Opinion
01 Civ. 7612 (WHP)
September 11, 2002
David Y. Loh, Esq. Nicoletti, Hornig, Campise Sweeney New York, New York, Attorneys for Plaintiff.
James M. Kenny, Esq. Kenny Stearns New York, New York, Attorneys for Defendant.
MEMORANDUM AND ORDER
Plaintiff, Fireman's Fund Insurance Company ("Fireman's Fund"), brought this admiralty cargo action as the subrogee of Whittier Wood Products Co. ("Whittier"), the shipper of the subject cargo, against defendant, Yang Ming Transport Corporation ("Yang Ming"), the carrier. Before this Court are the parties' dueling summary judgment motions on damages and Fireman's Fund motion to strike Yang Ming's second and third affirmative defenses, which assert the $500 per package limitation on liability found in the Carriage of Goods by Sea Act ("COGSA"), see 46 U.S.C. § 1304 (5). Fireman's Fund also moves for summary judgment on liability. For the reasons stated below, Yang Ming's motion for summary judgment is granted in part and denied in part, and Fireman's Fund's motion for summary judgment is granted in part and denied in part and its motion to strike certain affirmative defenses is denied.
Background
Whittier is a well established exporter of wood products that previously contracted with Yang Ming for approximately twenty-one shipments in the two years prior to the shipment at issue, each utilizing Yang Ming's standard form bill of lading. (Def.'s Rule 56.1 Stmt. ¶ 8; Pl.'s Response to Def.'s Rule 56.1 Stmt. ¶ 8 ("Pl.'s Response").) In late September 1998, Whittier arranged through Fujitrans U.S.A., Inc. ("Fujitrans"), its freight forwarder, to ship 3,990 pieces of custom-sized "Alder Wood" via ocean carrier to Bremerhaven, Germany on Yang Ming's vessel "M/V Trade Cosmos." (Pl.'s Rule 56.1 Stmt. ¶¶ B-C; Def.'s Response to Pl.'s Rule 56.1 Stmt. ¶ 1 ("Def.'s Response"); Def.'s Rule 56.1 Stmt. ¶ 1; Pl.'s Response ¶ 1.) The wood. was packaged onto thirty-eight pallets and "stuffed" into one container for shipment by Whittier. (Decl. of Robert Whittier dated Feb. 11, 2002 ¶ 6 ("Whittier Decl."); Decl. of Sophie Kar dated Feb. 11, 2002 ¶ 3 Ex. A; Reply Decl. of Sophie Kar dated June 5, 2002 ¶ 12.)
Although the container arrived at the terminal of Yang Ming's stevedore and terminal operator Maher Terminals, Inc. ("Maher") at Port Elizabeth in the Port of New York on or about October 5, 1993, it was not loaded on the "M/V Trade Cosmos" for shipment, admittedly due to the failure of Maher. (Def.'s Rule 56.1 Stmt. ¶¶ 1-3; Pl.'s Response ¶¶ 1-3.) The container did not arrive in Germany as scheduled and was declared lost. (Pl.'s Rule 56.1 Stmt. ¶¶ H K; Def.'s Response ¶ 1.) Whittier had insured the shipment with Fireman's Fund, for the value of $52,906.18. (Pl.'s Rule 56.1 Stmt. ¶¶ K-L; Def.'s Response ¶ 1; Decl. of David Y. Loh dated Feb. 26, 2002 Ex. K.) After the shipment was declared lost, Whittier shipped replacement customsized wood pieces to its customer and submitted an insurance claim to Fireman's Fund for the amount of the original shipment. Fireman's Fund paid Whittier the full amount of the claim and is thus subrogated to Whittier's rights. (Pl.'s Rule 56.1 Stmt. ¶¶ K-L; Def.'s Response ¶ 1; Whittier Decl. ¶¶ 9-13.)
On March 24, 1999, the container that housed Fireman's Fund's customized wood was found at the Bremerhaven Terminal. (Def.'s Rule 56.1 Stmt. ¶ 4; Pl.'s Response ¶ 4.) Whittier's German client rejected delivery of that original shipment having already received the replacement. Yang Ming sold the wood from the original shipment as salvage receiving net proceeds of $15,104, which Yang Ming's counsel is holding in trust to be applied to the judgment rendered in this action. (Def.'s Rule 56.1 Stmt. ¶¶ 5-6; Pl.'s Response ¶¶ 5-6.)
Because the original shipment was not placed on the vessel "M/V Trade Cosmos," no bill of lading was issued for the shipment. (Pl.'s Rule 56.1 Stmt. ¶ O; Def.'s Response ¶ 1.) So too, no paper dock receipt was prepared or issued in connection with the shipment. (Pl.'s Rule 56.1 Stmt. ¶ Q; Def.'s Response ¶ 1.) However, the parties agree that if the bill of lading had issued its contents would have been exclusively derived from the information contained in the shipper's bill of lading instruction from Fujitrans. (Def.'s Rule 56.1 Stmt. ¶ 14; Pl.'s Response ¶ 14.) Thus, the bill of lading would have indicated under the "Designation of Packages and Goods" column that the container contained "38 Pallets (3,990 PCS.) ALDER LUMBER." (Def.'s Rule 56.1 Stmt. ¶ 16; Pl.'s Response ¶ 16.) Lastly, the parties both agree that Fireman's Fund's claims are governed by COGSA. (Pl.'s Rule 56.1 Stmt. ¶ A; Def.'s Response ¶ 1.)
Yang Ming concedes liability and thus summary judgment is proper in favor of Fireman's Fund on liability alone. Further, at oral argument counsel for Fireman's Fund acknowledged that the terms in Yang Ming's standard form bill of lading apply to the situation at hand, and the form afforded Whittier a fair opportunity to declare an excess value for the cargo above the $500 per package limitation. Thus, the COGSA $500 per package limitation applies here and Yang Ming is entitled to summary judgment on that issue. The remaining issue concerns the measure of damages, namely the oft-litigated issue of what is a package for COGSA per package limitation purposes.
Fireman's Fund argues that the number of packages for the COGSA per package limitation is 3,990 — the number of pieces of wood that were shipped. Yang Ming contends that applying the COGSA per package limitation the number of packages is 38 — the number of pallets that were used to ship the 3,990 pieces of wood. Importantly, neither party contends that there was only one package — the number of containers used to ship the 38 pallets carrying 3,990 customized pieces of wood.
The Court may only grant summary judgment when there is an absence of genuine issues of material fact and the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c); O'Shea v. Bidcom, Inc., 01 Civ. 3855 (WHP), 2002 WL 1610942, at *3 (S.D.N.Y. July 22, 2002). Moreover, where contract language is ambiguous, the differing interpretations of the contract present a triable issue of fact and summary judgment is inappropriate. Record Club of Am., Inc. v. United Artists Records, Inc., 890 F.2d 1264, 1270-71 (2d Cir. 1989); accord Haemopharm, Inc. v. M/V MSC Indonesia, No. 01 Civ. 3646 (HB), 2002 WL 732118, at *2 (Apr. 24, 2002). "In a case brought under COGSA in particular, summary judgment will be precluded if there is any ambiguity regarding the intent of the parties with respect to the meaning of `packages.'" Haemopharm, 2002 WL 732118, at *2. However, neither conclusory statements nor speculation suffice to defeat summary judgment. MacSteel Int'l USA Corp. v. M/V IBN Abdoun, 154 F. Supp.2d 826, 831 (S.D.N.Y. 2001); accord Kulak v. City of New York, 88 F.3d 63, 71 (2d Cir. 1996).
Both parties move for summary judgment on the ground that the number of packages for the limitation purposes is not subject to a genuine dispute of material fact. To determine the number of packages on a particular shipment, the Court in all cases, both "container" and "non-container" cases, first looks at the number of packages listed in the number of packages column of the bill of lading as evidence of the parties intent.See Binladen BSB Landscaping v. M.V. Nedlloyd Rotterdam, 759 F.2d 1006, 1012 (2d Cir. 1985) ("[T]he touchstone of our analysis should be the contractual agreement between the parties, as set forth in the bill of lading. Entries on the bill of lading are thus important evidence of the intent of the parties . . ." (citations omitted)); Seguros "Illimani" S.A. v. M/V Popi P, 929 F.2d 89, 94 (2d Cir. 1991) ("We begin with a bill of lading's use of the term `package,' and will adopt the unit of packaging unambiguously identified in the bill of lading." (citations omitted))
Here, no bill of lading was ever issued. Further, the parties dispute what number would appear in the number of packages column on the bill of lading had it been issued. They agree, however, that the bill of lading's contents would have derived from the information contained in the shipper's bill of lading instruction from Fujitrans, and that under the "Designation of Packages and Goods" column, "38 Pallets (3,990 PCS.) ALDER LUMBER" would appear.
Yang Ming contends that had the bill of lading issued, it would have listed 38 pallets as the number in the number of packages column. Fireman's Fund asserts that the bill of lading instruction indicated that the number of packages was "1 X 40'" — short-hand for one forty foot container — and that would have been the number inputted in the number of packages column. Thus, the parties dispute that fact. Yang Ming argues, however, that this issue of fact is not material since either figure would yield the same result.
If the bill of lading provided "1 X 40'" in the number of packages column, as Fireman's Fund urges, and "38 Pallets (3,990 PCS.) ALDER LUMBER" in the "Designation of Packages and Goods" column, as the parties agree, then
[n]otwithstanding the insertion in the number-of-packages column(s) of the bill of lading of a number reflecting the number of containers, where the bill of lading discloses on its face what is inside the container(s) and those contents may reasonably be considered COGSA packages, the latter, not the container(s) are the COGSA packages.Monica Textile Corp. v. S.S. Tana, 952 F.2d 636, 641 (2d Cir. 1991). Here, however, the description of the contents on the bill of lading is ambiguous in that it lists both the number of pallets and the number of pieces. Thus, the Court must determine what the contractual intent of the parties was, namely to deem the COGSA package to be 38 pallets or 3,990 separate pieces of wood. See Monica Textile, 952 F.2d at 641;Haemopharm, 2002 WL 732118, at *3. In its determination the Court should "look elsewhere in the bill of lading and to other evidence of the parties' intentions." Seguros, 929 F.2d at 94; accord Haemopharm, 2002 WL 732118, at *3-4; Empire Hair Processing Corp. v. S.S. Aconcagua, 91 Civ. 0501 (PKL), 1992 WL 354497, at *5 (S.D.N.Y. Nov. 17, 1992)
In Empire Hair and Haemopharm, the factual background was similar to the present case in that the bill of lading indicated the number of containers in the number of packages column and also indicated both the number of pallets and pieces in the description column. See Haemopharm, 2002 WL 732118, at *3-4; Empire Hair Processing, 1992 WL 354497, at *5-6. Those Courts held that summary judgment was improper because there was a material issue of fact as to the parties' intent with respect to whether the pallets or the pieces are the relevant COGSA packages. See Haemopharm, 2002 WL 732118, at *4-6; Empire Hair Processing, 1992 WL 354497, at *7-9; see also Berjaya General Insurance SDN, BHD. v. M/V Hyundai Discovery, No. 97 Civ. 7463 (HB), 1998 WL 438634, at *3-4 (S.D.N.Y. July 31, 1998) (denying summary judgment where the "number of packages" column was left blank and the "bill of lading is ambiguous as to what the parties intended the `packages' to be" since it contained the number of pallets and pieces)
This Court agrees with the Empire Hair and Haemopharm courts that summary judgment is premature in situations where a question of fact exists concerning what the parties intended the COGSA package to be for purposes of the $500 limitation. See Haemopharm, 2002 WL 732118, at *4-6;Empire Hair Processing, 1992 WL 354497, at *7-9
Moreover, there is not enough evidence in the record presently before this Court to determine that the 3,990 pieces of custom-sized wood could not, as a matter of law, be deemed packages under COGSA. It is undisputed that the pallets were "stuffed" into the container. However, no evidence indicates how the pieces were actually packed on the pallets. As such, "it is impossible to determine based on the current record whether the pieces of [wood] are items to which some packaging preparation for transportation has been made or not," and thus whether the pieces of wood could be COGSA packages as a matter of law. Berjaya General, 1998 WL 438634, at *3
Accordingly, Fireman's Fund's motions to strike Yang Ming's affirmative defenses and for summary judgment on damages are denied, but its motion for summary judgment on liability is granted. Further, Yang Ming's motion for summary judgment on damages is granted to the extent that the COGSA limitation applies to the instant matter, but denied to the extent that it seeks to deem the number of packages for COGSA limitation purposes as 38, not 3,990. A pre-trial conference is scheduled for October 4, 2002, at 2:15 p.m.