Kukje Hwajae Ins. Co., Ltd. v. M/V Hyundai Liberty

• Decision Date: 26 May 2005
• Docket Number: No. 00-56970.,00-56970.
• Citation: 408 F.3d 1250
• Parties: KUKJE HWAJAE INSURANCE CO., LTD., a corporation, Plaintiff-Appellant-Cross-Appellee, v. The "M/V HYUNDAI LIBERTY," her Engines, Boilers, Tackle, etc., in rem, Defendant-Appellee-Cross-Appellant, and Glory Express, Inc., a business entity, in personam, Defendant-Appellee. Glory Express, Inc., a California Corporation, Third-party plaintiff-Appellee, v. Streamline Shippers Association, a California Corporation, Third-party defendant, and Hyundai Merchant Marine Co., Ltd., a business entity, Does 1-10 inclusive, Third-party defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

408 F.3d 1250

KUKJE HWAJAE INSURANCE CO., LTD., a corporation, Plaintiff-Appellant-Cross-Appellee, v. The "M/V HYUNDAI LIBERTY," her Engines, Boilers, Tackle, etc., in rem, Defendant-Appellee-Cross-Appellant, and Glory Express, Inc., a business entity, in personam, Defendant-Appellee.

Glory Express, Inc., a California Corporation, Third-party plaintiff-Appellee, v. Streamline Shippers Association, a California Corporation, Third-party defendant, and Hyundai Merchant Marine Co., Ltd., a business entity, Does 1-10 inclusive, Third-party defendants-Appellees.

No. 00-56970.

United States Court of Appeals, Ninth Circuit.

May 26, 2005.

Michael W. Lodwick, Haight Brown & Bonesteel LLP, Santa Ana, CA, for the plaintiff-appellant/cross-appellee.

Christina L. Owen and Robert E. Coppola, Cogswell Nakazawa & Chang, Long Beach, CA, for the defendant-appellee/cross-appellant.

Simon H. Langer, Beverly Hills, CA, for the defendant/third-party plaintiff-appellee.

On Remand from the United States Supreme Court.

Before BEEZER, TASHIMA, and GRABER, Circuit Judges.

GRABER, Circuit Judge.

This case is before us for a second time.¹ In our previous opinion, Kukje Hwajae Insurance Co. v. The M/V Hyundai Liberty, 294 F.3d 1171, 1179 (9th Cir.2002), we held:

With respect to the in rem action: The forum-selection clause in the Hyundai bill of lading is enforceable against Plaintiff. As a result, the district court lacked jurisdiction over Plaintiff's in rem action against the Hyundai Liberty and properly dismissed that action.

With respect to the in personam action: The Glory Express bills of lading comply with the [Carriage of Goods by Sea Act] COGSA "fair opportunity" requirement. Therefore, Glory Express is entitled to the limitations on liability provided in 46 U.S.C. app. § 1304(5), and the district court properly granted summary judgment.

Thereafter, the Supreme Court of the United States entered this order: "Petition for writ of certiorari granted. Judgment vacated, and case remanded to the United States Court of Appeals for the Ninth Circuit for further consideration in light of Norfolk Southern R. Co. v. James N. Kirby, 543 U.S. ___, 125 S.Ct. 385, 160 L.Ed.2d 283 (2004)." Green Fire & Marine Ins. Co. v. M/V Hyundai Liberty, ___ U.S. ___, 125 S.Ct. 494, 160 L.Ed.2d 368 (2004).² In particular, the Supreme Court criticized our "agency" analysis with respect to the forum-selection clause. Norfolk Southern, 125 S.Ct. at 398-99. As subsequent briefing has clarified, however, there is a completely separate, preserved, and properly argued route by which we reach the same answer to the first question, that is, the binding effect of the forum-selection clause. The second issue is not affected by the Supreme Court's decision in Norfolk Southern. We again affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff Kukje Hwajae Insurance Company is the subrogated insurer of the Doosan Corporation, a Korean manufacturer of machinery. Doosan contracted with Glory Express, Inc., a non-vessel operating common carrier, to ship a "Doosan Brand Vertical Twin Spindle CNC Lathe" from Busan, Korea, to Los Angeles, California, on the vessel the Hyundai Liberty. Glory Express issued three bills of lading to cover the shipment. Each one identifies Doosan as the shipper and the "Hyundai Liberty" as the "Exporting Carrier." The Glory Express bills of lading contain a forum-selection clause requiring that all suits relating to the carriage of goods covered by the bills of lading be brought in the federal courts in New York, although Glory Express has not sought to enforce that clause here.

Glory Express, in turn, contracted with Hyundai Merchant Marine Company to ship the lathe on its vessel, the Hyundai Liberty. It did so by acting through Streamline Shippers Association, a nonprofit organization of shippers (Streamline).³ Hyundai Merchant Marine issued a bill of lading identifying Streamline as the shipper. That bill of lading provided:

The claims arising from or in connection with or relating to this Bill of Lading shall be exclusively governed by the law of Korea except otherwise provided in this Bill of Lading. Any and all action concerning custody or carriage under this Bill of Lading whether based on breach of contract, tort or otherwise shall be brought before the Seoul Civil District Court in Korea.

(Emphasis added.)

According to Plaintiff's complaint, the lathe was damaged during the course of the sea voyage, resulting in more than $200,000 in damages. Plaintiff paid Doosan's claim and then initiated this action. The complaint asserted claims for damage to cargo, breach of contract, negligence, breach of duty to care for property in bailment, and unseaworthiness. Plaintiff brought the action in personam against Defendant Glory Express and in rem against the Hyundai Liberty (Hyundai).⁴

Hyundai moved to dismiss Plaintiff's complaint as to the vessel, seeking to enforce the forum-selection clause in its bill of lading. The district court denied the motion, in part because it found that Hyundai had not properly authenticated the copy of the bill of lading that it had attached to its motion.⁵ Additionally, the court denied the motion because Plaintiff's subrogor, Doosan, had not "accepted" the bill of lading and it was, therefore, not enforceable against Plaintiff. The court stated further that, if Plaintiff "accepted" the bill during the litigation by relying on it to establish an element of one of its claims, the court would entertain again Hyundai's motion to enforce the forum-selection clause.

Hyundai filed a motion for partial summary judgment on the ground that the COGSA—specifically 46 U.S.C. app. § 1304(5)—limited the ship's in rem liability. Over Plaintiff's opposition, the court granted the motion.

Plaintiff then moved for summary judgment against Glory Express. The court granted the motion in part, holding that Glory Express was liable to Plaintiff for damage to the lathe, but that its liability was limited by the terms of the Glory Express bills of lading and by COGSA. At that time, the court did not calculate the total amount of damages for which Glory Express was liable, because Plaintiff had not established how many "packages" had been shipped for purposes of COGSA. Glory Express then moved for summary judgment on the ground that the total number of packages shipped was six. The court granted the motion.

Plaintiff and Hyundai filed cross-motions for summary judgment on the issue of the vessel's in rem liability. Each party opposed the other's motion. The court denied both parties' motions and, instead, dismissed the case. The court reasoned that Plaintiff's use of a part of the Hyundai bill of lading to establish that the goods were delivered on board the Hyundai Liberty in good condition constituted "acceptance" of the bill of lading. The court also held that "any claim that Kukje has against the Hyundai Liberty must be brought pursuant to the Hyundai's Bills of Lading." The court dismissed the action with respect to Hyundai "without prejudice to Plaintiff's right to bring a claim that complies with the forum selection clause of the Hyundai's Bills of Lading."

Plaintiff and Hyundai timely appealed.

STANDARDS OF REVIEW

We review for abuse of discretion the district court's decision whether to enforce a forum-selection clause. Fireman's Fund Ins. Co. v. M.V. DSR Atl., 131 F.3d 1336, 1338 (9th Cir.1998). A motion to enforce a forum-selection clause is treated as a motion pursuant to Federal Rule of Civil Procedure 12(b)(3). Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 324 (9th Cir.1996). Consequently, the pleadings need not be accepted as true, and facts outside the pleadings properly may be considered. Id.

We review de novo the district court's grant of summary judgment. Balint v. Carson City, 180 F.3d 1047, 1050 (9th Cir. 1999) (en banc).

DISCUSSION

A. Whether Plaintiff is bound by the forum-selection clause in the Hyundai bill of lading.

Plaintiff argues that the district court erred by dismissing the in rem action during the pendency of the litigation because of the forum-selection clause contained in the bill of lading. By contrast, Hyundai argues that the district court erred by not enforcing the forum-selection clause at the outset of the litigation. For the reasons that follow, we agree with Hyundai.

In paragraph 6, Plaintiff's complaint alleges that all defendants, including the vessel, "entered into contracts of affreightment, which are evidenced by a number of bills of lading, including, but not necessarily limited to[, the Glory Express bills of lading]." In paragraph 8, the complaint alleges that "defendants, and each of them, failed and neglected to discharge and deliver the Cargo pursuant to the applicable bills of lading, contracts of affreightment, and/or freight bills, in like good order and condition as when received." By contrast, says Plaintiff in paragraph 9, Plaintiff performed all "promises required to be performed by them in accordance with the terms and conditions of the applicable bills of lading." These paragraphs are part of the claim for Damage to Cargo. Paragraph 14, which is part of the claim for Breach of Contract, states that "Defendants, and each of them, materially and substantially breached and deviated from the said applicable bills of lading, contracts of affreightment, and/or freight bills by failing to deliver the Cargo in good order and condition to the consignee or other party entitled to the Cargo." Paragraph 15 again recites that Plaintiff performed all "promises required to be performed by them in accordance with the terms and conditions of the applicable bills of lading." Paragraph 16 lists damages resulting from the "material breach of and deviation from the applicable bills of lading." Later parts of the complaint, containing claims for Negligence and Bailment, incorporate some or all of the foregoing allegations by reference.

We have held that a cargo owner "acc...