Hamburg Sud's ship brought the machinery from its port of departure, Sydney, Australia, to its port of discharge, Savannah, Georgia, where it was placed on a train owned by Norfolk Southern Railway Co., which Hamburg Sud had sub-contracted to transport the machinery inland to its destination, Huntsville, Alabama. The wreck occurred while the train was en route to Huntsville from Savannah, and allegedly caused $1.5 million of damage to the machinery.

The district court decided that Norfolk Southern could limit its liability to Kirby on the basis of the Himalaya clause in the Hamburg Sud bill. We conclude, however, that the Hamburg Sud bill does not limit Norfolk Southern's liability to Kirby because Kirby was not bound by its terms. We further conclude that although the terms of the ICC bill do bind Kirby, that bill does not limit Norfolk Southern's liability because Norfolk Southern is not a clearly designated beneficiary of that bill's Himalaya clause. Therefore, because the district court erroneously concluded that Norfolk Southern should be able to limit its liability to Kirby, we reverse and remand.

I. BACKGROUND

Kirby, a company based in Sydney, Australia, sold ten containers of machinery to the General Motors plant in Huntsville, Alabama. To fulfill its obligation to deliver the machinery to Huntsville, Kirby entered into a contract of carriage with ICC, another Australian company. ICC was a "freight forwarder," a company that arranges for, coordinates, and facilitates cargo transport. To formalize the contract of carriage, ICC issued a bill of lading to Kirby (the ICC bill of lading) for the ten containers of machinery.

The ICC bill of lading embodies ICC's contractual obligation to Kirby to deliver the machinery from Sydney to Huntsville. It names Kirby as the consigner of the cargo, and ICC as the carrier. It designates Sydney as the port of loading, Savannah as the port of discharge, and Huntsville as the ultimate destination of the machinery. It contains a Clause Paramount that invokes the defenses and limitations of liability of the Carriage of Goods by Sea Act (COGSA), 46 U.S.C. §§ 1300-1315 to govern ICC's liability to Kirby for any damage done to the goods in the course of the carriage. Finally, it contains a Himalaya clause, a contractual clause that extends to the carrier's agents and contractors the carrier's own defenses and limitations of liability under the bill. See Fireman's Fund Ins. Co. v. Tropical Shipping & Constr. Co., 254 F.3d 987, 993 n. 1 (11th Cir.2001). Specifically, the Himalaya clause in the ICC bill of lading extends the bill's limitations of ICC's liability to "any servant, agent or other person including any independent contractors whose services have been used to perform the contract."

Having been hired by Kirby, ICC then hired Hamburg Sud,² a German ocean shipping company, to transport the machinery from Sydney to Huntsville. Hamburg Sud issued its own bill of lading (the "Hamburg Sud bill") to ICC. On the Hamburg Sud bill, ICC was listed as the shipper, and Hamburg Sud as the carrier. Like the ICC bill, the Hamburg Sud bill named Sydney as the port of loading, Savannah as the port of discharge, and Huntsville as the destination. The Hamburg Sud bill contained its own Clause Paramount, and its own Himalaya clause that extended the bill's limitations on Hamburg Sud's liability to "all agents, servants, employees, representatives, all participating (including inland) carriers and all stevedores, terminal operators, warehousemen, crane operators, watchmen, carpenters, ship cleaners, surveyors and all independent contractors whatsoever."

A Hamburg Sud ship carried the machinery on the ocean leg of the journey, from Sydney to Savannah. Once in Savannah, inland transport to Huntsville was taken on by Norfolk Southern, which had been hired by Hamburg Sud through Columbus Line USA, Hamburg Sud's American subsidiary.³ Norfolk Southern did not issue its own bill of lading to Columbus Line, but instead acted under the Hamburg Sud bill. The train carrying the containers derailed while en route from Savannah to Huntsville, and allegedly $1.5 million dollars of damage was done to the machinery.⁴

After the train wreck, Kirby sued Norfolk Southern to recover for the damages caused to the machinery by the derailment. Kirby's claims included negligence and breach of contract, among others. Norfolk Southern denied that it was liable, but also filed a motion for partial summary judgment arguing that its liability, if any was limited by the Himalaya clause in the Hamburg Sud bill of lading.

As mentioned, a Himalaya clause in a bill of lading extends to the carrier's agents and contractors the carrier's defenses and limitations of liability under the bill. Here, as is often the case, both bills invoked the Carriage of Goods by Sea Act (COGSA), meaning that the carrier's defenses and limitations under each bill- and, by extension, the defenses and limitations of any party covered by each bill's Himalaya clause included those provided to carriers by COGSA.⁵ One COGSA defense available to a carrier is the "package limitation," which limits the carrier's liability for damage to goods to $500 per package (when the goods are shipped in packages). 46 U.S.C. app. § 1304(5). By invoking COGSA in the Clause Paramount, each bill incorporated COGSA's package limitation as a limit on the carrier's liability. In its summary judgment motion Norfolk Southern claimed that it was entitled, via the Himalaya clause, to claim the package limitation, and thus limit its liability to $5,000 — $500 for each of Kirby's ten containers.⁶

The district court granted Norfolk Southern's motion for partial summary judgment, holding that Norfolk Southern's liability to Kirby, if any, was limited to $5,000. The court concluded that the Himalaya clause in the Hamburg Sud bill of lading bound Kirby, and that Norfolk Southern was a beneficiary of that clause entitled to invoke the package limitation. The district court then designated its order granting partial summary judgment as appropriate for interlocutory appeal pursuant to 28 U.S.C. § 1292(b), and we granted permission to appeal on the issue of whether the bills of lading limit Norfolk Southern's liability.⁷

II. DISCUSSION

We first consider whether the district court was right to decide that the Himalaya clause in the Hamburg Sud bill limited Norfolk Southern's liability to Kirby. Because we conclude that it was not right in that regard, we next consider whether Norfolk Southern's liability is limited by the Himalaya clause in the other bill of lading, the ICC bill. We conclude that it is not so limited. The result of our conclusions that neither bill of lading limits Norfolk Southern's liability to Kirby is that we reverse the district court's grant of partial summary judgment to Norfolk Southern.

A. THE HAMBURG SUD BILL

The Hamburg Sud bill was issued by Hamburg Sud, the ocean shipping company, to ICC, the freight forwarder which had been engaged by Kirby. The Himalaya clause in the Hamburg Sud bill can limit Norfolk Southern's liability to Kirby only if Kirby is bound by the terms of that bill. Yet ICC, not Kirby, hired Hamburg Sud, and ICC, not Kirby, is named on the bill as the shipper of the goods, which means that Kirby did not itself agree to the terms of the bill. If, however, ICC had been acting as Kirby's agent when it entered the shipping contract with Hamburg Sud, then ICC had authority to and did bind Kirby to the terms of the bill, including its package limitation and its Himalaya clause. See, e.g., Great N. Ry. Co. v. O'Connor, 232 U.S. 508, 513-14, 34 S.Ct. 380, 382, 58 L.Ed. 703 (1914) (holding that a plaintiff who used a freight forwarder to arrange a shipment of goods was bound by limitations of liability in the contracts the freight forwarder made with carriers on the plaintiff's behalf). Therefore, Norfolk Southern can limit its liability to Kirby only if ICC was acting as Kirby's agent when it received Hamburg Sud's bill. Whether it was acting as Kirby's agent at that time is, then, the pivotal question.

ICC's status as a freight forwarder is not...