Nippon Fire & Marine Ins. Co. v. M.V. Tourcoing

• Decision Date: 17 September 1997
• Docket Number: No. 96 Civ. 0719(MGC).,96 Civ. 0719(MGC).
• Citation: 979 F.Supp. 206
• Parties: The NIPPON FIRE & MARINE INSURANCE COMPANY, Plaintiff, v. M.V. TOURCOING, Wilhelmsen Lines A.S. and Maher Terminals, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

979 F.Supp. 206

The NIPPON FIRE & MARINE INSURANCE COMPANY, Plaintiff, v. M.V. TOURCOING, Wilhelmsen Lines A.S. and Maher Terminals, Inc., Defendants.

No. 96 Civ. 0719(MGC).

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

September 17, 1997.

COPYRIGHT MATERIAL OMITTED

Maloof & Browne, LLP, New York City by David T. Maloof, Lawrence Browne, for Plaintiff.

Kenny & Stearns, New York City by William J. Manning, Jr., James M. Kenny, for defendants.

OPINION

CEDARBAUM, District Judge.

In this action, Nippon Fire & Marine Insurance Company seeks recovery of $1,186,467.87 that it paid to Komori America Corporation pursuant to a marine cargo insurance policy. The money was paid for damage to an offset printing press after the press had been shipped from Japan to the United States and while it was being unloaded from the vessel M.V. Tourcoing. Nippon sues Wilhelmsen Lines A.S., the owner and operator of M.V. Tourcoing, and Maher Terminals, Inc., which acted as stevedore for Wilhelmsen at the port of discharge.¹ The only issue now before the court is whether the $500 limitation of liability that is included in the bill of lading limits the liability of either Wilhelmsen or Maher or both. For the reasons that follow, Wilhelmsen's motion for partial summary judgment limiting its liability to $500 per package is granted but Maher's motion for partial summary judgment similarly limiting its liability is denied. Nippon's motion for summary judgment or, in the alternative, for partial summary judgment dismissing any limitation-of-liability defense, is denied. Nippon's motion pursuant to Fed.R.Civ.P. 37 to designate certain facts as true, to preclude defendants from introducing evidence on certain issues and to require defendants to pay Nippon's expenses is also denied.

Undisputed Facts

In December 1992, Komori entered into a contract with Wilhelmsen to ship an offset printing press from Japan to the United States. (Pl.'s 3(g) ¶ 5; Defs.' counter-3(g) ¶ 5.) The press was to be shipped disassembled in thirteen separate cases. (Defs.' 3(g) ¶¶ 7, 8; Pl.'s Resp. to Defs.' 3(g) ¶¶ 7, 8.) It is undisputed that each case constitutes a "package" within the meaning of the Carriage of Goods by Sea Act ("COGSA"). A bill of lading covering the thirteen cases was issued by Wilhelmsen on December 28, 1992. (Defs.' 3(g) ¶ 6; Pl.'s Resp. to Defs.' 3(g) ¶ 6.) Clause 11 of that bill of lading, entitled "Package Limitation," expressly limits the liability of Wilhelmsen, its servants and its subcontractors to $500 per package, unless the shipper declares the nature and value of the cargo and pays an additional charge. Although there is a box on the front of the bill of lading in which the shipper could have declared an excess value, it is undisputed that no value was declared. (Defs.' 3(g) ¶ 17; Pl.'s Resp. to Defs.' 3(g) ¶ 17.)

On February 1, 1993, the Tourcoing, carrying the printing press, arrived at the port of discharge in New Jersey. (Defs.' 3(g) ¶ 9; Pl.'s Resp. to Defs.' 3(g) ¶ 9.) Maher, which was acting as stevedore, unloaded the press from the vessel. During the course of discharge but while the press was still on board the vessel, two of the cases were damaged.² (Defs.' 3(g) ¶ 11; Pl.'s Resp. to Defs.' 3(g) ¶ 11; Defs.' Br. at 3 n. 2.) Nippon, as Komori's insurer, paid Komori ¥ 123,582,641 for the damage. (Pl.'s 3(g) ¶ 14; Defs.' counter-3(g) ¶ 14.) In this action, Nippon seeks to recover $1,186,467.87 from defendants. (Pl.'s 3(g) ¶ 12; Defs.' counter-3(g) ¶ 12.)

Defendants admit that, subject to any package limitation or other defense, they are liable for the damage to the offset printing press. (Pl.'s 3(g) ¶ 15; Defs.' counter-3(g) ¶ 15.) Accordingly, the only issue is whether Wilhelmsen and/or Maher is entitled to the benefit of the $500 package limitation in the bill of lading.

Discussion

Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). To defeat a motion for summary judgment brought by the party that does not bear the burden of proof, the party with the burden of proof must make a showing sufficient to establish the existence of every element essential to that party's claim. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). In deciding whether a genuine issue of material fact exists, the court must "examine the evidence in the light most favorable to the party opposing the motion, and resolve ambiguities and draw reasonable inferences against the moving party." In re Chateaugay Corp., 10 F.3d 944, 957 (2d Cir.1993) (citation omitted).

1. The Fair Opportunity Doctrine

Plaintiff argues that the bill of lading in this case does not give clear and unambiguous notice to the shipper of a limitation of liability. Accordingly, plaintiff argues, no limitation of liability is available. This argument is based on the judicially-created "fair opportunity doctrine." The doctrine, as enunciated by the Supreme Court in New York, New Haven & Hartford Railroad Co. v. Nothnagle, 346 U.S. 128, 135, 73 S.Ct. 986, 990, 97 L.Ed. 1500 (1953), provides that "only by granting its customers a fair opportunity to choose between higher and lower liability by paying a correspondingly greater or lesser charge can a carrier lawfully limit recovery to an amount less than the actual loss sustained." If the carrier does not provide such a fair opportunity, it is not entitled to the benefit of any limitation of liability that might otherwise apply. General Electric Co. v. MV Nedlloyd, 817 F.2d 1022, 1028 (2d Cir.1987), cert. denied, 484 U.S. 1011, 108 S.Ct. 710, 98 L.Ed.2d 661 (1988).

A carrier seeking to enforce a package limitation must first make a prima facie showing that notice of the limitation was given to the shipper, and that thus the shipper was given an opportunity to opt out of the limitation by declaring a higher value. See General Electric, 817 F.2d at 1029; Couthino, Caro and Co., Inc. v. M/V Sava, 849 F.2d 166, 171 (5th Cir.1988). This prima facie showing can be made by pointing to the language contained in the bill of lading. General Electric, 817 F.2d at 1029. If the carrier succeeds in establishing its prima facie case, the burden shifts to the shipper to demonstrate that a fair opportunity did not exist. Id.

The language of the bill of lading at issue in this case expressly provides that liability is limited to $500 per package. Clause 11 of the bill of lading, entitled "Package Limitation," states:

Neither the Carrier, its servants or subcontractors nor the vessel shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding U.S. $500 per package, ... unless the nature and value of such goods have been declared by the shipper before shipment and inserted in this bill of lading (Box 16) AND the shipper has paid the additional charges on such declared value.

Box 16, on the front of the bill of lading, is labeled "DECLARED VALUE (SEE CLAUSE 11 RE: $500 LIMIT)" and provides a space for the shipper to declare an excess value. It is undisputed that in this case, no excess value was declared.

Plaintiff argues, however, that Clause 7 of the bill of lading, the "clause paramount," is ambiguous and that therefore it is not clear that the $500 limitation of Clause 11 applies. According to plaintiff, the ambiguity of Clause 7 stems from the fact that it provides for alternative limitations of liability depending on the country in which suit is brought. Clause 7 provides: "[T]his Bill of Lading shall be subject to the provisions of COGSA, ..., which Act is incorporated herein, or to any law similar to the 1924 Hague Rules or Hague-Visby Rules if such Law is compulsorily applicable to this Bill of Lading in the country where suit is brought." COGSA is the Carriage of Goods by Sea Act, which was approved on April 16, 1936 and is based on the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, known as the "Hague Rules." COGSA applies ex proprio vigore to all shipments to or from United States ports. 46 U.S.C.App. §§ 1300, 1312. A number of countries, including Japan, have adopted both the Hague Rules and certain amendments to the Hague Rules known as the Visby Amendments, which together are known as the "Hague-Visby Rules." Thus, Clause 7 of the bill of lading provides that COGSA applies if suit is brought in the United States, and the Hague-Visby Rules apply if suit is brought in a country that has made those Rules compulsorily applicable.

The only difference between COGSA and the Hague-Visby Rules that is relevant to this case is the amount of the limitation of liability. COGSA limits the carrier's liability to $500 per package, but permits shippers and carriers to agree to raise that limit by contract. The Hague-Visby Rules generally provide for a higher limitation of liability than does COGSA, but the exact limitation varies among countries. According to plaintiff, the fact that the applicable limitation of liability depends on the country in which suit is brought renders Clause 7 ambiguous and means that the shipper was not given clear notice of the limitation of liability. This is particularly true, according to plaintiff, because the limitation varies greatly among countries. Thus, plaintiff contends, it was impossible for either party to determine, at the time the bill of lading was issued, which of over 100 different limitations would apply.³ (Pl.'s Br. at 5; see William Tetley, Package & Kilo Limitations and The Hague, Hague/Visby and Hamburg Rules & Gold, J.Mar.L. & Com., Jan. 1995 at 133, App. A, attached as Ex. A to Pl.'s Br.)

However, plaintiff provides no authority to support its position that the existence of...