Yang Ming Marine Transport Corp. v. Okamoto Freighters

• Decision Date: 07 August 2001
• Docket Number: DEFENDANT-CROSS-DEFENDANT-3RD-PARTY-PLAINTIF,THIRD-PARTY-DEFENDANT,AND,No. 00-55358,PLAINTIFF-APPELLEE,DEFENDANT-X-CLAIM-3RD-PARTY-PLAINTIFF-APPELLANT,DEFENDANT-CROSS-DEFENDAN,OCEANBRIDGE,THIRD-PARTY-DEFENDANT-APPELLEE,00-55358
• Citation: 259 F.3d 1086
• Parties: (9th Cir. 2001) YANG MING MARINE TRANSPORT CORPORATION,, v. OKAMOTO FREIGHTERS LTD.,LAUFER FREIGHT LINES LTD.,, v. G.E. INTERNATIONAL INC. (USA); BRITISH AMERICAN TOBACCO;SHIPPING INTERNATIONAL INC.,AMERICAN INTERNATIONAL CARGO,
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1086

259 F.3d 1086 (9th Cir. 2001)

YANG MING MARINE TRANSPORT CORPORATION, PLAINTIFF-APPELLEE, v. OKAMOTO FREIGHTERS LTD., DEFENDANT-CROSS-DEFENDANT, AND LAUFER FREIGHT LINES LTD., DEFENDANT-X-CLAIM-3RD-PARTY-PLAINTIFF-APPELLANT, v. G.E. INTERNATIONAL INC. (USA); BRITISH AMERICAN TOBACCO; THIRD-PARTY-DEFENDANTS, OCEANBRIDGE SHIPPING INTERNATIONAL INC., DEFENDANT-CROSS-DEFENDANT-3RD-PARTY-PLAINTIFF, AND AMERICAN INTERNATIONAL CARGO, THIRD-PARTY-DEFENDANT-APPELLEE.

No. 00-55358

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted June 6, 2001

Filed August 7, 2001

[Copyrighted Material Omitted]

Counsel Frank X. Dipolito (Argued and Briefed), Swain & Dipolito Llp, Long Beach, California, for appellant Laufer Freight Lines, Ltd.

Mark A. O'Brien (Argued), Long Beach, California, for appellee Yang Ming Transport Corporation.

Thomas C. Jorgensen (Briefed), Cogswell, Nakazawa & Chang, Long Beach, California, for appellee Yang Ming Transport Corporation.

Michael W. Lodwick (Argued and Briefed), Haight, Brown & Bonesteel Llp, Santa Ana, California, for appellee American International Cargo Service, Inc.

Appeal from the United States District Court for the Central District of California Dickran M. Tevrizian, District Judge, Presiding D.C. No. CV-97-08550-DT

Before: Procter Hug, Jr., Stephen S. Trott, and William A. Fletcher, Circuit Judges.

Trott, Circuit Judge

OVERVIEW

In this appeal, we are asked to ascertain the rights and responsibilities of several entities in relation to four separate contracts for the transportation of ten shipping containers from California to Japan. The district court, after addressing eight motions for summary judgment, a motion for reconsideration, and a motion to amend the judgment, held that Yang Ming Marine Transport Corporation ("Yang Ming") was entitled to summary judgment on its indemnity claim against Laufer Freight Systems, Inc. ("Laufer") as a result of Laufer's misdescription of the cargo. The district court also awarded summary judgment to American International Cargo, Inc. ("American") with respect to Laufer's claim for indemnity against American. Laufer timely appeals both adverse rulings. We have jurisdiction pursuant to 28 U.S.C. §§ 1291, and AFFIRM in part and REVERSE in part.

DISCUSSION

1. Background

G. E. International (U.S.A.), Inc. ("G.E."), an agent for Philip Morris, Inc., hired Oceanbridge Shipping International, Inc. ("Oceanbridge"), a non-vessel-operating common carrier ("NVOCC"), to transport ten containers holding cigarettes from Long Beach, California to Tokyo, Japan. Oceanbridge then contracted with American, another NVOCC, to ship the containers from Long Beach to Tokyo. American issued a bill of lading to Oceanbridge identifying Oceanbridge as the "exporter/shipper" and Okamoto Freighters ("Okamoto") as the consignee. The "particulars furnished by shipper" in the bill of lading listed the cargo as ten containers holding "9600 Cases Cigarettes."

American, in turn, contracted with Laufer, yet another NVOCC, to transport the containers to Japan. Laufer provided American with a booking report confirming the information provided to Laufer by American and naming American as the "shipper/supplier." Laufer then issued a bill of lading to American designating American as the "exporter, " and describing the cargo as "Cigarettes & Cigars" (the "American/ Laufer Bill of Lading").

Finally, on June 16, 1997, Laufer booked a shipment of the ten containers of cargo with Yang Ming, to be carried to Tokyo from Long Beach aboard the M/V SETO BRIDGE. Yang Ming issued a bill of lading to Laufer (the"Yang Ming/ Laufer Bill of Lading") evidencing the contract of carriage and describing the goods as "STC: 9600 CARTONS OF CIGARS & CIGARETTES." The Yang Ming/Laufer Bill of Lading labels Laufer as the "shipper" and Okamoto as the "consignee." Section 7 of the bill of lading provides that the "Merchant" -expressly defined as including the "shipper" -"shall indemnify the Carrier against all loss, damage, expenses, liability, penalties and fines" arising or resulting from a misdescription of the cargo. The bill of lading expressly incorporated by reference the terms of Yang Ming's tariff. A tariff is a public document filed by the carrier and published by the Federal Maritime Commission letting shippers know what services a carrier will furnish under certain conditions and at what price. One such service contemplated by Yang Ming's tariff was the storage of the shipper's cargo at the point of destination in return for a predetermined fee called demurrage.

The ten containers were loaded on board the M/V SETO BRIDGE in Long Beach on June 23, 1997, and arrived in Tokyo on July 5, 1997. Upon their arrival in Japan, four of the ten containers were transported by T.S. Shipping Company ("T.S.") to a nearby warehouse where it was discovered that the containers held used tires instead of cigars and cigarettes. T.S. immediately returned the containers to Yang Ming's Tokyo container yard. Japanese Customs officials allegedly informed Yang Ming that the remaining containers also held old tires. Okamoto subsequently notified Yang Ming that it was rejecting the entire shipment and abandoning the containers in Yang Ming's Tokyo container yard.

Yang Ming promptly notified Laufer that the containers had been rejected by T.S. and proposed that Laufer coordinate the return of the containers to Long Beach through Okamoto. On July 16, 1997, Yang Ming notified Laufer that"free time" had expired on the ten containers on July 15, 1997, and that demurrage charges were being incurred pursuant to Yang Ming's tariff.

Anticipating that Laufer would abandon the cargo, Yang Ming began seeking potential buyers of the tires in Tokyo. Yang Ming discovered that the tires had no commercial value in Japan and that it would cost $25,000 to dispose of the tires in that country. As Yang Ming expected, Laufer sent Yang Ming a written notice of its abandonment of the containers on July 23, 1997.

Unwilling to pay the $25,000 disposal fee in Japan, Yang Ming began searching in several countries for potential buyers of the tires. Yang Ming located an individual in Hong Kong who was willing to dispose of the tires free of charge if Yang Ming would absorb all costs arising from the shipment of the containers from Japan to Hong Kong. Yang Ming agreed and used its own vessels to transport the tires to Hong Kong.

On November 20, 1997, Yang Ming filed a complaint against Oceanbridge, Laufer and Okamoto, alleging (1) breach of contract, (2) violation of the Carriage of Goods by Sea Act ("COGSA"), (3) negligence, (4) fraud, and (5) negligent misrepresentation.

Laufer answered the complaint, filed a cross-claim for indemnity against Oceanbridge and Okamoto, and filed a third-party complaint against American in favor of Yang Ming pursuant to Federal Rule of Civil Procedure 14(c). Oceanbridge filed its own third-party complaint against G.E. seeking indemnification and declaratory relief, and an amended third-party complaint adding Philip Morris, Inc. and British American Tobacco as third-party defendants. American filed a cross-claim against Oceanbridge, G.E., and Philip Morris for (1) intentional misrepresentation, (2) negligent misrepresentation, (3) indemnification, (4) contribution, and (5) declaratory relief.

On September 8, 1998, Okamoto filed a motion to dismiss Yang Ming's complaint for lack of personal jurisdiction, which was granted. Pursuant to stipulation by the parties, the district court dismissed without prejudice third-party defendant Philip Morris from the Oceanbridge third-party complaint.

On January 15, 1999, Yang Ming moved for summary judgment on its claims for breach of contract and violation of COGSA against Oceanbridge and Laufer. Laufer responded by moving for summary judgment against Yang Ming. American then brought motions for summary judgment against both Yang Ming and Laufer.

On February 8, 1999, the district court denied Yang Ming's motion for summary judgment against Laufer and Oceanbridge and granted American's motions for summary judgment against Laufer and Yang Ming. In March of 1999, the district court denied Oceanbridge's motion for summary judgment against Laufer and granted in part and denied in part Oceanbridge's motion for partial summary judgment against Yang Ming. After being presented with additional evidence in May of 1999, the court granted Yang Ming's motion for summary judgment against Laufer and Oceanbridge. Laufer timely appeals the district court's awards of summary judgment to Yang Ming and American.

2. Yang Ming's Motion for Summary Judgment Against Laufer

To recover indemnity from Laufer pursuant to Section 7 of the Yang Ming/Laufer Bill of Lading, Yang Ming must demonstrate that (1) Laufer breached its warranty as to the accuracy of the particulars, (2) Laufer has no defenses to Yang Ming's claim for indemnity, and (3) Yang Ming's damages are reasonable under the circumstances. See Atlantic Overseas Corp. v. Feder, 452 F. Supp. 347, 351 (S.D.N.Y. 1978). The district court concluded that Yang Ming had satisfied all three requirements and therefore was entitled to summary judgment in the amount of $67,385.63.

a. Standard of Review

We review de novo a district court's award of summary judgment. Balint v. Carson City, 180 F.3d 1047, 1050 (9th Cir. 1999) (en banc).

b. Breach of Warranty

In addressing Laufer's breach of warranty claim, the district court held that Laufer, as the "shipper " of the containers, warranted the description of the contents of the containers both implicitly under COGSA and expressly in Section 7 of the Yang Ming/Laufer Bill of Lading.

On appeal, Laufer challenges the district court's holding that COGSA requires a shipper to indemnify a carrier for the misdescription of cargo. We need not address this claim, however, because Laufer expressly concedes in its opening brief that the district court's...