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Madonna Shipping Services, Inc. v. Mediterranean Shipping Company S.A. Geneva

September 24, 2007


The opinion of the court was delivered by: Gerard E. Lynch, District Judge


In the Port of Tema, Ghana, after being shipped from New York and while being unloaded from a vessel owned by Mediterranean Shipping Company ("MSC"), a large cargo container fell into the ocean, destroying or severely damaging its contents. The individuals whose property was damaged, as well as Madonna Shipping Services, the freight consolidator hired to ship the freight, sued Oceane Marine Shipping Co., the Federal Marine Commission-licensed non-vessel-operating common carrier ("NVOCC") hired to arrange for the transport of the shipment, as well as MSC. The individuals seek compensation for the damaged property in excess of $500,000 and Madonna seeks compensation for the costs of shipment.

Two bills of lading were issued regarding the shipment, one by Oceane and one by MSC. Oceane's bill of lading, dated December 22, 2004, described the shipment as follows: "1998 TOYOTA SIENNA . . . 124 PIECES PERSONAL EFFETS. NO SED REQUIRED. . ." (Defendant Exhibit ("DX") A.) MSC's bill of lading, dated December 23, 2004, also described the shipment with the same language. (DX D.)*fn1

Defendants move for partial summary judgment, arguing that the Carriage of Goods by Sea Act ("COGSA") [46 U.S.C. §§ 1300-1315] applies, limiting plaintiffs' potential recovery from defendants to $500 per package, and that pursuant to COGSA the shipment contained at most 125 "packages." There is no dispute that the bill of lading referred to carriage of goods by sea from a US port. Plaintiffs oppose summary judgment on three grounds, claiming that the COGSA limitations do not apply to limit plaintiffs' claims. First, plaintiffs claim that they were not provided a reasonable opportunity to declare the value of their cargo because certain terms of the bill of lading were illegible. Second, plaintiffs claim that defendants fundamentally breached their contract of carriage by failing to provide the appropriate Shipper's Export Declaration in connection with the shipment. Third, plaintiffs claim that the stevedore was grossly negligent in unloading the goods in Tema. As plaintiffs' first argument presents issues of fact for trial, the defendants' motion fails.


I. The Legal Standards

A. Summary Judgment

Summary judgment is appropriate where 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 a judgment as a matter of law." Fed. R. Civ. P. 56(c). Rule 56 "mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). The Court's responsibility is to determine if there is a genuine issue to be tried, and not to resolve disputed issues of fact. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). The Court must draw all reasonable inferences and resolve all ambiguities in the nonmoving party's favor, and construe the facts in the light most favorable to the nonmoving party. Id. at 254-55. However, the "mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient" to withstand a motion for summary judgment. Id. at 252.


COGSA applies to "[e]very bill of lading . . . for the carriage of goods by sea to or from ports of the United States, in foreign trade." 46 U.S.C. §1300. The term "'carriage of goods' covers the period from the time when the goods are loaded on to the time when they are discharged from the ship." 46 U.S.C. § 1301. See also Seguros Illimani S.A. v. M/V Popi P, 929 F.2d 89, 93 (2d Cir. 1991). Pursuant to COGSA, [n]either the carrier nor the ship shall . . . 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.

46 U.S.C. § 1304(5).

In determining what constitutes a COGSA package, the Court is guided by certain principles. First, the task is "largely and in the first instance a matter of contract interpretation." Allied Chemical Intern. Corp. v. Companhia de Navegacao Lloyd Brasileiro, 775 F.2d 476, 485 (2d Cir. 1985); Binladen BSB Landscaping v. M.V. Nedlloyd Rotterdam, 759 F.2d 1006, 1012 (2d Cir. 1985) ("the touchstone of our analysis should be the contractual agreement between the parties, as set forth in the bill of lading"). Interpreting the bill of lading is thus a matter of law for the court. Second, though the definition of package is flexible, it must be "the result of some preparation [of the cargo item] for transportation . . . which facilitates handling, but which does not necessarily conceal or completely enclose the goods." Binladen, 759 F.2d at 1012. Third, the Second Circuit has "refused to hold a shipping container to be a COGSA package, absent a clear agreement between the parties to that effect, at least so long as its contents and the number of packages or units are disclosed." Id. (internal citations and quotation marks omitted). Thus, "when the bill of lading discloses not only the number of containers but the number of cartons within them, the cartons, not the containers, will be treated as COGSA packages." Id. at 1013.

The COGSA per-package limitations do not apply if the carrier does not give the shipper a fair opportunity to declare a higher value, including adequate notice of the liability limitation provisions, as well as a reasonable ad valorem charge for the additional protection. General Elec. Co. v. M.V. Nedlloyd, 817 F.2d 1022, 1028 (2d Cir. 1987); see also Nippon Fire & Marine Ins. Co. v. M.V. Tourcoing, 167 F.3d 99, 101 (2d Cir. 1999). A carrier can make a prima facie showing that notice of the limitation and an opportunity to purchase excess coverage was given to the shipper through the language of the bill of lading. General Elec. Co., 817 F.2d at 1029. If such a showing is made, the burden of proof then shifts to the shipper to demonstrate that the fair opportunity to declare additional value did not in fact exist. Id.

Even if the shipper has a fair opportunity to declare a higher value and chooses not to do so, the COGSA limitations will not apply if the carrier engages in an "unreasonable or unjustifiable deviation [of the terms of carriage that] so changes the essence of the agreement as to effect its abrogation." SNC S.L.B. v. M/V Newark Bay, 111 F.3d 243, 248 (2d Cir. 1997) (internal citations and quotation marks omitted). A deviation is unreasonable "when, in the absence of significant countervailing factors, the deviation substantially increases the exposure of cargo to foreseeable dangers that would have been avoided had no deviation occurred." Id. (internal citations and quotation marks omitted). In addition, when a carrier makes a misrepresentation in a bill of lading with respect to its own conduct, such as whether it had in fact loaded the cargo, or whether the cargo was improperly loaded above deck, the COGSA per-package limitations may not apply. See Berisford Metals Corp. v. S/S Salvador, 779 F.2d 841, 847 (2d Cir. 1985). Or, "[i]f the carrier delivers the goods to one other than the authorized holder of the bill of lading, the carrier is liable for misdelivery." Allied Chemical, 775 F.2d at 481.

Courts have either held or assumed that the COGSA limitations extend to the NVOCCs. See, e.g., Kukje Hwajae Ins. Co., Ltd. v. M/V Hyundai Liberty, 408 F.3d 1250, 1256-57 (9th Cir. 2005); Schramm, Inc. v. Shipco Transport, Inc., 364 F.3d 560, 566 (4th Cir. 2004); All Pac. Trading v. Vessel M/V Hanjin Yosu, 7 F.3d 1427, 1430 (9th Cir. 1993).*fn2 Though COGSA limits liability for carriers, it does not do so for stevedores. Robert C. Herd & Co. Inc., v. Krawill Machinery Corp., 359 U.S. 297, 302-03 (1959). Parties may contract to extend COGSA liability limitations to stevedores "thereby making COGSA apply [not] of its own force as a statute, but merely as a contractual term in the bill of lading." Seguros Illimani, 929 F.2d at 93 (internal citations and quotation marks omitted); Bernard Screen Printing Corp. v. Meyer Line, 464 F.2d 934, 936 (2d Cir. 1972). However, "bills of lading are contracts of adhesion and, as such, are strictly construed against the carrier." Allied ...

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