Wemhoener Pressen v. Ceres Marine Terminals, Inc.

• Decision Date: 13 September 1993
• Docket Number: No. 92-1885,92-1885
• Citation: 5 F.3d 734
• Parties: WEMHOENER PRESSEN, Plaintiff-Appellant, v. CERES MARINE TERMINALS, INCORPORATED, Defendant-Appellee, and M/V TADEUSZ KOSCIUSZKO, her engines, boilers, etc., in rem; French-Polish Shipping Company; Polskie Linie Oceaniczne, Defendants.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 734

5 F.3d 734

1993 A.M.C. 2842

WEMHOENER PRESSEN, Plaintiff-Appellant, v. CERES MARINE TERMINALS, INCORPORATED, Defendant-Appellee and M/V TADEUSZ KOSCIUSZKO, her engines, boilers, etc., in rem French-Polish Shipping Company; Polskie Linie Oceaniczne, Defendants.

No. 92-1885.

United States Court of Appeals Fourth Circuit.

Argued June 10, 1993.

Decided Sept. 13, 1993.

James Dygert Skeen, Wright, Constable & Skeen, Baltimore, argued, for appellant.

JoAnne Zawitoski, Semmes, Bowen & Semmes, Baltimore, argued, for appellee.

Before RUSSELL, Circuit Judge, SPROUSE, Senior Circuit Judge, and BRITT, United States District Judge for the Eastern District of North Carolina, sitting by designation.

OPINION

BRITT, District Judge:

The issues before the court are whether the district court erred first in finding that federal maritime law applied to appellant Wemhoener Pressen's claim against appellee Ceres Marine Terminals, and then in deciding that the Himalaya clause in the bill of lading effectively extended to Ceres the $500 limitation of liability available to the carrier under the provisions of the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C.App. Sec. 1304(5). Ceres contends that the district court had federal maritime jurisdiction over all of Wemhoener's claims, including the claim against it, and that because delivery of the cargo had not yet occurred, the contractual extension of COGSA's limitation of liability was in full effect at the time of the damage to Wemhoener's cargo. Ceres argues further that the Himalaya clause is sufficiently specific to confer on Ceres the benefits of COGSA, which was incorporated into the bill of lading. We agree, and therefore affirm.

I.

Wemhoener is a German corporation that manufactures and sells hydraulic presses for use in woodworking. It sold a press and related machinery to an Ohio business, IDI/PSC, and selected a forwarding agent, ICT Neuss, to ship the press to Ohio at the best price possible. Transportation involved putting the press into a crate and lashing it with steel cables onto a wheeled, non-motorized flatbed trailer called a "mafi." Mafis are used to transport cargo on roll-on, roll-off vessels. The mafi was owned by carrier Polskie Linie Oceaniczne (Polish Ocean Lines, or "POL"). Both the mafi and the crate were shipped across Germany to the German port of departure in Bremerhaven, where they were loaded onto the M/V Tadeusz Kosciuszko. The Express Cargo Bill [hereinafter Express Bill] accompanied the crate and served as the bill of lading. Shippers are entitled to avoid liability limitations if they so choose by entering the value of the goods in the space provided on the Express Bill and by paying a higher price to ship the goods, but Wemhoener did not exercise this option. The space designated in the Express Bill as "value of goods declared of shipper" was left blank.

The M/V Tadeusz Kosciuszko took the mafi, crate attached, to the port of Baltimore. On November 30, 1989, the crate was unloaded from the ship by defendant Ceres's stevedores and transported to a storage area at the terminal, still strapped to the mafi. No rail cars were immediately available to take the crate to Ohio, so it remained in storage at the terminal until it could be shipped. The railcars were scheduled to arrive on December 12, 1989. On December 5, Ceres began to strip the crate from the mafi. A Ceres gearman used a cutting torch to remove the steel cables, which caused the packaging to catch fire and damaged both press and mafi. The cost of stripping the mafi (as well as for stripping other mafis) was billed by Ceres to POL pursuant to a written agreement between them, under which Ceres agreed to provide for POL a full range of stevedoring and terminal operation services for a set fee. Id. at 64, 67, 85-86. Ceres's personnel loaded the damaged press onto a rail car on December 13, 1989 and billed that service to John A. Steer, Inc., "as agents" for the Ohio buyer. Id. at 89, 90. The press was received by IDI/PSC on December 28, 1989. Despite repair attempts, it now operates at 70% efficiency. Wemhoener claims that the press had an invoice value of over one million dollars and that components valued at $350,000 were damaged by the fire.

On November 26, 1990, Wemhoener sued the vessel ¹ that transported the crate and mafi, POL, and Ceres. As to defendant Ceres, the Complaint alleged that jurisdiction was premised on admiralty and maritime jurisdiction and on diversity jurisdiction. The Complaint did not specifically allege negligence but stated that Ceres had "agreed to handle, transport and deliver [the cargo] as a terminal operator or bailee to the consignee in as good order and condition as received, but on receipt by the consignee, said cargo was not in as good order as received by Ceres, but seriously injured and damaged." In its appellate brief, however, Wemhoener characterized the basis of its claim against Ceres as "negligent and improper handling of Wemhoener's property [in Ceres's capacity] as a terminal operator."

Both POL and Ceres moved for partial summary judgment on grounds that the liability of each was limited to $500 per package. In response, Wemhoener conceded that POL was liable only for $500 based on Sec. 1304(5) of COGSA, which stipulates that the carrier shall not be liable for over $500 per package unless, prior to shipping, the shipper declares a higher value for the goods in the bill of lading. However, Wemhoener contended then and now that Ceres cannot claim benefit of the $500 per package limitation. Ceres asserts that it can, based on the "Himalaya" clause in POL's North America Service Bill of Lading [hereinafter "America Bill"], which was incorporated into the terms of the Express Bill. ² The Himalaya clause is set out in Section II of the America Bill as follows:

9. Sub-contracting and Indemnity.

(1) The Carrier shall be entitled to subcontract on any terms the whole or any part of the carriage.

(2) The Merchant undertakes that no claim or allegation shall be made against any person whomsoever by whom the Carriage or any part of the Carriage is performed or undertaken (other than the Carrier) which imposes or attempts to impose upon any such person or any vessel owned by any such person any liability whatsoever in connection with the Goods whether or not arising out of negligence on the part of such person and if any claim or allegation should nevertheless be made to indemnify the carrier against all consequences thereof. Without prejudice to the foregoing every such person shall have the benefit of all provisions herein benefitting the Carrier as if such provisions were expressly for his benefit; and in entering into this contract, the Carrier, to the extent of these provisions, does so not only on his own behalf, but also as agent and trustee for such persons.

According to the definitions set out in Section I, the Merchant is Wemhoener, the Carrier is POL, and Carriage "means the whole of the operations and services undertaken by the carrier in respect of the goods."

Based on the language of the Himalaya clause and also on clauses 23 and 24 ³, Ceres argued in its motion for partial summary judgment that while cutting the cables, stripping the crate from the mafi and preparing the crate for rail transport, it was performing parts of the carriage as a subcontractor for POL and that it therefore was, under the Himalaya clause, entitled to the carrier's COGSA benefits. The district court agreed. In the Memorandum accompanying his Order, Chief United States Magistrate Judge Clarence E. Goetz declined to address the state law issue "inasmuch as the court, exercising federal maritime jurisdiction, holds that the COGSA limitation of liability extends to Ceres in this case." Id. at 138. The court determined that federal maritime law applied, despite its concurrent diversity jurisdiction, based on the facts and on precedent developed in this circuit. Id. at 135-36; see B. Elliott (Canada) Ltd. v. John T. Clark & Son, 704 F.2d 1305 (4th Cir.1983), aff'g 542 F.Supp. 1367 (D.Md.1982); Rockwell Int'l Corp. v. S/S Koeln Express, 1987 A.M.C. 2541, 1987 WL 33398 (D.Md.1987). The court found that "the action which caused the damage, i.e., the stripping of the cargo from the mafi, is a peculiarly maritime activity, inasmuch as mafis are intended solely to facilitate shipboard loading and unloading, which fact links the activity even more closely to the maritime shipping process." (J.A. at 135-36.) After concluding that the damage did occur during carriage, the court turned to Wemhoener's claim of ambiguity and stated that "[t]o the contrary, the court finds that the clause clearly is intended to extend the benefits of the bill of lading to all subcontractors engaged in the carriage of goods which, in this case, the court finds to include defendant Ceres." Id. at 136. After discounting Wemhoener's argument that Second Circuit Court of Appeals precedent should control its disposition of the motion and disagreeing with Wemhoener's characterization of prevailing case law in that circuit, id. at 136-37, the court granted partial summary judgment to Ceres and limited its liability to $500. Wemhoener filed a motion to reconsider, which was denied, and judgment of $500 subsequently was entered for Wemhoener against both POL and Ceres. Wemhoener then appealed to this court.

II.

We turn first to the issue of whether the district court erred by applying federal maritime law to Wemhoener's claim against Ceres. Paragraphs one and two of the Complaint read as follows:

1. This is a case of admiralty and maritime jurisdiction as hereinafter more fully appears, and is an admiralty and maritime claim within the meaning of Rule 9(h) of the Federal Rules of Civil Procedure.

2. As to Defendant, Ceres Marine Terminals, Inc., this is also a case of pendent and diversity jurisdiction, the amount in controversy being in excess of Fifty Thousand Dollars....

Id....