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HARTFORD FIRE INS. CO. v. NOVOCARGO USA INC.

March 31, 2003

HARTFORD FIRE INSURANCE COMPANY, VIVA TRADE CORPORATION, AND INTERNATIONAL SALES INC., PLAINTIFFS,
v.
NOVOCARGO USA INC., DSR SENATOR LINES, DSR SENATOR LINES GMBH, UNITED ARAB SHIPPING CO. (S.A.G.) SIRIUS NAVIGATION CORP., IN PERSONAS, AND M/V "PACIFIC SENATOR," HER ENGINES, TACKLE, BOILERS, ETC., IN REM., DEFENDANTS. NOVOCARGO USA, INC., THIRD-PARTY PLAINTIFF, V. GLOBAL TERMINAL & CONTAINER SERVICES, INC. AND REEDEREI HANSESCAN GMBH, THIRD-PARTY DEFENDANTS. UNITED ARAB SHIPPING CO. (S.A.G.), THIRD-PARTY PLAINTIFF, V. CASAN COLOMAR, S.A., THIRD-PARTY DEFENDANT.



The opinion of the court was delivered by: William H. Pauley III, United States District Judge

OPINION & ORDER

In this multi-party admiralty action, plaintiffs seek to recover damages caused to a shipment of furniture during and after a voyage from Valencia, Spain to the Port of New York. Plaintiffs assert that the cargo was damaged when an aircraft tow tractor fell on the container carrying the cargo during a storm at sea, and sustained further damage as a result of post-discharge exposure and devanning. After a one day bench trial and consideration of the parties' voluminous post-trial submissions, this Court finds that: (1) defendants Novocargo USA Inc. ("Novocargo") and Senator Lines GmbH ("Senator") are jointly and severally liable to plaintiffs for the damage to the cargo caused by the aircraft tow tractor; (2) third-party defendant Global Terminal & Container Services, Inc. ("Global") is directly liable to plaintiffs for all post-discharge damage; (3) Novocargo is entitled to full indemnity from Senator; and (4) Senator is entitled to full indemnity from defendant United Arab Shipping Co. (S.A.G.) ("United Arab").

FINDINGS OF FACT

This Opinion and Order presumes familiarity with this Court's prior decisions in this action. See Hartford Fire Ins. Co. v. Novocargo USA Inc., No. 01 Civ. 94 (WHP), 2002 WL 10543 (S.D.N.Y. Jan. 3, 2002); Hartford Fire Ins. Co. v. Novocargo USA Inc., 156 F. Supp.2d 372 (S.D.N.Y. 2001).

I. The Parties

Plaintiff Hartford Fire Insurance Co. ("Hartford") is the subrogated insurer of the cargo in suit. (Stipulated Facts, contained in the Joint Pre-Trial Order dated November 19, 2001, at 10-13 ("Stip.") ¶ 1.) Plaintiffs Viva Trade Corporation and International Furniture Sales Inc. (collectively, "Viva") are the consignees, purchasers and owners of the cargo at issue. (Stip. ¶ 2.) Novocargo is a non-vessel owning common carrier ("NVOCC") engaged in the business of common carriage of cargo for hire. (Stip. ¶ 3; Trial Transcript dated April 8, 2002 ("Tr.") at 64.) Senator, sued under its former name, DSR Senator Lines GmbH, is a German corporation engaged in the business of common carriage of cargo for hire. (Stip. ¶ 4.) United Arab is a corporation engaged in the business of carriage of cargo for hire. (Stip. ¶ 5.) Global is a stevedore with an outdoor storage facility in New Jersey. (Stip. ¶ 6.)

Novocargo tendered the defense of this action to Senator on January 12, 2001 and several times thereafter. (Defendants' Trial Exhibits ("Def. Exs.") N-O, N-P, N-Q.) Senator answered the complaint and asserted cross-claims against Novocargo and another defendant, later voluntarily dismissed from this action. United Arab Shipping answered and asserted a cross-claim against Senator and a third-party complaint against Casan Colomar, S.A. ("Casan Colomar"). Novocargo filed a third-party complaint against Global.

II. The Voyage of The M/V PACIFIC SENATOR

In December 1999, three different lots of Spanish applewood furniture were consolidated at the Port of Valencia and consigned to Viva. (Stip. ¶ 2; Plaintiff's Trial Exhibit ("Pl. Ex.") 3.) On or about January 3, 2000, Novocargo contracted with Viva to ship that specialty furniture from Valencia to the Port of New York. (Stip. ¶ 7.) Novocargo issued three bills of lading for the cargo to Viva, and subcontracted the ocean carriage to Senator. (Stip. ¶ 7, 8.) Senator issued a sea waybill to Novocargo for the furniture on or about January 4, 2000.*fn1 (Stip. ¶ 8.)

Viva's cargo was loaded aboard the M/V PACIFIC SENATOR, a container ship time chartered by Senator at the Port of Valencia. (Stip. ¶ 9.) Fatefully, a 21-ton aircraft tow tractor (the "aircraft tractor"), en route from Abu Dhabi to New York through Valencia, was also loaded in the hold of the M/V PACIFIC SENATOR. (Tr. at 87-89; Def. Exs. S-F at 2, S-G at 4-5, U-H.) The aircraft tractor had been rejected for unseaworthy lashing several days earlier from carriage on board the M/V CALIFORNIA SENATOR. (Tr. at 89; Def. Exs. U-D, U-N.) During the "Millennium" celebrations surrounding the 2000 New Year, the aircraft tractor was relashed to a flatrack container by Casan Colomar at the direction of Roca Monzo, S.A. ("Roca Monzo"), United Arab's agent in Valencia.*fn2 (Tr. at 87; Def. Exs. U-D, U-E, U-R.) Roca Monzo paid Casan Colomar for the relashing, and in turn re-billed its "principals," United Arab, for the entire amount. (Tr. at 98.) After relashing, the aircraft tractor was accepted on board the M/V PACIFIC SENATOR under a bill of lading issued by United Arab pursuant to United Arab's slot charter agreement with Senator. (Stip. ¶ 22; Tr. at 89; Def. Exs. U-D, U-E, U-R.)

United Arab's slot charter agreement with Senator was governed by two interrelated contracts, the Master Agreement (Def. Ex. UM) and the slot charter (Def. Ex. S-E) (collectively, the "slot charter agreement"). Article 16 of the Master Agreement, titled "Charterer's Responsibilities And Liabilities," provides in relevant part:

[United Arab] shall be responsible for the proper and careful loading, stowage, lashing and securing of the goods in the containers offered by them for shipment and shall be liable for all loss or damage (including loss of or damage to the vessel) caused to [Senator] as a result of improper or careless performance of such operations.
[United Arab] shall indemnify and hold harmless [Senator] for damage to property, death, injury or illness resulting from misdescription of goods, improper stowage of goods within containers, or defect in the construction of the containers tendered by [United Arab] to [Senator].
(Def. Ex. U-M.) Clause 5.1.12 of the slot charter agreement provides in relevant part:
[United Arab] shall indemnify and hold harmless [Senator] from any loss, damage, death or injuries including any fine, penalty, or duties and expenses arising out of or in connection with the act or omission of [United Arab], or its agent, sub-contractors or employees including but not limited to. improper stowage of goods in the container, and defect of the goods or containers.
(Def. Ex. S-E.)

During the nine-day transatlantic voyage from Valencia to the Port of New York, the M/V PACIFIC SENATOR encountered wind/sea conditions of Beaufort Force 8/9, including significant swells that caused the vessel to roll up to 32 degrees. (Def. Ex. S-G at 3.) During that gale, the aircraft tractor broke free from its lashing and fell onto the container holding Viva's cargo, severely damaging both the container and the furniture. (Stip. ¶ 21; Def. Ex. S-G at 4.) The surveyor hired by United Arab reported that the aircraft tractor's lashing was "insufficient" because it used only two bulldog grips for each half-inch wire component, rather than the recommended three. (Def. Ex. N-R at 3.)

III. Discharge At Global's Facility

The misadventure did not end with the M/V PACIFIC SENATOR's arrival at the Port of New York. On or about January 14, 2000, the start of the Martin Luther King Day holiday weekend, Senator discharged the damaged container at Global's one hundred acre outdoor storage facility in New Jersey. (Stip. ¶ 10; Tr. at 103.) There, the damaged container was grounded on the pier tarmac and exposed to the vagaries of a New York winter. During the fortnight the container sat unprotected at Global's facility, meteorological records from the National Climatic Data Center reveal that nearby Newark Liberty International Airport experienced five snowstorms, freezing rain and temperatures as low as four degrees Fahrenheit. (Def. Ex. G-C.) At the time the container was discharged from the M/V PACIFIC SENATOR, Global was aware that the container's roof was breached and open to the weather. (Tr. at 103; Def. Exs. G-A, G-B, N-N.) Nevertheless, Global left the container without a tarpaulin to protect it until January 28, 2000, when the container was devanned. (Tr. at 104-05; Pl. Ex. 18 at 3-4; Def. Exs. G-A, G-C, N-I, S-G.)

Senator and Global operated under a terminal and stevedoring agreement which states in relevant part:

The CONTRACTOR shall be liable for any damage caused by the negligence of CONTRACTOR, his servants, agents or subcontractors to the container vessel including its gear, all other equipment and cargo on board while the container vessel is berthed at the terminal.
If CARRIERS in its capacity as carrier should be liable for any damage to and/or loss of cargo to the cargo owners or third parties, and if such damage is proven to have been caused to the cargo while in custody of the CONTRACTOR, and caused by the negligence or default of CONTRACTOR [Global], his servants, agents or subcontractors, then CONTRACTOR shall indemnify CARRIERS for any such liability to the full amount payable by CARRIERS plus survey fees and legal costs.
(Def. Ex. S-D ¶ 5.01-03.)

Graham Marine Associates ("Graham Marine") conducted a survey on behalf of Novocargo. (Stip. ΒΆ 12.) It found that the container roof was pushed in, and that furniture cartons under those areas were crushed. (Tr. at 76; Def. Ex. N-I.) In addition, Graham Marine found an accumulation of ice and snow inside the container, and many of the bottom tier boxes had frozen to the container floor. (Tr. at 76-77; Def. Ex. N-I.) Global's employees used forklifts to pry the frozen cartons from the container, causing further damage. (Tr. at 77-78, 81-83; Pl. Exs. 9-10.) Apparently, Global never considered the possibility of waiting to remove the ...


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