Opinion
01 Civ. 3646 (HB).
April 23, 2002
OPINION ORDER
In this action, M/V MSC defendant Indonesia ("MSC") and co-defendant Novolio Shipping Co., Ltd. ("Novolio") (collectively, "defendants") move for partial summary judgment limiting their liability to plaintiff Haemopharm, Inc. and co-plaintiff Farina Biagini, SPA's (collectively, "plaintiffs") to $500 per package, or $9000.00, pursuant to § 1304(5) of the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. § 1300 et seq. Plaintiffs contend that the package limitation is not less than $490,500.00. In addition, they insured their shipment with Travelers Property Casualty in the amount of $1,149,355.00. Both parties are in agreement that all of the evidence material to this issue has been taken and that this issue is therefore ripe for summary judgment. For the reasons detailed below, defendants' MSC's and Novolio's motion for partial summary judgment is denied. Trial is scheduled to start on May 13, 2002.
BACKGROUND
Plaintiff Haemopharm is a New Jersey corporation in the business of buying human plasma in the United States and selling it to European customers. (Flood Aff Ex. A — Stocco Dep. at 13, 26-27). Haemopharm retained Voco Incorporated ("Voco"), a foreign corporation, to assist in the procurement and shipping of various biological products, including human plasma. (Flood Aff Ex. A — Stocco Dep. at 51-53). Co-plaintiff Farina Biagini, an Italian company, is one of Haemopharm's European buyers. (Flood Aff. Ex. A — Stocco Dep. at 53). Caliber Logistics ("Caliber") and its successor company, FDX Supply Chain, were used by Voco to handle, store, and ship human plasma. (Flood Aff Ex. A — Stocco Dep. at 78-82). Kyfi, an international freight forwarder located in Louisville Kentucky, acted as Voco's freight forwarder for all of Voco's and Haemopharm's human plasma shipments, which were transported by ocean vessel from the United States to Europe between 1995 and the present. (Flood Aff. Ex. A — Stocco Dep. at 70). Kyfi had acted as a freight forwarder for Voco on approximately 30-40 occasions prior to the subject shipment and was fully familiar with Voco's shipping procedures and requirements. (Flood Aff Ex. A — Stocco Dep. at 154-57, Ex. B — Moore Dep. at 15-16). Acting on Haemopharm's behalf, Voco retained Kyfi's services to book the shipment of frozen human plasma at issue in this case aboard an ocean container vessel for transport from Norfolk, Virginia to Livorno, Italy in March, 2000. (Flood Aff Ex. A — Stocco Dep. at 70-73).
Defendant MSC is a foreign corporation engaged in the business of a common carrier of merchandise. Co-defendant Novolio was the owner of the MSC INDONESIA, the vessel which transported the shipment from Norfolk to Antwerp, Belgium. The shipment at issue consisted of 981 cartons filled with plastic bags of frozen plasma that were packaged on eighteen pallets. In preparation for shipment, Ms. Denise Moore of Kyfi prepared the docket receipts. (Flood Aff Ex. B — Moore Dep. at 40-41). In addition, Ms. Moore also prepared the master bills of lading and the shipper export declarations; MSC did not have any input into the language that appeared on the master bill of lading. (Flood Aff Ex. B — Moore Dep. at 46-47, 82-83). The cargo description authored by Kyfi contained on the master bill of lading under "Description of Packages and Goods" for the subject shipment reads: "18 PALLETS (981 CASES) FROZEN HUMAN PLASMA." (Flood Aff Ex. B — Moore Dep. at 81-83; Ex. D — Ex. 61). According to Ms. Moore, Kyfi had been using that language — that is, including the number of both pallets and cases on the bill of lading — since before she joined the company in or around 1998. (Flood Aff Ex. B. — Moore Dep. at 16; 44-45). One can assume her practice never failed to result in the number of "cases" representing the number of packages under COGSA. This assumes, of course, there was a prior claim. After Kyfi forwarded the master bill of lading to MSC, MSC entered it into its own computer system to generate a bill of lading for the shipment. (Flood Aff Ex. C — Whealdon Dep. at 74, 86). The description on MSC's computer generated bill of lading under "Description of Packages and Goods" reads: "18 Package(s) of (PALLETS) STC FROZEN HUMAN PLASMA (981 CASES)." (Flood Aff. Ex. D — Ex. 14). The signed and stamped on board bill of lading is the version noted above that was authored by Kyfi. In addition, Haemopharm obtained third-party insurance for the shipment. (Flood Aff Ex. A — Stocco Dep. at 171; Ex. D — Ex. 11).
During her deposition, which took place on January 10, 2002, Ms. Moore suggested that she had worked at Kyfi for "four or five years." (Flood Aff Ex. A — Moore Dep. at 16).
On or about May 5, 2000, Farina Biagini received the subject shipment. That same day, plaintiffs' Italian agent, Farosped S.r.L., submitted a note of protest to MSC's Italian agent, contending that the proper carrying temperature had not been maintained throughout the trip and that it was holding MSC liable for any damages to the shipment. (Flood Aff Ex. A — Stocco Dep. at 321-22).
DISCUSSION
1) Summary Judgment Standard
In a motion for summary judgment, the burden is on the moving party to establish that no genuine issues of material fact are in dispute and that it is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986); Fed.R.Civ.P. 56(c). A dispute regarding a material fact is genuine "`if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'"Aldrich v. Randolph Cent. Sch. Dist., 963 F.2d 520, 523 (2d Cir. 1992) (quotingAnderson, 477 U.S. at 248, cert. denied, 506 U.S. 965 (1992)). The court resolves all ambiguities and draws all inferences in favor of the nonmoving party in order to determine how a reasonable jury would decide. Aldrich, 963 F.2d at 523. In contract disputes generally, it is well-settled that "`[w]here contract language is ambiguous, the differing interpretations of the contract present a triable issue of fact' and "summary judgment is therefore inappropriate.'" Record Club of Am., Inc. v. United Artists Records, Inc., 890 F.2d 1264, 1270-71 (2d Cir. 1989) (citation omitted). 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." Berjaya Gen. Ins. SDN. BHD. v. M/V Hyundai Discovery, FFS Freight Int'l. Inc., No. 97 CIV. 7463 (HB), 1998 WL 438634 (S.D.N.Y. July 31, 1998).
2) Applicability of COGSA
The parties agree that Section 1304(5) of the United States Carriage of Goods by Sea Act ("COGSA") applies to the facts of this case. That section provides that
[n]either the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United States, or in the case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading. This declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall not be conclusive on the carrier.
46 U.S.C. § 1304(5). But for an exception that is not relevant here, the liability of a carrier is limited to $500 per package. Berjava Gen. Ins. SDN. BHD., 1998 WL 438634, at *2. In this case, both parties agree that, by virtue of the terms contained in the bill of lading, defendants are entitled, by contract, to limit their liability for delivering plaintiffs' shipment of frozen human plasma at an improper temperature to $500 per "package" as provided in Section 1304(5) of COGSA. Accordingly, the only issue is the precise application of the term "package" under COGSA. Nine-hundred and eighty-one cases of frozen human plasma were shipped on eighteen pallets, and the pallets were placed in a large forty-foot shipping container. Defendants argue that the eighteen pallets constitute the "packages" and that their liability thus totals $9000.00, while plaintiffs contend that the 981 cases constitute the "packages" and that defendants' liability thus totals $490,500.00.
2) Determining the Relevant "Package" Under COGSA
Because COGSA does not define the term "package," the question of what constitutes a COGSA "package" is largely a mailer of contract interpretation, "in which the intent of the parties is the overarching standard." Allied Int'l Am. Eagle Trading Corp. v. S.S. Yang Ming, 672 F.2d 1055, 1061 (2d Cir. 1982). Typically, the intent of the parties is determined by the bill of lading. Allied Chem. Int'l v. Companhia de Navegacao Lloyd Brasileiro, 775 F.2d 476, 485 (2d Cir. 1985), cert. denied, 475 U.S. 1099 (1986). In the case of "non-containers," as here, the bill of lading is the starting point for determining the number of COGSA packages. Seguros "Illimani" S.A. v. M/V POPI P, 929 F.2d 89, 94 (2d Cir. 1991). "[U]nless the significance of that number is plainly contradicted by contrary evidence of the parties' intent, or unless the number refers to items that cannot qualify as `packages', it is also the ending point" of the inquiry. Id. As the Seguros court explained," `package' is a term of art in the ocean shipping business, and parties to bills of lading should expect to be held to the number that appears under a column whose heading so unmistakably refers to the number of packages."Id. However, in the event of any ambiguity, courts "look elsewhere in the bill of lading and to other evidence of the parties' intentions." Id. Finally, it is well-established that any ambiguities in the bill of lading must be resolved against the carrier. Empire Hair Processing Corp. v. S.S. ACONCAGUA, No. 91 Civ. 0501 (PKL), 1992 WL 354497, at *7 (S.D.N.Y. Nov. 17, 1992).
The Second Circuit had adopted two basic rules in an attempt to alleviate the confusion in this area of the law — one applied to containers and the other addressing non-containers. Monica Textile Corp. v. S.S. Tana, 952 F.2d 636, 640 (2d Cir. 1991.) ("A container is a very large, oblong metal box, resembling a truck without a wheel or cab." Yang Ming, 672 F.2d at 1058). I agree with defendants that this case clearly falls under the non-container line of cases and disagree with plaintiffs' argument that the Court should "look to the decisional law under the container line of cases for direction in determining the definition of package." (Pls' opp. memo. at 12). The Second Circuit made it clear that the non-container analysis applies to pallets. Monica Textile Corp., 952 F.2d at 640.
In this case, the number "1" appears in the column entitled "No. of Pkgs" in the bill of lading. Neither party contests the fact that this number provides little to no assistance here. Under such circumstances, the Second Circuit has noted that courts should "look elsewhere in the bill of lading and to other evidence of the parties' intentions." Seguros "Illimani S.A.", 929 F.2d at 94. Here, the "Description of Packages and Goods" column in the bill of lading reads "18 PALLETS (981 CASES) FROZEN HUMAN PLASMA." (Flood Aff Ex. D-Ex.9). Defendants argue that the "18 PALLETS" unambiguously constitute the COGSA packages, and that, even if there were ambiguity in the bill of lading, the surrounding documentary evidence reveals that the parties intended that the eighteen pallets constituted the COGSA packages. By contrast, plaintiffs contend that while the bill of lading is ambiguous with respect to the meaning of "package," the parties' intentions clearly reflect that the "981 cases" were to constitute the COGSA packages.
I do not agree with defendants that the bill of lading is unambiguous. Although the "981 CASES" appears on the bill of lading after the "18 PALLETS" and is placed in parentheses, the description is sufficiently ambiguous so as to require a detailed look at the surrounding documents in an effort to glean the parties' intent. Berjaya Gen. Ins. SDN. BHD., 1998 WL 438634, at * 1 (denying defendant carrier's motion for summary judgment on the ground that the "Description of Packages and Goods" column was ambiguous insofar as it listed both "8 skids" and the "163, 629 pieces" contained in the skids).
Unlike the situation in Berjaya, where the bill of lading was ambiguous as to the definition of package and the parties failed to submit any other documents to the Court to resolve that ambiguity, in this case the parties have submitted considerable documentary evidence in addition to the bill of lading. Specifically, defendants maintain that each of the following documents establishes the clear intent of the parties to designate the eighteen pallets, rather than the 981 cases, as the relevant number: (1) MSC's initial computer generated bill of lading, on which Kyfi's master bill of lading was based, stated "18 Package(s) of (PALLETS) STC FROZEN HUMAN PLASMA (981 CASES)." (Flood Aff Ex. D-Ex. 14); (2) the cargo declaration submitted by MSC to U.S. Customs stating the same. (Flood Aff Ex. C — Whealdon Dep. at 102); (3) MSC's cargo declaration, filed with the U.S. Department of Treasury, stating the same. (Flood Aff Ex. D-Ex. 15); (4) plaintiff Biagini's cargo declaration, submitted to Italian customs, listing "18 pallets" to identify the quantity of the cargo. (Flood Aff Exs. E F); (5) the notice of protest that was sent to MSC from Farosped, Farina Biagini's agent, referring to the shipment as 18 pallets and makes no mention of cases. (Flood Aff Exs. E, F, G); (6) MSC's reefer and heated declaration stating "18 Pallets of Human Origin Blood Plasma." (Flood Aff Ex. E, Buzzini Dec. 66 11, 13(e)); and (7) the terminal interchange at import issued by italian terminal, road haulage consignment note, stating "18 crates/11,830 Kgs." (Flood Aff Ex. E, Buzzini Dec. 6 11(c)). As I see it, it is far from clear that both parties intended for the eighteen pallets rather than the 981 cases to constitute the "packages" when the first three of the above listed documents include a description of "18 PALLETS" as well as "981 CASES." In addition, I do not believe that the parties' mutual intent may somehow be divined from documents that either were authored by one party exclusively (e.g., plaintiff Biagini's cargo declaration and MSC's reefer and heated declaration) or were used solely for the benefit of third parties (e.g., Italian customs).
Furthermore, defendants also maintain that because plaintiffs, as shippers, deliberately chose to make up the cases into a pallet for their own benefit and in accordance with industry custom, they clearly "intended" for the pallet, rather than the case, to constitute the COGSA package. Menley James Labs. Ltd. v. MN HELLENIC SPLENDOR, 433 F. Supp. 252, 245 (S.D.N.Y. 1977) (the fact that "the decision to palletize was made by the shipper" militates in favor of defining the pallet as the COGSA package). Finally, defendants claim that plaintiffs purchased insurance from a third party rather than declaring excess value under COGSA and that this suggests that they "realized the impact of the package limitation and made a business decision in buying its own insurance coverage rather than declaring Ad Valorem to the carrier in order to avoid the $500 package limitation." (Defs' reply memorandum at 8) (citing Ingram Micro Inc. v. Airroute Cargo Express, 154 F. Supp.2d 834, 843 (S.D.N.Y. 2001)).
On the other hand, plaintiffs contend that: (1) the "981 cases" are the relevant COGSA packages under a line of cases dealing with this issue; and (2) the discussion and documents exchanged between Kyfi and MSC indicate that both parties understood the 981 cases to be the relevant COGSA packages. More precisely, plaintiffs maintain that neither Haemopharm, the shipper, nor Kyfi, its freight forwarder, ever referred to the pallets as packages, and that MSC in effect co-authored with Kyfi the cargo description found on the on board bill of lading — and was therefore fully aware that plaintiffs understood the relevant COGSA packages to be the 981 cases.
I cannot agree with defendants that the surrounding documentary evidence clearly indicates that it was the parties' intent to define the eighteen pallets as the relevant COGSA "packages." Indeed, since the "981 CASES" appears on the bill of lading as well as on other shipping documents, an opposite view is equally tenable. Even if defendants are correct that Ms. Moore, Kyfi's representative, conceded that MSC did not participate in drafting the cargo description found on the bill of lading, it stretches credulity to conclude that the evidence demonstrates an intent to disregard completely the bill of lading's "981 CASES" notation. Further, defendants' considerable reliance on Standard Electrica is somewhat misplaced. In that case, the court was faced with a situation in which the number of cartons was not mentioned in any of the shipping documents prepared at the time of contract, including the bill of lading. Standard Electrica, S.A. v. Hamburg Sudamerikanische Dampfschifffahrts-Gesellschaft, 375 F.2d 943, 946 (2d Cir. 1967). Such a decision is readily distinguishable from this case, where the content of the eighteen pallets — 981 cases — appeared not only on the bill of lading but also on several other shipping documents, including MSC's computer generated bill, as noted above, as well as on the cargo declaration submitted to U.S. Customs. Although defendants are correct that the extrinsic documents on which they rely include references to "18 PALLETS," they fail to point out that many of those same documents refer to the "981 CASES" as well, and that others on which they rely are simply shorthand descriptions where further specificity — i.e., referencing the number of packages on the pallet — is both unnecessary and irrelevant. In a nutshell, defendants simply cannot refute the proposition that plaintiffs kept the "981 CASES" in the bill of lading for a reason — more than likely to make it clear that the 981 cases were to be considered as the relevant number of COGSA packages.
Finally, I find defendants' argument with respect to plaintiffs' purchase of third-party insurance similarly unconvincing. As a preliminary matter, it is unclear why plaintiffs are looking to the carrier for relief if they are able to recover from their insurer (assuming they are not represented by their carrier, which cannot be determined from the papers before me). Further, plaintiffs' purchase of $1,149,355.00 of insurance suggests that the value of the cargo was understood to be far more than $9,000.00. In fact, the purchase of third-party insurance contributes to, rather than resolves, the ambiguity surrounding the parties' intent in this case.
In sum, while the COGSA limitation of liability applies here, I find that there is a material issue of fact as to the parties' intent with respect to whether the pallets or the cases are the relevant COGSA packages, and thus summary judgment is precluded.
CONCLUSION
For the reasons detailed more fully above, defendants' motion for partial summary judgment is denied. Trial is scheduled to start on May 13, 2002 and the parties shall submit their joint pre-trial order by April 30, 2002.