King Ocean Cent. America, S.A. v. Precision Cutting Services, Inc.

• Decision Date: 12 June 1998
• Docket Number: No. 91033,91033
• Citation: 717 So.2d 507
• Parties: , Fed. Carr. Cas. P 84,080, 23 Fla. L. Weekly S320 KING OCEAN CENTRAL AMERICA, S.A., Petitioner, v. PRECISION CUTTING SERVICES, INC., Respondent.
• Court: Florida Supreme Court

Page 507

717 So.2d 507

1998 A.M.C. 2372, Fed. Carr. Cas. P 84,080,

23 Fla. L. Weekly S320

KING OCEAN CENTRAL AMERICA, S.A., Petitioner, v. PRECISION CUTTING SERVICES, INC., Respondent.

No. 91033.

Supreme Court of Florida.

June 12, 1998.

Rehearing Denied Sept. 10, 1998.

Richard B. Austin, and Gerhardt A. Schreiber, Miami, for Petitioner.

James C. Blecke of Deutsch & Blumberg, P.A., Miami, and Rex B. Guthrie, Miami, for Respondent.

ANSTEAD, Justice.

We have for review the decision in Precision Cutting Services, Inc. v. King Ocean Central America, S.A., 696 So.2d 824 (Fla. 3d DCA 1997). We accepted jurisdiction to answer the following question certified to be of great public importance:

WHERE AN OCEAN CARRIER ISSUES A THROUGH BILL OF LADING WHICH INCLUDES INLAND TRANSPORTATION IN THE UNITED STATES BY MOTOR CARRIER, AND WHICH PROVIDES THAT THE OCEAN CARRIER WILL BE VICARIOUSLY LIABLE FOR ANY LOSS WHILE THE GOODS ARE IN THE CUSTODY OF THE INLAND MOTOR CARRIER, AND THE GOODS ARE LOST WHILE IN THE CUSTODY OF THE INLAND MOTOR CARRIER WHO HAS ISSUED A SEPARATE BILL OF LADING, IS THE OCEAN CARRIER

AS A MATTER OF LAW SUBJECT TO THE CARMACK AMENDMENT AND THE CARMACK TWO-YEAR STATUTE OF LIMITATIONS FOR THE INLAND LEG OF THE JOURNEY, OR IS THE OCEAN CARRIER'S LIABILITY GOVERNED BY THE CARRIAGE OF GOODS BY SEA ACT (COGSA), THE TERMS OF THE BILL OF LADING, AND THE COGSA ONE-YEAR STATUTE OF LIMITATIONS?

Id. at 829. We have jurisdiction. Art. V, § 3(b)(4), Fla. Const. For the reasons expressed below, we quash the Third District's decision and hold that the ocean carrier's liability is governed by the Carriage of Goods by Sea Act (COGSA), the specific provisions of the parties' through bill of lading, and the one-year statute of limitations found in COGSA and the bill of lading.

MATERIAL FACTS ¹

King Ocean Central America, S.A. (King Ocean), contracted with Precision Cutting Services, Inc. (Precision), in May 1993 to transport Precision's goods ² from Costa Rica in Central America to Miami, and then overland from Miami to Little Rock, Arkansas via motor carrier. In its through bill of lading, King Ocean agreed to be vicariously liable for any loss or damage to Precision's goods while they were in the custody of the inland carrier, Paradise Freightway, Inc. A specific provision in the King Ocean-Precision bill of lading required any claims to be filed against King Ocean within one year. A separate bill of lading covered the inland portion of the transport by Paradise. Precision's goods were then allegedly stolen during the inland portion while the goods were at Paradise's Miami freightyard.

Over a year later, Precision filed an action against King Ocean to recover damages for the stolen goods. The trial court entered summary judgment in favor of King Ocean after finding that the suit was barred by the one-year statute of limitations in the Carriage of Goods by Sea Act, 46 U.S.C.App. § 1303(6) (1992), better known as COGSA, which was expressly incorporated into the parties' contract. On appeal to the Third District, Precision argued that a separate federal law, referred to as the Carmack Amendment, 49 U.S.C. § 11707 (1992), rather than COGSA, was controlling, and therefore the one-year statute of limitations was inapplicable. The Third District agreed with Precision based on its earlier opinion in Harvest International, Inc. v. Tropical Shipping & Construction Co., 644 So.2d 112 (Fla. 3d DCA 1994). The majority opinion reasoned that, as in Harvest International, because the domestic inland portion of the transport from a foreign country was covered by a separate bill of lading, the Carmack Amendment was applicable and therefore the trial court erred in granting summary judgment based on COGSA's one-year statute of limitations. Precision Cutting Services, Inc., 696 So.2d at 825-26. Judge Cope disagreed with the majority's result and reasoning, arguing that Harvest International was "wrongly decided." However, he concurred because Harvest International remains binding precedent in the Third District. Id., 696 So.2d at 826 (Cope, J., specially concurring).

LAW AND ANALYSIS

As noted in the district court's opinions and by the parties in their briefs, the issue presented is not one of liability. There is no dispute that King Ocean expressly voluntarily subjected itself by contract to vicarious liability for any loss or damage done to Precision's goods while they were in the custody of the inland carrier, Paradise Freightway, Inc. Precision Cutting Services, Inc., 696 So.2d at 825; Precision Cutting Services, Inc., 696 So.2d at 829 n. 5 (Cope, J., specially concurring). Rather, the issue raised in the certified question is the applicable law and its corresponding statute of limitations as well as the effect of the one-year limitation provision set out in the parties' contract.

BILLS OF LADING

Precision and King Ocean entered into an agreement for the shipment of Precision's A "through bill of lading" may be thought of as a bill of lading with "long legs." It is designed "for the carriage of goods from one place to another by several shipowners or railway companies." Sir Thomas Edward Scrutton, Charterparties and Bills of Lading 72 (9th ed.1919). The through bill of lading emerged as international trade developed in the latter half of the nineteenth century, especially between the United States and Europe. See generally Thomas Gilbert Carver, Carriage of Goods by Sea (6th ed.1918). As to its legal import, Carver wrote that:

                goods by King Ocean by executing a through bill of lading.  A bill of lading is a "document evidencing the receipt of goods for shipment issued by a person engaged in the business of transporting or forwarding goods."   See UCC § 1-201(6) (1995).  The value of a bill of lading is found in the multiple roles that it plays:  first, it is the best evidence of the contract of carriage between the carrier and the seller;  second, it serves as the receipt for the goods under transport;  and third, it is a document of title to property which can be endorsed and negotiated.  See William Tetley, Marine Cargo Claims (3d ed.1988)
                

When a contract for a through journey is made with a carrier or contractor, he is answerable for its complete performance, although it may be intended that some part of the carrying shall be done by others, unless the contract expressly limits his liability to his own part of the journey.

Apart, then, from such a limitation, the first carrier with whom the contract is made may be liable for a breach of it after the goods have left his hands. But the carrier in whose hands they were when the breach was committed is also generally liable, if the through contract was made for his benefit, and with his authority; and, on the other hand, he is entitled to the benefit of the exceptions of liability which the contract may contain.

Id. at 162 (citations omitted). Put another way,

[a] pure through bill of lading is a contract whereby the first carrier contracts to carry from point 'A' to point 'B' and on to final destination 'C[.]' The goods are received and the first carrier carries to point 'B' and a second carrier carries to point 'C[.]' There even may be intermediate carriers, but in every case the claimant may call upon the first carrier for any loss along the route whether or not the loss took place in the first carrier's hands.

William Tetley, Marine Cargo Claims 253 (1965). More recently, the Seventh Circuit Court of Appeals has defined a through bill of lading as one "issued in a foreign country to govern a shipment throughout its transportation from abroad to its final destination in the United States." Capitol Converting Equip., Inc. v. LEP Transp., Inc., 965 F.2d 391, 394 (7th Cir.1992).

COGSA

In 1936 Congress adopted the Carriage of Goods by Sea Act (COGSA). Ch. 229, § 3, 49 Stat. 1208 (1936) (codified at 46 U.S.C. app. §§ 1300-1315). COGSA was the domestic enactment of the 1924 International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, better known as the Hague Rules. Michael F. Sturley, Proposed Amendments to the Carriage of Goods by Sea Act, 18 Hous. J. Int'l L. 609, 610 (1996). The Hague Rules and COGSA were intended to bring more balance to the merchant/shipper-carrier relationship and overcome some of the overly advantageous contract clauses in the bills of lading, which were traditionally drafted by the carriers. See Tessler Brothers (B.C.) Ltd. v. Italpacific Line, 494 F.2d 438, 444 (9th Cir.1974) (footnote and citation omitted) (recognizing that Congress passed COGSA and its predecessor statute "to counteract the persistent efforts of carriers, who are the drafters of ocean bills of lading, to insert all embracing exceptions to liability"). Indeed, the legislative history of COGSA reveals that one of its specific purposes was "to obviate the necessity for a shipper to make a detailed study of the fine print clauses of a carrier's regular bill of lading on each occasion before shipping a package." Id. at 445. ³

Nevertheless, certain COGSA provisions, especially section 1303(6) (one-year statute of limitations for bringing a civil suit, beginning with the date the goods were delivered or should have been delivered), and section 1304(5) (limiting the carrier's and the ship's liability to no more than $500 per package or customary freight unit), clearly benefit carriers. ⁴

CARMACK AMENDMENT

On the other hand, the Carmack Amendment to the Interstate Commerce Act was passed by Congress in 1906; Ch. 3591, § 7, 34 Stat. 595 (1906); and governs the liability of U.S. inland common carriers for lost or damaged goods. Rini v. United Van Lines, Inc., 104 F.3d 502, 503 (1st Cir.1997). As the First Circuit recently reiterated:

[T]he principal purpose of the Amendment was to achieve national uniformity in the liability assigned to carriers. It is evident that Congress intended to adopt a uniform rule and relieve such contracts from the...