Outokumpu Stainless USA, LLC v. M/V Vegaland
| Decision Date | 13 May 2014 |
| Docket Number | Civil Action No. H–13–66. |
| Citation | 21 F.Supp.3d 816 |
| Parties | OUTOKUMPU STAINLESS USA, LLC, Plaintiff, v. M/V VEGALAND, et al., Defendants. |
| Court | U.S. District Court — Southern District of Texas |
Jeffrey R. Bale, The Bale Law Firm, PLLC, Sugar Land, TX, for Plaintiff.
William A. Durham, Eastham Watson et al., Houston, TX, for Defendants.
Pending before the court are Nordana Line A/S's (“Nordana”) motion for partial summary judgment (Dkt. 14) and plaintiff's motion for partial summary judgment (Dkt. 27). After considering the parties' briefing, record evidence, and applicable law, the court is of the opinion that Nordana's motion for partial summary judgment should be GRANTED and plaintiff's motion for partial summary judgment should be DENIED.
This maritime case stems from damaged cargo being transported by sea from Genoa, Italy to Houston, Texas. Dkt. 1, p. 7. Plaintiff, a large producer of stainless steel, shipped a 63–ton tilt drive industrial machine1 for installation in its Melt Shop facility in Alabama through Nordana as the common carrier and time charterer of the M/V VEGALAND. Id.; Dkt. 14, Ex. A. Before reaching Nordana, the melt shop was prepared for shipment by Siemens–VAI Metal Technologies (“Siemens”), the seller of the melt shop. Id. at Ex. B. It was wrapped in plastic sheeting, enclosed in a crate made from wooden slats with several inches separating each wooden slat, and mounted to a skid. Id. at Ex. D. The melt shop was shipped along with two other wooden crates containing components for the melt shop. Id. at Ex. A. Consistent with the summary packaging slip prepared by Siemens, Nordana issued a bill of lading describing the packages to be shipped as 3 “crates.” Id. at Exs. A–B. Plaintiff did not declare the value of the cargo on the face of the bill of lading. Id. at Ex. A. While in transit, the M/V VEGALAND encountered heavy weather. Dkt. 27, Ex. I. When the M/V VEGALAND reached the Port of Houston, the cargo was found tipped over on its side. Dkt. 1, pp. 8–9. The melt shop experienced significant damage. Id.
Plaintiff filed suit in admiralty on January 9, 2013, claiming $566,740.80 in actual damages to the melt shop. Id. at 9. Plaintiff and Nordana filed cross-motions for partial summary judgment seeking a determination regarding whether the Carriage of Goods by Sea Act (“COGSA”), 46 U.S.C. § 30701 et seq., limits Nordana's liability to $500 per package. Nordana submits that the physical packaging of the cargo and the bill of lading establish, as a matter of law, that the melt shop was a single package under COGSA. Plaintiff counters that the melt shop does not constitute a package, and further, that Nordana is not entitled to limit its liability because it did not give plaintiff a fair opportunity to declare a higher value for the cargo.
Summary judgment is proper if “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a) ; see also Carrizales v. State Farm Lloyds, 518 F.3d 343, 345 (5th Cir.2008). The moving party bears the initial burden of informing the court of evidence, if any, that demonstrates the absence of a genuine dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Only when the moving party has discharged this initial burden does the burden shift to the non-moving party to demonstrate that there is a genuine dispute of material fact. Id. at 322, 106 S.Ct. 2548. A dispute is “genuine” if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; Cooper Tire & Rubber Co. v. Farese, 423 F.3d 446, 454 (5th Cir.2005). A dispute is “material” if its resolution could affect the outcome of the action. Anderson, 477 U.S. at 248, 106 S.Ct. 2505. The substantive law determines which facts are material in each case. Lastly, in determining whether a genuine dispute of material fact exists, the court views the evidence and draws inferences in the light most favorable to the non-moving party. See id. at 255, 106 S.Ct. 2505 ; Richardson v. Monitronics Int'l, Inc., 434 F.3d 327, 332 (5th Cir.2005).
If there are no issues of witness credibility, “the court may conclude on the basis of the affidavits, depositions, and stipulations before it, that there are no genuine issues of material fact, even though decision may depend on inferences to be drawn from what has been incontrovertibly proved.” Tamini v. Salen Dry Cargo AB, 866 F.2d 741, 742–43 (5th Cir.1989) (quoting Nunez v. Superior Oil Co., 572 F.2d 1119, 1123–24 (5th Cir.1978) ). Under these circumstances, the judge, who is also the trier of fact in an admiralty case, may be warranted in deciding a factual question as a matter of law. Id. “The judge, as trier of fact, is in a position to and ought to draw his inferences without resort to the expense of trial.” Id.
Nordana seeks partial summary judgment solely on the issue of whether its liability for the damaged cargo is limited to $500 per package under COGSA. Nordana maintains that the melt shop was packaged for shipping and that plaintiff failed to declare a higher value for the cargo on the bill of lading in order to avoid additional ad valorem freight charges, despite being given a fair opportunity to do so. Plaintiff responds that the melt shop does not constitute a package because the nature and value of the equipment were apparent to Nordana such that it should not be entitled to limit its liability to $500. Plaintiff also contends it was not given a fair opportunity to declare a higher value, which should render void the limitation clause in the bill of lading. Additionally, plaintiff seeks to avoid the limitation of liability by making claims of geographic deviation, improper stowage, and spoliation of evidence. The court will address the arguments relevant to the question of whether the COGSA package limitation applies.
Both parties agree that COGSA applies. COGSA “applies to a carrier engaged in the carriage of goods to or from any port in the United States.” 46 U.S.C. § 30702. The COGSA package limitation provides, in relevant part:
Neither the carrier nor the ship 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 $500 per package lawful money of the United States, or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading. This declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall not be conclusive on the carrier.
The parties dispute whether the melt shop was a package for purposes of COGSA's $500 per package limitation. Specifically, plaintiff argues that the contents of the crate were visible to Nordana, Nordana was provided photographs and drawings of the melt shop, and the content of the crate was sufficiently described in the bill of lading to put Nordana on notice that the value of the melt shop exceeded $500. Further, the parties did not evidence an intent that the melt shop was a package because the package column was left blank in the bill of lading and the freight charges were calculated on a weight and measure basis. Nordana, however, argues that the cargo was pre-packaged for shipment. It was fully wrapped in plastic, surrounded on all sides by wooden slats, and mounted to H-beams to facilitate lashing.
The limitation of a carrier's liability to $500 per package turns on whether or not the melt shop was a “package.” The statute does not provide any guidance as to what constitutes a package; however, the Fifth Circuit and lower courts have construed the term on a case-by-case basis. In determining whether certain cargo constitutes a package under COGSA, courts have focused on whether the cargo was only partially packaged or fully exposed, whether the cargo was prepared to facilitate handling or shipping, and whether the shipping documents evinced an intent by the parties that the cargo be treated as a package. See e.g., Tamini, 866 F.2d 741 (5th Cir.1989) ; Croft & Scully Co. v. M/V Skulptor Vuchetich, 664 F.2d 1277 (5th Cir.1982) ; Allstate Ins. Co. v. Inversiones Navieras Imparca, C.A., 646 F.2d 169 (5th Cir.1981).
The packaging of the melt shop in this case and the contents of the bill of lading are not in dispute. The melt shop was generally referred to as one of three “Crates” being shipped from Genoa, Italy to Houston, Texas. The space provided for “No. of Pkgs.” was left blank in the bill of lading, but this notation is not determinative. See Tamini, 866 F.2d at 743 (). These facts provide the only unequivocal support for plaintiff's position that the melt shop was not a package. In all other respects, the melt shop was prepared and delivered to Nordana as a package. Specifically, the melt shop was wrapped fully in plastic, it was then fully enclosed in a crate made of wooden slats. While there was space in between each wooden slat, the plastic wrap was all that could be seen between the spaces in the slats. Cargo does not have to be fully enclosed to be considered a package. Calmaquip Eng'g W. Hemisphere Corp. v. W. Coast Carriers, 650 F.2d 633, 639 (5th Cir.1981). Further, the melt shop was attached to H-beams in order to facilitate shipping. Thus, the majority of factors considered by the Fifth Circuit in determining whether cargo is a package for purposes of COGSA weigh in favor of a finding that the melt shop was a package.
Plaintiff relies on the Fifth Circuit's decision in Tamini to...
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