Royal Smit Transformers BV v. Onego Shipping & Chartering

• Decision Date: 02 August 2018
• Docket Number: No. 17-30543,17-30543
• Citation: 898 F.3d 543
• Parties: ROYAL SMIT TRANSFORMERS BV; AXA Versicherung AG; HDI-Gerling Industrie Versicherung AG; Basler Sachversicherung AG; Ergo Versicherung AG, Plaintiffs-Appellants v. ONEGO SHIPPING & CHARTERING, BV ; Illinois Central Railroad Company; Berard Transportation, Incorporated, in personam, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

898 F.3d 543

ROYAL SMIT TRANSFORMERS BV; AXA Versicherung AG; HDI-Gerling Industrie Versicherung AG; Basler Sachversicherung AG; Ergo Versicherung AG, Plaintiffs-Appellants

v.ONEGO SHIPPING & CHARTERING, BV ; Illinois Central Railroad Company; Berard Transportation, Incorporated, in personam, Defendants-Appellees.

No. 17-30543

United States Court of Appeals, Fifth Circuit.

FILED August 2, 2018

Philip S. Brooks, Jr., Esq., Ronald Joseph Kitto, Gordon, Arata, Montgomery, Barnett, McCollam, Duplantis & Eagan, L.L.C., New Orleans, LA, for Plaintiffs-Appellants.

John Herr Musser, V, Esq., Tarryn Elizabeth Walsh, Murphy, Rogers, Sloss, Gambel & Tompkins, New Orleans, LA, for Defendant-Appellee Onego Shipping & Chartering, BV.

Bradley Russell Belsome, John B. Stanton, Bradley, Murchison, Kelly & Shea, L.L.C., New Orleans, LA, for Defendant-Appellee Illinois Central Railroad Company.

Francis Julian Barry, Jr., Robert E. Kerrigan, Deutsch Kerrigan, L.L.P., New Orleans, LA, for Defendant-Appellee Berard Transportation, Incorporated, in personam.

Before HIGGINBOTHAM, SMITH, and CLEMENT, Circuit Judges.

EDITH BROWN CLEMENT, Circuit Judge:

Royal SMIT tried to ship a few of its transformers from the Netherlands to Louisiana. It contracted with an intermediary to arrange the transport. The transformers were damaged along the way, so Royal SMIT and its insurers tried to sue the carriers with whom the intermediary had contracted. But the district court concluded they were precluded from doing so because of a Himalaya Clause in the company’s agreement with the intermediary. The court granted summary judgment in favor of the carriers. That decision was appealed, and we affirm.

I.

Plaintiff Royal SMIT Transformers B.V. ("Royal") is a company based in the Netherlands that manufactures large power transformers. In November 2015, Royal sold three of its transformers to Entergy Louisiana, LLC, for use at one of its substations in St. Gabriel, Louisiana. The transformers were insured by the co-plaintiffs-appellants AXA Versicherung AG, HDI-Gerling Industrie-Versicherung AG, Basler Sachversicherung AG, and Ergo Versicherung AG.

One month later, Royal contracted with Central Oceans USA, LLC ("Central Oceans") to facilitate the delivery of the three transformers from the Port of Rotterdam to St. Gabriel. The arrangement was established by a multimodal through bill of lading¹ between the parties.

The delivery comprised three legs: ocean transportation from Rotterdam to New Orleans, rail transportation from New Orleans to St. Gabriel, and truck transportation to Entergy’s substation. Central Oceans contracted with the defendants to carry out each part of the journey: Onego Shipping & Chartering, B.V. ("Onego") provided the ocean carriage to New Orleans; Illinois Central Railroad Company ("IC") provided rail carriage to St. Gabriel; and Berard Transportation, Inc. ("Berard") provided truck carriage to the final destination.

All of these arrangements were negotiated separately. The defendants were not involved in—nor aware of—the agreement between Central Oceans and Royal, and Royal was not a party to the contracts Central Oceans signed with the defendants. Each defendant negotiated its agreement with Central Oceans independently and memorialized its terms in separate documents.

The terms of the agreement between Royal and Central Oceans were initially set forth in a Request for Transport Quotation ("RFQ") issued by Royal, which incorporated terms from two other documents: a Shipment of Transformers Procedure and a General Terms and Conditions of Purchase. The Terms and Conditions stated that Central Oceans would be held liable "for all cases of loss or damage suffered by [Royal] ... caused by [Central Oceans’s] performance" of the contract. It also anticipated that Central Oceans might subcontract with a third party to perform part of its duties. It warned that Central Oceans was "not release[d] ... from any obligation or liability" as a result of subcontracting its duty, but was still required to "indemnify [Royal] in full against [resultant liability]." Further, Central Oceans was required to "bind [the] third party fully to the provisions of these terms and conditions." The Terms and Conditions did not, however, specify whether or to what extent the third parties were liable to Royal.

The Purchase Order between the parties noted that "[a]ll services provided" were pursuant to the RFQ, and "expressly den[ied] the applicability of any other terms and conditions." Notwithstanding this provision, the parties then executed the through bill of lading, which stated that its "provisions ... apply to all claims against [Central Oceans] relating to the performance of the Multimodal Transport Contract."

Like the Terms and Conditions, the bill also anticipated that, as Royal’s intermediary, Central Oceans would facilitate the transport by contracting with other entities. Those entities were designated as agents acting on behalf of Central Oceans. Central Oceans, in turn, was liable for their actions:

10. Basis of Liability

....

(c) [Central Oceans] shall be responsible for the acts and omissions of his servants or agents when any such servant or agent is acting within the scope of his employment, or of any other person of whose services he makes use for the performance of the Contract, as if such acts and omissions were his own.

The bill of lading limited both the amount and source of Royal’s recovery if something went wrong. Specifically, it set a per-package limitation on liability in accordance with requirements set by the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. § 30701, note § 4(5). And, relevant to the present appeal, it also contained a Himalaya Clause, which prohibited Royal from suing Central Oceans’s subcontractors:

15. Defenses and limits for [Central Oceans], Servants, etc.

....

(b) [Royal] undertakes that no claim shall be made against any servant, agent, or other persons whose services [Central Oceans] has used in order to perform the Multimodal Transport Contract and if any claim should nevertheless be made, to indemnify [Central Oceans] against all consequences thereof.

(c) However, the provisions of this Contract apply whenever claims relating to the performance of the Multimodal Transport Contract are made against any servant, agent or other person whose services [Central Oceans] has used in order to perform the Multimodal Transport Contract, whether such claims are founded in contract or in tort. In entering into this Contract, [Central Oceans] ... does so not only on his own behalf but also as agent or trustee for such persons.

The transformers were delivered to the final destination in January 2016, where an inspection revealed that the transformers had been damaged by "excessive vibration" somewhere along the journey.² Royal and its insurers³ then sued Central Oceans and the defendants on September 12, 2016, for breach of contract, fault, and negligence, seeking over $1,600,000 in damages. Notably, the complaint alleged that "Royal ... contracted with Central Oceans ... pursuant to" the through bill of lading. It did not mention the RFQ or Purchase Order.

Central Oceans filed a motion to transfer venue three months later, relying on the mandatory forum selection clause in the multimodal through bill of lading. Royal’s opposition again did not contest the applicability of the bill of lading; rather, it was based on convenience to the remaining defendants, who were "not privy to the contractual forum select clause" therein. Royal admitted, in fact, that its "claims against Central Oceans [were] under the" multimodal bill of lading, and it justified its opposition to transfer in part by relying on the bill.

The district court granted the motion in part, severing Royal’s claims against Central Oceans and transferring them to the Western District of Virginia. The court noted that "[n]o one disputes the validity of the forum selection clause" in the bill of lading, and that Royal must abide by the terms it negotiated with Central Oceans. The court also concluded that the claims against the defendants could not be transferred because they were not bound by the clause.

The remaining defendants collectively filed a summary judgment motion on April 21, 2017, arguing that they were protected from suit by the Himalaya Clause. In response, Royal submitted an affidavit from Niek Vehreschild, its Strategic Procurement Manager, denying that Royal agreed to this clause. Vehreschild asserted, "In engaging Central Oceans ... for the transportation services at issue ... [Royal] did not agree to be bound by any contractual terms barring [Royal] from filing any action and seeking recovery for damages sustained to its transformers from any ... entities involved in their transport." Royal also submitted certain documents received from the defendants during discovery, which outlined the terms of their carrier agreements with Central Oceans.

The district court granted the defendants’ motion. Relying on two Supreme Court opinions, Norfolk Southern Railway Co. v. Kirby , 543 U.S. 14, 125 S.Ct. 385, 160 L.Ed.2d 283 (2004) and Kawasaki Kisen Kaisha, Ltd. v. Regal-Beloit Corp. , 561 U.S. 89, 130 S.Ct. 2433, 177 L.Ed.2d 424 (2010), the court concluded that "actual carriers who fall within the scope of Himalaya Clauses can rely on those clauses to limit their liability." The court also observed that enforcing Himalaya Clauses that shield downstream carriers from liability had become "common practice." Because the defendants fell within the scope of the Himalaya Clause’s protection, they could not be sued. Royal timely appealed.

II.

This court reviews grants of summary judgment de novo, applying the same standard as the district court. Star Fin. Servs., Inc. v. Cardtronics USA, Inc. , 882 F.3d 176, 179 (5th Cir. 2018). Summary judgment is appropriate "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...