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ST. PAUL FIRE & MARINE v. SEA-LAND SERV.

September 13, 1990

ST. PAUL FIRE & MARINE INSURANCE COMPANY, PLAINTIFF,
v.
SEA-LAND SERVICE, INC., DEFENDANT.



The opinion of the court was delivered by: Robert P. Patterson, Jr., District Judge.

OPINION AND ORDER

Defendant Sea-Land Service, Inc. ("Sea-Land") moves for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure or, in the alternative, for a $500 per container limitation on its liability in this maritime loss action.*fn1 Defendant's motion for summary judgment is based on the fact, agreed upon at oral argument, that the loss occurred after the container was discharged from the vessel but during the period it was in the carrier's control before being placed in the Customs House for receipt by the consignee.

By opinion and order dated April 24, 1990, 735 F. Supp. 129, this Court decided a motion for partial summary judgment against defendant. In that motion, defendant sought to invoke a clause of its bill of lading for carriage of goods from Port Everglades, Florida to Rio Haina, Dominican Republic, which limited defendant's liability to $500 for a single container said to contain 150 packages freight all kinds. The Court held that the clause of limitation was inconsistent with the $500 per package limitation which applied ex proprio vigore under the United States Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. App. § 1300 et seq., and that defendant was not relieved "of liability it would otherwise have under COGSA," i.e., the $500 per package or per customary freight unit limitation as stated in the statute.

Defendant in this motion relies on the fact that "the loss occurred after discharge from the vessel while the container was stored for a week in its terminal at Rio Haina before it was moved to the Customs Warehouse for unstuffing by the consignee." Documentary evidence establishes that the seal on the container was intact when the container was discharged from the vessel at Rio Haina. The evidence also is undisputed that upon delivery of the container at the Customs House, the seal was missing and had been replaced by a thick padlock which had to be broken open with a hammer.

Defendant argues that COGSA specifically states that the term "carriage of goods covers the period from the time the goods are loaded on to the time they are discharged from the ship," 46 U.S.C. App. § 1301(e) and that, since the missing cargo must have been stolen while the goods were in the defendant's custody in the yard where containers are stored prior to being taken to the Customs warehouse for unstuffing, the bill of lading clause of limitation of liability to $500 per container rather than the COGSA $500 per package limitation governs.

Defendant's position is that COGSA does not apply ex proprio vigore once the goods have been discharged. It cites Pannell v. United States Lines Co., 263 F.2d 497 (2d Cir. 1959), Smythgreyhound v. M/V Eurygenes, 666 F.2d 746 (2d Cir. 1981), and Institute of London Underwriters v. Sea-Land Service, Inc., 881 F.2d 761 (9th Cir. 1989).

The plaintiff correctly distinguishes Pannell on the grounds it dealt with on-deck cargo and, therefore, COGSA did not apply ex proprio vigore, 46 U.S.C. App. § 1301(c). It distinguishes Smythgreyhound on the grounds that there, too, COGSA, did not apply ex proprio vigore since the shipment was not to or from the United States. Under these cases, the terms of COGSA, although incorporated into the bill of lading, had no greater effect than other bill of lading provisions.

The Court declines to apply Institute of London Underwriters, a Ninth Circuit case in which COGSA did not apply ex proprio vigore. Furthermore, London Underwriters is not consistent with precedent in this Circuit and the bill of lading at issue did not contain the Clause Paramount found here.

In this case, the typed description on the face of the bill of lading specified one 40 ft. container, No. SEAU-465911-3, Seal No. OOOO613, said to contain 150 packages freight all kinds. The terms of the bill of lading printed on its reverse side contained two provisions leading to this dispute, clauses 1 and 17.

Provision 1, entitled Clause Paramount, reads as follows:

  This bill of lading shall have effect subject to
  all the provisions of the Carriage of Goods by Sea
  Act of the United States of America, approved
  April 16, 1936, as if set forth herein. The
  defenses and limitations of said Act shall apply
  to goods whether carried on or under the deck, to
  carriage of goods between U.S. ports, or between
  non-U.S. ports, before the goods are loaded on and
  after they are discharged from the vessel, and
  throughout the entire time the goods are in the
  actual custody of Carrier, whether acting as
  carrier, bailee or stevedore.
  If this bill of lading is issued in or the goods
  are delivered to a locality where there is in
  force a compulsorily applicable Carriage of Goods
  by Sea Act ordinance or statute similar to the
  International Convention for the Unification of
  Certain Rules relating to Bills of Lading dated at
  Brussels, August 25, 1924, then it is subject to
  such Act, ordinance or statute before the goods
  are loaded on and after they are discharged from
  the vessel and throughout the entire time the
  goods are in the actual custody of Carrier,
  whether acting as carrier, bailee or stevedore.
  Carrier shall be entitled to the full benefit of
  all rights and immunity under and all limitations
  of or exemptions from liability contained in any
  law of the United States or any other place whose
  law shall be compulsorily applicable. If any term
  of this bill of lading be repugnant to the
  Carriage of Goods by Sea Act of the United States
  or any other law compulsorily applicable such term
  only shall be void to that extent but no further.
  This bill of lading shall be construed and the
  rights of the parties hereunder determined
  according to ...

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