Opinion
CV 00-05729 SVW (SHx)
January 18, 2001
ORDER DENYING DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD:
I. FACTS
Defendant Scanwell Container Line Ltd. ("Scanwell") agreed to transport three shipments of clothing from Hong Kong to Los Angeles via Long Beach. For each shipment Scanwell issued a separate bill of lading containing identical terms and conditions. The three shipments were consolidated with other cargo and delivered safely by steamship to the Port of Long Beach.
On or about December 7, 1998, Scanwell subcontracted with co-Defendant Nova Container Freight Station ("Nova CFS") to pick up the consolidated cargo from Long Beach and move it to Nova CFS' facility in Los Angeles. Once the cargo was in Los Angeles, Nova CFS was to prepare it for pickup by the consignees by devanning it and clearing it through U.S. customs. The cargo owners were then to select a new trucker who would provide further U.S. transit.
At Nova CFS' request, on December 20, 1998, a driver for co-defendant Nova Transportation Services, Inc. ("Nova Transportation") picked up the container at the Port of Long Beach and delivered it to Nova CFS' Los Angeles facility. However before the container cleared through Customs it was stolen out of the facility's parking lot. Plaintiff HBSC Insurance Limited ("HSBC") assured the cargo owners for their losses and initiated the instant action on May 26, 2000, more than one year and five months after the loss of the goods.
The bill of lading governing these shipments has two potentially applicable statues of limitations. Clauses 1 and 3.2 of the bill of lading establish the default rule that, except where specifically provided otherwise, the Carriage of Goods by Sea Act ("COGSA") governs disputes arising while the goods were in the possession of Scanwell or one of its subcontractees. Defendants now move for summary judgment on the grounds that Clauses 1 and 3.2 apply, and Plaintiff's lawsuit does not comply with COGSA's one year statute of limitations. 46 U.S.C. § 1303 (6). Plaintiff does not dispute that this lawsuit was filed outside COGSA's statute of limitations, but contends, among other things, that the default rule of Clauses 1 and 3.2 were overridden by Clause 6.6 of the bill of lading. Accordingly, to prevail on summary judgment, the Defendants must demonstrate that Clause 6.6 does not apply to the facts of this case.
Clause 1 provides: "This Bill of Lading shall have effect subject to the provision of the Carriage of Goods By Sea Act of the United States 46 U.S.C. § 1300-1315 (hereafter "COGSA"). The provisions stated in COGSA (except as may otherwise be specifically provided herein) shall govern before the goods are loaded on and after they are discharged from the ship and throughout the entire time the goods are in custody of the Carrier." Clause 2.2 provides :"`Carrier' means Scanwell Container Line, Ltd. on whose behalf this Bill of Lading has been signed."
Clause 3.2 provides: Every servant or agent or subcontractor of Carrier shall be entitled to the same rights, exemptions from liability, defenses and immunities to which Carrier is entitled. For these purposes, Carrier shall be deemed to be acting as agent or trustee for such servants or agents, who shall be deemed to be parties to the contract evidenced in this Bill of Lading.
II. ANALYSIS
Because a natural reading of Clause 6.6 indicates its applicability, the Defendants have not met their burden on summary judgment. Clause 6.6 provides that if Scanwell subcontracts for transportation by an inland carrier from the port of discharge, such transportation is governed by the inland carrier's tariff. The contract defines the port of discharge as Long Beach. Furthermore, Scanwell subcontracted with Nova CFS to move the goods on land from Long Beach to Los Angeles. According to this reading of Clause 6.6, the transportation from Long Beach was governed by Nova CFS's tariff. Nova CFS maintains a tariff with the National Motor Freight Traffic Association which governs intrastate transportation. Plaintiff contends this tariff contains a two year statute of limitations provision. Therefore to the extent Clause 6.6 applies, Clause 1 is overridden and Plaintiff's suit is timely filed. Defendants present four arguments as to why Clause 6.6 is inapplicable.
Clause 6.6 provides: "With respect to the transportation performed by inland Carriers to the port of loading or from the port of discharge, the responsibility of Carrier shall be to procure transportation by such carriers (one or more) and such transportation shall be subject to the inland Carrier's contracts of carriage, tariffs, and any law compulsorily applicable."
A. Nova CFS's Tariff May Apply Even Though Nova Transportation Moved The Goods
Defendants argue that Nova CFS's tariff is inapplicable to this transaction because the transportation was performed by Nova Transportation. To revisit the pertinent facts: Nova CFS contracted with Scanwell to deliver the cargo to its warehouse. Nova CFS then delegated its carriage duties to Nova Transportation. Because Nova Transportation actually performed the carriage, Defendants argue the tariff governing Nova CFS's intrastate transportation of goods is inapplicable.
However, this argument flies in the face of textbook contract and agency law. See Contemporary Mission, Inc. v. Famous Music Corp., 557 F.2d 918, 924 (7th Cir. 1977); Fenn v. Pickwick Corp., 117 C.A. 236, 241 (1931); California Civil Code §§ 1457, 2230; Restatement, Second, Contracts § 318; Restatement, Agency § 212. As the old adage goes, delegating a duty is like passing on a cold- giving a liability to another does not mean you have gotten rid of it for yourself. Accordingly, Nova Transportation's actual performance under the contract is not a matter of much consequence. Rather, the fact that Nova CFS agreed to transport the goods means that the Defendants' liability under the bill of lading is established on the same terms as if Nova CFS had transported the goods themselves.
B. The Bill of Lading Does Not Support A Distinction Between "Customs" and "Transportation"
Defendants note that Clause 6.6 governs "transportation" and the goods were lost while being cleared through "customs." Defendants argue that clearing goods through "customs" is technically distinct from "transportation" and therefore Clause 6.6 does not apply. Unfortunately for the Defendants, it is unclear that their bill of lading accommodates such fine distinctions. On one hand, it can be argued that going through "customs" is a different activity than "transportation", and the bill of lading intended to reflect this distinction. On the other hand, it can reasonably be argued that clearing goods through "customs" is so intimately related to "transportation" that the bill of lading intended the word "transportation" to encompass both actions. Furthermore, the latter interpretation might be favored because it avoids the awkward stop and start liability that would result from drawing sharp distinctions between similar activities. At any rate, the bill of lading does not define transportation or contain an express provision governing the movement of good through customs. The Court cannot grant the Defendants' Motions For Summary Judgment where their own contract seems ambiguous.
C. Defendants Have Not Met Their Burden of Showing That Transportation To Customs Is Not Inland Transportation
Defendants allege that Clause 6.6 only applies to inland transportation, and the transportation of goods from the docks to the warehouse is not properly considered inland transportation. Rather, Defendants seem to argue that it is a common understanding that Customs is an extension of the dock, and the act of taking the goods to Customs thus is a continuation of sea carriage. However, Defendants have failed to produce any evidence supporting such an interpretation. Furthermore to the extent the Defendants' purport this distinction is commonly understood and widely embraced in maritime circles, the Court is somewhat skeptical. See Sea-Land Serv. v. Atlantic Pac. Int'l, 61 F. Supp.2d 1102 (D. Haw. 1999) ("courts have repeatedly held that shoreside cargo handling, including trucking ("drayage") and container handling, is not of a maritime nature"). Regardless of the merits of this contention, however, the Defendants' unsupported allegations concerning the scope of the phrase "inland transportation" are insufficient to carry their own Motions for Summary Judgment.
D. Cargo Owners Did Not Need To Intend For Nova CFS's Tariff To Apply
The Court in ascertaining the meaning of a contract should attempt to determine the intent of the contracting parties. Defendants contend that Nova CFS's tariff should not apply because the cargo owner had no reason to suspect that Nova CFS or its tariff would be involved in the transportation if its cargo.
However, the unequivocal intent of the parties as expressed in Clause 6.6 was that "transportation performed by inland Carriers . . . from the port of discharge . . . shall be subject to the inland carriers . . . tarriffs." In order to enforce their rights under this variable provision, the cargo owners are not required at the time of contracting, to specifically identify the inland carrier whose tariff will apply. See Restatement, Contracts § 34(1) ("the terms of a contract may be reasonably certain even though it empowers one or both parties to make a selection of terms in the course of performance")
The Ninth Circuit has shown a willingness to protect shippers by refusing to incorporate the harmful and latent terms contained in a third party tariff. Comsource Indepen. Foodservice v. Union Pacific, 102 F.3d 438, 444 (9th Cir. 1996); Hughes Aircraft Co. v. North American Van Lines, 970 F.2d 609 (9th Cir. 1992). However, insofar as Nova CFS decided to enter into this tariff and Scanwell decided to use Nova CFS's services, the Court finds no justification for intervening to protect the Defendants from the consequences of their own actions.
III. CONCLUSION
For the foregoing reasons, the Defendants' Motions For Summary Judgment are DENIED.
IT IS SO ORDERED.