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ORIENT ATLANTIC PARCO, v. MAERSK LINES

June 29, 1990

ORIENT ATLANTIC PARCO, INC., PLAINTIFF,
v.
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:

OPINION

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 29, 1988.

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 summary judgment.

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
  custody.

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. Moreover,

  [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.

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, ...


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