Prima U.S. Inc. v. Panalpina

• Decision Date: 01 August 1999
• Docket Number: Docket No. 99-9025
• Citation: 223 F.3d 126
• Parties: (2nd Cir. 2000) PRIMA U.S. INC., Plaintiff, M/V ADDIRIYAH, HER ENGINES, BOILERS, ETC., Defendant, UNITED ARAB SHIPPING COMPANY, Defendant-Third-Party-Plaintiff, WESTINGHOUSE ELECTRIC CORP., Third-Party-Defendant-Fourth-Party-Plaintiff- Appellee, v. PANALPINA, INC., Fourth-Party-Defendant-Appellant
• Court: U.S. Court of Appeals — Second Circuit

Page 126

223 F.3d 126 (2nd Cir. 2000)

PRIMA U.S. INC., Plaintiff, M/V ADDIRIYAH, HER ENGINES, BOILERS, ETC., Defendant, UNITED ARAB SHIPPING COMPANY, Defendant-Third-Party-Plaintiff, WESTINGHOUSE ELECTRIC CORP., Third-Party-Defendant-Fourth-Party-Plaintiff- Appellee, v. PANALPINA, INC., Fourth-Party-Defendant-Appellant.

Docket No. 99-9025

August Term, 1999

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Argued: May 25, 2000

Decided: August 24, 2000

Defendant Panalpina appeals from an order of the United States District Court for the Southern District of New York (Hellerstein, J.), ordering it to indemnify Westinghouse.

REVERSED.

JAMES DeMORSCIA, Sonageri & Fallan, Garden City, NY (James L. Sonageri, of counsel), for Third-Party-Defendant-Fourth-Party-Plaintiff-Appellee.

ANDREW R. SPECTOR, Hyman & Kaplan, P.A., Miami, FL (Nicholas E. Pantelopoulos, Biedermann, Hoenig, Massamillo & Ruff, P.C., New York, NY, of counsel), for Fourth-Party-Defendant-Appellant.

Before: McLAUGHLIN AND CALABRESI, Circuit Judges, AND MUKASEY, District Judge.^*

McLAUGHLIN, Circuit Judge:

BACKGROUND

The Westinghouse Electric Corporation ("Westinghouse") contracted in writing with Panalpina, Inc. ("Panalpina"), a "freight forwarder," for the transportation and shipment of an electric transformer from the manufacturer (in Italy) to the ultimate consignee, the 3M Corporation (in Iowa). Panalpina, as freight forwarder, was to oversee all of the transportation for the transformer, both on land and over sea. Aware of its obligation, Panalpina stated to Westinghouse, "rest assured your shipment will receive door to door our close care and supervision . . . ."

Panalpina's obligations under the contract included ensuring that the transformer was properly secured and lashed onto a flat-rack for ocean shipment. Westinghouse paid Panalpina $21,785.00, for its services. As is the industry custom, Panalpina did not issue a bill of lading for the shipment.

Westinghouse and Panalpina had done business on countless occasions. Pursuant to the standard terms and conditions listed on the reverse side of its contract, Panalpina undertook to exercise "reasonable care" in the selection of those who would actually carry, store or otherwise handle the goods. The standard terms also limited Panalpina's liability for losses to $50 per shipment, and they disclaimed liability for all consequential or special damages in excess of this amount. These were the same terms utilized in the prior ten-year course of dealing involving over 1,000 transactions between Westinghouse and Panalpina.

When the time came to ship the transformer, Panalpina arranged for it to be picked up at a factory in Melegano, Italy, and brought to the Port of Genoa for an ocean trip. In Genoa, Panalpina hired Ligure Toscano, a customs broker, to coordinate the movement of the transformer through the Genoa Port. Because the transformer was oversized, it had to be secured to a forty foot "flat-rack" container for ocean shipment. Through Toscano, Panalpina hired CSM, a local stevedore, to load the transformer onto the appropriate container, and to lash it securely for the trip. The transformer, on its flat-rack, was loaded aboard the M/V Addiriyah for the voyage to the United States.

Panalpina never inquired of CSM how the transformer was lashed for the ocean voyage. Nor did it supervise the endeavor. On the other hand, Westinghouse never requested that Panalpina be present at any point during the shipment of the transformer, and specifically retained Panalpina only to arrange for the various services in connection with the export of the transformer from Italy to the United States. CSM, moreover, was a well-known stevedore and had often been utilized by other well-known freight forwarding companies, including the United Arab Shipping Company (owner of the M/V Addiriyah, the ship that carried the transformer).

During the ocean voyage, the M/V Addiriyah encountered heavy seas and the transformer, which CSM had negligently lashed to its flat-rack, broke loose, crushing a laser cutting machine owned by Prima (U.S.A), Inc. ("Prima").

In 1998, Prima, via its subrogated insurer, filed a complaint in the United States District Court for the Southern District of New York (Hellerstein, J.), against: (1) the United Arab Shipping Company ("United") (as owner of the M/V Addiriyah); (2) Westinghouse; and (3) Panalpina. Prima sought damages for the loss of its laser. United filed a third-party action against Westinghouse for indemnification, and for clean up costs related to some silicon that had spilled from the broken transformer. A fourth-party action was then filed by Westinghouse against Panalpina for indemnification.

Panalpina moved for summary judgment, dismissing: (1) Westinghouse's fourth-party action; and (2) Prima's direct suit. The district court denied both prongs of the motion.

At a bench trial, the district court then awarded: (1) Prima $2500.00 from United; (2) United $103,508.19 from Westinghouse for the costs of cleaning up the spilled silicon; and (3) Prima $260,000.00 from Westinghouse for the broken laser. The court held that Westinghouse was directly liable to United for the spilled silicon; and directly liable to Prima for the broken laser, because Westinghouse had stipulated that it was engaged in a maritime venture, and thus subject to the Carriage of Goods by Sea Act ("COGSA"). 46 U.S.C. App. § 1300 et. seq.

The district court went on to find Panalpina liable to Westinghouse, in indemnity, for both the spilled silicon and the broken laser awards, because the contract that Panalpina had entered with Westinghouse stated that Panalpina would give "door to door . . . close care and supervision." Because of that clause in the contract, the court found that any negligence of the stevedore, CSM, in lashing the transformer was imputed to Panalpina.

Panalpina now appeals, challenging the district court's decision that it must indemnify Westinghouse for CSM's negligent actions. Panalpina asserts that it is only a freight forwarder, and hence, should not be made to indemnify Westinghouse.

DISCUSSION

This court reviews conclusions of law, as well as mixed questions of law and fact, de novo. See In re Ionosphere Clubs, Inc., 922 F.2d 984, 988 (2d Cir. 1990); Muller ex rel. Muller v. Committee on Special Educ. of East Islip Union Free Sch. Dist., 145 F.3d 95, 102 (2d Cir. 1998). We apply a de novo standard in this case because the question whether an entity is a freight forwarder is a mixed question of law and fact.

I. Panalpina was a freight forwarder, not a carrier

The job of a non-vessel operating common carrier ("NVOCC") is to consolidate cargo from numerous shippers into larger groups for shipment by an ocean carrier. See Chicago, Milwaukee, St. Paul & Pacific R.R. Co. v. Acme Fast Freight, Inc., 336 U.S. 465, 467-68 (1949); Insurance Co. of North America v. S/S American Argosy, 732 F.2d 299, 300-01 (2d Cir. 1984). A NVOCC - as opposed...