Lite-On Peripherals v. Burlington Aire Express

• Decision Date: 06 June 2001
• Docket Number: PLAINTIFF-APPELLEE,AND,LITE-ON,No. 99-57003,DEFENDANT-APPELLAN,99-57003
• Parties: (9th Cir. 2001) PERIPHERALS, INC., A CORPORATION,, v. BURLINGTON AIRE EXPRESS, INC., A CORPORATION, DBA BURLINGTON OCEAN SERVICES,DOES 1 THROUGH 10, INCLUSIVE, DEFENDANT
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1189

255 F.3d 1189 (9th Cir. 2001)

LITE-ON PERIPHERALS, INC., A CORPORATION, PLAINTIFF-APPELLEE, v. BURLINGTON AIRE EXPRESS, INC., A CORPORATION, DBA BURLINGTON OCEAN SERVICES, DEFENDANT-APPELLANT, AND DOES 1 THROUGH 10, INCLUSIVE, DEFENDANT.

No. 99-57003

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted June 6, 2001--Pasadena, California

Filed July 10, 2001

Kathleen C. Jeffries, Russell, Hancock, Jeffries & Gaston Llp, Pasadena, California, for the appellee.

Michael W. Lodwick, Haight, Brown & Bonesteel, Llp, Santa Ana, California, for the appellant.

Appeal from the United States District Court for the Central District of California J. Spencer Letts, District Judge, Presiding. D.C. No. CV-98-07709-JSL

Before: Procter Hug, Jr., Stephen S. Trott, and William A. Fletcher, Circuit Judges.

Trott, Circuit Judge

OPINION

In this case we must decide whether a consignor of goods named in a bill of lading has standing to sue the carrier for misdelivery of goods and breach of contract where there is evidence that the consignee, and not the consignor, entered into the shipment contract with the carrier. We answer this question affirmatively, and hold that, in this situation, the consignor of goods was a party to the contract evidenced by the bill of lading with full rights to enforce it. Accordingly, we affirm the district court's decision granting summary judgment in favor of the plaintiff.

FACTS

The parties in this case are Lite-On Peripherals, Inc. ("Lite-On") and Burlington Air Express, Inc. ("Burlington"). Lite-On sued Burlington for breach of contract and misdelivery of goods, alleging that Burlington had violated the terms of its own bill of lading by failing to obtain an endorsed copy of the bill before delivering goods to the buyer, Reveal Computer Products ("Reveal"). Because Reveal turned out to be insolvent, Burlington's failure to obtain a copy of the bill resulted in a loss of over $100,000 to Lite-On.

Lite-On's involvement with this case stems from its relationship with the Silitek Corporation, a Taiwanese exporter of computer products. Lite-On is a subsidiary of Silitek, and is the assignee of Silitek's rights under the bill of lading that is the center of this dispute. The defendant, Burlington, is a company engaged in the business of transporting goods over-seas. Reveal Computer Products is a computer manufacturing company located in California and is not a party to the case.

On January 22, 1996, Burlington received in Keelung, Taiwan, a shipment of 1,000 cartons of computer keyboards from Silitek. Silitek gave Burlington an invoice and a packing list that indicated that the keyboards were to be shipped to Reveal at its offices in California. Burlington, in turn, issued Silitek a document entitled a "Negotiable Combined Transport Bill of Lading." This bill of lading listed Silitek as the consignor of the keyboards. The goods were consigned to the order of Reveal, and listed "LPI" as a "notify party" along with Reveal. Although "LPI" was meant to refer to Lite-On, the bill of lading did not indicate this, nor did it list any address or contact information for LPI. The following language also appeared on the face of the bill: "One of these Combined Transport Bills of Lading must be surrendered duly endorsed in exchange for the goods."

Although the bill of lading indicated that the keyboards were to be delivered to Reveal, Lite-On claims that Reveal was not in fact the intended consignee, but that Lite-On was. Lite-On claims that the goods were ultimately intended for Reveal, but that Lite-On was to receive them first and deliver them to Reveal only when Lite-On, on behalf of Silitek, was satisfied with Reveal's creditworthiness. Lite-On discovered the mistake when it received the bill of lading from Silitek. On January 29, 1996, as soon as the error was recognized, Lite-On claims that one of its employees telephoned Burlington and instructed it not to deliver the goods to Reveal. Lite-On also claims that on February 2, 1996, it sent Burlington a facsimile letter again instructing Burlington not to deliver the goods to Reveal. Burlington, however, claims to have no record of either the telephone call or the fax.

Burlington delivered the keyboards to Reveal. Reveal, however, did not give Burlington a copy of the bill of lading that was supposed to be obtained in exchange for the goods. In fact, Reveal has never had the bill, which has at all times been in either Silitek's or Lite-On's possession.

Lite-On was able to recover approximately half of the keyboards mistakenly delivered to Reveal. The unrecovered keyboards, however, were worth $101,602.80. Reveal has not paid Lite-On or Silitek for the keyboards it did receive, and has filed for bankruptcy. Silitek has now assigned to Lite-On all rights it possessed under the bill of lading.

After attempting unsuccessfully to obtain payment from Burlington for the misdelivered keyboards, Lite-On filed suit in federal district court. Lite-On alleged a claim for breach of contract, specifically, breach of the clause in Burlington's bill of lading that indicated that the keyboards would not be delivered without surrender of a duly endorsed bill. The complaint also included causes of action for misdelivery of cargo and negligence. After the parties had conducted informal discovery as ordered, the district judge entered summary judgment in favor of Lite-On. Burlington now appeals.

DISCUSSION

We review de novo a district court's decision to grant summary judgment. See, e.g., Balint v. Carson City, 180 F.3d 1047, 1050 (9th Cir. 1999) (en banc). Making all inferences in favor of the non-moving party, we must determine whether material issues of fact exist that would necessitate a trial. Id. In this case, summary judgment in favor of Lite-On was appropriate.

Lite-On contends that this is a straightforward contract case. We agree. Lite-On is the assignee of Silitek's rights under the bill of lading, and is therefore able to enforce that contract as Silitek would. The bill of lading, which Burlington itself issued, contained a "surrender-upon-delivery" clause indicating that the keyboards would not be turned over to the named consignee, Reveal, unless the consignee produced an endorsed bill of lading. Despite this language, Burlington gave the goods to Reveal without first requiring Reveal to produce the bill. Burlington admits these essential facts, which are the only facts necessary to establish liability under the bill of lading. See, e.g., Pere Marquette Ry. Co. v. J.F. French & Co., 254 U.S. 538, 546-47 (1921) (failure to require surrender of endorsed bill of lading before delivery of goods when bill of lading so requires is actionable misconduct on the part of the carrier); C-Art Ltd. v. Hong Kong Island Line America, 940 F.2d 530, 532-33 (9th Cir. 1991) (same). Burlington, however, raises numerous issues as to why this case is not so simple. We address these arguments below.

A. Silitek Was a Party to the Bill of Lading Contract, and Lite-On, as Silitek's Assignee, Has Standing to Enforce it.

Burlington's arguments boil down to the central assertion that Silitek was a stranger to the shipping contract evidenced by the bill of lading, and that therefore, neither Silitek nor Lite-On has standing to enforce the surrender upon delivery clause. This argument fails, and once this card is pulled out, Burlington's whole house falls down.

Burlington bases its argument that Silitek was a stranger to the bill of lading on the following contentions and facts. First it argues that Reveal, and not Silitek, arranged to have Burlington ship the keyboards from Taiwan to California. To support this contention, Burlington points to a pre-existing "Rate and Service Agreement" between it and Reveal, in which Reveal agreed to use Burlington for all its shipping needs.

Burlington also claims that Reveal paid the freight charges for the shipment of keyboards. It points out that the invoice provided by Silitek to Burlington contained the notation "F.O.B. Taiwan." Burlington argues that this notation means that Silitek was responsible for getting the keyboards to Burlington, but that Reveal would actually be responsible for Burlington's freight charges for the transportation to the United States. Burlington claims, not without some support, that the term "F.O.B. Taiwan" would mean that title to the keyboards transferred to Reveal when Silitek delivered the keyboards to Burlington in Taiwan. See, e.g., U.C.C. §§ 2-319(1); Black's Law Dictionary 578 (5th ed. 1979). Burlington argues that these facts and propositions demonstrate that Silitek was a stranger to the shipping contract, and that therefore Lite-On is an interloper in no position to bring this lawsuit.

Burlington's analysis misses the point. We assume for the sake of argument that Reveal made the arrangements to have Burlington ship the keyboards, that Reveal was responsible for the freight charges, and that the "F.O.B Taiwan" notation would mean that title to the goods had theoretically passed to Reveal. Even if all these claims were true, none of them would mean that Silitek was a stranger to the shipping contract.

First, Burlington's claim that Silitek had nothing to do with the shipping contract is factually insupportable. The undisputed facts of this case demonstrate that Silitek was involved with the transaction that produced the bill of lading, despite Burlington's contentions to the contrary. As Burlington admits, Silitek was the party that gave it the invoices indicating what goods were to be shipped and to whom.

Burlington incorporated the information on these invoices into the bill of lading. And Burlington gave Silitek the bill of lading when Silitek delivered the keyboards to Burlington in Taiwan. In contrast, Burlington never gave a copy of the bill to Reveal.

Silitek is also listed as the "consignor" of the goods on the face of the bill of lading. The fine...