Travelers Indem. Co. v. Vessel Sam Houston

• Decision Date: 02 June 1994
• Docket Number: No. 92-55277,92-55277
• Citation: 26 F.3d 895
• Parties: TRAVELERS INDEMNITY COMPANY, Plaintiff-Appellant, v. The VESSEL SAM HOUSTON, Defendant, and Waterman Steamship Corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 895

26 F.3d 895

1994 A.M.C. 2162

TRAVELERS INDEMNITY COMPANY, Plaintiff-Appellant, v. The VESSEL SAM HOUSTON, Defendant and Waterman Steamship Corporation, Defendant-Appellee.

No. 92-55277.

United States Court of Appeals Ninth Circuit.

Argued and Submitted April 5, 1994.

Decided June 2, 1994.

Dennis A. Cammarano, Long Beach, CA, for plaintiff-appellant.

William H. Collier, Jr., Dawn M. Schock, Michael L. Armitage, Keesal, Young & Logan, Long Beach, CA, for defendant-appellee.

Appeal from the United States District Court for the Central District of California.

Before: HUG, WIGGINS, and NOONAN, Circuit Judges.

Opinion by Judge WIGGINS

WIGGINS, Circuit Judge:

This action arose when a barge owned and operated by appellee sank in the inner harbor of Alexandria, Egypt. The barge was carrying machinery and materials for appellant's assured. Appellant sustained a loss of $1,174,876 when a portion of the cargo was lost or damaged. Appellant brought suit against appellee in federal district court. Appellee moved twice for partial summary judgment. The district court found that the $500 per package or per customary freight unit limitation on liability, set forth in the Carriage of Goods by Sea Act (COGSA), controlled. See 46 U.S.C. Secs. 1300-1315. In addition, the district court found that 77 "packages" were damaged or lost. Thus, the district court granted appellee's motions for partial summary judgment and entered final judgment against appellee for $38,500. Appellant appeals this final judgment. We have jurisdiction pursuant to 28 U.S.C. Sec. 1291. We affirm.

I.

In December 1989, appellant's assured, L.A. Water Treatment Corporation, delivered machinery and equipment to appellee Waterman Steamship Corporation for carriage from Louisiana to Alexandria, Egypt. The shipment consisted of steel, valves, pumps and other materials to be used in the erection of sewage treatment plants and elevated water tanks. L.A. Water insured the goods with appellant Travelers Indemnity Company.

Waterman's stevedore loaded the cargo onto LASH ("lighter aboard ship") barges. The LASH barges were then lifted aboard the LASH vessel, M/V Sam Houston. Travelers asserts that the stevedore received most of the cargo with little or no packaging or preparation for transportation. Waterman disputes this assertion. As evidence that the cargo was packaged, Waterman offers the declaration of the stevedore's general manager. He stated that it is the stevedore's policy to load only cargo that has been packaged or, if it is a single unit, prepared for shipment. He further asserted that "every piece [of L.A. Water's cargo] was carried aboard the barge either crafted, skidded, banded, or shrink-wrapped in package form."

Ultimately, the cargo was carried under Bills of Lading # 1, # 4, and # 5. The total shipment consisted of 286 ¹ packages. ² LASH Barge No. WA10449 carried 77 of the 286 packages. ³ Waterman and L.A. Water did not use Waterman's standard freight rates, but rather established freight rates through negotiation.

In January 1990, LASH Barge No. WA10449 sank in the inner harbor of Alexandria. All 77 packages on board were lost or damaged. (No damage was caused to any of the cargo carried on the other LASH barges.) Travelers sued Waterman for money damages. Travelers also sued L.A. Water in a separate lawsuit.

Waterman made two motions for partial summary judgment. Waterman asserted that its liability was limited to $500 per package or per customary freight unit. See 46 U.S.C. Sec. 1304(5). ⁴ On August 28, 1991, the district court granted one of Waterman's motions for partial summary judgment. The district court found that there was no genuine issue of material fact as to the cargo shipped under Bill of Lading # 1. Specifically, the district court concluded that Bill of Lading # 1 was subject to COGSA's $500 per package limitation on liability. The district court denied partial summary judgment as to the cargo shipped under Bills of Lading # 4 and # 5, however. It found that, as of that time, a genuine issue of material fact remained.

On January 24, 1992, the district court granted Waterman's second motion for partial summary judgment as to the cargo shipped under Bills of Lading # 4 and # 5. The district court therefore then concluded that the $500 limit on liability applied to all 77 packages which sank. Accordingly, the district court calculated Waterman's liability to be $38,500. Final judgment was entered against Waterman on January 28, 1992.

Travelers filed a timely notice of appeal. The Ninth Circuit stayed the appeal pending disposition of the lawsuit between Travelers and L.A. Water. That litigation concluded in March 1993.

II.

1. Did L.A. Water offer sufficient evidence to withstand Waterman's motions for partial summary judgment?

COGSA regulates the liability of international carriers for loss or damage to cargo. Specifically, Section 4(5) of COGSA provides that a carrier is liable for $500 per package or per customary freight unit. 46 U.S.C. Sec. 1304(5). The shipper may increase the carrier's liability, however, by declaring on the bill of lading the nature and value of the goods shipped and paying a higher freight rate. Carman Tool & Abrasives, Inc. v. Evergreen Lines, 871 F.2d 897, 899 (9th Cir.1989). A carrier may take advantage of COGSA's $500 per package or per customary freight unit limitation on liability "only if the shipper is given a 'fair opportunity' to opt for a higher liability by paying a correspondingly greater charge." Nemeth v. General S.S. Corp., 694 F.2d 609, 611 (9th Cir.1982) (citations omitted); see Mori Seiki U.S.A., Inc. v. M.V. Alligator Triumph, 990 F.2d 444, 448 (9th Cir.1993); Carman Tool, 871 F.2d at 899; Komatsu, Ltd. v. States S.S. Co., 674 F.2d 806, 809 (9th Cir.1982); Pan Am. World Airways, Inc. v. California Stevedore & Ballast Co., 559 F.2d 1173, 1176 (9th Cir.1977) (per curiam); Tessler Bros. (B.C.), Ltd. v. Italpacific Line, 494 F.2d 438, 443 (9th Cir.1974).

The fair opportunity requirement is meant to give the shipper notice of the legal consequences of failing to opt for a higher carrier liability. Thus, the carrier must "bear an initial burden of producing prima facie evidence which demonstrates that it provided ... notice [of a choice of liabilities and rates] to the shipper." Mori Seiki, 990 F.2d at 449; see Carman Tool, 871 F.2d at 899. "Normally, the carrier can meet this initial burden by showing that the language of COGSA Section 4(5) is contained in the bill of lading." Nemeth, 694 F.2d at 611. The carrier may provide either an express recitation of COGSA Section 4(5), or language to the same effect. Mori Seiki, 990 F.2d at 449; Pan Am., 559 F.2d at 1176. But, the language must be printed in a legible manner. Nemeth, 694 F.2d at 611-12 (holding that a carrier cannot meet the fair opportunity requirement by printing the liability limitation clause in a microscopic and blurry manner). And, "the mere incorporation of COGSA by reference is not adequate." Mori Seiki, 990 F.2d at 449; Komatsu, 674 F.2d at 809-10; Pan Am., 559 F.2d at 1175-77.

Waterman's bill of lading incorporates by reference all provisions of COGSA. See Clause Paramount. ⁵ It also gives notice of both the $500 per package or per customary freight unit limitation on liability and the opportunity to opt out by declaring a higher value and paying a higher freight rate. See Liability of the Carrier Clause. ⁶ Accordingly, Travelers concedes that Waterman's bill of lading provides prima facie evidence that Waterman gave L.A. Water a fair opportunity to opt out of COGSA's $500 per package or per customary freight unit limitation on liability.

Because Waterman met its burden, the burden shifted to Travelers to disprove that L.A. Water was given a fair opportunity to opt out of COGSA's liability limitation. Mori Seiki, 990 F.2d at 449; Carman Tool, 871 F.2d at 899. Travelers offered two pieces of evidence. First, L.A. Water submitted to Waterman prior to shipment the export declaration it prepared for customs. This export declaration reported the value of the total cargo to be $6,000,000. Travelers pointed out that in Nemeth this court found that such a detailed list of the contents and their value "can be interpreted as evidence ... that [the shipper] would have opted for a higher liability had [it] been given a fair opportunity to do so." Nemeth, 694 F.2d at 612.

Second, Waterman's bill of lading did not contain a designated space in which to declare a higher value. Nemeth, 694 F.2d at 612. Travelers noted that the Nemeth court considered "the fact that the bill of lading contains no designated place for an excess value declaration" to be evidence that the shipper did not have a fair opportunity to opt out of COGSA's liability limitation. Id.

We review de novo the district court's grant of partial summary judgment. M/V American Queen v. San Diego Marine Const. Corp., 708 F.2d 1483, 1487 (9th Cir.1983). We find that the evidence provided by Travelers did not raise a genuine issue of material fact as to whether L.A. Water was denied a fair opportunity to opt out of COGSA's liability limitation. First, L.A. Water's export declaration does not, in fact, constitute evidence that L.A. Water "would have opted for a higher liability had [it] been given a fair opportunity to do so." Nemeth, 694 F.2d at 612. Rather, if L.A. Water wanted a higher carrier liability, it would have contracted for it. L.A. Water is a sophisticated shipper of goods. ⁷ And, it had shipped its goods with Waterman on several previous occasions. ⁸ Thus, L.A. Water was familiar with Waterman's shipping procedures and its bill of lading. See Institute of London Underwriters v. Sea-Land Serv., Inc., 881 F.2d 761, 766 (9th Cir.1989); Carman Tool, 871 F.2d at 901 n. 10. Accordingly, if L.A. Water had actually attempted to opt out of COGSA's limitation on liability, it would have succeeded. See London Underwriters, 881 F.2d at 766.

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