Appeal from a judgment entered in the United States District Court for the Southern District of New York after a bench trial before Judge Richard Owen. The district court determined that an ocean carrier's negligence constituted an unreasonable deviation within the meaning of the Carriage of Goods by Sea Act, thereby voiding the $500 per package limitation of liability and allowing the cargo owner full recovery for decrease in value of its temporarily lost cargo. Reversed and remanded with directions to enter judgment in plaintiff's favor for $1,000.
Before: NEWMAN, PIERCE and MINER, Circuit Judges.
In this action for loss of value of cargo shipped aboard their vessel, defendants appeal from a judgment entered in the United States District Court for the Southern District of New York after a bench trial before Judge Richard Owen. The district court found that defendants' conduct constituted an unreasonable deviation within the meaning of the Carriage of Goods by Sea Act of 1936 ("COGSA"), 46 U.S.C. §§ 1300-1315 (1982), thereby voiding the statutory $500 per package limitation of liability and allowing plaintiff cargo owner to recover $182,637.48 in damages. The district court also held that defendants were not entitled to assert the COGSA "restraint of princes" defense. We reverse the judgment to the extent that it does not limit defendants' liability to $500 per package and remand the case with directions to enter judgment in plaintiff's favor for $1,000.
The dispute in this case arises out of the British Government's requisition of the M/V STRATHEWE for use in the Falkland Islands War. The STRATHEWE was owned by defendants-appellants, The Peninsular and Oriental Steam Navigation Company, The Peninsular and Oriental Steam Navigation Company Limited, and Strick Line Limited (collectively referred to as "P & O"). Plaintiff-appellee Sedco, Inc. was both shipper and consignee of eighteen packages of oil drilling equipment shipped in 1982 aboard the STRATHEWE.
In the early part of June, 1982, P & O received the eighteen packages from Sedco in Dubai, U.A.E., to be shipped to Houston, Texas, where Sedco had contracted to sell the equipment for $350,000. Within a few days of the vessel's departure from Dubai, the British Government requisitioned her under its war powers for duty in the Falkland Islands War. The British Government informed P & O:
Your vessel STRATHEWE is required for service in connexion with the Falkland Islands Emergency. Request you instruct your master to proceed to Southampton at best speed discharging present cargo at a port convenient to you subject to minimum delay.
Having determined that Malta was not only on the STRATHEWE's course to Southampton but also on the course of one of its other vessels coming by at a later date en route to the United States, P & O obtained the permission of the British Government to transship the United States-bound cargo aboard the STRATHEWE at Malta. On June 12th, P & O off-loaded Sedco's cargo at Malta along with other cargo destined for the United States.
Panalpina, Sedco's customs broker in Houston, twice inquired of P & O in July as to the vessel's estimated time of arrival. In both instances, P & O told Panalpina that the cargo would arrive aboard the STRATHEWE on August 24th. On August 4th, P & O informed Panalpina that the cargo in fact had already been discharged at Malta and had been reloaded on the M/V STRATHESK, which had left Malta the day before. The STRATHESK arrived in Houston on August 30th; although Sedco's eighteen pieces of cargo had been off-loaded at Malta and the manifest stated that all eighteen had been reloaded on the STRATHESK, only sixteen pieces actually had been placed aboard the STRATHESK. The remaining two pieces were left on a pier in Malta. An extensive search was conducted for the two missing boxes, but they were not located until 1984, by which time their only value to Sedco was as salvage.
In explanation of the delay in locating the cargo, P & O asserted that the two packages were improperly marked by Sedco and that the manifest, which erroneously noted that eighteen packages had been reloaded on the STRATHESK, caused P & O to focus the search at ports between Malta and Houston.
After a bench trial, Judge Owen found in favor of Sedco for the full amount of its loss, $182,637.48 (the difference between its resale contract price and the salvage price obtained for the equipment). In so holding, Judge Owen found that COGSA $500 per package limitation of liability, 46 U.S.C. § 1304(5), was inapplicable because P & O's conduct amounted to an unreasonable deviation. Sedco Inc. v. S.S. Strathewe, (S.D.N.Y. 1986). In addition, Judge Owen rejected P & O's argument that it was totally immune from liability under COGSA's "restraint of princes" defense, 46 U.S.C. § 1304(2)(g) 630 F.2d 120.
On appeal, P & O contends that deviation heretofore has been limited to "geographic deviation" and "unauthorized on-deck stowage," and therefore that its allegedly negligent conduct in handling Sedco's cargo or failing to inform Sedco of the transshipment at Malta cannot constitute a deviation. Consequently, P & O asserts, its liability should be limited to $1,000. P & O also renews ...