Aig Europe, S.A. v. Locust Point Termina ( 1998 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
AIG EUROPE, S.A.,
Plaintiff-Appellee,
v.
LOCUST POINT TERMINAL
CORPORATION, t/a Marine Freight
Company,
Defendant-Appellant,
and
No. 96-2437
M/V MSC LAUREN, its tackle, boats,
engines, etc., in rem; M/V MSC
CHIARA, its tackle, boats, engines,
etc., in rem; MEDITERRANEAN
SHIPPING COMPANY, S.A.; M/V
SEXTUM, its tackle, boats, engines,
etc., in rem,
Defendants.
AIG EUROPE, S.A.,
Plaintiff-Appellant,
v.
MEDITERRANEAN SHIPPING COMPANY,
S.A.; LOCUST POINT TERMINAL
CORPORATION, t/a Marine Freight
Company,
Defendants-Appellees, No. 96-2481
and
M/V MSC LAUREN, its tackle, boats,
engines, etc., in rem; M/V MSC
CHIARA, its tackle, boats, engines,
etc., in rem; M/V SEXTUM, its
tackle, boats, engines, etc., in rem,
Defendants.
Appeals from the United States District Court
for the Eastern District of Virginia, at Norfolk.
Henry C. Morgan, Jr., District Judge.
(CA-95-1024-2, CA-95-1025-2)
Argued: June 5, 1997
Decided: January 5, 1998
Before RUSSELL, HAMILTON, and MOTZ, Circuit Judges.
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Affirmed by unpublished per curiam opinion.
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COUNSEL
ARGUED: Timothy Sean Brunick, KNIGHT, DUDLEY, CLARKE
& DOLPH, P.L.C., Norfolk, Virginia; Vincent M. De Orchis,
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DE ORCHIS & PARTNERS, New York, New York, for Appellant.
Carter Branham Snow Furr, MCGUIRE, WOODS, BATTLE &
BOOTHE, L.L.P., Norfolk, Virginia, for Appellee. ON BRIEF: Mark
S. Davis, MCGUIRE, WOODS, BATTLE & BOOTHE, L.L.P., Nor-
folk, Virginia, for Appellee AIG. Edward J. Powers, VANDE-
VENTER, BLACK, MEREDITH & MARTIN, Norfolk, Virginia, for
Appellee Mediterranean Shipping.
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Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
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OPINION
PER CURIAM:
Locust Point Terminal Corporation, t/a Marine Freight Company
("Marine Freight"), appeals from the district court's order granting
judgment to AIG Europe, S.A. ("AIG") against Marine Freight, grant-
ing judgment to Mediterranean Shipping Company ("MSC") against
AIG, and declining to award pre-judgment interest to AIG. AIG noted
a cross-appeal. Finding no reversible error, we affirm.
AIG is an underwriter who insured two shipments of tanned and
dyed leather skins from Italian Leather S.P.A. ("I.L. Italy") in Bari,
Italy, to its subsidiary, Italian Leather USA, Inc. ("I.L. USA"), in
Randleman, North Carolina. When the shipments arrived at I.L. USA,
it was discovered that part of the cargo was missing. AIG brought suit
in the district court against MSC and Marine Freight to recover dam-
ages it suffered as a result of the missing cargo.
The first shipment of skins from I.L. Italy to I.L. USA consisted
of ten wooden pallets loaded into a twenty-foot shipping container1 at
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1 Both shipments were carried inside sealed multi-modal containers.
Multi-modal containers are metal, rectangular boxes that can be stacked
aboard ships, loaded onto trains, or mounted upon truck trailer frames
without having to disturb the container with each transfer.
3
I.L. Italy's warehouse on September 23, 1994. Each pallet was
stacked with twelve, six-foot-long cartons, each containing approxi-
mately twenty tanned and dyed leather skins. I.L. Italy locked and
sealed the shipping container with a steel band-type seal. Zeta Sys-
tems, an Italian corporation that arranges shipments of cargo for Ital-
ian shippers, transported the containers by truck to the port of Naples.2
At the port, Zeta Systems delivered the containers to MSC for trans-
portation by ship to Norfolk, Virginia. Before loading the cargo
aboard an MSC ship, MSC placed its own bolt-type security seal on
the containers' doors. MSC then loaded the container onto the MSC
Chiara, on September 27, 1994.
MSC issued a bill of lading to I.L. Italy describing the cargo as
"2,450 packages of skins tanned" and contained the disclaimer "ship-
per's load and count." The gross weight was listed as 7,623 kilograms.3
The cargo reached Norfolk, Virginia, on October 16, 1994, and
remained there until October 21, 1994. At that time, Marine Freight
issued a bill of lading for overland carriage by truck from Norfolk to
Randleman. The bill of lading described the contents as "2,450 CTNS
tanned skins," and listed the weight as 7,623 kilograms.
On October 21, 1994, a Marine Freight driver and a guard from the
Portsmouth Marine Terminal conducted a visual check of the seals on
the container and found them to be intact. The Marine Freight driver
moved the container to Marine Freight's storage lot in Portsmouth,
Virginia, where it remained until October 24, 1994, when Marine
Freight transported the container to Randleman. The container
remained on the truck overnight while the driver slept in the cab. The
next morning, an I.L. USA employee cut the seals and discovered that
two pallets were missing from the container.
The second shipment consisted of tanned and dyed skins packed
onto nineteen pallets and loaded into a forty-foot shipping container
by I.L. Italy, and sealed with a steel bolt-type seal. On November 30,
1994, Zeta Systems transported the container from I.L. Italy's ware-
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2 An employee of I.L. Italy accompanied the truck driver in a separate
vehicle from I.L. Italy's warehouse to the port of Naples.
3 MSC transcribed the information from the bill of lading provided by
Zeta Systems.
4
house to the port of Naples. As with the first shipment, MSC issued
a bill of lading to I.L. Italy for carriage from Naples, to Norfolk, Vir-
ginia. The bill of lading described the cargo as"4,484 packages skins
tanned" and contained the disclaimer "shipper's load and count." The
gross weight was listed as 14,401 kilograms. On December 9, 1994,
MSC loaded the container onto its ship, the Sextum. The container
arrived in Norfolk on January 3, 1995. Marine Freight picked up the
container on January 9, 1995, and issued a bill of lading for carriage
overland by truck from Norfolk to Randleman. Again, a Marine
Freight driver and a guard from the Portsmouth Marine Terminal,
conducted a visual inspection of the seal on the container and found
it to be intact. On the way to Randleman, the driver stopped at a truck
stop for four and one-half hours and then slept overnight in the cab.
The following morning, an I.L. USA employee cut the seal and dis-
covered six pallets missing.
On appeal, Marine Freight asserts that the district court erred in
finding Marine Freight liable for the loss of cargo. On cross-appeal,
AIG asserts that the district court erred in not finding MSC also liable
for the loss of cargo and in declining to award pre-judgment interest
to AIG.
The record establishes that both containers were delivered intact to
MSC in Naples and that somewhere between Naples and Randleman
the containers were broken into and cargo stolen. 4 Because it cannot
be established where the loss occurred, liability for the loss is deter-
mined by the burdens of proof and presumptions applicable to the
various bills of lading issued by the carriers of the containers. Bills
of lading for the carriage of "goods by sea to or from ports of the
United States, in foreign trade" are governed by the Carriage of
Goods by Sea Act ("COGSA"), 46 U.S.C.A. §§ 1300-1315 (West
1994 & Supp. 1997). Domestic bills of lading issued by common car-
riers transporting goods in interstate commerce are governed by the
Carmack Amendment, 49 U.S.C. § 11707(a)(1) (1994). The bills of
lading issued by MSC for the ocean segment of the shipments are
governed by COGSA. These bills of lading terminated once the ship-
ments reached Norfolk. See Reider v. Thompson , 339 U.S. 113, 116-
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4 Subsequent inspection of the seals from both shipments established
that they were removed and reattached.
5
17 (1950). At that point, Marine Freight issued new bills of lading to
cover the domestic overland segment of the shipments and are there-
fore governed by the Carmack Amendment.
Turning to Marine Freight's liability, a common carrier is liable
for the loss of goods it carries unless it can prove that it was free from
fault or negligence and that the loss was due to one of the excepted
causes relieving the carrier of liability. See 46 U.S.C.A.
§ 11707(a)(1); Missouri Pac. Ry. v. Elmore & Stahl, 377 U.S. 134,
137 (1964). The excepted causes include: an act of God, the public
enemy, the act of the shipper himself, public authority, or the inherent
vice or nature of the goods. See Missouri Pac. Ry., 377 U.S. at 137.
Under the Carmack Amendment, to establish a prima facie case for
recovery against Marine Freight, AIG must prove: (1) that intact con-
tainers were delivered to Marine Freight and (2) that Marine Freight
delivered less than intact containers to Randleman. Id. Once the prima
facie case is established, the burden of proof shifts to the carrier to
show that it was both free from negligence and that the damage to the
cargo was due to one of the excepted causes. Id.AIG presented evidence that Marine Freight received intact
containers.5 Upon receiving the containers, Marine Freight issued
clean bills of lading specifying the gross weight of the containers.
When a carrier issues a clean bill of lading for cargo open to inspec-
tion, whether or not the carrier does in fact inspect the cargo, it will
be held liable for delivery of the cargo in good condition. See
National Transp., Inc. v. Inn Foods, Inc., 827 F.2d 351, 354 (8th Cir.
1987) (citations omitted). Also, when a carrier issues a bill of lading
declaring the gross weight of the container, regardless of whether the
carrier actually weighs the container, it will be liable for receipt of
that gross weight. See Westway Coffee Corp. v. M.V. Netuno, 675
F.2d 30, 32 (2d Cir. 1982) (under COGSA the weight listed on a bill
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5 AIG asserts that it need not prove that intact containers were delivered
to Marine Freight, because Marine Freight is liable under the "last car-
rier" rule. Under the "last carrier" rule, there is a presumption of liability
upon the last carrier when a through bill of lading is issued. See The
Madow Co. v. S.S. Liberty Exporter, 569 F.2d 1183, 1185-86 (2d Cir.
1978). However, the "last carrier" rule is not applicable in this case
because a through bill of lading was not issued.
6
of lading is prima facie evidence of receipt of that weight). Thus,
despite the fact that Marine Freight did not weigh the containers
before issuing clean bills of lading, the first element of the prima facie
case is established based on the clean bills of lading specifying the
weight of the containers. Marine Freight asserts that the weight given
by I.L. Italy may have been inaccurate. A weighing of the containers,
however, would have established any discrepancies. Therefore,
Marine Freight fails to establish a defense to this element of the prima
facie case.
AIG also established the second element of the prima facie case for
recovery. The evidence clearly showed that the containers arrived at
I.L. USA less than intact. Thus, AIG established a prima facie case
against Marine Freight, and Marine Freight failed to establish that the
damages were caused by one of the recognized exceptions relieving
the carrier of liability. See Missouri Pac. Ry. , 377 U.S. at 137.
Accordingly, we find that the district court did not err in finding
Marine Freight liable for the loss of cargo.
Turning to the liability of MSC, under COGSA, to establish a
prima facie case for recovery against MSC, AIG must prove the fol-
lowing: (1) that intact containers were delivered to MSC and (2) that
MSC delivered less than intact containers to Norfolk. See 46 U.S.C.A.
§ 1303(4); Bally, Inc. v. M.V. Zim Am., 22 F.3d 65, 68-69 (2d Cir.
1994); Cummins Sales & Serv., Inc. v. London & Overseas Ins. Co.,
476 F.2d 498, 500 (5th Cir. 1973). Once the prima facie case is estab-
lished, the burden shifts to the carrier to show that the loss falls within
one of the exceptions set forth in COGSA. See 46 U.S.C.A.
§ 1304(2); Vana Trading Co. v. S.S. "Mette Skou", 556 F.2d 100, 105
(2d Cir. 1977). If an exception is shown, the burden returns to the
shipper to show that there were concurrent causes of loss in the fault
and neglect of the ocean carrier. Id.AIG established the first part of the prima facie case for recovery
under COGSA. There is prima facie evidence establishing that I.L.
Italy delivered intact containers to MSC in Naples, Italy. MSC issued
"clean" bills of lading upon receipt of the containers. The clean bills
of lading covering the subject goods are sufficient proof of the car-
gos' good condition on receipt by the carrier to satisfy the plaintiff's
burden of production. See 46 U.S.C.A. § 1303(3), (4).
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However, AIG fails to establish that MSC delivered less than the
intact containers to Norfolk. Though the evidence at trial established
that the containers had been off-loaded at a foreign port, where they
remained for an unspecified period of time before being re-loaded
onto another MSC ship and transported to Norfolk, MSC presented
evidence of its method of storing containers aboard its vessels. It
stored the containers in such a way that theft would be virtually
impossible while at sea. Though it could easily be inferred that the
containers had been tampered with while in the foreign port, evidence
showed that upon arrival in Norfolk, Marine Freight employees
inspected the containers and found the seals to be intact. Thus, AIG
failed to establish that MSC delivered less than intact containers and
therefore, failed to establish a prima facie case for recovery against
MSC. We therefore find that the district court did not err in determin-
ing that MSC was not liable for the loss of cargo.
AIG also asserts on cross-appeal that the district court erred in
deciding not to award prejudgment interest. The denial of prejudg-
ment interest is reviewed for abuse of discretion. See Coliseum Car-
thage Co. v. Rubbermaid Statesville, Inc., 975 F.2d 1022, 1026 (4th
Cir. 1992). The district court denied the grant of prejudgment interest
because it found Marine Freight disputed liability in good faith. In
U.S. Fire Ins. Co. v. Allied Towing Corp., 966 F.2d 820 (4th Cir.
1992), we concluded that although awarding prejudgment interest in
maritime cases is the general rule, a court may deny such an award
if "peculiar circumstances" would make it inequitable. See U.S. Fire
Ins. Co., 966 F.2d at 828. "[A] genuine dispute regarding liability" is
a typical example of "peculiar circumstances." Id. at 828 n.14. Here,
there was never an express determination that Marine Freight acted
in a negligent manner or directly participated in the loss of the goods.
Thus, Marine Freight presented a genuine dispute regarding liability,
and the district court did not abuse its discretion in denying prejudg-
ment interest.
For these reasons, we affirm the district court's order.
AFFIRMED
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