Mori Seiki USA, Inc. v. M.V. Alligator Triumph

• Decision Date: 23 March 1993
• Docket Number: No. 91-56430,91-56430
• Citation: 990 F.2d 444
• Parties: MORI SEIKI USA, INC., Plaintiff-Appellant, v. M.V. ALLIGATOR TRIUMPH, her engines, tackle, etc., in rem, Defendant, Mitsui O.S.K. Lines, Ltd.; Camellia Container Carrier, S.A. Panama; Trans Pacific Container Service Corporation, Marine Terminals Corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 444

990 F.2d 444

1993 A.M.C. 1521

MORI SEIKI USA, INC., Plaintiff-Appellant, v. M.V. ALLIGATOR TRIUMPH, her engines, tackle, etc., in rem, Defendant,

Mitsui O.S.K. Lines, Ltd.; Camellia Container Carrier, S.A.

Panama; Trans Pacific Container Service

Corporation, Marine Terminals

Corporation, Defendants-Appellees.

No. 91-56430.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 3, 1993.

Decided March 23, 1993.

Paul Gary Sterling, Finan and Sterling, and William M. Duncan, Meadows, Smith, Lenker, Sterling & Davis, Long Beach, CA, for plaintiff-appellant.

Alan Nakazawa and B. Alexander Moghaddam, Williams, Woolley, Cogswell, Nakazawa & Russell, Long Beach, CA, Arthur A. Leonard, Sands, Narwitz, Forgie & Leonard, Los Angeles, CA, for defendants-appellees.

Appeal from the United States District Court for the Central District of California.

Before: HUG, SKOPIL, and O'SCANNLAIN, Circuit Judges.

HUG, Circuit Judge:

Appellant Mori Seiki USA, Inc. ("Mori Seiki") was the consignee of a precision lathe that was damaged while being transported from Nagoya, Japan to Houston, Texas. The lathe was damaged after it was unloaded from an ocean vessel at the Port of Los Angeles, but before it was released from the seaport. Mori Seiki filed suit in district court seeking damages from After partial summary judgment and trial, the district court held that the carrier's bill of lading limited the cumulative liability of all parties to $500 by contractually extending the liability limits already applicable under the Carriage of Goods by Sea Act ("COGSA"). Mori Seiki now appeals the district court's orders. We have jurisdiction under 28 U.S.C. § 1291 and we affirm.

the ocean carrier (Mitsui O.S.K. Lines, Ltd.), the ship (M.V. Alligator Triumph), the charterer/operator of the ship (Camellia Container Carrier, S.A. Panama), the seaport operator (Trans Pacific Container Service Corporation), and the stevedore services firm which unloaded and handled its lathe (Marine Terminals Corporation).

I.

APPLICABILITY OF COGSA'S $500 PACKAGE LIMITATION AFTER

DISCHARGE OF THE LATHE FROM THE SHIP

Mori Seiki contends that the district court erred by concluding that the bill of lading extended COGSA's $500 package liability limitation to the period during which the lathe was damaged, that is, the period after the lathe was discharged from the ship, but before it was released from the sea terminal. We disagree.

COGSA applies to all cargo shipments which are carried by sea, to or from the United States. See 46 U.S.C.App. §§ 1300-1315. By its own terms, COGSA limits liability for cargo damage to $500, if the damage occurs between the time the cargo is loaded on to the ship and the time it is discharged from the ship ("tackle to tackle"). 46 U.S.C.App. §§ 1304(5), 1301(e). Parties to a shipping agreement, however, may contractually extend the limitation period. 46 U.S.C.App. § 1307.

Section 7(2)(i) of the bill of lading at issue in this case, reads in relevant part:

[W]ith respect to loss or damage occurring during the period from the time when the Goods arrived at the sea terminal at the port of loading to the time when they left the sea terminal at the port of discharge ... [the carrier shall be responsible for such loss or damage] to the extent prescribed by the applicable Hague Rules Legislation....

The parties do not dispute that COGSA constitutes the "Hague Rules Legislation" which is applicable to this case.

The plain meaning of this language is that COGSA's liability limitation would extend to the period after the lathe was discharged from the ship, but before it was released from the sea terminal. We believe that this is precisely the kind of extension of the limitation period which is contemplated and authorized by 46 U.S.C.App. § 1307 and note that at least two courts have read substantially similar language in the same way. See B.M.A. Industries, Ltd. v. Nigerian Star Line, Ltd., 786 F.2d 90, 91 (2d Cir.1986); GAF (Osterreich) GmbH v. Dart Containerline Co. Ltd., 541 F.Supp. 9, 11 (D.N.J.1981).

Mori Seiki contends that COGSA's liability limitation was not extended under the bill of lading. Mori Seiki argues that under Section 2 of the bill of lading, COGSA applies to the contract only to the extent that it applies by its own terms. Section 2 reads in relevant part:

As far as this Bill of Lading covers the carriage of the Goods by water, this Bill of Lading shall have effect subject to the provisions of the International Carriage of Goods by Sea Act, 1957 of Japan, unless it is adjudged that any other legislation of a nature similar to the International Convention for the Unification of Certain Rules relating to Bills of Lading signed at Brussels on August 25, 1924 compulsorily applies to this Bill of Lading, in which case it shall have effect subject to the provisions of such legislation, and the said Act or legislation (hereinafter called Hague Rules Legislation) shall be deemed to be incorporated herein.

Mori Seiki argues that under this language, Japan's International Carriage of Goods by Sea Act ("JCOGSA") governs the bill of lading, unless some other Hague Rules Legislation applies. Where some other country's legislation applies, it only applies Mori Seiki misconstrues Section 2. Though the language states that JCOGSA will apply unless another statute applies "compulsorily," it does not state that such a statute will apply only to the extent it applies by its own terms. Where another statute is applicable, Section 2 clearly states that "it shall have effect subject to the provisions of such legislation, and ... shall be deemed to be incorporated herein." Under its own terms, the statute which is compulsorily applicable to the bill of lading in this case, COGSA, permits the extension of the liability limitation period. Accordingly, the extension under Section 7(2)(i) is not undermined by Section 2.

                to the extent that it applies "compulsorily," that is, to the extent of its own terms.   Because COGSA, which applies here, applies by its own terms only tackle to tackle, 46 U.S.C.App. § 1301(e), Mori Seiki concludes that the apparent extension of the limitation period in Section 7(2)(i) is not effective
                

Moreover, we conclude that the case upon which Mori Seiki principally relies to support this argument, Allstate Ins. Co. v. International Shipping Corp., 703 F.2d 497 (11th Cir.1983), is inapposite. In Allstate, a carrier sought the protection of COGSA's one year statute of limitations for cargo damage that occurred before the cargo was loaded on to a ship. The Eleventh Circuit Court of Appeals held that by its own terms, COGSA's statute of limitations does not apply to damage occurring at such a time. Id. at 499. The court also declined to give effect to an incorporated bill of lading provision which required a shipper to bring suit within one year. Id. at 500. Unlike the bill of lading at issue in this case, however, the bill of lading in Allstate did not include a provision, like Section 7(2)(i), that extended the period during which COGSA's package liability limitation would apply.

Alternatively, Mori Seiki argues that the bill of lading was a contract of adhesion, that its language was ambiguous, and that it should therefore be construed in Mori Seiki's favor. This argument also fails. Although it is true that a bill of lading is a contract of adhesion, which is "strictly construed against the carrier," C-ART, Ltd. v. Hong Kong Islands Line America, S.A., 940 F.2d 530, 532 (9th Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 1762, 118 L.Ed.2d 425 (1992), and that "any ambiguity in the bill of lading must be construed in favor of the shipper and against the carrier," Institute of London Underwriters v. Sea-Land Serv., Inc. ("London Underwriters"), 881 F.2d 761, 767 (9th Cir.1989), we are not persuaded that such an ambiguity exists here. The only ambiguity in the bill of lading arises from Mori Seiki's strained reading of its provisions. Accordingly, the favorable construction that Mori Seiki seeks is not available. See id. (declining to adopt shipper's strained interpretation of passage where language is unambiguous).

We conclude, therefore, that the district court properly granted summary judgment in favor of appellees on the issue of whether the bill of lading extended COGSA's $500 liability limitation to the period during which the lathe was damaged.

II. FAIR OPPORTUNITY TO OPT FOR A HIGHER LIABILITY LIMIT

Mori Seiki argues that the district court erred by concluding on summary judgment that COGSA's $500 package liability limit should not apply to this case because the shipper, Mori Seiki Japan, Inc., was not afforded a "fair opportunity" to declare a higher value for the cargo. We disagree.

Under Ninth Circuit law, a carrier may take advantage of COGSA's $500 liability limit only if it gives the shipper a "fair opportunity" to opt for a higher liability by paying a correspondingly higher freight rate. Carman Tool & Abrasives, Inc. v. Evergreen Lines, 871 F.2d 897, 899 (9th Cir.1989); Komatsu, Ltd. v. States S.S. Co., 674 F.2d 806, 809 (9th Cir.1982); Tessler Bros. (B.C.) Ltd. v. Italpacific Line, 494 F.2d 438, 443 (9th Cir.1974). As we have explained in the past, "[t]he fair opportunity requirement is meant to give the shipper notice of the legal consequences In a dispute over "fair opportunity" such as this one, the carrier bears an initial burden of producing prima facie evidence which demonstrates that it provided such notice to the shipper. Carman Tool, 871 F.2d at 899. "Normally, the carrier can meet this initial burden by showing that the language of COGSA Section 4(5) [liability limitation] is contained in the bill of lading." Nemeth v. General S.S. Corp., Ltd., 694 F.2d 609, 611 (9th Cir.1982). Language in the bill of lading "to the same effect" as the statute is adequate. Pan American World Airways, Inc. v. California Stevedore & Ballast Co., 559 F.2d 1173, 1176 (9th...