Shelter Forest Int'l Acquisition, Inc. v. Cosco Shipping (USA) Inc.

• Citation: 475 F.Supp.3d 1171
• Decision Date: 28 July 2020
• Docket Number: Case No. 3:19-cv-01259-JR
• Parties: SHELTER FOREST INTERNATIONAL ACQUISITION, INC., an Oregon Corporation, Plaintiff, v. COSCO SHIPPING (USA) INC., a Delaware Corporation; COSCO Shipping Lines (North America) Inc., a Delaware Corporation; COSCO Shipping Terminals (USA) LLC, a Delaware LLC; Rudy Rogers, an individual; COSCO Shipping Lines Co., Ltd.; and Jane and John Does Nos. 1-3, Defendants.
• Court: U.S. District Court — District of Oregon

475 F.Supp.3d 1171

SHELTER FOREST INTERNATIONAL ACQUISITION, INC., an Oregon Corporation, Plaintiff,

v.COSCO SHIPPING (USA) INC., a Delaware Corporation; COSCO Shipping Lines (North America) Inc., a Delaware Corporation; COSCO Shipping Terminals (USA) LLC, a Delaware LLC; Rudy Rogers, an individual; COSCO Shipping Lines Co., Ltd.; and Jane and John Does Nos. 1-3, Defendants.

Case No. 3:19-cv-01259-JR

United States District Court, D. Oregon.

Signed July 28, 2020

Joel P. Leonard, John D. Ostrander, William A. Drew, Elliott Ostrander Preston, PC, Portland, OR, for Plaintiff.

Molly J. Henry, Schwabe, Williamson & Wyatt, Seattle, WA, for Defendants.

OPINION AND ORDER

RUSSO, Magistrate Judge:

Shelter Forest International Acquisition, Inc. ("SFI") filed this action against defendants COSCO Shipping (USA) Inc., COSCO Shipping Lines (North America) Inc., COSCO Shipping Terminals (USA) LLC, Rudy Rogers, and COSCO Shipping Lines Co., Ltd. ("CSL") alleging multiple contractually-based claims under state law.¹ All parties have consented to allow a Magistrate Judge enter final orders and judgment in this case in accordance with Fed. R. Civ. P. 73 and 28 U.S.C. § 636(c). CSL now moves for partial summary judgement, pursuant to Fed. R. Civ. P. 56, as to one of its two breach of contract counterclaims.

CSL also seeks summary judgment on SFI's claims on the basis that they are untimely under the Carriage of Goods at Sea Act ("COGSA"), 46 U.S.C. § 30701 et seq. For the reasons stated below, CSL's motions are granted.

BACKGROUND

This case hinges on the terms of three separate contracts between the parties: a service contract, designated LAI18634 ("Service Contract"); and two separate but substantively identical bills of lading, designated COSU6179362350 and COSU6185400200, concerning the "Portland Shipment" and the "Chippewa Falls Shipment," respectively.²

CSL is a shipping company based in China operating a fleet of oceangoing containerships that transport cargo internationally, including between China and the United States. SFI is an Oregon corporation that imports and distributes lumber, plywood, and other building materials. The parties entered into the Service Contract in April 2018. See generally Zhang Decl. Ex. 1 (doc. 29-1). The Service Contract provided that CSL would guarantee SFI a specified freight rate in exchange for SFI's promise to ship a minimum volume of cargo on CSL's vessels over the course of the contractual term.

Specifically, Term 1 of the Service Contract included a minimum quantity provision ("MQP"), which required SFI to ship 5,000 Twenty-Foot Equivalent Containers ("TEUs") between May 1, 2018, and April 30, 2019. Id. at 13. Under Term 2, CSL promised to provide adequate and assured vessel space to carry the minimum quantity of cargo, with at least three regularly scheduled sailings per month. Id. Should CSL fail to furnish space on a specific sailing, SFI had the option to "apply for guaranteed space on one or more specific sailings by submitting a written request to [CSL] at least 10 days before the earliest scheduled departure of a vessel upon which guaranteed space is requested." Id. at 14.

If SFI failed to fulfill the MQP, Term 5 of the Service Contract provided that CSL was entitled to liquidated damages, unless SFI's failure was excused by one of three specified conditions. Id. at 16. First, SFI had the option to reduce the minimum quantity of shipments if CSL did not provide vessel space for cargo tendered in good order. Id. at 13. Second, CSL could cancel the Service Contract by written notice to SFI after the MQP was fulfilled. Id. at 17. Finally, the force majeure provision excused either party's performance if "prevented by acts of god, strikes, embargoes, or events similarly beyond the knowledge or control of either party, but not including commercial contingencies." Id.

Otherwise, the Service Contract would terminate upon assignment, completion, or expiration. Id. at 17-18. CSL expressly retained the right to strictly enforce the terms of the Service Contract, unless formally excused by mutual written consent:

No failure by either [CSL] or [SFI] to demand the strict and literal performance of or compliance with any provision, condition, or requirement herein shall be deemed to be a waiver thereof, or of strict and literal performance of and compliance with any other provision, condition, or requirement herein, nor to be a waiver of, or in any manner release such other party from, strict compliance with any provision, condition, or requirement in the future. No waiver hereunder shall be enforceable unless in writing and signed by the party against whom enforcement is sought.

Id. at 20.

In regard to three previous service contracts, the parties filed formal amendments of the minimum quantity requirements with the Federal Maritime Commission ("FMC"). Rogers Decl. ¶¶ 7-8 (doc. 31). There is no evidence in the record that CSL agreed to waive SFI's performance under the Service Contract at issue or modify the MQP.

Disputes over two separate shipments gave rise to the present action. Zhang Decl. ¶ 5 (doc. 29). Each of these shipments was booked under the Service Contract, as well as an individual bill of lading, which incorporated CSL's standard terms and conditions and set out the particulars for the respective shipments. Id. at ¶ 6. These terms and conditions appear on the backside of every one of CSL's bills of lading and are also published as part of CSL's tariff of general applicability, which is filed with the FMC. Id.; see generally Zhang Decl. Ex. 2 (doc. 29-2). Accordingly, CSL's standard terms and conditions are publicly available through the FMC and CSL's website. Zhang Decl. ¶¶ 4, 6 (doc. 29).

Several of CSL's terms and conditions expressly subject contracts for the carriage of goods to COGSA. For instance, Clause 26(2) provides:

where carriage includes carriage to or from or through a port or place in the United States of America, this Bill of Lading shall be subject to the provisions of the US COGSA, which shall be deemed to have been incorporated herein and nothing herein contained shall be deemed a surrender by [CSL] of any of its rights, immunities, exceptions or limitations or an increase of any of its liabilities under US COGSA ... COGSA (except as may be otherwise specifically provided herein) shall also govern before loading and after discharging as long as the goods remain in [CSL's] custody of control.

Zhang Decl. Ex. 2, at 44-45 (doc. 29-2); see also id. at 36 (same). Likewise, the "NOTICE OF CLAIM AND TIME BAR" provision incorporates COGSA's limitation on the time to bring suit: "[CSL] shall be discharged from all liabilities whatsoever unless suit is brought within one year after delivery of the Goods or the date when the Goods should have been delivered." Id. at 35. Finally, the "LOSS OR DAMAGE" provision makes clear that CSL's responsibilities relating to any shipment are limited to those specified by contract:

The terms of this Bill of Lading shall at all times govern all responsibilities of [CSL] in connection with or arising out of the carriage of the Goods not only during the carriage, but also during the period prior to and/or subsequent to the carriage. The exemptions from liability, defenses and limitation of liability provided for herein or otherwise shall apply in any action against [CSL] for loss or damage or delay, howsoever occurring and whether the action be founded in contract or in tort and even if the loss, damage or delay arose as a result of unseaworthiness, negligence or fundamental breach of contract.

Id.

The first incident, the Portland Shipment, was booked in April 2018 by SFI's affiliate, Xuzhou Shelter, who also was responsible for packing the containers.³ Zhang Decl. ¶¶ 7, 9 (doc. 29). As a result, the bill of lading for the Portland Shipment identified Xuzhou Shelter as the shipper and SFI as the consignee. Zhang Decl. Ex. 3, at 2 (doc. 29-3). Xuzhou Shelter requested, and CSL agreed, to "telex release" the bill of lading to SFI's associate in China. Zhang Decl. ¶ 8 & Ex. 4 (doc. 29-4); Second Henry Decl. ¶ 2 & Ex. 1 (doc. 47).

A dispute arose when SFI's cargo, destined for Portland, Oregon, was damaged in a rollover accident. Zhang Decl. ¶¶ 10-12 (doc. 29). The parties disagree as to the cause of the accident – i.e., CSL's negligent driving or SFI's failure to properly load the container. Compare Zhang Decl. Ex. 6, at 5-7 (doc. 29-6), with Macy Decl. ¶ 4 (doc. 44). In any event, the cargo was delivered to Portland on May 23, 2018, and CSL made it available to SFI for pick-up upon payment for container damage and cargo transloading charges. Zhang Decl. ¶ 13 & Ex. 7 (doc. 29-7). The parties were unable to resolve fault for the damage to SFI's cargo and CSL's container, such that CSL continued to hold the cargo in the container yard and began charging demurrage (i.e., storage fees) on June 2, 2018. Zhang Decl. ¶ 13 (doc. 29); Macy Decl. ¶ 8 (doc. 44).

The second incident, the Chippewa Falls Shipment, was also booked in April 2018 pursuant to an original bill of lading and "telex" release. Zhang Decl. ¶¶ 15-16 & Exs. 8-9 (doc. 29); Second Henry Decl. ¶ 3 & Ex. 2 (doc. 47). An SFI affiliate in China arranged to have cargo shipped directly to Chippewa Falls, Wisconsin. Bennett Decl. ¶ 2 (doc. 41); Macy Decl. ¶ 14 & Ex. A (doc. 44). SFI was responsible for confirming that the shipment was directed to the proper port. Third Henry Decl. Ex. 2, at 8-10 (doc. 62). Issues with routing due to the cargo's weight prevented a direct delivery to the scheduled destination, such that SFI's affiliate agreed to amend the bill of lading to allow rerouting to St. Paul, Minnesota, approximately 90 miles from Chippewa Falls.⁴ Bennett Decl. ¶ 2 (doc. 41); Zhang Decl. ¶ 17 & Ex. 10 (doc. 29-10). This rerouting resulted in a significant delay that negatively impacted SFI's relationship with a major client. Macy Decl. ¶ 31 (doc. 44). SFI picked up the Chippewa Falls Shipment in St....