The opinion of the court was delivered by: LASKER
B. F. McKernin & Co., Inc. sued United States Lines, Inc. and United States Lines Operations, Inc. in New York State Court to recover damages allegedly resulting from the defendants' delays in delivering a shipment of 10 cases of "Brassware" from the Netherlands. The case was removed to this court from the New York Supreme Court. United States Lines subsequently served a third-party complaint on International Terminal Operating Co., Inc. for indemnification. Defendants (U.S. Lines) and the third-party defendant (I.T.O.) move for summary judgment dismissing the complaint pursuant to Rule 56 of the Federal Rules of Civil Procedure.
McKernin contracted with U.S. Lines to ship 10 cases of Brassware from Rotterdam to New York on the vessel American Leader in October, 1973. Prior to shipment McKernin had contracted to resell the goods in the United States for $10,207. Due to a chain of mishaps, McKernin did not receive the goods on time. When the vessel reached this country the cases were erroneously unloaded in Philadelphia. From Philadelphia the cases were taken by truck to Newark and by mistake reshipped to Europe. U.S. Lines flew the goods back to New York as soon as they reached the Netherlands and McKernin ultimately received them about December 13, 1973, a month later than expected. Despite the delay, McKernin resold the goods at prices comparable to the original prices which it had expected to receive. (Deposition of Vincent L. McKernin, President of B. F. McKernin, pp. 29-30).
McKernin failed to perceive any comedy in this series of errors and filed a complaint stating four causes of action. The first and second seek compensatory damages in the amount of $10,207. for "conversion" (first cause of action) and breach of contract (second cause of action).
The third seeks to recover $50,000. for loss of goodwill, future business and business reputation; the fourth requests punitive damages in the amount of $100,000. for U.S. Line's willful and "gross" conduct.
Claims for Conversion and Breach of Contract
As stated above, McKernin sold the brassware for the same price it intended to charge had it arrived on schedule. Although McKernin characterizes its first two causes of action as stating common law claims of conversion and breach of contract, U.S. Lines and I.T.O. argue that under the Bill of Lading and statutory law (1) any claim McKernin might have arises solely under the Carriage of Goods by Sea Act (COGSA); (2) COGSA limits damages to the monetary amount actually lost as a result of the carrier's negligence; and (3) because McKernin ultimately received the price it initially sought, it is entitled to no damages and the first two causes of action must be dismissed.
The brassware was transported under Ocean Bill of Lading No. 110-006 which constituted the contract between McKernin and U.S. Lines. According to the third clause of the Ocean Bill of Lading and the second clause of U.S. Line's Long Form Bill of Lading (which was incorporated into No. 110-006), the relationship between the parties is governed by COGSA.
The statutory language of COGSA, as well as the shipping contract, is further authority that COGSA governs. Sections 1300 and 1312 of the Act provide:
"§ 1300 Bills of lading subject to chapter
Every bill of lading or similar document of title which is evidence of a contract for the carriage of goods by sea to or from parts of the United States, in foreign trade, shall have ...