Parker Hannifin Corp. v. Ceres Marine Terminals, Civil Action No. WMN-95-961.

• Decision Date: 12 March 1996
• Docket Number: Civil Action No. WMN-95-961.
• Citation: 935 F. Supp. 632,1996 AMC 1573
• Parties: PARKER HANNIFIN CORPORATION, et al. v. CERES MARINE TERMINALS, INC.
• Court: U.S. District Court — District of Maryland

935 F. Supp. 632

1996 AMC 1573

PARKER HANNIFIN CORPORATION, et al. v. CERES MARINE TERMINALS, INC.

Civil Action No. WMN-95-961.

United States District Court, D. Maryland.

March 12, 1996.

Donald C. Greenman, Ober, Kaler, Grimes & Shriver, Baltimore, MD, for SR International Business Insurance Company, Ltd.

Jo Anne Zawitoski, Semmes, Bowen & Semmes, Baltimore, MD, Elizabeth Worthington Benet, Semmes, Bowen & Semmes, Baltimore, MD, for Ceres Marine Terminals, Inc.

MEMORANDUM

NICKERSON, District Judge.

Pending before the Court are the cross-motions for partial summary judgment filed by Defendant Ceres Marine Terminals, Inc. (Paper No. 12) and Plaintiffs Parker Hannifin Corporation and SR International Business Insurance Company Ltd. (Paper No. 13). The issues have been fully briefed and are ripe for consideration. Upon a review of the pleadings and the applicable law, the Court determines that Defendant's Motion for Partial Summary Judgment will be granted and Plaintiffs' Motion for Partial Summary Judgment will be denied.

I. BACKGROUND

This case arises out of the damage sustained by two crates of automatic screw machinery owned by Plaintiff Parker Hannifin Corporation ("Parker Hannifin") and insured by Plaintiff SR International Business Insurance Company Ltd. ("SR International") while they were in the possession of Defendant Ceres Marine Terminals, Inc. ("Ceres"). Plaintiff Parker Hannifin shipped the two crates of machinery from Ohio to Baltimore, where it arrived at the Dundalk Marine Terminal on or about September 21, 1993. The two crates were to be loaded on board the Atlantic Container Line ("ACL") vessel M/V ATLANTIC CONVEYER within the week for carriage by sea to Bremerhaven, Germany. Defendant Ceres was hired by ACL to act as stevedore and marine terminal operator to receive, handle, store, and eventually load the crates of machinery on ACL's behalf.

On September 23, 1993, while Ceres was storing the two crates of screw machinery for ACL prior to the arrival of the M/V ATLANTIC CONVEYER, Ceres dropped another piece of cargo, that it was handling for a different ocean carrier, on top of the two crates. The contents of Parker Hannifin's two crates were damaged.

Plaintiffs subsequently filed a Complaint on March 31, 1995 against Ceres, alleging negligence and bailee liability, and claiming damages in the amount of $240,000. Defendant Ceres denied liability, and raised as an affirmative defense that, in accordance with the Carriage of Goods by Sea Act ("COGSA"), 46 App.U.S.C. § 1304(5) and the terms of ACL's regular form of bill of lading, liability for any such damage was limited to $500 per crate of machinery, or $1,000. On October 31, 1995, Defendant Ceres filed a Motion for Partial Summary Judgment on this issue. On November 15, 1995, Plaintiffs filed a cross-motion for summary judgment, seeking to strike Ceres's affirmative defense of limitation.¹

II. LEGAL STANDARD

It is well established that summary judgment is proper if the evidence before the court, consisting of the pleadings, depositions, answers to interrogatories, and admissions of record, establishes that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). Rule 56 mandates the entry of summary judgment against a party who, after reasonable time for discovery and upon motion, "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. at 322, 106 S.Ct. at 2552. "A complete failure of proof concerning an essential element of the non-moving party's case necessarily renders all other facts immaterial and the moving party is `entitled to judgment as a matter of law.'" Id. at 323, 106 S.Ct. at 2553 (citations omitted).

If the evidence favoring the non-moving party is "merely colorable, or is not significantly probative, summary judgment may be granted." Anderson v. Liberty Lobby Inc., 477 U.S. 242, 249-50, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986) (citations omitted). Unsupported speculation is insufficient to defeat a motion for summary judgment. Felty v. Graves-Humphreys Co., 818 F.2d 1126, 1128 (4th Cir.1987) (citing Ash v. United Parcel Serv., Inc., 800 F.2d 409, 411-12 (4th Cir. 1986). Moreover, the mere existence of some factual dispute is insufficient to defeat a motion for summary judgment; there must be a genuine issue of material fact. Anderson, 477 U.S. at 247-48, 106 S.Ct. at 2509-11. Thus, only disputes over those facts that might affect the outcome of the case under the governing law are considered to be "material." Id.

With these principles in mind, the Court will address the arguments presented by the parties.

III. DISCUSSION

The Carriage of Goods by Sea Act ("COGSA"), 46 App.U.S.C. § 1300 et seq., which governs every contract for the carriage of goods by sea in foreign trade to or from ports of the United States, limits the amount of damages that may be claimed by a shipper for loss or damage to its goods as follows:

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 ... unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading.

46 App.U.S.C. § 1304(5). The issue to be resolved in the pending cross-motions is whether under the facts of this case, Ceres, the stevedore contracted by ACL, is entitled to the $500 limitation of liability in § 1304(5).

The Supreme Court, in Robert C. Herd & Co. v. Krawill Mach. Corp., 359 U.S. 297, 79 S.Ct. 766, 3 L.Ed.2d 820 (1959), held that § 1304(5) limited the liability of the carrier, but not the stevedore if the latter was not a party to nor a beneficiary of the contract of carriage between the shipper and the carrier. Id. at 308, 79 S.Ct. at 772-73. Since Herd v. Krawill Machinery Corp., courts have established that carriers may extend certain COGSA limitations of liability to terminal operators, stevedores, and other third parties via third-party beneficiary clauses, known as "Himalaya Clauses" in the carrier's bills of lading. See, e.g., Wemhoener Pressen v. Ceres Marine Terminals, Inc., 5 F.3d 734 (4th Cir.1993); Koppers Co., Inc. v. S.S. DEFIANCE, 542 F.Supp. 1356 (D.Md. 1982), aff'd, 704 F.2d 1309 (4th Cir.1983); B. Elliott (Canada) Ltd. v. John T. Clark & Son, 542 F.Supp. 1367 (D.Md.1982), aff'd, 704 F.2d 1305 (4th Cir.1983); Mediterranean Marine Lines v. John T. Clark & Son, 485 F.Supp. 1330 (D.Md.1980). Thus, a stevedore may be entitled to the $500 limitation of liability if the bill of lading covers the stevedore. Mediterranean Marine Lines v. John T. Clark & Sons, 485 F.Supp. 1330, 1333 (D.Md.1980); Carle & Montanari, Inc. v. American Export Isbrandtsen Lines, Inc., 275 F.Supp. 76, 78 (S.D.N.Y.), aff'd, 386 F.2d 839 (2d Cir.1967), cert. denied, 390 U.S. 1013, 88 S.Ct. 1263, 20 L.Ed.2d 162 (1968).

In the instant case, Defendant Ceres argues that a Himalaya Clause is contained in Section 2 of Clause 5 of the ACL form bill of lading that expressly extends the carrier's benefits under the bill of lading to independent contractors of the carrier, such as Ceres. Plaintiffs argue that Ceres cannot take advantage of any such limitation of liability for two reasons. First, Plaintiffs argue that because Ceres was handling cargo for another carrier when it dropped the cargo on Plaintiffs' crates, ACL's bill of lading should not be construed to cover Ceres's negligent act for the other carrier. Secondly, Plaintiffs contend that because of a missing comma in the Himalaya Clause and the strict construction of such clauses required by the case law, the limitation of liability set out in ACL's bill of lading should not be extended to Ceres. This Court agrees with Defendant.

Clause 5(2) of ACL's bill of lading, which comes under the heading of "Certain Rights and Immunities of the Carrier and Other Persons," states, in part, as follows:

The Merchant undertakes that no claim or allegation shall be made against any person or vessel whatsoever, other than the Carrier including, but not limited to, the Carrier's servants or agents, any independent contractor and his servants or agents, and all others by whom the whole or any part of the carriage, whether directly or indirectly, is procured, performed or undertaken, which imposes or attempts to impose upon any such person or vessel any liability whatsoever in connection with the goods or the carriage.

Ceres's Motion for Partial Summary Judgment, Exhibit E (emphasis added). The clause goes on to require that the Merchant, in this case Parker Hannifin, hold the Carrier harmless if it makes such claim. The clause further states that

every such person and vessel shall have the benefit of all provisions herein benefiting the Carrier as if such provisions were expressly for his benefit and in entering into this contract, the Carrier, to the extent of these provisions, does so not only on his own behalf, but also as agent or trustee for such persons and vessels and such persons and vessels shall to this extent be or are deemed parties to this contract.

Id.

Plaintiffs argue that Ceres cannot avail itself of the defenses of ACL under COGSA because the clause, as quoted above, contains a grammatical error, making it defective. Specifically, due to a printer's mistake, there is a comma missing after the word "Carrier" in the first part of the clause. Deposition of Howard Heslin, Plaintiffs' Exhibit D at 18. Plaintiffs, noting that strong policy reasons motivate strict construction of such clauses, point to the plain language of the clause, and argue that "grammatically the persons who the Merchant agrees not to sue, and who are thus to have...