The opinion of the court was delivered by: CHARLES S. HAIGHT, JR.
This admiralty action involves alleged damage to a relatively exotic cargo, dried Gingko Biloba leaves (hereinafter "leaves"), the theft of a container, and the belated emergence on the scene of the Federal Bureau of Investigation. The action has metastasized into fourth-party practice, and is now before the Court on various motions and cross-motions.
The complaint also names as a defendant Bridge Terminal Transport ("BTT"). BTT is affiliated with Maersk Container Service, another Maersk Lines entity involved in ocean carriage.
Specifically, on October 24, 1989 Maersk Line Agency issued a "master work / delivery order" which indicated that on October 24, 1989, BTT would pick up at Garnay's Sumter facility three containers of leaves for delivery to Maersk Line at the Wando Terminal, Mount Pleasant, South Carolina, for loading on board the McKINNEY MAERSK, scheduled to depart Mount Pleasant on her transatlantic voyage on November 2, 1989.
A report dated October 31, 1989 from A. J. Lancaster, BTT's transport manager, to the Maersk Line Agency office in Mount Pleasant states that on October 24, 1989, a contract driver for BTT delivered to the BTT yard at Mount Pleasant a 40-foot container bearing number ITLU 5321620 which was said to contain 117 bales of leaves. This is one of the three containers of leaves that Garnay had sold to its Irish purchaser, and contracted with Maersk Lines to deliver. BTT intended to deliver the container to Maersk Lines at the Wando Terminal within the next few days. However, on October 26 the driver noticed that the container was missing. Efforts to track the container at other BTT terminals proved fruitless. On the morning of October 30, 1989, Lancaster reported the container as stolen to the county police. On October 31, 1989, the BTT risk management office advised Lancaster to report the loss to the Federal Bureau of Investigation. The transport manager's report dated October 31, 1989 concludes with this sentence: "I talked with agent Al Paltola and he is to get back with me later today."
As the result of the FBI's conduct in this case, the United States has been made a fourth-party defendant by underwriters of the liability risks of Maersk Lines and BTT. The Government moves to dismiss that fourth-party complaint and submits in its support an affidavit of Ronald L. Dick, an FBI agent in charge of the pertinent investigation. From that affidavit we learn that on October 31, 1989 BTT reported to the FBI that the container of leaves had been stolen. In point of fact, the FBI had purchased and received the container of leaves on or about October 26, 1989. The FBI purchased the stolen cargo as part of an undercover "sting" operation targeting, for the most part, automobile thefts in the area. The FBI kept the leaves, stored in the container, and said nothing to BTT about it. Agent Dick says in his affidavit: "The disclosure of its recovery was withheld from BTT as necessary to protect the integrity and security of the continuing investigation."
The undercover operation came to an end on June 17, 1991 after the local press revealed its existence. The FBI gave notice of the leaves' whereabouts to Garnay's underwriters' surveyor on June 26, 1991.
Reverting to events at the intended loading port of Mount Pleasant, when the vessel arrived only two of the three containers comprising Garnay's shipment of leaves to Cara Partners were on hand at the Maersk Lines facility, the third container having been stolen. The two remaining containers were loaded on board the vessel. Maersk Lines issued a "house to house" bill of lading covering two 40-foot containers "said to contain by shipper 230 bales dried Gingko Biloba leaves, 1989 crop." The bill of lading recites Sumter, South Carolina as the place of receipt and Cork as the place of delivery. The port of discharge from the vessel was Rotterdam, to be followed by further onward routing.
Thus the bill of lading covered the two containers that comprised part of Garnay's sale of leaves to Cara Partners. No bill of lading was issued with respect to the third, missing container.
As noted, the FBI advised cargo surveyors on June 26, 1991 that the FBI had the leaves. The container was moved from an FBI impoundment facility in Columbia, South Carolina, to the BTT terminal in Mount Pleasant. The container was opened. The report of the cargo surveyor, Jack Moore of the firm of Toplis & Harding, recites that upon examination the leaves were found to be "in a dry and apparently normal condition," with a "light musty odor"; the leaves were medium brown in color "and crumbled easily when touched." Dr. Cecil Johnson, a representative of Garnay, attended the survey and advised that "although the goods appeared to be sound an exact determination of the condition of the goods would require a laboratory analysis." The surveyors representing all interests at the July 17, 1991 survey agreed that Johnson would send samples of the leaves for analysis in Ireland.
Garnay sent samples from twelve different bales to Cara Partners for analysis. The report of Dr. J. O'Reilly, the Quality Assurance Manager, for Cara Partners reads as follows:
The leaves were green brown with a faint musty odor suggesting that the leaves were not stored under ideal conditions.
The average percentage dry extract for the 12 bales was 29.27% which is 17.0% lower than the 35.28% obtained for the average percentage dry extract for leaves from Garnay in 1989. Similarly, the percentage heterosides is lower by 6.8%. The percentage terpenes is higher by 3.3% than the overage crop in 1989 from Garnay.
Cara Partners operates to GMP procedures, which requires that we have control of raw materials from time of harvesting to processing. In this situation we did not have this control. Also, while the percentage terpenes in the stolen container is similar to the crop average, there is a very significant decrease in the percentage dry extract which is most unusual. Bearing this in mind and more importantly the fact that we did not have control of the raw materials, I recommend that these leaves should not be used for the production of Ginkgo Biloba extract."
Cara Partners having refused to accept the leaves, they were sold at auction by Toplis & Harding at Charleston, South Carolina on November 12, 1991. The salvage proceeds were $ 2,151.19. Garnay and its underwriters allege that they incurred survey fees of $ 1,203.00 for the investigation of the loss and the salvage sale. Garnay bases its claim upon the CIF value of the leaves as evidenced by the invoice. That CIF value is $ 81,950.00, from which Garnay deducts the salvage proceeds of $ 2,151.19, but adds in the survey fees of $ 1,203.00, for a net damage claim of $ 81,001.81.
After Garnay filed its complaint against the vessel, Maersk Lines, and BTT, those defendants tendered the defense to their liability underwriters, who declined coverage for reasons that the present record does not reveal. Accordingly, Maersk Lines and BTT filed a third-party complaint against those liability underwriters, generically referred to as "certain underwriters at Lloyds of London and various other underwriting companies in London." Those third-party defendants brought a fourth-party complaint against the United States because of the activities of the FBI. The various parties defendant assert appropriate cross-claims against each other.
Garnay now moves for summary judgment against the vessel, Maersk Lines, and BTT or, in the alternative, for an order under Rule 14(a), Fed. R. Civ. P., severing its action against these defendants from the third-party and fourth-party actions.
Maersk Lines and BTT oppose Garnay's motions for summary judgment and to sever, and cross-move for summary judgment dismissing the complaint or, in the alternative, for partial summary judgment limiting the amount of Garnay's damages to a package limitation amount of $ 500 per bale of leaves.
The United States moves under Rule 12(b)(1) and 12(b)(6) to dismiss the fourth-party complaint, or in the alternative for ...