-
USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 93-1543
HENLEY DRILLING COMPANY,
Plaintiff, Appellee,
v.
WILLIAM H. McGEE
AND
CNA CASUALTY OF PUERTO RICO,
Defendants, Appellants.
____________________
No. 93-1548
HENLEY DRILLING COMPANY,
Plaintiff, Appellee,
v.
MARINE TRANSPORTATION SERVICES, ETC.
AND
LUIS A. AYALA COLON SUCRS., INC.,
Defendants, Appellants.
____________________
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Raymond L. Acosta, U.S. District Judge]
___________________
____________________
Before
Torruella, Circuit Judge,
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Aldrich, Senior Circuit Judge,
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and Cyr, Circuit Judge.
_____________
____________________
Keith A. Graffam, with whom Dario Rivera Carrasquillo, John
________________ _________________________ ____
E. Mudd and Cordero, Miranda & Pinto were on brief for plaintiff.
_______ ________________________
Jose F. Sarraga for defendant Marine Transportation
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Services.
Eugene F. Hestres, with whom Bird, Bird & Hestres was on
_________________ _____________________
brief for defendant Luis A. Ayala Colon Sucrs., Inc.
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September 27, 1994
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CYR, Circuit Judge. The central question in this case
CYR, Circuit Judge.
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whether the $500 per-package limit on ocean carriage liability
imposed by the Carriage of Goods by Sea Act (COGSA), 46 U.S.C.
1304(5), is applicable to an oil drilling rig requires the
court to consider for the first time the COGSA-related "fair
opportunity" doctrine.
I
I
BACKGROUND
BACKGROUND
__________
Puerto Rico Electric Power Authority (PREPA) contracted
with Henley Drilling Company (Henley) to conduct petroleum
drilling operations in Puerto Rico. Marine Transportation
Services-Sea Barge Group, Inc. (Sea Barge), an ocean carrier,
agreed to transport Henley's drilling equipment from Houston to
Puerto Rico, and return. PREPA obtained marine cargo insurance
on the Henley drilling rig through William H. McGee & Co. (McGee)
and CNA Casualty of Puerto Rico (CNA). Following an uneventful
southbound voyage, Sea Barge retained a stevedoring contractor,
Luis A. Ayala Col n Sucrs., Inc. (Ayacol), to stow the drilling
rig aboard the barge for the return trip to Houston. When the
barge arrived in Houston, however, Henley's huge drilling rig,
valued at $629,000, was nowhere to be found.
Henley sued Sea Barge, Ayacol, McGee, CNA and PREPA in
the United States District Court for the District of Puerto Rico.
Under the terms of their settlement agreement, PREPA, McGee and
CNA were subrogated to the rights of Henley, leaving Sea Barge
3
and Ayacol as the only defendants. In March 1992, Sea Barge and
Ayacol moved for partial summary judgment, contending that their
liability, if any, could not exceed the $500 per-package/CFU
limit imposed by COGSA.1 Contemporaneously, Ayacol and Sea
Barge moved for summary judgment on the further ground that the
stowing of the drilling rig aboard the barge for the return trip
to Houston was improperly supervised by the marine surveyor
retained by PREPA, thereby entitling Ayacol and Sea Barge to
exoneration from liability.
A magistrate judge recommended partial summary judgment
in favor of Sea Barge and Ayacol, based on a finding that the
drilling rig constituted a "package" within the meaning of COGSA
4(5), for which the maximum liability of the carrier is $500.2
The magistrate judge did not rule on the summary judgment claim
for exoneration. McGee, CNA and PREPA objected to the magis-
trate-judge's report and recommendation, which the district judge
subsequently adopted over their objection. McGee, CNA and PREPA
unsuccessfully moved for reconsideration by the district judge.
CNA and McGee [collectively: "McGee"] appealed. Ayacol and Sea
Barge cross-appealed, challenging the district court order
adopting the magistrate-judge's report and recommendation insofar
as it failed to grant Ayacol and Sea Barge exoneration from all
liability and included no attorney fee award against McGee.
____________________
1The COGSA-imposed liability limit applies to each package
or "customary freight unit" ("CFU").
__
2See note 1 supra.
___ _____
4
II
II
DISCUSSION
DISCUSSION
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A. The McGee Appeal (No. 93-1543)
A. The McGee Appeal (No. 93-1543)
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1. Summary Judgment Standard
1. Summary Judgment Standard
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We review a grant of summary judgment de novo.
__ ____
Commercial Union Ins. Co. v. Walbrook Ins. Co., 7 F.3d 1047, 1050
_________________________ _________________
(1st Cir. 1993). Summary judgment is appropriate where the
record, viewed in the light most favorable to the nonmoving
party, reveals no genuine issue as to any material fact, and the
moving party is entitled to judgment as a matter of law. Velez-
______
Gomez v. SMA Life Assur. Co., 8 F.3d 873, 874-75 (1st Cir. 1993).
_____ ___________________
2. The COGSA Liability Limitation
2. The COGSA Liability Limitation
______________________________
Section 1304(5) of COGSA, entitled "Rights and immuni-
ties of carrier and ship," provides in relevant part:
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 trans-
portation of goods in an amount exceeding
$500 per package . . . or in case of goods
not shipped in packages, per customary
freight unit . . . unless the nature and
______ ___ ______ ___
value of such goods have been declared by the
_____ __ ____ _____ ____ ____ ________ __ ___
shipper before shipment and inserted in the
_______ ______ ________ ___ ________ __ ___
bill of lading . . . .
____ __ ______
By agreement between the carrier, mas-
ter, or agent of the carrier, and the shipper
another maximum amount than that mentioned in
this paragraph may be fixed . . . [but] in no
event shall the carrier be liable for more
than the amount of damage actually sustained.
46 U.S.C. App. 1304(5) (emphasis added).
5
The courts generally have required the carrier to
afford the shipper a "fair opportunity" to avoid the COGSA
"package/CFU" liability limitation through adequate advance
notice. See, e.g., Carman Tool & Abrasives, Inc. v. Evergreen
___ ____ _______________________________ _________
Lines, 871 F.2d 897, 899 n.3 (9th Cir. 1989). As this court has
_____
not adopted the COGSA "fair opportunity" doctrine, see Granite
___ _______
State Ins. Co. v. M/V Caraibe, 825 F. Supp. 1113, 1118-24 (D.P.R.
______________ ___________
1993) (noting absence of First Circuit precedent on "fair
opportunity" doctrine), we first examine the case law in other
jurisdictions.
All courts which have addressed the matter require the
carrier to provide the shipper some notice of the COGSA
"package/CFU" liability limitation, differing only as to the type
of notice. See id. (examining circuit split as to level of
___ ___
notice required); see generally Michael F. Sturley, The Fair
___ _________ _________
Opportunity Requirement Under COGSA Section 4(5): A Case Study
_________________________________________________________________
in the Misinterpretation of the Carriage of Goods by Sea Act
_________________________________________________________________
(Part I), 19 J. Mar. L. & Com. 1, 13-17 (1988) (hereinafter,
________
"Sturley, Part I"); Michael F. Sturley, The Fair Opportunity
_______ _____________________
Requirement (Part II), 19 J. Mar. L. & Com. 157 (1988) (here-
_____________________
inafter, "Sturley, Part II"). The Ninth Circuit is thought to
_______
have the more demanding notice requirement, see 2A Ellen Flynn &
___
Gina A. Raduazzo, Benedict on Admiralty 166, at pp. 16-28 to
______________________
16-29 (Michael F. Sturley, contrib. ed. 1993) (hereinafter, 2A
Benedict) (describing "strict" Ninth Circuit standard, citing
________
cases), mandating that the carrier provide the shipper legible
6
written notice of the COGSA "package/CFU" liability limitation in
the bill of lading, employing language substantially similar to
COGSA 4(5). See, e.g., Nemeth v. General S.S. Corp., 694 F.2d
___ ____ ______ ___________________
609, 611 (9th Cir. 1982). Other courts, including the Second,
Fourth, Fifth and Eleventh Circuits, simply require that the bill
of lading include a "clause paramount" incorporating COGSA by
reference. See, e.g., Insurance Co. of N. Am. v. M/V Ocean Lynx,
___ ____ _______________________ ______________
901 F.2d 934, 939 (11th Cir. 1990), cert. denied, 498 U.S. 1025
_____ ______
(1991); General Elec. Co. v. M/V Nedlloyd, 817 F.2d 1022, 1029
_________________ ____________
(2d Cir. 1987), cert. denied, 484 U.S. 1011 (1988); Cincinnati
_____ ______ __________
Milacron, Ltd. v. M/V American Legend, 804 F.2d 837, 837 (4th
______________ ____________________
Cir. 1986) (en banc) (per curiam), rev'g 784 F.2d 1161 (4th Cir.
_____
1986); Brown & Root, Inc. v. M/V Peisander, 648 F.2d 415, 424
___________________ _____________
(5th Cir. 1981). The courts are in agreement that the carrier
bears the burden of proving that it has afforded the shipper the
requisite "fair opportunity" notice. See, e.g., General Elec.,
___ ____ _____________
817 F.2d at 1029; Tessler Bros. (B.C.) Ltd. v. Italpacific Line,
_________________________ ________________
494 F.2d 438, 443 (9th Cir. 1974).
Our review leads us to conclude that the bill of lading
in this case afforded "fair opportunity" notice sufficient to
satisfy whatever essential requirements are imposed by these
other courts. Constructive notice was afforded by the "clause
paramount"3 legibly printed on the reverse side of the bill of
____________________
3The bill of lading included a typical "clause paramount":
1. CLAUSE PARAMOUNT: This bill of lading shall have
effect subject to the provisions of the Carriage of
Goods by Sea Act, approved April 16, 1936.
7
lading: "This bill of lading shall have effect subject to the
provisions of the Carriage of Goods by Sea Act . . . ." See
___
Cincinnati Milacron, 804 F.2d at 837 ("clause paramount" provides
___________________
constructive notice).4 A more particular notice was contained
in the bill of lading "valuation clause":
20. VALUATION. Carrier shall not be liable
in any event for any loss, damage, misdeliv-
ery or delay with respect to the goods in an
amount exceeding $500.00 lawful money of the
United States per package, or in the case of
goods not shipped in packages, per customary
freight unit, unless the nature of the goods
and a valuation thereof higher than $500.00
is declared in writing by Shipper on delivery
of the goods to Carrier and inserted in the
Bill of Lading and extra freight is paid
thereon as required by the applicable tariff
to obtain the benefit of such higher valua-
tion.
See Carman Tool, 871 F.2d at 899 n.4 (finding that bill of lading
___ ___________
provision substantially similar to that sub judice recited terms
___ ______
____________________
See also 46 U.S.C. App. 1312 ("any bill of lading . . .
___ ____
containing an express statement that it shall be subject to the
provisions of [COGSA] shall be subjected hereto as fully as if
subject hereto by the express provisions of [COGSA] . . . Provid-
_______
ed further, that every bill of lading . . . shall contain a
___________
statement that it shall have effect subject to the provisions of
[COGSA]") (emphasis original); cf. Komatsu Ltd. v. States S.S.
___ ____________ ___________
Co., 674 F.2d 806, 810 n.6 (9th Cir. 1982) (rejecting statutory
___
challenge to "fair opportunity" doctrine based on 1312, because
this section "leaves a carrier free to quote the language of
section 4(5) in full").
4McGee does not challenge the legibility of the COGSA
notice. Cf. Nemeth, 694 F.2d at 611-12 (illegible recitation of
___ ______
COGSA 4(5) does not provide "fair opportunity" notice).
8
of COGSA 4(5) and thus afforded actual notice); cf. supra pp.
___ _____
5-6 (quoting 46 U.S.C. App. 1304(5)).5
McGee contends that Sea Barge did not demonstrate its
entitlement to summary judgment on compliance with the "fair
opportunity" requirement because there was competent evidence
that Sea Barge failed to offer PREPA ad valorem rates based on
__ _______
the true value of the cargo. Specifically, McGee reiterates its
claim below that Sea Barge failed to show that published tariffs
were available for a drilling rig on this voyage.6 McGee relies
primarily on the Fifth Circuit's language in Brown & Root:
____________
[T]he circumstances of the case before us do
not overcome the prima facie evidence of the
opportunity for a choice of rates and valua-
tions . . . First, COGSA was expressly incor-
porated in the bill of lading to thereby
bring into play 4(5). Next, and more sig-
____ ____
nificantly, the published tariff which has
__________ ___ _________ ______
____________________
5In light of our conclusion that the bill of lading met
whatever "fair opportunity" notice requirements are imposed by
other circuits, we refrain from embracing the "fair opportunity"
doctrine itself, in any form. We take this course because the
parties have assumed, from the outset, that a COGSA-related "fair
opportunity" doctrine would apply. Thus, we leave for another
day, and a proper adversarial setting, what we perceive to be a
problematic question. See Michael F. Sturley, The Fair Opportu-
___ __________________
nity Requirement Under COGSA Section 4(5): A Case Study in the
_________________________________________________________________
Misinterpretation of the Carriage of Goods by Sea Act (Part I),
________________________________________________________________
19 J. Mar. L. & Com. 1 (1988); and Michael F. Sturley, The Fair
___ ________
Opportunity Requirement (Part II), 19 J. Mar. L. & Com. 157, 176
__________________________________
(1988) ("All of the available evidence suggests that the [COGSA]
package limitation should not be subject to a fair opportunity
requirement.").
6McGee relies on a deposition by William Lauderdale, the Sea
Barge agent responsible for negotiating freight charges with
PREPA, which states that the rate for transporting the drill rig
was "outside" the tariff Sea Barge filed with the Federal Mari-
time Commission, because this was "a single shipper on a single
voyage, on a contract voyage." The record does not contain a
copy of the Sea Barge tariff. Cf. infra note 7.
___ _____
9
the effect of law very carefully gave Shipper
____ _______
a choice of valuations by a choice of pre-
_ ______ __ __________ __ _ ______ __ ____
cisely definable freight rates.
______ _________ _______ _____
648 F.2d at 424 (emphasis added, citations omitted); see also
___ ____
Wuerttembergische v. M/V Stuttgart Express, 711 F.2d 621, 622
_________________ ______________________
(5th Cir. 1983) (per curiam) (similar, applying Brown & Root).
____________
The controlling question before us therefore becomes: whether
actual and constructive notice, without more, affords the shipper
"fair opportunity," as a matter of law.
Careful examination of the authorities has disclosed no
appellate case which requires a valid tariff in addition to
actual or constructive notice as an element of the "fair
opportunity" doctrine. The Fifth Circuit, whose cases constitute
the principal authority relied on by McGee, has reserved judgment
on this matter:
The facts of [Brown & Root, 648 F.2d at 424,
____________
and Wuerttembergische, 711 F.2d at 622] re-
_________________
veal that we have not held . . . that the
___
mere incorporation of COGSA into a bill of
lading constitutes prima facie evidence of
fair opportunity. Because that circumstance
_______ ____ ____________
is not before us in this case, we express no
__ ___ ______ __ __ ____ _____ __ _______ __
opinion on the issue.
_______ __ ___ _____
Couthino, Caro & Co. v. M/V Sava, 849 F.2d 166, 170 n.6 (5th Cir.
____________________ ________
1988) (emphasis added). Other courts of appeals either directly
hold that a tariff is not required if notice of the COGSA liabil-
____
ity limitation has been given, see, e.g., Ocean Lynx, 901 F.2d at
___ ____ __________
939 ("Brown & Root thus adopted a system of constructive notice
____________
of an opportunity to declare excess valuation. Either a clause
paramount in the bill of lading or a valid tariff filed with the
__
Federal Maritime Commission . . . is sufficient to afford the
10
shipper an opportunity to declare excess value.") (citations
omitted, emphasis added),7 or clearly imply such a rule, see,
_____ ___
e.g., Aetna Ins. Co. v. M/V Lash Italia, 858 F.2d 190, 193 (4th
____ _______________ _______________
Cir. 1988) ("In this case [language reciting the COGSA liability
limitation in the] bill of lading establishes prima facie evi-
_____ _____
dence of fair opportunity by clearly outlining the limitation of
liability and explaining the shipper's opportunity to avoid the
limitation by declaring a higher value."); Carman Tool, 871 F.2d
___________
at 901 ("so long as the bill of lading, on its face, provides
adequate notice of the liability limit and an opportunity to
declare a higher value, the carrier has discharged its responsi-
bility") (9th Cir.); cf. Komatsu, 674 F.2d at 811 (published
___ _______
tariff, without actual notice of the relevant provisions of
COGSA, does not satisfy "fair opportunity" requirement).
We thus eschew McGee's implicit invitation to augment
the "fair opportunity" doctrine. As the Ninth Circuit observed
in a similar context:
We decline to expand the fair opportunity
requirement as suggested by [shipper]. The
requirement is not found in the language of
COGSA; it is a judicial encrustation, de-
signed to avoid what courts felt were harsh
or unfair results. The requirement has been
criticized for introducing uncertainty into
____________________
7Though the published tariff in Ocean Lynx "provide[d] that
__________
an ad valorem rate shall be applied to shipments of certain com-
__ _______
modities [but did] not provide for the method through which a
shipper of goods other than the listed commodities can avoid
COGSA section 4(5)'s limitation on liability," 901 F.2d at 940,
the court found that incorporation of COGSA into the bill of
lading satisfied the "fair opportunity" requirement, id. The
___
argument rejected by the Eleventh Circuit is very similar to that
advanced by McGee. See supra note 6.
___ _____
11
commercial transactions that should be gov-
erned by certain and uniform rules.
Carman Tool, 871 F.2d at 900 (citations omitted); see also Vimar
____________ ___ ____ _____
Seguros y Reaseguros, S.A. v. M/V Sky Reefer, ___ F.3d ___, ___
___________________________ _______________
(1st Cir. 1994) [No. 93-2179, slip op. at 4 (1st Cir. July 7,
1994)] ("COGSA was . . . intended to reduce uncertainty concern-
ing the responsibilities and liabilities of carriers, responsi-
bilities and rights of shippers, and liabilities of insurers.")
(citations omitted); see generally Sturley, Parts I, II
___ _________ _______
(criticizing "fair opportunity" doctrine as economically ineffi-
cient and inconsistent with COGSA's roots in international and
domestic law).8 The bill of lading indisputably provided both
____________________
8Further, nothing in the facts of this case counsels exten-
sion of the "fair opportunity" doctrine. McGee has not shown
that the absence of relevant published tariffs prevented PREPA
from avoiding the COGSA liability limitation. We will not
presume that PREPA, McGee's insured, would have declared addi-
_______
tional value under a published tariff, especially since PREPA's
contract with Henley obligated it to provide marine cargo insur-
_________ __
ance for the full replacement value of the drilling rig. Compare
____ ___________ _____ _______
Travelers Indemn. Co. v. Vessel Sam Houston, 26 F.3d 895, 900
_____________________ ___________________
(9th Cir. 1994) (because shipper obtained insurance through an
independent underwriter, "there is every reason to believe that
[the shipper] made a deliberate choice to forego the additional
cost that would have been incurred in raising [the COGSA] liabil-
ity limit"). Indeed, Sea Barge proffered uncontroverted evidence
that though it offered insurance, PREPA declined, opting instead
to purchase insurance through McGee.
Professor Sturley has suggested that in the typical case,
the ad valorem rates for excess value offered by a carrier are
__ _______
higher than premiums for equivalent cargo-insurance coverage from
a third-party underwriter. See Sturley, Part II, at 194. A
___ _______
rational shipper confronted with such a choice is not likely to
pay ad valorem rates when third-party insurance coverage is less
__ _______
expensive. Moreover, a judicially-imposed tariff requirement
would increase transaction costs to the carrier, with no corre-
sponding benefit to either party.
12
actual and constructive notice of the COGSA 4(5) liability
limitation.9 As there was no material fact in genuine dispute,
the district court properly granted summary judgment for Sea
Barge/Ayacol on the ground that the COGSA "package/CFU" liability
limitation applies.
3. COGSA Package/Customary Freight Unit
3. COGSA Package/Customary Freight Unit
____________________________________
COGSA 4(5) limits liability to "$500 per package . .
. or in case of goods not shipped in packages, per customary
freight unit." 46 U.S.C. App. 1304(5). The district court
concluded that the drill rig was shipped as a single "package."
Strictly speaking, of course, it was not a "package." The
parties agree that "the actual cargo that was lost overboard was
a truck mounted Cabot 900 Drilling rig, which was self propelled
and had eighteen (18) wheels . . . [and which] was not boxed or
___ _____ __
crated in any way." McGee's Mot. Opposing Def.'s Mot. for Summ.
______ __ ___ ___
J. at 5-6 (emphasis added); compare Sea Barge's Resp. to Pl.'s
_______
Statement of Uncont. Mat. Facts at 4 (expressly admitting these
facts). Moreover, we have held that a printing press shipped "in
____________________
9McGee also argues that because David Kiester, the PREPA
agent who negotiated the bill of lading with Sea Barge, allegedly
was inexperienced in maritime matters, knowledge of the effect of
COGSA 4(5) may not be imputed to PREPA. The only case McGee
cites for this proposition, see Pan American World Airways, 559
__________________________
F.2d at 1177 (holding that "clause paramount" alone cannot be
_____
used to impute knowledge of effect of COGSA to shipper), is
inapposite. Moreover, we conclude that Kiester's inexperience is
immaterial to our analysis. Cf. Carman Tool, 871 F.2d at 901 n.9
___ ___________
("So long as the bill of lading has all the necessary information
[i.e., gives actual notice of COGSA 4(5)], the shipper, or any
___ ________ __ ___
other interested party, has the means of learning everything it
_____ __________ _____
may wish to know about the terms of the transaction.") (emphasis
added).
13
open view, unboxed, [which] was not wrapped or crated . . . was
not a package as defined by COGSA." Hanover Ins. Co. v. Shulman
________________ _______
Transp. Enters., Inc., 581 F.2d 268, 275 (1st Cir. 1978); accord
______________________ ______
Tamini v. Salen Dry Cargo AB, 866 F.2d 741, 743 (5th Cir. 1989)
______ __________________
(free-standing portable drilling rig, "for the most part" fully
exposed and not enclosed in a container, was not a COGSA "pack-
age"); Petition of Isbrandtsen Co., 201 F.2d 281, 286 (2d Cir.
___________________________
1953) (uncrated locomotive not COGSA "package"); 2A Benedict,
________
supra, 167, at 16-35 ("cargo that is shipped without any
_____
packaging whatsoever is generally treated as 'not shipped in
packages'") (citations omitted, citing numerous cases). How,
then, since the shipper chose to describe the shipment as a
single package can it now claim it constituted multiple units?
Thus, the drilling rig constituted but one unit,
whether labeled a "package" or, more correctly, one "customary
freight unit" (CFU). Within the meaning of COGSA, the CFU "is
generally the unit on which the freight charge is based for the
shipment at issue." Binladen BSB Landscaping v. M.V. Nedlloyd
_________________________ _____________
Rotterdam, 759 F.2d 1006, 1016 (2d Cir.), cert. denied, 474 U.S.
_________ _____ ______
902 (1985); Granite State, 825 F. Supp. at 1126.10 To deter-
______________
____________________
10Some early cases looked to shipping-industry custom in
determining the CFU. See, e.g., Waterman S.S. Corp. v. United
___ ____ ____________________ ______
States Smelting, Ref. & Mining Co., 155 F.2d 687, 693-94 (5th
____________________________________
Cir.), cert. denied, 329 U.S. 761 (1946). But the clear modern
_____ ______
trend is to "recognize the customary freight unit as the unit
specifically employed by the parties in arriving at the rate
charged for shipment," Granite State, 825 F. Supp. at 1126; see,
_____________ ___
e.g., FMC Corp. v. S.S. Marjorie Lykes, 851 F.2d 78, 80 (2d Cir.
____ _________ ___________________
1988); see also Jerome C. Scowcroft, Recent Developments Concern-
___ ____ ____________________________
ing the Package Limitation, 20 J. Mar. L. & Com. 403, 412 (1989)
___________________________
(discussing modern cases); 2A Benedict, supra, 168, at pp. 16-
________ _____
14
mine the unit upon which freight was charged we look "to the
parties' intent, as expressed in the Bill of Lading, applicable
tariff, and perhaps elsewhere."11 Croft & Scully Co. v. M/V
___________________ ___
Skulptor Vuchetich, 664 F.2d 1277, 1282 (5th Cir. 1982); see FMC
___________________ ___ ___
Corp. v. S.S. Marjorie Lykes, 851 F.2d 78, 80 (2d Cir. 1988) (in
_____ ___________________
determining the CFU, "district court should examine the bill of
lading, which expresses the contractual relationship in which the
intent of the parties is the overarching standard") (citations
omitted).
In support of its motion for summary judgment, Sea
Barge argued that it charged a lump sum for transporting the
drilling rig on the northbound voyage.12 Sea Barge relied on
the bill of lading, PREPA's acceptance of the bid/purchase order
(purchase order), and a facsimile from Sea Barge to PREPA quoting
the charge for the northbound voyage ("quoted charge"). The
purchase order and the quoted charge clearly establish that the
freight charge was based on a lump sum:
____________________
46 to 16-47 (same).
11Since the bill of lading is the contract of carriage
between shipper and carrier, Grant Gilmore & Charles L. Black,
Jr., The Law of Admiralty 93 (2d ed. 1975), familiar principles
_____________________
of contract interpretation govern its construction, see Croft &
___ _______
Scully Co. v. M/V Skulptor Vuchetich, 664 F.2d 1277, 1282 (5th
___________ _______________________
Cir. 1982).
12It is undisputed that the freight charges for the south-
______
bound voyage, totalling $164,583, were calculated on a short-ton
_____
basis, as evidenced by the bill of lading. It is not clear from
the record exactly why the parties opted for a lump-sum contract
rate on the northbound voyage, but the Lauderdale deposition
suggests that Sea Barge's expenses would be lower for the trip to
Houston because the barge to be used on the return leg was
already positioned in Puerto Rico.
15
[PURCHASE ORDER]
[PURCHASE ORDER]
Charges will be as follows:
a) Ocean Transportation
--Drill rig & acc.: $86,400 lumpsum
b) Port charges & handling fees
--San Juan arrimo: $5.00/2,000 lbs
--Houston Wharfage: 1.50/2,000 lbs
--Houston truck loading: $7.50/2,000 lbs
[QUOTED CHARGE]
[QUOTED CHARGE]
David, I have finalize [sic] shipping charges for this
move and wish to give you our charges to move this rig
to Houston, Texas.
. . .
Charges ocean transportation:
Drill rig and accessories loose. $86,400.00
lumpsum
. . .
Port charges and handling fees:
San Juan Arrimo $5.00 per 2000 lbs
Houston Wharfage $1.50 per 2000 lbs
Houston truck loading $7.50 per 2000 lbs
The relevant portion of the bill of lading is substantially the
same, though it does not use the term "lump sum."13 This evi-
dence was sufficient to establish that Sea Barge was entitled to
summary judgment on its claim that the northbound freight charge
____________________
13
_________________________________________________
TARIFF ITEM NUMBER CHARGES TOTAL
TARIFF ITEM NUMBER CHARGES TOTAL
_________________________________________________
CONTRACT 86,400.00
_________________________________________________
_________________________________________________
TOTAL THRU FREIGHT
_________________________________________________
WHARFAGE 1.50 st 1,322.25
_________________________________________________
TERMINAL USAGE(1)PR 5.00 st 4,407.50
_________________________________________________
TERMINAL USAGE(2)US 7.50 st 6,611.25
_________________________________________________
. . .
TOTAL CHARGES -------- 98,741.00
--------
________________________________________________
(Italicized characters are typed in the original; all other
characters are pre-printed in the bill of lading.)
16
was based on a lump sum. See FMC Corp., 851 F.2d at 81 (bill of
___ __________
lading established that CFU was calculated on lump-sum basis).
McGee argues that listing wharfage and terminal usage
charges by short ton (st) on the bill of lading established the
short ton as the CFU. We think this argument cuts the other way.
The portion of the bill of lading reproduced above, see supra
___ _____
note 13, sets out the charge per short ton only for wharfage and
____
terminal usage, whereas the freight charge is stated in a lump
sum. And this reading is buttressed by the quoted charge and the
purchase order, which clearly evince the intent of the parties to
calculate the freight charge on a lump-sum basis.
Sea Barge having carried the initial burden on its
motion for summary judgment, the burden shifted to McGee to point
to competent evidence indicating a trialworthy issue. See Local
___ _____
48 v. United Bhd. of Carps. & Joiners, 920 F.2d 1047, 1050 (1st
__ ________________________________
Cir. 1990). In support of its claim that freight charges were
based on the short ton, McGee proffered the Sea Barge invoice to
PREPA relating to the northbound voyage, and a portion of the
deposition testimony of William Lauderdale. The invoice is
similar in all relevant respects to the portion of the bill of
lading set out in the margin. See supra note 13. A flat $86,400
___ _____
charge is made for "Ocean freight," while wharfage and terminal
charges are listed on a short-ton basis. Although, as McGee
points out, other portions of the invoice and bill of lading
reflect that the drilling rig weighed 1,726,000 pounds, there is
17
nothing to link weight with the freight charge, and McGee made no
_______
proffer supporting such a link.14
More importantly, the Lauderdale deposition tendered by
McGee states that Lauderdale calculated the charges for the
northbound voyage based on Sea Barge's expenses, including the
___ _______ ________
costs of operating the vessel; agency, port, stevedoring and
container costs; as well as a profit margin. Nowhere does
Lauderdale intimate that the drilling-rig weight was a factor in
calculating the freight charge or in the parties' discussions of
the freight charge for the northbound voyage. Thus, we find no
competent evidence that the freight charge was based on anything
other than a lump sum, see S.S. Marjorie Lykes, 851 F.2d at 80-81
___ ___________________
(finding that bill of lading and tariff established that parties
intended to calculate freight on lump-sum basis), which means
that the drilling rig itself was the CFU in this case. Binladen,
________
759 F.2d at 1016; see Union Carbide Corp. v. M/V Michele, 764 F.
___ ___________________ ____________
Supp. 783, 786 (S.D.N.Y. 1990) (CFU was transportable tank, since
freight charge was computed on lump-sum basis).
B. The Cross Appeal (No. 93-1548)
B. The Cross Appeal (No. 93-1548)
______________________________
____________________
14Even evidence that Sea Barge used the weight of the drill
rig to calculate its own costs may not have been dispositive.
___
See M/V Lash Italia, 858 F.2d at 193 ("[w]hile [carrier] may have
___ _______________
considered the vehicles' dimensions in setting its freight rates,
the mere consideration of a particular measure does not render it
a customary freight unit"); S.S. Marjorie Lykes, 851 F.2d at 80-
___________________
81 (even though preliminary negotiations indicated that carrier
was calculating freight based on price per ton, the fact that the
bill of lading and tariff unambiguously reflected a lump-sum rate
was controlling).
18
The Ayacol and Sea Barge cross-appeal challenges (1)
the district court finding that the loading of the drilling rig
was not controlled by PREPA to such an extent that Ayacol was
exonerated from liability, and (2) the order denying Ayacol/Sea
Barge an attorney fee award against McGee.15 We deem these
claims waived due to cross-appellants' failure to object to the
magistrate-judge's report and recommendation within the ten-day
period prescribed by 28 U.S.C. 636(b)(1)(C). See Park Motor
___ __________
Mart, Inc. v. Ford Motor Co., 616 F.2d 603, 605 (1st Cir.
___________ ________________
1980)16 ("[A] party 'may' file objections within ten days or he
may not, as he chooses, but he 'shall' do so if he wishes further
[appellate] consideration.").17 See also Fed. R. Civ. P. 72(b)
___ ____
(same); D.P.R. Loc. R. 510.2(A) (failure to object to magistrate-
____________________
15Prior to briefing and oral argument, McGee moved to
dismiss the Ayacol/Sea Barge cross-appeal for failure to comply
with D.P.R. Loc. R. 510.2(A) (failure to object to magistrate-
judge's report within ten days waives right to appellate review).
On written submissions by the parties, we denied the motion
without prejudice, specifically preserving McGee's right to
address this issue in its appellate brief. Ayacol/Sea Barge
failed to respond to the waiver argument presented in McGee's
brief, either at oral argument or in their principal brief on
appeal, and filed no reply brief. Thus, we rely on the Ayacol/-
SeaBarge submissions in opposition to McGee's motion to dismiss.
16The Supreme Court has made clear that the failure to make
timely objection does not deprive the court of appeals of juris-
diction. Thomas v. Arn, 474 U.S. 140, 146 n.4 (1985).
______ ___
17We reject the contention that the Ayacol/Sea Barge claim
sought to be raised on cross-appeal was preserved by an oblique
footnote reference in their joint memorandum opposing McGee's
________ _______
objection to the magistrate-judge's report. Their joint memoran-
_________
dum was not filed within the ten-day period prescribed by 28
U.S.C. 636(b)(1)(C). See Park Motor Mart., 616 F.2d at 605.
___ ________________
19
judge's report within ten days waives absolute right to appeal
district court order).18
Ayacol/Sea Barge urge that timely objection is required
only when a party challenges a finding actually set out in the
magistrate-judge's report and recommendation. Thus, they assert
no exception to the report per se but challenge the "fail[ure] to
___ __
make the additional findings requested [in the motion for summary
judgment]." We reject their contention, which would allow an
aggrieved party to assert on appeal an argument never surfaced in
the district court; namely, in this case, that the magistrate-
judge's report failed to respond to the portions of the motion
dealing with exoneration of liability and attorney fees. See
___
United States v. Nu ez, 19 F.3d 719, 722 n.8 (1st Cir. 1994)
_____________ _____
(arguments not seasonably addressed to trial court may not be
surfaced for first time on appeal) (citing cases).19 Finally,
____________________
18The report and recommendation warned that "failure to
comply with [D.P.R. Loc. R. 510.2(A)] precludes further appellate
review." See United States v. Valencia-Copete, 792 F.2d 4, 6
___ _____________ _______________
(1st Cir. 1986) (directing inclusion of notice of waiver in
magistrate-judge's reports).
19Ayacol/Sea Barge point to Orthopedic & Sports Injury
_____________________________
Clinic v. Wang Labs., Inc., 922 F.2d 220 (5th Cir. 1991), as
______ _________________
support for their theory. In Wang, plaintiffs did not object to
____
the magistrate-judge's report with respect to its failure to
treat plaintiffs' res ipsa loquitur defense against partial
___ ____ ________
summary judgment. The Fifth Circuit rejected the defendant's
argument that Thomas v. Arn barred the claim, stating: "[plain-
______ ___
tiff] is still able to request that the issue be considered on
__ _______
appeal, even if it did not question the magistrate's findings."
Wang, 922 F.2d at 225 (emphasis added), citing Thomas, 477 U.S.
____ ______ ______
at 148-49. Although the court did not detail the reasons for its
decision, the referenced portion of Thomas states: "we need not
______
decide whether the Act mandates a waiver of appellate review
absent [timely objection to the magistrate-judge's report]. We
hold only that it does not forbid such a rule." Id. No other
___
20
the proposed bypass of the Article III judge would undermine the
established role of the magistrate judge in the federal system:
The purpose of the Federal Magistrates Act is
to relieve courts of unnecessary work. Since
magistrates are not Article III judges, it is
necessary to provide for a redetermination by
the court, if requested, of matters falling
__ _________
within subsection (b)(1)(B). To require it
__ _______ __
if not requested would defeat the main pur-
__ ___ _________ _____ ______ ___ ____ ____
pose of the act.
____ __ ___ ___
Park Motor Mart, 616 F.2d at 605 (footnote omitted) (emphasis
________________
added); see also id. at 605 n.1 ("Nor can it be thought that a
___ ____ ___
party could skip the district court and, in effect, appeal
directly to us. We have no jurisdiction to review the determina-
tions of magistrates").20
We affirm the district court judgment for Sea
We affirm the district court judgment for Sea
_______________________________________________________
Barge/Ayacol, dismiss the Sea Barge/Ayacol cross-appeal, and
Barge/Ayacol, dismiss the Sea Barge/Ayacol cross-appeal, and
_________________________________________________________________
remand for further proceedings consistent with this opinion. All
remand for further proceedings consistent with this opinion. All
___________________________________________________________ ___
parties are to bear their own costs.
parties are to bear their own costs.
___________________________________
____________________
court has cited Wang on this point. We think Wang is better seen
____ ____
as support for the view that a court of appeals has discretion to
__________
adopt a rule allowing a party to raise a claim not preserved
before magistrate-judge. Since this case presents no suitable
occasion for such a rule, see Park Motor Mart, 616 F.2d at 605,
___ ________________
we find Wang to be inapposite.
____
20Additionally, we note that these claims likely would not
succeed on the merits. Ayacol cites no case holding that a
stevedore's duty of care may be delegated, in toto, to its marine
__ ____
surveyor. The district court case cited for this proposition,
see Royal Embassy of Saudi Arabia v. S.S. Ioannis Martinos, 1986
___ _____________________________ _____________________
A.M.C. 769 (E.D.N.C. 1984), merely found a right to contribution
____________
from the marine surveyor. As concerns the request for attorney
fees, Sea Barge/Ayacol established no conduct on the part of
McGee which would warrant a fee award.
21
Document Info
Docket Number： 93-1543
Filed Date： 9/27/1994
Precedential Status： Precedential
Modified Date： 9/21/2015