United States District Court, Southern District of New York
June 29, 1990
ORIENT ATLANTIC PARCO, INC., PLAINTIFF,
MAERSK LINES A/K/A LEDA MAERSK & MOLLER STEAMSHIP COMPANY AND KURZ-ALLEN, INC., DEFENDANTS.
The opinion of the court was delivered by: Goettel, District Judge:
The plaintiff, Orient Atlantic Parco, Inc. ("Orient") as
consignee, contracted with the defendant Maersk Lines, as
shipper, to ship 3600 cartons of frozen mushrooms from Shanghai
to Philadelphia. The bill of lading designates that the cargo
was to be shipped on a freight collect basis. The shipment
arrived in Philadelphia on February 17, 1988. Before the goods
arrived, the plaintiff became aware of an error in the freight
charges and advised the defendant. The discrepancy was cleared
up and the proper freight charges assessed on or about February
During the time when the freight charges were being settled,
demurrage charges were accruing. The defendant tendered the
mushrooms and demanded payment for the freight and the
demurrage charges. The precise date of tender is unclear. The
plaintiff refused to pay the demurrage charges contending that
the delay was due to the defendant's error. Because of this
dispute, the cargo remained at the discharging terminal and
demurrage charges continued to accrue.
On or about July 27, 1988, the plaintiff requested that the
mushrooms be moved into a cold storage facility to avoid
further demurrage charges and agreed to accept the storage
charges as of July 27, 1988.*fn1 The defendant completed the
transfer to the Holt Cold Storage Facility on August 2, 1988,
where they apparently remain to date.*fn2 At some point after
discharge of the cargo it came to the plaintiff's attention
that the goods had been damaged.*fn3
The plaintiff commenced this action in State Supreme Court,
Westchester County by a summons and complaint dated September
15, 1989 which was allegedly served on the defendant some time
in January 1990. The action asserted a claim against Maersk for
breach of contract and sought recovery of freight, demurrage,
storage charges and customs duties the plaintiff might be
compelled to pay as well as damages and lost profits in
connection with the shipment of defective goods.*fn4 The
defendant removed the action to this court and has moved for
The defendant's primary argument is that the plaintiff's
action is barred by the statute of limitations. The Carriage of
Goods by Sea Act ("COGSA"), which, the parties agree, governs
this action, provides that "the carrier and the ship shall be
discharged from all liability in respect of loss or damage
unless suit is brought within one year after delivery of the
goods or the date when the goods should have been delivered."
46 U.S.C.App. § 1303(6) (1982). Thus, the critical question for
determination on this motion is when delivery occurred.
The defendant contends that delivery took place, at the
latest, on August 2, 1988, when the goods were transferred to
the refrigerated warehouse at the plaintiff's request. Indeed,
the defendant argues that delivery occurred months before that
when the cargo was discharged and the plaintiff was put on
notice of its arrival and given an opportunity to inspect the
goods and take possession. The plaintiff, on the other hand,
contends that the cargo has never been delivered.*fn5
There are surprisingly few cases that define "delivery"
within the context of COGSA. As stated succinctly by Judge
Haight: "There is no statutory definition, no legislative
history, little case law, and no Supreme Court or Second
Circuit authority directly on point. Each of the relatively few
cases turns on its own circumstances." Atlantic Mutual Ins.
Cos. v. M/V "Balsa 38", 695 F. Supp. 165, 167 (S.D. N.Y. 1988).
There appears to be a consensus among the courts, however, that
delivery requires something more than mere discharge of the
cargo. See Lithotip, CA v. S.S. Guarico, 569 F. Supp. 837, 839
(S.D. N.Y. 1983) (citing cases).*fn6 It is equally apparent
that something less than actual physical delivery is required.
See Lithotip, CA v. S.S. Guarico, 592 F. Supp. 1280, 1281
(S.D.N.Y. 1984). In a decision that was dubbed by the court as
"the first time an American court has been called upon to
decide what the term [delivery] means as used in COGSA," Judge
Wollenberg of the Northern District of California stated that:
Just as "delivery" does not mean actual physical
transfer, neither does it mean discharge from the
ship, without more. Between these two extremes is
a period in which the consignee should receive
notice that the goods have been discharged and
should have a reasonable opportunity to remove
the goods or place them under proper care and
National Packaging Corp. v. Nippon Yusen Kaisha (N.Y. K Line),
354 F. Supp. 986-87 (N.D.Cal. 1972). Judge Lasker, in both
Lithotip decisions, concluded that delivery did not occur until
the consignee had an opportunity to inspect the goods. "[A]
principle distinction between 'discharge' and 'delivery' is
that delivery implies an opportunity for the consignee or his
agent to observe defects." Lithotip I, 569 F. Supp. at 839.
[w]hile this passage makes clear that the
"opportunity to retrieve" requirement for accrual
of the COGSA statute of limitations is intended
to give consignees the chance to make inspections
of cargo condition, there is no suggestion . . .
that the statute does not begin to run until an
actual inspection takes place.
Lithotip II, 592 F. Supp. at 1281. Similarly, in Atlantic Mutual
Ins. Cos. v. M/V "Balsa 38", 695 F. Supp. 165 (S.D.N.Y. 1988),
court concluded that "effective delivery does not occur until
the consignee has had a reasonable time to restore order from
chaos, so that the fact of damage or loss . . . may be
established, and their amounts quantified." Id. at 170.
Accordingly, we define delivery for purposes of COGSA's statute
of limitations as discharge of the cargo with notice to the
consignee and an opportunity for the consignee to inspect the
goods for defects.*fn7
In this case, it is undisputed that the cargo of mushrooms
arrived in Philadelphia on February 17, 1988. It is also clear
that the plaintiff received notice of the cargo's arrival a
short time afterwards when the defendant made a demand for
freight and demurrage charges. In any event, when the
mushrooms were placed in cold storage on August 2, 1988, the
plaintiff clearly had an opportunity to inspect the cargo for
defects. That the plaintiff agreed to accept the storage
charges attests to its knowledge of the mushroom's whereabouts
as well as its opportunity to inspect. Indeed, annexed to the
defendant's reply affidavit is Warehouse Receipt and Invoice,
dated August 3, 1988, from the cold storage facility that
noted that "MANY [CARTONS] ARE CRUSHED, BULGING AND HAVE SPLIT
ENDS CONTENTS ARE BLOCK FROZEN." Reply Affidavit of Massoud
Messkoub, Ex. B. The addressee of the invoice is the
plaintiff, Orient Atlantic. Thus, the plaintiff may have
aquired actual knowledge of potential defects in the cargo
sometime in August 1988.
In light of all these factors, we conclude that delivery for
the purposes of COGSA's statute of limitations occurred, at
the latest, on August 2, 1988.*fn8 Because this action was
not commenced until September 15, 1989, at the earliest,*fn9
the claims against Maersk Lines for loss or damage are
time-barred. Consequently, the counts asserted against Maersk
Lines for loss or damage to cargo are dismissed.
The defendant also seeks summary judgment on its
counterclaim for freight costs. The plaintiff concedes that
freight in the amount of $20,400.00 is due and owing to the
defendant. Its only arguments in opposition to the
counterclaim are that summary judgment should not be granted
because the plaintiff's claims against the defendant for loss
and damage are outstanding and because there is a question of
fact regarding delivery. Having resolved those questions and
dismissed the plaintiff's loss and damage claims, there is no
sound reason why the defendant should not be granted summary
judgment on its counterclaim for freight in the amount of
$20,400.00. There being no just reason for delay, the clerk is
directed to enter judgment for the defendant Maersk Lines
a/k/a Leda Maersk & Moller Steamship Company against the
plaintiff pursuant to Rule 54(b) in the amount of $20,400.00.
It is important to note at this juncture that we do not
resolve the parties' dispute about demurrage and storage
charges. The plaintiff's complaint contains a claim for
demurrage and cold storage charges against the defendant and
the defendant asserts a similar claim by counterclaim.
Although we have dismissed the plaintiff's loss and damage
claims, its claims for demurrage, customs duties and cold
storage charges stand. Similarly, while we grant the defendant
summary judgment on its
claim for freight, we do not rule on its claim for demurrage.
Finally, the defendant moves to strike the plaintiff's jury
demand. The plaintiff's remaining claims against the defendant
are for demurrage, storage charges and customs duties. Claims
within the admiralty or maritime jurisdiction of the federal
courts do not give rise to a right to a trial by jury.
Fed.R.Civ.P. 38(e). Demurrage claims clearly fall within the
court's admiralty jurisdiction. See Maritime Ventures Int'l,
Inc. v. Caribbean Trading & Fidelity, Ltd., 689 F. Supp. 1340,
1356 (S.D.N.Y. 1988); G. Gilmore & C. Black, The Law of
Admiralty 22 (2d ed. 1975). Consequently, the plaintiff's
demurrage claim does not create a right to a trial by jury.
The plaintiff's claim for cold storage charges, however, is
another matter. Onland storage, occurring either before
loading or after discharge is within the court's admiralty
jurisdiction when "the element of storage is merely incident
to a maritime contract." Moore-McCormack Lines v. International
Terminal Operating Co., 619 F. Supp. 1406, 1409 (S.D.N.Y. 1985).
When the storage contract is separate from the shipment of
goods by sea, however, it is not a maritime contract and is
outside of federal admiralty jurisdiction. See Roco Carriers,
Ltd. v. M/V Nurnberg Express, 899 F.2d 1292, 1295 (2d Cir.
1990); Colgate Palmolive Co. v. S/S Dart Canada, 724 F.2d 313,
315 (2d Cir. 1983), cert. denied, 466 U.S. 963, 104 S.Ct. 2181,
80 L.Ed.2d 562 (1984). While defining a maritime contract is a
[i]f the subject matter of the contract "relates
to a ship in its use as such, or to commerce or
to navigation on navigable waters, or to
transportation by sea or to maritime employment"
it is fairly said to constitute a maritime
Ingersoll Milling Machine Co. v. M/V Bodena, 829 F.2d 293, 302
(2d Cir. 1987), cert. denied, 484 U.S. 1042, 108 S.Ct. 774, 98
L.Ed.2d 860 (1988) (quoting CTI-Container Leasing Corp. v.
Oceanic Operations Corp., 682 F.2d 377, 379 (2d Cir. 1982)
(quoting 1 Benedict on Admiralty § 183, at 11-6 (7th ed.
It appears to us that the decision to place the mushrooms in
cold storage while the parties attempted to resolve their
dispute over freight and demurrage was not a maritime matter.
The maritime aspect of the parties' relations had drawn to a
close. The ship had arrived in port and discharged its cargo.
While short-term storage between discharge and delivery may be
sufficiently related to maritime services to fall within the
court's admiralty jurisdiction, see Moore-McCormack Lines v.
International Terminal Operating Co., 619 F. Supp. 1406, 1409
(S.D.N.Y. 1985), storage for an indefinite period of time while
the parties resolve various contract disputes is not
sufficiently related to maritime activity to invoke federal
admiralty jurisdiction. Consequently, we conclude that the
plaintiff's claim for cold storage charges is, in essence, a
state law contract claim outside the ambit of federal admiralty
jurisdiction.*fn10 Thus, the plaintiff is entitled to a jury
trial on this claim.
Finally, we consider whether the plaintiff is entitled to a
jury trial on its claim for customs duties. Our research
efforts have revealed no cases that touch upon this question.
Under the standards enunciated above, however, it would appear
that the payment of customs duties on the importation of
foreign goods brought into the country by overseas transport
is a matter incident to maritime transactions. Consequently,
determination of issues arising from the payment of customs
duties would be within this court's admiralty jurisdiction.
Thus, this claim, like the plaintiff's demurrage claim, will
not be tried to a jury.
In conclusion, the defendant's motion to dismiss the
plaintiff's claims for cargo damage and consequential damages
is granted. The defendant's motion for summary judgment on its
freight charges in the amount of $20,400.00 is granted but is
denied in all other respects. The defendant's motion to strike
the plaintiff's jury demand is granted as to the plaintiff's
demurrage and customs duties claims but is denied with respect
to its storage charges claim. Execution of judgment on the
defendant's counterclaim is stayed pending resolution of the
parties' remaining claims. Fed.R.Civ.P. 62(h).