Koppers Co., Inc. v. S/S DEFIANCE

• Citation: 542 F. Supp. 1356
• Decision Date: 13 July 1982
• Docket Number: Civ. No. K-80-2416.
• Parties: KOPPERS COMPANY, INC. and Paul Wurth, S. A. and Republic Steel Corporation v. S/S DEFIANCE, her engines, boilers, etc. Farrell Lines, Inc. and John T. Clark and Son of Maryland, Inc.
• Court: U.S. District Court — District of Maryland

542 F. Supp. 1356

KOPPERS COMPANY, INC. and Paul Wurth, S. A. and Republic Steel Corporation v. S/S DEFIANCE, her engines, boilers, etc. Farrell Lines, Inc. and John T. Clark and Son of Maryland, Inc.

Civ. No. K-80-2416.

United States District Court, D. Maryland.

July 13, 1982.

David W. Skeen, William A. Skeen and James D. Skeen, Baltimore, Md., for plaintiffs.

Manfred W. Leckszas, Baltimore, Md., for defendants S/S DEFIANCE, her engines, boilers, etc. and Farrell Lines.

R. Roger Drechsler, J. Paul Mullen and H. John Bremmerman, III, Baltimore, Md., for defendants S/S DEFIANCE, her engines, boilers, etc., Farrell Lines, Inc. and John T. Clark and Sons of Maryland, Inc. FRANK A. KAUFMAN, Chief Judge.

The facts of the within case are not in dispute¹ and may be summarized as follows: Plaintiff Republic Steel Corporation (Republic) purchased from plaintiff Paul Wurth, S. A. (Wurth) certain spare parts for a blast furnace. Wurth undertook to ship the same from Bremerhaven, West Germany, aboard the S/S DEFIANCE, a vessel owned and operated by defendant Farrell Lines, Inc. (Farrell) to Baltimore, Maryland, where they were to be delivered to the consignee, plaintiff Koppers Company, Inc. (Koppers). From Baltimore, the parts were to be shipped by Koppers by truck to Republic's plant in Ohio.

The parts were packaged in four separate crates, three of which were shipped in one container. The fourth crate, containing a Warren Bell Less Top Blast Furnace, was attached with wires and turnbuckles to a "flat rack" container. Each of the two containers was owned by Farrell. The cargo was loaded on board the DEFIANCE at Bremerhaven in August 1979, and arrived in Baltimore without incident. On September 10, 1979, the cargo was discharged from the DEFIANCE at the Dundalk Marine Terminal in the Baltimore area by John T. Clark and Sons of Maryland, Inc. (Clark), a stevedoring firm which performed services under a contract between it and Farrell. The "flat rack" container, along with its attached cargo, was lifted by crane out of the hold of the vessel and placed upon a chassis owned by Farrell. That chassis, with the "flat rack" container, was then hauled by one or more Clark employees to a container yard within the terminal some 300 yards from the point of discharge, where the said chassis and container remained overnight. The other container containing the three crates also was taken to the container yard by one or more Clark employees. It apparently arrived without any problem at Republic's plant in Ohio.

On September 11, 1979, Joseph Letts, an employee of Clark, was instructed by his foreman to bring the chassis with the "flat rack" container from the container yard to Shed No. 4, Dundalk Marine Terminal. A portion of Shed No. 4 was leased by Farrell from the Maryland Port Administration, was operated by Clark and was used by Clark for cargo storage and for the preparation of cargo for inland shipment. While Letts was hauling the chassis bearing the "flat rack" container out of the container yard, the chassis tipped over, damaging the cargo in that container. It is with regard to that damage that plaintiffs' claim herein against the three defendants. Had the accident not occurred, the "flat rack" container would have been transported to Shed No. 4, and the crate with the furnace part would have been removed from it and loaded for transport to Warren, Ohio, on a trailer owned or operated by George's Transfer Co., a trucker selected by John S. Connor, Inc. (Connor), the customs broker retained by Koppers both to obtain customs clearance for the cargo and to make arrangements for the overland shipment from Koppers to Republic. After the accident, the contents of the "flat rack" container were not handled by Clark, but were instead recrated by another stevedoring firm for shipment to Republic in Ohio.

On the face of the bill of lading there was stamped the designation "Pier to Pier Traffic." That designation requires handling of the cargo by the carrier before its loading on and after its discharge from the vessel, and differs from the designation "House to House Traffic" on a bill of lading. The latter calls for the shipper to pack the container at the shipper's own facility and to deliver the packed container to the carrier at the port of departure for further loading aboard a vessel and shipment to the port of destination. At such port, the container, shipped as "House to House Traffic," is unloaded from the vessel and taken to a container yard, from which it is picked up by an outside trucking company for hauling to the ultimate consignee. By way of contrast, under the "Pier to Pier" designation, the cargo itself is delivered to the carrier at the port of departure, where it is put into a container, loaded onto a vessel and shipped to its port of destination. On arrival at such port, the container is unloaded from the vessel and taken to the container yard, and from the container yard is taken to a facility within the terminal (such as Shed No. 4) to be "stripped." The process of stripping involves the removal of the cargo from the container. The cargo is then repackaged, if necessary, and loaded on one or more trucks for the balance of its journey to the ultimate consignee.² An additional fee over and above that charged for "House to House Traffic" is paid to the carrier by the shipper for a "Pier to Pier" shipment, to cover the cost of the additional services to be rendered.

All services performed by Clark in connection with the discharge of the two containers from the DEFIANCE on September 10, 1979, and the transportation of those containers to the container yard were classified by Clark as "Stevedoring Operations," and were billed as such by Clark to Farrell. All services performed by Clark in connection with the transportation of the container containing the three crates from the container yard to Shed No. 4 and the preparation of the contents of that container for inland shipment were classified by Clark as "Terminal Operations," and were billed as such to Farrell. Had the accident not intervened, Farrell would have been charged by Clark in the same way for the same services with regard to the "flat rack" container. Under the contract between Farrell and Clark, the schedule of rates for stevedoring operations differed from that for terminal operations. The cost of loading the three crates in the container which encountered no mishap, after those three crates had been removed from that container at Shed No. 4 and placed on the George's Transfer trailer for overland transport, was charged by Clark to Connor which in turn charged Koppers. Had the accident not intervened, the cost of loading the cargo contained in the "flat rack" container after it would have been processed at Shed No. 4 would also have been charged by Clark to Connor, and by Connor to Koppers.

The negligence of Joseph Letts, and, thus, the vicarious liability of Letts' employer, Clark, are admitted. The parties have stipulated that if Clark prevails herein, defendants are liable to plaintiffs jointly and severally in the amount of $500,³ and that if plaintiffs prevail herein, defendants are liable to plaintiffs jointly and severally in the amount of $50,000, the agreed amount of damage to the contents of the "flat rack" container, plus prejudgment interest at the rate of ten percent from September 16, 1979, to date of judgment. The parties also agree that the crate containing the Bell Less Top Blast Furnace is a single package, for purposes of both the Carriage of Goods by Sea Act (COGSA) and the bill of lading.⁴ The parties disagree as to whether defendant Clark is entitled to the $500 limitation of liability set forth in Section 4(5) of COGSA, 46 U.S.C. § 1304(5) and/or in a limitation of liability provision in the bill of lading issued by Farrell.⁵ That section, Section 4(5) of COGSA provides in relevant part:

(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 ... unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading.

The relevant part of ¶ 16 of the bill of lading states:

In case of any loss or damage to or in connection with goods exceeding in actual value the equivalent of $500.00 ... the value of the goods shall be deemed to be $500.00 per package .... The carrier's liability, if any, shall be determined on the basis of a value of $500.00 per package ... or pro rata in case of partial loss or damage, unless the nature of the goods and a valuation higher than $500.00 per package ... have been declared in writing by the Shipper, upon delivery to the Carrier and inserted in this bill of lading and extra charge paid.⁶

In Robert C. Herd & Co. v. Krawill Machinery Corp., 359 U.S. 297, 79 S.Ct. 766, 3 L.Ed.2d 820 (1959), the Supreme Court concluded that the combination of the COGSA § 4(5) limitation of liability, and a similar limitation in a bill of lading such as that in ¶ 16 of the bill of lading involved herein, contractually extends to third parties only if the intent to have such third parties as beneficiaries of those limitations is clearly and unambiguously expressed in and provided for by the bill of lading. In the within case, ¶ 1 of the bill of lading, in relevant part, reads as follows:

(a) The Carrier shall be entitled to the full benefit of, and right to, all limitations of, or exemption from liability authorized by ... COGSA .... The terms of this bill of lading constitute the contract of carriage, which is between the shipper, consignee and authorized owner of the goods, and the Carrier, owner or demise charterer of the vessel designated to carry the shipment. It is understood and agreed that other than the Carrier, shipowner or demise charterer, no person firm or corporation or other legal entity whatsoever

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