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GOYA FOODS, INC. v. S.S. ITALICA

April 13, 1983

GOYA FOODS, INC., Plaintiff,
v.
S.S. ITALICA, S.S. Americana, their engines, boilers, etc., In Rem, and Italia S.p.A. di Navigazione, Defendants



The opinion of the court was delivered by: LUMBARD

LUMBARD, Circuit Judge:

Plaintiff Goya Foods, Inc., was the purchaser and consignee of 12,088 cartons of pimientos shipped from Spain to New York in the winter of 1976-77 aboard two vessels owned and operated by the defendant, Italia S.p.A. di Navigazione (Italia Lines). Soon after Goya took possession of the cargo in New York, it became apparent that some of the pimientos had been damaged and had begun to decompose. Goya eventually destroyed all of the pimientos as unfit for human consumption. Goya attributes the decomposition of the pimientos to freezing damage, and claims that the pimientos froze because Italia Lines stowed them improperly and deviated from the transatlantic route the parties had agreed upon. Goya, invoking admiralty jurisdiction, 28 U.S.C. § 1333(1) (1976), seeks damages of $108,413.88. *fn1" Goya's claim was tried to the court between November 8th and 10th, 1982. The court finds that Italia Lines' vessels did not deviate from their customary routes and that Goya has not otherwise proven its case under the governing statutes, and accordingly directs the entry of judgment for Italia Lines.

 Goya, a food processor and distributor, has imported pimientos from Spain for many years. In June, July, and November, 1976 Goya agreed to purchase from Conservas Hispamer, S.A., a Spanish food packager, 12,088 cartons of pimientos to be shipped "Cost & Freight" between September and December, 1976. The purchase price thus included the cost of carriage arranged by Conservas. Conservas packaged the pimientos for Goya in autumn, 1976 at its plant near Jumilla, Spain.

 Enrique Cedeno Querra, Conservas's general manager, testified by deposition to the quality control procedures which Conservas ordinarily employs and which it applied to Goya's consignment. During the packaging process the pimientos are inspected several times, the jars are washed and sterilized, and the pimientos' temperature and acidity (PH) is carefully monitored. In order to exclude air and prevent spoilage, the pimientos are vacuum-packed in jars with deflection caps which pop up if the vacuum is lost. A jar in which the cap has deflected upward is called a "springer." Before shipping a consignment of pimientos Conservas inspects each carton for springers and removes any that are found. Conservas designs its packaging and inspection procedures to conform to both Spain's and the importing country's health regulations.

 Conservas contracted with Italia Lines for shipment of Goya's pimientos. In December, 1976 Italia Lines delivered five shipping containers to Conservas at its plant. Conservas packed three of the containers with a total of 7,240 cartons of pimientos stacked in pallets. Each carton, depending on jar size, contained 12 to 24 four ounce, six and one-half ounce, or twelve ounce, jars of pimientos. Truckers hired by Italia took the three containers to Alicante where, on December 15 and 16, 1976, they were laden on board Italia Lines' container ship, the S.S. Americana. Conservas packed the remaining two containers with 4,848 palletized cartons of pimientos. Italia Lines' truckers transported the final two containers to Valencia where, on December 31, 1976, they were laden on board the Americana's sister ship, the S.S. Italica. Italia Lines issued clean bills of lading for all five containers. Additionally, before the ships were loaded, a Spanish governmental agency known as "Servicio Official de Inspeccion, Vigilancia y Regulacion de las Exportaciones (SOIVRE, or "Official Exports Inspection Surveillance and Regulation Service"), inspected pimientos in each of the five containers to insure that they were edible and in conformity with United States regulations. SOIVRE approved the export of all of the pimientos.

 Neither party has presented direct evidence of where Italia Lines stowed the pimientos. However, Italia Lines, which has failed to produce the Americana's and the Italica's stowage plans, concedes that the containers were stowed on deck. The containers that Italia Lines provided to Conservas could not be heated during the voyage across the Atlantic. Although heated shipping containers are available for a higher charge, Conservas never requested, and Italia Lines never suggested that Conservas use, such containers. The ordinary practice in the trade is to use unheated containers. Although the bills of lading issued by Italia Lines listed only New York as the port of discharge and did not identify any other ports to be visited during the voyages, paragraph 3 of the bills of lading did authorize the ships to stop, inter alia, at their "usual or customary or advertised ports of call."

 The Americana departed from the Mediterranean on January 2, 1977, and arrived at Saint John, New Brunswick on January 8, at Boston on January 9, and at New York on January 12. On either January 12 or 13 the Americana discharged its three containers of pimientos onto an open, unheated pier operated at Weehawken, New Jersey by Italia Lines' United States agent, Seatrain Agencies, Inc. Goya had notice of the Americana's arrival because its documentation clerk, Joseph Perez, had repeatedly called Italia Lines' New York office about the vessel's progress. Goya's truckers picked up one container on January 14, another on January 17, and the final container on January 20, and drove the containers six miles to Goya's heated warehouse at Secaucus, New Jersey. Temperatures frequently fell below freezing during the period between discharge and Goya's pick-up of the final container. Although the Weehawken pier had facilities to heat discharged cargo, Italia Lines neither instructed, nor did Goya request, Seatrain to heat the containers.

 The Italica left the Mediterranean on January 17, 1977, and arrived at Saint John on January 23, at Boston on January 24, and at New York on January 25. The Italica discharged both of its containers of pimientos onto the Weehawken pier shortly after arrival. Goya, through Perez, had notice of the Italica's arrival and discharge of cargo. Goya's truckers picked up the Italica's two containers on February 3 and transported them to the Secaucus warehouse. Seatrain did not heat the containers during the interval between discharge and pick-up.

 The Food and Drug Administration (FDA) inspected both the Americana and the Italica's pimientos and cleared them for import. On February 1 and 14, Goya paid Conservas by letters of credit which had made FDA approval of the pimientos a condition of payment.

 When the containers arrived at its warehouse, Goya removed the pallets of pimientos and stacked them in the center of the building. Goya maintained a temperature of approximately 60 degrees in the warehouse. The cartons of pimientos, when removed from the containers, appeared to be sound and without external damage. However, in late January, 1977, warehouse employees noticed puddles of liquid forming underneath some of the stacked pallets. Upon opening some of the cartons, Goya found that a number of jars had become springers and were leaking fluid, and that the contents of other jars were frozen. Goya communicated its findings to Italia Lines, the FDA, and its cargo underwriter, Talbot, Bird & Co. On February 9 Robert Louis of Talbot, Bird & Co. and a Mr. Krawchuk of Italia Lines jointly surveyed the cargo. Louis and Krawchuk found that the vacuum seals on many of the jars from both the Americana and Italica shipments had broken, that some jars were leaking fluid, and that some of the pimientos had decayed. They recommended to Goya that it attempt to segregate the sound portion of the cargo from the bad. On February 10 Goya sent Italia Lines a notice of claim for the full value of all five containers of pimientos, stating in its notice that the pimientos had arrived in a "'freeze-damage' condition."

 Between February 14 and March 15 Goya segregated 885 cartons of totally damaged pimientos. On February 17 Inspector James Blumenstock of the New Jersey Department of Health conducted an annual inspection of the Goya warehouse. Inspector Blumenstock examined the pimientos, made note in his report of the broken seals, leakage, and decay, and placed the entire cargo under embargo pending the completion of segregation. Under the embargo Goya could not sell the pimientos or remove them from the warehouse without permission from the Department of Health. In late February or early March the Department of Health took seven samples for testing from jars that Goya had segregated as apparently sound. The Department's tests found four samples to be sound; but found three samples, including two that were discovered to contain mold, to be unsatisfactory. In March, Goya applied for and received from the Department permission to destroy the 885 cartons of pimientos segregated as totally damaged. On March 29 Goya removed the 885 cartons from its warehouse, crushed them and dumped them in a landfill.

 At Goya's request, the FDA in April agreed to reinspect the remaining pimientos. On April 29 Goya shipped the FDA 560 jars for testing. On June 8 the FDA informed Goya that its tests had revealed "a potential problem with bacterial contamination" and ordered Goya not to distribute the pimientos pending final evaluation of the test results. On June 14 Goya requested the FDA to issue final rejection notices for all of the pimientos. Goya told the FDA that it felt that "the problem of bacterial contamination is too great a risk to take, not only for our company name, but, also for our loyal consumers." Thereafter, between June 17 and June 22, Goya received from the FDA final refusals of admission covering all of the pimientos. The FDA notices stated that the pimientos had been found to be in violation of § 801(a)(3) of the Food, Drug, and Cosmetic Act, indicated that the pimientos had to be either exported or destroyed, and informed Goya of its right to take an administrative appeal. Goya did not appeal.

 The pimientos were also tested in June by Jacobs-Winston Laboratories, Inc., which received 14 samples of pimientos from Robert Louis of Talbot, Bird & Co. Louis took the samples on June 3 both from apparently sound and from visibly damaged cartons. On June 10 Jacobs-Winston reported that half of the 14 samples were acceptable, and half were unacceptable due to decomposition. Jacobs-Winston's report stated that weakening of the vacuum seals on the jars was a major factor behind the decomposition.

 On July 25 United States Customs, and on July 28 and 29, the New Jersey Department of Health, authorized Goya to destroy all of the pimientos not previously destroyed, and Goya immediately did so. Until they were destroyed, the pimientos exhibited increasing damage. By July 29 many of the jars had lost all of their fluid, and the pimientos in those jars, and in many others, were badly decayed. However, a significant number of the jars ...


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