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DELPHI-DELCO ELECTRONICS SYSTEMS v. M/V NEDLLOYD EUROPA

May 5, 2004.

DELPHI-DELCO ELECTRONICS SYSTEMS AND DELPHI ENERGY AND ENGINE MANAGEMENT SYSTEMS, divisions of DELPHI AUTOMOTIVE SYSTEMS, LLC, Plaintiffs, -against- M/V NEDLLOYD EUROPA, et al., Defendants


The opinion of the court was delivered by: PETER LEISURE, District Judge

OPINION AND ORDER

[EDITORS' NOTE: THIS PAGE CONTAINED ATTORNEY'S NAMES.] Plaintiffs Delphi-Delco. Electronics and Delphi Energy and Engine Systems, divisions of Delphi Automotive Systems, LLC (collectively, "Delphi" or "plaintiff) bring this admiralty and maritime action seeking damages resulting from the alleged misdelivery of numerous shipments of automotive parts. Delphi seeks damages totaling $8,000,000 from numerous defendants, including Ace Shipping Corp. and Ace Young, Inc. (collectively "Ace"); Hanjin Shipping Co., Ltd. ("Hanjin"); Nippon Yusen Kaisha, d.b.a. NYK Line (sued as NYK Line, Inc.) ("NYK"); and P & O Nedlloyd, Ltd. (sued as P & O Nedlloyd B.V.) ("P & O Nedlloyd"), who were involved in shipping the parts from the United States to Busan, South Korea. Ace now moves for partial summary judgment limiting its liability and the liability of its subcontractors to $500 per package, or $190,500, under § 1304(5) of the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. App. 1304(5). Hanjin moves for similar relief, limiting its liability to $500 per package, or $50,500, under COGSA. NYK and P & O Nedlloyd, on their own behalf and on behalf of several vessel-owning defendants (for the purposes of this motion, collectively, "NYK defendants"), move to dismiss the claims against them based on a forum selection clause in NYK's standard bill of lading terms and conditions. In the event the Court holds the forum selection clause unenforceable, the NYK defendants move for partial summary judgment limiting their liability to $500 per package under COGSA.*fn1 Delphi opposes each of these motions and brings its own motion for partial summary judgment striking the $500 package limitation defense with regard to Hanjin and NYK. For the reasons stated below, the Court grants in part and denies in part the motion of defendant Ace; grants in part and denies in part the motion of defendant Hanjin; denies the NYK defendants' motion to dismiss pending further discovery and therefore does not reach their motion for partial summary judgment; and denies the motion of plaintiff Delphi.

  BACKGROUND

  This action stems from the sale and shipment of various automotive parts by Delphi from the United States to Daewoo Corporation ("Daewoo") in Busan, South Korea. Delphi arranged to ship most of these parts through Ace, a non-vessel operating common carrier ("NVOCC"), which issued 91 bills of lading to Delphi covering the majority of these shipments.*fn2 According to Delphi, Daewoo's payment for these shipments was secured by letters of credit issued by various Korean banks. These letters of credit required Delphi to obtain "full on board" bills of lading that consigned the parts to the issuing banks rather than Daewoo in order for Delphi to obtain payment on the letters. (Quinnete Decl. ¶¶ 6-9, Ex. 2; Wolf Decl. ¶¶ 6-9, Ex. 2.) Consistent with this requirement, the 91 Ace bills of lading contain the term "FOB USA PORT" and are consigned to the order of the banks that issued the letters of credit. (Lambert Aff, Exs. 1-91; Quinnete Decl. ¶ 10; Wolf Decl. ¶ 10.)

  Ace, in turn, arranged for the actual shipment of the parts to South Korea through the ocean carriers Hanjin and NYK. Hanjin, which was party to a service agreement with Ace, transported its share of the shipments in containers on board the Hanjin Amsterdam, the Hanjin Athens, the Hanjin Paris, and the Hanjin Valencia. Rather than issuing bills of lading for these shipments, however, Hanjin issued electronic sea waybills at the request of Ace. These waybills list Ace as the shipper, but consign the shipments to either Daewoo or "Sun Express Corp.," as opposed to the Korean banks listed as consignees in the Ace bills of lading. (Lee Decl., Ex. 4.) NYK, which arranged to transport its share of the shipments on vessels either slot or time chartered from P & O Nedlloyd and the other NYK defendants, also issued electronic sea waybills at Ace's request for the shipments it carried. The NYK waybills list either Ace or Daewoo as shipper and Daewoo as consignee. (Ferguson Decl., Ex. A.)

  Without specifying the factual basis for its loss, Delphi alleges that it suffered damages when Ace, Hanjin and the NYK defendants delivered the parts to third parties (presumably Daewoo and Sun Express) without production of the pertinent bills of lading. Delphi further alleges that Ace is liable for issuing false bills of lading, failing to issue bills of lading and delivering the shipments without payment. As noted above, Ace and Hanjin now bring motions for summary judgment seeking to limit their liability, if any, to $500 per package under COGSA. The NYK defendants move for dismissal based on a forum selection clause in NYK's standard bill of lading and, only in the event that the Court finds the forum selection clause unenforceable, for summary judgment limiting their liability to $500 per package under COGSA. Delphi opposes each of these motions and makes its own motion for summary judgment striking Hanjin and NYK's package limitation defense.

  It bears noting that at this stage of the litigation, the factual record before the Court is somewhat sparse, as the parties have elected to bring motions on the applicability of COGSA's $500 per package liability limitation and the enforceability of NYK's forum selection clause prior to engaging in extensive litigation on the underlying merits of the case. The benefits of such a strategy are clear: an early determination of the parties' liability exposure in this Court may facilitate settlement and streamline the course of the action going forward. Unfortunately, the potential for delay and wasted effort resulting from premature motions for summary judgment are sometimes under appreciated by overanxious litigants. As will become clear in the discussion below, additional discovery prior to these motions likely would have enabled the Court to resolve definitively the applicability of NYK's forum selection clause and the package limitation question. On the present record, however, the Court is limited in the conclusions it can reach. DISCUSSION

 I. The Standard for Summary Judgment

  A moving party is entitled to summary judgment if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Holt v. KMI-Continental Inc., 95 F.3d 123, 128 (2d Cir. 1996). The substantive law underlying a claim determines if a fact is material and "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When considering the motion, "the judge's function is not himself to weigh the evidence and determine truth of the matter but to determine whether there is a genuine issue for trial." Id. at 249; see also Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir. 1986).

  In determining whether genuine issues of material fact exist, the Court must resolve all ambiguities and draw all justifiable inferences in favor of the nonmoving party. See Anderson, 477 U.S. at 255; Holt, 95 F.3d at 129. The moving party bears the burden of demonstrating that no genuine issue of material fact exists. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970); Gallo v. Prudential Residential Serv. L.P., 22 F.3d 1219, 1223-24 (2d Cir. 1994). "[T]he movant's burden will be satisfied if he can point to an absence of evidence to support an essential element of the nonmoving party's claim." Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir. 1995). Once the moving party discharges his burden of demonstrating that no genuine issue of material fact exists, the burden shifts to the nonmoving party to offer specific evidence showing that a genuine issue for trial exists. See Celotex, 477 U.S. at 324. "Conclusory allegations will not suffice to create a genuine issue. There must be more than a `scintilla of evidence,' and more than `some metaphysical doubt as to the material facts.'" Delaware & Hudson Rv. Co. v. Conrail, 902 F.2d 174, 178 (2d Cir. 1990) (quoting Anderson, 477 U.S. at 252, and Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). In other words, "[t]he non-movant cannot escape summary judgment merely by vaguely asserting the existence of some unspecified disputed material facts, or defeat the motion through mere speculation of conjecture." Western World Ins. Co. v. Stack Oil Inc., 922 F.2d 118, 121 (2d Cir. 1990) (quotations omitted). "A `genuine' dispute over a material fact only arises if the evidence would allow a reasonable jury to return a verdict for the nonmoving party." Dister v. Cont'l Group, 859 F.2d 1108, 1114 (2d Cir. 1988) (citing Anderson, 477 U.S. at 248).

  II. Per Package Liability for Cargoes Shipped Under the 91 Ace Bills of Lading

  Ace moves for partial summary judgment limiting its potential liability, and the potential liability of its subcontractors, pursuant to COGSA's per package liability limitation, which provides,

  Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package. . . . unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading. This declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall not be conclusive on the carrier. 46 U.S.C. § 1304(5). Ace argues that the 91 Ace bills of lading clearly identify 381 packages of goods and that Delphi was afforded fair opportunity to declare a higher value but chose not to do so. Therefore, according to Ace, its liability is limited to $190,500, or $500 per package. Ace further submits that its subcontractors, including the ocean carriers NYK, Hanjin, and the vessels on which the cargoes were ultimately shipped, are entitled to the same $500 package limitation pursuant to a "Himalaya Clause" in the Ace bills of lading. That clause provides,

 
It is understood and agreed that other than the said Carrier, no person whatsoever (including the Master, officers and crew of the vessel, all servants, agents, employees, representatives, and all stevedores, terminal operators, crane operators, watchmen, carpenters, ship cleaners, surveyors and other independent contractors whatsoever) is or shall be deemed to be liable with respect to the Goods as Carrier, bailee or otherwise howsoever, in contract or in tort. If, however, it should be adjudged that any other than said Carrier is under any responsibility with respect to the Goods, all limitations of an exonerations from liability provided by law or by the terms hereof shall be available to such other persons as herein described.
(Lambert Aff, Ex. 92, Terms and Conditions ¶ 3.)

  Delphi does not contest the applicability of COGSA to the Ace bills of lading or claim that it did not have a fair opportunity to declare higher value. Instead, Delphi argues that Ace may not claim the benefit of COGSA's package limitation because the bills of lading issued by Ace were materially false and fraudulent. Specifically, Delphi contends that at the time Ace issued the bills of lading to Delphi consigning the goods to the order of the various Korean banks, it had already arranged with NYK and Hanjin to ship the goods to Korea under electronic waybills that named either Daewoo or Sun Express as consignees. Thus, according to Delphi, the statements on the Ace bills of lading that the goods were consigned to the Korean banks were false and fraudulent at the time they were issued. Delphi claims that it relied on these statements to ensure that the goods were not released to Daewoo until Daewoo had paid for them and that this purpose was frustrated by Ace's actions. In addition, Delphi argues that values were, in fact, declared on 71 of the 91 bills, totaling $3,025,971.74, precluding summary judgment limiting Ace's ...


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