Thyssen Steel Co. v. M/V Kavo Yerakas

• Decision Date: 27 April 1995
• Docket Number: No. 93-2771,93-2771
• Citation: 50 F.3d 1349
• Parties: THYSSEN STEEL COMPANY, et al., Plaintiffs-Appellants, v. M/V KAVO YERAKAS, etc., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1349

50 F.3d 1349

1995 A.M.C. 2317

THYSSEN STEEL COMPANY, et al., Plaintiffs-Appellants, v. M/V KAVO YERAKAS, etc., et al., Defendants-Appellees.

No. 93-2771.

United States Court of Appeals Fifth Circuit.

April 27, 1995.

As Amended on Denial of Rehearing May 31, 1995.

William F. O'Rourke, Kroll & Tract, Houston, TX, for appellants.

James P. Cooney, Christopher A. Lowrance, Royston, Rayzor, Vickery & Williams, L.L.P., Houston, TX, for Dodekaton.

Appeal from the United States District Court for the Southern District of Texas.

Before WISDOM, DUHE and BENAVIDES, Circuit Judges.

DUHE, Circuit Judge:

Thyssen Steel Company and Associated Metals and Minerals Corporation (collectively Appellants) appeal from summary judgment entered in favor of Dodekaton Corporation (Appellee). We reverse in part, affirm in part and remand.

I. FACTS

Thyssen Steel Company (Thyssen), Associated Metals and Minerals Corporation (AMMC) entered into a contract of carriage with Europe-Overseas Steamship Lines (Eurolines) to transport steel pipe from Europe to the United States aboard the vessel M/V YERAKAS which had been time chartered to Eurolines by its owner, Dodekaton Corporation (Dodekaton). The cargo was loaded pursuant to bills of lading issued and signed by Eurolines' agent "for the master."

Thyssen and AMMC contend that, upon arrival, some of the cargo was damaged, and that the damage occurred during transit. ¹ Thyssen and Associated sued the M/V KAVO YERAKAS in rem, Dodekaton and Eurolines. The district court granted Dodekaton's motion for summary judgment and entered a final "take nothing" judgment. The remaining defendants settled, and Appellants dismissed all of their claims except those against Dodekaton.

II. STANDARD OF REVIEW

Summary judgment is appropriate if the record discloses "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In reviewing the summary judgment, we apply the same standard of review as did the district court. Waltman v. International Paper Co., 875 F.2d 468, 474 (5th Cir.1989); Moore v. Mississippi Valley State Univ., 871 F.2d 545, 548 (5th Cir.1989).

III. IS DODEKATON A COGSA "CARRIER"?

A. In General

Under COGSA, a cargo owner may recover only from the carrier of the goods. Pacific Employers Ins. Co. v. M/V GLORIA, 767 F.2d 229, 234 (5th Cir.1985); Associated Metals & Minerals Corp. v. SS PORTORIA, 484 F.2d 460, 462 (5th Cir.1973). A "carrier" is "the owner or the charterer who enters into a contract of carriage with a shipper." 46 U.S.C.App. Sec. 1301(a). A "contract of carriage" is a contract of carriage covered by a bill of lading or other similar document of title. 46 U.S.C.App. Sec. 1301(b). We have expressly held that to recover under COGSA, the cargo owner must establish that the vessel owner or charterer executed a contract of carriage with the cargo owner. See Pacific Employers, 767 F.2d at 236-37.

A contract of carriage with the vessel owner may be either directly between the parties, or by virtue of the charterer's authority to bind the vessel owner by signing the bill of lading "for the master." Pacific Employers, 767 F.2d at 236. See also In re Intercontinental Properties Management, S.A., 604 F.2d 254, 258 n. 3 (4th Cir.1979). However, if the charterer signs the bill of lading without the authority of the vessel owner, then the owner does not become a party to the contract of carriage and does not become liable as a "carrier" within the meaning of COGSA. Pacific Employers, 767 F.2d at 237; J. Gerber & Co., Inc. v. M/V INAGUA TANIA, 828 F.Supp. 458, 460 (S.D.Tex.1992). The cargo owner has the burden to prove that the vessel owner was a party to the contract, and its failure to do so establishes that the cargo owner did not rely on the vessel owner to perform the contract. Associated Metals, 484 F.2d at 462.

B. The District Court's Holding

The district court held that Dodekaton was not liable for the cargo damage as a COGSA carrier. Relying in particular on Clause 8 of the charter party, ² the court found that Dodekaton did not become a party to the contract of carriage because the master was the agent of Eurolines, with no authority to issue bills of lading on behalf of Dodekaton. The court did not address the argument that the Charterer (Eurolines) had authority to sign bills of lading on behalf of Dodekaton ³ based on charter party provisions almost identical to those contained in Pacific Employers.

In Pacific Employers, we found that charter party provisions largely indistinguishable from Clauses 8 and 45 in the instant charter party authorized the charterer to sign bills of lading on behalf of the vessel owner. Pacific Employers, 767 F.2d at 237-38. We distinguished Yeramex, Int'l v. S.S. TENDO, 595 F.2d 943 (4th Cir.1979) because the Yeramex charter party contained an indemnification of the owner by the charterer "from all consequences arising out of Master or agents signing bills of lading in accord with charterers' instructions." Id. ⁴ Although the instant charter party contains provisions almost identical to those in Pacific Employers, it also contains an indemnification provision similar to that in the Yeramex charter party. For this reason, this case is distinguishable from Pacific Employers, and we address res nova the effect of the indemnity provision.

C. Effect of the Indemnity Provision

A careful examination of the Yeramex opinion reveals that while the Fourth Circuit may have viewed the indemnity provision as evidence that the master acted as agent for the charterer vis-a-vis the cargo, the court did not interpret the provision, by itself, to relieve the vessel owner of liability to the shipper. ⁵

Under these [agency and indemnity] provisions, the owner is responsible for navigation and seaworthiness of the vessels; the charterer is responsible for all matters relating to cargo other than trim and stability and other matters affecting the vessels' seaworthiness. As between the owner and the charterer, MCL is solely responsible for notice of visible damage to cargo when accepted for loading by MCL or its agents at port.

Yeramex v. S.S. Tendo, 595 F.2d 943, 947-48 (4th Cir.1979) (emphasis supplied). In fact, a provision in a contract of carriage that purports to relieve a party of COGSA liability is expressly void under the Act. See, 46 U.S.C.App. Sec. 1303(8). ⁶ The charter party at issue attempts to do indirectly that which could not be directly done in the bill of lading, i.e., contractually apportion COGSA liability. However, as Sec. 1303(8) makes clear, the determination of COGSA liability is not left to the discretion of the parties, but must be resolved by reference to the statute. While Sec. 1303(8) may not expressly void the indemnity provision contained in the charter party, the indemnity provision can have no bearing on whether Appellee is liable to the cargo owner as a COGSA carrier.

We are left with a charter party and bill of lading that cannot be meaningfully distinguished from the charter party and bill of lading in Pacific Employers, and our decision is determined by the holding therein. Clause 45 of the instant charter party authorized the master to allow Eurolines' agent to sign the bills of lading and therefore to bind Appellee. On remand, Appellants will have the burden of proving that the master in fact granted Eurolines permission to sign on his behalf. If Appellants carry this burden, they will prove that Appellee satisfies the Pacific Employers framework, is in privity of contract and thereby meets the definition of a COGSA carrier. In that event, the remaining issues may prove moot. However, because we cannot presently be certain whether Appellee satisfies both prongs of the Pacific Employers framework, we address the remaining issues.

IV. IS PRIVITY OF CONTRACT A COGSA PREREQUISITE?

Thyssen and Associated rely on cases ⁷ from the Second Circuit to assert a direct claim against the vessel owner under COGSA in the absence of privity of contract. See Siderius, Inc. v. M.V. AMILLA, 880 F.2d 662 (2d Cir.1989) (holding that when charterer's liability to cargo owner arises because vessel was not seaworthy, vessel owner may be directly liable to cargo owner for breach of warranty of seaworthiness); Samsung America, Inc. v. M/T FORT PRODUCER, 798 F.Supp. 184 (S.D.N.Y.1992) (holding both charterer and vessel owner liable because they were closely related business entities with authority to act for each other); Joo Seng Hong King Co., Ltd. v. S.S. UNIBULKFIR, 483 F.Supp. 43, 46 (S.D.N.Y.1979) (construing term "carrier" broadly to include all charterers and owners to allow for discovery before dismissal of parties not named on bill of lading). However, these cases are distinguishable, and are not controlling authority in this Circuit which requires privity of contract of carriage before liability under COGSA arises.

Although the district court did not directly address the argument that the "Demise" clause in the bills of lading shifted liability from the charterer to the vessel owner, the court correctly disregarded the argument as such clauses are void under COGSA. 46 U.S.C.App. Sec. 1303(8). See also Amoco Transport Co. v. S/S MASON LYKES, 768 F.2d 659, 663 n. 4 (5th Cir.1985).

V. BAILMENT

Appellants also argue that the district court erred in holding that no bailment claim exists against the vessel owner for cargo damage. Specifically, Thyssen and Associated contend that, even if Dodekaton is not a carrier within the meaning of COGSA, Dodekaton is liable for the cargo damage as a bailee under common law or general maritime law. They cite Tuscaloosa Steel Corp v. M/V "NAIMO", 1993 AMC 622, 626-27, 1992 WL 477117 (S.D.N.Y.1992) ("[F]airness dictates that the law of bailment be an available remedy to a shipper where the owner is not bound to the contract of carriage."), and DB-Trade Int'l, Inc. v. Astramar, 1988 AMC 766, 767 (N.D.Ill.1...