Servicios-Expoarma, C.A. v. Industrial Maritime Carriers, Inc., SERVICIOS-EXPOARM

• Decision Date: 25 February 1998
• Docket Number: C,No. 97-30143,SERVICIOS-EXPOARM,97-30143
• Citation: 135 F.3d 984
• Parties: A., and Orimpex-Zona Ind. Del Este, Plaintiffs-Appellees, v. INDUSTRIAL MARITIME CARRIERS, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 984

135 F.3d 984

1998 A.M.C. 1453

SERVICIOS-EXPOARMA, C.A., and Orimpex-Zona Ind. Del Este Plaintiffs-Appellees, v. INDUSTRIAL MARITIME CARRIERS, INC., Defendant-Appellant.

No. 97-30143.

United States Court of Appeals Fifth Circuit.

Feb. 25, 1998.

John B. Gooch, Jr., Christopher E. Carey, Montgomery, Barnett, Brown Read, Hammond & Mintz, New Orleans, LA, David P. Karcher, Underwood, Karcher & Karcher, Miami, FL, for Plaintiff-Appellee.

Thomas Michael Schodowski, New Orleans, LA, for Defendant-Appellant.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before MAGILL, ^* SMITH, and DeMOSS, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

In this maritime case, we are called upon to decide two issues under the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. app. §§ 1300-1315 (1994). We must first determine when "delivery" occurs under 46 U.S.C. app. § 1303(6), commencing the one-year period during which a shipper may bring an action for cargo damage against a carrier. We must also decide which party--the carrier or the shipper--bears the burden of proving the extent of damage to each package for purposes of COGSA's $500 per-package limitation of liability, 46 U.S.C. app. § 1304(5). The district court concluded that "delivery" under § 1303(6) did not occur until the consignee had a reasonable opportunity to inspect the shipped goods, and that the carrier bore the burden of showing the extent of damage to each package. We reverse.

I.

In 1992, Orimpex-Zona Ind. del Este ("Orimpex"), a Venezuelan business, bought $1,360,001 worth of pre-fabricated steel building materials from Butler Manufacturing ("Butler"), of Kansas City. The materials were designed to fit into 40-foot cargo containers, and Butler recommended that the materials be shipped as such. Orimpex opted to ship the cargo uncontainerized, however, and Butler provided the materials in 1,140 packages, including plastic-bagged rolls of insulation; cartons of fasteners, roofing and wall materials; and bundles of structural steel.

Orimpex, through its Venezuelan customs broker, Servicios Expoarma, C.A. ("Servicios"), arranged for shipping and insurance for the building materials. Servicios contracted with Industrial Maritime Carriers, Inc. ("IMC"), to ship the goods from New Orleans to La Guaria, Venezuela, in two shipments.

The bill of lading specified that "[t]he Carrier or his Agent shall not be liable for loss of or damage to the goods during the period before loading and after discharge from the vessel howsoever such loss or damage arises." It also specified that the carrier assumed responsibility for the goods "from ship's tackle at port of loading to end of ship's tackle at port of discharge...." The nature and value of the two shipments were not declared beyond the $500 per package limit of liability contained in COGSA, 46 U.S.C. app. § 1304(5).

The first shipment, aboard the M/V ANDREALON, departed New Orleans on April 16, 1992. The second shipment, aboard the M/V ARDAL, left New Orleans on May 2, 1992. The bills of lading for both shipments showed Servicios as consignee and "notify" party and were issued without exceptions, clean on board.

The ANDREALON arrived in La Guaria and commenced out-turn on April 30, completing discharge on May 2. The goods were discharged to an adjacent pier under the ship's tackle, and then moved about 30 meters to the warehouse of Mercaduana Almacenes ("Mercaduana"), there to be stored pending customs clearance. The goods cleared customs on May 12 and then were released to the consignee.

The ARDAL arrived and began discharging its cargo to Mercaduana on May 14, completing discharge the same day. Servicios obtained customs clearance for the second shipment on May 25.

It was apparent upon out-turn that some of the goods from both shipments were damaged. Both parties conducted independent surveys of the damage and disagreed as to its cause and extent. After trial, the district court found that all the packages in the first shipment and half of the packages in the second had been damaged to some extent during transit.

Orimpex trucked the building materials to the construction site, then removed the materials from their packages. Orimpex paid $324,342.64 to repair or replace components of the first shipment, and $51,910.90 to repair or replace components of the second. Orimpex recovered $15,664 from its cargo insurer for the damage done to the rolls of insulation.

Pursuant to a contractual choice-of-forum clause, Orimpex and Servicios sued IMC under COGSA in federal court. Following a bench trial, the court found IMC liable for the damages to Orimpex's building materials.

The court calculated damages by first excluding the rolls of insulation, for which Orimpex had been compensated by its insurer. The court then computed the actual damages sustained for each shipment: $324,342.64 for the first shipment and $51,910.90 for the second.

The court then computed the maximum liability under COGSA, which establishes a maximum liability of $500 for each damaged package, 46 U.S.C. app. § 1304(5). In the first shipment, there were 287 non-insulation packages, for a maximum liability of $143,500 (287 X $500). In the second shipment, there were 249 non-insulation packages, for a maximum liability, for the half of the packages that had been damaged, of $62,250 (249 X .5 X $500). Given these maximums, the court set damages at $143,500 for the first shipment and $51,900 for the second, plus prejudgment interest.

II.

COGSA provides a limitations period of one year from "delivery" during which a shipper must bring suit against the carrier:

In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered.

46 U.S.C. app. § 1303(6). This suit was filed more than a year from the ANDREALON's discharge and transfer of the cargo to the customs warehouse, but less than a year from when the consignee, Orimpex, received the goods after they cleared customs. Thus, when "delivery" occurred dictates whether the claims arising from the damage to the cargo of the ANDREALON are time-barred.

IMC urges that "delivery" means "delivery from the carrier," while Servicios contends that "delivery" means "delivery to the consignee." Between these two points in time are the ten days during which the cargo was in the possession of neither the carrier nor the consignee. The statute does not define the term, and either reading could be consistent with the plain text of the subsection.

A.

No court of appeals has decided when "delivery" occurs for purposes of section 1303(6). ¹ Several district courts have addressed the question, however, and these cases can be arranged into two general lines of authority. Some courts have concluded that "delivery" occurs when cargo leaves a ship's slings, irrespective of whether it is placed in the hands of the consignee (or its agent). See, e.g., Cargill Ferrous Int'l v. M/V ELIKON, 857 F.Supp. 45, 47 (N.D.Ill.1994); C. Tennant Sons & Co. v. Norddeutscher Lloyd, 220 F.Supp. 448, 449 (E.D.La.1963). Other courts have held that delivery occurs only when the consignee has a reasonable opportunity to inspect the goods for damage. See, e.g., Atlantic Mut. Ins. Cos. v. M/V BALSA 38, 695 F.Supp. 165 (S.D.N.Y.1988); National Packaging Corp. v. Nippon Yusen Kaisha, 354 F.Supp. 986, 987 (N.D.Cal.1972). ² Finding neither standard entirely compelling, however, we adopt a different rule, one more closely in keeping with the nature of COGSA and with the general usage of the term "delivery" in maritime law.

B.

1.

Most limitation periods begin running when the cause of action "accrues." See, e.g., 45 U.S.C. § 56 (Jones Act). Thus, under the Jones Act, which provides that actions are time-barred unless commenced "within three years from the day the cause of action accrued," id. (emphasis added), this circuit has applied the discovery rule with respect to latent injuries: "A cause of action under the Jones Act and general maritime law accrues when a plaintiff has had a reasonable opportunity to discover his injury, its cause, and the link between the two." Crisman v. Odeco, Inc., 932 F.2d 413, 415 (5th Cir.1991). It is, of course, eminently reasonable that a cause of action should not "accrue" until the plaintiff has actual or constructive knowledge of its existence. Cf. id.; Albertson v. T.J. Stevenson & Co., 749 F.2d 223, 228-29 (5th Cir.1984).

The COGSA limitations period, however, makes no reference to when the cause "accrues." Rather, it defines the running of the limitations period solely by reference to an extrinsic event: when the goods were delivered. See 46 U.S.C. app. § 1303(6). This distinction is neither insignificant nor unique. ³ So, in enacting COGSA, Congress deliberately tied the limitations period to an extrinsic event and apparently paid no attention to when a cause might accrue or when a plaintiff has notice that it has been damaged.

Thus, the statute states that where the goods are lost at sea--and are never delivered--the period begins running not when the ship sinks, or when the consignee has notice of the loss, but, instead, when the goods should have been delivered. See 46 U.S.C. app. § 1303(6). Any other event--including actual receipt by the consignee--is irrelevant to the mechanical application of when delivery should have occurred.

Similarly, when a shipment is first delayed and then arrives at port damaged, the limitations period commences not when the damaged goods are actually delivered, but rather when they should have been delivered. In Western Gear Corp. v. States Marine Lines, 362 F.2d 328 (9th Cir.1966), the cargo washed overboard but was recovered and repaired and re-shipped, arriving five months after the original delivery date. The suit was time-barred, however, when it was brought...