Starrag v. Maersk, Inc.

• Decision Date: 14 May 2007
• Docket Number: No. 04-56771.,04-56771.
• Citation: 486 F.3d 607
• Parties: STARRAG; Starrag-Heckert Inc., Plaintiffs-Appellants, v. MAERSK, INC., a New York Corporation; Maersk Pacific Ltd., a California Corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

486 F.3d 607

STARRAG; Starrag-Heckert Inc., Plaintiffs-Appellants, v. MAERSK, INC., a New York Corporation; Maersk Pacific Ltd., a California Corporation, Defendants-Appellees.

No. 04-56771.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted October 16, 2006.

Filed May 14, 2007.

Iliaura Hands (argued), New Orleans, LA, Timothy R. Lord, Bernadette M. Chala, Costa Mesa, CA, for the appellants.

Theodore H. Adkinson (argued), and John D. Giffin, Long Beach, CA, for the appellees.

Appeal from the United States District Court for the Central District of California; Percy Anderson, District Judge, Presiding. D.C. No. CV-01-11013-PA.

Before JOHN R. GIBSON,^* RAYMOND C. FISHER, and CONSUELO M. CALLAHAN, Circuit Judges.

CALLAHAN, Circuit Judge.

INTRODUCTION

Starrag and Starrag-Heckert, Inc. (collectively "Starrag") appeal from the district court's order granting partial summary judgment and applying the $500 per package liability limitation under the Carriage of Goods by Sea Act ("COGSA") to three machines shipped with Maersk, Inc. that were damaged while being transported across a container yard operated by Maersk Pacific Ltd., a terminal operator. Starrag argues that the package limitation cannot apply to damage that occurred after Maersk unloaded the machines from their ship, and that application of the limitation conflicts with the COGSA and a related statute, the Harter Act.¹ In addition, Starrag claims that the term "delivery" in Maersk's Combined Transport Bill of Lading ("CTBL") is ambiguous, and therefore should be read to restrict the package limitation to damage occurring after the machines were loaded onto the ship and before the cargo was unloaded.

We affirm the district court, holding: (1) Maersk did not need to provide actual notice to Starrag that the CTBL contractually extended the terms of COGSA outside of the "tackle to tackle" period; (2) contractually extending the package limitation does not conflict with the COGSA or the Harter Act; and (3) the district court properly interpreted the term "delivery" in a manner consistent with both maritime law and the terms of the short form non-negotiable sea way-bill ("Short Form") and the CTBL.

FACTUAL BACKGROUND²

On or about August 31, 2000, Starrag and Maersk entered into a Contract of Affreightment that is embodied in a Non-Negotiable Seaway Bill.³ By the terms of the seaway bill, a flat rack with three crates containing aerospace machinery were carried from Rotterdam to Long Beach, California aboard the M/V McKinney Maersk. Maersk Inc. was acting as the U.S. Agent for the owners of the M/V McKinney Maersk, and Maersk Pacific Ltd., which operated the terminal at which the cargo was removed from the M/V McKinney Maersk. The flat rack was unloaded from the M/V McKinney Maersk at Maersk Pacific Ltd.'s terminal at Pier J in the Port of Long Beach. The flat rack was moved from the dock to Maersk Pacific Ltd.'s container yard. While the flat rack was being parked in Row M, it tipped over to its side causing damage to the cargo contained within the three crates.

PROCEDURAL HISTORY

The parties filed cross-motions for partial summary judgment on whether Maersk could enforce the package liability limit of $500 per package under the COGSA, capping defendants' liability at $1,500. The district court granted Maersk's motion for partial summary judgment, limiting Maersk's total liability to $1,500. The district court found that the CTBL incorporated the package damage liability limit of the COGSA into the Short Form as expressly authorized by the COGSA. The district court rejected Starrag's claim that Maersk was required to provide actual notice of the extension of COGSA to any damage after unloading of the cargo and before "delivery" of the goods. The district court also found that under the terms of the CTBL, there was no "delivery" of the machines. As a result, the district court found that under the terms of the Short Form and the CTBL, the package damage liability limit of $500 per package applied, and Maersk was not liable for more than $1,500 in damages. The parties stipulated to liability and damages, and the district court entered a final judgment.

STANDARD OF REVIEW

In an appeal from a summary judgment, the appellate court must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. Olsen v. Idaho State Bd. of Medicine, 363 F.3d 916, 922 (9th Cir.2004). Appellate courts review a district court's analysis of contractual language and application of principles of contract interpretation de novo. Miller v. Safeco Title Ins. Co., 758 F.2d 364, 367 (9th Cir.1985).

DISCUSSION

I.

The COGSA limits damages against a carrier for loss or damage to goods in transit to $500, stating:

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 lawful money of the United States, or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading. This declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall not be conclusive on the carrier.

By agreement between the carrier, master, or agent of the carrier, and the shipper another maximum amount than that mentioned in this paragraph may be fixed: Provided, That such maximum shall not be less than the figure above named. In no event shall the carrier be liable for more than the amount of damage actually sustained. COGSA § 4(5).⁴ Essentially, the package limitation presents the shipper with a choice to accept the liability limitation in exchange for a lower rate for shipping, or to declare a higher value and pay a higher rate. See Norfolk Southern Railway Co. v. Kirby, 543 U.S. 14, 19, 125 S.Ct. 385, 160 L.Ed.2d 283 (2004) ("[A]s is common in the industry, Kirby accepted a contractual liability limitation for ICC below the machinery's true value, resulting, presumably, in lower shipping rates.").⁵

Ordinarily, the COGSA only applies "from the time when the goods are loaded on to the time when they are discharged from the ship." COGSA § 1(e); see Mori Seiki USA, Inc. v. M.V. Alligator Triumph, 990 F.2d 444, 447 (9th Cir.1993) ("By its own terms, COGSA limits liability for cargo damage to $500, if the damage occurs between the time the cargo is loaded on to the ship and the time it is discharged from the ship (`tackle to tackle')."); Pan Am. World Airways, Inc. v. California Stevedore & Ballast Co., 559 F.2d 1173, 1177 n. 5 (9th Cir.1978) (noting COGSA applies "from the time the ship's tackle is hooked onto the cargo at the port of loading until the time when cargo is released from the tackle at the port of discharge"). Section 7 of the COGSA explicitly states, however, that:

Nothing contained in [COGSA] shall prevent a carrier or a shipper from entering into any agreement, stipulation, condition, reservation, or exemption as to the responsibility and liability of the carrier or the ship for the loss or damage to or in connection with the custody and care and handling of goods prior to the loading on and subsequent to the discharge from the ship on which the goods are carried by sea.

COGSA § 7. Therefore, the COGSA expressly permits parties to a maritime shipping contract to provide for liability limitations beyond the "tackle to tackle" period for damage that occurs prior to loading or after unloading of the goods from the ship.

In this case, the Short Form begins by stating, "[t]he contract evidenced by this Waybill is subject to the exceptions, limitations, conditions and liberties (including those relating to pre-carriage and on-carriage) set out in Maersk Sealand's current Combined Transport Bill of Lading." The Short Form therefore incorporates by reference the CTBL's language in paragraph 5.2 (also known as a "period of responsibility clause," see Sompo Japan Ins. Co. of Am. v. Union Pac. R.R. Co., 456 F.3d 54, 56 (2d Cir.2006)), stating that Maersk's liability shall be determined according to the COGSA "[w]here loss or damage has occurred between the time of receipt of the Goods by the Carrier at the port of loading and the time of delivery by the Carrier at the port of discharge, or during any prior or subsequent period of carriage by water...." As a matter of contract interpretation, this language extends COGSA's liability limitation beyond its statutory terms to activities before and after the "tackle to tackle" period, including up to "the time of delivery."

II.

Starrag's main contention is that the failure of the Short Form (that was provided to Starrag) to explicitly state that the CTBL (that was merely made available to Starrag) contractually extends the COGSA package limitation through delivery of the goods causes it to conflict with the COGSA and therefore the package limitation cannot be enforced.

A.

A short form bill of lading may incorporate by reference the terms in a long form bill of lading without providing specific notice of those terms so long as the incorporated provisions are not special terms or exceptions that differ from the governing federal statutes. See Comsource Indep. Foodservice Cos. v. Union Pac. R.R., 102 F.3d 438, 443-444 (9th Cir. 1996) (citing Encyclopaedia Britannica, Inc. v. S.S.Hong Kong Producer, 422 F.2d 7, 14 (2d Cir.1969)). If a short form bill of lading fails to give notice of a term in a long form bill of lading that is inconsistent with a statute, a court may refuse to enforce the contract clause. See Encyclopaedia Britannica, 422 F.2d at 16 (refusing to enforce a clause that shifted the burden of proof from the carrier to the shipper); see also ...