Leather's Best Intern., Inc. v. MV Lloyd Sergipe

• Decision Date: 13 February 1991
• Docket Number: No. 88 Civ. 8841 (CHT).,88 Civ. 8841 (CHT).
• Citation: Leather's Best Intern., Inc. v. MV Lloyd Sergipe, 760 F. Supp. 301, 1991 AMC 1929 (S.D. N.Y. 1991)
• Parties: LEATHER'S BEST INTERNATIONAL, INC., Plaintiff, v. MV "LLOYD SERGIPE" and Companhia De Navegacao Lloyd Brasileiro (C.N. Lloyd Brasileiro), Defendants. COMPANHIA DE NAVEGACAO LLOYD BRASILEIRO (C.N. Lloyd Brasileiro), Third-Party Plaintiff, v. LEATHER'S BEST BRASIL COMERCIO E REPRESENTACOES LTDA., Third-Party Defendant.
• Court: U.S. District Court — Southern District of New York

760 F. Supp. 301

1991 AMC 1929

LEATHER'S BEST INTERNATIONAL, INC., Plaintiff, v. MV "LLOYD SERGIPE" and Companhia De Navegacao Lloyd Brasileiro (C.N. Lloyd Brasileiro), Defendants.

COMPANHIA DE NAVEGACAO LLOYD BRASILEIRO (C.N. Lloyd Brasileiro), Third-Party Plaintiff, v. LEATHER'S BEST BRASIL COMERCIO E REPRESENTACOES LTDA., Third-Party Defendant.

No. 88 Civ. 8841 (CHT).

United States District Court, S.D. New York.

February 13, 1991.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Bigham Englar Jones & Houston (John E. Cone, Jr., William R. Connor III, of counsel), New York City, for plaintiff.

Crowell, Rouse & Matera (Francis R. Matera, of counsel), New York City, for defendants and third-party plaintiff.

Warshaw Burstein Cohen Shlesinger & Kuh (Allen N. Ross, of counsel), New York City, for third-party defendant.

OPINION

TENNEY, District Judge.

Plaintiff, Leather's Best International, Inc. ("LBI"), brings this action against defendant, Companhia de Navegacao Lloyd Brasileiro ("Lloyd"), for the loss of five pallets of leather which were shipped on board defendant's vessel, M.V. LLOYD SERGIPE ("LLOYD SERGIPE"). LBI alleges that the leather was stolen as a result of Lloyd's negligence and unreasonable deviations from the terms of the contract of carriage. Lloyd, as third-party plaintiff, has impleaded the shipper-consignor of the leather, Leather's Best Brasil, Comercio E Representacoes Ltda. ("LBB"), alleging that the loss was caused not by its own negligence, but rather by the acts of LBB and its agents. For the reasons set forth below, the court finds that Lloyd is liable to LBI for the full value of the missing cargo. The following, including those additional facts referred to in the Discussion, constitutes the court's findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52(a).

FINDINGS OF FACT

1. The shipment in question consisted of 106,270.50 square feet of crust leather having a gross weight of 8,413 kilograms and a net weight of 8,233 kilograms.¹ Tr. 28, 126, 230; Exh. 27.²

2. The leather was acquired by LBB in Brazil and was later sold to LBI pursuant to an invoice, No. 017/88, dated February 29, 1988.³ Tr. 28-29, 219, 230-31, 242-44; Exhs. 27, 34. LBI purchased the leather according to "cost and freight" invoice terms, meaning that LBB paid for all the transport and freight charges before the cargo was loaded on the ship. See Tr. 28-29, 230-31.

3. Prior to loading, LBB weighed the shipment in Novo Hamburgo, Brazil, using a scale which had been checked by Imerto, the official organization for controlling the accuracy of commercial scales in Brazil. Tr. 235-39, 420-22, 429-31, 442-43; Exh. 28, 29.

4. LBB then palletized the leather,⁴ loaded it onto ten wooden pallets, and placed the pallets on a truck at LBB's warehouse in Novo Hamburgo. Tr. 422-26, 434-37.

5. The ten pallets of leather were driven by truck from LBB's warehouse to the Customs' bonded warehouse of Expresso Rio Grande Sao Paulo ("Expresso") located in the Port of Rio Grande. Tr. 511-12.

6. LBB hired a freight forwarder named Transcontinental Servicos e Representacoes, Ltda. ("Transcontinental") to oversee the movement of the cargo while it remained in Brazil. See Tr. 270. Transcontinental then hired Commissaria de Despachos Ltda. ("CODEL") to manage the shipment while it was at the Expresso warehouse. Tr. 270.

7. On March 5, while the goods were in the Expresso warehouse, Lloyd delivered an empty container (CTIU 323389-7) to CODEL. Tr. 446-48.

8. Before putting the leather into the container, a Brazilian Treasury official counted the number of pallets and issued a document called a "Papeleta," attesting to the type and quantity of goods loaded into the container. Tr. 447-48, 516-17.⁵

9. The container was then closed with Brazilian Treasury seal # 852146, and the Papeleta was affixed on the outside its doors. Tr. 447-54, 516-17. The Brazilian Treasury seals that were used at the time were thin chrome-colored strips on which was written "Brazil" and "FRS" (Federal Revenue Service). Tr. 453-54.

10. The loaded and sealed container was kept in a yard toward the rear of the Expresso warehouse and remained there from March 5 to March 7. Tr. 520. The yard was controlled by the Brazilian Federal Revenue Service. Tr. 454-55.

11. On March 7, the container — with seal and Papeleta intact — was delivered to the terminal in Rio Grande operated by Consorcio de Terminals de Container do Rio Grande ("CONTECON"). Tr. 455-57.⁶

12. CONTECON issued a receipt for the container, dated March 7, indicating that the container had a gross weight of 10,885 kilograms and that it was sealed with the Brazilian Treasury seal # 852146. Tr. 455-59; Exh. 46. At the time, there were two weight scales located at the CONTECON terminal. Tr. 458-59, 493-94.

13. Transcontinental selected Lloyd as the carrier for this shipment. See Tr. 522. Lloyd then chose its ship, the LLOYD SERGIPE, to transport the cargo from Brazil to the United States. Exhs. 16, 17, 18. The LLOYD SERGIPE is a general cargo ship. Tr. 110.

14. The LLOYD SERGIPE was scheduled to arrive in Rio Grande between March 5 and 7, but because of mechanical difficulties in the Port of Santos, Brazil, the ship did not arrive until March 21. Tr. 316-18, 75, 378-82.

15. The container remained at the CONTECON terminal from March 7 until March 23, when it was loaded onto the LLOYD SERGIPE. See Tr. 455-59, 83, 199; Exhs. 52, 57, 63.

16. The container was stowed on the ship's weather deck. Tr. 249-50, 565; Exhs. 16, 17, 18, 56. Lloyd never authorized, and none of the bills of lading contained a stamp or clause for, on-deck stowage. Id.⁷

17. In early 1988, there had been many reported thefts from Treasury-sealed containers located at the CONTECON terminal. Tr. 468-70, 495-99; see Exhs. 47, 48.

18. During the period of the ship's delay — March 7 to March 22 — LBB repeatedly asked Transcontinental to have the cargo loaded into another company's container and shipped on a different vessel. Tr. 316-20. However, each request was met with Transcontinental's response that the LLOYD SERGIPE would be arriving in Rio Grande the next day, and thus, it would not be worthwhile to unload and reload the cargo into another container. Tr. 316-20, 381-84, 400-01. Transcontinental's representations were based on the information provided by Lloyd and its agents in Rio Grande. See Tr. 316-20, 380.

19. The LLOYD SERGIPE arrived in the port of Rio Grande on or about March 21. See Tr. 300-01. On March 23, the container was loaded aboard the ship, and Lloyd issued a document called a "Controle do Operacio," indicating that Lloyd's seal (# 75501) was affixed to the container and that the container was in good condition. Exh. 52; see Tr. 83-84, 199.

20. Lloyd's sole agent at the Port of Rio Grande was Brascon, S.A. ("Brascon"). Tr. 56-57, 82-83, 459, 490-91. As such, Brascon was the only entity authorized by Lloyd to place its "onboard" stamps on bills of lading issued at the Port of Rio Grande.⁸ Tr. 56-57, 66, 81-82.

21. Brascon issued bills of lading for the entire shipment on forms provided by Lloyd. Exhs. 16, 17, 18; Tr. 533-43, 543-44, 546. Each bill of lading specified the weight of the cargo, and each was stamped "clean on board."⁹ Exhs. 16, 17, 18; Tr. 63-65, 540.

22. These bills of lading, however, possessed different "onboard" dates, ranging from March 10 to March 22. Exhs. 16, 17, 20. Twenty-nine of the thirty-one bills of lading bound for New York were stamped "clean on board" on dates prior to the arrival of the ship.¹⁰ Exh. 20; Tr. 75-80.

23. The LLOYD SERGIPE set sail from Rio Grande on March 23. Tr. 708-09. On the way to the United States, the ship stopped at the ports of San Francisco do Sul, Vitoria, and Fortaleza. Tr. 206.

24. On April 12, the LLOYD SERGIPE arrived in Port Elizabeth, New Jersey, where the container was discharged at the Maher Terminals. See Tr. 612-15, 646-47. Upon discharge, the container was not weighed and the seals were not checked.¹¹ Tr. 650, 651-60.

25. In order to obtain delivery of the shipment from Maher Terminals, LBI presented an endorsed original bill of lading stamped "clean on board March 10" to Lloyd's New York agent, Norton Lilly International, Inc. ("Norton Lilly"). Tr. 33, 42. The only bills of lading LBI received were those sent by LBB stamped "clean on board" March 10. Tr. 264-66, 284; Exhs. 16, 17, 18.

26. LBI then sent its trucker, S.L.A. Transport, Inc. ("S.L.A."), to deliver the container from the Maher Terminals in Port Elizabeth, New Jersey to LBI's warehouse in Johnstown, New York. Tr. 612-15.

27. When the container was picked up on April 12, it possessed the seals of both Lloyd and the Brazilian Treasury. See Tr. 654, 668, 687-88; Exh. 35, 53. However, the horizontal brace connected to the door hatch on the right side of the container was bent.¹² Tr. 618-20, 685-87; Exh. 53.

28. S.L.A. then transported the container to the S.L.A. yard in Gloversville, New York, where it remained overnight. Tr. 622-23. During this period, the container was kept in a secure place in the yard, making it virtually impossible for anyone to tamper with or break into the cargo. Tr. 624-25.

29. On April 13, S.L.A. delivered the container to LBI in Johnstown, New York, where LBI's warehouse supervisor signed a receipt before opening the container.¹³ Tr. 625-26.

30. The thin metal seal (Brazilian Treasury seal # 852146) appeared old and "rusty looking," and the numbers on the seal were difficult to read. Tr. 591-92, 595. In order to remove the Brazilian Treasury seal, the LBI supervisor merely had to pull it with one hand.¹⁴ See Tr. 592-93. A seal of this type (a metal band approximately one quarter of an inch wide) cannot normally be removed by simply pulling on its metal strip.¹⁵ Tr. 688.

31. After the S.L.A. driver left, an LBI employee opened the container and discovered that five pallets of leather were missing. Tr. 590-95. The LBI employee also found...