Mendes Junior Intern. Co. v. M/V SOKAI MARU

• Decision Date: 08 March 1991
• Docket Number: Civ. A. No. H-82-847.
• Citation: 758 F. Supp. 1169
• Parties: MENDES JUNIOR INTERNATIONAL COMPANY, Plaintiff, v. The M/V SOKAI MARU and Atlanta Maritime Corporation, Defendants.
• Court: U.S. District Court — Southern District of Texas

758 F. Supp. 1169

MENDES JUNIOR INTERNATIONAL COMPANY, Plaintiff, v. The M/V SOKAI MARU and Atlanta Maritime Corporation, Defendants.

Civ. A. No. H-82-847.

United States District Court, S.D. Texas, Houston Division.

March 8, 1991.

William C. Bullard, Houston, Tex., for plaintiff.

James J. Sentner, Jr., Houston, Tex., for defendants.

MEMORANDUM OPINION

FRANCES H. STACY, United States Magistrate Judge.

This litigation arises out of a maritime contract for the carriage of goods to Iraq. The shipper, a Brazilian construction company, sued the Houston-based maritime carrier for damages suffered because of delivery delays, claiming that the ship carrying its cargo deviated from the course of the contracted voyage and that the carrier was negligent in chartering a ship that appeared on the Arab blacklist.

The carrier argued that the case was time-barred under the Carriage of Goods by Sea Act's one-year statute of limitations and countered with claims of its own for damages stemming from shipper-caused delays on six voyages, for interest owed on late payments of freight and bank transfer fees, and for deadfreight charges incurred on the JADE III voyage.

The case was tried and argued before Judge Ross N. Sterling, and taken under advisement, in June, 1985. In February, 1987, Judge Sterling passed away without having issued an opinion in the case. With the consent of the parties and pursuant to 28 U.S.C. § 636(c), U.S. Magistrate Judge Frances H. Stacy reheard final arguments on November 26, 1990, and reviewed the evidence, transcript and briefs in the case.

I. Background

On October 1, 1978, Mendes Junior International Company (MJIC) of Brazil and the government of Iraq signed a construction contract representing a four-year, $1.2 billion project to build the Baghdad-Hasaibah and Al Qaim-Akashat Railway in Iraq. Atlanta Maritime Corporation (AMC) was one of the shipping companies engaged by MJIC to carry construction materials, equipment and supplies from Brazil and other locations to Iraq.

In early 1980, while the construction project and the attendant cargo shipments were underway, war broke out between Iraq and Iran. Hostilities closed the Iraqi port of Basra to shipping and compelled MJIC to direct its materiel through the already-congested alternative ports of Aqaba, Jordan, and Kuwait City, Kuwait, for overland transport to the jobsite in Iraq.

The delays which resulted affected the construction schedule, causing Iraq and MJIC to modify their original agreement in order for the project to continue. While AMC and MJIC demonstrated some flexibility in their dealings so that shipping might proceed, each eventually developed claims against the other which, initially, they sought to resolve amicably.

When the railway project was completed, MJIC's efforts to negotiate final payment with the Government of Iraq failed. It required diplomatic negotiations between the Brazilian and Iraqi governments to resolve the matter, with MJIC recovering only a part of its claim. MJIC thereafter abandoned its negotiations with AMC for settling the claims in dispute here and filed this lawsuit.

II. MJIC's Claim: The M/V SOKAI MARU

On November 19, 1980, MJIC contracted with AMC to transport equipment and supplies on the M/V SOKAI MARU from Brazil to Aqaba, Jordan. The ship left Santos, Brazil on December 12, 1980, to encounter a series of unforeseen circumstances and misadventures that would finally take the last of the Mendes cargo to Kuwait for discharge in March, 1981, and lead to the filing of this lawsuit on March 24, 1982.

At the threshold we must consider whether March 24, 1982 is, as AMC claims, beyond the deadline for bringing this suit.

AMC's Statute of Limitations Claim

Section 3(6) of the Carriage of Goods by Sea Act (COGSA), 46 U.S.C.App. § 1303(6) (1976), contains a one-year statute of limitations that begins to run when the goods at issue are delivered to the shipper or his agent.

The SOKAI MARU arrived in Kuwait on March 15, 1981, discharged cargo including that of MJIC, and departed on March 26, 1981. This lawsuit was filed on March 24, 1982. In order for the lawsuit to proceed, the last of the MJIC cargo aboard the SOKAI MARU must have been discharged after March 24, 1981. The exact date of the Kuwait unloading, however, is in dispute.

AMC claims that MJIC's cargo aboard the SOKAI MARU was unloaded on March 15, 1981, the day the ship obtained a berth in Kuwait. In support of its position, AMC presented documents at trial, issued by the Kuwaiti port authority and attested to by the U.S. Embassy and the Ministry of Foreign Affairs, showing that MJIC's goods were unloaded from the SOKAI MARU on March 15, 1981. Twelve packages from this shipment were warehoused at the port car division from the time they were unloaded until MJIC picked them up on April 4th and 6th, and the documents related to the warehousing also show a discharge date of March 15, 1981. At trial, AMC's agent in Kuwait verified that the MJIC goods were unloaded and delivered on March 15.

Under the COGSA statute, delivery occurs when the goods leave the ship's slings, whether to the consignee or his authorized agent. C. Tennant Sons & Co. v. Norddeutscher Lloyd, 220 F.Supp. 448 (E.D.La.1963). According to AMC's argument, both lots having left the ship's unloading facilities on March 15, both lots were "delivered" on March 15 and this lawsuit is barred.

MJIC disagrees with this account, speculating that the port authority, in preparing the documents it provided to AMC, simply assumed that unloading occurred on the day listed as the date of arrival. MJIC claims that its cargo was not unloaded until March 26, 1981, the day the SOKAI MARU departed Kuwait. Under those facts, this lawsuit could proceed.

In support of its position, MJIC relies on a letter written on July 10, 1981, by John G. Miller, who replaced Mr. John Wulfers as AMC manager in the early months of 1981 after the relevant events had taken place. In this letter, Mr. Miller states that the "vessel finished discharging in Kuwait and sailed on March 26, 1981." Several MJIC employees also testified that the vessel was unloaded on the 26th, basing their belief on documents which show that the vessel "discharged and left on the 26th."

The single discordant note in plaintiff's litany is a statement by Mr. Delzio Morato, managing director of MJIC's trading company, Comex, which handled its shipping of goods and supplies to Iraq. In answer to a question posed to him by written interrogatory, he states that the SOKAI MARU finished unloading MJIC's goods in Kuwait on March 23, 1981. If correct, this delivery date would also bar this lawsuit. Under cross-examination at trial, however, Mr. Morato attributed that answer to a "typo," and added his voice to those of the other employees who said delivery occurred on the 26th. Whatever the case, nowhere in this evidence is there any definite statement, standing alone, or any testimony based on direct personal knowledge, that MJIC's cargo was unloaded on the 26th of March, 1981.

After weighing the evidence and testimony concerning this single question of fact on which the issue depends, the Court concludes that the SOKAI MARU indeed sailed from Kuwait on March 26, 1981, but the MJIC cargo was unloaded from it on March 15, as evidenced by verified port documents. It bases its conclusion on the port documents, the only concrete evidence presented, and notes the absence of any evidence of similar authority in opposition or of any convincing testimony to the contrary. The result is that under the facts of this case, this lawsuit is barred.

MJIC, however, argues that maritime law ousts the statute of limitations defense where there has been an unreasonable deviation and, presuming that the facts of this case support the finding of an unreasonable deviation, voids the statute of limitations here. We need not decide whether an unreasonable deviation does indeed have this effect, an issue on which the courts disagree, because we find that the SOKAI MARU did not at any time in its voyage deviate unreasonably.

Deviation

MJIC claims that the SOKAI MARU deviated on two separate occasions during its voyage from Brazil before MJIC's goods were finally delivered. The first of these involved a side trip to unload cargo in Jeddah while the ship waited on line for a berth at congested Aqaba. The second involved the ship's return from Jeddah to Aqaba to unload non-MJIC Jordan-bound cargo after MJIC had agreed to send its cargo to Kuwait so as to avoid the Aqaba congestion.

The facts are these: The SOKAI MARU, carrying cargo destined for Aqaba, Jeddah, Damman and Kuwait, left Brazil on December 12, 1980. The bill of lading listed Aqaba as the port of discharge. MJIC, operating under contractual time constraints, expected that AMC would unload its equipment in Aqaba first, although the shipping contract contained no terms to that effect.

When the SOKAI MARU arrived in Aqaba, congestion necessitated a minimum four-week wait for a berth. Her captain elected to register the ship with Aqaba port authorities, a procedure described as analogous to taking a number at a bakery, and make the two-day voyage to Jeddah, Saudi Arabia to unload non-MJIC cargo. He expected that the ship would resume her place on line upon her return to Aqaba having utilized otherwise lost time, a procedure successfully followed by the AMC-MJIC carrier M/V ST. CHRISTOPHORUS on an earlier date.

After the SOKAI MARU had negotiated entrance through the barrier reef into the sheltered port of Jeddah on January 1, 1981, the Saudi Arabian government declared the ship on the Arab blacklist for having traded with Israel, and refused her a berth or a pilot to aid her departure. AMC and Sanko Kisen, the charterer, were unaware of the ship's adverse history, there being no notation of restrictions against calling at Saudi Arabia, or Arab countries generally, on her charters.

Meanwhile, at a...