Opinion
CIVIL ACTION NO. MJG-01-3786
July 1, 2003
MEMORANDUM AND ORDER
The Court has before it Defendant M/V Leon through its owners Rickmers Linie GmbH CIE.KG ("Rickmers") and Double C Shipping Co. Ltd.'S ("Double C") (together, "Defendants") Motion for Summary Judgment Premised on the Fire Statute, or, in the Alternative, Motion for Partial Summary Judgment Premised on the Package Limitation, and the materials submitted by the parties in relation thereto. The Court finds a hearing unnecessary.
In the instant context, the facts must be taken in the light most favorable to Plaintiff Atlantic Coast Yacht.
The instant case arises out of an incident aboard the in rem Defendant M/V Leon ("the Leon"), a cargo-carrying Motor Vessel owned by Defendants. The Leon was carrying as cargo a yacht ("the Yacht") belonging to Plaintiff Atlantic Coast Yacht Sales ("Plaintiff" or "Atlantic").
The basic facts are not in dispute. In mid-October 2001, the Yacht was damaged by fire in Japan while aboard the Leon. The Yacht was stowed in the No. 3 Lower Hold of the Leon and covered by a "tween deck" in which there was a removable pontoon floor which could be opened and closed to allow access to the space below. In port in Hitachi, Japan, a welding operation was undertaken to attach lashings for new cargo in the upper level of the No. 3 Hold. The welding was performed by the stevedore, Hitachi Futo Co., Inc. ("Hitachi") or its welding subcontractor, Yacht Man Co. Inc. ("Yacht Man"). During the operation, "flash" (essentially sparks) from the welding fell between the pontoons and started a fire on the plastic cover of the Yacht below.
The stevedores could not extinguish the fire and the hold was evacuated when it filled with smoke. As a safety measure, the hatch covers were closed and the carbon dioxide system engaged. The fire was later extinguished by a local fire brigade. There is no dispute that the Yacht was seriously damaged in the fire.
Plaintiff has sued the Leon in rem. The Defendants have Answered and filed the instant Motion on behalf of the Leon. A companion lawsuit against Rickmers in personam, based upon the same incident, is currently in discovery.
Defendants filed the instant Motion seeking summary judgment that the Leon and its owner Double C is not liable for damage to the Yacht based on the Fire Statute, 46 App. U.S.C. § 184 and its corollary in the Carriage of Goods Over Sea ActC'COGSA"), 42 U.S.C. § 1304(2)(b) (together, "the Fire Statutes"), or, in the alternative, that their liability is limited to $500.00 pursuant to COGSA'S "Package Exception," 46 App. U.S.C. § 1304 (5).
II. LEGAL STANDARD
In deciding a summary judgment motion, the Court must look beyond the pleadings and determine whether there is a genuine need for trial.See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The Court must determine whether the evidence presents a sufficient disagreement to require submission to a jury or whether the evidence is so one-sided that one party must prevail as a matter of law. See Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 251-53 (1986). If the defendant carries its burden by showing an absence of evidence to support a claim, the plaintiff must demonstrate that there is a genuine issue of material fact for trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 324-25 (1986). The Court must look at the evidence presented in regard to the motion for summary judgment through the non-movant's rose colored glasses but must view it realistically. Nevertheless, the non-movant is entitled to have all reasonable inferences drawn in his favor. Adickes v. S.H. Kress Co., 398 U.S. 144, 158-59 (1970).
An issue of fact must be both genuine and material in order to forestall summary judgment. An issue of fact is genuine if the evidence is such that a reasonable jury could return a verdict in favor of the plaintiff. See Anderson, 477 U.S. at 248. An issue of fact is material only if the establishment of that fact might affect the outcome of the lawsuit under governing substantive law. See id. "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Id. at 249-50 (internal citations omitted).
III. DISCUSSION
A. Applicability of the Fire Statutes
The Fire Statute, 46 App. U.S.C. § 182, reads:
No owner of any vessel shall be liable to answer for or make good to any person any loss or damage, which may happen to any merchandise whatsoever, which shall be shipped, taken in, or put on board any such vessel, by reason or by means of any fire happening to or on board such vessel, unless such fire is caused by the design or neglect of such owner.
The COGSA Fire Statute, 46 App. U.S.C. § 1304(2)(b), reads:
Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from —
* * *
(b) Fire, unless caused by the actual fault or privity of the carrier.
The parties agree that these provisions control the instant case. However, they sharply dispute whether Defendants are entitled to the protection of the Fire Statutes.
The parties agree that, under the Fire Statutes and the case law interpreting them, the burden is on the Plaintiff, Atlantic, to prove that the "personal negligence" of the carrier caused the fire or prevented the fire from being extinguished. See Consumers Import Co. v. Kabushiki Kaisha Kawasaki Zosenjo, 320 U.S. 249, 255 (1943); Def' s Motion at 6-7, Pi's Opp. at 2. When, as here, the carrier is a corporation, the relevant "personal negligence" is that of the corporation's officers or its agents, not that of the vessel's crew.See Ionmar Compania Naviera v. Central of Georgia R. Co., 471 F. Supp. 942, 951 (D. Ga. 1979). The parties dispute whether the actions of the carrier Rickmers' Port Captain, Tino Bauer ("Bauer") were those of a "managing agent" of the carrier and thus may serve to confer liability on Defendants.
Plaintiff contends that Bauer was supervising and exercising control over the welding operation that caused the fire and thus may be construed as a "managing agent" of Defendants at the time of the incident. Defendants deny that Bauer was a managing agent.
Both parties cite In re Hellenic Inc. Limitations Proceedings, 252 F.3d 391, 397 (5th Cir. 2001) for the guidelines a court should follow in determining whether an employee should be considered a "managing agent" for the purposes of the Fire Statutes. In that case, the court listed eight factors to consider in making that determination:
1. the scope of the agent's authority over day-to-day activity in the relevant field of operations;
2. the relative significance of this field of operations to the business of the corporation;
3. the agent's ability to hire and fire other employees;
4. his power to negotiate and enter into contracts on behalf of the corporation;
5. his authority to set prices;
6. the agent's authority over the payment of expenses;
7. whether the agent's salary is fixed or contingent; and
8. the duration of his authority.
The list is described as "non-exhaustive" and none of the factors is dispositive. Id.
Defendants argue that there is no evidence that Bauer satisfies any of these criteria. Bauer's affidavit states that he had never "spoken with, or given instructions to, stevedoring companies about . . . any matters relating to welding operations," and that his responsibility with regard to the welding operation was limited to "confirm[ing] that the welders were arranged." Statement of Tino Bauer at ¶¶ 3.
Bauer's duties with regard to stowage, as described in his affidavit, were to provide the Master with information and a plan for stowing and lashing freight, which plan was subject to the Master's ultimate approval. Id. at ¶¶ 4. In his deposition, Rickmers' Senior Advisor to the Managing Director, Herbert Steuber ("Steuber"), also testified that Bauer's duties were to "advise the Master" as to the "overall voyage planning" and the loading, unloading and stowing of cargo. Steuber Deposition at 21-22. He also testified that the Port Captain (Bauer) "only give[s] them [the master and the chief officer] information, and the Master decides, or the chief officer decides, on the actual stowage." Id. at 34. Finally, Steuber testified that the charter agreement specified that the master had "the ultimate responsibility for stowing and lashing" and that Bauer was not empowered to overrule the Master's decisions. Id. at 52.
In response, Atlantic has submitted the "Fleet Instruction Manual" ("Manual") governing operations on the Leon. The Manual describes safety precautions to be taken during "hot work" (which includes welding) on board the vessel. The Manual specifies that the "Master/ Chief Engineer" shall have final authorization for all welding work. Manual at 5. It further describes safety precautions that Atlantic alleges were not followed. Atlantic points to a section of the Manual that reads: "while responsibility for enforcing the observation of safety precautions rests largely with the master and ship's officers, it is a matter of concern to all personnel on board to see that they are observed." Id.
Atlantic argues that the accident report commissioned by Rickmers clearly shows that the fire-safety protocols outlined in the Manual were not followed, leading to the fire and the damage to the Yacht. However, even assuming this to be the case, the Manual plainly states that the Chief Engineer, not the Port Captain, had responsibility for compliance with fire protocols. The vague language cited by Atlantic cannot reasonably be read as transferring this responsibility away from the Chief Engineer and to Bauer.
Atlantic further argues that because at one point Bauer "gave an order to the ship's foreman to move one of the welders" from one welding site to another "to expedite the operation" at the second location, he "had control" over the welders. See Bauer Aff. at ¶¶ 9. The Court does not agree. There is no evidence that Bauer had any control over the welding operation or the implementation of fire safety precautions, the two "fields of operations in which the [alleged] negligence occurred."Hellenic, 252 F.3d at 397.
Atlantic has presented no evidence to show that Bauer had responsibilities more substantial than Defendants' evidence indicates. Nor has it presented evidence sufficient to create a genuine question of material fact as to whether Bauer's employment duties satisfy any of the eight factors of the Hellenic test. Atlantic thus cannot satisfy its burden of proof to show that the personal negligence of the carrier caused the fire or prevented its extinguishment as required by the Fire Statutes. Thus, the Court shall grant defendants' motion for summary judgment on the applicability of the Fire Statutes to the instant case. Because the Fire Statutes eliminate any liability for Defendants, the Court shall enter final judgment for the Defendants. However, in the interest of completeness, the Court shall also consider Defendants' alternative argument that it is protected from any liability exceeding $500 by virtue of COGSA's "Package Limitation."
B. Applicability of the Package Limitation
The parties appear to agree that COGSA's Package Limitation, if applicable, would limit Defendants' liability to $500.00. The Package Limitation reads as follows:
Neither the carrier nor the ship shall in any event be or become liable for any loss or damage . . . in an amount exceeding $500 per package . . . unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading.46 App. U.S.C. § 1304(5). Atlantic does not dispute Defendants' contention that the Yacht qualifies as a "package" under the Package Limitation. Instead, Atlantic argues that the Package Limitation does not apply because Defendants's stowage of the Yacht below deck was an "unreasonable deviation from its contract of carriage with Atlantic." Pl's Opp at 7.
Some courts have denied protection under the Package Limitation where there has been an "unreasonable deviation" by the carrier in complying with the contract of carriage. See. e.g. Sedco. Inc. v. S.S. Strathewe, 800 F.2d 27, 31 (2d Cir. 1986). In dictum, the Fourth Circuit has noted that numerous District Courts in this Circuit have held that the doctrine of unreasonable deviation as an exception to the package limitation survived the enactment of COGSA. Caterpillar Overseas. S. A. v. Marine Trans. Inc., 900 F.2d 714, 721 (4th Cir. 1990). The Fourth Circuit expressed a "preference" for the adoption of the holding of the Second Circuit in Sedco. Id. The court in Sedco decision's holding that an "unreasonable deviation" in the context of COGSA is limited to "geographic deviation and unauthorized on-deck stowage." The Sedco court further stated:
Other courts have rejected any potential exception to COGSA's Package Limitation. See, e.g. Atlantic Mut. Ins. Co. v. Poseidon Schiffahrt, 313 F.2d 872, 874 (7th Cir. 1963) (no exception to COGSA's $500 limitation).
[m]ere negligence, lack of due diligence, or a failure to properly handle, stow, care, or deliver cargo, never has constituted deviation. Although such conduct might violate the duty imposed by COGSA properly and carefully to carry and care for the cargo, 46 App. U.S.C. § 1303(2), it is not a deviation having the effect of voiding either a contractual or statutory limitation of liability.Sedco, 800 F.2d at 32 (emphasis added).
Atlantic argues that an unreasonable deviation existed because the Yacht was intended to be stowed on-deck (based on the Bill of Lading, which specified "on-deck" stowage) and was instead stowed below-deck. Atlantic concedes that stowage in a hold "would certainly offer more protection in a trans — Pacific crossing" than on-deck stowage. See Pl's Opp. at 8. However, Atlantic contends that the stowage of the Yacht below-deck introduced a "new" and unanticipated hazard, which was the sparks from welding.
Defendants contend that the Bill of Lading specifying on-deck stowage was an error. Atlantic's President, Andrew Andreoli, stated in his deposition that, before he received the bill of lading indicating that the Yacht was to be stowed on-deck, he had no expectation as to where the Yacht would be stowed. See Andreoli Deposition at 31-32. Further, Andreoli stated that if he had known the Yacht was being loaded below-deck, he "wouldn't have told" the manufacturer's representative who was observing the loading of the Yacht on the Leon to load the Yacht on the deck instead. Id. at 33-34. In light of this testimony it is evident that neither party "intended" or contemplated that the Yacht would only be stowed on-deck.
In light of the limitation of the "unreasonable deviation" exception to geographic deviation and unauthorized on-deck stowage, stowagebelow-deck, whether authorized or not, could not amount to an unreasonable deviation. The identification of unauthorized on-deck storage as an unreasonable deviation is based on the recognition, accepted by Atlantic, that on-deck storage is generally more dangerous and risky to cargo than storage on the interior of a vessel, and that therefore unauthorized stowage on-deck where below — deck stowage was contemplated constitutes a "material departure" from the contract. See Minex v. Int'l Trade Co. of Virginia, 303 F. Supp. 205 (E.D. Va. 1969). Here, the alleged "departure" from the Bill of Lading was the choice of an inherently safer method of carriage that does not constitute a "material departure" that can be characterized as an unreasonable deviation.
In addition, the Court notes that Atlantic has not provided any evidence supporting its assertion that the fire risk from welding below-deck was greater than it would have been on-deck. In contrast, Atlantic admits that stowage on the interior of the vessel would offer the Yacht "more protection" in general. Further, even if Defendants had been negligent in stowing the Yacht below deck, "negligent stowage is not and could not constitute a deviation." Minex, 303 F. Supp at 210.
In sum, Atlantic has provided no evidence that supports the existence of a genuine question of material fact as to whether the stowage of the Yacht below, as opposed to above, the deck of the Leon constitutes an unreasonable deviation, voiding the protections of the Package Limitation. The Court thus finds that, even if the COGSA, Fire Statutes did not apply to protect Defendants from liability, such liability would be limited to $500 by the COGSA Package Limitation.
IV. CONCLUSION
For the foregoing reasons:
1. Defendants Defendant M/V Leon through its owners Rickmers Linie GmbH CIE.KG and Double C Shipping Co. Ltd.'S Motion for Summary Judgment Premised on the Fire Statute is GRANTED.
2. Defendants' Motion for Partial Summary Judgment Premised on the Package Limitation is meritorious, but DENIED AS MOOT.
3. Judgment for the Defendants shall be entered by separate Order.
SO ORDERED.