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ALPINA INS. CO. LTD. v. TRANS AMERICAN TRUCKING SERVICE

United States District Court, S.D. New York


July 28, 2004.

ALPINA INSURANCE COMPANY, LTD. ZURICH, AON JAUCH & HUBENER GMBH, TRANSPAC CONTAINER SYSTEM LTD. d/b/a BLUE ANCHOR LINE and KUEHNE & NAGEL (AG & CO.), Plaintiffs,
v.
TRANS AMERICAN TRUCKING SERVICE, INC., TRANS AMERICAN BROKERAGE SERVICE, INC. and UNITED EXPRESS SERVICE, INC. d/b/a UES TRANSPORT, Defendants.

The opinion of the court was delivered by: WILLIAM PAULEY, District Judge

MEMORANDUM and ORDER

Plaintiffs Alpina Insurance Company, Ltd. Zurich ("Alpina"), AON Jauch & Hubener GmbH ("AON"), Transpac Container System Ltd. d/b/a Blue Anchor Line ("Blue Anchor") and Kuhne & Nagel (AG & Co.) ("K&N") (collectively, "plaintiffs") bring this breach of contract and negligence action to recover $385,000 in damages from defendants Trans American Trucking Service, Inc., Trans American Brokerage Service, Inc. (collectively, "Trans American") and United Express Service, Inc. d/b/a/ UES Transport ("UES") (collectively, "defendants"). Alpina is an insurer of Blue Anchor and K&N, and AON is Alpina's agent in connection with its insurance for Blue Anchor and K&N. (Amended Complaint, dated Sept. 30, 2003 ("Am. Compl.") ¶¶ 4-5.) Plaintiffs seek to recover funds Alpina paid in settlement in Germany to non-party Gerling-Konzern Allgemeine Versicherungs-AG ("Gerling"), the insurer of non-party MAN Roland/DE (the "German Shipper"), for printing equipment damaged in New Jersey en route from Germany to Nebraska. (Am. Compl. ¶¶ 10, 20-22.) Presently before this Court are: (1) Trans American's "motion to dismiss" the complaint pursuant to Fed.R.Civ.P. Rules 12(b) and 56; (2) UES's motion to dismiss pursuant to Fed.R.Civ.P. Rule 12(b)(6), and (3) UES's motion for partial summary judgment pursuant to Fed.R.Civ.P. Rule 56, limiting its liability to $500 per package. For the reasons stated below, defendants' motions to dismiss are granted, and UES's motion for partial summary judgment is denied as moot.

BACKGROUND

  This action concerns printing equipment damaged in an accident during transport from Bremerhaven, Germany to Omaha, Nebraska. In February 2001, the German Shipper hired Blue Anchor to transport a printing press by ship from Bremerhaven to New York, and then by truck to Omaha. (Am. Compl. ¶ 10.) Through its agent K&N, Blue Anchor issued a bill of lading ("Bill of Lading") to the German Shipper to transport the equipment. (Am. Compl. ¶¶ 10-11.) On February 13, 2001, the printing equipment was loaded aboard the MV Atlantic Carrier in Germany, and on February 27, 2001, the equipment arrived at the port of discharge in New York City. (Am. Compl. ¶¶ 12-13.) In March 2001, K&N contracted with Trans American to transport the printing equipment from New York to Nebraska, and Trans American subcontracted the transport to UES, a common carrier. (Am. Compl. ¶¶ 14-15.) On March 5, 2001, the printing equipment was severely damaged after UES's truck jackknifed into the median on I-80 West in New Jersey. (Am. Compl. ¶¶ 18-19.)

  After settling the loss the German Shipper's insurer, Gerling asserted a claim for damage against K&N under the Bill of Lading. (Plaintiffs' Supplemental Memorandum, dated January 27, 2004 ("Pl. Supp. Mem."), Ex. A: Declaration of Roland Doerre, dated January 20, 2004 ("Doerre Decl.") at ¶ 3.)*fn1 On the advice of its German counsel, Alpina paid Gerling 335,000 Euros (approximately $385,000) to settle the claim. (Am. Compl. ¶¶ 1, 21; Doerre Decl. at ¶ 9.) Plaintiffs argue that as a result of that payment, they are subrogated to the rights of the German Shipper in connection with the printing equipment.

  The Bill of Lading contains a nine-month statute of limitations clause, which states: "The Carrier shall be discharged of all liability under this Document unless suit is brought within nine months after the delivery of the Goods, or the date when the Goods should have been delivered unless International Conventions or statutory regulations compulsorily applicable in the individual case are stipulating a longer term of prescription." (Bill of Lading ¶ 3.)

  Additionally, the Bill of Lading contains a "U.S. Clause" which states that the Carriage of Goods by Sea Act ("COGSA"), 46 App. U.S.C.A. § 1300, et seq., is applicable where the goods are shipped to a United States port, and continues to be applicable while the goods are in the carrier's custody. (Bill of Lading ¶ 28.1.) The U.S. Clause expressly adopts Section 1304(5) of COGSA limiting the Carrier's and/or the vessel's liability to $500 unless the nature and value of goods are declared. (Bill of Lading ¶ 28.1.) The Bill of Lading also states that if any part of the Bill of Lading is deemed unenforceable under COGSA, it "shall not affect the validity or enforceability" of any other term of the Bill. (Bill of Lading ¶ 28.1.)

  Finally, the Bill of Lading contains a "Himalaya Clause," that allows a secondary carrier to claim the benefits of the primary carrier's contractual limitations of liability and extends the terms of the Bill of Lading to inland transport after transport by sea. (Bill of Lading ¶ 17(c).) Plaintiffs Blue Anchor and K&N filed their original complaint on January 31, 2003. On September 30, 2003, plaintiffs filed an amended complaint, adding plaintiffs Alpina and AON and joining defendant Trans American Brokerage Service, Inc. (Am. Compl. ¶¶ 4-5, 8.)

  DISCUSSION

  Trans American moves to dismiss the complaint pursuant to Fed. R. Civ. P. Rule 12(b) for: (i) lack of subject matter jurisdiction; (ii) improper venue; and (iii) failure to state a claim upon which relief can be granted. Trans American also moves "to dismiss" pursuant to Fed.R.Civ.P. Rule 56 for: (i) failure to file within the statute of limitations; (ii) failure to satisfy a condition precedent to suit; and (iii) failure to file a timely action. (See Declaration of James M. Haddad, dated October 31, 2003 ("Haddad Decl.") ¶¶ 3-4.)

  Defendant UES separately moves to dismiss the complaint for: (i) failure to file within the applicable COGSA statute of limitations; and (ii) as against plaintiffs Blue Anchor and K&N for lack of standing. Alternately, UES moves for partial summary judgment limiting liability to $500 per package. (UES Memorandum, dated October 31, 2003 ("UES Mem.") at 3.) I. Summary Judgment

  Both defendants move to dismiss plaintiffs' complaint on the ground that it is barred by the applicable statute of limitations. Defendants asserted their statute of limitations arguments during an initial exchange of memoranda and supplemented them with additional briefing required by this Court. (Tr. at 15-16.)

  "When matters outside the pleadings are presented on a motion to dismiss under Rule 12(b)(6), a court may convert the motion to one for summary judgment so long as it affords all parties the opportunity to present supporting material." Wesley v. NMU Pension & Welfare Plan, No. 01 Civ. 2628 (WHP), 2002 WL 10486, at *3 (S.D.N.Y. Jan. 3, 2002) (citing Morelli v. Cedel, 141 F.3d 39, 46 (2d Cir. 1998)). The court may base its decision to convert the motions sua sponte on "whether [plaintiff] should reasonably have recognized the possibility that the motion might be converted into one for summary judgment or [was] taken by surprise and deprived of a reasonable opportunity to meet facts outside the pleadings." Kraft Foods N. Am., Inc. v. Rockland County Dept. of Weights & Measures, No. 01 Civ. 6980 (WHP), 2003 WL 554796 (S.D.N.Y. Feb. 26, 2003) (citing In re G. & A. Books, Inc., 770 F.2d 288, 295 (2d Cir. 1985)); see also Kennedy v. Empire Blue Cross & Blue Shield, 989 F.2d 588, 592 (2d Cir. 1993) (holding that there was no error in sua sponte conversion, and plaintiffs were not unfairly surprised, where defendant's motion papers sought dismissal on certain grounds, summary judgment was granted on those grounds, and plaintiffs had supplemented the record with exhibits).

  Defendants' motions to dismiss were accompanied by summary judgment motions that expressly addressed the applicability of COGSA and the applicable statute of limitations period. At oral argument, plaintiffs acknowledged that the motions to dismiss would likely be converted to summary judgment, and subsequently provided this Court with a supplemental memorandum, a Rule 56.1 Statement, and a declaration with exhibits. (Tr. at 11-12, 15-16; Pl. Supp. Mem, Exs. A, B.) Since plaintiffs had sufficient notice and opportunity to respond to the allegations through supplemental briefing, their own 56.1 statement and other submissions, all of defendants' motions will be treated as ones for summary judgment.

  Rule 56(c) provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show 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); accord Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). The burden of demonstrating the absence of any genuine dispute as to a material fact rests with the moving party. See, e.g., Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970); Grady v. Affiliated Cent., Inc., 130 F.3d 553, 559 (2d Cir. 1997). In evaluating the record to determine whether there is a genuine issue as to any material fact, "[t]he evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor." Liberty Lobby, 477 U.S. at 255.

  II. Statute of Limitations

  The parties differ in their positions concerning the applicable law in this case. Trans American argues that New York State law applies and that the Bill of Lading's nine-month statute of limitations bars suit under New York law. (Trans American Memorandum, dated October 31, 2003 ("Trans Am. Mem.") at 2-3.) Plaintiffs also contend that New York State law applies, but interpret New York State law to implicate a three-year statute of limitations pursuant to N.Y.C.P.L.R. § 214(4) and the Carmack Amendment, 49 U.S.C § 14709(e)(1), which would not bar suit. (Plaintiffs' Opposition, dated November 17, 2003 ("Pl. Mem.") at 5-6.) UES argues that COGSA applies instead of New York law, and that COGSA's one-year statute of limitations bars plaintiffs' suit. (UES Mem. at 3-7.) A. COGSA's Statute of Limitations

  COGSA's one-year statute of limitations bars this action in its entirety. COGSA governs the relationship between the parties to a bill of lading "which is evidence of a contract for the carriage of goods by sea to or from ports of the United States." 46 App. U.S.C.A. § 1300; see Watermill Export, Inc. v. MV Ponce, 506 F. Supp. 612, 613 (S.D.N.Y. 1981) (stating that COGSA applies to "contracts of carriage relating to shipments between United States ports and foreign ports"). Parties also may contractually agree to have COGSA govern the inland portion of a multi-modal transport. See Allianz CP Gen. Ins. Co. v. Blue Anchor Line, No. 02 Civ. 2238 (NRB), 2004 WL 1048228, at *6 (S.D.N.Y. May 7, 2004); see Toshiba Int'l Corp. v. M/V Sea-Land Exp., 841 F. Supp. 123, 125 (S.D.N.Y. 1994) ("[T]he provisions of COGSA may contractually be extended past the time of discharge of the cargo from the ship. . . . It is also well-settled that the protections of COGSA and other provisions of the bill of lading may contractually be extended to third party agents of the carrier, such as inland carriers.") (citations omitted).

  To extend the applicability of COGSA, parties may include in their contract a "U.S. Clause," expressly stating that COGSA shall govern the entire transportation. See Allianz, 2004 WL 1048228 at *7; Sompo Japan Ins. of Am. v. Union Pacific R.R. Co., No. 03 Civ. 1604 (RCC), 2003 WL 22510361, at *2-3 (S.D.N.Y. Nov. 5, 2003); see also Colgate Palmolive Co. v. S/S Dart Canada, 724 F.2d 313, 314 (2d Cir. 1983) (stating that the provisions of COGSA may contractually be extended past the time of the discharge of the cargo from the ship). When COGSA limits liability, it preempts state law, even if the claims are phrased as common law causes of action. See Greenidge v. Mundo Shipping Corp., 41 F. Supp.2d 354, 358 (E.D.N.Y. 1999) (COGSA "sets forth the minimum liabilities, rights and responsibilities of the carrier and the shipper."); Junior Gallery, Ltd. v. Neptune Orient Lines, Ltd., No. 94 Civ. 4518 (DC), 1998 WL 770558 (S.D.N.Y. Nov. 3, 1998) ("[T]he application of COGSA cannot be circumvented merely by construing claims arising out of the carriage of goods by sea as common law causes of action."); Miller Export Corp. v. Hellenic Lines, Ltd., 534 F. Supp. 707, 710 (S.D.N.Y. 1982) ("[T]he exclusive application of COGSA cannot be avoided by couching claims in terms of negligence or other common law causes of action.").

  The parties adopted COGSA through a U.S. Clause in the Bill of Lading which states:

If this Express Cargo Bill covers the Carriage of Goods to or from ports of United States of America this Express Cargo Bill shall be subject to United States Carriage of Goods by Sea Act (USA COGSA), which shall be incorporated herein, and the provisions of said Act shall govern before loading and after discharge and throughout the entire time the Goods are in the custody of the Carrier.
(Bill of Lading ¶ 28.1.) Under COGSA, "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 App. U.S.C.A. § 1303(6).

  The defendants are entitled to the benefit of defenses under COGSA by virtue of the Bill of Lading's Himalaya Clause, which states: "each and every Participating Carriers [sic] . . . engaged or employed by the Carrier . . . shall be a beneficiary of this contract and shall be entitled to all exemptions from and limitations of liability which the Carrier has under this Express Cargo Bill and the applicable law." (Bill of Lading ¶ 17(c).) The Bill defines "Participating Carrier" as "any other water carrier, including those performing transshipment or relay, feeder, or towage services, or any land or air carrier performing any stage of the carriage provided for herein." (Bill of Lading ¶ 1.3.)

  Under the definition in the Bill of Lading, UES qualifies as a Participating Carrier since it was the land carrier that performed a stage of the transportation provided for in the Bill of Lading. (Am. Compl. ¶¶ 14-16; Bill of Lading ¶¶ 1.3, 17(c).) Trans American, with whom K&N contracted to transport the equipment from New York to Nebraska, similarly qualifies as a Participating Carrier under the Bill. (Am. Compl. ¶¶ 14-16; Bill of Lading ¶¶ 1.3, 17(c).) As Participating Carriers, UES and Trans American are entitled to the benefit of the limitations of liability in paragraph 17(c) of the Bill of Lading.

  The parties do not dispute that defendants qualify as Participating Carriers under the definition in the Bill of Lading. Instead, plaintiffs contend that since the limitations in the Bill of Lading were not available to them under German law, defendants are not entitled to those defenses as third-party beneficiaries to the Bill of Lading. (Pl. Mem. at 5; Tr. at 6 ("[E]ven though this bill of lading is enforceable and these limitations are enforceable under United States federal law, they weren't enforceable under German law.").)

  Plaintiffs acknowledge that the Himalaya Clause "makes defendants third-party beneficiaries of the defenses stated in the Bill of Lading" (Pl. Mem. at 5), but argue that those defenses are limited by German law since the settlement was reached there. (Pl. Mem. at 5-6.) Plaintiffs' argument is unpersuasive. They offer no admissible evidence concerning the state of German law on this subject, and cite to no case where a German court has limited the defenses available under a Bill of Lading or COGSA. Tellingly, Alpina did not oppose the Gerling claim, electing instead negotiated a settlement before the dispute went before a German court. (Doerre Decl. ¶¶ 8-10.)

  In their initial submissions, plaintiffs offered no evidence of the settlement or citations to applicable German law. Even after oral argument, plaintiffs submitted only a bare affidavit from AON's German counsel, an interested party, expressing his opinion on the relevant questions of German law. (Doerre Decl. ¶¶ 1, 7-10; Pl. Supp. Mem. at 2.) Plaintiffs failed to provide this Court with any German statutes, court decisions, or other independent, admissible legal analysis relating to the defenses available under German law. This Court will not prohibit defendants from asserting legitimate defenses under the Bill of Lading and COGSA on the supposition that German law may bar them.

  B. The Carmack Amendment

  Plaintiffs argue that COGSA's statute of limitations period is inapplicable and that this Court should instead apply a three-year statue of limitations period for filing claims under New York law. Specifically, plaintiffs claim that the Carmack Amendment to the Interstate Commerce Act of 1887, 49 U.S.C. § 14706(e)(1),*fn2 invalidates any limitations period under COGSA. Plaintiffs' contention is without merit.

  The Carmack Amendment governs the liability of common carriers for goods lost or damaged during a shipment in interstate commerce." Ford v. Allied Van Lines, Inc., 3:96 Civ. 2598 (AHN), 1997 WL 317315, at *2 (D. Conn. June 3, 1997). While the Carmack Amendment generally applies to the domestic leg of an international journey "as long as the domestic leg is covered by a separate bill or bills of lading", it is inapplicable where the bill of lading governing the shipment is a "through bill of lading." Allianz, 2004 WL 1048228, at *4 (citing Swift Textiles v. Warkin Motor Lines, 799 F.2d 697, 701 (11th Cir. 1986); Ins. Co. of N. Am. v. S/S Transworld Bridge, 92 Civ. 7375, 1994 WL 75249, at *7 n. 6 (S.D.N.Y. Mar. 7, 1994)); accord Capital Converting Equip., Inc. v. LEP Transp., Inc., 965 F.2d 391, 394 (7th Cir. 1992). A "through bill of lading is one which governs the entire course of transport and applies to the connecting carriers despite the fact that they are not parties to the contract." M/V Sealand Express, 841 F. Supp. at 128; accord Capital Converting, 965 F.2d at 394 ("A bill of lading issued in a foreign country to govern a shipment throughout its transportation from abroad to its final destination in the United States is termed a `through bill of lading.').

  It is undisputed that the Bill of Lading, which governed the entire shipment, was a through bill of lading. (See, e.g., UES 56.1 Stmt. ¶¶ 1-2, 8, 10, 13 (describing Bill of Lading as contract covering transport of goods from Germany to Nebraska); Pl. 56.1 Stmt. ¶ 2-4 (same); Pl.'s Response to UES 56.1 Stmt ¶ 1-2, 8, 10, 13 (admitting same).) Indeed, the Bill of Lading expressly contemplates the inland transportation of the goods and designates both the point of origin, Bremerhaven, and the final destination, Omaha. (Bill of Lading at p. 1, ¶ 28.1.) The German Shipper entered into the Bill of Lading with Blue Anchor for all transportation from Germany to Nebraska. Thus, the Bill of Lading was a through bill of lading, which governed the entire transportation of goods and applied to all connecting carriers. (Bill of Lading ¶ 28.1.) See Alianz, 2004 WL 1048228, at *4 (holding Carmack Amendment inapplicable where through bill of lading contemplated inland transportation of goods and designated Ohio as final destination and Bangkok as point of origin). Accordingly, the Carmack Amendment is inapplicable here since it "does not apply where a through bill of lading covers the entire course of an international journey," Allianz, 2004 WL 1048228, at *5 (citing New York Marine & Gen. Ins. Co. v. S/S Ming Prosperity, 920 F. Supp. 416, 425 (S.D.N.Y. 1996)).

  Additionally, it is well-established "that the Carmack Amendment may be departed from by contract and supplanted by . . . COGSA to the detriment of the merchant." Sompo, 2003 WL 22510361, at *3 (citing M/V Sealand Express, 841 F. Supp. at 125 ("It is . . . well-settled that the protections of COGSA and other provisions of the bill of lading may contractually be extended to third party agents of the carrier, such as inland carriers.")).*fn3 As noted, the parties clearly invoked COGSA's terms in the Bill of Lading, and contemplated that they would apply to the whole shipment. (Bill of Lading ¶ 28.1.)

  Thus, this Court finds that COGSA's one-year statute of limitations is applicable since the Bill of Lading makes COGSA applicable to the inland portion of the shipment.

  III. This Action is Time-Barred

  COGSA's one-year statute of limitations applies to this case. The parties agree that the statute of limitations began to run in early March 2001. In its supplemental memorandum, Trans American contends that the statute of limitations began to toll on March 8, 2001, the day the goods should have been delivered to Omaha, Nebraska. (Trans American Supplemental Memorandum, dated January 27, 2004 ("Trans Am. Supp. Mem.") at 5.) Plaintiffs and UES agree that the statute of limitations commenced on March 5, 2001, the day of the accident. (Pl. Supp. Mem. at 4; UES Supplemental Memorandum, dated January 27, 2004 ("UES Supp. Mem.") at 5.) This three-day gap is a distinction without a difference. Plaintiffs filed their original complaint on January 31, 2003, more than a year and ten months after the statute of limitations period commenced.*fn4 Thus, COGSA's one-year statute of limitations bars plaintiffs' suit.

  Because the application of the COGSA statute of limitations mandates dismissal of this action, this Court finds moot UES's motion for partial summary judgment invoking a $500 per package liability limitation. CONCLUSION

  For the reasons set forth above, defendants' motions are granted, and this action is dismissed with prejudice. UES's motion for partial summary judgment is denied as moot since the application of COGSA's one-year statute of limitations bars plaintiffs' claims. The Clerk of the Court is directed to mark this case closed.

  SO ORDERED.


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