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NORWICH UNION FIRE INS. v. LYKES BROS. S.S. CO.

June 15, 1990

NORWICH UNION FIRE INSURANCE SOCIETY, LTD., PLAINTIFF,
v.
LYKES BROS. STEAMSHIP CO., INC., DEFENDANT.



The opinion of the court was delivered by: Kimba M. Wood, District Judge.

OPINION

Defendant moves, and plaintiff crossmoves, for partial summary judgment on the issue whether a clause in defendant's bill of lading limiting its liability to $500 applies in this case. Plaintiff also crossmoves for summary judgment regarding defendant's liability. For the reasons stated below, the Court holds that the liability limitation applies. The Court denies plaintiff's motion for summary judgment regarding defendant's liability.

FACTS

Lykes carried the cargo, in an open top twenty foot freight container, by ship to Norfolk, Virginia and then by rail to Cincinnati. Def. 3(g) St. at ¶ 4. At the rail yard in Cincinnati, Lykes's subcontractor ASAP Truck Lines ("ASAP") picked up the cargo for carriage by truck to the purchaser's place of business. Def. 3(g) St. at ¶ 5. During this trip, the cargo struck the underside of an overpass on Interstate Route 71 and was severely damaged. Def. 3(g) St. at ¶ 6. Plaintiff Norwich Union Fire Insurance Society, Ltd. ("Norwich") brings this claim, pursuant to the Court's admiralty jurisdiction, as the subrogee of the purchaser and owner of the cargo. Norwich demands damages of $75,000.

DISCUSSION

Defendant argues that COGSA's limitation of liability provisions apply to this case, and plaintiff is thus limited to damages of $500.

I. THE DOCTRINE OF DEVIATION

Plaintiff argues that because Lykes charged a higher freight rate for the cargo because it was over standard height, and because the bill of lading noted that the cargo was "overheight," Lykes thereby had assumed a duty of specialized care. Plaintiff argues that defendant unreasonably deviated from its duties to provide specialized care, thereby voiding the limitation of liability clause.

The doctrine of deviation evolved from the pre-COGSA law of marine insurance. When the carrier inexcusably deviated from its contract of voyage, the shipper's insurance on its cargo was often voided. In order to protect shippers in those circumstances, courts developed the rule that an inexcusable geographic deviation prevented the carrier from invoking a limitation of liability clause in the contract of carriage. Later pre-COGSA decisions extended the doctrine of deviation to unauthorized on-deck stowage (quasi-deviation). See Sedco, Inc. v. S.S. Strathewe, 800 F.2d 27, 31 (2d Cir. 1986); B.M.A. Industries, Ltd. v. Nigerian Star Line, 786 F.2d 90, 91 (2d Cir. 1986) (per curiam) (discussing evolution of doctrine of deviation).

COGSA, enacted in 1936, did not define deviation; its only reference to deviation is in § 4(4):

  Any deviation in saving or attempting to save life or
  property at sea, or any reasonable deviation shall not
  be deemed to be an infringement or breach of this
  chapter or of the contract of carriage, and the
  carrier shall not be liable for any loss or damage
  resulting therefrom: Provided, however, That if the
  deviation is for the purpose of loading or unloading
  cargo or passengers it shall, prima facie, be regarded
  as unreasonable.

COGSA § 4(4), 46 U.S.C.A.App. § 1304(4) (West 1975 & Supp. 1990).

The Second Circuit has limited the doctrine of deviation to instances of geographic deviation and unauthorized on-deck stowage of cargo (quasi-deviation), and has stated that the doctrine should not be extended beyond these categories. Sedco, 800 F.2d at 31-32; see B.M.A. Industries, 786 F.2d at 91-92; Italia di Navigazione, S.p.A. v. M.V. Hermes I, 724 F.2d 21, 22-23 (2d Cir. 1983); Iligan Integrated Steel Mills, Inc. v. SS. John Weyerhaeuser, 507 F.2d 68, 71-73 (2d Cir. 1974), cert. denied, 421 U.S. 965, 95 S.Ct. 1954, 44 L.Ed.2d 452 (1975). "[M]ere negligence, lack of due diligence, or a failure to properly handle, stow, care, or deliver cargo never has constituted deviation" that would have ...


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